260 Phil.

125

THIRD DIVISION

G.R. No. 85915, January 17, 1990

PAGKAKAISA NG MGA MANGGAGAWA SA TRIUMPH INTERNATIONAL-UNITED LUMBER AND GENERAL

WORKERS OF THE PHILIPPINES (PMTI-ULGWP), PETITIONER, VS. PURA FERRER-CALLEJA, DIRECTOR OF
THE BUREAU OF LABOR RELATIONS AND THE CONFEDERATION OF FILIPINO WORKERS (CFW),
PROGRESSIVE EMPLOYEES UNION (PEU-TIPI), RESPONDENTS.

DECISION

GUTIERREZ, JR., J.:

Once again we uphold the existing law which encourages one-union, one-company policy in this petition for certiorari
with prayer for preliminary injunction. The petitioner assails the resolutions of the public respondent dated August 24,
1988 and October 28, 1988 both ordering the holding of a certification election among certain monthly-paid employees
of Triumph International Philippines, Inc. (Triumph International for brevity).

The petitioner is the recognized collective bargaining agent of the rank-and-file employees of Triumph International
with which the latter has a valid and existing collective bargaining agreement effective up to September 24, 1989.

On November 25, 1987, a petition for certification election was filed by the respondent union with the Department of
Labor and Employment.

On January 30, 1988, a motion to dismiss the petition for certification election was filed by Triumph International on
the grounds that the respondent union cannot lawfully represent managerial employees and that the petition cannot
prosper by virtue of the contract - bar rule. On the same grounds, the petitioner, as intervenor, filed its opposition to
the petition on February 18, 1988.

On April 13, 1988, the Labor Arbiter issued an order granting the petition for certification election and directing the
holding of a certification election to determine the sole and exclusive bargaining representative of all monthly-paid
administrative, technical, confidential and supervisory employees of Triumph International.

On appeal, the public respondent on August 24, 1988 affirmed the Labor Arbiter’s order with certain modifications as
follows:

"WHEREFORE, premises considered, the order appealed from is hereby affirmed subject to the modification in that
the subject employees sought to be represented by the petitioner union are given the option whether to join the
existing bargaining unit composed of daily paid rank-and-file employees. If they opt to join, the pertinent provision of
the existing CBA should be amended so as to include them in its coverage." (Rollo, p. 19)

On September 5, 1988, Triumph International filed a motion for reconsideration which was denied by the public
respondent in a resolution dated October 28, 1988.

The sole issue presented by the petitioner in the instant case is whether or not the public respondent gravely abused
its discretion in ordering the immediate holding of a certification election among the workers sought to be represented
by the respondent union.

The petitioner argues that the members of respondent union are managerial employees who are expressly excluded
from joining, assisting or forming any labor organization under Art. 245 of the Labor Code.

In the determination of whether or not the members of respondent union are managerial employees, we accord due
respect and, therefore, sustain the findings of fact made by the public respondent pursuant to the time-honored rule
that findings of fact of quasi-judicial agencies like the Bureau of Labor Relations which are supported by substantial
evidence are binding on us and entitled to great respect considering their expertise in their respective fields (see Phil.
Airlines Employees Asso. (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; Producers Bank of the Philippines v.
National Labor Relations Commission, G.R. No. 76001, September 5, 1988; Salvador Lacorte v. Hon. Amado G.
Inciong, et al, G.R. No. 52034, September 27, 1988; Johnson and Johnson Labor Union - FFW, et al. v. Director of
Labor Relations, G.R. No. 76427, February 21, 1989; Teofila Arica, et al. v. National Labor Relations Commission, et
al., G.R. No. 78210, February 28, 1989; A. M. Oreta & Co., Inc. v. National Labor Relations Commission, G.R. No.
74004, August 10, 1989). According to the Med-Arbiter, while the functions, and we may add, the titles of the
personnel sought to be organized appear on paper to involve an apparent exercise of managerial authority, the fact
remains that none of them discharge said functions. The petitioner has failed to show reversible error insofar as this
finding is concerned.
In ruling that the members of respondent union are rank-and-file and not managerial employees, the public
respondent made the following findings:

“x x x (1) They do not have the power to lay down and execute management policies as they are given ready policies
merely to execute and standard practices to observe; 2) they do not have the power to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees but only to recommend for such actions as the power rests upon the
personnel manager; and 3) they do not have the power to effectively recommend any managerial actions as their
recommendations have to pass through the department manager for review, the personnel manager for attestation
and the general manager/president for final actions. x x x " (At pp. 17-18, Rollo)

The petitioner further argues that while it has recognized those signatories and employees occupying the positions of
Assistant Manager, Section Chief, Head Supervisor and Supervisor as managerial employees under the existing
collective bargaining agreement, in the event that they are declared as rank-and-file employees in the present case
they are not precluded from joining and they should join the petitioner.

We find the aforesaid contention of the petitioner meritorious in the absence of a showing that there are compelling
reasons such as the denial of the right to join the petitioner which is the certified bargaining unit to the members of
respondent union or that there are substantial distinctions warranting the recognition of a separate group of rank-and-
file employees even as there is an existing bargaining agent for rank-and-file employees.

In the case of Philtranco Service Enterprises v. Bureau of Labor Relations, et al., G.R. No. 85343 promulgated on
June 28, 1989, we stated that:

"The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and the rank and file
groups. Thus, Art, 212 (k) of the Code provides:

xxx xxx xxx

"(k) ‘Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial action. All employees not falling within this definition are considered rank and file
employees for purposes of this Book.

"In implementation of the aforequoted provision of the law, Section 11 of Rule II, Book V of the Omnibus Rules
implementing the Labor Code did away with existing supervisory unions classifying the members either as managerial
or rank and file employees depending on the work they perform. If they discharge managerial functions, supervisors
are prohibited from forming or joining any labor organization. If they do not perform managerial work, they may join the
rank and file union and if none exists, they may form one such rank and file organization. This rule was emphasized in
the case of Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628 [1986])."

We have explicitly explained in the case of Franklin Baker Company of the Philippines v. Trajano, 157 SCRA 416
[1988] that:

"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 (National Warehousing Corp. v. CIR, 7 SCRA 602-603
[1963])."

The public respondent, in its factual findings, found that the supervisory employees sought to be represented by the
respondent union are not involved in policy-making and their recommendatory powers are not even instantly effective
since the same are still subject to review by at least three managerial heads (department manager, personnel
manager and general manager) before final action can be taken. Hence, it is evidently settled that the said employees
do not possess a managerial status. The fact that their work designations are either managers or supervisors is of no
moment considering that it is the nature of their functions and not the said nomenclatures or titles of their jobs which
determines their statuses (see Engineering Equipment, Inc. v. National Labor Relations Commission, 133 SCRA 752
[1984] citing National Waterworks and Sewerage Authority v. NWSA Consolidated Unions, 11 SCRA 766 [1964]).

Under the old Industrial Peace Act (Republic Act No. 875), the term "supervisors" had the following definition, to wit:

"SEC. 2. Definitions — As used in this Act —

xxx xxx xxx

(k) ‘Supervisor’ means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off,
recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their
grievances, or effectively to recommend such acts if, in connection with the foregoing, the exercise of such authority is
not of a merely routinary or clerical nature but requires the use of independent judgment."

Section 3 of the same Act further provides that the supervisors as defined above shall not be eligible for membership
in a labor organization of employees under their supervision but may form separate organizations of their own.

With the enactment of the Labor Code (Presidential Decree No. 442 as amended), the term "supervisor" was replaced
by "managerial employee." Book V, Art. 212, subparagraph (k) of said Code reads:

"(k) ‘Managerial Employee’ is one who is vested with power or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions. All Employees not falling within this definition are considered rank and file
employees for purposes of this Book."

Art. 245 of the aforementioned Code prohibits managerial employees from joining, assisting or forming any labor
organization. Hence, employees who had then formed supervisory unions were classified either as managerial or
rank-and-file depending on their functions in their respective work assignments. (Bulletin Publishing Corp. v. Sanchez,
supra.)

The recent amendments to the Labor Code contain separate definitions for managerial and supervisory employees.
Section 4 of Republic Act No. 6715 states that:

"Section 4, Article 212 of the Labor Code of the Philippines, as amended, is further amended to read as follows:

xxx xxx xxx

"(m) 'Managerial Employee' is one who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer, effectively recommend such management actions if the
exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this
Book.

Section 18 of the same Act retains the provision on the ineligibility of managerial employees to join any labor
organization. However, the right of supervisory employees to form their own union is revived under the said section
which states, in part, to wit:

"x x x Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own."

Thus, the right of supervisory employees to organize under the Industrial Peace Act is once more recognized under
the present amendments to the Labor Code. (see Adamson & Adamson, Inc., v. The Court of Industrial Relations, 127
SCRA 268 [1984]). In the absence of any grave abuse of discretion on the part of the public respondent as to the
status of the members of the respondent union, we adopt its findings that the employees sought to be represented by
the respondent union are rank-and-file employees.

There is no evidence in the records which sufficiently distinguishes and clearly separates the group of employees
sought to be represented by the private respondents into managerial and supervisory on one hand or supervisory and
rank-and-file on the other. The respondents’ pleadings do not show the distinctions in functions and responsibilities
which differentiate the managers from the supervisors and sets apart the rank-and-file from either the managerial or
supervisory groups. As a matter of fact, the formation of a supervisor's union was never before the Labor Arbiter and
the Bureau of Labor Relations and neither is the issue before us. We, therefore, abide by the public respondent's
factual findings in the absence of a showing of grave abuse of discretion.

In the case at bar, there is no dispute that the petitioner is the exclusive bargaining representative of the rank-and-file
employees of Triumph International. A careful examination of the records of this case reveals no evidence that rules
out the commonality of interests among the rank-and-file members of the petitioner and the herein declared rank-and-
file employees who are members of the respondent union. 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. Hence, the circumstances of this case impel us to disallow the holding of a certification election
among the workers sought to be represented by the respondent union for want of proof that the right of said workers
to self-organization is being suppressed.
Once again we enunciate that the proliferation of unions in an employer unit is discouraged as a matter of policy
unless compelling reasons exist which deny a certain and distinct class of employees the right to self-organization for
purposes of collective bargaining. (see General Rubber & Footwear Corporation v. Bureau of Labor Relations, 155
SCRA 283 [1987]).

Anent the correlative issue of whether or not the contract-bar rule applies to the present case, Rule V, Section 3, Book
V of the Implementing Rules and Regulations of the Labor Code is written in plain and simple terms. It provides in
effect that if a collective bargaining agreement validly exists, a petition for certification election can only be entertained
within sixty (60) days prior to the expiry date of said agreement. Respondent union's petition for certification election
was filed on November 25, 1987. At the time of the filing of the said petition, a valid and existing CBA was present
between petitioner and Triumph International. The CBA was effective up to September 24, 1989. There is no doubt
that the respondent union's CBA constituted a bar to the holding of the certification election as petitioned by the
respondent union with public respondent. (see Associated Trade Unions [ATU] v. Trajano, 162 SCRA 318 [1988],
Federation of Democratic Trade Union v. Pambansang Kilusan ng Paggawa, 156 SCRA 482 [1987]; Tanduay
Distilling Labor Union v. National Labor Relations Commissions, 149 SCRA 470 [1987]). The members of the
respondent union should wait for the proper time.

The CBA in this case expired on September 24, 1989. If a new CBA with the same provisions as the old one has been
executed, its terms should be amended so as to conform to the tenor of this decision.

WHEREFORE, in view of the foregoing, the assailed resolutions of the public respondent dated August 24, 1988 and
October 28, 1988 are hereby SET ASIDE. The restraining order dated January 11, 1989 issued by the Court is made
permanent.

SO ORDERED.
G.R. No. 81883

THIRD DIVISION

G.R. No. 81883, September 23, 1992

KNITJOY MANUFACTURING, INC., PETITIONER, VS. PURA FERRER-CALLEJA, DIRECTOR OF BUREAU OF

LABOR RELATIONS, AND KNITJOY MONTHLY EMPLOYEES UNION, RESPONDENTS.

[G.R. NO. 82111. SEPTEMBER 23, 1992]

CONFEDERATION OF FILIPINO WORKERS (CFW), PETITIONER, VS. DIRECTOR PURA FERRER-CALLEJA

AND KNITJOY MONTHLY EMPLOYEES UNION (KMEU), RESPONDENTS.

DECISION

DAVIDE, JR., J.:

These petitions have a common origin and raise identical issues. They were ordered consolidated on 23 November
1988.

In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of the Bureau of Labor Relations in BLR
Case No. A-10-315-87, which reversed the Order of Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September
1987 and ordered the holding of a certification election among the regular rank-and-file monthly-paid employees of
Knitjoy Manufacturing, Inc. (KNITJOY), is assailed by the latter.

The Med-Arbiter's order dismissed the petition of private respondent Knitjoy Monthly Employees Union (KMEU) for
such certification election and directed the parties "to work out (sic) towards the formation of a single union in the
company."

The antecedent material operative facts in these petitions are as follows:

Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation of Filipino Workers (FFW). The
bargaining unit covered only the regular rank-and-file employees of KNITJOY paid on a daily or piece-rate basis. It did
not include regular rank-and-file office and production employees paid on a monthly basis. The CBA expired on 15
June 1987. Prior to its expiration, the FFW was split into two (2) factions -- the Johnny Tan and the Aranzamendez
factions. The latter eventually became the Confederation of Filipino Workers (CFW), herein petitioner in G.R. No.
82111.

Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied Services (TUPAS) filed a petition
for the holding of a certification election among KNITJOY's regular rank-and-file employees paid on a daily and piece-
rate basis. Excluded were the regular rank-and-file employees paid on a monthly basis. In the certification election
conducted on 10 June 1987, CFW emerged as the winner; thereafter, negotiations for a new CBA between CFW and
KNITJOY commenced.

On 24 June 1987, during the pendency of the said negotiations, private respondent KMEU filed a petition for
certification election among KNITJOY's regular rank-and-file monthly–paid employees with Regional Office No. IV of
the Department of Labor and Employment (DOLE) which docketed the same as R-04-OD-M-6-75-87. The Knitjoy
Monthly Employees Association and Confederation of Citizens Labor Union (KMEA-CCLU), another union existing in
the said company, and petitioner CFW intervened therein.

The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter Rolando S. de la Cruz, the dispositive
portion of which reads:

"WHEREFORE, premises considered, the petition is hereby Dismissed, but the parties are instructed to work out (sic)
towards the formation of a single union in the company."[1]

KMEU filed a motion to reconsider this order, which was treated as an appeal by the Bureau of Labor Relations (BLR).
On 1 December 1987, public respondent Pura Ferrer-Calleja, Director of the BLR, handed down a Decision[2]
reversing the order of Med-Arbiter de la Cruz. The dispositive portion of the Decision reads:

"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly Employees is hereby granted subject to the
exclusion of the monthly paid employees who are deemed managerial.

Let, therefore, the certification election proceed without delay, with the following as choices:

1. Knitjoy Monthly Employees Union (KMEU); and

2. No Union.

The company's latest payroll shall be the basis in determining the list of eligible voters.

SO ORDERED."

Respondent Director brushed aside KNITJOY's arguments that the monthly-paid employees have the same working
incentives as their counterparts, the daily-paid workers; that the existing collective bargaining agent (CFW) is willing to
include the monthly-paid employees; and that out of the 212 monthly-paid employees, 116 qualify as managerial
employees while the rest who are holding confidential or technical positions should likewise be excluded. In finding for
KMEU, said Director declared that:

"As pointed out by the Supreme Court in the similar case of General Rubber and Footwear Corporation vs. Bureau of
Labor Relations, et al., G.R. No. 74262, it is perhaps unusual for management to have to deal with two (2) collective
bargaining unions but there is no one to blame except management for creating the situation it is in. From the
beginning of the existence of the CBA, management had sought to indiscriminately suppress the members of the
petitioners' right (sic) to self-organization. Respondents' argument that the incumbent collective bargaining agent is
willing to accommodate herein petitioner is of no moment since the option now rests upon the petitioner as to whether
or not they desire to join the existing collective bargaining agent or remain as separate (sic) union."[3]

KNITJOY and CFW separately moved to reconsider the said decision alleging, as principal underpinning therefor, the
conclusion and signing between them, allegedly on 27 November 1987 -- before the rendition of the challenged
decision -- of a CBA which includes in its coverage the monthly-paid rank-and-file employees. It is averred that said
CBA has rendered the case moot and academic; moreover, to remove the monthly-paid employees from their present
bargaining unit would lead to the fragmentation thereof, contrary to existing labor policies favoring larger units.

In her Decision of 8 February 1988, respondent Director denied for lack of merit the motion for reconsideration on the
principal ground that although the monthly-paid rank-and-file employees were allegedly included within the scope of
the new CBA, they are not barred from forming a separate bargaining unit considering that: (a) since the petition for
certification election was filed as early as 24 June 1987, there already existed a pending representation issue when
KNITJOY and CFW commenced negotiations for a new CBA; nevertheless, KMEU was not brought into the said
negotiations and was therefore not a privy to the CBA; (b) members of KMEU did not participate in the ratification of
the CBA; contrary to KNITJOY's claim that the same was unanimously ratified by the members of the bargaining unit,
the CBA failed to mention even one monthly-paid employee who participated in the ratification process; and (c) while it
is true that the policy of the DOLE is to favor a one company-one union scenario which finds basis in Section 2, Rule
V, Book V of the Rules Implementing the Labor Code, there are, nonetheless, some exceptions thereto, as where the
bargaining history requires the formation of another bargaining unit. Besides, such a policy must yield to an
employee's Constitutional right to form unions which includes the freedom to join a union of one's choice. [4]

The new CBA, which KMEU claims to have been signed on 12 December 1987, and not on 27 November 1987 as
both KNITJOY and CFW boldly assert, defines the bargaining unit covered as follows:

"SEC. 2. The bargaining unit covered by this Agreement consists of all regular and permanent rank-and-file
employees of the COMPANY employed in its production plants and paid on a daily or piece-rate basis and regular,
rank-and-file monthly paid office employees, excluding managerial, supervisory, casual, temporary and probationary
employees, and security guards."[5]

Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the instant petitions. The former imputes
upon respondent Director grave abuse of discretion in holding that (a) the scope of the bargaining unit agreed upon in
the new CBA does not bind KMEU because it is not a party thereto, (b) the acceptance by all the members of KMEU
of all benefits of the CBA did not constitute an overt act of ratification and (c) the CBA was concluded on 12 December
1987 and not on 27 November 1987. It further contends that respondent Director contumaciously violated the one
company-one union policy of the Labor Code and disregarded the ruling of this Court in Bulletin Publishing Corp. vs.
Hon. Sanchez,[6] reiterated in part in General Rubber and Footwear Corp. vs. Bureau of Labor Relations.[7] Upon the
other hand, CFW contends that respondent Director committed grave abuse of discretion in (a) allowing the creation
of a unit separate from the existing bargaining unit defined in the new CBA thus abetting the proliferation of unions, (b)
disregarding the CBA provisions which consider the CFW as the sole and exclusive bargaining agent of all rank-and-
file employees and (c) excluding CFW from the choices of unions to be voted upon. [8]

On 24 August 1988,[9] this Court gave due course to the petition in G.R. No. 81883 after both the public and private
respondents filed their separate comments and the petitioner filed its consolidated reply thereto. [10]

On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883 and the petitioner in the former was
ordered to file a consolidated reply to the separate comments of both respondents. [11]

The principal issues raised in these petitions are:

1. Whether or not petitioner KNITJOY'S monthly-paid regular rank-and-file employees can constitute an appropriate
bargaining unit separate and distinct from the existing unit composed of daily or piece-rate paid regular rank-and-file
employees, and

2. Whether or not the inclusion in the coverage of the new CBA between KNITJOY and CFW of the monthly-paid rank-
and-file employees bars the holding of a certification election among the said monthly paid employees.

We decide for the respondents.

1. The suggested bias of the Labor Code in favor of the one company-one union policy, anchored on the greater
mutual benefits which the parties could derive, especially in the case of employees whose bargaining strength could
undeniably be enhanced by their unity and solidarity but diminished by their disunity, division and dissension, is not
without exceptions.
The present Article 245 of the Labor Code expressly allows supervisory employees who are not performing
managerial functions to join, assist or form their separate union but bars them from membership in a labor
organization of the rank-and-file employees. It reads:

"ART. 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 a labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own."

This provision obviously allows more than one union in a company.

Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the Labor Code, which seeks to
implement the policy, also recognizes exceptions. It reads:

"SEC. 2. Who may file. -- Any legitimate labor organization or the employer, when requested to bargain collectively,
may file the petition.

The petition, when filed by a legitimate labor organization shall contain, among others:

xxx

(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; x x x."
(Emphasis supplied)

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.[12] 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 self-organization and to enter
into collective bargaining negotiations, among others, which the Constitution guarantees.[13]

The right to form a union or association or to self-organization comprehends two (2) broad notions, to wit: (a) the
liberty or freedom, i.e., the absence of restraint which guarantees that the employee may act for himself without being
prevented by law, and (b) the power, by virtue of which an employee may, as he pleases, join or refrain from joining
an association. In Victoriano vs. Elizalde Rope Workers' Union,[14] this Court stated:

"x x x Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature
and contents of a ‘right’, it can be safely said that whatever theory one subscribes to, a right comprehends at least two
broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for
himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or refrain
from joining an association. It is, therefore, the employee who should decide for himself whether he should join or not
an association; and should he choose to join, he himself makes up his mind as to which association he would join; and
even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said
organization at any time [Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil.,
1010, 1019]. It is clear, therefore, that the right to join a union includes the right to abstain from joining any union [Abo,
et al. vs. PHILAME (KG) Employees Union, et al., L-19912, January 30, 1965, 13 SCRA 120, 123, quoting
Rothenberg, Labor Relations]. Inasmuch as what both the Constitution and the Industrial Peace Act have recognized,
and guaranteed to the employee, is the 'right' to join associations of his choice, it would be absurd to say that the law
also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an
employee to sign up with any association."

Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has been consistently limited to the
regular rank-and-file employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees
paid on a monthly basis were never included within its scope. Respondent KMEU's membership is limited to the latter
class of employees; KMEU does not seek to dislodge CFW as the exclusive bargaining representative for the former.
The records further disclose that in the certification solicited by TUPAS and during the elections which followed
thereafter, resulting in the certification of CFW as the exclusive bargaining representative, the monthly-paid
employees were expressly excluded. Thus, the negotiations between CFW and KNITJOY following such a certification
could only logically refer to the rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore,
KNITJOY and CFW recognize that insofar as the monthly-paid employees are concerned, the latter's constituting a
separate bargaining unit with the appropriate union as sole bargaining representative, can neither be prevented nor
avoided without infringing on these employees' rights to form a union and to enter into collective bargaining
negotiations. Stated differently, KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is
not -- and has never been -- the employer unit. Given this historical and factual setting, KMEU had the unquestioned
and undisputed right to seek certification as the exclusive bargaining representative for the monthly-paid rank-and-file
employees; both KNITJOY and CFW cannot block the same on the basis of this Court's declaration in Bulletin
Publishing Corp. vs. Hon. Sanchez[15] and General Rubber and Footwear Corp. vs. Bureau of Labor Relations[16]
regarding the one company-one union concept. Petitioners have obviously misread these cases. In the first, We stated
that "[t]he crux of the dispute x x x is whether or not supervisors in petitioner company therein may, for purposes of
collective bargaining, form a union separate and distinct from the existing union organized by the rank-and-file
employees of the same company,"[17] and ruled that the members of the Bulletin Supervisory Union, wholly composed
of supervisors, are not qualified to form a union of their own under the law and rules then existing, considering that "[a]
perusal of the job descriptions corresponding to the private respondents as outlined in the petition, clearly reveals the
private respondents to be managers, purchasing officers, personnel officers, property officers, supervisors, cashiers,
heads of various sections and the like. The nature of their duties gives rise to the irresistible conclusion that most of
the herein private respondents are performing managerial functions;"[18] hence, under Article 246[19] of the Labor Code,
they cannot form, join and assist labor organizations. It should be stressed that the statement therein that supervisors
"who do not assume any managerial function may join or assist an existing rank-and-file union or if none exists, to join
or assist in the formation of such rank-and-file organization"[20] is no longer legally feasible under existing laws. As
earlier noted, the present Article 245 of the Labor Code allows supervisory employees who are not exercising
managerial functions to join, assist or form separate labor organizations of their own but prohibits them from joining a
labor organization composed of the rank-and-file employees.

The second case, on the other hand, demolishes the stand of KNITJOY and CFW for, as correctly contended by the
respondents, it in fact recognizes an exception to the one company-one union concept. Thus:

"Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions but there is no one to
blame except petitioner itself for creating the situation it is in. From the beginning of the existence in 1963 of a
bargaining unit for the employees up to the present, petitioner had sought to indiscriminately suppress the members of
the private respondent's right (sic) to self-organization provided for by law. Petitioner, in justification of its action,
maintained that the exclusion of the members of the private respondent from the bargaining union of the rank-and-file
or from forming their own union was agreed upon by petitioner corporation with the previous bargaining
representatives x x x. Such posture has no leg to stand on. It has not been shown that private respondent was privy to
this agreement. And even if it were so, it can never bind subsequent federations and unions particularly private
respondent-union because it is a curtailment of the right to self-organization guaranteed by the labor laws. However,
to prevent any difficulty and to avoid confusion to all concerned and, more importantly, to fulfill the policy of the New
Labor Code as well as to be consistent with Our ruling in the Bulletin case, supra, the monthly-paid rank-and-file
employees should be allowed to join the union of the daily-paid-rank-and-file employees of petitioner so that they can
also avail of the CBA benefits or to form their own rank-and-file union, without prejudice to the certification election
that has been ordered."[21] (Emphasis supplied)

2. Regardless of the date when the new CBA was executed -- whether on 27 November 1987 as contended by
KNITJOY and CFW or 12 December 1987 as claimed by the respondents -- the fact remains that it was executed
before the resolution of KMEU's petition for certification election among the monthly paid employees became final.
This Court, however, sustains the respondents' claim for indeed if it was executed by the parties on 27 November
1987, both KNITJOY and CFW would have immediately filed the appropriate pleading with the BLR informing it of
such execution and moving for the dismissal of the appeal on the ground that it has been rendered moot and
academic. Moreover, public respondent’s finding on this point is supported by substantial evidence, thus:

"The parties could not have signed the said CBA on 27 November 1987, contrary to their allegation, because from
4:00 - 10:00 p.m. on the same day, 27 November 1987, the parties still attended a conciliation conference before
Assistant Director Maximo L. Lim of the NCR (see Annex "F" of respondent's Supplemental Motion for
Reconsideration) and agreed in principle on nine (9) items or provisions to be included in said CBA. Said minutes do
not state that these nine items are the remaining unresolved issues in the negotiation of the CBA." [22]

It was only in their motion for the reconsideration of public respondent's decision of 1 December 1987 that the
existence of the new CBA was made known.

Considering that (a) the TUPAS solicited certification election was strictly confined to the rank-and-file employees who
are paid on a daily or piece-rate basis, (b) the results of the election must also necessarily confine the certified union's
representation to the group it represents and (c) the issue of the plight of the monthly-paid employees was still
pending, KNITJOY and CFW clearly acted with palpable bad faith and malice in including within the scope of the new
CBA these monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the right of the KMEU
and its members to bargain collectively and negotiate for themselves, to impose upon the latter a contract the
negotiation for which they were not even given notice of, consulted or allowed to participate in, and to oust from the
BLR the pending appeal on the certification issue. In the latter case, KNITJOY and CFW are guilty of contumacious
conduct. It goes without saying then that the new CBA cannot validly include in its scope or coverage the monthly-paid
rank-and-file employees of KNITJOY. It does not bar the holding of a certification election to determine their sole
bargaining agent and the negotiation for and the execution of a subsequent CBA between KNITJOY and the eventual
winner in said election. Section 4, Rule V, Book V of the Rules Implementing the Labor Code expressly provides:

"SEC. 4. Effects of early agreements. -- The representation case shall not, however, be adversely affected by a
collective bargaining agreement registered before or during the last 60 days of a subsisting agreement or during the
pendency of the representation case." (Emphasis supplied)

The public respondent then committed no abuse of discretion in ordering a certification election among the monthly-
paid rank-and-file employees, except managerial employees, of KNITJOY. The choice however, should not be, as
correctly contended by CFW, limited to merely (a) KMEU and (b) no union. The records disclose that the intervenors
in the petition for certification are the KMEA-CCLU and CFW. They should be included as among the choices in the
certification election.

WHEREFORE, the instant petitions are DISMISSED. However, the challenged decision of public respondent of 1
December 1987 is modified to include in the choices for the certification election petitioner Confederation of Filipino
Workers (CFW) and the Knitjoy Monthly Employees Association and Confederation of Citizens Labor Unions (KMEU-
CCLU).

Costs against petitioners.

SO ORDERED.
G.R. No. 96490

FIRST DIVISION

G.R. No. 96490, February 03, 1992

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, PETITIONER, VS. VOLUNTARY ARBITRATOR

TEODORICO P. CALICA AND INDOPHIL TEXTILE MILLS, INC., RESPONDENTS.

DECISION

MEDIALDEA, J.:

This is a petition for certiorari seeking the nullification of the award issued by the respondent Voluntary Arbitrator
Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c), Article I of the Collective Bargaining
Agreement between Indophil Textile Mills, Inc. and Indophil Textile Mill Workers Union-PTGWO does not extend to the
employees of Indophil Acrylic Manufacturing Corporation as an extension or expansion of Indophil Textile Mills,
Incorporated.

The antecedent facts are as follows:

Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly registered with the
Department of Labor and Employment and the exclusive bargaining agent of all the rank-and-file employees of
Indophil Textile Mills, Incorporated. Respondent Teodorico P. Calica is impleaded in his official capacity as the
Voluntary Arbitrator of the National Conciliation and Mediation Board of the Department of Labor and Employment,
while private respondent Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and export of
yarns of various counts and kinds and of materials of kindred character and has its plants at Barrio Lambakin, Marilao,
Bulacan.

In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent Indophil Textile Mills, Inc.
executed a collective bargaining agreement effective from April 1, 1987 to March 31, 1990.

On November 3, 1987, Indophil Acrylic Manufacturing Corporation was formed and registered with the Securities and
Exchange Commission. Subsequently, Acrylic applied for registration with the Board of Investments for incentives
under the 1987 Omnibus Investments Code. The application was approved on a preferred non-pioneer status.

In 1988, Acrylic became operational and hired workers according to its own criteria and standards. Sometime in July,
1989, the workers of Acrylic unionized and a duly certified collective bargaining agreement was executed.

In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the petitioner union claimed
that the plant facilities built and set up by Acrylic should be considered as an extension or expansion of the facilities of
private respondent Company pursuant to Section 1(c), Article I of the CBA, to wit,

"c) This Agreement shall apply to the Company's plant facilities and installations and to any extension and expansion
thereat." (Rollo, p.4)

In other words, it is the petitioner's contention that Acrylic is part of the Indophil bargaining unit.

The petitioner's contention was opposed by private respondent which submits that it is a juridical entity separate and
distinct from Acrylic.

The existing impasse led the petitioner and private respondent to enter into a submission agreement on September 6,
1990. The parties jointly requested the public respondent to act as voluntary arbitrator in the resolution of the pending
labor dispute pertaining to the proper interpretation of the CBA provision.

After the parties submitted their respective position papers and replies, the public respondent Voluntary Arbitrator
rendered its award on December 8, 1990, the dispositive portion of which provides as follows:

"PREMISES CONSIDERED, it would be a strained interpretation and application of the questioned CBA provision if
we would extend to the employees of Acrylic the coverage clause of Indophil Textile Mills CBA. Wherefore, an award
is made to the effect that the proper interpretation and application of Sec. 1, (c), Art. I, of the 1987 CBA do (sic) not
extend to the employees of Acrylic as an extension or expansion of Indophil Textile Mills, Inc." (Rollo, p. 21)

Hence, this petition raising four (4) issues, to wit:

“1. WHETHER OR NOT THE RESPONDENT ARBITRATOR ERRED IN INTERPRETING SECTION 1(c), ART I OF
THE CBA BETWEEN PETITIONER UNION AND RESPONDENT COMPANY.

“2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE AND DISTINCT ENTITY FROM RESPONDENT
COMPANY FOR PURPOSES OF UNION REPRESENTATION.

“3. WHETHER OR NOT THE RESPONDENT ARBITRATOR GRAVELY ABUSED HIS DISCRETION AMOUNTING
TO LACK OR IN EXCESS OF HIS JURISDICTION.

“4. WHETHER OR NOT THE RESPONDENT ARBITRATOR VIOLATED PETITIONER UNION'S CARDINAL
PRIMARY RIGHT TO DUE PROCESS." (Rollo, pp. 6-7)

The central issue submitted for arbitration is whether or not the operations in Indophil Acrylic Corporation are an
extension or expansion of private respondent Company. Corollary to the aforementioned issue is the question of
whether or not the rank-and-file employees working at Indophil Acrylic should be recognized as part of, and/or within
the scope of the bargaining unit.

Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section 1(c), Article I of the CBA in
its literal meaning without taking cognizance of the facts adduced that the creation of the aforesaid Indophil Acrylic is
but a devise of respondent Company to evade the application of the CBA between petitioner Union and respondent
Company.
Petitioner stresses that the articles of incorporation of the two corporations establish that the two entities are engaged
in the same kind of business, which is the manufacture and sale of yarns of various counts and kinds and of other
materials of kindred character or nature.

Contrary to petitioner's assertion, the public respondent through the Solicitor General argues that the Indophil Acrylic
Manufacturing Corporation is not an alter ego or an adjunct or business conduit of private respondent because it has a
separate legitimate business purpose. In addition, the Solicitor General alleges that the primary purpose of private
respondent is to engage in the business of manufacturing yarns of various counts and kinds and textiles. On the other
hand, the primary purpose of Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter, import, export and
otherwise deal in yarns of various counts and kinds. Hence, unlike private respondent, Indophil Acrylic cannot
manufacture textiles while private respondent cannot buy or import yarns.

Furthermore, petitioner emphasizes that the two corporations have practically the same incorporators, directors and
officers. In fact, of the total stock subscription of Indophil Acrylic, P1,749,970.00 which represents seventy percent
(70%) of the total subscription of P2,500,000.00 was subscribed to by respondent Company.

On this point, private respondent cited the case of Diatagon Labor Federation v. Ople, G.R. No. L-44493-94,
December 3, 1980, 101 SCRA 534 which ruled that two corporations cannot be treated as a single bargaining unit
even if their businesses are related. It submits that the fact that there are as many bargaining units as there are
companies in a conglomeration of companies is a positive proof that a corporation is endowed with a legal personality
distinctly its own, independent and separate from other corporations. (see Rollo, pp. 160-161)

Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension or expansion of
private respondent, to wit:

a. the two corporations have their physical plants, offices and facilities situated in the same compound, at Barrio
Lambakin, Marilao, Bulacan;

b. many of private respondent's own machineries, such as dyeing machines, reeling, boiler, Kamitsus among
others, were transferred to and are now installed and being used in the Acrylic plant;

c. the services of a number of units, departments or sections of private respondent are provided to Acrylic; and

d. the employees of private respondent are the same persons manning and servicing the units of Acrylic. (see
Rollo, pp. 12-13)

Private respondent insists that the existence of a bonafide business relationship between Acrylic and private
respondent is not a proof of being a single corporate entity because the services which are supposedly provided by it
to Acrylic are auxiliary services or activities which are not really essential in the actual production of Acrylic. It also
pointed out that the essential services are discharged exclusively by Acrylic personnel under the control and
supervision of Acrylic managers and supervisors.

In sum, petitioner insists that the public respondent committed grave abuse of discretion amounting to lack or in
excess of jurisdiction in erroneously interpreting the CBA provision and in failing to disregard the corporate entity of
Acrylic.

We find the petition devoid of merit.

Time and again, We stress that the decisions of voluntary arbitrators are to be given the highest respect and a certain
measure of finality, but this is not a hard and fast rule, it does not preclude judicial review thereof where want of
jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice or erroneous interpretation
of the law were brought to our attention. (see Ocampo, et al. v. National Labor Relations Commission, G.R. No.
81677, 25 July 1990, First Division Minute Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R. No. L-43890,
July 16, 1984, 130 SCRA 392)

It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator Teodorico Calica, a
professor of the U.P. Asian Labor Education Center, now the Institute for Industrial Relations, found that the existing
law and jurisprudence on the matter, supported the private respondent's contentions. Contrary to petitioner's
assertion, public respondent cited facts and the law upon which he based the award. Hence, public respondent did not
abuse his discretion.

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

In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the
corporation is a devise to evade the application of the CBA between petitioner Union and private respondent
Company. While we do not discount the possibility of the similarities of the businesses of private respondent and
Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that
the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent
are the same persons manning and providing for auxilliary services to the units of Acrylic, and that the physical plants,
offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient
to justify the piercing of the corporate veil of Acrylic.

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

Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the ULGWP v. Ople (supra) that
it is grave abuse of discretion to treat two companies as a single bargaining unit when these companies are
indubitably distinct entities with separate juridical personalities.

Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file employees working at
Acrylic should not be recognized as part of, and/or within the scope of the petitioner, as the bargaining representative
of private respondent.

All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator did not commit grave
abuse of discretion in its interpretation of Section 1(c), Article I of the CBA that the Acrylic is not an extension or
expansion of private respondent.

ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator is hereby AFFIRMED.

SO ORDERED.

330 Phil. 628

FIRST DIVISION

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

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, REPRESENTED BY ITS PRESIDENT RAYMUNDO

HIPOLITO, JR., PETITIONER, VS. HON. MA. NIEVES D. CONFESOR, SECRETARY OF LABOR, DEPT. OF
LABOR & EMPLOYMENT, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION (FORMERLY,
MAGNOLIA PLANT) AND SAN MIGUEL FOODS, INC. (FORMERLY, B-MEG PLANT), RESPONDENTS.

DECISION

KAPUNAN, J.:

This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15, 1993 involving a
labor dispute at San Miguel Corporation.

The facts are as follows:

On June 28, 1990, petitioner-union San Miguel Corporation Employees Union - PTGWO entered into a Collective
Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC) to take effect upon the expiration
of the previous CBA or on June 30, 1989.

This CBA provided, among others, that:

ARTICLE XIV

DURATION OF AGREEMENT

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-
interest, shall become effective and shall remain in force and effect until June 30, 1992.

SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement insofar as the
representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June 30, 1994. Hence, the
freedom period for purposes of such representation shall be sixty (60) days prior to June 30, 1994.

SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement is reached by
the parties.[1]

In keeping with their vision and long term strategy for business expansion, SMC management informed its employees
in a letter dated August 13, 1991[2]that the company which was composed of four operating divisions namely: (1) Beer,
(2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agri-business would undergo a restructuring. [3]

Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became two separate and
distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-
offs, the CBA remained in force and effect.

After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article 253-A of the
Labor Code. Negotiations started sometime in July, 1992 with the two parties submitting their respective proposals
and counterproposals.

During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still include the employees
of the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall be effective only for
the remaining period of two years or until June 30, 1994.

SMC, on the other hand, contended that the members/employees who had moved to Magnolia and SMFI,
automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA should be effective for three
years in accordance with Art. 253-A of the Labor Code.

Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitioner-union declared
a deadlock on September 29, 1990.

On October 2, 1992, a Notice of Strike was filed against SMC.

In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to conduct preventive
mediation. No settlement was arrived at despite several meetings held between the parties.

On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike.

On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the Secretary of Labor
praying that the latter assume jurisdiction over the labor dispute in a vital industry.

As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10, 1992. [4] Several
conciliation meetings were held but still no agreement/settlement was arrived at by both parties.

After the parties submitted their respective position papers, the Secretary of Labor issued the assailed Order on
February 15, 1993 directing, among others, that the renegotiated terms of the CBA shall be effective for the period of
three (3) years from June 30, 1992; and that such CBA shall cover only the employees of SMC and not of Magnolia
and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of Labor.

Subsequently, on March 30, 1995,[5] petitioner-union filed a Motion for Issuance of a Temporary Restraining Order or
Writ of Preliminary Injunction to enjoin the holding of the certification elections in the different companies, maintaining
that the employees of Magnolia and SMFI fall within the bargaining unit of SMC.

On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed for. [6]

Meanwhile, an urgent motion for leave to intervene[7]in the case was filed by the Samahan ng Malayang
Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its authorized
representiative, Elmer S. Armando, alleging that it is one of the contending parties adversely effected by the
temporary restraining order.

The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,[8] G.R. No. 101766, March 5,
1993, where the Court recognized the separation of the employees of Magnolia from the SMC bargaining unit. It then
prayed for the lifting of the temporary restraining order.

Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the withdrawal/dismissal of the
petition considering that the temporary restraining order jeopardized the employees’ right to conclude a new CBA. At
the same time, he challenged the legal personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its
president when the latter was already officially dismissed from the company on October 4, 1994.

Amidst all these pleadings, the following primordial issues arise:

1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years or for only two
years; and

2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and SMFI.

Petitioner-union contends that the duration for the non-representation provisions of the CBA should be coterminous
with the term of the bargaining agency which in effect shall be for the remaining two years of the current CBA, citing a
previous decision of the Secretary of Labor on December 14, 1992 in the matter of the labor dispute at Philippine
Refining Company.[9]

However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the renegotiated terms of
the CBA at SMC should run for a period of three (3) years.

We agree with the Secretary of Labor.

Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:

ART. 253-A. Terms of a Collective Bargaining Agreement. -- Any Collective Bargaining Agreement that the parties
may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election
shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before
the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such
other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of
the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on
the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement,
the parties may exercise their rights under this Code. (underlining supplied.)

Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the Herrera-Veloso
Law) which took effect on March 21, 1989. This new provision states that the CBA has a term of five (5) years instead
of three years, before the amendment of the law as far as the representation aspect is concerned. All other provisions
of the CBA shall be negotiated not later than three (3) years after its execution. The "representation aspect" refers to
the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned."All other provisions" simply refers to the rest of the CBA, economic as well as
non-economic provisions, except representation.[10]
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the duration of the CBA
insofar as the representation aspect is concerned, but is quite ambiguous with the terms of the other provisions of the
CBA. It is a cardinal principle of statutory construction that the Court must ascertain the legislative intent for the
purpose of giving effect to any statute. The history of the times and state of the things existing when the act was
framed or adopted must be followed and the conditions of the things at the time of the enactment of the law should be
considered to determine the legislative intent.[11] We look into the discussions leading to the passage of the law:

THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are concerned . . .

THE CHAIRMAN (SEN. HERRERA): Maximum of three years?

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

THE CHAIRMAN (SEN. HERRERA): Present practice?

THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang magnegotiate in that CBA for the
remaining two years.

THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years but assuming three
years which, I think, that’s the likelihood. . . .

THE CHAIRMAN (REP. VELOSO): Yes.

THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change of agent, at least
he has one year to administer and to adjust, to develop rapport with the management. Yan ang importante.

You know, for us na nagne-negotiate, and hazard talaga sa negotiation, when we negotiate with somebody na hindi
natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor; ang mga employer, ito bayaran ko lang
ito okay na.

‘Yan ang nangyayari, but let us give that allowance for one year to let them know.

Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage union to fight
each other. ‘Yan ang problema.’[12]

xxx xxx xxx

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

HON. CHAIRMAN HERRERA: Five years.

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

HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than three years.

HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.

HON. CHAIRMAN HERRERA: Yes.

HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan - then, seven years . . .

HON. CHAIRMAN HERRERA: Not later than three years.

HON. ISIDRO: Assuming that they usually follow the period - three years nang three years, but under this law with
respect to representation - five years, ano? Now, after three years, nagkaroon ng bagong terms, tapos na iyong term,
renewed na iyong terms, ang karapatan noon sa representation issue mayroon pang two years left.

HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three.

HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So, another CBA was
formed and this CBA mayroon na naman siyang bagong five years with respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three years.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms and conditions.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .

HON. ISIDRO: Oo.

HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be questioned, so baka
puwedeng magkaroon ng certification election. If the incumbent union loses, then the new union administers the
contract for one year to give him time to know his counterpart - the employer, before he can negotiate for a new
term. Iyan ang advantage.

HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and conditions and then,
so you have to renew that in three years - you renew for another three years, mayroon na naman another five years
iyong ano . . .

HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.

HON. CHAIRMAN HERRERA: Two years na lang sa representation.

HON. ANIAG: So that if they changed the union, iyong last year. . . .

HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary arbitration na
kayo and then mayroon ka nang probisyon "retroact on the date of the expiry date". Pagnatalo and incumbent unyon,
mag-aassume and new union, administer the contract. As far as the term ang condition, for one year, and that will give
him time and the employer to know each other.

HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not want to
administer a CBA which has not been negotiated by the union itself.

HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in the country is
that the term ng contract natin, duon din mage-expire ang representation. Iyon and nangyari. That is where you have
the gulo. Ganoon and nangyari. So, ang nangyari diyan, pag-mayroon certification election, expire ang contract, ano
ang usual issue - company union. I can you (sic) give you more what the incumbent union is giving. So ang
mangyayari diyan, pag-negotiate mo hardline na agad.

HON. CHAIRMAN VELOSO: Mon, for four years?

HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation aspect - why do we
have to distinguish between three and five? What’s wrong with having a uniform expiration period?

HON. CHAIRMAN HERRERA: Five years.

HON. ISIDRO: Puro three years.

HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart, pagpasok mo sa
kumpanya, mag-ne-negotiate ka ng six months, that’s the average, aabot pa minsan ng one year. Pagkatapos ng
negotiation mo, signing kayo. There will be an allowed period of one year. Third year na, uumpisahan naman ang
organizations, papasok na ang ibang unyon because the reality in Trade Union committee, they organize, we
organize. So, actually, you have only industrial peace for one year, effective industrial peace. That is what we are
trying to change. Otherwise, we will continue to discourage the investors and the union will never grow because every
other year it has to use its money for the certification election. Ang grabe pang practice diyan, mag-a-advance ang
federation for three years union dues para panggastos lang sa certification election. That is what we are trying to
avoid.

HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I think our
responsibility here is to create a legal framework to promote industrial peace and to develop responsible and fair labor
movement.

HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .

xxx

HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the period of effectivity of the CBA, the better
for industrial peace.

HON. CHAIRMAN HERRERA: representation status.

HON. CHAIRMAN VELOSO: Only on -

HON. CHAIRMAN HERRERA: - the representations.

HON. CHAIRMAN VELOSO: But on the economic issues.

HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.

HON. CHAIRMAN VELOSO: At least on second year.

HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate when the company is -
(interrupted)[13]

xxx

From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for three (3) years
insofar as the economic as well as non-economic provisions are concerned, except representation.

Obviously, the framers of the law wanted to maintain industrial peace and stability by having both management and
labor work harmoniously together without any disturbance. Thus, no outside union can enter the establishment within
five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms
and conditions of employment (economic and non-economic) can not be questioned by the employers or employees
during the period of effectivity of the CBA. The CBA is a contract between the parties and the parties must respect the
terms and conditions of the agreement.[14] Notably, the framers of the law did not give a fixed term as to the effectivity
of the terms and conditions of employment. It can be gleaned from their discussions that it was left to the parties to fix
the period.

In the instant case, it is not difficult to determine the period of effectivity for the non-representation provisions of the
CBA. Taking it from the history of their CBAs, SMC intended to have the terms of the CBA effective for three (3) years
reckoned from the expiration of the old or previous CBA which was on June 30, 1989, as it provides:

SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-
interest, shall become effective and shall remain in force and effect until June 30, 1992.

The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of the Secretary of
Labor in the light of SMC’s peculiar situation as compared with PRC’s company situation.

It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at Philippine Refining
Company), we ruled that the term of the renegotiated provisions of the CBA should coincide with the remaining term of
the agency. In doing so, we placed premium on the fact that PRC has only two (2) unions and no other union had yet
executed a renewed term of 3 years. Nonetheless, in ruling for a shortened term, we were guided by our considered
perception that the said term would improve, rather than ruin, the general welfare of both the workers and the
company. It is equally true that once the economic provisions of the CBA expire, the residual representative status of
the union is effective for only 2 more years. However, if circumstances warrant that the contract duration which it is
soliciting from the company for the benefit of the workers, shall be a little bit longer than its lifespan, then this Office
cannot stand in the way of a more ideal situation. We must not lose sight of the fact that the primordial purpose of a
collective contract is to promote industrial harmony and stability in the terms and conditions of employment. To our
mind, this objective cannot be achieved without giving due consideration to the peculiarities and unique characteristics
of the employer. In the case at bar, there is no dispute that the mother corporation (SMC) spun-off two of its divisions
and thereby gave birth to two (2) other entities now known as Magnolia Corporation and San Miguel Foods, Inc. In
order to effect a smooth transition, the companies concerned continued to recognize the existing unions as the
bargaining agents of their respective bargaining units. In the meantime, the other unions in these companies
eventually concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle. Notably,
the following CBAs were forged incorporating a term of 3-years on the renegotiated provisions, to wit:

1. SMC - daily-paid employees union (IBM)

2. SMF - monthly-paid employees and daily-paid employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition by the company of the continuing representative status of the
unions after the aforementioned spin-offs and the stand of the company for a 3-year renegotiated cycle when the
economic provisions of the existing CBAs expired, i.e., to maintain stability and avoid confusion when the umbilical
cord of the two divisions were severed from their parent. These two cannot be considered independently of each
other for they were intended to reinforce one another. Precisely, the company conceded to face the same union
notwithstanding the spin-offs in order to preserve industrial peace during the infancy of the two corporations. If the
union would insist on a shorter renegotiated term, then all the advantages gained by both parties in this regard, would
have gone to naught. With this in mind, this office feels that it will betray its mandate should we order the parties to
execute a 2-year renegotiated term for then chaos and confusion, rather than tranquility, would be the order of the
day. Worse, there is a strong likelihood that such a ruling might spawn discontent and possible mass actions against
the company coming from the other unions who had already agreed to a 3-year renegotiated terms. If this happens,
the purpose of this Office’s intervention into the parties’ controversy would have been defeated. [15]

The issue as to the term of the non-representation provisions of the CBA need not belabored especially when we take
note of the Memorandum of the Secretary of Labor dated February 24, 1994 which was mentioned in the Resolution
of Undersecretary Bienvenido Laguesma on January 16, 1995 in the certification election case involving the SMC
employees.[16] In said memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms
of the CBA vis-a-vis the term of the bargaining agent, to wit:

As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term which would
coincidde (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.

Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the effectivity of
the renegotiated terms of the CBA shall be for three (3) years.

With respect to the second issue, there is, likewise, no merit in petitioner-union’s assertion that the employees of
Magnolia and SMFI should still be considered part of the bargaining unit of SMC.

Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991. Management saw the need
for these transformations in keeping with its vision and long term strategy as it explained in its letter addressed to the
employees dated August 13, 1991:

x x x As early as 1986, we announced the decentralization program and spoke of the need for structures that can
react fast to competition, a changing environment, shorter product life cycles and shifts in consumer preference. We
further stated in the 1987 Annual Report to Stockholders that San Miguel’s businesses will be more autonomous and
self sufficient so as to better acquire and master new technologies, cope with a labor force with different expertises
and expectations, and master and satisfy the changing needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility, greater awareness of operating results, and speedier,
more responsive decision making.

xxx

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

Undeniably, the transformation of the companies was a management prerogative and business judgment which the
courts can not look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the
part of SMC so as to justify the application of the doctrine of piercing the corporate veil. [18] Ever mindful of the
employees’ interests, management has assured the concerned employees that they will be absorbed by the new
corporations without loss of tenure and retaining their present pay and benefits according to the existing CBAs. [19]
They were advised that upon the expiration of the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining representatives of the employees concerned. As a result of
the spin-offs:

1. Each of the companies are run by, supervised and controlled by different management teams including separate
human resource/personnel managers.

2. Each Company enforces its own administrative and operational rules and policies and are not dependent on each
other in their operations.

3. Each entity maintains separate financial statements and are audited separately from each other. [20]

Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they
can not belong to a single bargaining unit as held in the case of Diatagon Labor Federation Local 110 of the ULGWP
v. Ople.[21] We elucidate:

The fact that their businesses are related and that the 236 employees of Georgia Pacific International Corporation
were originally employees of Lianga Bay Logging Co., Inc. is not a justification for disregarding their separate
personalities. Hence, the 236 employees, who are now attached to Georgia Pacific International Corporation, should
not be allowed to vote in the certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate
certification election to determine the collective bargaining representative of the employees of Georgia Pacific
International Corporation.

Petitioner-union’s attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit so as to have a
bigger mass base of employees has, therefore, no more valid ground.

Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of
interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual
interests in terms of employment and working conditions as evinced by the type of work they performed.[22]
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 beer manufacturing. Magnolia is involved in
the manufacturing and processing of dairy products[23] while SMFI is involved in the production of feeds and the
processing of chicken.[24] The nature of their products and scales of business may require different skills which must
necessarily be commensurated by different compensation packages. The different companies may have different
volumes of work and different working conditions. For such reason, the employees of the different companies see the
need to group themselves together and organize themselves into distinctive and different groups. It would then be
best to have separate bargaining units for the different companies where the employees can bargain separately
according to their needs and according to their own working conditions.

We reiterate what we have explained in the case of University of the Philippines v. Ferrer-Calleja[25] that:

[T]here are various factors which must be satisfied and considered in determining the proper constituency of a
bargaining unit. No one particular factor is itself decisive of the determination. The weight accorded to any particular
factor varies in accordance with the particular question or questions that may arise in a given case. What are these
factors? Rothenberg mentions a good number, but the most pertinent to our case are: (1) will of the employees
(Globe Doctrine); (2) affinity and unit of employees’ interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior collective bargaining history; and (4) employment status,
such as temporary, seasonal and probationary employees x x.

xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th Annual Report
of the National Labor Relations Board wherein it is emphasized that the factors which said board may consider and
weigh in fixing appropriate units are: the history, extent and type of organization of employees; the history of their
collective bargaining; the history, extent and type of organization of employees in other plants of the same employer,
or other employers in the same industry; the skill wages, work, and working conditions of the employees; the desires
of the employees; the eligibility of the employees for membership in the union or unions involved; and the relationship
between the unit or units proposed and the employer’s organization, management, and operation x x.

x x In said report, it is likewise emphasized that the basic test in determining the appropriate bargaining unit is that a
unit, to be appropriate, must affect a grouping of employees who have substantial, mutual interests in wages, hours,
working conditions and other subjects of collective bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor
Laws, 162) x x.

Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI from those of SMC
has been recognized in the case of Daniel Borbon v. Laguesma.[26] We quote:

Even assuming in gratia argumenti that at the time of the election they were regular employees of San Miguel,
nonetheless, these workers are no longer connected with San Miguel Corporation in any manner because Magnolia
has ceased to be a division of San Miguel Corporation and has been formed into a separate corporation with a
personality of its own (p. 305, Rollo). This development, which was brought to our attention by private respondents,
necessarily renders moot and academic any further discourse on the propriety of the elections which petitioners
impugn via the present recourse (p. 319, Rollo).

In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary of Labor in
rendering the assailed Order.

WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on March 29,
1995 is lifted.

SO ORDERED.

559 Phil. 549

THIRD DIVISION

G.R. No. 171153, September 12, 2007

SAN MIGUEL CORPORATION EMPLOYEES UNION—PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (SMCEU—PTGWO), PETITIONER, VS. SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNION—
PAMBANSANG DIWA NG MANGGAGAWANG PILIPINO (SMPPEU—PDMP), RESPONDENT.[1]

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, petitioner SAN MIGUEL
CORPORATION EMPLOYEES UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION
(SMCEU-PTGWO) prays that this Court reverse and set aside the (a) Decision[2] dated 9 March 2005 of the Court of
Appeals in CA-G.R. SP No. 66200, affirming the Decision[3] dated 19 February 2001 of the Bureau of Labor Relations
(BLR) of the Department of Labor and Employment (DOLE) which upheld the Certificate of Registration of respondent
SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNION—PAMBANSANG DIWA NG MANGGAGAWANG
PILIPINO (SMPPEU—PDMP); and (b) the Resolution[4] dated 16 January 2006 of the Court of Appeals in the same
case, denying petitioner's Motion for Reconsideration of the aforementioned Decision.

The following are the antecedent facts:

Petitioner is the incumbent bargaining agent for the bargaining unit comprised of the regular monthly-paid rank and file
employees of the three divisions of San Miguel Corporation (SMC), namely, the San Miguel Corporate Staff Unit
(SMCSU), San Miguel Brewing Philippines (SMBP), and the San Miguel Packaging Products (SMPP), in all offices
and plants of SMC, including the Metal Closure and Lithography Plant in Laguna. It had been the certified bargaining
agent for 20 years — from 1987 to 1997.

Respondent is registered as a chapter of Pambansang Diwa ng Manggagawang Pilipino (PDMP). PDMP issued
Charter Certificate No. 112 to respondent on 15 June 1999.[5] In compliance with registration requirements,
respondent submitted the requisite documents to the BLR for the purpose of acquiring legal personality. [6] Upon
submission of its charter certificate and other documents, respondent was issued Certificate of Creation of Local or
Chapter PDMP-01 by the BLR on 6 July 1999.[7] Thereafter, respondent filed with the Med-Arbiter of the DOLE
Regional Officer in the National Capital Region (DOLE-NCR), three separate petitions for certification election to
represent SMPP, SMCSU, and SMBP.[8] All three petitions were dismissed, on the ground that the separate petitions
fragmented a single bargaining unit.[9]

On 17 August 1999, petitioner filed with the DOLE-NCR a petition seeking the cancellation of respondent's registration
and its dropping from the rolls of legitimate labor organizations. In its petition, petitioner accused respondent of
committing fraud and falsification, and non-compliance with registration requirements in obtaining its certificate of
registration. It raised allegations that respondent violated Articles 239(a), (b) and (c) [10] and 234(c)[11] of the Labor
Code. Moreover, petitioner claimed that PDMP is not a legitimate labor organization, but a trade union center, hence,
it cannot directly create a local or chapter. The petition was docketed as Case No. NCR-OD-9908-007-IRD.[12]

On 14 July 2000, DOLE-NCR Regional Director Maximo B. Lim issued an Order dismissing the allegations of fraud
and misrepresentation, and irregularity in the submission of documents by respondent. Regional Director Lim further
ruled that respondent is allowed to directly create a local or chapter. However, he found that respondent did not
comply with the 20% membership requirement and, thus, ordered the cancellation of its certificate of registration and
removal from the rolls of legitimate labor organizations.[13] Respondent appealed to the BLR. In a Decision dated 19
February 2001, it declared:

As a chartered local union, appellant is not required to submit the number of employees and names of all its members
comprising at least 20% of the employees in the bargaining unit where it seeks to operate. Thus, the revocation of its
registration based on non-compliance with the 20% membership requirement does not have any basis in the rules.

Further, although PDMP is considered as a trade union center, it is a holder of Registration Certificate No. FED-
11558-LC issued by the BLR on 14 February 1991, which bestowed upon it the status of a legitimate labor
organization with all the rights and privileges to act as representative of its members for purposes of collective
bargaining agreement. On this basis, PDMP can charter or create a local, in accordance with the provisions of
Department Order No. 9.

WHEREFORE, the appeal is hereby GRANTED. Accordingly, the decision of the Regional Director dated July 14,
2000, canceling the registration of appellant San Miguel Packaging Products Employees Union-Pambansang Diwa ng
Manggagawang Pilipino (SMPPEU-PDMP) is REVERSED and SET ASIDE. Appellant shall hereby remain in the
roster of legitimate labor organizations.[14]

While the BLR agreed with the findings of the DOLE Regional Director dismissing the allegations of fraud and
misrepresentation, and in upholding that PDMP can directly create a local or a chapter, it reversed the Regional
Director's ruling that the 20% membership is a requirement for respondent to attain legal personality as a labor
organization. Petitioner thereafter filed a Motion for Reconsideration with the BLR. In a Resolution rendered on 19
June 2001 in BLR-A-C-64-05-9-00 (NCR-OD-9908-007-IRD), the BLR denied the Motion for Reconsideration and
affirmed its Decision dated 19 February 2001.[15]

Invoking the power of the appellate court to review decisions of quasi-judicial agencies, petitioner filed with the Court
of Appeals a Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure docketed as CA-G.R. SP No.
66200. The Court of Appeals, in a Decision dated 9 March 2005, dismissed the petition and affirmed the Decision of
the BLR, ruling as follows:

In Department Order No. 9, a registered federation or national union may directly create a local by submitting to the
BLR copies of the charter certificate, the local's constitution and by-laws, the principal office address of the local, and
the names of its officers and their addresses. Upon complying with the documentary requirements, the local shall be
issued a certificate and included in the roster of legitimate labor organizations. The [herein respondent] is an affiliate of
a registered federation PDMP, having been issued a charter certificate. Under the rules we have reviewed, there is no
need for SMPPEU to show a membership of 20% of the employees of the bargaining unit in order to be recognized as
a legitimate labor union.

xxxx

In view of the foregoing, the assailed decision and resolution of the BLR are AFFIRMED, and the petition is
DISMISSED.[16]

Subsequently, in a Resolution dated 16 January 2006, the Court of Appeals denied petitioner's Motion for
Reconsideration of the aforementioned Decision.

Hence, this Petition for Certiorari under Rule 45 of the Revised Rules of Court where petitioner raises the sole issue
of:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING
THAT PRIVATE RESPONDENT IS NOT REQUIRED TO SUBMIT THE NUMBER OF EMPLOYEES AND NAMES
OF ALL ITS MEMBERS COMPRISING AT LEAST 20% OF THE EMPLOYEES IN THE BARGAINING UNIT
WHERE IT SEEKS TO OPERATE.

The present petition questions the legal personality of respondent as a legitimate labor organization.

Petitioner posits that respondent is required to submit a list of members comprising at least 20% of the employees in
the bargaining unit before it may acquire legitimacy, citing Article 234(c) of the Labor Code which stipulates that any
applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:

a. Fifty pesos (P50.00) registration fee;

b. The names of its officers, their addresses, the principal address of the labor organization, the minutes of the
organizational meetings and the list of the workers who participated in such meetings;

c. The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining
unit where it seeks to operate;

d. If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

e. Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification
and the list of the members who participated in it.[17]

Petitioner also insists that the 20% requirement for registration of respondent must be based not on the number of
employees of a single division, but in all three divisions of the company in all the offices and plants of SMC since they
are all part of one bargaining unit. Petitioner refers to Section 1, Article 1 of the Collective Bargaining Agreement
(CBA),[18] quoted hereunder:
ARTICLE 1
SCOPE

Section 1. Appropriate Bargaining Unit. The appropriate bargaining unit covered by this Agreement consists of all regular rank and
file employees paid on the basis of fixed salary per month and employed by the COMPANY in its Corporate Staff Units (CSU), San
Miguel Brewing Products (SMBP) and San Miguel Packaging Products (SMPP) and in different operations existing in the City of
Manila and suburbs, including Metal Closure and Lithography Plant located at Canlubang, Laguna subject to the provisions of
Article XV of this Agreement provided however, that if during the term of this Agreement, a plant within the territory covered by this
Agreement is transferred outside but within a radius of fifty (50) kilometers from the Rizal Monument, Rizal Park, Metro Manila, the
employees in the transferred plant shall remain in the bargaining unit covered by this Agreement. (Emphasis supplied.)

Petitioner thus maintains that respondent, in any case, failed to meet this 20% membership requirement since it based
its membership on the number of employees of a single division only, namely, the SMPP.

There is merit in petitioner's contentions.

A legitimate labor organization[19] is defined as "any labor organization duly registered with the Department of Labor
and Employment, and includes any branch or local thereof."[20] The mandate of the Labor Code is to ensure strict
compliance with the requirements on registration because a legitimate labor organization is entitled to specific rights
under the Labor Code,[21] and are involved in activities directly affecting matters of public interest. Registration
requirements are intended to afford a measure of protection to unsuspecting employees who may be lured into joining
unscrupulous or fly-by-night unions whose sole purpose is to control union funds or use the labor organization for
illegitimate ends.[22] Legitimate labor organizations have exclusive rights under the law which cannot be exercised by
non-legitimate unions, one of which is the right to be certified as the exclusive representative [23] of all the employees in
an appropriate collective bargaining unit for purposes of collective bargaining. [24] The acquisition of rights by any
union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends
on whether or not the labor organization has attained the status of a legitimate labor organization. [25]

A perusal of the records reveals that respondent is registered with the BLR as a "local" or "chapter" of PDMP and was
issued Charter Certificate No. 112 on 15 June 1999. Hence, respondent was directly chartered by PDMP.

The procedure for registration of a local or chapter of a labor organization is provided in Book V of the Implementing
Rules of the Labor Code, as amended by Department Order No. 9 which took effect on 21 June 1997, and again by
Department Order No. 40 dated 17 February 2003. The Implementing Rules as amended by D.O. No. 9 should
govern the resolution of the petition at bar since respondent's petition for certification election was filed with the BLR in
1999; and that of petitioner on 17 August 1999.[26]

The applicable Implementing Rules enunciates a two-fold procedure for the creation of a chapter or a local. The first
involves the affiliation of an independent union with a federation or national union or industry union. The second,
finding application in the instant petition, involves the direct creation of a local or a chapter through the process of
chartering.[27]

A duly registered federation or national union may directly create a local or chapter by submitting to the DOLE
Regional Office or to the BLR two copies of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter;

(b) The names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and

(c) The local/chapter's constitution and by-laws; Provided, That where the local/chapter's constitution and by-laws is
the same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President.[28]

The Implementing Rules stipulate that a local or chapter may be directly created by a federation or national union. A
duly constituted local or chapter created in accordance with the foregoing shall acquire legal personality from the date
of filing of the complete documents with the BLR.[29] The issuance of the certificate of registration by the BLR or the
DOLE Regional Office is not the operative act that vests legal personality upon a local or a chapter under Department
Order No. 9. Such legal personality is acquired from the filing of the complete documentary requirements enumerated
in Section 1, Rule VI.[30]

Petitioner insists that Section 3 of the Implementing Rules, as amended by Department Order No. 9, violated Article
234 of the Labor Code when it provided for less stringent requirements for the creation of a chapter or local. This
Court disagrees.

Article 234 of the Labor Code provides that an independent labor organization acquires legitimacy only upon its
registration with the BLR:

Any applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the
organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit
where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the
list of the members who participated in it. (Italics supplied.)
It is emphasized that the foregoing pertains to the registration of an independent labor organization, association or
group of unions or workers.

However, the creation of a branch, local or chapter is treated differently. This Court, in the landmark case of
Progressive Development Corporation v. Secretary, Department of Labor and Employment,[31] declared that when an
unregistered union becomes a branch, local or chapter, some of the aforementioned requirements for registration are
no longer necessary or compulsory. Whereas an applicant for registration of an independent union is mandated to
submit, among other things, the number of employees and names of all its members comprising at least 20% of the
employees in the bargaining unit where it seeks to operate, as provided under Article 234 of the Labor Code and
Section 2 of Rule III, Book V of the Implementing Rules, the same is no longer required of a branch, local or
chapter.[32] The intent of the law in imposing less requirements in the case of a branch or local of a registered
federation or national union is to encourage the affiliation of a local union with a federation or national union in order to
increase the local union's bargaining powers respecting terms and conditions of labor. [33]

Subsequently, in Pagpalain Haulers, Inc. v. Trajano[34] where the validity of Department Order No. 9 was directly put in
issue, this Court was unequivocal in finding that there is no inconsistency between the Labor Code and Department
Order No. 9.

As to petitioner's claims that respondent obtained its Certificate of Registration through fraud and misrepresentation,
this Court finds that the imputations are not impressed with merit. In the instant case, proof to declare that respondent
committed fraud and misrepresentation remains wanting. This Court had, indeed, on several occasions, pronounced
that registration based on false and fraudulent statements and documents confer no legitimacy upon a labor
organization irregularly recognized, which, at best, holds on to a mere scrap of paper. Under such circumstances, the
labor organization, not being a legitimate labor organization, acquires no rights. [35]

This Court emphasizes, however, that a direct challenge to the legitimacy of a labor organization based on fraud and
misrepresentation in securing its certificate of registration is a serious allegation which deserves careful
scrutiny. Allegations thereof should be compounded with supporting circumstances and evidence. The records of the
case are devoid of such evidence. Furthermore, this Court is not a trier of facts, and this doctrine applies with greater
force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, such as the BLR, which
have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only
great respect but even finality.[36]

Still, petitioner postulates that respondent was not validly and legitimately created, for PDMP cannot create a local or
chapter as it is not a legitimate labor organization, it being a trade union center.

Petitioner's argument creates a predicament as it hinges on the legitimacy of PDMP as a labor organization. Firstly,
this line of reasoning attempts to predicate that a trade union center is not a legitimate labor organization. In the
process, the legitimacy of PDMP is being impugned, albeit indirectly. Secondly, the same contention premises that a
trade union center cannot directly create a local or chapter through the process of chartering.

Anent the foregoing, as has been held in a long line of cases, the legal personality of a legitimate labor organization,
such as PDMP, cannot be subject to a collateral attack. The law is very clear on this matter. Article 212 (h) of the
Labor Code, as amended, defines a legitimate labor organization[37] as "any labor organization duly registered with the
DOLE, and includes any branch or local thereof."[38] On the other hand, a trade union center is any group of
registered national unions or federations organized for the mutual aid and protection of its members; for assisting such
members in collective bargaining; or for participating in the formulation of social and employment policies, standards,
and programs, and is duly registered with the DOLE in accordance with Rule III, Section 2 of the Implementing
Rules.[39]

The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Once a certificate of registration is issued to a
union, its legal personality cannot be subject to collateral attack. [40] It may be questioned only in an independent
petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules. The
aforementioned provision is enunciated in the following:

Sec. 5. Effect of registration. The labor organization or workers' association shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter
be subject to collateral attack, but may be questioned only in an independent petition for cancellation in accordance
with these Rules.
PDMP was registered as a trade union center and issued Registration Certificate No. FED-11558-LC by the BLR on
14 February 1991. Until the certificate of registration of PDMP is cancelled, its legal personality as a legitimate labor
organization subsists. Once a union acquires legitimate status as a labor organization, it continues to be recognized
as such until its certificate of registration is cancelled or revoked in an independent action for cancellation. [41] It bears
to emphasize that what is being directly challenged is the personality of respondent as a legitimate labor organization
and not that of PDMP. This being a collateral attack, this Court is without jurisdiction to entertain questions indirectly
impugning the legitimacy of PDMP.

Corollarily, PDMP is granted all the rights and privileges appurtenant to a legitimate labor organization, [42] and
continues to be recognized as such until its certificate of registration is successfully impugned and thereafter cancelled
or revoked in an independent action for cancellation.

We now proceed to the contention that PDMP cannot directly create a local or a chapter, it being a trade union center.

This Court reverses the finding of the appellate court and BLR on this ground, and rules that PDMP cannot directly
create a local or chapter.

After an exhaustive study of the governing labor law provisions, both statutory and regulatory,[43] we find no legal
justification to support the conclusion that a trade union center is allowed to directly create a local or chapter through
chartering. Apropos, we take this occasion to reiterate the first and fundamental duty of this Court, which is to apply
the law. The solemn power and duty of the Court to interpret and apply the law does not include the power to correct
by reading into the law what is not written therein.[44]

Presidential Decree No. 442, better known as the Labor Code, was enacted in 1972. Being a legislation on social
justice,[45] the provisions of the Labor Code and the Implementing Rules have been subject to several amendments,
and they continue to evolve, considering that labor plays a major role as a socio-economic force. The Labor Code
was first amended by Republic Act No. 6715, and recently, by Republic Act No. 9481. Incidentally, the term trade
union center was never mentioned under Presidential Decree No. 442, even as it was amended by Republic Act No.
6715. The term trade union center was first adopted in the Implementing Rules, under Department Order No. 9.

Culling from its definition as provided by Department Order No. 9, a trade union center is any group of registered
national unions or federations organized for the mutual aid and protection of its members; for assisting such members
in collective bargaining; or for participating in the formulation of social and employment policies, standards, and
programs, and is duly registered with the DOLE in accordance with Rule III, Section 2 of the Implementing
Rules.[46] The same rule provides that the application for registration of an industry or trade union center shall be
supported by the following:

(a) The list of its member organizations and their respective presidents and, in the case of an industry union, the
industry where the union seeks to operate;

(b) The resolution of membership of each member organization, approved by the Board of Directors of such union;

(c) The name and principal address of the applicant, the names of its officers and their addresses, the minutes of its
organizational meeting/s, and the list of member organizations and their representatives who attended such
meeting/s; and

(d) A copy of its constitution and by-laws and minutes of its ratification by a majority of the presidents of the member
organizations, provided that where the ratification was done simultaneously with the organizational meeting, it shall be
sufficient that the fact of ratification be included in the minutes of the organizational meeting.[47]

Evidently, while a "national union" or "federation" is a labor organization with at least ten locals or chapters or
affiliates, each of which must be a duly certified or recognized collective bargaining agent; [48] a trade union center, on
the other hand, is composed of a group of registered national unions or federations. [49]

The Implementing Rules, as amended by Department Order No. 9, provide that "a duly registered federation or
national union" may directly create a local or chapter. The provision reads:

Section 1. Chartering and creation of a local/chapter. — A duly registered federation or national union may directly
create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following:

(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter;
(b) The names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and

(c) The local/chapter's constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the
same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President.[50]

Department Order No. 9 mentions two labor organizations either of which is allowed to directly create a local or
chapter through chartering — a duly registered federation or a national union. Department Order No. 9 defines a
"chartered local" as a labor organization in the private sector operating at the enterprise level that acquired legal
personality through a charter certificate, issued by a duly registered federation or national union and reported to the
Regional Office in accordance with Rule III, Section 2-E of these Rules.[51]

Republic Act No. 9481 or "An Act Strengthening the Workers" Constitutional Right to Self-Organization, Amending for
the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines'
lapsed[52] into law on 25 May 2007 and became effective on 14 June 2007.[53] This law further amends the Labor Code
provisions on Labor Relations.

Pertinent amendments read as follows:

SECTION 1. Article 234 of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines, is hereby further amended to read as follows:

ART. 234. Requirements of Registration. — A federation, national union or industry or trade union center or an
independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the
organizational meetings and the list of the workers who participated in such meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list
of the members who participated in it.

SECTION 2. A new provision is hereby inserted into the Labor Code as Article 234-A to read as follows:

ART. 234-A. Chartering and Creation of a Local Chapter. — A duly registered federation or national union may directly
create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter
shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued
a charter certificate.

The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the
submission of the following documents in addition to its charter certificate:

(a) The names of the chapter's officers, their addresses, and the principal office of the chapter; and

(b) The chapter's constitution and by-laws: Provided, That where the chapter's constitution and by-laws are the same
as that of the federation or the national union, this fact shall be indicated accordingly.

The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and
attested by its president. (Emphasis ours.)

Article 234 now includes the term trade union center, but interestingly, the provision indicating the procedure for
chartering or creating a local or chapter, namely Article 234-A, still makes no mention of a "trade union center."

Also worth emphasizing is that even in the most recent amendment of the implementing rules, [54] there was no
mention of a trade union center as being among the labor organizations allowed to charter.
This Court deems it proper to apply the Latin maxim expressio unius est exclusio alterius. Under this maxim of
statutory interpretation, the expression of one thing is the exclusion of another. When certain persons or things are
specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred. If a statute
specifies one exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or
effects are excluded.[55] Where the terms are expressly limited to certain matters, it may not, by interpretation or
construction, be extended to other matters.[56] Such is the case here. If its intent were otherwise, the law could have
so easily and conveniently included "trade union centers" in identifying the labor organizations allowed to charter a
chapter or local. Anything that is not included in the enumeration is excluded therefrom, and a meaning that does not
appear nor is intended or reflected in the very language of the statute cannot be placed therein. [57] The rule is
restrictive in the sense that it proceeds from the premise that the legislating body would not have made specific
enumerations in a statute if it had the intention not to restrict its meaning and confine its terms to those expressly
mentioned.[58] Expressium facit cessare tacitum.[59] What is expressed puts an end to what is implied. Casus
omissus pro omisso habendus est. A person, object or thing omitted must have been omitted intentionally.

Therefore, since under the pertinent status and applicable implementing rules, the power granted to labor
organizations to directly create a chapter or local through chartering is given to a federation or national union, then a
trade union center is without authority to charter directly.

The ruling of this Court in the instant case is not a departure from the policy of the law to foster the free and voluntary
organization of a strong and united labor movement,[60] and thus assure the rights of workers to self-
organization.[61] The mandate of the Labor Code in ensuring strict compliance with the procedural requirements for
registration is not without reason. It has been observed that the formation of a local or chapter becomes a handy tool
for the circumvention of union registration requirements. Absent the institution of safeguards, it becomes a convenient
device for a small group of employees to foist a not-so-desirable federation or union on unsuspecting co-workers and
pare the need for wholehearted voluntariness, which is basic to free unionism. [62] As a legitimate labor organization is
entitled to specific rights under the Labor Code and involved in activities directly affecting public interest, it is
necessary that the law afford utmost protection to the parties affected. [63] However, as this Court has enunciated in
Progressive Development Corporation v. Secretary of Department of Labor and Employment, it is not this Court's
function to augment the requirements prescribed by law. Our only recourse, as previously discussed, is to exact strict
compliance with what the law provides as requisites for local or chapter formation. [64]

In sum, although PDMP as a trade union center is a legitimate labor organization, it has no power to directly create a
local or chapter. Thus, SMPPEU-PDMP cannot be created under the more lenient requirements for chartering, but
must have complied with the more stringent rules for creation and registration of an independent union, including the
20% membership requirement.

WHEREFORE, the instant Petition is GRANTED. The Decision dated 09 March 2005 of the Court of Appeals in CA-
GR SP No. 66200 is REVERSED and SET ASIDE. The Certificate of Registration of San Miguel Packaging Products
Employees Union—Pambansang Diwa ng Manggagawang Pilipino is ORDERED CANCELLED, and SMPPEU-PDMP
DROPPED from the rolls of legitimate labor organizations.

338 Phil. 310

FIRST DIVISION

G.R. No. 115077, April 18, 1997

PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT, PETITIONER, VS. HON. BIENVENIDO

LAGUESMA, IN HIS CAPACITY AS UNDERSECRETARY OF LABOR, AND NAGKAKAISANG LAKAS NG
MANGGAGAWA (NLM)-KATIPUNAN, RESPONDENTS.
DECISION

KAPUNAN, J.:

On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union) filed a petition for
certification election with the Department of Labor (National Capital Region) in behalf of the rank and file employees of
the Progressive Development Corporation (Pizza Hut) docketed as NCR Case No. NCR-OD-M-9307-020.[1]

Petitioner filed on August 20, 1993, a verified Motion to Dismiss the petition alleging fraud, falsification and
misrepresentation in the respondent Union's registration making it void and invalid. The motion specifically alleged
that: a) respondent Union's registration was tainted with false, forged, double or multiple signatures of those who
allegedly took part in the ratification of the respondent Union's constitution and by-laws and in the election of its
officers that there were two sets of supposed attendees to the alleged organizational meeting that was alleged to have
taken place on June 26, 1993; that the alleged chapter is claimed to have been supported by 318 members when in
fact the persons who actually signed their names were much less; and b) while the application for registration of the
charter was supposed to have been approved in the organizational meeting held on June 27, 1993, the charter
certification issued by the federation KATIPUNAN was dated June 26, 1993 or one (1) day prior to the formation of the
chapter, thus, there were serious falsities in the dates of the issuance of the charter certification and the organization
meeting of the alleged chapter.

Citing other instances of misrepresentation and fraud, petitioner, on August 29, 1993, filed a Supplement to its Motion
to Dismiss,[2] claiming that:

1) Respondent Union alleged that the election of its officers was held on June 27, 1993; however, it appears from the
documents submitted by respondent union to the BIR-DOLE that the Union's constitution and by-laws were adopted
only on July 7, 1993, hence, there was no bases for the supposed election of officers on June 27, 1993 because as of
this date, there existed no positions to which the officers could be validly elected;

2) Voting was not conducted by secret ballot in violation of Article 241, section (c) of the Labor Code;

3) The Constitution and by Laws submitted in support of its petition were not properly acknowledged and notarized.[3]

On August 30, 1993, petitioner filed a Petition[4] seeking the cancellation of the Union's registration on the grounds of
fraud and falsification, docketed as BIR Case No. 8-21-83.[5]Motion was likewise filed by petitioner with the Med-
Arbiter requesting suspension of proceedings in the certification election case until after the prejudicial question of the
Union's legal personality is determined in the proceedings for cancellation of registration.

However, in an Order dated September 29, 1993,[6] Med-Arbiter Rasidali C. Abdullah directed the holding of a
certification election among petitioner's rank and file employees. The Order explained:

x x x Sumasaklaw sa Manggagawa ng Pizza Hut is a legitimate labor organization in contemplation of law and shall
remain as such until its very charter certificate is canceled or otherwise revoked by competent authority. The alleged
misrepresentation, fraud and false statement in connection with the issuance of the charter certificate are collateral
issues which could be properly ventilated in the cancellation proceedings. [7]

On appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E. Laguesma in a Resolution
dated December 29, 1993[8] denied the same.

A motion for reconsideration of the public respondent's resolution was denied in his Order [9] dated January 27, 1994,
hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court where the principal issue
raised is whether or not the public respondent committed grave abuse of discretion in affirming the Med-Arbiter's order
to conduct a certification election among petitioner's rank and file employees, considering that: (1) respondent Union's
legal personality was squarely put in issue; (2) allegations of fraud and falsification, supported by documentary
evidence were made; and (3) a petition to cancel respondent Union's registration is pending with the regional office of
the Department of Labor and Employment.[10]

We grant the petition.

In the public respondent's assailed Resolution dated December 29, 1993, the suggestion is made that once a labor
organization has filed the necessary documents and papers and the same have been certified under oath and attested
to, said organization necessarily becomes clothed with the character of a legitimate labor organization. The resolution
declares:

Records show that at the time of the filing of the subject petition on 9 July 1993 by the petitioner NLM-KATIPUNAN,
for and in behalf of its local affiliate Sumasaklaw sa Manggagawa ng Pizza Hut, the latter has been clothed with the
status and/or character of a legitimate labor organization. This is so, because on 8 July 1993, petitioner submitted to
the Bureau of Labor Relations (BLR), this Department, the following documents: Charter Certificate, Minutes of the
Organizational Meeting, List of Officers, and their respective addresses, financial statement, Constitution and By-Laws
(CBL, and the minutes of the ratification of the CBL). Said documents (except the charter certificate) are certified
under oath and attested to by the local union's Secretary/Treasurer and President, respectively.

As to the contention that the certification election proceedings should be suspended in view of the pending case for
the cancellation of the petitioner's certificate of registration, let it be stressed that the pendency of a cancellation case
is not a ground for the dismissal or suspension of a representation proceedings considering that a registered labor
organization continues to be a legitimate one entitled to all the rights appurtenant thereto until a final valid order is
issued canceling such registration.[11]

In essence, therefore, the real controversy in this case centers on the question of whether or not, after the necessary
papers and documents have been filed by a labor organization, recognition by the Bureau of Labor Relations merely
becomes a ministerial function.

We do not agree.

In the first place, the public respondent's views as expressed in his December 29, 1993 Resolution miss the entire
point behind the nature and purpose of proceedings leading to the recognition of unions as legitimate labor
organizations. Article 234 of the Labor Code provides:

Art. 234. Requirements of registration. - Any applicant labor organization, association or group of unions or workers
shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the
organizational meetings and the list of the workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit
where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the
list of the members who participated in it.

A more than cursory reading of the aforecited provisions clearly indicates that the requirements embodied therein are
intended as preventive measures against the commission of fraud. After a labor organization has filed the necessary
papers and documents for registration, it becomes mandatory for the Bureau of Labor Relations to check if the
requirements under Article 234 have been sedulously complied with. If its application for registration is vitiated by
falsification and serious irregularities, especially those appearing on the face of the application and the supporting
documents, a labor organization should be denied recognition as a legitimate labor organization. And if a certificate of
recognition has been issued, the propriety of the labor organization's registration could be assailed directly through
cancellation of registration proceedings in accordance with Articles 238 and 239 of the Labor Code, or indirectly, by
challenging its petition for the issuance of an order for certification election.

These measures are necessary - and may be undertaken simultaneously - if the spirit behind the Labor Code's
requirements for registration are to be given flesh and blood. Registration requirements specifically afford a measure
of protection to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole
purpose is to control union funds or use the labor organization for illegitimate ends. [12] Such requirements are a valid
exercise of the police power, because the activities in which labor organizations, associations and unions of workers
are engaged directly affect the public interest and should be protected. [13]

Thus, in Progressive Development Corporation vs. Secretary of Labor and Employment, [14] we held:

The controversy in this case centers on the requirements before a local or chapter of a federation may file a petition
for certification election and be certified as the sole and exclusive bargaining agent of the petitioner's employees.

xxx

But while Article 257 cited by the Solicitor General directs the automatic conduct of a certification election in an
unorganized establishment, it also requires that the petition for certification election must be filed by a legitimate labor
organization. xxx

xxx

xxx. The employer naturally needs assurance that the union it is dealing with is a bona-fide organization, one which
has not submitted false statements or misrepresentations to the Bureau. The inclusion of the certification and
attestation requirements will in a marked degree allay these apprehensions of management. Not only is the issuance
of any false statement and misrepresentation or ground for cancellation of registration (see Article 239 (a), (c) and
(d)); it is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against the commission of fraud. They likewise
afford a measure of protection to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night
unions whose sole purpose is to control union funds or to use the union for dubious ends.

xxx

xxx. It is not this Court's function to augment the requirements prescribed by law in order to make them wiser or to
allow greater protection to the workers and even their employer. Our only recourse is, as earlier discussed, to exact
strict compliance with what the law provides as requisites for local or chapter formation.

xxx

The Court's conclusion should not be misconstrued as impairing the local union's right to be certified as the
employees' bargaining agent in the petitioner's establishment. We are merely saying that the local union must first
comply with the statutory requirements in order to exercise this right. Big federations and national unions of workers
should take the lead in requiring their locals and chapters to faithfully comply with the law and the rules instead of
merely snapping union after union into their folds in a furious bid with rival federations to get the most number of
members.

Furthermore, the Labor Code itself grants the Bureau of Labor Relations a period of thirty (30) days within which to
review all applications for registration. Article 235 provides:

"Art. 235. Action on application. - The Bureau shall act on all applications for registration within thirty (30) days from
filing.

All requisite documents and papers shall be certified under oath by the secretary or the treasurer of the organization,
as the case may be, and attested to by its president."

The thirty-day period in the aforecited provision ensures that any action taken by the Bureau of Labor Relations is
made in consonance with the mandate of the Labor Code, which, it bears emphasis, specifically requires that the
basis for the issuance of a certificate of registration should be compliance with the requirements for recognition under
Article 234. Since, obviously, recognition of a labor union or labor organization is not merely a ministerial function, the
question now arises as to whether or not the public respondent committed grave abuse of discretion in affirming the
Med-Arbiter's order in spite of the fact that the question of the Union's legitimacy was squarely put in issue and that
the allegations of fraud and falsification were adequately supported by documentary evidence.

The Labor Code requires that in organized and unorganized[15] establishments, a petition for certification election must
be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the
right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has
attained the status of a legitimate labor organization.

In the case before us, the Med-Arbiter summarily disregarded the petitioner's prayer that the former look into the
legitimacy of the respondent Union by a sweeping declaration that the union was in the possession of a charter
certificate so that "for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate labor
organization."[16] Glossing over the transcendental issue of fraud and misrepresentation raised by herein petitioner,
Med-Arbiter Rasidali Abdullah held that:

The alleged misrepresentation, fraud and false statement in connection with the issuance of the charter certificate are
collateral issues which could be ventilated in the cancellation proceedings.[17]

It cannot be denied that the grounds invoked by petitioner for the cancellation of respondent Union's registration fall
under paragraph (a) and (c) of Article 239 of the Labor Code. to wit:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and
by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, the list of members who took part in the
ratification;

xxx
(c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of
officers, the list of voters, or failure to submit these documents together with the list of the newly elected-appointed
officers and their postal addresses within thirty (30) days from election

xxx

The grounds ventilated in cancellation proceedings in accordance with Article 239 of the Labor Code constitute a
grave challenge to the right of respondent Union to ask for certification election. The Med-Arbiter should have looked
into the merits of the petition for cancellation before issuing an order calling for certification election. Registration
based on false and fraudulent statements and documents confer no legitimacy upon a labor organization irregularly
recognized, which, at best, holds on to a mere scrap of paper. Under such circumstances, the labor organization, not
being a legitimate labor organization, acquires no rights, particularly the right to ask for certification election in a
bargaining unit.

As we laid emphasis in Progressive Development Corporation Labor,[18] "[t]he employer needs the assurance that the
union it is dealing with is a bona fide organization, one which has not submitted false statements or
misrepresentations to the Bureau." Clearly, fraud, falsification and misrepresentation in obtaining recognition as a
legitimate labor organization are contrary to the Med-Arbiter's conclusion not merely collateral issues. The invalidity of
respondent Union's registration would negate its legal personality to participate in certification election.

Once a labor organization attains the status of a legitimate labor organization it begins to possess all of the rights and
privileges granted by law to such organizations. As such rights and privileges ultimately affect areas which are
constitutionally protected, the activities in which labor organizations, associations and unions are engaged directly
affect the public interest and should be zealously protected. A strict enforcement of the Labor Code's requirements for
the acquisition of the status of a legitimate labor organization is in order.

Inasmuch as the legal personality of respondent Union had been seriously challenged, it would have been more
prudent for the Med-Arbiter and public respondent to have granted petitioner's request for the suspension of
proceedings in the certification election case, until the issue of the legality of the Union's registration shall have been
resolved. Failure of the Med-Arbiter and public respondent to heed the request constituted a grave abuse of
discretion.

WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and the Resolution and Order of the
public respondent dated December 29, 1993 and January 24, 1994, respectively, are hereby SET ASIDE.

The case is REMANDED to the Med-Arbiter to resolve with reasonable dispatch petitioner's petition for cancellation of
respondent Union's registration
SO ORDERED.

136 Phil. 289

G.R. No. L-22228, February 27, 1969

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), SOCIAL SECURITY SYSTEM EMPLOYEES
ASSOCIATION-PAFLU, ALFREDO FAJARDO AND ALL THE OTHER MEMBERS AND OFFICERS OF THE
SOCIAL SECURITY EMPLOYEES ASSOCIATION-PAFLU, PETITIONERS, VS. THE SECRETARY OF LABOR,
THE DIRECTOR OF LABOR RELATIONS, AND THE REGISTRAR OF LABOR ORGANIZATIONS,
RESPONDENTS.

DECISION

CONCEPCION, C.J.:

Petitioners pray for writs of certiorari and prohibition to restrain respondents, the Secretary of Labor, the Director of
Labor Relations and the Registrar of Labor Organizations, from enforcing an order of cancellation of the registration
certificate of the Social Security System Employees Association - hereinafter referred to as the SSSEA which is
affiliated to the Philippine Association of Free Labor Unions - hereinafter referred to as PAFLU - as well as to annul all
proceedings in connection with said cancellation and to prohibit respondents from enforcing Section 23 of Republic
Act No. 875. Petitioners, likewise, pray for a writ of preliminary injunction pending the final determination of this
case. In their answer, respondents traversed some allegations of fact and the legal conclusions made in the
petition. No writ of preliminary injunction pendente lite has been issued.

It appears that on September 25, 1963, the Registrar of Labor Organizations - hereinafter referred to as the Registrar -
issued a notice of hearing, on October 17, 1963, of the matter of cancellation of the registration of the SSSEA,
because of:

“1. Failure to furnish the Bureau of Labor Relations with copies of the reports on the finances of that union duly
verified by affidavits which its treasurer or treasurers rendered to said union and its members covering the periods
from September 24, 1960 to September 23, 1961 and September 24, 1961 to September 23, 1962, inclusive, within
sixty days of the 2 respective latter dates, which are the end of its fiscal year; and

“2. Failure to submit to this office the names, postal addresses and non-subversive affidavits of the officers of that
union within sixty days of their election in October (1st Sunday), 1961 and 1963, in conformity with Article IV(1) of its
constitution and by-laws."

in violation of Section 23 of Republic Act No. 875. Counsel for the SSSEA moved to postpone the hearing to October
21, 1963, and to submit then a memorandum, as well as the documents specified in the notice. The motion was
granted, but, nobody appeared for the SSSEA on the date last mentioned. The next day, October 22, 1963, Manuel
Villagracia, Assistant Secretary of the SSSEA, filed, with the Office of the Registrar, a letter dated October 21, 1963,
enclosing the following:

1. Joint non-subversive affidavit of the officers of the SSS Employees' Association - PAFLU;

2. List of newly elected officers of the Association in its general elections held on April 29, 1963; and

3. Copy of the amended constitution and by-laws of the Association.

Holding

“1. That the joint non-subversive affidavit and the list of officers mentioned in the letter of Mr. Manuel Villagracia were
not the documents referred to in the notice of hearing and made the subject matter of the present proceeding; and

"2. That there is no iota of evidence on records to show and/or warrant the dismissal of the present proceeding."

on October 23, 1963, the Registrar rendered a decision cancelling the SSSEA’s Registration Certificate No. 1-1P-169,
issued on September 30, 1960. Soon later, or on October 28, 1963, Alfredo Fajardo, president of the SSSEA moved
for a reconsideration of said decision and prayed for time, up to November 15, within which to submit the requisite
papers and data. An opposition thereto having been filed by one Paulino Escueta, a member of the SSSEA, upon the
ground that the latter had never submitted any financial statement to its members, said motion was heard on
November 27, 1963. Subsequently, or on December 4, 1963, the Registrar issued an order declaring that the SSSEA
had "failed to submit the following requirements to wit:

“1. Non-subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo Zalameda, Raymundo Sabino and
Napoleon Pefianco who were elected along with others on January 30, 1962.

"2. Names, postal addresses and non-subversive affidavits of all the officers who were supposedly elected on
October (1st Sunday), of its constitution and by-laws."

and granting the SSSEA 15 days from notice to comply with said requirements, as well as meanwhile holding in
abeyance the resolution of its motion for reconsideration.

Pending such resolution, or on December 16, the PAFLU, the SSSEA, Alfredo Fajardo "and all the officers and
members" of the SSSEA commenced the present action, for the purpose stated at the beginning of this decision, upon
the ground that Section 23 of Republic Act No. 875 violates their freedom of assembly and association, and is
inconsistent with the Universal Declaration of Human Rights; that it unduly delegates judicial power to an
administrative agency; that said Section 23 should be deemed repealed by ILO-Convention No. 87; that respondents
have acted without or in excess of jurisdiction and with grave abuse of discretion in promulgating, on November 19,
1963, its decision dated October 22, 1963, beyond the 30-day period provided in Section 23(c) of Republic Act No.
875; that "there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law"; that the
decision complained of had not been approved by the Secretary of Labor; and that the cancellation of the SSSEA's
certificate of registration would cause irreparable injury.

The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and
association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in paragraph (b) of
said section[1] is not a limitation to the right of assembly or association, which may be exercised with or without said
registration.2 The latter is merely a condition sine qua non for the acquisition of legal personality by labor
organizations, associations or unions and the possession of the "rights and privileges granted by law to legitimate
labor organizations." The Constitution does not guarantee these rights and privileges, much less said personality,
which are mere statutory creations, for the possession and exercise of which registration is required to protect both
labor and the public against abuses, fraud, or impostors who pose as organizers, although not truly accredited agents
of the union they purport to represent. Such requirement is a valid exercise of the police power, because the activities
in which labor organizations, associations and union of workers are engaged affect public interest, which should be
protected.3 Furthermore, the obligation to submit financial statements, as a condition for the non-cancellation of a
certificate of registration, is a reasonable regulation for the benefit of the members of the organization, considering
that the same generally solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the organization.4

For the same reasons, said Section 23 does not impinge upon the right of organization guaranteed in the Declaration
of Human Rights, or run counter to Articles 2, 4, 7 and Section 2 of Article 8 of the ILO-Convention No. 87, which
provide that "workers and employers, x x shall have the right to establish and x x join organizations of their own
choosing, without previous authorization;" that "workers and employers organizations shall not be liable to be dis-
solved or suspended by administrative authority;" that "the acquisition of legal personality by workers' and employers'
organizations, x x shall not be made subject to conditions of such a character as to restrict the application of the
provisions" above mentioned; and that "the guarantees provided for in" said Convention shall not be impaired by the
law of the land.

In B.S.P. v. Araos5, we held that there is no incompatibility between Republic Act No. 875 and the Universal
Declaration of Human Rights. Upon the other hand, the cancellation of the SSSEA's registration certificate would not
entail a dissolution of said association or its suspension. The existence of the SSSEA would not be affected by said
cancellation, although its juridical personality and its statutory rights and privileges - as distinguished from those
conferred by the Constitution - would be suspended thereby.

To be registered, pursuant to Section 23 (b) of Republic Act No. 875, a labor organization, association or union of
workers must file with the Department of Labor the following documents:

"(1) A copy of the constitution and by-laws of the organization together with a list of all officers of the association, their
addresses and the address of the principal office of the organization;

'"(2) A sworn statement of all the officers of the said organization, association or union to the effect that they are not
members of the Communist Party and that they are not members of any organization which teaches the overthrow of
the Government by force or by any illegal or unconstitutional method; and

"(3) If the applicant organization has been in existence for one or more years, a copy of its last annual financial
report."

Moreover, paragraph (d) of said Section ordains that:

"The registration and permit of a legitimate labor organization shall be cancelled by the Department of Labor, if the
Department has reason to believe that the labor organization no longer meets one or more of the requirements of
paragraph (b) above; or fails to file with the Department of Labor either its financial report within the sixty days of the
end of its fiscal year or the names of its new officers along with their non-subversive affidavits as outlined in
paragraph; (b) above within sixty days of their election; however, the Department of Labor shall not order the
cancellation of the registration and permit without due notice and hearing, as provided under paragraph (c) above, and
the affected labor organization shall have the same right of appeal to the courts as previously provided."6

The determination of the question whether the requirements of paragraph (b) have been met, or, whether or not the
requisite financial report or non-subversive affidavits have been filed within the period above stated, is not judicial
power. Indeed, all officers of the government, including those in the executive department, are supposed to act on the
basis of facts, as they see the same. This is specially true as regards administrative agencies given by law the power
to investigate and render decisions concerning details related to the execution of laws the enforcement of which is
entrusted thereto. Hence, speaking for this Court, Mr. Justice Reyes (J.B.L.) had occasion to say:

"The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue delegation of
judicial power to the Secretary of Public Works but also for being unreasonable and arbitrary, are not tenable. It will
be noted that the Act (R.A. 2056) merely empowers the Secretary to remove unauthorized obstructions or
encroachments upon public streams, constructions that no private person was anyway entitled to make, because the
bed of navigable streams is public property, and ownership thereof is not acquirable by adverse possession (Palanca
vs. Commonwealth, 69 Phil. 449).

"It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some
questions of fact, such as the existence of the stream and its previous navigable character; but these functions,
whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear navigable
streams of unauthorized obstructions or encroachments, and authorities are clear that they are validly conferable upon
executive officials provided the party affected is given opportunity to be heard, as is expressly required by Republic
Act No. 2056, section 2."7

It should be noted, also, that, admittedly, the SSSEA had not filed the non-subversive affidavits of some of its officers -
"Messrs. Sison, Tolentino, Atienza, Zalameda, Sabino and Pefianca" - although said organization avers that these
persons "were either resigned or out on leave as directors or officers of the union," without specifying who had
resigned and who were on leave. This averment is, moreover, controverted by respondents herein.

Again, the 30-day period invoked by the petitioners is inapplicable to the decision complained of. Said period is
prescribed in paragraph (c)8 of Section 23, which refers to the proceedings for the "registration" of labor organizations,
associations or unions not to the "cancellation" of said registration, which is governed by the above-quoted paragraph
(d) of the same section.

Independently of the foregoing, we have repeatedly held that legal provisions prescribing the period within which a
decision should be rendered are directory, not mandatory in nature - in the sense that, a judgment promulgated after
the expiration of said period is not null and void, although the officer who failed to comply with law may be dealt with
administratively, in consequence of his delays9 - unless the intention to the contrary is manifest. Such, however, is
not the import of said paragraph (c). In the language of Black:

"When a statute specifies the time at or within which an act is to be done by a public officer or body, it is generally held
to be directory only as to the time, and not mandatory, unless time is of the essence of the thing to be done, or the
language of the statute contains negative words, or shows that the designation of the time was intended as a limitation
of power, authority or right.”10

Then, again, there is no law requiring the approval, by the Secretary of Labor, of the decision of the Registrar
decreeing the cancellation of a registration certificate. In fact, the language of paragraph (d) of Section 23 suggests
that, once the conditions therein specified are present, the office concerned "shall" have no choice but to issue the
order of cancellation. Moreover, in the case at bar, there is nothing, as yet, for the Secretary of Labor to approve or
disapprove, since petitioners' motion for reconsideration of the Registrar's decision of October 23, 1963, is still
pending resolution. In fact, this circumstance shows, not only that the present action is premature11, but, also, that
petitioners have failed to exhaust the administrative remedies available to them.12 Indeed, they could ask the
Secretary of Labor to disapprove the Registrar's decision or object to its execution or enforcement, in the absence of
approval of the former, if the same were necessary, on which we need not and do not express any opinion.

In view of the foregoing, the petition herein should be, as it is hereby dismissed, and the writs prayed for denied,
with costs against the petitioners.

IT IS SO ORDERED.

327 Phil. 1011

THIRD DIVISION

G.R. No. 118562, July 05, 1996

ALLIANCE OF NATIONALIST AND GENUINE LABOR ORGANIZATION (ANGLO-KMU), PETITIONER, VS.

SAMAHAN NG MGA MANGAGAWANG NAGKAKAISA SA MANILA BAY SPINNING MILLS AT J.P. COATS
(SAMANA BAY), GILBERT SUNGAYANN, FERNANDO MELARPIS, ET. AL, RESPONDENTS.

RESOLUTION

FRANCISCO, J.:

Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO for brevity) is a duly registered labor
organization while respondent union Samahan Ng Mga Mangagawang Nagkakaisa sa Manila Bay Spinning Mills and
J.P. Coats (SAMANA BAY for brevity) is its affiliate. In representation of SAMANA BAY, ANGLO entered and
concluded a Collective Bargaining Agreement (CBA) with Manila Bay Spinning Mills and J.P. Coats Manila Bay, Inc.
(hereinafter referred to as the corporations) on November 1, 1991. On December 4, 1993, the Executive Committee of
SAMANA BAY decided to disaffiliate from ANGLO in view of the latter's dereliction of its duty to promote and advance
the welfare of SAMANA BAY and the alleged cases of corruption involving the federation officers. Said disaffiliation
was unanimously confirmed by the members of SAMANA BAY.

On April 4, 1994, a petition to stop remittance of federation dues to ANGLO was filed by SAMANA BAY with the
Bureau of Labor Relations on the ground that the corporations, despite having been furnished copies of the union
resolution relating to said disaffiliation, refused to honor the same. ANGLO counteracted by unseating all officers and
board members of SAMANA BAY and appointing, in their stead, a new set of officers who were duly recognized by the
corporations.

In its position paper, ANGLO contended that the disaffiliation was void considering that a collective bargaining
agreement is still existing and the freedom period has not yet set in. The Med-Arbiter resolved that the disaffiliation
was void but upheld the illegality of the ouster officers of SAMANA BAY. Both parties filed their respective appeals
with the Department of Labor and Employment. In a resolution dated September 23, 1994, herein public respondent
modified the order and ruled in favor of respondent union, disposing as follows:

"WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack of merit while the appeal of petitioners is
hereby granted. Accordingly, the order of the Med-Arbiter is modified by:

1) declaring the disaffiliation of petitioner union from respondent ANGLO as valid;

2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to stop remitting to ANGLO federation dues and
instead to remit the whole amount of union dues to the treasurer of petitioner union; and

3) enjoining ANGLO-KMU from interfering in the affairs of petitioner union.

SO ORDERED."[1]

ANGLO filed a motion for reconsideration but the same was denied for lack of merit. Hence, this petition for certiorari
under Rule 65.

The petition calls upon us to resolve two issues, to wit:

1) whether the disaffiliation was valid; and

2) whether petitioner can validly oust individual private respondents from their positions.

We rule for the respondents.

For clarity, we shall first consider the issue respecting the validity of the disaffiliation.

Petitioner ANGLO wants to impress on us that the disaffiliation was invalid for two reasons, namely: that the
procedural requirements for a valid disaffiliation were not followed; and that it was made in violation of P.D. 1391.

Anent the first ground, we reiterate the rule that all employees enjoy the right to self-organization and to form and join
labor organizations of their own choosing for the purpose of collective bargaining. This is a fundamental right of labor
and derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of
the Constitution and the labor laws, rules or regulations, we have always adopted the liberal approach which favors
the exercise of labor rights.[2]

This Court is not ready to bend this principle to yield to a mere procedural defect, to wit: failure to observe certain
procedural requirements for a valid disaffiliation. Non-compliance with the procedure on disaffiliation, being premised
on purely technical grounds cannot rise above the fundamental right of self- organization.[3]

We quote, with approval, the findings of herein public respondent, that:

"x x x the resolution of the general membership ratifying the disaffiliation action initiated by the Board, substantially
satisfies the procedural requirements for disaffiliation. No doubt was raised on the support of the majority of the union
members on the decision to disaffiliate."[4]
This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts inimical to the interests of respondent
union have not been sufficiently rebutted. It is clear under the facts that respondent union's members have
unanimously decided to disaffiliate from the mother federation and ANGLO has nothing to offer in dispute other than
the law prohibiting the disaffiliation outside the freedom period.

In the same wise, We find no ground for ruling against the validity of the disaffiliation in the light of recent
jurisprudential rules.

Although P.D. 1391 provides:

"Item No. 6. No petition for certification election, for intervention and disaffiliation shall be entertained or given due
course except within the 60-day freedom period immediately preceding the expiration of a collective bargaining
agreement,"

said law is definitely not without exceptions. Settled is the rule that a local union has the right to disaffiliate from its
mother union when circumstances warrant.[5] Generally, a labor union may disaffiliate from the mother union to form a
local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA.
However, even before the onset of the freedom period, disaffiliation may be carried out when there is a shift of
allegiance on the part of the majority of the members of the union. [6]

Coming now to the second issue, ANGLO contends that individual private respondents were validly ousted as they
have ceased to be officers of the incumbent union (ANGLO-KMU) at the time of disaffiliation. In order to fill the
vacuum, it was deemed proper to appoint the individual replacements so as not to put in disarray the organizational
structure and to prevent chaos and confusion among the general membership and within the company.

The contention is bereft of merit. A local labor union is a separate and distinct unit primarily designed to secure and
maintain an equality of bargaining power between the employer and their employee-members. A local union does not
owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its
creation to the will of its members.[7] The mere act of affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently of the local union. It only gives rise to a
contract of agency[8] where the former acts in representation of the latter.

By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously bound the two entities was completely
severed. ANGLO was divested of any and all power to act in representation of SAMANA BAY. Thus, any act
performed by ANGLO affecting the interests and affairs of SAMANA BAY, including the ouster of herein individual
private respondents, is rendered without force and effect.

WHEREFORE, premises considered, the petition is hereby DISMISSED.

SO ORDERED.

260 Phil. 181

FIRST DIVISION

G.R. Nos. L-43495-99, January 20, 1990

TROPICAL HUT EMPLOYEES’ UNION-CGW, JOSE ENCINAS, JOSE LUIS TRIBINO, FELIPE DURAN, MANUEL
MANGYAO, MAMERTO CAHUCOM, NEMESIO BARRO, TEODULFO CAPAGNGAN, VICTORINO ABORRO,
VIDAL MANTOS, DALMACIO DALDE, LUCIO PIASAN, CANUTO LABADAN, TERESO ROMERDE, CONRADO
ENGALAN, SALVADOR NERVA, BERNARDO ENGALAN, BONIFACIO CAGATIN, BENEDICTO VALDEZ,
EUSEBIO SUPILANAS, ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO, ZACARIAS DAMING,
PRUDENCIO LADION, FULGENCIO BERSALUNA, ALBERTO PERALES, ROMEO MAGRAMO, GODOFREDO
CAMINOS, GILDARDO DUMAS, JORGE SALDIVAR, GENARO MADRIO, SEGUNDINO KUIZON, LUIS
SANDOVAL, NESTOR JAPAY, ROGELIO CUIZON, RENATO ANTIPADO, GREGORIO CUEVO, MARTIN
BALAZUELA, CONSTANCIO CHU, CRISPIN TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO
VILLAMOR, RESTITUTO HANDAYAN, VICTORINO ESPEDILLA, NOEL CHUA, ARMANDO ALCORANO,
ELEUTERIO TAGUIK, SAMSON CRUDA, DANILO CASTRO, CENON VALLENAS, DANILO CAWALING,
SIMPLICIO GALLEROS, PERFECTO CUIZON, PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES,
REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN, TEODORO ORENCIO, ARMANDO LUAYON,
JAIME NERVA, NARCISO CUIZON, ALFREDO DEL ROSARIO, EDUARDO LORENZO, PEDRO ARANGO,
VICENTE SUPANGAN, JACINTO BANAL AND BONIFACIO PUERTO, PETITIONERS, VS. TROPICAL HUT FOOD
MARKET, INC., ESTELITA J. QUE, ARTURO DILAG, MARCELINO LONTOK, JR., NATIONAL ASSOCIATION OF
TRADE UNIONS (NATU), NATIONAL LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO P. ATIENZA,
GERONIMO Q. QUADRA, FEDERICO C. BORROMEO, AND HON. BLAS F. OPLE, RESPONDENTS.

DECISION

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 seeking to set aside the decisions of the public respondents Secretary of
Labor and National Labor Relations Commission which reversed the Arbitrators' rulings in favor of petitioners herein.

The following factual background of this case appears from the record:

On January 2, 1968, the rank and file workers of the Tropical Hut Food Market, Incorporated, referred to herein as
respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the THEU,
elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the National
Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation.
Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department of Labor in
the name of the Tropical Hut Employees Union - NATU. It appears, however, that NATU itself as a labor federation,
was not registered with the Department of Labor.

After several negotiations were conducted between THEU-NATU, represented by its local president and the national
officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-President and Marcelina
Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President and General
Manager, Cezar Azcona, Sr., a Collective Bargaining Agreement was concluded between the parties on April 1, 1968,
the term of which expired on March 31, 1971. Said agreement contained these clear and unequivocal terms:

"This Agreement made and entered into this___ day of__________________, 1968, by and between:

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

- and -

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

Witnesseth:

xxx

"Article I

"Coverage and Effectivity

"Section 1. The COMPANY recognizes the UNION as the sole and exclusive collective bargaining agent for all its
workers and employees in all matters concerning wages, hours of work, and other terms and conditions of
employment.

xxx

"Article III

"Union Membership and Union Checkoff

“Section 1 - x x x Employees who are already members of the UNION at the time of the signing of this Agreement or
who become so thereafter shall be required to maintain their membership therein as a condition of continued
employment.

xxx

Section 3 - Any employee who is expelled from the UNION for joining another federation or forming another union, or
who fails or refuses to maintain his membership therein as required, x x x shall, upon written request of the UNION, be
discharged by the COMPANY." (Rollo, pp. 667-670)
And attached to the Agreement as Appendix "A" is a check-off Authorization Form, the terms of which are as follows:

"We, the undersigned, hereby designate the NATIONAL Association of Trade Unions, of which the TROPICAL HUT
EMPLOYEES UNION is an affiliate as sole collective bargaining agent in all matters relating to salary rates, hours of
work and other terms and conditions of employment in the Tropical Hut Food Market, Inc. and we hereby authorize the
said company to deduct the amount of Four (P4.00) Pesos each every month as our monthly dues and to deliver the
amount to the Treasurer of the Union or his duly authorized representatives." (Rollo, pp. 680-684)

On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement which
ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the attached
check-off authorization form.

Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-NATU, was appointed by the respondent
company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his union that for reason
of his present position, he was resigning as President of the THEU-NATU effective that date. As a consequence
theref, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the THEU-NATU.

On December 19, 1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of
the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20, 1973,
the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general membership of
the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the Confederation of General
Workers (CGW). The letter was passed around among the members of the THEU-NATU, to which around one
hundred and thirty-seven (137) signatures appeared as having given their consent to and acknowledgment of the
decision to disaffiliate the THEU from the NATU.

On January 1, 1974, the general membership of the so-called THEU-CGW held its annual election of officers, with
Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed
the respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President of the
Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEU-CGW to the respondent
company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to the
THEU-CGW, but this was refused by the respondent company.

On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter
to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position was
declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made by the
NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of Article III
of the Collective Bargaining Agreement. Encinas was also advised in the letter that NATU was returning the letter of
disaffiliation on the ground that:

"1. Under the restructuring program NOT of the Bureau of Labor but of the Philippine National Trade Union Center in
conjunction with the NATU and other established national labor centers, retail clerks and employees such as our
members in the Tropical Hut pertain to Industry II which by consensus, has been assigned already to the jurisdiction of
the NATU;

"2. The right to disaffiliate belongs to the union membership who-on the basis of verified reports received by -- have
not even been consulted by you regarding the matter;

“3. Assuming that the disaffiliation decision was properly reached; your letter nevertheless is unacceptable in view of
Article V, Section 1, of the NATU Constitution which provides that ‘withdrawal from the organization shall be valid
provided three (3 months notice of intention to withdraw is served upon the National Executive Council.'" (p. 281,
Rollo)

In view of NATU's request, the respondent company, on the same day, which was January 11, 1974, suspended
Encinas pending the application for clearance with the Department of Labor to dismiss him. On January 12, 1974,
members of the THEU-CGW passed a resolution protesting the suspension of Encinas and reiterated their ratification
and approval of their union's disaffiliation from NATU and their affiliation with the Confederation of General Workers
(CGW). It was Encinas' suspension that caused the filing of NLRC Case No. LR-2511 on January 11, 1974 against
private respondents herein, charging them of unfair labor practice.

On January 15, 1974, upon the request of NATU, respondent company applied for clearance with the Secretary of
Labor to dismiss the other officers and members of THEU-CGW. The company also suspended them effective that
day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for
unfair labor practices.

On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining
THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the
alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On
February 14, 1974, these temporary officers were considered as having been elected as regular officers for the year
1974.

On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce Enrile, Secretary of National Defense,
complaining of the unfair labor practices committed by respondent company against its members and requesting
assistance on the matter. The aforementioned letter contained the signatures of one hundred forty-three (143)
members.

On February 24, 1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company that
they will be given forty-eight (48) hours upon receipt of the notice within which to answer and affirm their membership
with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru letters dated
February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set forth in the CBA,
and that he had requested respondent company to dismiss them.

Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's charges
before action was taken thereon. However, no comment or reply was received from petitioners. In view of this, Estelita
Que, President/General Manager of respondent company, upon Dilag's request, suspended twenty four (24) workers
on March 5, 1974, another thirty seven (37) on March 8, 1974 and two (2) more on March 11, 1974, pending approval
by the Secretary of Labor of the application for their dismissal.

As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an unnumbered case were filed by petitioners
against Tropical Hut Food Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo Dilag.

It is significant to note that a joint letter petition signed by sixty-seven (67) employees was filed with the Secretary of
Labor, the NLRC Chairman and Director of Labor Relations to cancel the words NATU after the name of Tropical Hut
Employees Union under Registration Certificate No. 5544 IP. Another letter signed by one hundred forty six (146)
members of THEU-CGW was sent to the President of the Philippines informing him of the unfair labor practices
committed by private respondents against THEU-CGW members.

After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed with the Labor Arbiter, Arbitrator Daniel
Lucas issued an order dated March 21, 1974, holding that the issues raised by the parties became moot and
academic with the issuance of NLRC Order dated February 25, 1974 in NLRC Case No. LR-2670, which directed the
holding of a certification election among the rank-and-file workers of the respondent company between the THEU-
NATU and THEU-CGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent company to
cease and desist from committing further acts of dismissals without previous order from the NLRC and for the
complainant Tropical Hut Employees Union-CGW to file representation cases on a case to case basis during the
freedom period provided for by the existing CBA between the parties (pp. 91-93, Rollo).

With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered case, Arbitrator Cleto T. Villatuya rendered
a decision dated October 14, 1974, the dispositive portion of which states:

"Premises considered, a DECISION is hereby rendered ordering respondent company to reinstate immediately the
sixty three (63) complainants to their former positions with back wages from the time they were illegally suspended up
to their actual reinstatement without loss of seniority and other employment rights and privileges, and ordering the
respondents to desist from further committing acts of unfair labor practice. The respondent company's application for
clearance filed with the Secretary of Labor to terminate the subject complainants’ services effective March 20 and 23,
1974, should be denied.

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

From the orders rendered above by Arbitrator Daniel Lucas in NLRC Cases Nos. LR-2511 and LR-2521 and by
Arbitrator Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all parties thereto,
namely, petitioners herein, respondents company, NATU and Dilag appealed to the National Labor Relations
Commission.

In a decision rendered on August 1, 1975, the National Labor Relations Commission found the private respondents’
appeals meritorious, and stated, inter alia:

"WHEREFORE, in view of the foregoing premises, the Order of Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521
and the decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971, 3015 and the unnumbered Case are hereby
REVERSED. Accordingly, the individual complainants are deemed to have lost their status as employees of the
respondent company. However, considering that the individual complainants are not presumed to be familiar with nor
to have anticipated the legal mesh they would find themselves in, after their 'disaffiliation' from National Association of
Trade Unions and the THEU-NATU, much less the legal consequences of the said action which we presume they
have taken in all good faith; considering, further, that the thrust of the new orientation in labor relations is not towards
the punishment of acts violative of contractual relations but rather towards fair adjustments of the resulting
complications; and considering, finally, the consequent economic hardships that would be visited on the individual
complainants, if the law were to be strictly enforced against them, this Commission is constrained to be magnanimous
in this instant, notwithstanding its obligation to give full force and effect to the majesty of the law, and hereby orders
the respondent company, under pain of being cited for contempt for failure to do so, to give the individual
complainants a second chance by reemploying them upon their voluntary reaffirmation of membership and loyalty to
the Tropical Hut Employees Union-NATU and the National Association of Trade Unions in the event it hires additional
personnel.

"SO ORDERED." (pp. 312-313, Rollo)

The petitioner employees appealed the decision of the respondent National Labor Relations Commission to the
Secretary of Labor. On February 23, 1976, the Secretary of Labor rendered a decision affirming the findings of the
Commission, which provided, inter alia:

"We find, after a careful review of the record, no sufficient justification to alter the decision appealed from except that
portion of the dispositive part which states:

‘x x x this Commission x x x hereby orders respondent company under pain of being cited for contempt for failure to do
so, to give the individual complainants a second chance by reemploying them upon their voluntary reaffirmation of
membership and loyalty to the Tropical Hut Employees Union-NATU and the National Association of Trade Union in
the event it hires additional personnel.'

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

"In lieu of the foregoing, and to give complainants positive relief pursuant to Section 9, Implementing Instruction No. 1,
dated November 9, 1972, respondent is hereby ordered to grant to all the individual complainants financial assistance
equivalent to one (1) month salary for every year of service.

"WHEREFORE, with the modification as above indicated, the Decision of the National Labor Relations Commission is
hereby affirmed.

"SO ORDERED." (pp. 317-318, Rollo)

From the various pleadings filed and arguments adduced by petitioners and respondents, the following issues appear
to be those presented for resolution in this petition to wit: 1) whether or not the petitioners failed to exhaust
administrative remedies when they immediately elevated the case to this Court without an appeal having been made
to the Office of the President; 2) whether or not the disaffiliation of the local union from the national federation was
valid; and 3) whether or not the dismissal of petitioner employees resulting from their union's disaffialition from the
mother federation was illegal and constituted unfair labor practice on the part of respondent company and federation.

We find the petition highly meritorious.

The applicable law then is the Labor Code, PD 442, as amended by PD 643 on January 21, 1975, which states:

"Art. 222. Appeal - x x x.

x x x.

Decisions of the Secretary of Labor may be appealed to the President of the Philippines subject to such conditions or
limitations as the President may direct." (Emphasis ours)

The remedy of appeal from the Secretary of Labor to the Office of the President is not a mandatory requirement
before resort to courts can be had, but an optional relief provided by law to parties seeking expeditious disposition of
their labor disputes. Failure to avail of such relief shall not in any way serve as an impediment to judicial intervention.
And where the issue is lack of power or arbitrary or improvident exercise thereof, decisions of the Secretary of Labor
may be questioned in a certiorari proceeding without prior appeal to the President (Arrastre Security Association -
TUPAS v. Ople, No. L-45344, February 20, 1984, 127 SCRA 580). Since the instant petition raises the same issue of
grave abuse of discretion of the Secretary of Labor amounting to lack of or in excess of jurisdiction in deciding the
controversy, this Court can properly take cognizance of and resolve the issues raised herein.

This brings Us to the question of the legality of the dismissal meted to petitioner employees. In the celebrated case of
Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512, We held that
the validity of the dismissals pursuant to the union security clause in the collective bargaining agreement hinges on
the validity of the disaffiliation of the local union from the federation.
The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and
voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when
circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association (Volkschel
Labor Union v. Bureau of Labor Relations, No. L-45824, June 19,1985, 137 SCRA 42).

All employees enjoy the right to self organization and to form and join labor organizations of their own choosing for the
purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection. This is a
fundamental right of labor that derives its existence from the Constitution. In interpreting the protection to labor and
social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the
liberal approach which favors the exercise of labor rights.

Relevant on this point is the basic principle We have repeatedly affirmed in many rulings:

"x x x The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining
power between the employer and their employee-members in the economic struggle for the fruits of the joint
productive effort of labor and capital; and the association of the locals into the national union (PAFLU) was in
furtherance of the same end. These associations are consensual entities capable of entering into such legal relations
with their members. The essential purpose was the affiliation of the local unions into a common enterprise to increase
by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals
remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints
imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual
welfare upon the terms laid down in the agreement which brought it into existence.'" (Adamson & Adamson, Inc. v.
CIR, No. L-35120, January 31, 1984, 127 SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel, No. L-41955,
December 29, 1977, 80 SCRA 681; Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., supra).

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

When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary
right to labor organization for the effective enhancement and protection of common interests. In the absence of
enforceable provisions in the federation's constitution preventing disaffiliation of a local union, a local may sever its
relationship with its parent (People's Industrial and Commercial Employees and Workers Organization (FFW) v.
People's Industrial and Commercial Corporation, No-37687, March 15, 1982, 112 SCRA 440).

There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly
forbidden to disaffiliate from the federation (pp. 62, 281, Rollo). The alleged non-compliance of the local union with the
provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not
produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor
organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not
possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right
and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act
of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above
the fundamental right of self-organization.

Respondent Secretary of Labor, in affirming the decision of the respondent Commission, concluded that the supposed
decision to disaffiliate was not the subject of a free and open discussion and decision on the part f the THEU-NATU
general membership (p. 305, Rollo). This, however, is contradicted by the evidence on record. Moreover, We are
inclined to believe Arbitrator Villatuya's findings to the contrary, as follows:

"x x x. However, the complainants refute this allegation by submitting the following: a) Letter dated December 20,
1973 signed by 142 members (Exhs. 'B to B-5'); b) resolution dated January 12, 1974, signed by 140 members (Exhs.
'H to H-6'); c) letter dated February 26, 1974 to the Department of Labor signed by 165 members (Exhs. 'I to 1-10'); d)
letter dated January 30, 1974 to the Secretary of the National Defense signed by 144 members (Exhs. '0 to 0-5') and;
e) letter dated March 6,1974 signed by 146 members addressed to the President of the Philippines (Exhs. 'HH to HH-
5'), to show that in several instances, the members of the THEU-NATU have acknowledged their disaffiliation from
NATU. The letters of the complainants also indicate that an overwhelming majority have freely and voluntarily signed
their union's disaffiliation from NATU, otherwise, if there was really deception employed in securing their signatures as
claimed by NATU/Dilag, it could not be possible to get their signatures in five different documents." (p. 144, Rollo)

We are aware of the time-honored doctrine that the findings of the NLRC and the Secretary of Labor are binding on
this Court if supported by substantial evidence. However, in the same way that the findings of facts unsupported by
sustantial and credible evidence do not bind this Court, neither will We uphold erroneous conclusions of the NLRC
and the Secretary of Labor when We find that the latter committed grave abuse of discretion in reversing the decision
of the labor arbiter (San Miguel Corporation v. NLRC, L-50321, March 13, 1984, 128 SCRA 180). In the instant case,
the factual findings of the arbitrator were correct against that of public respondents.

Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union security
clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining
agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive
collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other
terms and conditions of employment (pp. 667-706, Rollo). Although NATU was designated as the sole bargaining
agent in the check-off authorization form attached to the CBA, this simply means it was acting only for and in behalf of
its affiliate. The NATU possessed the status of an agent while the local union remained the basic principal union which
entered into contract with the respondent company. When the THEU disaffiliated from its mother federation, the
former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security clause
embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not applicable to
the circumstances obtaining in this case. The CBA imposes dismissal only in case an employee is expelled from the
union for joining another federation or for forming another union or who fails or refuses to maintain membership
therein. The case at bar does not involve the withdrawal of merely some employees from the union but of the whole
THEU itself from its federation. Clearly, since there is no violation of the union security provision in the CBA, there was
no sufficient ground to terminate the employment of petitioners.

Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We,
however, are inclined to agree instead with the Arbitrator's findings when he declared:

"x x x. Much more, the so called THEU-NATU under Dilag's group which assumes to be the original THEU-NATU has
a very doubtful and questionable existence not to mention that the alleged president is performing supervisory
functions and not qualified to be a bona fide member of the rank and file union." (p. 146, Rollo)

Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a
managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas
replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from the
federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining group
which was alleged to be the true union since he belonged to the managerial personnel who could not be expected to
work for the betterment of the rank and file employees. Besides, managers and supervisors are prohibited from joining
a rank and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association of Free Labor Unions
(PAFLU), et al., L-18782, August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or supervisor organizes or
joins a rank and file union, he will be required to resign therefrom (Magalit, et al. v. Court of Industrial Relations, et al.,
L-20448, May 25, 1965, 14 SCRA 72).

Public respondents further submit that several employees who disaffiliated their union from the NATU subsequently
retracted and reaffirmed their membership with the THEU-NATU. In the decision which was affirmed by respondent
Secretary of Labor, the respondent Commission stated that:

"x x x out of the alleged one hundred and seventy-one (171) members of the THEU-CGW whose signatures appeared
in the ‘Analysis of Various Documents Signed by Majority Members of the THEU-CGW, (Annex 'T', Complainants),
which incidentally was relied upon by Arbitrator Villatuya in holding that complainant THEU-CGW commanded the
majority of employees in respondent company, ninety?three (93) of the alleged signatories reaffirmed their
membership with the THEU-NATU and reanounced whatever connection they may have had with other labor unions,
(meaning the complainant THEU-CGW) either through resolution or membership application forms they have
unwittingly signed.’ ” (p. 306, Rollo)

Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were
executed on various dates beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This shows that the
retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas,
formerly THEU-NATU President, who became THEU-CGW President, and the suspension pending their dismissal of
the other elected officers and members of the THEU-CGW on January 15, 1974. It is also clear that some of the
retractions occurred after the suspension of the first set of workers numbering about twenty-four (24) on March 5,
1974. There is no use in saying that the retractions obliterated the act of disaffiliation as there are doubts that they
were freely and voluntarily done especially during such time when their own union officers and co-workers were
already suspended pending their dismissal.

Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was
hastily and summarily done without the necessary due process. The respondent company sent a letter to petitioners
herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving them forty-eight
(48) hours within which to comment (p. 637, Rollo). When petitioners failed to do so, respondent company
immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of the mandate
of due process, which is to afford the employee to be dismissed an opportunity to be heard.

The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or
arbitrariness, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus,
the discharge of an employee from his employment is null and void where the employee was not formally investigated
and given the opportunity to refute the alleged findings made by the company (De Leon v. NLRC, L-52056, October
30, 1980, 100 SCRA 691). Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed
its employees in line with a closed shop provision if they were not given a proper hearing (Binalbagan-Isabela Sugar
Co., Inc., (BISCOM) v. Philippines Association of Free Labor Unions (PAFLU) et al., L-18782, August 29, 1963, 8
SCRA 700).

In view of the fact that the dispute revolved around the mother federation and its local, with the company suspending
and dismissing the workers at the instance of the mother federation, then, the company's liability should be limited to
the immediate reinstatement of the workers. And since their dismissals were effected without previous hearing and at
the instance of NATU, this federation should be held liable to the petitioners for the payment of their back wages, as
what We have ruled in the Liberty Cotton Mills Case (supra).

ACCORDINGLY, the petition is hereby GRANTED and the assailed decision of respondent Secretary of Labor is
REVERSED and SET ASIDE, and the respondent company is hereby ordered to immediately reinstate all the
petitioner employees within thirty (30) days from notice of this decision. If reinstatement is no longer feasible, the
respondent company is ordered to pay petitioners separation pay equivalent to one (1) month pay for every year of
service. The respondent NATU federation is directed to pay petitioners the amount of three (3) years backwages
without deduction or qualification. This decision shall be immediately executory upon promulgation and notice to the
parties.

SO ORDERED.

426 Phil. 35

SECOND DIVISION

G.R. No. 127374, January 31, 2002

PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO AND FRANCISCO DAKILA, PETITIONERS, VS.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER EMERSON TUMANON, PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER (NOW UNIFIED PAFLU) AND SERAFIN
AYROSO, RESPONDENTS.

[G.R. No. 127431. January 31, 2002]

PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO CABANIAS, PEPITO RODILLAS,

SHARON CASTILLO, DANILO CARBONEL, MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA, RICARDO
LUMBA, JOSEPH MARISOL, NERISA MORTEL, TEOFILO QUIRONG, LEONARDO REYES, MANUEL CADIENTE
AND HERMINIA RIOSA, PETITIONERS, VS. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU)
SEPTEMBER (NOW UNIFIED PAFLU) AND NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION,
RESPONDENTS.

DECISION
BELLOSILLO, J.:

This is a petition for certiorari[1] seeking to set aside the 31 July 1996 Decision[2] of the National Labor Relations
Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc.,
Mariles C. Romulo[3] and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and
Workers Association-PAFLU[4] guilty of unfair labor practice and ordering them to pay private respondent Philippine
Association of Free Labor Union (PAFLU) September[5] P150,000.00 as damages. Petitioners likewise seek the
reversal of the 31 October 1996 Resolution of the NLRC denying their Motion for Reconsideration.

In November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the
Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted
among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of
Labor.

Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as
reason PAFLU's supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was
a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to
disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine
Skylanders Employees Association - National Congress of Workers (PSEA-NCW), and to maintain continuity within
the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers
in the newly-forged PSEA-NCW.

On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately
registered with the Department of Labor and Employment.

Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary General Serafin Ayroso wrote Mariles
C. Romulo requesting a copy of PSI's audited financial statement. Ayroso explained that with the dismissal of PSEA-
WATU’s election protest the time was ripe for the parties to enter into a collective bargaining agreement.

On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEA's
disaffiliation from PAFLU and its subsequent affiliation with NCW.

Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a complaint for unfair labor practice
against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from
PSI’s refusal to bargain collectively with its workers, the company through its president and personnel manager, was
also liable for interfering with its employees' union activities.[6]

Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of PAFLU for unfair labor practice
against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA's organizational meeting
thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had
unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining
agreement which was detrimental to their interests.[7] The two (2) complaints were thereafter consolidated.

On 1 February 1995 PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional
party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito
Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph
Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty
of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner
Francisco Dakila.[8]

PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the dismissal of the complaint on
the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor
Arbiter. On the other hand, PSEA-NCW took the cudgels for its officers who were being sued in their capacities as
former officers of PSEA-PAFLU and asserted that since PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU
for that matter had no personality to file the instant complaint. In support of this assertion, PSEA-NCW submitted in
evidence a Katunayan signed by 111 out of 120 rank and file employees of PSI disauthorizing Ayroso or PAFLU from
instituting any action in their behalf.[9]

In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's disaffiliation from PAFLU invalid and held
PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice. The Decision explained that despite
PSEA-PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file employees, the company
knowingly sanctioned and confederated with Dakila in actively assisting a rival union. This, according to the Labor
Arbiter, was a classic case of interference for which PSI could be held responsible. As PSEA-NCW's personality was
not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid. Ayroso's
legal personality to file the complaint was sustained on the ratiocination that under the Labor Code no petition
questioning the majority status of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day
period immediately before the expiry date of such five (5)-year term of the collective bargaining agreement that the
parties may enter into. Accordingly, judgment was rendered ordering PSI, PSEA-PAFLU and their officers to pay
PAFLU P150,000.00 in damages.[10]

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC
upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's
certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA
could not validly separate from PAFLU, join another national federation and subsequently enter into a collective
bargaining agreement with its employer-company.[11]

Petitioners separately moved for reconsideration but both motions were denied. Hence, these petitions for certiorari
filed by PSI and PSEA-NCW together with their respective officers pleading for a reversal of the NLRC's Decision
which they claimed to have been rendered in excess of jurisdiction. In due time, both petitions were consolidated.

In these petitions, petitioner PSEA together with its officers argued that by virtue of their disaffiliation PAFLU as a
mere agent had no authority to represent them before any proceedings. They further asserted that being an
independent labor union PSEA may freely serve the interest of all its members and readily disaffiliate from its mother
federation when circumstances so warrant. This right, they averred, was consistent with the constitutional guarantee
of freedom of association.[12]

For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain collectively with PSEA-NCW
was actuated, to a large extent, by PAFLU's behavior. Having heard no objections or protestations from PAFLU
relative to PSEA's disaffiliation, they reckoned that PSEA's subsequent association with NSW was done bona fide.[13]

The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted. In his
Manifestation, the Solicitor General argued against the Labor Arbiter's assumption of jurisdiction citing the following as
reasons: first, there was no employer-employee relationship between complainant Ayroso and PSI over which the
Labor Arbiter could rightfully assert his jurisdiction; second, since the case involved a dispute between PAFLU as
mother federation and PSEA as local union, the controversy fell within the jurisdiction of the Bureau of Labor
Relations; and lastly, the relationship of principal-agent between PAFLU and PSEA had been severed by the local
union through the lawful exercise of its right of disaffiliation.[14]

Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of PSEA's disaffiliation. To be more
precise, may PSEA, which is an independent and separate local union, validly disaffiliate from PAFLU pending the
settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSI's rank and
file employees?

At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly lies
with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter. [15] Nonetheless, with due recognition of this
fact, we deem it proper to settle the controversy at this instance since to remand the case to the BLR would only mean
intolerable delay for the parties.

The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. In the
landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.[16] we upheld the right of local unions
to separate from their mother federation on the ground that as separate and voluntary associations, local unions do
not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of
their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of
local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without
succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints
imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the
terms laid down in the agreement which brought such affiliation into existence.

Such dictum has been punctiliously followed since then.[17]

Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions
becomes clearly apparent. There is nothing shown in the records nor is it claimed by PAFLU that the local union was
expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid
breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did
not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120
members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of
disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. Surely, this is not a
case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation, but it is a
case where almost all local union members decided to disaffiliate.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had
validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently
affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.

There is a further consideration that likewise argues for the granting of the petitions. It stands unchallenged that
PAFLU instituted the complaint for unfair labor practice against the wishes of workers whose interests it was
supposedly protecting. The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give
PAFLU the license to act independently of the local union. Recreant to its mission, PAFLU cannot simply ignore the
demands of the local chapter and decide for its welfare. PAFLU might have forgotten that as an agent it could only act
in representation of and in accordance with the interests of the local union. The complaint then for unfair labor
practice lodged by PAFLU against PSI, PSEA and their respective officers, having been filed by a party which has no
legal personality to institute the complaint, should have been dismissed at the first instance for failure to state a cause
of action.

Policy considerations dictate that in weighing the claims of a local union as against those of a national federation,
those of the former must be preferred. Parenthetically though, the desires of the mother federation to protect its locals
are not altogether to be shunned. It will however be to err greatly against the Constitution if the desires of the
federation would be favored over those of its members. That, at any rate, is the policy of the law. For if it were
otherwise, instead of protection, there would be disregard and neglect of the lowly workingmen.

WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders and Workers Association-
NCW, together with their respective officers, are GRANTED. The Decision of the National Labor Relations
Commission of 31 July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine
Skylanders and Workers Association-NCW, Philippine Skylanders, Inc. and their respective officers, guilty of unfair
labor practice and ordering them to pay damages to private respondent Philippine Association of Free Labor Unions
(PAFLU) September (now UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying reconsideration is
REVERSED and SET ASIDE. No costs.

SO ORDERED.

665 Phil. 784

THIRD DIVISION

G.R. No. 190515, June 06, 2011

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS PETITIONER, VS. CIRTEK

ELECTRONICS, INC., RESPONDENT.

RESOLUTION

CARPIO MORALES, J.:

This resolves the motion for reconsideration and supplemental motion for reconsideration filed by respondent, Cirtek
Electronics, Inc., of the Court's Decision dated November 15, 2010.

Respondent-movant avers that petitioner, in filing the petition for certiorari under Rule 65, availed of the wrong
remedy, hence, the Court should have dismissed the petition outright. It goes on to aver that the Court erred in
resolving a factual issue — whether the August 24, 2005
Memorandum of Agreement (MOA) was validly entered into —, which is not the office of a petition for certiorari.

Respondent-movant further avers that the MOA[1] signed by the remaining officers of petitioner Union and allegedly
gratified by its members should have been given credence by the Court.
Furthermore, respondent-movant maintains that the Secretary of Labor cannot insist on a ruling beyond the
compromise agreement entered into by the parties; and that, as early as February 5, 2010, petitioner Union had
already filed with the Department of Labor and Employment (DOLE) a resolution of disaffiliation from the Federation of
Free Workers resulting in the latter's lack of personality to represent the workers in the present case.

The motion is bereft of merit.

Respondent indeed availed of the wrong remedy of certiorari under Rule 65. Due, however, to the nature of the case,
ape involving workers' wages and benefits, and the fact that whether the petition was filed under Rule 65 or appeal by
certiorari under Rule 45 it was filed within 15 days (the reglementary period under Rule 45) from petitioner's receipt of
the resolution of the Court of Appeals' Resolution denying its motion for reconsideration, the Court resolved to give it
due course. As Almelor v. RTC of Las Piñas, et al.[2] restates:

Generally, on appeal taken either to the Supreme Court or the CA by the wrong or inappropriate mode shall
be dismissed. This is to prevent the party from benefiting from one's neglect and mistakes. However, like most
rules, it carries certain exceptions. After all, the ultimate purpose of all rules of procedures is to achieve
substantial justice as expeditously as possible. (emphasis and underscoring supplied)

Respecting the attribution of error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF
FACET arises when the doubt or difference arises as to the truth or falsehood of alleged facts,[3] while a QUESTION
OF LAW exists when the doubt or difference arises as to what the law is on a certain set of facts.

The present case presents the primordial issue of whether the Secretary of Labor is empowered to give arbitral
awards in the exercise of his authority to assume jurisdiction over labor disputes.

Ineluctably, the issue involves a determination and application of existing law, the provisions of the Labor Code, and
prevailing jurisprudence.
Intertwined with the issue, however, is the question of validity of the MOA and its ratification which, as movant
correctly points out, is a question of fact and one which is not appropriate for a petition for review on certiorari under
Rule 45. The rule, however, is not without exceptions, viz:

This rule provides that Hie parlies may raise only iquestions of law, because the Supreme Court is dot a trier of facts.
Generally, we are not duty-bound to analyze again and weigh the evidence'introduced in and considered by the
tribunals below. When supported by substantial evidence, the findings of fact of the CA are conclusive and
binding on the parties and are not renewable by this Court, unless the case falls under any of the following
recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures:

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion:

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflating:

(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to
the admissions of both appellant and appellee;

(7) When the findings arc contrary to those of , the trial court:

(8) When the findings of fact art without citation of specific evidence on which the conclusions are based;

(9) When the facts set forth in the petition as well as in the petitioners1 main and reply briefs are not disputed by the
respondents; and

(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record, (emphasis and underscoring supplied)
In the present case, the findings of the Secretary of Labor and the appellate court on whether the MOA is valid and
binding are conflicting, the former giving scant consideration thereon, latter affording it more and the weight.

As found by the Secretary of Labor, the MOA came about as a result of the constitution, at respondent's behest, of the
Labor- Management Council (LMC) which, he reminded the parties, should not be used as an avenue for bargaining
but for the purpose of affording workers to participate in policy and derision-making. Hence, the agreements
embodied in the MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and,
therefore, deserving little weight.

The appellate court, held, however, that the Secretary did not have the authority to give an arbitral award higher than
what was stated in the MOA. The conflicting views drew the Court to re-evaluate the facts as borne by the records, an
exception to the rule that only questions of law may be dealt with in an appeal by certiorari under Rule 45.

As discussed in the Decision under reconsideration, the then Acting Secretary of Labor Manuel G. Imson acted well
within his jurisdiction in ruling that the wage increases to be given are P10 per day effective January 1, 2004 and P15
per day effective January 1, 2005, pursuant to his power to assume jurisdiction under Art. 263 (g) [4] of the Labor Code.

While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because
it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction,
the award can be considered, as an approximation of a collective bargaining agreement which would
otherwise have been entered into by the parties. Hence, it has the force and effect of a valid contract obligation
between the parties.[5]

In determining arbitral awards then, aside from the MOA, courts considered other factors and documents including,
as in this case, the financial documents[6] submitted by respondent as well as its previous bargaining history and
financial outlook and improvements as stated in its own website.[7]

The appellate court's ruling that giving credence to the "Pahavag" and the minutes of the meeting which were not
verified and notarized would violate the rule on parol evidence is erroneous. The parol evidence rule, like other rules
on evidence, should not be strictly applied in labor cases. Interphil Laboratories Employees Union-FFW v. Interphil
Laboratories Inc.[8] teaches:

[R]eliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor
Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded
from accepting and evaluating evidence other than. and even contrary to, what is stated in the CBA. (emphasis and
underscoring [supplied)

On the contention that the MOA should have been given credence because it was validly entered into by the parties,
the Court notes that even those who signed it expressed reservations, thereto. A CBA (assuming in this case that the
MOA can be treated as one) is a contract imbued with public interest. It must thus be given a liberal, practical and
realistic, rather than a narrow and technical construction, with due consideration to the context in which it is negotiated
and the purpose for which it is intended.[9]

As for the contention that the alleged disaffiliation of the Union from the FFW during the pendency of the case resulted
in the FFW losing its personality to represent the Union, the same does not affect the Court's upholding of the
authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the
MOA. Contrary to respondent's assertion, the "unavoidable issue of disaffiliation" bears no significant legal
repercussions to warrant the reversal of the Court's Decision.

En passant, whether there was a valid disaffiliation is a factual issue. Besides, the alleged disaffiliation of the Union
from the FFW was by virtue of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna Field
Office on March 5, 2010 two months after the present petition was filed on December 22, 2009, - hence, it did not
affect FFW and its Legal Center's standing to file the petition nor this Court's jurisdiction to resolve the same.

At all events, the issue of disaffiliation is an infra-union dispute which must be resolved in a different forum in an action
at the instance of either or both the FFW and the Union or a rival labor organization, not the employer.

An infra-union dispute refers to any conflict between; and among union members, including grievances
arising from any violation of the rights and conditions of membership, violation of or disagreement over any
provision of (he union's constitution and by-laws, or disputes arising from chartering or disaffiliation of the
union. Sections 1 and 2. Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the
following circumstances as inter/intra-union disputes, viz:

RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES

SECTION I. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members or by another labor organization:

(b) conduct of election of union and workers' association officers/nullification of election of union and workers'
association officers;

(c) audit/accounts examination of union or workers association funds:

(d) deregistration of collective bargaining agreements:

(e) validity/invalidity of union affiliation or disaffiliation:

(f) validity/invalidity of acceptance/non-acceptance for union membership;

(g) validity/invalidity of impeachment/expulsion;- of union and workers' association officers and members:

(h) validity/invalidity of voluntary recognition;

(i) opposition to application for union and CBA registration:

(j) violations of or disagreements over any provision in a union or workers' association constitution and by-laws:

(k) disagreements over chartering or registration of labor organizations and collective bargaining agreements:

(l) violations of the rights and conditions of union or workers' association membership;

(m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining
agreements;

(n) such other disputes or conflicts involving the rights to self- organization, union membership and collective
bargaining -

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers' association.

SECTION 2. Coverage. - Other related labor relations disputes shall include any conflict between a labor union and
the employer or any individual, entity or group that is not a labor organization or workers' association. This
includes: (1) cancellation of registration of unions and workers' associations; and (2) a petition for interpleader.[10]
(emphasis supplied)

Indeed, as respondent-movant itself argues, a local union may disaffiliate at any time from its mother federation,
absent any showing that the same is prohibited under its constitution or rule. Such, however, does not result in it
losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa Manila
Bar Spinning Mills At J.P. Coats[11] enlightens

A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of
bargaining power between the employer and their employee-members. A local union does not one its existence to
the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the
will of its members. The mere act of affiliation does not divest the local union of its own personality, neither
does it give the mother federation the license to act independently of the local union. It only gives rise to a
contract of agency where the former acts in representation of the latter, (emphasis and underscoring supplied)

Whether then, as respondent claims, FFW "went against the will and wishes of its principal" (the member-employees)
by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent to determine, but for the
Union and FFW to resolve on their own pursuant to their principal-agent relationship.
WHEREFORE, the motion for reconsiders ion of this Court's Decision of November 15, 2010 is DENIED.

SO ORDERED

266 Phil. 132

THIRD DIVISION

G.R. Nos. 87266-69, July 30, 1990

ASSOCIATED WORKERS UNION-PTGWO, PETITIONER, VS. THE NATIONAL LABOR RELATIONS

COMMISSION (EN BANC), METRO PORT SERVICE, INC., MARINA PORT SERVICES, INC., ADRIANO S. YUMUL
AND 10 OTHER INDIVIDUAL RESPONDENTS REPRESENTED BY ATTY. EPIFANIO JACOSALEM,
RESPONDENTS.

[G.R. NOS. 91223-26. JULY 30, 1990]

MARINA PORT SERVICES, INC., PETITIONER, VS. HON. ARTHUR G. AMANSEC AND ADRIANO YUMUL,
PABLITO REANDELAR, MACARIO DE LUNA, JR., ADAN MENDOZA, SMITH CARLOTA, EMERECIANO
VERGARA, ROMEO ABACAN, LEONARDO ROMULO, ELINO JOSE, AND CATINDIANO CALUAG (COLLEC-
TIVELY CALLED AWUM), RESPONDENTS.

DECISION

FELICIANO, J.:

These cases have been unusually difficult for the Court, not because the issues posed are in themselves intellectually
demanding, but because of problems generated by the procedure adopted by the parties in coming before this
Court. The incidents subject of these cases spawned multiple cases and petitions before the National Labor Relations
Commission ("NLRC"). After the NLRC rendered a consolidated decision, the parties, in turn, filed multiple
separate certiorari petitions to the Court -- on a staggered and piecemeal basis. This situation resulted in a number of
discrete discussions of issues actually inter-related, since the Court, at any one time, could only see a small part of the
whole picture and decide only on the basis of what it could see. In what follows, we have tried to put the whole picture
together and to render comprehensive and substantial justice to all the parties.

On 26 October 1984, petitioner Associated Workers Union ("AWU") - PTGWO, the then bargaining representative of
the dockworkers at South Harbor, Port Area, Manila, filed a Notice of Strike against respondent Metro Port Service,
Inc. ("Metro"), the then arrastre contractor in the South Harbor, on the issues, among others, of unfilled vacancies and
union busting. This was docketed as NLRC Case No. NCR-NS-10-288-84.

On 3 April 1985, the abovementioned case was certified in an Order by the then Minister of Labor and Employment to
the NLRC for compulsory arbitration; the Order also forbade the holding of strikes or lockouts.[1] The case was
docketed as Certified NLRC Case No. 0403-85. In the latter case, one of the demands raised by AWU was that
Metro terminate the employment of respondents Adriano Yumul and ten (10) others (individual respondents), for
having organized, on 26 October 1984, the Associated Workers Union in Metroport ("AWUM") among the rank-and-file
employees of Metro, ostensibly as a local or chapter of AWU. AWU had earlier expelled individual respondents from
membership in AWU for disloyalty and, pursuant to the closed-shop provision of the existing AWU-Metro collective
bargaining agreement ("CHA"), sought the termination of their employment.

Metro initially resisted AWU's request to terminate the employment of individual respondents, contending that the
termination would be premature as individual respondents had not been afforded due process, and that the
termination would be violative of the status quo agreement in NLRC Case No. NCR-NS-10-288-84.[2] Metro, however,
eventually relented and suspended individual respondents after AWU -- despite the express prohibition in the Order
dated 3 April 1985 -- staged a strike against it. On 18 April 1985, Metro executed a Compromise Agreement
("Agreement") with AWU to end the strike, item No. 2 of which stipulated:

"At the instance of the union, [Metro] agrees to preventively suspend (individual respondents] effective immediately." [3]

The Agreement was attested to by then Deputy Labor Minister Carmelo Noriel.

As a result of Metro's implementation of the Agreement, individual respondents on 30 April 1985 filed a complaint
against Metro, docketed as NLRC Case No. NCR-4-1372-85. Metro in that case filed in turn a third-party complaint
against AWU and its officers.

Metro in April 1985 also filed a complaint for illegal strike with damages against AWU and its officers, docketed as
NLRC Case No. NCR-4-1341-85. On 21 June 1985, Labor Arbiter Ceferina Diosana in an Order directed Metro
provisionally to reinstate individual respondents pending resolution of the issues raised therein, with which Order
Metro complied.

On 15 July 1985, AWU filed a petition for injunction against Metro, docketed as NLRC Injunction Case No. 993,
praying for issuance of a temporary restraining order stopping the implementation of the Order of provisional
reinstatement, and for Metro's compliance with the Agreement providing for the suspension of individual
respondents. On 1 August 1985, the NLRC in an En Banc Resolution directed Metro to comply with the Agreement,
and Metro complied and re-suspended individual respondents. Individual respondents' petition before the NLRC for
preliminary mandatory injunction on 30 August 1985, praying "that pursuant to the Implementing Rules of
Batas Pambansa Blg. 130, [Metro] be ordered to pay their salaries and allowances from and after their initial
preventive suspension of thirty (30) days and until their actual reinstatement," was not acted upon.

All the above-mentioned cases, to wit: (a) Certified NLRC Case No. 0403-85 (NCR No. NS-10-288-84); (b) NLRC
Case No. NCR-4-1341-85; (c) NLRC Case No. NCR-4-1372-85; and (d) NLRC Injunction Case No. 993, were ordered
consolidated before the NLRC en banc.

On 4 September 1986, the NLRC rendered a consolidated Decision. In Certified NLRC Case No. 0403-85, the NLRC
ruled that: (a) respondent Metro cannot be compelled to fill up vacancies with AWU's recommendees; (b) respondent
Metro cannot be held liable for union busting, the issue of the medically impaired workers having become moot and
academic; and (c) the compulsory retirement of AWU's members who have reached the age of 60 years is a valid
exercise of management prerogative.

In NLRC Case No. NCR-4-1372-85, the NLRC, finding that AWU was a national union, and that individual
respondents have the right to organize themselves into a local chapter thereof, the formation of which was a protected
activity and could not be considered as disloyalty, held the suspension or dismissal of individual respondents as illegal
and, in relation to NLRC Injunction Case No. 993, ordered their reinstatement with backwages, to be paid solidarily by
AWU and respondent Metro.

In NLRC Case No. NCR-4-1341-85, the NLRC found the strike staged by AWU not illegal, holding that AWU was of
the belief, although erroneously, that it could validly stage a strike during the pendency of its motion for
reconsideration of the Minister's Order dated 3 April 1985enjoining a strike or lockout.

Both AWU and Metro filed separate motions for reconsideration of the consolidated Decision.

Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc. ("Marina"), by virtue of a Special Permit issued by
the Philippine Ports Authority, started operations as the arrastre operator at the Manila South Harbor vice Metro. On
November 1986, individual respondents in a Motion/Manifestation prayed that Marina be included as party-
respondent.

On 27 July 1987, the NLRC in a Resolution denied AWU's and Metro's motions for reconsideration of the consolidated
Decision dated 4 September 1986, but (acting on individual respondents' Motion/Manifestation) with the modification
limiting Metro's liability for backwages to wages accruing up to July 20, 1986 and ordering Marina to reinstate
individual respondents with backwages and allowances starting from 21 July 1986. Marinacomplied with the
Resolution by reinstating individual respondents through its payroll retroactive to 21 July 1986.

AWU thereafter in G.R. Nos. 87266-69 filed with the Court a Petition for Certiorari on 14 March 1989 praying for the
reversal of the decision of the NLRC in NLRC Case No. NCR-NS-10-288-84 and NLRC Injunction Case No. 993
(praying principally for reversal of the order holding that respondent Metro could not be compelled to fill up vacancies
with AWU's recommendees) and in NLRC Case No. NCR-4-1372-85 (praying chiefly for reversal of the order
reinstating the eleven [11] private respondents to their former positions with backwages payable solidarily by AWU
and respondent Metro). These cases (G.R. Nos. 87266-69) were assigned to the Third Division of the Court.

Marina, meantime, had gone to the Court on certiorari on 14 June 1988 in G.R. Nos. 81256-59 (entitled "Marina Port
Services, Inc. v. National Labor Relations Commission, Metro Port Service, Inc, Associated Workers Union [AWU-
PTGWO], and Associated Workers Union in Metro Port [AWUM]") protesting, on grounds of alleged denial of due
process, its inclusion by the NLRC as a party in NLRC Case No. NCR-4-1372-85 and its being required to reinstate
individual respondents with backwages. In dismissing these cases (G.R. Nos. 81256-59) on 3 August 1988, the Court
held that:

"x x x [t]he decision to include Marina in the questioned [NLRC Resolution dated 17 July 1987] is based on Par. '7' of
the Special Permit granted to Marina which states that 'Labor and personnel of previous operator, except those
positions of trust and confidence, shall be absorbed by the grantee.' Besides, the petitioner was able to file not only a
Motion for Reconsideration of the Questioned Resolution but also a Motion to Set Aside Motion/ Manifestation and
Remarks on the Comment of Metro Port. The lack of due process at the beginning, if any, was cured by the above
motions that the petitioner was able to file."[4]

On 13 April 1988, Metro in G.R. No. 82705 (entitled "Metro Port Services, Inc. v. National Labor Relations
Commission, Associated Workers Union-PTGWO, Marina Port Services, Inc., and Adriano Yumul [and 10 others]”)
went to this Court again and assailed the NLRC ruling in NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case
No. 993, Metro claimed that it should not have been held solidary liable with AWU because it had merely suspended
individual respondents pursuant to the Agreement dated 18 April 1985 it had executed with AWU and, later, had
merely obeyed the Resolution of the NLRC dated 1 August 1985 ordering Metro to re-suspend individual
respondents. In similarly dismissing Metro's petition, the Court in G.R. No. 82705, held:

"x x x Considering that the petitioner was a party to the compromise agreement with AWU which provided that 'at the
instance of the union, the company agrees to preventively suspend Adriano S. Yumul and eleven associates effective
immediately' and accordingly suspended the private respondents despite the suspension being contrary to law, the
petitioner should be made solidarily liable with AWU for the backwages and allowances that the private
respondents may have been entitled to during their suspension. The petitioner's liability, however, should not
extend to the time that respondent NLRC ordered it to re-suspend the private respondents."[5] (Underscoring supplied)

Judgment was entered in G.R. Nos. 81256-59 and G.R. No. 82705 on 23 September 1988 and 4 July 1989,
respectively, and the cases were remanded to the Labor Arbiter of origin for execution.
On 18 September 1989, the Labor Arbiter issued a writ of execution against Marina to reinstate individual respondents
and to pay them the amount of P154,357.00 representing salary adjustments. Marina moved to quash the writ of
execution questioning the award of P154,357.00, but without success. Marina thereafter appealed to the NLRC
assailing the Labor Arbiter's refusal to quash the writ of execution.

On 23 November 1989, Marina received an Order from the Executive Labor Arbiter dated 15 November 1989,
requiring the release of any garnished deposit from its bank, holding that no seasonable appeal from the 7 November
1989 Order denying Marina's motion to quash had been taken. Marina filed a Manifestation dated 23 November
1989, arguing that it had filed an appeal with the NLRC within the 10-day reglementary period.

On 6 December 1989, the Executive Labor Arbiter issued a writ of execution requiring Marina: (a) to reinstate
individual respondents and to pay them the amount of P154,357.00 representing salary adjustments; and (b) to
implement and honor the legality of the organization and registration of AWUM as the local chapter of AWU. Marina
then once more went to the Court in G.R. Nos. 91223-26 and filed a Petition for Certiorari to invalidate the writ of
execution, pleading that: (a) execution had been ordered without due regard for its right of appeal from the Labor
Arbiter's Order; and (b) execution would result in its being made to pay more than what is called for by the ruling of the
Court in G.R. No. 82705, where the Court affirmed the NLRC ruling that Marina "should be made solidarily liable with
AWU for the backwages and allowances that the private respondents may have been entitled to during their
suspension [although liability] should not extend to the time that respondent NLRC ordered it to re-suspend the private
respondents." These cases (G.R. Nos. 91223-26) were assigned to the First Division of the Court. On 20 December
1989, a temporary restraining order was issued by the First Division of the Court to enjoin the implementation of the
Executive Labor Arbiter's Order of 6 December 1989.

On 16 April 1990, G.R. Nos. 91223-26 were consolidated with G.R. Nos. 87266-69.

1. Deliberating on the instant Petition for Certiorari, the Court in G.R. Nos. 87266-69 considers that petitioner AWU
has failed to show grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in
Certified NLRC Case No. 0403-85 (NCR No. NS-10-288-84). The NLRC was correct there in holding that respondent
Metro cannot be compelled to fill up vacancies with AWU's recommendees, as the CBA between AWU and
respondent Metro granted the latter the right to "fill or not to fill-up vacancies"; that the issue of the medically impaired
employees had already been raised in another Notice of Strike filed by AWU against respondent Metro on 16
September 1985, and both parties had agreed to abide by the recommendation and decision of an examining
physician selected by them; and that the existing CBA grants respondent Metro the right to compulsorily retire any
member of AWU who had reached 60 years of age, which right has been exercised by Metro.

2. The NLRC, however, misappreciated the relevant facts in NLRC Case No. NCR-4-1372-85 and NLRC Injunction
Case No. 993. While it is true that AWUM as a local union, being an entity separate and distinct from AWU, is free to
serve the interest of all its members and enjoys the freedom to disaffiliate, such right to disaffiliate may be exercised,
and is thus considered a protected labor activity, only when warranted by circumstances. Generally, a labor union
may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom
periodimmediately preceding the expiration of the CBA.[6] Even before the onset of the freedom period (and despite
the closed-shop provision in the CBA between the mother union and management) disaffiliation may still be carried
out, but such disaffiliation must be effected by a majority of the members in the bargaining unit.[7] This happens when
there is a substantial shift in allegiance on the part of the majority of the members of the union. In such a case,
however, the CBA continues to bind the members of the new or disaffiliated and independent union up to
the CBA's expiration date.[8]

The record does not show that individual respondents had disaffiliated during the freedom period. The record does,
however, show that only eleven (11) members of AWU (individual respondents) had decided to disaffiliate from AWU
and form AWUM. Respondent Metro had about 4,000 employees, and around 2,000 of these were members of
AWU.[9] It is evident that individual respondents had failed to muster the necessary majority in order to justify their
disaffiliation. (In fact, it was only on 5 December 1985 that individual respondents were finally able to register an
independent union called Metroport Workers Union [MWU].[10] Even then, in the absence of allegation by AWUM
[MWU] of the exact number of its members, the Court presumes that only twenty percent [20%] of the employees of
Metro had joined MWU.[11]) Thus, in the referendum held on 7 January 1985at the PTGWO compound (where
representatives of the Ministry of Labor and Employment were present) to determine whether individual respondents
should be expelled from AWU, 1,229 members (out of 1,695 members present) voted for expulsion of individual
respondents.[12]

The individual respondents here have failed to present proof of their allegation that the 1,695 members of AWU were
not employees of respondent Metro alone; the Court therefore presumes that those who voted for their expulsion
were bona fide employees of respondent Metro. Moreover, individual respondents failed to allege that their expulsion
for disloyalty violated AWU's constitution and by-laws.[13] In sum, the attempted disaffiliation of the eleven (11) private
respondents from the petitioner mother union and the effort to organize either a new local of the mother union or an
entirely new and separate union, did not, under the circumstances of this case, constitute protected activities of the
eleven (11) individual respondents.

II

In view of the conclusion reached above in G.R. Nos. 87266-69, i.e., that AWU was justified in expelling from its
membership the eleven (11) individual respondents, the question now arises: how and to what extent does such
conclusion affect the liability of Metro, and Marina (as successor-employer)? It will be recalled that the Resolutions of
this Court in G.R. Nos. 81256-59 and 82705 dismissing the Petitions for Certiorari of both Metro and Marina assailing
the NLRC consolidated Decision of 4 September 1986 insofar as their (Metro's and Marina's) liability for reinstatement
and backwages of the individual respondents thereunder is concerned, became final and judgment entered therein,
sometime ago.

1. So far as concerns AWU's liability under the NLRC consolidated Decision, it should in the first place be pointed out
that the Court did not make any pronouncement either in G.R. Nos. 81256-59 or in G.R. No. 82705
concerning AWU's liability. In G.R. No. 82705, the Court merely acted on the issue raised by petitioner Metro: that
Metro should not be liable at all for reinstatement and backwages considering that Metro was only pressed into
suspending individual respondents because of AWU's threat to strike. In dismissing Metro's Petition, the Court in G.R.
No. 82705 in effect merely held that Metro, whatever the liability of AWU might be in respect of the expulsion of
individual respondents, could not escape liability by throwing all responsibility upon AWU; and that Metro could not
validly plead that it was under duress when it executed the Agreement with AWU providing for, among other things,
the preventive suspension of individual respondents.

The Court is, of course, aware that AWU was a party-respondent in both G.R. Nos. 81256-59 and 82705, and that
AWU had in fact filed a Comment in both G.R. Nos. 81256-59 and 82705. Nonetheless, the Court did not either in
G.R. Nos. 82156-59 or in G.R. No. 82705 in fact make a determination of the legality of AWU's expulsion of individual
respondents from its membership. The Court in G.R. No. 82705 held only that the liability of Metro was solidary in
nature, i.e., solidary with AWU, whatever AWU's liability might be; and it may be well to recall that solidary liability is
different from secondary liability. In G.R. Nos. 81256-59, the Court simply held that Marina was properly impleaded in
the underlying cases and could not be absolved from responsibility for reinstatement and backwages upon the ground
of denial of due process.

2. Thus, so far as concerns the liability of Metro and Marina for reinstatement with backwages of individual
respondents under the consolidated NLRC Decision, the preeminent fact is that the Court's Resolutions in G.R. Nos.
81256-59 and 82705 dismissing their Petitions are already final. The liabilities of Metro and Marina for reinstatement
and backwages under the consolidated NLRC Decision have become fixed and definite, with the modification decreed
by the Court in G.R. No. 82705 in so far as backwages were concerned. Thus, the conclusion we today have reached
in G.R. Nos. 87266-69 cannot benefit Metro and Marina and will not dissolve their already fixed and definite liabilities.

3. Turning to the question of the backwages due to the eleven (11) individual respondents, three (3) different time
periods are relevant here and must be distinguished from one another:

First Period: From 18 April 1985 to 21 June 1985: the Compromise Agreement between Metro and AWU to end the
strike, in which Metro agreed to preventively suspend the eleven (11) individual respondents, was effected on 18 April
1985 and implemented immediately. The Labor Arbiter on 21 June 1985 ordered Metro to reinstate provisionally the
eleven (11) individual respondents and Metro complied.

Second Period: From 1 August 1985 up to 27 July 1987: the NLRC, pursuant to the urging of AWU, ordered Metro to
re-suspend the individual respondents on 1 August 1985 and Metro again complied with this Order. Approximately
two (2) years later, on 27 July 1987, NLRC ordered Metro/Marina to reinstate the individual respondents
and Marina complied by reinstating the individual respondents on the payroll, i.e., paying their salaries although they
were not allowed to work on their jobs.

Third Period: From 28 July 1987 to 18 September 1989: on 18 September 1989, the Labor Arbiter issued the
questioned writ of execution ordering, among other things, Marina to reinstate formally the individual respondents.

Under the consolidated NLRC Decision, Metro/Marina are liable for the backwages accruing during the First and Third
Periods above indicated. In respect of the Second Period, however, the Court in G.R. No. 82705, as already pointed
out earlier, held that Metro/Marina should not be held liable for backwages accruing during that period. Strictly
speaking, in view of our conclusion above that AWU was justified in expelling individual respondents from its
membership, neither AWU nor Metro/Marina would be liable to individual respondents for the backwages accruing
during this Second Period.
4. In the interest of substantial and expeditious justice, however, we believe that the backwages accruing during the
Second Period should be paid and shared by AWU and by Metro/Marina, on a 50-50 basis. We here establish this
equitable allocation of ultimate responsibility in order to forestall further litigation between AWU and Metro/Marina and
individual respondents in respect of claims and countering claims for payment or reimbursement or contribution and to
put a definite end to this prolonged and costly confrontation among the several parties.

The equitable considerations which impel us to hold AWU liable for one-half (1/2) of the backwages during the Second
Period include:

(a) the fact that Metro had been reluctant to comply with the demand of AWU to terminate the services of individual
respondents and had wanted to give the latter procedural due process, but gave in to the demands of AWU;

(b) that AWU had pressed Metro very hard and indeed went on strike against Metro when Metro refused simply to
terminate the services of the individual respondents;

(c) that AWU, instead of waiting for final judicial determination of the legality of its expulsion of individual
respondents, chose to importune the NLRC to issue the order requiring the re-suspension of the individual
respondents on 1 August 1985, with which order Metro eventually complied.

5. Turning to Metro/Marina, we note that, apart from the finality of the Court's Resolutions in G.R. Nos. 81256-59 and
82705, there is independent basis for holding Metro/Marina responsible for reinstatement with backwages accruing
throughout the three (3) periods above indicated. The equitable considerations which lead us to hold Metro/Marina
responsible for one-half (1/2) of the backwages accruing during the above Second Period relate to the failure of Metro
to accord individual respondents procedural due process by giving them reasonable opportunity to explain their side
before suspending or dismissing them. Such dismissal was accordingly in violation of the Labor
Code.13 Notwithstanding AWU's closed-shop clause in the CBA, Metro was bound to conduct its own inquiry to
determine the existence of substantial basis for terminating the employment of individual respondents. [14] That AWU,
disregarding the Minister of Labor and Employment's express order, had threatened to go on strike, and indeed
actually went on strike, if Metro had continued with the services of individual respondents, did not relieve Metro from
the duty to accord procedural due process to individual respondents. [15]

6. The portion of the Writ of Execution issued by the Executive Labor Arbiter requiring Marina to pay salary
differentials in the total amount of P154,357.00 accruing during the period from 20 July 1986 up to October 1989,
should be modified to conform with the above legal and equitable allocation of liability for the backwages which had
accrued during the three (3) Periods above mentioned during which the individual respondents were suspended. The
salary differentials, as we understand it, refer to increases in the prevailing wages accruing partly during the Second
Period and partly during the Third Period as above indicated. In other words, the salary differentials accruing from 20
July 1986 up to 27 July 1987 should be borne on a 50-50 basis by AWU on the one hand and Metro/Marina on the
other. The salary differentials accruing from 28 July 1987 up to 18 September 1989 shall be borne exclusively
by Marina.

7. The portion of the Writ of Execution issued by the Executive Labor Arbiter which requires Marina to recognize the
legality of the organization and registration of AWUM (now MWU) as a local chapter of AWU, is inconsistent with the
conclusions we have set forth in Part I above, and must be deleted. What was in fact eventually established by
individual respondents was a separate, independent union called Metro Port Workers Union (MWU) which was not
entitled, during the time periods here relevant, to recognition as the bargaining unit in CBA negotiations.

ACCORDINGLY, the Court Resolved:

In G.R. Nos. 87266-69:

(a) to DISMISS the Petition for Certiorari in respect of Certified NLRC Case No. 0403-855 (NCR-NS-10-288-84) for
lack of merit; and

(b) to GRANT partially the Petition for Certiorari in respect of NLRC Case No. NCR-4-1372-85 and NLRC Injunction
Case No. 993. The consolidated Decision of the NLRC dated 4 September 1986 ordering AWU and Marina to
pay solidarily the backwages of individual respondents, as well as the NLRC Resolution of 27 July 1987
denying AWU's and Metro's Motions for Reconsideration, are hereby MODIFIED so as to require AWU and
Metro/Marina to pay, on a 50-50 basis, to individual respondents the backwages which accrued during the Second
Period, i.e., from 1 August 1985 up to 27 July 1987.

In G.R. Nos. 91223-26:

to GRANT partially the Petition. The Order of the Executive Labor Arbiter dated 6 December 1989 is hereby
MODIFIED so as (a) to require AWU and Metro/Marina on a 50-50 basis to pay the salary differentials accruing during
the period from 20 July 1986 up to 27 July 1987, and Marina alone to pay the salary differentials accruing from 28 July
1987 up to 31 October 1989, and so as (b) to delete the portion requiring Marina to recognize AWUM (MWU) as the
local chapter of AWU. The Temporary Restraining Order issued by the Court on 20 December 1989 is hereby
LIFTED so as to permit enforcement of the Order of the Executive Labor Arbiter as herein modified.

No pronouncement as to costs.

SO ORDERED.