IV- THE RIGHT TO SELF-ORGANIZATION:

CONCEPT OF THE RIGHT TO SELF ORGANIZATION

This is a key article that offers an inclusionary definition of the right to self-organization (S.O.) by saying not
what it is but what it includes. It includes at least two rights: (1) the right to form, join or
assist labor organizations, and (2) the right to engage in lawful concerted activities. The “labor organization”
may be a union or association of employees, as mentioned in Article 212(g). Its purposes
may be collective bargaining (as stated in this Article) or dealing with the employer [as stated in Article
212(g)]. The right to form labor organization is twin to the right to engage in concerted activities.
It is worth noting, finally, that the right to self-organization is granted not only to employees but to
“workers,” whether employed or not. In fact, constitutionally speaking, the right to form associations or
societies is a right of the “people,” whether workers or not.

A. WHO ARE ENTITLE D TO SELF-ORGANIZATION?

ART. 253. [243] Coverage and Employees' Right to Self-Organization.195 All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the right to self-organization and to form, join,
or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and protection.

AMBULANT – MOVING OR SCATTERING, not confined in specific place but having large scope like the
messanger

INTERMITTENT- seasonal employees

ITINERANT – travelling form place to place

What is the exception?

Who cannot exercise?- the managerial, confidential

B. RESTRICTIONS ON SOME EMPLOYEES IN UNIONIZATION

1. Civil Service Employees

ART. 254. [244] Right of Employee in the Public Service. 196 Employees of government corporations
established under the Corporation Code shall have the right to organize and to bargain collectively with their
respective employers. All other employees in the civil service shall have the right to form associations for
purposes not contrary to law.

2. Managerial Employees

Who are managerial employees? Those vested with powers or prerogatives to lay down or execute
management policies, to hire, transfer , susupend employees.

Supervisory employees_ who recommends managerial functions or actions. Where the exercise of such right
is not routinary or clerical in character.

1
ART. 255. [245] Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory
Employees. 197 Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-
and-file legitimate labor organizations of their own. The rank and file union and the supervisors' union
operating within the same establishment may join the same federation or national union.

Are supervisory employee’s part of managerial staff?

STANDARD CHARTERED BANK EMPLOYEES UNION (SCBEU-NUBE) ,

petitioner, vs. STANDARD CHARTERED BANK and ANNEMARIE
DURBIN, in her capacity as Chief Executive O6cer, Philippines,
Standard Chartered Bank, respondents.

FACTS: Petitioner and the Standard Chartered Bank (Bank) began negotiating for a new Collective
Bargaining Agreement (CBA) in May 2000 as their 1998-2000 CBA already expired. Due to a deadlock in the
negotiations, petitioner =led a Notice of Strike prompting the Secretary of Labor and Employment to
assume jurisdiction over the labor dispute.
On May 31, 2001, Secretary Patricia A. Sto. Tomas of the Department of Labor
and Employment (DOLE) issued an Order with the following dispositive portion:

WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank and the Standard Chartered
Bank Employees Union are directed to execute their collective bargaining agreement effective 01
April 2001 until 30 March 2003 incorporating therein the foregoing dispositions and the
agreements they reached in the course of negotiations and conciliation. All other submitted
issues that were not passed upon are dismissed. The charge of unfair labor practice for bargaining
in bad faith and the claim for damages relating thereto are hereby dismissed for lack of merit.
Finally, the charge of unfair labor practice for gross violation of the economic provisions of the CBA
is hereby dismissed for want of jurisdiction. SO ORDERED.
- 3
Both petitioner and the Bank =led their respective motions for reconsideration,
which were denied by the Secretary per Order dated August 30, 2001
BOTHE WERE DISMISSED.
resolution is an appeal by certiorari =led by petitioner under Rule 45 of the
Rules of Court, assailing the Decision 1 dated October 9, 2002 and Resolution 2 dated January 26, 2004
issued by the Court of Appeals (CA), dismissing their petition and a6rming the Secretary of Labor and
Employment's Orders dated May 31, 2001 and August 30, 2001.

The resolution of this case has been overtaken by the execution of the parties'
2003-2005 CBA. Courts will decide a question otherwise moot if it is capable of repetition yet evading review
The CBA provisions in dispute are the exclusion of certain employees from the
appropriate bargaining unit and the adjustment of remuneration for employees servingin an acting capacity
for one month.
The renewal sought by SCBEU-NUBE, they only wanted the exclusion to apply only to the following
employees from the appropriate bargaining unit – all managers who are vested with the right to hire and fire

2
employees, confidential employees, those with access to labor relations materials, Chief Cashiers, Assistant
Cashiers, personnel of the Telex Department and one Human Resources (HR) staff.
these are all considered as confidential employees.
ISSUE : In this case, the question that needs to be answered is whether the Bank's Chief
Cashiers and Assistant Cashiers, personnel of the Telex Department and HR staff are
confidential employees, such that they should be excluded.
The Secretary, however, maintained the previous exclusions because petitioner failed to show that the
employees sought to be removed from the list qualify for exclusion.

- With regard to the remuneration of employees working in an acting capacity, it was petitioner's position
that additional pay should be given to an employee who has been serving in a temporary/acting capacity
for one week. The Secretary likewise rejected petitioner's proposal and instead, allowed additional pay for
those who had been working in such capacity for one month

The Secretary's disposition of the issues raised by petitioner were a6rmed by

the CA. 13 The Court sustains the CA.

RULING :
The disquali=cation of managerial and con=dential employees from joining a bargaining unit for rank and
=le employees is already well-entrenched in jurisprudence. While Article 245 of the Labor Code limits the
ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has
extended this prohibition to con=dential employees or those who by reason of their positions or
nature of work are required to assist or act in a FIduciary manner to managerial
employees and hence, are likewise privy to sensitive and highly confidential records.

QUALI=CATION OF BANK CASHIERS AS CON=DENTIAL EMPLOYEES

National Association of Trade Unions (NATU) — Republic Planters Bank Supervisors Chapter v. Torres 16
declared that they are con=dential employees having control,custody and/or access to con=dential
matters, e.g., the branch's cash position,statements of =nancial condition and therefore, disquali=ed
fromjoining or assisting a union; or joining, assisting or forming any other labor organization.

Golden Farms, Inc. v. Ferrer-Calleja 18 meanwhile stated that "con=dential employees such as accounting
personnel, radio and telegraph operators who, having access to con=dential information, may become the
source of undue advantage. Said employee(s) may act as spy or spies of either party to a collective
bargainingagreement". 19

Finally, in Philips Industrial Development, Inc. v. National Labor Relations Commission, 20 the Court
designated personnel staff, in which human resources staff may be quali=ed, as con=dential employees
because by the very nature of their functions, they assist and act in a con=dential capacity to, or have access
to con=dential matters of, persons who exercise managerial functions in the =eld of labor
relations.

Petitioner insists that the foregoing employees are not con=dential employees; however, it failed to buttress
its claim. Aside from its generalized arguments, and despite the Secretary's =nding that there was no
evidence to support it, petitioner still failed to substantiate its claim. Petitioner did not even bother to

3
state the nature of the duties and functions of these employees, depriving the Court of any basis on which
it may be concluded that they are indeed con=dential employees. As aptly stated by the
CA:
While We agree that petitioner's proposed revision is in accordance with
the law, this does not necessarily mean that the list of exclusions enumerated in the 1998-2000 CBA is
contrary to law. As found by public respondent, petitioner failed to show that the employees sought to be
removed from the list of exclusions are actually rank and =le employees who are not managerial or
con=dential in status and should, accordingly, be included in the appropriate bargaining unit.
Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex department and one
(1) HR Staff have mutuality of interest with the other rank and =le employees, then they
are rightfully excluded from the appropriate bargaining unit. . . . 21 (Emphasis supplied)

All covenanted and assistant officers (now called National Officers)

B. One confidential secretary of each of the:

1. Chief Executive, Philippine Branches
2. Deputy Chief Executive/Head, Corporate Banking Group
3. Head, Finance
4. Head, Human Resources
5. Manager, Cebu
6. Manager, Iloilo
7. Covenanted Officers provided said positions shall be filled by new recruits.
C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in any other branch that the
BANK may establish in the country.
D. Personnel of the Telex Department
E. All Security Guards
F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as amended by R.A.
6715, casuals or emergency employees; and
G. One (1) HR Staff
But then in the renewal sought by SCBEU-NUBE, they only wanted the exclusion to apply only to the
following employees from the appropriate bargaining unit – all managers who are vested with the right to
hire and fire employees, confidential employees, those with access to labor relations materials, Chief
Cashiers, Assistant Cashiers, personnel of the Telex Department and one Human Resources (HR) staff. –
SCBEU-NUBE also averred that employees assigned in an acting capacity for at least a week should be given
salary raise.
A notice of strike was given to the Department of Labor due to this deadlock. Then DOLE Secretary Patricia
Sto. Tomas issued an order dismissing the Union’s plea.

4
ISSUE: Whether or not the confidential employees sought to be removed from the exclusion as appropriate
bargaining unit by SCBEU-NUBE holds ground.
HELD: No. Whether or not the employees sought to be excluded from the appropriate bargaining unit are
confidential employees is a question of fact, which is not a proper issue in a petition for review under Rule
45 of the Rules of Court. SCBEU-NUBE insists that the foregoing employees are not confidential employees;
however, it failed to buttress its claim. Aside from its generalized arguments, and despite the Secretary’s
finding that there was no evidence to support it, SCBEU-NUBE still failed to substantiate its claim. SCBEU-
NUBE did not even bother to state the nature of the duties and functions of these employees, depriving
the Court of any basis on which it may be concluded that they are indeed confidential employees.
With regards to the salary increase of employees in acting capacities, the Supreme Court agreed with the
Court of Appeals that a restrictive provision would curtail management’s prerogative, and at the same time,
recognized that employees should not be made to work in an acting capacity for long periods of time
without adequate compensation. The usual rule that “employees in acting capacities for at least a month
should be given salary raise” is upheld.

3. Supervisory Employees

ART. 255. [245] Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory
Employees. 197 Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-
and-file legitimate labor organizations of their own. The rank and file union and the supervisors' union
operating within the same establishment may join the same federation or national union.

4. Members and Owners of Cooperatives

BENGUET ELECTRIC COOPERATIVE, INC., petitioner, vs. HON. PURA

FERRER-CALLEJA

DOCTRINES:

LABOR LAW; LABOR RELATIONS; RIGHT TO SELF-ORGANIZATION; NOT AVAILABLE TO EMPLOYEES OF A

COOPERATIVE WHO AT THE SAME TIME IS A MEMBER-OWNER THEREOF

RATIONALE: that members of cooperative cannot join a labor union for purposes of collective bargaining
was based on the fact that as members of the cooperative they are co-owners thereof

-It is the fact of ownership of the cooperative, and not involvement in the management thereof, which
disqualifies a member from joining any labor organization within the cooperative. All members thereof
cannot form, assist or join a labor organization for the purpose of collective bargaining.

Cooperative vs Corporation

Its owners and/or members are the ones who run and operate the business while the others are its
employees. As above stated, irrespective of the number of shares owned by each member they are entitled
to cast one vote each in deciding upon the affairs of the cooperative. Their share capital earn limited
interest. They enjoy special privileges as — exemption from income tax and sales taxes, preferential light
to supply their products to State agencies and even exemption from the minimum wage laws. An employee

5
therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective
bargaining for certainly an owner cannot bargain with himself or his co-owners.

FACTS :

June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations (hereinafter
referred to as BWLU-ADLO) =led a petition for direct certi=cation as the sole and exclusive bargaining
representative of all the rank and =le employees of Benguet Electric Cooperative, Inc. (hereinafter referred
to as BENECO) BENECO has in its employ two hundred and fourteen (214) rank and =le employees; that
one hundred and ninety-eight (198) or 92.5% of these employees have supported the =ling of the petition;

An opposition to the petition was =led by the Beneco Employees Labor Union (hereinafter referred to as
BELU) contending that it was certi=ed as the sole and exclusive bargaining representative of the subject
workers pursuant to an order issued by the med-arbiter on October 20, 1980; that pending resolution by
the National Labor Relations Commission are two cases it =led against BENECO involving bargaining
deadlock and unfair labor practice; and, that the pendency of these cases bars any representation question.

BENECO, on the other hand, =led a motion to dismiss the petition claiming that it is a non-pro=t electric
cooperative engaged in providing electric services to its members and patron-consumers in the City of
Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not
eligible to form, join or assist labor organizations of their own choosing because they are members and
joint owners of the cooperative

On September 2, 1985 the med-arbiter issued an order giving due course to the
petition for certi=cation election AND found that there are thirty-seven (37) employees who are not members
and without any involvement in the actual ownership of the cooperative.

choices:
1. BENECO WORKERS LABOR UNION-ADLO
2. BENECO EMPLOYEES LABOR UNION
3. NO UNION
The payroll for the month of June 1980 shall be the basis in determining the qualified voters who may
participate in the certification election to be conducted.

-BENECO =led with this Court a petition for certiorari with prayer for preliminary injunction and or
restraining order,

BENECO and insisted that only these employees are eligible to vote in the certi=cation election. Canvass of
the votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast

- that the thirty seven (37) employees who were originally nonmembers of the cooperative can still vote in
the certi=cation election since they were only "forced and compelled to join the cooperative on pain of
disciplinary action,"

Med-arbiter dismissed THE PROTEST

Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja aNrmed the med-arbiter's order and certi=ed
BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO Respondent
director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor

6
union of their own choice for purposes of collective bargaining would amount to a patent violation of their
right to selforganization. She points out that: "albeit a person assumes a dual capacity as rank and =le
employee and as member of a certain cooperative..

BELU FURTHER claims that since membership in petitioner cooperative is only nominal, the rank and =le
employees who are members thereof should not be deprived of their right to self-organization.

ISSUE:

whether or not member-consumers who are employees of BENECO could form, assist or join a labor union.
The main issue in this case is whether or not respondent director committed grave abuse of discretion in
certifying respondent BELU as the sole and exclusive bargaining representative of the rank and file
employees of BENECO.

RULING :

CONTENTIONS UNTENABLE.

As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with
himself or his coowners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the
fact of ownership of the cooperative, and not involvement in the management thereof, which disquali=es a
member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their
participation in the actual management of the cooperative, all members thereof cannot form, assist or join
a labor organization for the purpose of collective bargaining.

2ND ISSUE ON THE NOMINAL OWNERSHIP:

The above contention of respondent union is based on the erroneous presumption that membership in a
cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise
some of the rights and privileges given to ordinary corporations provided under existing laws, such
cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No.
175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives have
rights and obligations different from those of stockholders of ordinary corporations. It was precisely because
of the special nature of cooperatives,

However, the minutes of the certi=cation election [Annex "C" of the Petition: Rollo, p. 28] show that a total
of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent
union. Thus, even if We agree with respondent union's contention that the thirty seven (37) employees
who were originally nonmembers of the cooperative can still vote in the certi=cation election since they
were only "forced and compelled to join the cooperative on pain of disciplinary action," the
certi=cation election held on October 1, 1986 is still null and void since even those who
were already members of the cooperative at the time of the issuance of the medarbiter's order, and
therefore cannot claim that they were forced to join the union, were
allowed to vote in the election. Llcd Article 256 of the Labor Code provides, among others, that:
To have a valid, election, at least a majority of all eligible voters in the unit must
have cast their votes. The labor union receiving the majority of the valid votes
cast shall be certi=ed as the exclusive bargaining agent of all workers in the unit . . . [Emphasis supplied.]
In this case it cannot be determined whether or not respondent union was duly

7
elected by the eligible voters of the bargaining unit since even employees who are
ineligible to join a labor union within the cooperative because of their membership therein were allowed
to vote in the certification election. Considering the foregoing, the Court =nds that respondent director
committed grave abuse of discretion in certifying respondent union as the sole and exclusive
bargaining representative of the rank and file employees of petitioner cooperative. WHEREFORE, the
petition is hereby GRANTED and the assailed resolution of respondent director is ANNULLED. The
certi=cation election conducted on October 1, 1986, is SET ASIDE. The Regional ONce No. 1 of San
Fernando, La Union is hereby directed to immediately conduct new certi=cation election proceedings
among the rank and file employees of the petitioner who are not members of the cooperative. LLjur
SO ORDERED

5. Religious Objectors

EXCEPTION: RELIGIOUS OBJECTORS; IGLESIA NI

CRISTO MEMBERS
Under the Industrial Peace Act (1953) which preceded the Labor Code (and even under the present Code)
the employer and the union could enter into a “closed shop” agreement which would compel employees
to become union workers as a condition of continued employment. But in 1961 R.A. No. 3350 was passed
to exempt from such compulsory union membership the followers of any religious sect (such as then Iglesia
ni Cristo) whose teachings forbid membership in labor unions. The constitutionality of R.A. No. 3350 was
upheld by the Supreme Court in Victoriano v. Elizalde. It may not be amiss to point out here that the free
exercise of religious profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former.

BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE

WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, defendant-appellant

FACTS :

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the
"Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as
Company) since 1958. As such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective bargaining agreement
containing a closed shop provision which reads as follows "Membership in the Union shall be required as a
condition of employment for all permanent employees workers covered by this Agreement."

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment
by Republic Act No. 3350, the employer was not precluded "from making an agreement with a labor
organization to require as a condition of employment membership therein, if such labor organization is the
representative of the employees." On June 18, 1961, however, Republic Act No. 3350 was enacted,
introducing an amendment to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: .
. . "but such agreement shall not cover members of any religious sects which prohibit aIliation of their
members in any such labor organization".

8
Being a member of a religious sect that prohibits the aIliation of its members with any labor organization,
Appellee presented his resignation to appellant Union in 1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to the
Company asking the latter to separate Appellee from the service in view of the fact that he was resigning
from the Union as a member. The management of the Company in turn notiJed Appellee and his counsel
that unless the Appellee could achieve a satisfactory arrangement with the Union, the Company would be
constrained to dismiss him from the service. This prompted Appellee to Jle an action for injunction, docketed
as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin the Company and the
Union from dismissing Appellee. In its answer, the Union invoked the "union security clause" of the
collective bargaining agreement; assailed the constitutionality of Republic Act No. 3350; and contended
that the Court had no jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d)
and (e). 2 Upon the facts agreed upon by the parties during the pre-trial conference,

CONTENTION ON THE CONSTITUTIONALITY OF RA 33350

that the Act infringes on the fundamental right to form lawful associations; that "the very phraseology of
said Republic Act 3350, that membership in a labor organization is banned to all those belonging to such
religious sect prohibiting aIliation with any labor organization" 4 , "prohibits all the members of a given
religious sect from joining any labor union if such sect prohibits aIliations of their members
thereto" 5 ; and, consequently, deprives said members of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to Article III,
Section 1 (6) of the 1935 Constitution.

Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for
impairing the obligation of contracts in that, while the Union is obliged to comply with its collective
bargaining agreement containing a "closed shop provision,"

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects which
ban their members from joining labor unions, in violation of Article III, Section 1 (7) of the 1935 Constitution;
and while said Act unduly protects certain religious sects, it leaves no rights or protection to labor
organizations.

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause of
the Constitution, it being a discriminatory legislation, inasmuch as by exempting from the operation of
closed shop agreement the members of the "Iglesia ni Cristo", furthermore, asserted that a "closed shop
provision" in acollective bargaining agreement cannot be considered violative of religious freedom, as
to call for the amendment introduced by Republic Act No. 3350; 12 and that unless
Republic Act No. 3350 is declared unconstitutional, trade unionism in this country
would be wiped out as employers would prefer to hire or employ members of the
Iglesia ni Cristo in order to do away with labor organizations.

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350does not violate the right
to form lawful associations, for the right to join associations includes the right not to join or to resign from a
labor organization, if one's conscience does not allow his membership therein, and the Act has given
substance to such right by prohibiting the compulsion of workers to join labor organizations; 14 that said Act
does not impair the obligation of contracts for said law formed part of, and was
incorporated into, the terms of the closed shop agreement; 15 that the Act does not violate the

9
establishment of religion clause or separation of Church and State, for Congress, in enacting said law,
merely accommodated the religious needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized labor with the constitutional right of
an individual to freely exercise his chosen religion; that the constitutional right to the free exercise of
one's religion has primacy and preference over union security measures which are merely contractual 16 ;
that said Act does not violate the constitutional provision of equal protection, for the classiJcation of
workers under the Act depending on their religious tenets is based on substantial distinction, is germane to
the purpose of the law, and applies to all the members of a given class; 17 that said Act, Jnally, does not
violate the social justice policy of the Constitution, for said Act was enacted precisely to equalize
employment opportunities for all citizens in the midst of the diversities of their religious beliefs.

THE COURT, Both the Constitution and Republic Act No. 875 recognize freedom of
association.

CONCEPT OF RIGHT :

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 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.

The law does not enjoin an employee to sign up with any association.

There is an exception to the closed shop agreement : What the exception provides, therefore, is that
members of said religious sects cannot be compelled or coerced to join labor unions even when said unions
have closed shop agreements with the employers; that in spite of any closed shop agreement, members
of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that
they are not members of the collective bargaining union.

Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract,
speciJcally, the "union security clause" embodied in its Collective Bargaining Agreement with the Company,
by virtue of which "membership in the union was required as a condition for employment for all
permanent employees workers". This agreement was already in existence at the time Republic Act No. 3350
was enacted of June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the
agreement. But by reason of this amendment, Appellee, as well as others similarly situated, could no longer
be dismissed from his job even if he should cease to be a member, or disaIliate from the
Union, and the Company could continue employing him notwithstanding his disaIliation from the Union.

exempting the members of said religious sects from coverage of union

security agreements — is reasonable.

10
It is certain that not every conscience can be accommodated by all the laws of the land; but when general
laws conOict with scrupples of conscience,exemptions ought to be granted unless some "compelling state
interest" intervenes.

KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local

Chapter No. 1027), petitioner, vs. THE HONORABLE BLR DIRECTOR
PURA FERRER CALLEJA, MEAT AND CANNING DIVISION UNIVERSAL
ROBINA CORPORATION and MEAT AND CANNING DIVISION NEW
EMPLOYEES AND WORKERS UNITED LABOR ORGANIZATION ,
respondents.

FACTS:

Contending unions:

a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity);

b) Meat and Canning Division New Employees and Workers United Labor
Organization (or "NEW ULO" for brevity);

c) No Union

shall be the bargaining unit of the daily wage rank and Dle employees in the Meat
and Canning Division of the company. From 1984 to 1987 TUPAS was the sole and exclusive collective
bargaining representative of the workers in the Meat and Canning Division of the Universal Robina
Corporation, with a 3-year collective bargaining agreement (CBA) which was to expire on November 15,
1987.

Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS Dled an amended notice of
strike on September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new
CBA with it.

On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect,
registered as a labor union.

On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting
in an agreement to return to work and for the parties to negotiate a new CBA.

The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the, daily wage rank and
Dle employees numbering 191," Dled a petition for a certiDcation election at the Bureau of Labor Relations
(Annex A).

TUPAS moved to dismiss the petition for being defective in form and that themembers of the NEW ULO
were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to aKliate with any
labor union. It also accused the company of using the NEW ULO to defeat TUPAS' bargaining rights (Annex
B).

11
On November 17, 1987, the Med-Arbiter ordered the holding of a certiDcation election within 20 days (Annex
C).

TUPAS appealed to the Bureau of Labor Relations (BLR). In the meantime, it was able to negotiate a new 3-
year CBA with ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990.On
January 27, 1988, respondent BLR Director Calleja dismissed the appeal (Annex D). TUPAS' motion for
reconsideration (Annex E) was denied on March 17, 1988 (Annex F). On April 30, 1988, it Dled this petition
alleging that the public respondent acted in excess of her jurisdiction and with grave abuse of discretion in
affirming the Med-Arbiter's order for a certification election

ISSUE:

WHETHER OR NOT THE BLR ACTED IN EXCESS OF HER JURISDICTION AND WITH GADALEJ IN AFFIRMING
THE MED ARBITER’S ORDER FOR A CERTIFICATION ELECTION.

RULING :

The public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87.
This Court's decision in Victoriano vs. Elizalde Rope Workers' Union,59 SCRA 54, upholding the right of
members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs,
does not bar the members of that sect from forming their own union. The public respondent
correctly observed that the "recognition of the tenets of the sect . . . should not infringe on the basic right of
self-organization granted by the constitution to workers, regardless of religious affiliation."

The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60- day freedom period of
the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to
majority status, by FIling a timely petition for certification election on October 13, 1987 before TUPAS' old
CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3,
1987. As pointed out by Med-Arbiter Abdullah, a "certiDcation election is the best forum in
ascertaining the majority status of the contending unions wherein the workers themselves can freely choose
their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted
with unfairness, this Court will not thwart the holding of a certiDcation election

Petition for certiorari is denied,

6. Subversive Employees

What are subversive organizations?

ART. 250.

(e) No labor organization shall knowingly admit as members or continue in membership any individual who
belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity;

ART. 250. [241] Rights and Conditions of Membership in a Labor Organization. 192 The following are the
rights and conditions of membership in a labor organization:

12
(a) No arbitrary or excessive initiation fees shall be required of the members of a legitimate labor
organization nor shall arbitrary, excessive or oppressive fine and forfeiture be imposed;

(b) The members shall be entitled to full and detailed reports from their officers and representatives of all
financial transactions as provided for in the constitution and by-laws of the organization;

(c) The members shall directly elect their officers in the local union, as well as their national officers in the
national union or federation to which they or their local union is affiliated, by secret ballot at intervals of
five (5) years. No qualification requirement for candidacy to any position shall be imposed other than
membership in good standing in subject labor organization. The secretary or any other responsible union
officer shall furnish the Secretary of Labor and Employment with a list of the newly-elected officers,
together with the appointive officers or agents who are entrusted with the handling of funds within thirty
(30) calendar days after the election of officers or from the occurrence of any change in the list of officers
of the labor organization;

(d) The members shall determine by secret ballot, after due deliberation, any question of major policy
affecting the entire membership of the organization, unless the nature of the organization or force majeure
renders such secret ballot impractical, in which case, the board of directors of the organization may make
the decision in behalf of the general membership;

(e) No labor organization shall knowingly admit as members or continue in membership any individual who
belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity;

(f) No person who has been convicted of a crime involving moral turpitude shall be eligible for election as a
union officer or for appointment to any position in the union;

(g) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions
in its behalf or make any disbursement of its money or funds unless he is duly authorized pursuant to its
constitution and by-laws;

(h) Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed
by the officer or agent making the collection and entered into the record of the organization to be kept and
maintained for the purpose;

(i) The funds of the organization shall not be applied for any purpose or object other than those expressly
provided by its constitution and by-laws or those expressly authorized by written resolution adopted by the
majority of the members at a general meeting duly called for the purpose;

(j) Every income or revenue of the organization shall be evidenced by a record showing its source, and
every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is
made, which shall state the date, place and purpose of such payment. Such record or receipt shall form
part of the financial records of the organization

Any action involving the funds of the organization shall prescribe after three (3) years from the date of
submission of the annual financial report to the Department of Labor and Employment or from the date
the same should have been submitted as required by law, whichever comes earlier: Provided, That this
provision shall apply only to a legitimate labor organization which has submitted the financial report
requirements under this Code: Provided, further, That failure of any labor organization to comply with the

13
periodic financial reports required by law and such rules and regulations promulgated thereunder six (6)
months after the effectivity of this Act shall automatically result in the cancellation of union registration of
such labor organization;

(k) The officers of any labor organization shall not be paid any compensation other than the salaries and
expenses due to their positions as specifically provided for in its constitution and by-laws, or in a written
resolution duly authorized by a majority of all the members at a general membership meeting duly called
for the purpose. The minutes of the meeting and the list of participants and ballots cast shall be subject to
inspection by the Secretary of Labor or his duly authorized representatives. Any irregularities in the
approval of the resolutions shall be a ground for impeachment or expulsion from the organization;

(l) The treasurer of any labor organization and every officer thereof who is responsible for the account of
such organization or for the collection, management, disbursement, custody or control of the funds,
moneys and other properties of the organization, shall render to the organization and to its members a
true and correct account of all moneys received and paid by him since he assumed office or since the last
day on which he rendered such account, and of all bonds, securities and other properties of the
organization entrusted to his custody or under his control. The rendering of such account shall be made:

(1) At least once a year within thirty (30) days after the close of its fiscal year; (2) At such other times as
may be required by a resolution of the majority of the members of the organization; and (3) Upon vacating
his office. The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished
the Secretary of Labor.

(m) The books of accounts and other records of the financial activities of any labor organization shall be
open to inspection by any officer or member thereof during office hours;

(n) No special assessment or other extraordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members in a general
membership meeting duly called for the purpose. The secretary of the organization shall record the minutes
of the meeting including the list of all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the
president.

o) Other than for mandatory activities under the Code, no special assessments, att’s fees, negotiation fees
or any other extra-ordianry fees that may be checked-off from any amount due to an employee without an
individual written authorization duly signed by the employee. The authorization should specifically state
the amount, purpose and beneficiary of the deduction; and

(p) It shall be the duty of any labor organization and its officers to inform its members on the provisions of
its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system and all
their rights and obligations under existing labor laws.

For this purpose, registered labor organizations may assess reasonable dues to finance labor relations
seminars and other labor education activities.

Any violation of the above rights and conditions of membership shall be a ground for cancellation of union
registration or expulsion of officers from office, whichever is appropriate. At least thirty percent (30%) of the
members of a union or any member or members specially concerned may report such violation to the

14
Bureau. The Bureau shall have the power to hear and decide any reported violation to mete the appropriate
penalty.

Criminal and civil liabilities arising from violations of above rights and conditions of membership shall
continue to be under the jurisdiction of ordinary courts.

7. Crime- convicted Employees

Article 250

(f) No person who has been convicted of a crime involving moral turpitude shall be eligible for election as a
union officer or for appointment to any position in the union;

WHAT IS MORAL TURPITUDE? "Moral turpitude" has been defines as an act of baseness, vileness, or
depravity in the private and social duties which a man owes his fellow men, or to society in general, contrary
to the accepted and customary rule of right and duty between man and man (Traders 7 General Ins.
Co. vs.Rusell, Tex. Civ. App., 99 S.W. [2d] 1079) or conduct contrary to justice, honesty, modesty, or good
morals (Marah vs. State Bar of California, 210 Cal. 303, 219 P. 583).

GIVE EXAMPLES.

IS MALA PROHBITA , INVOLVES MORAL TURPITUDE?

BP 22 IS A CRIME NOT INVOLVING MORAL TURPITUDE AS ALREADY BEEN HELD.

NEGLIGENCE RESULTING TO DAMAGE TO PROPERTY

Tak VS Republic (106 Phil. 730)

G.R. No. L-13017 December 23, 1959 In the Matter of the Petition of TAK NG to be admitted the Citizen
of the Philippines. TAK NG, Petitioner-Appellant, vs. REPUBLIC OF THE PHILIPPINES, oppositor-appellee.

FACTS:

This is an appeal taken from decision dated August 10, 1957 of the Court of First Instance of Manila (in Nat.
Case No. 29932), denying petitioner's application for naturalization.c

It is appears the petitioner Tak Ng, also known as Tedy Ng, was born in Manila in January 9, 1922. He resided
in the Philippines since birth and has never gone abroad. He is employed as a salesman in the St. George
Grocery and Cold Store Inc., at 242 Quezon Boulevard, Manila, with a salary of more than P2,200.00 a year.
He was single when filed his petition for naturalization on June 15, 1956, although since 1951, he had been
cohabiting extramaritally with Leonarda Cabacungan, with whom he had 3 children, namely, Adelaida,
Anthony, and Alfred, all surnamed Ng. He finally married on her May 15, 1957. He was able to secure
clearance from the Manila Police Department, the City Fiscal's Office, the NBI, the Bureau of Prisons, the
NICA, the Bureau of Immigration, the Court of First Instance of Manila, the CAFA, the Anti-Dummy Board,
and the Central Bank of the Philippines. However, according to Exhibit 0-1, he was convicted by the Court of
First Instance of Manila (in Crim. Case No. 6811) on October 29, 1948, of profiteering, ( MAKING PRIFTS IN

15
AN UNETHICAL WAY)1 and sentenced to pay a fine of P50.00 and, as a consequence, was reprimanded and
warranted by the Deportation Board 1a on February 8, 1957 (Exh. 1-A). He speaks and writes English and
Tagalog. He does not own any real property in the Philippines. He believes in the fundamental principles
underlying the Constitution. He has evinced a sincere desire to learn the customs and traditions of Filipino
people. He is not opposed to any organized government, or affiliated with any association, or group of
person who uphold and teach doctrines defending or advocating the necessity or property of violence,
personal assault, or assassination, for the predominance of men's ideas. He is not a polygamist or a believer
in the practice of polygamy. He is in good health, and it is intention in good become a Filipino citizen.

As vouching witness, he presented Messrs. Hilario M. Uaje and Pedro Nieva, Jr. Uaje declare that he knew
petitioner for more than 11 years up to the time he took the stand; and that he knew him as one who
believes in the principles underlying the Constitution and as a person of good moral character with fixed
income of P150.00 a month. Nieva, Jr., on the other hand, testified that he knew petitioner since 1944 and
had observed him to be a person attacked to the principle underlying the Constitution and disposed to
good order and happiness of the Filipino people.

After reception of the evidence, the court, on August 10, 1957, rendered a decision denying petitioner's
application for naturalization, on the grounds that: (1) he was convicted of profiteering, on October 29, 1948,
by the Court of First Instance of Manila, and sentenced to pay the Court of First Instance of Manila, and
sentenced to pay a fine of P50.00, as a result of which, he was charge before the Deportation Board which
reprimanded and warned him on February 8, 1957; and (2) he falsely stated in his declaration of intention
dated November 27, 2954, t that he had children, when in fact had already 3 at the time with Leonarda
Cabacungan.

As to the first ground above-stated, appellants contends that his conviction by the Court of First Instance
of Manila for profiteering, on October 29, 1948, as a result of which, he was fined P50.00, should not be
taken against him, because he is a mere employee of the St. George Grocery and Cold Store, Inc. at the time;
that he had nothing to do with the fixing of the selling price of commodities sold therein; and that he having
pleaded guilty to the information charging him to the offense, was upon the advice of his lawyer and the
manager of said establishment.

The trial court did not accept this explanation and we find no reason to do otherwise. It is hard to believed
that appellant would suffer to have his name stained with a criminal record pleading guilty to said
information, if he had absolutely nothing to do with the offense charged. As the lower court observed, it is
not easy to believed that petitioner did not know that he was selling over the price fixed by the authorities,
as these price limits are made known to the stores.

ISSUE : If profiteering a crime involving moral turpitude which disqualifies petitioner from admission to
Philippine citizenship?

RULING : We think so. "Moral turpitude" has been defines as an act of baseness, vileness, or depravity in
the private and social duties which a man owes his fellow men, or to society in general, contrary to the
accepted and customary rule of right and duty between man and man (Traders 7 General Ins. Co. vs.Rusell,
Tex. Civ. App., 99 S.W. [2d] 1079) or conduct contrary to justice, honesty, modesty, or good morals
(Marah vs. State Bar of California, 210 Cal. 303, 219 P. 583

16
There can be no doubt that profiteering, an offense is severally and heavily penalized with imprisonment
of not more than 10 years, or by a fine of not more than P10,000.00. or by both, 2 involves moral turpitude,
inasmuch as it affects the price of prime commodities and goes to the file of the citizens, especially those
who are poor and with hardly the means to sustain themselves. 3 Having been convicted of a crime involving
moral turpitude, petitioner is disqualified from naturalization as a Filipino citizen. 4

In respect of the second ground, petitioner claims that he failed marry Leonarda Cabacungan in 1951,
because she was then only 17 or 18 years of age, and her parents objected to their marriage because he
was ma Chinese citizen.

The contention deserves no serious consideration. As assuming that Leonarda's parent disapproved of
petitioner's marriage to her, he could have legally married her had he really wanted to, when Leonarda was
already 18 years of age, since under the law, 5 only the advice of her parents is required which, if not given,
does not prevent the celebration of the marriage, 3 months after the completion of the publication of the
application of the application for marriage license. Petitioner never made any attempt or effort to marry
Leonarda, but chose instead to live with her openly for 6 years without the benefit of marriage, begetting
with her 3 children, all out of wedlock. It was not until May 15, 1957, that is, almost 1 year after he had
filed his petition for according to the Solicitor General, was, evidently, entered into merely "for convenience
and with the avowed purpose of circumbenting the provision laws regarding irreproachable character and
good moral conduct."

Needless to say, the act of petitioner in cohabiting with Leonarda for 6 years without the benefit of
marriage, clearly indicate his bad character, which disqualifies him from becoming a Filipino citizen. 6 The
fact that petitioner marriage her on May 16, 1957, did not thereby cure his disqualification for lack of good
moral character. 7

We agree with the trial court and the Solicitor General that petitioner's statement in his declaration of
intention and his petition for naturalization that he was single and that he did not have any child at all,
when in truth and in fact he had then already 3 children with Leonarda Cabacungan, is a deliver ate
falsehood amounting to perjury, as he concealed his true status under oath and, likewise, shows
petitioner's wanton disregard for truth, hence, lack of good moral character disabling him from acquiring
Philippine citizenship.

Wherefore, finding no error in the judgment of the court a quo, the same is hereby affirmed, with costs
against the petitioner appellant. So ordered.

8. Confidential Employees

Who Are Confidential Employees?

Confidential employees assist and act in a confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join a labor union equally applies to them.
Confidential employees are those who by reason of their positions or nature of work are required to assist
or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and
highly confidential records. By the very nature of their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of, persons who exercise managerial functions in the
field of labor relations.

17
A confidential employee is one entrusted with confidence on delicate matters, or with the custody,
handling, or care and protection of the employer's property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of
necessary implication, confidential employees are similarly disqualified. The doctrine of necessary
implication means that what is implied in a statute is as much a part thereof as that which is expressed.

METROLAB INDUSTRIES, INC petitioner, vs. HONORABLE MA.

NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of the
Department of Labor and Employment and METRO DRUG
CORPORATION EMPLOYEES ASSOCIATION-FEDERATION OF FREE
WORKERS, respondents

DOCTRINES:

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction
over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such
assumption or certi?cation shall have the effect of automatically enjoining the intended or impending strike
or lockout as speci?ed in the assumption or certi?cation order. If one has already taken place at the
time of assumption or certi?cation, all striking or locked out employees shall immediately return to work and
the employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision
as well as with such orders as he may issue to enforce the same

Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization
to managerial employees, jurisprudence has extended this prohibition to con?dential employees or those
who by reason of their positions or nature of work are required to assist or act in a ?duciary manner to
managerial employees and hence, are likewise privy to sensitive and highly confidential records.

Con?dential employees cannot be classi?ed as rank and ?le. As previously discussed, the nature of
employment of con?dential employees is quite distinct from the rank and ?le, thus, warranting a separate
category. Excluding con?dential employees from the rank and ?le bargaining unit, therefore, is not
tantamount to discrimination.

FACTS:

Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter
referred to as the Union) is a labor organization representing the rank and ?le employees of petitioner
Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.

On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union
expired. The negotiations for a new CBA, however, ended in a deadlock.

Consequently, on 23 August 1991, the Union ?led a notice of strike against Metrolab and Metro Drug Inc.
The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and
Mediation Board.

18
To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an
assumption order dated 20 September 1991, the dispositive portion of which reads, thus:

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the
CBA and ordered the parties involved to execute a new CBA.

Thereafter, the Union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab
laid off 94 of its rank and file employees. On the same date, the Union ?led a motion for a cease and desist
order to enjoin Metrolab from implementing the mass layoff, alleging that such act violated the prohibition
against committing acts that would exacerbate the dispute as speci?cally directed in the assumption order.

On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its
management prerogative. It maintained that the company would suffer a yearly gross revenue loss of
approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract
Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of its
product "Eskinol," the number of workers required its production is significantly reduced.

Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to
availability of work in the production lines.

On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of
Metrolab's 94 rank and ?le workers illegal and ordered their reinstatement with full backwages.

Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees
on grounds of redundancy due to lack of work which the Union again promptly opposed on 5 October 1992.

On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for a
reconsideration Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-
shop provision of the CBA, not from the bargaining unit.

On 4 February 1993, the Union ?led a motion for execution. Metrolab opposed. Hence, the present petition
for certiorari with application for issuance of a Temporary Restraining Order.

ISSUE :

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT

GRAVELY ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING
UNIT OF RANK AND FILE EMPLOYEES.

RULING :

YES Forming part of the bargaining unit, the executive secretaries stand to bene?t from anyagreement
executed between the Union and Metrolab. Such a scenario, thus, gives rise to apotential conPict between
personal interests and their duty as con?dential employees toact for and in behalf of Metrolab.

ACTUALLY THE UNION ODES NOT DISAGREE THAT THEY ARE CONFIDETNTIOANL EMPLOYEES ONLY THAT
THEY INSISTS THAT Con?dential employees are rank and ?le employees AND UNIONS ASSURANCES FAIL TO

19
CONVINCE LIKE con?dential employees would not be members of and would not participate in the decision
making processes of the Union FURTHER RULING THAT con?dential employees cannot be classi?ed as rank
and ?le. As previously discussed, the nature of employment of con?dential employees is quite distinct from
therank and ?le, thus, warranting a separate category. Excluding con?dential employees fromthe rank and
file bargaining unit, therefore, is not tantamount to discrimination.

This Court recognizes the exercise of management prerogatives and often declines to interfere with the
legitimate business decisions of the employer. However, this privilege is not absolute but subject to
limitations imposed by law. 9 The exercise of management prerogatives was never considered boundless.
Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that management's prerogatives must be
without abuse of discretion. . .

That Metrolab's business is of national interest is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and pharmaceutical products to the
country.

Close Shop. — All Quali?ed Employees must join the Association immediately upon regularization as a
condition for continued employment. This provision shall not apply to:

(i) managerial employees who are excluded from the scope of the bargaining unit;

(ii) the auditors and executive secretaries of senior executive o=cers, such as, the President, Executive Vice-
President, Vice-President for Finance, Head of Legal, Vice-President for Sales, who are excluded from
membership in the Association; and

(iii) those employees who are referred to in Attachment I hereof, subject, however, to the application of
the provision of Article II, par. (b) hereof. Consequently, the above-speci?ed employees are not required to
join the Association as a condition for their continued employment. On the other hand, Attachment I
provides: Exclusion from the Scope of the Close Shop Provision The following positions in the Bargaining
Unit are not covered by the Close Shop provision of the CBA (Article I, par. b):

1.Executive Secretaries of Vice-Presidents, or equivalent positions.

2.Executive Secretary of the Personnel Manager, or equivalent positions.
3.Executive Secretary of the Director for Corporate Planning, or equivalent positions.
4. Some personnel in the Personnel Department, EDP Staff at Head O=ce, Payroll Staff at Head O=ce,
Accounting Department at Head O=ce, and Budget Staff, who because of the nature of their duties and
responsibilities need not join the Association as a condition for their employment.
5. Newly-hired secretaries of Branch Managers and Regional Managers. Both MDD and MII read the
exclusion of managerial employees and executive secretaries in our 14 April 1992 resolution as exclusion
from the bargaining unit.

20
PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and PHILIPS EMPLOYEES
ORGANIZATION (FFW), respondents.

DOCTRINE OF NECESSARY IMPLICATION

A confidential employee is one entrusted with confidence on delicate matters, or with the custody,
handling, or care and protection of the employer's property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of
necessary implication, confidential employees are similarly disqualified.
The doctrine of necessary implication means that what is implied in a statute is as much a part thereof as that
which is expressed.

DOCTRINES

security personnel were no longer disqualiAed from joining or forming a union. Section 6 of E.O No. 111,
enacted on 24 December 1986, repealed the original provisions of Article 245 of the Labor Code, reading
as follows: "ARTICLE 245. Ineligibility of security personnel to join any labor organization. — Security guards
and other personnel employed for the protection and security of the person, properties and premises of
the employer shall not be eligible for membership in any labor organization." and substituted it with the
following provision: "ARTICLE 245. Right of employees in the public service. — ". . . By virtue of such repeal
and substitution, security guards became eligible for membership in any labor organization. Manila Electric
Co. vs. Secretary of Labor and Employment. (197 SCRA 275 [1991])

-The rationale for this inhibition has been stated to be, because if these managerial employees would
belong to or be aKliated with a Union, the latter might not be assured of their loyalty to the Union in view of
evident conLict of interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership." In Golden Farms, Inc. vs. Ferrer-Calle ja, this Court explicitly
made this rationale applicable to confidential employees.

It is clear, therefore, that the right to join a union includes the right to abstain from joining any union.
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.

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

FACTS :

Petitioner Philips Industrial Development, Inc. (PIDI) seeks to set aside the Decision and Resolution, dated
16 January 1989 and 17 March 1989, respectively, of the National Labor Relations Commission (NLRC) in
Case No. NLRC-NCR-00-11-03936-87 on the ground that it committed grave abuse of discretion amounting
to lack of jurisdiction in holding that service engineers, sales representatives and conAdential employees
of PIDI are qualified to be included in the existing bargaining unit.

21
PIDI is a domestic corporation engaged in the manufacturing and marketing ofelectronic products. Since
1971, it had a total of six (6) collective bargaining agreements (CBAs) with private respondent Philips
Employees Organization-FFW (PEO-FFW), registered labor union and the certiAed bargaining agent of all
the rank and Ale employees of PIDI.

The conAdential employees are the division secretaries of light/telecom/data and consumer electronics,
marketing managers, secretaries of the corporate planning and business manager, Ascal and Anancial
system manager and audit and EDP manager, and the staff of both the General Management and the
Personnel Department.

In the sixth CBA covering the years 1987 to 1989, it was agreed upon, among others, that the subject of
inclusion or exclusion of service engineers, sales personnel and conAdential employees in the coverage of
the bargaining unit would be submitted for arbitration. the BLR endorsed the petition to the Executive
Labor Arbiter of the National Capital Region for compulsory arbitration pursuant to Article 228 of the Labor
Code : THAT “personnel and industrial relations department, secretaries of audit, EDP, Anancial system are
conAdential employees and as such are hereby deemed excluded in the bargaining unit.”

PEO-FFW appealed from the decision to the NLRC.

WHEREFORE, the foregoing premises considered, the appealed decision of the Executive Labor Arbiter is
hereby SET ASIDE and a new one entered declaring respondent company's Service Engineers, Sales Force,
division secretaries, all Staff of General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems are included within the rank and
file bargaining unit.

The reversal is anchored Article 245 5 of the Labor Code, as amended ". . . all workers, except managerial
employees and security personnel, are qualified to join or be a part of the bargaining unit . . .

ISSUE : THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
HOLDING THAT SERVICE ENGINEERS, SALES REPRESENTATIVES AND CONFIDENTIAL EMPLOYEES OF
PETITIONER ARE QUALIFIED TO BE PART OF THE EXISTING BARGAINING UNIT.

RULING :

YES respondent NLRC committed grave abuse of discretion in reversing the decision of the Executive Labor
Arbiter and in decreeing that PIDI's "Service Engineers, Sales Force, division secretaries,
all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP
and Financial Systems are included within the rank and Ale bargaining unit.

In the first place, all these employees, with the exception of the service engineers
and the sales force personnel, are conAdential employees. Their classiAcation as such is not seriously
disputed by PEO-FFW; the Ave (5) previous CBAs between PIDI and
PEO-FFW explicitly considered them as conAdential employees. By the very nature of their functions, they
assist and act in a conAdential capacity to, or have access to conAdential matters of, persons who exercise

22
managerial functions in the Aeld of labor relations. 12 As such, the rationale behind the ineligibility of
managerial employees to form, assist or join a labor union equally applies to them.

The Office of the Solicitor General supports the decision of the Executive Labor
Arbiter and refuses to uphold the position of the NLRC. It holds the view that the
division secretaries; the staff members of General Management, Personnel and theIndustrial Relations
Department; and the secretaries of Audit, EDP and FinancialSystems, are DISQUALIFIED from joining the PEO-
FFW as they are conAdential employees. They cannot even form a union of their own for, as held in Golden
Farms, Inc. vs. FerrerCalleja, 8 the rationale for the disqualiAcation of managerial employees from joining
unions holds true also for conAdential employees. As regards the sales representatives and service
engineers, however, there is no doubt that they are entitled to join or form a union, as they are not
disqualiAed by law from doing so. Considering that they have interests dissimilar to those of the rank and
Ale employees comprising the existing bargaining unit, and following the Globe Doctrine enunciated in In
Re: Globe Machine
and Stamping Company 9 to the effect that in determining the proper bargaining unit the express will or
desire of the employees shall be considered, they should be allowed to determine for themselves what union
to join or form. The best way to determine their preference is through a referendum As shown by the records,
such a referendum was decreed by the Executive Labor Arbiter.Li

At the outset, We express Our agreement with the petitioner's view that respondent NLRC did not quite
accurately comprehend the issue raised before it. Indeed, the issue is not whether the subject employees
may join or form a union, but rather, whether or not they may be part of the existing bargaining unit for
the rank and file employees of PIDI.

Even if the issue was, indeed, as perceived by the NLRC, still, a palpable error was committed by it in ruling
that under the law, all workers, except managerial employees and security personnel, are qualiAed to join
a union, or form part of a bargaining unit. At the time Case No. NLRC-NCR-00-11-03936-87 was Aled in
1987, security personnel were no longer disqualiAed from joining or forming a union. Section 6 of E.O No.
111,enacted on 24 December 1986, repealed the original provisions of Article 245 of the Labor Code,
reading as follows:

"ARTICLE 245. Ineligibility of security personnel to join any labor organization. — Security guards and other
personnel employed for the protection and security of the person, properties and premises of the employer
shall not be eligible for membership in any labor organization."

and substituted it with the following provision:

"ARTICLE 245. Right of employees in the public service. —" 10 xxx xxx xxx By virtue of such repeal and
substitution, security guards became eligible for membership in any labor organization.

". . . The rationale for this inhibition has been stated to be, because if these managerial employees would
belong to or be aKliated with a Union, the lattermight not be assured of their loyalty to the Union in view
of evident conLict of interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership." rationale holds true also for conAdential employees such as
accounting personnel, radio and telegraph operators, who having access to conAdential information, may
become the source of undue advantage. Said employee(s) may act as a spy or spies of either party to a
collective bargaining agreement. This is specially true in the present case where the petitioning Union is

23
already the bargaining agent of the rank-and-Ale employees in the establishment. To allow the conAdential
employees to join the existing Union of the rank-and-Ale would be in violation of the terms of the Collective
Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are
expressl

In Victoriano vs. Elizalde Rope Workers' Union, 17 this Court already ruled: llcd ". . . 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: Arst, 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. 18 It is clear, therefore,
that the right to join a union includes the right to abstain from joining any union. 19 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."y excluded."

Globe Doctrine Ands no application. Besides, this doctrine applies only in instances of evenly balanced claims
by competitive groups for the right to be established as the bargaining unit,

SET ASIDE while the Decision of the Executive Labor Arbiter in said case dated 17 March 1988 is hereby
REINSTATED,

9. Security Guards

SECURITY GUARDS MAY JOIN RANK-AND-FILE OR

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

Section 6 of E.O No. 111, enacted on 24 December 1986, repealed the original provisions of Article 245 of
the Labor Code, reading as follows: "ARTICLE 245. Ineligibility of security personnel to join any labor
organization. — Security guards and other personnel employed for the protection and security of the
person, properties and premises of the employer shall not be eligible for membership in any labor
organization." and substituted it with the following provision:" ARTICLE 245. Right of employees in the public
service. — ". . . By virtue of such repeal and substitution, security guards became eligible for membership in
any labor organization. Manila Electric Co. vs. Secretary of Labor and Employment.

MANILA ELECTRIC COMPANY , petitioner, vs. THE HONORABLE SECRETARY OF LABOR LEONARDO
QUISUMBING AND MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents

24
ISSUE : The Secretary of Labor apparently also acted arbitrarily and even whimsically in considering a
number of legal points; even the Solicitor General himself considered that the Secretary gravely abused his
discretion on at least three major points: (a) on the signing bonus issue; (b)on the inclusion of con<dential
employees in the rank and <le bargaining unit, and (c) in mandating a union security "closedshop" regime
in the bargaining unit.

2ND ISSUE : In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union, 40 we ruled that:
"Put another way, the con<dential employee does not share in the same "community of interests" that might
otherwise make him eligible to join his rank and file co-workers, precisely because of a conflict in those
interests." Thus, in Metrolab Industries vs. Roldan-Confesor, 41 We ruled: ". . . that the Secretary's order
should exclude the con<dential employees from the regular rank and <le employees qualified to become
members of the MEWA bargaining unit." From the foregoing disquisition, it is clear that employees holding
a con<dential position are prohibited from joining the union of the rank and file employees.

Additionally, the Union is demanding that the right of all rank and <le employees to join the Union shall be
recognized by the Company. Accordingly, all rank and file employees shall join the Union.
xxx xxx xxx These demands are fairly reasonable. We grant the same in accordance with the maintenance
of membership principle as a form of union security." The Secretary reconsidered this portion of his original
order when he said in his December 28, 1996 order that: ". . . . When we decreed that all rank and <le
employees shall join the Union, we were actually decreeing the incorporation of a closed shop form of
union security in the CBA between the parties.

In Ferrer v. NLRC, 224 SCRA 410, the Supreme Court ruled that a CBA provision for a closed shop is a valid
form of union security and is not a restriction on the right or freedom of association guaranteed by the
Constitution, citing Lirag v. Blanco, 109 SCRA 87." MERALCO objected to this ruling on the grounds that: (a)
it was never questioned by the parties; (b) there is no evidence presented that would justify the restriction
on employee's union membership; and (c) the Secretary cannot rule on the union security demand because
this is not a mandatory subject for collective bargaining agreement. We agree with MERALCO's contention.
An examination of the records of the case shows that the union did not ask for a closed shop security
regime; the Secretary in the <rst instance expressly stated that a maintenance of membership clause should
govern; neither MERALCO nor MEWA raised the issue of union security in their respective motions for
reconsideration of the Secretary's <rst disputed order; and that despite the parties clear acceptance of the
Secretary's <rst ruling, the Secretary motu proprio reconsidered his maintenance of membership ruling in
favor of the more stringent union shop regime. Under these circumstances, it is indubitably clear that the
Secretary gravely abused his discretion when he ordered a union shop in his order of December 28, 1996.
The distinctions between a maintenance of membership regime from a closed shop and their consequences
in the relationship between the union and the company are well established and need no further
elaboration. Consequently, We rule that the maintenance of membership regime should govern at
MERALCO in accordance with the Secretary's order of August 19, 1996 which neither party disputed.

6. RETROACTIVITY OF THE CBA; Finally, MERALCO also assails the Secretary's order that the effectivity of
the new CBA shall retroact to December 1, 1995, the date of the commencement of the last two years of
the effectivity of the existing CBA. This retroactive date, MERALCO argues, is contrary to the ruling of this
Court in Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confessor 47 which mandates that the
effective date of the new CBA should be the date the Secretary of Labor has resolved the labor dispute. On
the other hand, MEWA supports the ruling of the Secretary on the theory that he has plenary power and

25
discretion to <x the date of effectivity of his arbitral award citing our ruling in St. Lukes Medical Center, Inc.
vs. Torres. 48 MEWA also contends that if the arbitral award takes effect on the date of the Secretary
Labor's ruling on the parties' motion for reconsideration (i.e., on December 28, 1996), an anomaly situation
will result when CBA would be more than the 5-year term mandated by Article 253-A of the Labor Code.
However, neither party took into account the factors necessary for a proper resolution of this aspect. Pier
8, for instance, does not involve a mid-term negotiation similar to this case, while St. Lukes does not take
the "hold over" principle into account, i.e., the rule that although a CBA has expired, it continues to have legal
effects as between the parties until a new CBA has been entered into. 49

Article 253-A serves as the guide in determining when the effectivity of the CBA at bar is to take effect. It
provides thatthe representation aspect of the CBA is to be for a term of 5 years, while ". . . [A]ll other
provisions of the Collective Bargaining Agreement shall be re-negotiated not later than 3 years after its
execution. Any agreement on such other provision of the Collective Bargaining Agreement entered into
within 6 months from the date of expiry of the term of such other provisions as <xed in such Collective
Bargaining Agreement shall retroact to the day immediately following such date. If such agreement is
entered into beyond 6 months, the parties shall agree on the duration of the effectivity thereof.

. . ."
Under these terms, it is clear that the 5-year term requirement is speci<c to the representation aspect.
What the law additionally requires is that a CBA must be re-negotiated within 3 years "after its execution." It
is in this re-negotiation that gives rise to the present CBA deadlock. If no agreement is reached within 6
months from the expiry date of the 3 years that follow the CBA execution, the law expressly gives the parties
— not anybody else — the discretion to fix the effectivity of the agreement. Significantly, the law does not
specifically cover the situation where 6 months have elapsed but no agreement has been reached with
respect to effectivity. In this eventuality, we hold that any provision of law should then apply for the law
abhors a vacuum. One such provision is the principle of hold over, i.e., that in the absence of a new CBA,
the parties must maintain the status quo and must continue in full force and effect the terms and conditions
of the existing agreement until a new agreement is reached. 51 In this manner, the law prevents the
existence of a gap in the relationship between the collective bargaining parties. Another legal principle that
should apply is that in the absence of an agreement between the parties, then, an arbitrated CBA takes on
the nature of any judicial or quasi-judicial award; it operates and may be executed only respectively unless
there are legal justifications for its retroactive application. Consequently, we find no sufficient legal ground
on the other justification for the retroactive application of the disputed CBA, and therefore hold that the
CBA should be effective for a term of 2 years counted from December 28, 1996 (the date of the Secretary
of Labor's disputed order on the parties' motion for reconsideration) up to December 27, 1999.
WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August
19, 1996 and December 28, 1996 are set aside to the extent set forth above. The parties are directed to
execute a Collective Bargaining Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the
modi<cations set forth above.

10. Aliens or Foreigners

26
ART. 284. [269] Prohibition Against Aliens; Exceptions. 219 All aliens, natural or juridical, as well as foreign
organizations are strictly prohibited from engaging directly or indirectly in all forms of trade union activities
without prejudice to normal contacts between Philippine labor unions and recognized international labor
centers: Provided, however, That aliens working in the country with valid permits issued by the Department
of Labor and Employment, may exercise the right to selforganization and join or assist labor organizations
of their own choosing for purposes of collective bargaining: Provided, further, That said aliens are nationals
of a country which grants the same or similar rights to Filipino workers.

RULE II BOOK V IRR

Registration of Unions

SECTION 1. Who may join unions. — All persons employed in commercial, industrial and agricultural
enterprises, including employees of government corporations established under the Corporation Code as
well as employees of religious, medical or educational institutions whether operating for profit or not,
except managerial employees, shall have the right to self-organization and to form, join or assist labor
organizations for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite employers may form labor organizations
for their mutual aid and protection.cralaw

Supervisory employees and security guards ??? 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;
Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit,
upon the effectivity of Republic Act No. 6715, shall remain in that unit; Provided, further, that alien
employees with valid working permits issued by the Department of Labor and Employment may exercise
the right to self-organization and join or assist labor organizations for purposes of collective bargaining if
they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the
Department of Foreign Affairs.

For the purpose of this Section, any employee, whether employed for a definite period or not, shall,
beginning on the first day of his service, be eligible for membership in the union.

SECTION 2. Where to file application; procedure. — Any national labor organization or labor federation or
local union may file an application for registration with the Bureau or the Regional Office where the
applicant's principal office is located. The Bureau or the Regional Office shall immediately process and
approve or deny the application. In case of approval, the Bureau or the Regional Office shall issue the
registration certificate within thirty (30) calendar days from receipt of the application, together with all the
requirements for registration as hereinafter provided.

SECTION 3. Union affiliation; direct membership with national union. — An affiliate of a labor federation or
national union may be a local or chapter thereof or an independently registered union.

(a) The labor federation or national union concerned shall issue a charter certificate indicating the creation
or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor Relations
within thirty (30) days from issuance of such charter certificate.

(b) An independently registered union shall be considered an affiliate of a labor federation or national union
after submission to the Bureau of the contract or agreement of affiliation within thirty (30) days after its
execution.

27
(c) All existing labor federations or national unions are required to submit a list of all their affiliates, their
addresses and including the names and addresses of their respective officials, to the Bureau within thirty
(30) days from effectivity of these Rules.

(d) All existing labor federations or national unions with direct members are required to organize said
members into locals or chapters in their respective companies or establishments within sixty (60) days from
effectivity of these Rules.

(e) The local or chapter of a labor federation or national union shall have and maintain constitution and by-
laws, set of officers and books of accounts. For reporting purposes, the procedure governing the reporting
of independently registered unions, federations or national unions shall be observed.

(f) No person who is not an employee or worker of the company or establishment where an independently
registered union, affiliate, local or chapter of a labor federation or national union operates shall henceforth
be elected or appointed as an officer of such union, affiliate, local or chapter.

SECTION 4. Requirements for registration of local unions; applications. — The application for registration of
a local union shall be signed by at least twenty percent (20%) of the employees in the appropriate
bargaining unit which the applicant union seeks to represent, and shall be accompanied by the following:

(a) Fifty-peso 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 and the number of employees in the bargaining unit;

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

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

(f) A sworn statement by the applicant union that there is no certified bargaining agent in the bargaining
unit concerned. In case where there is an existing collective bargaining agreement duly submitted to the
Department of Labor and Employment, a sworn statement that the application for registration is filed
during the last sixty (60) days of the agreement; and

(g) The application for registration and all the accompanying documents shall be verified under oath by the
secretary or the treasurer, as the case may be, and attested to by the president.

SECTION 5. Denial of registration of local unions. — The Regional Office of the Bureau may deny the
application for registration on grounds of non-compliance with the requirements enumerated in Section 4
hereof.

The decision of the Regional Office or the Bureau denying the application for registration shall be in writing,
stating in clear terms the reasons therefor. A copy thereof shall be furnished the applicant union.

SECTION 6. Appeal. — Any applicant union may appeal to the Bureau the denial of registration by the
Regional Office, or to the Secretary if the denial is by the Bureau, within ten (10) calendar days from receipt
of such decision on grounds of:

28
(a) Grave abuse of discretion; and

(b) Gross incompetence.

The appeal shall be filed in the Regional Office/Bureau which shall cause the transmittal of the records to
the Bureau/Secretary within five (5) calendar days from receipt of the appeal.

The Bureau/Secretary shall decide the appeal within twenty (20) calendar days from receipt of the records
of the case.

SECTION 7. Cancellation of registration certificate. — The certificate of registration of any legitimate labor
organization including labor federations or national unions may be cancelled by the Bureau or the Regional
Office on any of the following grounds:

(a) Violation of Articles 234 (REQ FOR REGISTRATION), 237 (ADD RQ FOR FEDERATIONS OR NATIONAL
UNIONS) and 239 (GROUDS FOR CANCELLATION OF REG ) of the Code;

(b) Failure to comply with Article 238 (CANCELLATION PERTAINING TO 239) of the Code; and

(c) Violation of any of the provisions of Article 241 (RIGHTS AND CONDITIONS OF MEMEBERSHIP IN A LABOR
ORG ) of the Code.

SECTION 8. Notice of Cancellation. — The Bureau or the Regional Office shall serve a notice of the
cancellation proceedings on the labor organization concerned stating the grounds therefor, at least fifteen
(15) calendar days before the scheduled date of hearing. In such hearing, the representative of the labor
organization shall have the right to present its side.

SECTION 9. Appeal. — The labor organization may, unless the law provides otherwise, within fifteen (15)
calendar days from receipt of the decision cancelling or revoking its certificate of registration, file an appeal
to the Bureau, or in case of cancellation by the Bureau, to the Secretary, on any of the following grounds:

(a) Grave abuse of discretion; and

(b) Gross incompetence.

The Bureau/Secretary shall have fifteen (15) calendar days from receipt of the records of the case within
which to decide the appeal. The decision shall be final and unappealable.

SECTION 10. Rights of labor organizations. — A legitimate labor organization shall have the rights
enumerated in Article 242 of the Code.

SECTION 11. Automatic cancellation of union registration. — (a) The Bureau or the Regional Office shall,
after due process, cancel the certificate of registration of any labor organization which fails to submit the
financial reports required by the Code and its Implementing Rules six (6) months after the effectivity of
Republic Act No. 6715.

(b) The reports required under this section shall be submitted to the Bureau or the Regional Office.

C. THE ROLE OF GOVERNMENT EMPLOYEES IN THE UNIONIZATION

29
GOVERNMENT EMPLOYEES’ RIGHT TO ORGANIZE;
LIMITATIONS
The highest law of the land guarantees to government employees the right to organize and to negotiate, but
not the right to strike. 1.1

Limited Purpose The extent of the government employees' right of self-organization differs significantly
from that of employees in the private sector. The latter's right of self-organization, i.e., "to form, join or
assist labor organizations for purposes of collective bargaining," admittedly includes the right to deal and
negotiate with their respective employers in order to fix the terms and conditions of employment and also,
to engage in concerted activities for the attainment of their
objectives, such as strikes, picketing, boycotts. But the right of government employees to "form, join or assist
employees organizations of their own choosing" under Executive Order No. 180
is not regarded as existing or available for "purposes of collective bargaining.

EXECUTIVE ORDER NO. 180 June 1, 1987

PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES,
CREATING A PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES

In accordance with the provisions of the 1987 Constitution, I, CORAZON C. AQUINO, President of the
Philippines, do hereby order:

I. Coverage

Sec. 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and
agencies, of the Government, including government-owned or controlled corporations with original charters.
For this purpose, employees, covered by this Executive Order shall be referred to as "government
employees".

Sec. 2. All government employees can form, join or assist employees' organizations of their own choosing for
the furtherance and protection of their interests. They can also form, in conjunction with appropriate
government authorities, labor-management committees, works councils and other forms of workers'
participation schemes to achieve the same objectives.

Sec. 3. High-level employees whose functions are normally considered as policy-making or managerial or
whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and-file
government employees.

Sec. 4. The Executive Order shall not apply to the members of the Armed Forces of the Philippines, including
police officers, policemen, firemen and jail guards.

II. Protection of the Right to Organize

Sec. 5. Government employees shall not be discriminated against in respect of their employment by reason
of their membership in employees' organizations or participation in the normal activities of their organization.

30
Their employment shall not be subject to the condition that they shall not join or shall relinquish their
membership in the employees' organizations.

Sec. 6. Government authorities shall not interfere in the establishment, functioning or administration of
government employees' organizations through acts designed to place such organizations under the control
of government authority.

III. Registration of Employees' Organization

Sec. 7. Government employees' organizations shall register with the Civil Service Commission and the
Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of
the Department which shall process the same in accordance with the provisions of the Labor Code of the
Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of
Labor and Employment which shall immediately transmit the said applications to the Bureau of Labor
Relations within three (3) days from receipt thereof.

Sec. 8. Upon approval of the application, a registration certificate be issued to the organization recognizing
it as a legitimate employees' organization with the right to represent its members and undertake activities
to further and defend its interest. The corresponding certificates of registration shall be jointly approved
by the Chairman of the Civil Service Commission and Secretary of Labor and Employment.

IV. Sole and Exclusive Employees' Representatives

Sec. 9. The appropriate organizational unit shall be the employers unit consisting of rank-and-file
employees unless circumstances otherwise require.

Sec. 10. The duly registered employees' organization having the support of the majority of the employees
in the appropriate organizational unit shall be designated as the sole and exclusive representative of the
employees.

Sec. 11. A duly registered employees' organization shall be accorded voluntary recognition upon a showing
that no other employees' organization is registered or is seeking registration, based on records of the Bureau
of Labor Relations, and that the said organizations has the majority support of the rank-and-file employees
in the organizational unit.

Sec. 12. Where there are two or more duly registered employees' organizations in the appropriate
organizational unit, the Bureau of Labor Relations shall, upon petition, order the conduct of a certification
election and shall certify the winner as the exclusive representative of the rank-and-file employees in said
organization unit.

D. Terms and Conditions of Employment in Government Services

Sec. 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law,
may be the subject of negotiations between duly recognized employees' organizations and appropriate
government authorities.

VI. Peaceful Concerted Activities and Strikes

31
Sec. 14. The Civil Service laws and rules governing concerted activities and strikes in the government service
shall be observed, subject to any legislation that may be enacted by Congress.

VII. Public Sector Labor-Management Council

Sec. 15. A Public Sector Labor Management Council, hereinafter referred to as the Council, is hereby
constituted to be composed of the following:

1) Chairman, Civil Service Commission Chairman

2) Secretary, Department of Labor and Employment Vice Chairman

3) Secretary, Department of Finance Member

4) Secretary, Department of Justice Member

5) Secretary, Department of Budget and Management Member

The Council shall implement and administer the provisions of this Executive Order. For this purpose, the
Council shall promulgate the necessary rules and regulations to implement this Executive Order.

VIII. Settlement of Disputes

Sec. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the
resolution of complaints, grievances and cases involving government employees. In case any dispute
remains unresolved after exhausting all the available remedies under existing laws and procedures, the
parties may jointly refer the dispute to the Council, for appropriate action.

IX. Effectivity

Sec. 17. This Executive Order shall take effect immediately.

Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen hundred and eighty-seven.

D. RIGHT OF UNION MEMBERS –

ART. 250. [241] Rights and Conditions of Membership in a Labor Organization.

1. Political Right

2. Ddeliberative and Decision Making Right

3. Right over Money Matters

4. Right to Information

32
V. COLLECTIVE BARGAINING AGREEMENT

A. CBA; ITS CONCEPT

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

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

DURATION OF A C.B.A. RA No. 9715 (March 21, 2989) has introduced through Art. 253-A a significant change
in setting the durations or terms of a CBA at five years for the “representation aspect” and not more than
three years for “all other provisions.” The “representation aspect” refers to the identity and majority status
of the union that negotiated the CBA as the exclusive representative of the bargaining unit. “All other
provisions: simply refers to the rest of the CBA, economic as well as non-economic other than
representational.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs.

RUBEN V. ABARQUEZ, in his capacity as an accredited Voluntary
Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP),
respondents.

About sick leave for intermittent workers.

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

33
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation
leave benefits, among others, are by their nature, intended to be replacements for regular income which
otherwise would not be earned because an employee is not working during the period of said leaves. They
are non-contributory in nature, in the sense that the employees contribute nothing to the operation of the
benefits. By their nature, upon agreement of the parties, they are intended to alleviate the economic
condition of the workers.

Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the
petitioner-company may not unilaterally withdraw, or diminish such benefits.

 What is the provision of the law with regard to diminution of benefits.

Under the circumstances, these may be deemed to have ripened into company practice or policy which
cannot be peremptorily withdrawn.

FACTS : In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse
the Award 1 issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as Voluntary
Arbitrator of the National Conciliation and Mediation Board, Regional Arbitration Branch XI in Davao City in
Case No. AC-211-BX1-10-003-91 which directed petitioner to grant and extend the privilege of commutation
of the unenjoyed portion of the sick leave with pay benefits to its intermittent field workers who are members
of the regular labor pool and the present regular extra pool in accordance with the Collective Bargaining
Agreement (CBA) executed between petitioner and private respondent Association of Trade Unions (ATU-
TUCP), from the time it was discontinued and henceforth.

-Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private

respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of
petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985

CBA provides for sick leave with pay benefits each year to its employees who have rendered at least one
(1) year of service with the company, CBA provides : Sick Leaves — The Company agrees to grant 15 days
sick leavewith pay each year to every regular non-intermittent worker who already rendered at least one year
of service with the company. However, such sick leave can only be enjoyed upon certification by a company
designated physician that any unenjoyed portion thereof, shall be converted to cash and shall be paid at the
end of the said one year period. And provided however, that only those regular workers of the company
whose work are not intermittent, are entitled to the herein sick leave privilege.

But the coverage of the said benefits was expanded to include the "present Regular Extra Labor Pool as of
the signing of this Agreement." Section 3, Article VIII, as revised: "Section 3. — All intermittent field workers
of the company who are members of the Regular Labor Pool and present Regular Extra Labor Pool as of the
signing of this agreement shall be entitled to vacation and sick leaves per year of service with pay under
the following schedule based on the number of hours rendered including overtime

-During the effectivity of the CBA of October 16, 1985 until three (3) months after its
renewal on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9)
months), all the field workers of petitioner who are members of the regular labor pool and Any unenjoyed
portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year
period pursuant to Sections 1 and 3, Article VIII of the CBA.

34
However, discontinued or withdrawn when petitioner-company under a new assistant manager, Mr.
Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped
the payment of its cash equivalent on the ground that they are not entitled to the said benefits under
Sections 1 and 3 of the 1989 CBA. * made his own interpretation of the CBA.

CONTENTION OF THE UNION : The Union objected to the said discontinuance of commutation or conversion
to cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it
is a deviation from the true intent of the parties that negotiated the CBA; that it would violate the principle
in labor laws that benefits already extended shall not be taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers of the petitioner-company.

Upon failure of the parties to amicably settle the issue. Union brought the matter for voluntary arbitration
before the National Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way
of complaint for enforcement of the CBA. The parties mutually designated public respondent Ruben
Abarquez, Jr. to act as voluntary arbitrator.

Public respondent Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union ruling
that the regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay
benefits under Sections 1 and 3 of the 1989 CBA,

PETITIONER-COMPANY CONTENTION : further argued that while the intermittent workers were paid the
cash equivalent of their unenjoyed sick leave with pay benefits during the previous management of Mr.
Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-
company's rights to rectify the error it had committed and stop the payment of the said sick leave with pay
benefits. An error in payment, according to petitioner-company, can never ripen into a practice.

ISSUE : WHETHER OR NOT THE COMPANY MAY BAR THE REGULAR INTERMITTENT WORKERS FROM THE
PRIVILEGE OF COMMUTATION OR CONVERSION TO CASH OF THE UNENJOYED PORTION OF THEIR SICK LEAVE
WITH PAY BENEFITS.

RULING :

A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers
to a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect to
wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. 4 A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the
Philippines which governs the relations between labor and capital, is not
merely contractual in nature but impressed with public interest, thus, it must yield to the
common good. As such, it must be construed liberally rather than narrowly and technically,
and the courts must place a practical and realistic construction upon it, giving due
consi

35
The term "intermittent" implies, there is irregularity in their work-days. Reasonable and practical
interpretation must be placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam
pereat. Such interpretation is to be adopted, that the thing may continue to have efficacy rather than fail

Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the
petitioner-company may not unilaterally withdraw, or diminish such benefits. 1 0 It is a fact that petitioner-
company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed
portion of the sick leave benefits of some intermittent workers.

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two
(2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent workers or
those workers who render a daily eight-hour service to the company and are governed by Section 1, Article
VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool and the
present regular extra labor pool as of the signing of the agreement on April 15, 1989 or those workers who
have irregular working days and are governed by Section 3, Article VIII of the 1989 CBA.

Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave
privilege to be accorded the intermittent workers in the same way that they are both given the same
treatment with respect to vacation leaves - non-commutable and non-cumulative. If they are treated
equally with respect to vacation leave privilege, with more reason should they be on par with each other
with respect to sick leave privileges.

Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is the
necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of
the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of
discretion was committed by public respondent in issuing the award – end

Loy VS NLRC GR 54334, January 22, 1986

KIOK LOY, doing business under the name and style SWEDEN ICE
CREAM PLANT, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA
(KILUSAN), respondents.

FACTS : In a certification election held on October 3, 1978, the Pambansang Kilusan ng Paggawa (Union for
short), a legitimate labor federation, won and was subsequently certified in a resolution dated November
29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant.

Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company
with two copies of its proposed collective bargaining agreement. At the same time, it requested the
Company for its counter proposals, eliciting no response to the aforesaid request, the Union again wrote

36
the Company reiterating its request for collective bargaining negotiations and for the Company to furnish
them with its counter proposals. Both requests were ignored and remained unacted upon by the Company.

Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on
February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of
unresolved economic issues in collective bargaining.

Conciliation proceedings then followed during the thirty-day statutory cooling-off period.
But all attempts towards an amicable settlement failed, prompting the Bureau of Labor
Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration
pursuant to Presidential Decree No. 823.

Series of postponement were moved by the company until then requested for another postponement
which the labor arbiter denied. He also ruled that the Company has waived its right to present further
evidence: Respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to bargain, in
violation of Section (g) Article 248.

Issue: National Labor Relations Commission acted without or in excess of its jurisdiction or with grave abuse
of discretion amounting to lack of jurisdiction in rendering the challenged decision.

Contention of the company: Petitioner Company now maintains that its right to procedural due process
has been violated when it was precluded from presenting further evidence in support of its stand and when
its request for further postponement was denied. Petitioner further contends that the National Labor
Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law and
the evidence considering that it was only on May 24. 1979 when the Union furnished them with a copy of
the proposed Collective Bargaining Agreement and it was only then that they came to know of the Union's
demands; and finally, that the Collective Bargaining Agreement approved and adopted by the National
Labor Relations Commission is unreasonable and lacks legal basis.

RULING: NO. It defined, Collective bargaining which is defined as negotiations towards a collective
agreement, is one of the democratic frameworks under the New Labor Code, designed to stabilize the
relation between labor and management and to create a climate of sound and stable industrial peace. It is a
mutual responsibility of the employer and the Union and is characterized as a legal obligation.

So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to
refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an agreement and
executing a contract incorporating such agreement, if requested by either party.

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty
to initiate contract negotiation. The mechanics of collective bargaining is set in motion only when the
following jurisdictional preconditions are present, namely:

(1) possession of the status of majority representation of the employees' representative in accordance
with any of the means of selection or designation provided for by the Labor Code;

37
(2) proof of majority representation; and

(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . . . all of which preconditions
are undisputedly present in the instant case.

From the over-all conduct of petitioner company in relation to the task of negotiation, there
can be no doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of
which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor Code —
to bargain in good faith.

We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of
unfair labor practice. It has been indubitably established that

(1) Respondent Union was a duly certified bargaining agent;

(2) it made a definite request to bargain, accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were left unanswered and unacted upon; and

(3) the Company made no counter proposal whatsoever all of which conclusively indicate
lack of a sincere desire to negotiate. A Company's refusal to make counter proposal if
considered in relation to the entire bargaining process, may indicate bad faith and this is
specially true where the Union's request for a counter proposal is left unanswered,

Herald Delivery Carriers Union (PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair
labor practice is committed when it is shown that the respondent employer, after having been served with a
written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to the
said proposal. This doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it
was further ruled that "while the law does not compel the parties to reach an agreement, it does
contemplate that both parties will the negotiation with an open mind and make a reasonable effort to reach
a common ground of agreement".

38
B. COLLECTIVE NEGOTIATION AGREEMENT (CAN) ITS CONCEPT

Collective Negotiation Agreement or CNA is a contract negotiated between an accredited employees’

organization as the negotiating unit and the employer/management on the terms and conditions of
employment and its improvements that are not fixed by law.

Who can enter into a Collective Negotiation Agreement or CNA? An accredited union and the
employer/management can enter into a Collective Negotiation Agreement.

When can the Union negotiate?

After a certificate of union accreditation is issued and within one (1) year the union shall submit its CNA
proposal to management.

When shall it take effect?

Upon its signing by the parties and ratification by majority of the rank-and-file employees in the negotiating
unit to be done within ninety (90) calendar days. Otherwise, the application for registration shall be denied.
(PSLMC Res. No. 02, s. 2007)

What can be negotiated?

1. schedule of vacation and other leaves;

2. personal growth and development;

3. communication system-internal (lateral and vertical), external;

4. work assignment/reassignment/detail/ transfer;

5. distribution of work load;

6. provision for protection and safety;

7. provision for facilities for handicapped personnel;

8. provision for first aid medical services and supply;

9. physical fitness program;

39
10. provision for family planning services for married women;

11. annual medical/physical examination;

12. recreational, social, athletic and cultural activities and facilities;

13. CNA incentive pursuant to PSLMC Resolution No. 4, s. 2002 and Resolution No. 2, s. 2003; and

14. such other concerns which are not prohibited by law and CSC rules and regulations

NON- NEGOTIABLES?

Other MONETARY BENEFITS:

FRINGE BENEFITS: There is a need for legal authority or basis for the grant of these benefits,
whether by law or presidential issuance. In the absence of such authority, these are non-negotiable
concerns.

LONGEVITY PAY: This is the same as the step increment under Joint CSC-DBM Circular No. 1, series
of 1990. YEAR-END BENEFITS: The grant must comply with Presidential announcements. Any additional
year-end benefit will entail appropriation of funds.

14TH MONTH PAY: Not allowed since the grant will entail budgetary/ funding allocation.
Compensation matters

ALLOWANCES/ BONUSES

C. PUBLIC SECTOR UNIONISM VS PRIVATE SECTOR UNIONISM

EXECUTIVE ORDER NO. 180 June 1, 1987

PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES,
CREATING A PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES

40
D. DUTY TO BARGAIN COLLECTIVELY; ITS CONCEPT

DUTY TO BARGAIN DEFINED The law contemplates and defines two situations when the duty to bargain
exists: Situation one, when there is yet no collective bargaining agreement (Art. 252), and Situation two,
where a CBA exists (Art. 253).

For Situation One, the duty to bargain means in essence the mutual obligation of the employer and the
employees’ majority union to meet and convene. The purposes of the meeting and convening are: (1) to
negotiate an agreement on the subjects of: (a) wages, (b) hours of work, and (c) all other terms and
conditions of employment including proposals for adjusting grievances or questions arising under such
agreement; and (2) to execute a contract incorporating such agreement if requested by either party. The
kind of compliance required is prompt, expeditious, and in good faith.

The limitations or reservations of the duty are that it does not compel any party to agree to a proposal or to
make a concession. For Situation Two, the duty to bargain means all of the above and, additionally, the
obligation not to terminate or modify the CBA during its lifetime. But 60 days before the CBA expires, either
party may notify the other in writing that it desires to terminate or modify the agreement. During the 60-
day period and until a new agreement is reached, the CBA remains in full force and effect; the parties are
dutybound to keep the status quo. The law therefore provides for automatic renewal or extension of the
CBA. This 60-day period under Art. 253* CBA renewal refers to submission of proposals to renegotiate the
nonrepresentational provisions of the CBA. It does not always coincide with the 60-day period mentioned
in Articles 253-A and 256 * about certification election pertaining to “freedom period” to resolve
representation contest between unions

41
E. THE CONCEPT OF GOOD FAITH BARGAINING

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

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty
to initiate contract negotiation. The mechanics of collective bargaining is set in motion only when the
following jurisdictional preconditions are present, namely:

(1) possession of the status of majority representation of the employees' representative in accordance with
any of the means of selection or designation provided for by the Labor Code;

(2) proof of majority representation; and

(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . . . all of which preconditions are
undisputedly present in the instant case.

Herald Delivery Carriers Union (PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair
labor practice is committed when it is shown that the respondent employer, after having been served with
a written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to
the said proposal. This doctrine was reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein
it was further ruled that "while the law does not compel the parties to reach an agreement, it does
contemplate that both parties will the negotiation with an open mind and make a reasonable effort to reach
a common ground of agreement".

Kiokloy vs NLRC 141 SCRA 179

When the employer did not even bother too make counter proposals.

F. BARGAINING DEADLOCK OR EMPASSE: ITS CONCEPT

Lockout or Closure Amounting to U.L.P.

A lockout, actual or threatened, as a means of dissuading the employees from exercising their rights under
the Act is clearly an unfair labor practice. However, to hold an employer who actually or who threatens to

42
lock out his employees guilty of a violation of the Act, the evidence must establish that the purpose thereof
was to
interfere with the employees’ exercise of their rights. An honest closing of one’s plant is not a violation of
the Act.
However, cessation of operations, actual or threatened, does constitute an unfair labor practice, if it is,
directly or indirectly, expressly or by innuendo, calculated or employed to interfere with the employees’
rights under the Act. Proof of the employer’s state of mind, unless it is expressed, is often very difficult.
However, it may be proven by circumstantial evidence.
The rule is that it is unlawful for the employer to threaten its
employees with moving or shutting down the plant and consequent loss of employment, as the result of
their support for the union. An employer which closed its business to put an end to a union’s activities, and
which made no effort to allow the employees’ attempt to exercise their right to self-organization and
collective bargaining,
and even threatening the employees that they would lose their jobs if they did not cease affiliation with the
union, commits unfair labor practice.
American Shipbuilding Co. VS NLRB (380 US 300)

Syllabus
Petitioner, operator of four shipyards, entered negotiations with the unions representing its employees for
the purpose of securing a new agreement to replace the current contract, soon to expire. After a bargaining
impasse was reached, petitioner temporarily closed down one yard and laid off employees at the others.
The National Labor Relations Board found that the employer could not have reasonably anticipated a strike,
that the sole purpose of the layoffs was to bring economic pressure to secure a prompt and favorable
settlement of the labor dispute, * and that the employer committed ULP and that, therefore, petitioner
violated §§ 8(a)(1) and (3) of the National Labor Relations Act. The Court of Appeals granted enforcement
of the Board's order.
Held: an employer does not commit an unfair labor practice under either § 8(a)(1) or § 8(a)(3) of the Act
when, after an impasse has been reached in negotiations, he temporarily shuts down his plant and lays off
his employees for the sole purpose of applying economic pressure in support of his legitimate bargaining
position. Pp. 380 U. S. 308-318.

The American Ship Building Company operates four shipyards on the Great Lakes -- at Chicago at Buffalo, and
at Toledo and Lorain, Ohio. The company is primarily engaged in the repairing of ships, a highly seasonal
business concentrated in the winter months when the freezing of the Great Lakes renders shipping
impossible. On May 1, 1961, when the unions notified the company of their intention to seek modification
of the current contract, due to expire on August 1.

At the initial bargaining meeting on June 6, 1961, the company took the position that its competitive situation
would not allow increased compensation. The unions countered with demands for increased fringe benefits
and some unspecified wage increase.

The employer rejected the proposed extension because it would have led to expiration during the peak
season. On July 31, the eve of the contract's expiration, the employer made a proposal; the unions countered
with another, revived their proposal for a six-month extension, and proposed, in the alternative, that the
existing contract, with its no-strike clause, be extended indefinitely with the terms of the new contract to be

43
made retroactive to August 1. After rejection of the proposed extensions, the employer's proposal was
submitted to the unions' membership; on August 8 the unions announced that this proposal had been
overwhelmingly rejected.
After extended negotiations-- a situation which the trial examiner found was an impasse. Throughout the
negotiations, the employer displayed anxiety as to the unions' strike plans, fearing that the unions would call
a strike as soon as a ship entered the Ch In light of the failure to reach an agreement and the lack of available
work, the employer decided to lay off certain of his workers. On August 11, the employees received a notice
which read: "Because of the labor dispute which has been unresolved since August 1, 1961, you are laid off
until further notice."

The examiner went on to find that the employer was reasonably apprehensive of a strike at some point.
Although the unions had given assurances that there would be no strike, past bargaining history was thought
to justify continuing apprehension that the unions would fail to make good their assurances.

It was further found that the employer's primary purpose in locking out his employees was to avert
peculiarly harmful economic consequences which would be imposed on him and his customers if a strike
were called either while a ship was in the yard during the shipping season or later when the yard was fully
occupied.

The examiner concluded that the employer: "was economically justified and motivated in laying off
its employees when it did, and the fact that its judgment was partially colored by its intention to break the
impasse which existed is immaterial in the peculiar and special circumstances of this case. Respondent, by its
actions, therefore, did not violate sections 8(a)(1), (3), and (5) of the Act."

However the union argued : the Board was able to find only one purpose underlying the layoff: a
desire to bring economic pressure to secure prompt settlement of the dispute on favorable terms. And if the
employer had shut down its yard and laid off its workers solely for the purpose of bringing to bear economic
pressure to break an impasse and secure more favorable contract terms, an unfair labor practice would be
made out.

"The Board has held that, absent special circumstances, an employer may not during bargaining negotiations
either threaten to lock out or lock out his employees in aid of his bargaining position. Such conduct, the Board
has held, presumptively infringes upon the collective bargaining rights of employees in violation of Section
8(a)(1), and the lockout, with its consequent layoff, amounts to discrimination within the meaning of Section
8(a)(3).

ISSUE : WHAT WE ARE HERE CONCERNED WITH IS THE USE OF A TEMPORARY LAYOFF OF EMPLOYEES SOLELY
AS A MEANS TO BRING ECONOMIC PRESSURE TO BEAR IN SUPPORT OF THE EMPLOYER'S BARGAINING
POSITION, AFTER AN IMPASSE HAS BEEN REACHED constitutes Unfair Labor Practice.

RULING : The Board’s ruling is misplaced. There was no evidence and no finding that the employer was hostile
to its employees' banding together for collective bargaining, or that the lockout was designed to
discipline them for doing so. It is therefore inaccurate to say that the employer's intention was to destroy of
frustrate the process of collective bargaining. What can be said is that it intended to resist the demands made
of it in the negotiations, and to secure modification of these demands. We cannot see that this intention is in
any way inconsistent with the employees' rights to bargain collectively.

44
 It is true that recognition of the lockout deprives the union of exclusive control of the timing and duration of
work stoppages calculated to influence the result of collective bargaining negotiations, but there is nothing
in the statute which would imply that the right to strike "carries with it" the right exclusively to determine
the timing and duration of all work stoppages.

Thus, we cannot see that the employer's use of a lockout solely in support of a legitimate bargaining position
is in any way inconsistent with the right to bargain collectively or with the right to strike. Accordingly, we
conclude that, on the basis of the findings made by the Board in this case, there has been no violation of §
8(a)(1).

Section 8(a)(3) prohibits discrimination in regard to tenure or other conditions of employment to discourage
union membership. Under the words of the statute, there must be both discrimination and a resulting
discouragement of union membership.

As this case well shows, use of the lockout does not carry with it any necessary implication that the employer
acted to discourage union membership or otherwise discriminate against union members as such. The
purpose and effect of the lockout were only to bring pressure upon the union to modify its demands.
Similarly, it does not appear that the natural tendency of the lockout is severely to discourage union
membership, while serving no significant employer interest. In fact, it is difficult to understand what tendency
to discourage union membership or otherwise discriminate against union members was perceived by the
Board. T

-- all impose economic disadvantage during a bargaining conflict, but none is necessarily a violation of §
8(a)(3). To find a violation of § 8(a)(3), then, the Board must find that the employer acted for a proscribed
purpose. Indeed, the Board itself has always recognized that certain "operative" or "economic" purposes
would justify a lockout. But the Board has erred in ruling that only these purposes will remove a lockout from
the ambit of § 8(a)(3), for that section requires an intention to discourage union membership or otherwise
discriminate against the union.

The conclusions which we draw from analysis of §§ 8(a)(1) and (3) are consonant with what little of
relevance can be drawn from the balance of the statute and its legislative history. In the original version of
the Act, the predecessor of § 8(a)(1) declared it an unfair labor practice"[t]o attempt, by interference,
influence, restraint, favor, coercion, or lockout, or by any other means, to impair the right of employees
guaranteed in section 4.

The Board's position is premised on the view that the lockout interferes with two of the rights guaranteed by
§ 7: the right to bargain collectively and the right to strike. In the Board's view, the use of the lockout
"punishes" employees for the presentation of and adherence to demands made by their bargaining
representatives, and so coerces them in the exercise of their right to bargain collectively.

. It is important to note that there is here no allegation that the employer used the lockout in the service
of designs inimical to the process of collective bargaining. There was no evidence and no finding that the
employer was hostile to its employees' banding together for collective bargaining, or that the lockout was
designed to discipline them for doing so. It is therefore inaccurate to say that the employer's intention was
to destroy of frustrate the process of collective bargaining. What can be said is that it intended to resist the

45
demands made of it in the negotiations, and to secure modification of these demands. We cannot see that
this intention is in any way inconsistent with the employees' rights to bargain collectively.

Radio Officers' Union v. Labor Board, supra, at 347 U. S. 39-40. However, there is nothing in the Act which
gives employees the right to insist on their contract demands, free from the sort of economic disadvantage
which frequently attends bargaining disputes. Therefore, we conclude that, where the intention proven is
merely to bring about a settlement of a labor dispute on favorable terms, no violation of § 8(a)(3) is shown.

MR. JUSTICE WHITE, concurring in the result.

The Court today holds that the use of economic weapons by an employer for the purpose of improving his
bargaining position can never violate the broad provisions of §§ 8(a)(1) and (3) of the NLRA, and, hence, a
bargaining lockout of employees in resistance to demands of a union is invariably exempt from the
proscriptions of the Act
Page 380 U. S. 314

G. REQUIREMENTS FOR VALIDITY OF CBA

TUPAS contends that the said agreement suffers from certain fatal procedural flaws. Specifically, the CBA
was not posted for at least five days in two conspicuous places in the establishment before ratification, to
enable the workers to clearly inform themselves of its provisions. Moreover, the CBA submitted to the MOLE
did not carry the sworn statement of the union secretary, attested by the union president, that the CBA had
been duly posted and ratified, as required by Section 1, Rule 9, Book V of the Implementing Rules and
Regulations. These requirements being mandatory, non-compliance therewith rendered the said CBA
ineffective.”

ASSOCIATED TRADE UNIONS (ATU), Petitioner, v. HON. CRESENCIO B. TRAJANO, in his capacity as Director
of the Bureau of Labor Relations, MOLE, BALIWAG TRANSIT, INC. and TRADE UNIONS OF THE PHILIPPINES
AND ALLIED SERVICES (TUPAS) — WFTU, Respondents.

“posting is mandatory and non-compliance therewith will render it ineffective” ATU HAS PROCEDURAL
DEFECTS ON IT CBA.

When is the labor code enacted PD 442. Why are there inconsistencies in the provisions.

The resolution of this case has been simplified because it has been, in Justice Vicente Abad Santos’s
felicitous phrase, "overtaken by events."c

FACTS : This case arose when on March 25, 1986, the private respondent union (TUPAS) filed with the Malolos
labor office of the MOLE a petition for certification election at the Baliwag Transit, Inc. among its rank-and-
file workers. 1 Despite opposition from the herein petitioner, Associated Trade Unions (ATU), the petition
was granted by the med-arbiter on May 14, 1986, and a certification election was ordered "to determine the
exclusive bargaining agent (of the workers) for purposes of collective bargaining with respect to (their) terms
and conditions of employment

46
sustained by the respondent Director of Labor Relations

ATU then came to this Court claiming that the said orders are tainted with grave abuse of discretion and so
should be reversed. ATU claims that the private respondent’s petition for certification election is defective
because (1) at the time it was filed, it did not contain the signatures of 30% of the workers, to signify their
consent to the certification election; and (2) it was not allowed under the contract-bar rule because a new
collective bargaining agreement had been entered into by ATU with the company on April 1, 1986.
TUPAS for its part, supported by the Solicitor General, contends that the 30% consent requirement has been
substantially complied with, the workers’ signatures having been subsequently submitted and admitted.
THAT As for the contract-bar rule, its position is that the collective bargaining agreement, besides being
vitiated by certain procedural defects, was concluded by ATU with the management only on April 1, 1986
after the filing of the petition for certification election on March 25, 1986. 6

This initial sparring was followed by a spirited exchange of views among the parties which insofar as the
first issue is concerned has become at best only academic now. The reason is that the 30% consent required
under then Section 258 of the Labor Code is no longer in force owing to the amendment of this section by
Executive Order No. 111, which became effective on March 4, 1987. As revised by the said executive order,
the pertinent articles of the Labor Code now read as follows:chanrobles.com.ph : virtual law library

"Art. 256. Representation issue in organized establishments. — In organized establishments, when a petition
questioning the majority status of the incumbent bargaining agent is filed before the Ministry within the
sixty-day period before the expiration of the collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot to ascertain the will of the employees in the appropriate
bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election which provides for three or more choices
results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between
the choices receiving the two highest number of votes."cralaw virtua1aw library

"Art. 257. Petitions in unorganized establishments. — In any establishment where there is no certified
bargaining agent, the petition for certification election filed by a legitimate labor organization shall be
supported by the written consent of at least twenty (20%) percent of all the employees in the bargaining
unit. Upon receipt and verification of such petition, the Med-Arbiter shall automatically order the conduct
of a certification election." virtua1aw library

The applicable provision in the case at bar is Article 256 because Baliwag Transit, Inc. is an organized
establishment. Under this provision, the petition for certification election need no longer carry the
signatures of the 30% of the workers consenting to such petition as originally required under Article 258.
The present rule provides that as long as the petition contains the matters required in Section 2, Rule 5,
Book V of the Implementing Rules and Regulations, as amended by Section 6, Implementing Rules of E.O
No. 111, the med-arbiter "shall automatically order" an election by secret ballot "to ascertain the will of the
employees in the appropriate bargaining unit." The consent requirement is now applied only to unorganized
establishments under Article 257, and at that, significantly, has been reduced to only 20%.

The petition must also fail on the second issue which is based on the contract-bar rule under Section 3, Rule
5, Book V of the Implementing Rules and Regulations. This rule simply provides that a petition for certification
election or a motion for intervention can only be entertained within sixty days prior to the expiry date of an

47
existing collective bargaining agreement. Otherwise put, the rule prohibits the filing of a petition for
certification election during the existence of a collective bargaining agreement except within the freedom
period, as it is called, when the said agreement is about to expire. The purpose, obviously, is to ensure
stability in the relationships of the workers and the management by preventing frequent modifications of
any collective bargaining agreement earlier entered into by them in good faith and for the stipulated
original period.

ATU insists that its collective bargaining agreement concluded by it with Baliwag Transit, Inc. on April 1, 1986,
should bar the certification election sought by TUPAS as this would disturb the said new agreement.
Moreover, the agreement had been ratified on April 3, 1986, by a majority of the workers and is plainly
beneficial to them because of the many generous concessions made by the management. 8

Besides pointing out that its petition for certification election was filed within the freedom period and five
days before the new collective bargaining agreement was concluded by ATU with Baliwag Transit, Inc. TUPAS
contends that the said agreement suffers from certain fatal procedural flaws. Specifically, the CBA was not
posted for at least five days in two conspicuous places in the establishment before ratification, to enable the
workers to clearly inform themselves of its provisions. Moreover, the CBA submitted to the MOLE did not
carry the sworn statement of the union secretary, attested by the union president, that the CBA had been
duly posted and ratified, as required by Section 1, Rule 9, Book V of the Implementing Rules and Regulations.
These requirements being mandatory, non-compliance therewith rendered the said CBA ineffective.

ISSUE : WHETHER OR NOT THE CBA IS VALID

RULING : The Court will not rule on the merits and/or defects of the new CBA and shall only consider the
fact that it was entered into at a time when the petition for certification election had already been filed by
TUPAS and was then pending resolution. The said CBA cannot be deemed permanent, precluding the
commencement of negotiations by another union with the management. In the meantime however, so as
not to deprive the workers of the benefits of the said agreement, it shall be recognized and given effect on
a temporary basis, subject to the results of the certification election. The agreement may be continued in
force if ATU is certified as the exclusive bargaining representative of the workers or may be rejected and
replaced in the event that TUPAS emerges as the winner.

This ruling is consistent with our earlier decisions on interim arrangements of this kind where we declared:
library

". . . we are not unmindful that the supplemental collective bargaining contract, entered into in the
meanwhile between management and respondent Union contains provisions beneficial to labor. So as not
to prejudice the workers involved, it must be made clear that until the conclusion of a new collective
bargaining contract entered into by it and whatever labor organization may be chosen after the certification
election, the existing labor contract as thus supplemented should be left undisturbed. Its terms call for strict
compliance. This mode of assuring that the cause of labor suffers no injury from the struggle between
contending labor organization follows the doctrine announced in the recent case of Vassar Industries
Employees v. Estrella (L-46562, March 31, 1978). To quote from the opinion.’In the meanwhile, if as
contended by private respondent labor union the interim collective bargaining agreement which it
engineered and entered into on September 26, 1977 has much more favorable terms for the workers of

48
private respondent Vassar Industries, then it should continue in full force and effect until the appropriate
bargaining representative is chosen and negotiations for a new collective bargaining agreement thereafter
concluded.’" 10

It remains for the Court to reiterate that the certification election is the most democratic forum for the
articulation by the workers of their choice of the union that shall act on their behalf in the negotiation of a
collective bargaining agreement with their employer. Exercising their suffrage through the medium of the
secret ballot, they can select the exclusive bargaining representative that, emboldened by their confidence
and strengthened by their support shall fight for their rights at the conference table. That is how union
solidarity is achieved and union power is increased in the free society. Hence, rather than being inhibited and
delayed, the certification election should be given every encouragement under the law, that the will of the
workers may be discovered and, through their freely chosen representatives, pursued and realized.

WHEREFORE, the petition is DENIED. The temporary restraining order of August 20, 1986, is LIFTED. Cost
against the petitioner. SO ORDERED. Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

H. DIFFERENT KINDS OF UNION SECURITY AGREEMENT

Requsites for valid terminaton due to enforcement of union security clause

1. Union security clause is applicable

2. Bargaining union is requesting for the termination of employment due to enforcement of the union
security provision in the CBA
3. Sufficient evidence to support the union’s decision to expel the employee from the union
Principles

 Termination by union clause- not unfair labor practice

 Employer is obligated to act upon being demanded by the unon
 Employer should be afforded due process to the expelled unionist
 Employee sought to be terminated should be afforded an independent and separate hearing.
 Employer had liability for reinstatement, full backwages, damages and attorney’s fees in illegal
dismissal cases based on the union security clause.
 Employer has the right to be reimbursed for payment of any claims arising out of dismissals made
upon demand of the uion under the union security clause

Effects of application of the union security clause

On – Not allowed to resign or terminate their membership

members of therefrom
union – If resigned from union- may be recommended to the
employer for his termination of employment

49
 Non – Not bound by the union security clause
members of – Cannot be compelled to resign from their unions and
bargaining join the other
union but
members of
minority
unions

Non – Employee cannot be compelled to join the union

members of
any union

Newly hired – Can be compelled to join the bargaining agent

– Refusal- recommend for termination

Yellow dog contract

 A contract wherein an employer impose as a condition for employment that the applicant shall not
join a labor organization or shall withdraw from one which he belongs.
 Considered a ULP and is an interference with the individual’s right to self org

Valid Discrimination: Union Security Clause

There is a form of encouragement of union membership which is not considered ULP. This is where
Management and Union enter into a collective bargaining agreement containing a union security clause.

50
Despite variations and limitations, a union security clause essentially requires membership in the union so
that an employee may retain his job and the union’s existence is assured.

Union security is a generic term which is applied to and comprehends closed shop, union shop, maintenance
of membership or any other form of agreement which imposes upon employees the obligation to acquire
or retain union membership as a condition affecting employment. There is union shop when all new regular
employees are required to join the union within a certain period for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the effective date of
the agreement, or who thereafter become members, must maintain union membership as a condition for
continued employment until they are promoted or transferred out of the bargaining unit or the agreement
is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person may be employed in any or
certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the employees
in interest are a part.[19]
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we ruled that:

It is the policy of the State to promote unionism to enable the workers to negotiate
with management on the same level and with more persuasiveness than if they were to
individually and independently bargain for the improvement of their respective
conditions. To this end, the Constitution guarantees to them the rights to self-organization,
collective bargaining and negotiations and peaceful concerted actions including the right
to strike in accordance with law. There is no question that these purposes could be
thwarted if every worker were to choose to go his own separate way instead of joining his
co-employees in planning collective action and presenting a united front when they sit
down to bargain with their employers. It is for this reason that the law has sanctioned
stipulations for the union shop and the closed shop as a means of encouraging the workers
to join and support the labor union of their own choice as their representative in the
negotiation of their demands and the protection of their interest vis--vis the employer.
(Emphasis ours.)

In other words, the purpose of a union shop or other union security arrangement is to guarantee
the continued existence of the union through enforced membership for the benefit of the workers.

1. Closed shop agreement

Closed-shop: Only union members can be hired by the company and they must remain as union members
to retain employment in the company

a closed shop agreement is an agreement whereby an employer binds himself to hire only members of the
contracting union who must continue to remain members in good standing to keep their jobs. It is the most
prized achievement of unionism. It adds membership and compulsory dues. By holding out to loyal
members a promise of employment in the closed shop, it wields group solidarity.

51
When certain employees are obliged to join a particular union as a requisite for continued employment, as
in the case of Union Security Clauses, this condition is a valid restriction of the freedom or right not to join
any labor organization because it is in favor of unionism. This Court, on occasion, has even held that a union
security clause in a CBA is not a restriction of the right of freedom of association guaranteed by the
Constitution.

It is indeed compulsory union membership whose objective is to assure continued existence of the
union. In a sense, there is discrimination when certain employees are obliged to join a particular union. But
it is discrimination favouring unionism; it is a valid kind of “discrimination.” The employer is not guilty of
unfair labor practice if it merely complies in good faith with the request of the certified union for the
dismissal of employees expelled from the union pursuant to the union security clause in the collective
bargaining agreement.

2. Union Shop Agreement

Union Shop: Nonmembers may be hired, but to retain employment must become union members after a
certain period. The requirement applies to present and future employees

3. Modified Union shop agreement

Modified Union Shop: Employees who are not union members at the time of signing the contract need not
join the union, but all workers hired thereafter must join.

4. Exclusive Bargaining Shop Agreement

Exclusive Bargaining Shop: The union is recognized as the exclusive bargaining agent for all employees in
the bargaining unit, whether union members or not

5. Agency Shop agreement

Agency Shop: An agreement whereby employees must either join the union or pay the union as exclusive
bargaining agent a sum equal to that paid by the members. This is directed against “free rider” employees
who benefits from union activities without contributing financially to union support. It prevents situation
where non-union members enrich themselves at the expense of union members. Another term for agency
shop agreement is “maintenance of treasury shop.”

6. Open shop Agreement

The above variations are opposite of open shop, an arrangement which does not require union membership
as a condition of employment.

I. EXCEPTIONS TO THE APPLICATION OF UNION SECURITY CLAUSE

Religious ground.

All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are
subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted
from its coverage, namely, employees who at the time the union shop agreement takes effect are

1. bona fide members of a religious organization which prohibits its members from joining labor unions on
religious grounds;

52
2. employees already in the service and already members of a union other than the majority at the time the
union shop agreement took effect;[22]

3. confidential employees who are excluded from the rank and file bargaining unit;[23] and

4. employees excluded from the union shop by express terms of the agreement.

J. ADVANTAGES AND DISADVANTAGES OF UNION SECURITY CLAUSES

Advantages and Disadvantages of Closed-Shop Agreement

A closed-shop agreement is advantageous because it—

a. Increases the strength and bargaining power of labor organizations.

b. Prevents non-union workers from sharing in the benefits of the union’s activities without also sharing
its obligations.

c. Prevents the weakening of labor organizations by discrimination against union members.

d. Eliminates the lowering of standards caused by competition with non-union workers.

e. Enables labor organizations effectively to enforce collective agreements. f. Facilitates the collection of
dues and the enforcement of union rules. g. Creates harmonious relations between the employer and
employee

But it is disadvantageous as it—

a. Results in monopolistic domination of employment by labor organizations.

b. Interferes with the freedom of contract and personal liberty of the individual worker.

c. Compels employers to discharge all non-union workers regardless of efficiency, length of service, etc.

d. Facilitates the use of labor organizations by unscrupulous union leaders for the purpose of extortion,
restraint of trade, etc.

e. Denies to non-union workers equal opportunity for employment.

f. Enables union to charge exorbitant dues and initiation fees.

K. CERTIFICATION-YEAR BAR RULE

A certification Election may not be filed within 1 year from the

1. Date of valid certification, consent or run-off election ;

2. From the date of voluntary recognition.

Rule 5 Book V Sec 3 IRR Labor Code

SECTION 3. When to file. — In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
However, no certification election may be held within one year from the date of issuance of a final

53
certification election result. Neither may a representation question be entertained if, before the filing of a
petition for certification election, a bargaining deadlock to which an incumbent or certified bargaining agent
is a party had been submitted to conciliation or arbitration or had become the subject of a valid notice of
strike or lockout.

If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a
petition for certification election or a motion for intervention can only be entertained within sixty (60) days
prior to the expiry date of such agreement.

L. DEADLOCK BAR RULE

The Deadlock Bar Rule

-simply provides that a petition for certifcation election can only be entertained if there is no pending
bargaining deadlock submitted to conciliation or arbitration or had become the subject of a valid notice of
strike or lockout. The principal purpose is to ensure stability in the relationship of the workers and the
management.

A director of the Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial capacity.

-That one-year period — known as the "certification year" during which the certified union is required to
negotiate with the employer, and certification election is prohibited.

[G.R. No. 67485. April 10, 1992.]

NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF
THE PHILIPPINES (NACUSIP)-TUCP, petitioner, vs. DIR.
CRESENCIANO B. TRAJANO, BUREAU OF LABOR RELATIONS,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA, FEDERATION OF
UNIONS OF RIZAL (FUR)-TUCP AND CALINOG REFINERY
CORPORATION (NASUREFCO), respondents

 Bargaining deadlock. There is GADALEJ in granting Cert Elec petition of (FUR)-TUCP

 The law demands that the petition for certification election should fail in the presence of a then
pending bargaining deadlock.

Doctrines :

The clear mandate of Section 3, Book V, Rule V of the Omnibus Rules Implementing the Labor Code, is that
petition for certification election may be filed at any time, in the absence of a collective bargaining
agreement. Otherwise put, the rule prohibits the filing of a petition for certifcation election in the following
cases:

(1) during the existence of a collective bargaining agreement except within the freedom period;

(2) within one (1) year from the date of issuance of declaration of a final certification election result; or

54
(3) during the existence of a bargaining deadlock to which an incumbent or certified bargaining agent is a
party and which had been submitted to conciliation or arbitration or had become the subject of a valid
notice of strike or lockout.

FACTS:

Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP)-TUCP is the
certified exclusive bargaining representative of the rank and Ale workers of Calinog Refinery Corporation.

Private respondent Federation of Unions of Rizal (FUR)-TUCP is a labor organization duly registered with
the Department of Labor and Employment while private respondent Calinog ReAneries Employees Union
(CREU)- NACUSIP is the certified exclusive bargaining representative of the rank and Ale workers of the
private respondent Calinog Refinery Corporation by virtue of the certification election held on March 30,
1981

On June 21, 1982, petitioner union filed a petition for deadlock in collective bargaining with the Ministry of
Labor and Employment (now Department of Labor and Employment).

On July 21, 1982, private respondent FUR-TUCP Aled with the Regional OJce No. VI, MOLE (now DOLE),
Iloilo City a petition for certiAcation election among the rank and Ale employees of private respondent
company, alleging that:

(1) about forty-Ave percent (45%) of private respondent company's employees had disaJliated from
petitioner union and joined private respondent union;

(2) no election had been held for the past twelve (12) months; and

(3) while petitioner union had been certiAed as the sole collective bargaining agent, for over a year it failed
to conclude a collective bargaining agreement with private respondent company.

Petitioner union filed a motion to intervene in the petition for certification election filed by private
respondent union.

By order dated July 23, 1982, the Acting Med-Arbiter PaciAco V. Militante dismissed the petition for
certiAcation election for lack of merit since the petition is barred by a pending bargaining deadlock, private
respondent union (FUR)-TUCP filed an appeal to the Bureau of Labor Relations, Manila.

The Bureau of Labor Relations through respondent Director Cresenciano B. Trajano rendered a decision on
September 30, 1982 setting aside the order of the Acting Med-Arbiter

On May 2, 1983, Honorable Med-Arbiter Demetrio Correa issued an order in RD Case No. 4293 giving due
course to the petition of private respondent FUR-TUCP and ordering that an election be held within 20 days
from receipt of the order.

Petitioner interposed an appeal to the Bureau of Labor Relations.

During the pendency of the appeal or on September 10, 1983, a collective bargaining agreement was
entered and executed by the management of the National Sugar Refineries Co., Inc. and petitioner union and
was subsequently ratified by a majority of the rank and Ale employees. On the basis of the concluded CBA,

55
the Honorable Executive Labor Arbiter Celerino Grecia II issued an award dated September
12, 1983 adopting the submitted agreement as the CBA between the parties.

November 18, 1983, respondent Director Trajano rendered a decision aJrming with qualiAcation the order
of Med-Arbiter Correa dated May 2, 1983

"It appears that the Calinog ReAnery Employees Union- NACUSIP-TUCP no longer commands the support
of the majority of the employees. This observation is buttressed by the fact that more than seventy Ave
percent (75%) of the workers have disaJliated from the intervenor and joined the ranks of the petitioner.
Thus, intervernor's status as sole and exclusive bargaining representative is now of
doubtful validity.phil “obliged to resort to the most expeditious, practical and democratic option open to
us, that is, the conduct of a certification election. it is our view that the 10 September 1982 collective
agreement should be respected by the union that shall prevail in the election not only because it is an
arbitration award but also because substantial beneAts are provided thereunder. Otherwise stated, the
winning union shall administer said agreement.

Petitioner filed a motion for reconsideration dated December 6, 1983. The respondent Director in his order
dated March 21, 1984 denied the motion for reconsideration for lack of merit and aJrmed the Bureau's
decision of November 18, 1983.

Hence, this petition

ISSUE: Whether or not a petition for certifcation election may be filed during the pendency of a bargaining
deadlock submitted to arbitration or conciliation.

Whether or not Director Trajano committed grave abuse of discretion amounting to lack of jurisdiction when
it rendered a decision affirming the order of Med-Arbiter Correa finding that the deadlock is "nothing but a
mere subterfuge to obstruct the exercise of the workers of their legitimate right to self-organization, a last
minute maneuver to deny the workers the exercise of their constitutional rights and ordering a certiAcation
election among the rank and Ale workers of respondent company

Furthermore, petitioner stresses that the Anding that the contract (deadlock) bar rule has no room for
application in the instant case, runs counter to the provision of Section 3 of the Rules Implementing Batas
Pambansa Blg. 130 which prohibits the Aling of a petition for certiAcation election during the pendency of
a bargaining deadlock.ll

RULING : Respondent Director gravely abused his discretion when he affirmed the order of Med-Arbiter
Correa calling for a certiAcation election among the rank and file workers of private respondent company.

In the case at bar, a bargaining deadlock was already submitted to arbitration when private respondent FUR-
TUCP Aled a petition for certiAcation election. The same petition was dismissed for lack of merit by the
Acting Med-Arbiter in an order dated July 23, 1982 on the sole ground that the petition is barred by a
pending bargaining deadlock. However, respondent Director set aside the same order and subsequently
aJrmed an order giving due course to the petition for certiAcation election and
ordering that an election be held.

The law demands that the petition for certification election should fail in the presence of a then pending
bargaining deadlock.

56
All premises considered, the Court is convinced that the assailed decision and order of the respondent
Director is tainted with arbitrariness that would amount to grave abuse of discretion. ACCORDINGLY, the
petition is GRANTED;

---end

The Deadlock Bar Rule simply provides that a petition for certification election can only be entertained if there
is no pending bargaining deadlock submitted to conciliation or arbitration or had become the subject of a valid
notice of strike or lockout. The principal purpose is to ensure stability in the relationship of the workers and
the management.

Section 3, Book V, Rule V of the Omnibus Rules Implementing the Labor Code, to wit:

"SECTION 3. When to Ale. — In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certiAcation election may be Aled at any time.
However, no certiAcation election may be held within one year from the date of issuance of a Anal
certiAcation election result. Neither may a representation question be entertained if, before the Aling of a
petition for certiAcation election, a bargaining deadlock to which an incumbent or certiAed bargaining
agent is a party had been submitted to conciliation or arbitration or had become the subject of valid notice
or strike or lockout. "If a collective bargaining agreement has been duly registered in accordance with
Article 231 of the code, a petition for certiAcation election or a motion for intervention can only be
entertained within sixty (60) days prior to the expiry date of such agreement.

G.R. No. 75810. September 9, 1991.]

KAISAHAN NG MANGGAGAWANG PILIPINO (KAMPIL-KATIPUNAN) ,
petitioner, vs. HON. CRESENCIANO B. TRAJANO, in his capacity as
Director, Bureau of Labor Relations, and VIRON GARMENTS MFG.,
CO., INC., respondents.

 CE must be granted to KAMPIL

 These activities took place after the initiation of the certification election case by KAMPIL, and it was
grave abuse of discretion to have regarded them as precluding the holding of the certification
election thus prayed for.
 none of the proscriptions to certification election set out in the law exists in the case at bar

By virtue of a Resolution of the Bureau of Labor Relations dated February 27, 1981, the National Federation
of Labor Unions (NAFLU) was declared the exclusive bargaining representative of all rank-and-Cle
employees of Viron Garments Manufacturing Co., Inc. (VIRON).

More than four years thereafter, or on April 11, 1985, another union, the Kaisahan ng Manggagawang
Pilipino (KAMPIL-Katipunan) filed with the Bureau of Labor Relations a petition for certification election
among the employees of VIRON. The petition allegedly counted with the support of more than thirty
percent (30%) of the workers at VIRON.

57
NAFLU opposed the petition, as might be expected. The Med-Arbiter however ordered, on June 14, 1985,
that a certiCcation election be held at VIRON as prayed for, after ascertaining that KAMPIL had complied with
all the requirements of law and that since the certification of NAFLU as sole bargaining representative in
1981, no collective bargaining agreement had been executed between it and VIRON.

NAFLU appealed. It contended that at the time the petition for certification election was filed on April 11,
1985, it was in process of collective bargaining with VIRON; that there was in fact a deadlock in the
negotiations which had prompted it to file a notice of strike; and that these circumstances constituted a bar
to the petition for election in accordance with Section 3, Rule V, Book V of the Omnibus Rules
Implementing the Labor Code,

"SEC. 3. When to file. — In the absence of a collective bargaining agreement

submitted in accordance with Article 231 of the Code, a petition for certification election may be filed at
any time. However, no certiCcation election may be held within one year from the date of issuance of
declaration of a Cnal certiCcation election result. Neither may a representation question be entertained if,
before the Cling of a petition for certiCcation election, a bargaining deadlock to which an
incumbent or certiCed bargaining agent is a party had been submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout. If a collective bargaining agreement has been duly
registered in accordance with Article 231 of the Code, a petition for certiCcation election or a motion for
intervention can only be entertained within sixty (60) days prior to the expiry date
of such agreement.

Finding merit in a NAFLU's appeal, the Director of Labor Relations rendered a Resolution on April 30, 1986
setting aside the Med-Arbiter's Order of June 14, 1985 and dismissing KAMPIL's petition for certiCcation
election.

KAMPIL moved for reconsideration, and when this was denied, instituted in this Court the present certiorari
action.

ISSUE : Whether or not KAMPIL's petition for certification election is barred because, before its filing, a
bargaining deadlock between VIRON and NAFLU, as the incumbent bargaining agent, had been submitted to
conciliation or arbitration or had become the subject of a valid notice of strike or lockout, in accordance with
Section 3, Rule V, Book V of the Omnibus Rules above quoted

Ruling : To be sure, there are in the record assertions by NAFLU that its attempts to bring VIRON to the
negotiation table had been unsuccessful because of the latter's recalcitrance, and unfulfilled promises to
bargain collectively; 3 but there is no proof that it had taken any action to legally coerce VIRON to comply
with its statutory duty to bargain collectively. It could have charged VIRON with unfair labor practice; but it
did not. It could have gone on a legitimate strike in protest against VIRON's refusal to
bargain collectively and compel it to do so; but it did not. There are assertions by NAFLU, too, that its
attempts to bargain collectively had been delayed by continuing challenges to the resolution pronouncing
it the sole bargaining representative in VIRON; but there is no adequate substantiation thereof, or of how
it did in fact prevent initiation of the bargaining process between it and VIRON.Li

Incontrovertible fact is that from February 27, 1981 — when NAFLU was proclaimed the exclusive
bargaining representative of all VIRON employees — to April 11, 1985 — when KAMPIL filed its petition for

58
certiCcation election or a period of more than four (4) years, no collective bargaining agreement was ever
executed, and no deadlock ever arose from negotiations between NAFLU and VIRON resulting in conciliation
proceedings or the filing of a valid strike notice. The respondents advert to a strike declared by NAFLU on
October 26, 1986 for refusal of VIRON to bargain and for violation of terms and conditions of employment,
which was settled by the parties' agreement, and to another strike staged on December
6, 1986 in connection with a claim of violation of said agreement, a dispute which has since been certiCed
for compulsory arbitration by the Secretary of Labor & Employment. Obviously, however, these activities
took place after the initiation of the certification election case by KAMPIL, and it was grave abuse of discretion
to have regarded them as precluding the holding of the certification election thus prayed for.

WHEREFORE, it being apparent that none of the proscriptions to certification election set out in the law
exists in the case at bar, and it was in the premises grave abuse of discretion to have ruled otherwise, the
contested Resolution of the respondent Director of the Bureau of Labor Relations dated April 30, 1986 in
BLR Case No. A-7-139-85 (BZEO-CE-04-004-85) is NULLIFIED AND SET ASIDE. Costs against
private respondent. SO ORDERED.Lex

M. CONTRACT BAR RULE

59
ART. 238. [232] Prohibition on Certification Election. The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered existing
collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this Code.

ART. 264. [253] Duty to Bargain Collectively When There Exists a Collective Bargaining Agreement.

ART. 265. [253-A] Terms of a Collective Bargaining Agreement

ART. 268. [256] Representation Issue in Organized Establishments.

60
 G.R. No. 89609. January 27, 1992.]
NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF
THE PHILIPPINES (NACUSIP)-TUCP, petitioner, vs. HON. PURA
FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor
Relations; and the NATIONAL FEDERATION OF SUGAR WORKERS
(NFSW)-FGT-KMU, respondents.

 The records show that the CBA at the Collective Agreements Division (CAD) of the Bureau of Labor
Relations show that the CBA between Dacongcogon and private respondent NFSW-FGT-KMU had
expired on November 14, 1987, hence, the petition for certification election was filed too late, that is,
a period of more than one (1) year after the CBA expired.. the CBA was in fact evn extended.

The rule (Rule V, Section 6 Book V, Rules Implementing the Labor Code, as amended) simply provides that
a petition for certification election or a motion for intervention can only be entertained within sixty days
prior to the expiry date of an existing collective bargaining agreement.

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

Article 253 of the Labor Code that "(i)t shall be the duty of both parties to keep the status quo and to continue
in full force and effect the terms and conditions of the existing agreement during the 60-day period and or
until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of the CBA , the
law still considers the same as continuing in force and effect until a new CBA shall have been validly
executed. Hence, the contract bar rule still applies.

FACTS :

Petitioner National Congress of Unions in the Sugar Industry of the Philippines NACUSIP-TUCP) is a
legitimate national labor organization duly registered with the Department of Labor and Employment.
Respondent Honorable Pura Ferrer-Calleja is impleaded in her oMcial capacity as the Director of the Bureau
of Labor Relations of the Department of Labor and Employment, while private respondent National
Federation of Sugar Workers (NFSW-FGT-KMU) is a labor organization duly registered with the
Department of Labor and Employment.

Dacongcogon Sugar and Rice Milling Co., Inc. (Dacongcogon) based in Kabankalan, Negros Occidental
employs about Ave hundred (500) workers during milling season and about three hundred (300) on off-
milling season.

61
On November 14, 1984, private respondent NFSW-FGT-KMU and employer DACONGCOGON entered into a
collective bargaining agreement (CBA) for a term of three (3) years, which was to expire on November 14,
1987.

When the CBA expired, private respondent NFSW-FGT-KMU and Dacongcogon negotiated for its renewal.
The CBA was extended for another three (3) years with reservation to negotiate for its amendment,
particularly on wage increases, hours of work, and other terms and conditions of employment.

However, a deadlock in negotiation ensued on the matter of wage increases and optional retirement.

Hence, a Labor Management Council was set up and convened, with a representative of the Department
of Labor and Employment, acting as chairman, to resolve the issues.

On December 5, 1988, petitioner NACUSIP-TUCP filed a petition for direct certification or certification
election among the rank and file workers of Dacongcogon

On January 27, 1989, private respondent NFSW-FGT-KMU moved to dismiss the petition on the following
grounds, to wit:

1. The Petition was filed out of time;

2. There is a deadlocked (sic) of CBA negotiation between forced intervenor and respondent-central." (Rollo,
p. 25)

By an order dated February 8, 1989, the Med-Arbiter denied the motion to dismiss filed by private
respondent NFSW-FGT-KMU and directed the conduct of certification election among the rank and Ale
workers of Dacongcogon,

1. National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP); "(2) National
Federation of Sugar Workers (NFSW); "(3) No Union

On February 9, 1989, private respondent NFSW-FGT-KMU filed a motion for reconsideration that the
Honorable Med-Arbiter misapprehended the facts and the law applicable amounting to gross
incompetence. Hence, private respondent NFSW-FGT-KMU prayed that the order of the Med-Arbiter be set
aside and the motion to dismiss be reconsidered.

Bureau of Labor Relations rendered a resolution reversing the order of the Med-Arbiter, to wit:
"WHEREFORE, premises considered, the Order of the Med-Arbiter dated 8 February 1989 is hereby set
aside avand cated and a new one issued dismissing the above entitled petition for being filed out of time.

Bureau of Labor Relations saying that No certification elction will be conducted.

ISSUE: WHETHER OR NOT A PETITION FOR CERTIFICATION ELECTION MAY BE FILED AFTER THE 60-DAY
FREEDOM PERIOD.

NACUSIP-TUCP Petitioner maintains that respondent Director Calleja committed grave abuse of discretion
amounting to excess of jurisdiction in rendering the resolution dated June 26, 1989 setting aside, vacating
and reversing the order dated February 8, 1989 of Med-Arbiter Serapio

The NFSW-FGT-KMU public respondent maintains that Section 6 of the Rules Implementing Executive
Order No. 111 commands that the petition for certification election must be filed within the last sixty (60)

62
days of the CBA and further reiterates and warns that any petition filed outside the 60-day freedom period
"shall be dismissed outright." Moreover, Section 3, Rule V, Book V of the Rules Implementing the Labor
Code enjoins the Aling of a representation question, if before a petition for certiAcation election is Aled, a
bargaining deadlock to which the bargaining agent is a party is submitted forconciliation or arbitration.

The records show that the CBA at the Collective Agreements Division (CAD) of the Bureau of Labor Relations
show that the CBA between Dacongcogon and private respondent NFSW-FGT-KMU had expired on November
14, 1987, hence, the petition for certification election was filed too late, that is, a period of more than one (1)
year after the CBA expired

RULING : We find the petition devoid of merit. A careful perusal of Rule V, Section 6, Book V of the Rules
Implementing the Labor Code, as amended by the rules implementing Executive Order No. 111 provides
that: "SECTION 6. Procedure. — . . .

"In a petition involving an organized establishment or enterprise where the majority status of the
incumbent collective bargaining union is questioned by a legitimate labor organization, the Med Arbiter
shall immediately order the conduct of a certiFIcation election if the petition is Aled during the last sixty
(60) days of the collective bargaining agreement. Any petition filed before or after the sixty-day
freedom period shall be dismissed outright. "The sixty-day freedom period based on the original collective
bargaining agreement shall not be affected by any amendment, extension or renewal of the collective
bargaining agreement for purposes of certification election.

The clear mandate of the aforequoted section is that the petition for certiAcation election Aled by the
petitioner NACUSIP-TUCP should be dismissed outright, having been Aled outside the 60-day freedom
period or a period of more than one (1 ) year after the CBA expired.

It is a rule in this jurisdiction that only a certiAed collective bargaining agreement — i.e., an agreement duly
certiAed by the BLR may serve as a bar to certiAcation elections. (Philippine Association of Free Labor
Unions (PAFLU) v. Estrella, G.R. No. 45323, February 20, 1989, 170 SCRA 378, 382) It is noteworthy that the
Bureau of Labor Relations duly certiAed the November 14, 1984 collective bargaining agreement.
Hence, the contract-bar rule as embodied in Section 3, Rule V, Book V of the rules implementing the Labor
Code is applicable.

Anent the petitioner's contention that since the expiration of the CBA in 1987 private respondent NFSW-
FGT-KMU and Dacongcogon had not concluded a new CBA, We need only to stress what was held in the
case of Lopez Sugar Corporation v. Federation of Free Workers, Philippine Labor Union Association (G.R.
No. 75700-01, 30 August 1990, 189 SCRA 179, 191) quoting Article 253 of the Labor Code that "(i)t shall be
the duty of both parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by
the parties." Despite the lapse of the formal effectivity of the CBA the law still considers the same as
continuing in force and effect until a new CBA shall have been validly executed. Hence, the contract bar
rule still applies.

Besides, it should be emphasized that Dacongcogon, in its answer stated that the CBA was extended for
another three (3) years and that the deadlock was submitted to the Labor Management Council. All premises
considered, the Court is convinced that the respondent Director of the Bureau of Labor Relations did not

63
commit grave abuse of discretion in reversing the order of the Med-Arbiter. ACCORDINGLY, the petition is
DENIED and the resolution of the respondent Director of the Bureau of Labor Relations is hereby AFFIRMED.

N. ABSORPTION DOCTRINE

[G.R. No. 97237. August 16, 1991.]

FILIPINAS PORT SERVICES, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, PATERNO LIBOON, SEGUNDO AQUINO,
et al

 Did not diminish the fact that the ownership and constituency of the new corporation are
basically identical with the previous owners.

Doctrines : EMPLOYER-EMPLOYEE RELATIONSHIP; CONTINUES TO EXIST INSPITE OF THE MERGER OF THE

CORPORATION. By the fact of the merger, a succession of employment rights and obligations had
occurred between Filport and the private respondents.

FACTS : In view of the government policy which ordained that cargo handling operations
should be limited to only one cargo handling operator-contractor for every port the different stevedoring
and arrastre corporations operating in the Port of Davao were integrated into a single dockhandlers
corporation known as the Davao Dockhandlers, Inc., which was registered with the Securities and Exchange
Commission on July 13, 1976.

Due to the late receipt of its permit to operate at the Port of Davao from the Bureau of Customs, Davao
Dockhandlers, Inc., which was subsequently renamed Filport, actually started its operation on February 16,
1977.LexLib

As a result of the merger, Section 118, Article X of the General Guidelines on The Integration of
Stevedoring/Arrastre Services (PPA Administrative Order No. 13-77) mandated Filport to draw its personnel
complements from the merging operators, as follows:

"SECTION 118. Absorption of labor. — Subject to the provisions of the immediate preceding section, and
consistent with the actual operational requirements of the new management, all labor force together with
its necessary personnel complement, of the merging operators shall be absorbed by the merged
or integrated organization to constitute its labor force.

Thus, Filport's labor force was mostly taken from the integrating corporations, among
them the private respondents.

On February 4, 1987, private respondent Paterno Liboon and 18 others filed a complaint with the
Department of Labor and Employment Regional O@ce in Davao City,
alleging that they were employees of Filport since 1955 through 1958 up to December 31, 1986 when they
retired; that they were paid retirement bene:ts computed from February 16, 1977 up to December 31,
1986 only; and that taking into consideration their continuous length of service, they are entitled to be paid

64
retirement benefits differentials from the time they started working with the predecessors of Filport up to
the time they were absorbed by the latter in 1977

The Labor Arbiter held Filport liable for retirement benefits due private respondents for services rendered
prior to February 16, 1977. Said decision was affrmed by the NLRC

Filport filed a petition for certiorari.

ISSUE : Whether or not Filport may be liable for retirement benefits due private respondents for services
rendered prior to February 16, 1977

RULING : Renaming of the Davao Dockhandlers, Inc. to Filipinas Port Services, Inc. did not diminish the fact
that the ownership and constituency of the new corporation are basically identical with the previous
owners. "It is, therefore, the considered view of this office that respondent Filport being a mere alter ego
of the different merging companies has at the very least, the obligation not only to absorb into its employ
workers of the dissolved companies, but also to absorb the length of service earned by the absorbed
employees from their former employers.

Under the circumstances, respondent-appellant is a successor employer. As a successor entity, it is

answerable to the lawful obligations of the predecessor employers, herein integrees. This Commission has
so held under the principle of 'substitution' that the successor :rm is liable to (sic) the obligations of the
predecessor employer, notwithstanding the change in management or even personality, of the new
contracting employer."

"Substitutionary" doctrine in the case of Benguet Consolidated, Inc. vs. B0I Employees & Workers Union,

Thus, granting that Filport had no contract whatsoever with the private respondents regarding the services
rendered by them prior to February 16, 1977, by the fact of the merger, a succession of employment rights
and obligations had occurred between Filport and the private respondents.The law enforced at the time of
the merger was Section 3 of Act No. 2772 which took effect on March 6, 1918. Said law provides …” the
corporation merged shall be deemed and taken as absorbed by the other corporation and incorporated in it;
, shall be taken and deemed as transferred to and vested in the new corporation formed by the consolidation,
or in the surviving corporation in case of merger, without further act or deed; and the title to real estate,
either by deed or otherwise, under the laws of the Philippine Islands vested in either corporation, shall not
be deemed in any way impaired by reason of this Act:…

It was mandated that Filport shall absorb all labor force and necessary personnel complement of the merging
operators, thus, clearly indicating the intention to continue the employer-employee relationships of the
individual companies with its employees through Filport.

Finally, to deny the private respondents the fruits of their labor corresponding to the time they worked
with their previous employers would render at naught the constitutional provisions on labor protection. In
interpreting the protection to labor and social justice provisions of the Constitution and the labor laws, and
rules and regulations implementing the constitutional mandate, the Supreme Court has always
adopted to liberal approach which favors the exercise of labor rights.

O. SUBSTITUTIONARY DOCTRINE

65
"substitutionary" doctrine only provides that the employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple expedient of changing their bargaining agent. Thus,
but the collective bargaining contract which is still subsisting, continues to bind the employees up to its
expiration date.

"PRINCIPLE OF SUBSTITUTION", MEANING OF. — The principle of substitution, formulated by the National
Labor Relations Board, counterpart of our Court of Industrial Relations, means that where there occurs a
shift in employees' union allegiance after the execution of a collective bargaining contract with their
employer, the employees can change their agent - the labor union, but the collective bargaining contract
which is still subsisting, continues to bind the employees up to its expiration date. They may, however,
bargain for the shortening of said expiration date. And the only consideration for the "substitutionary"
doctrine is the employees' interest in the existing bargaining agreement; the agent's (Union's) interest
never enters into the picture.

CHANGE OF BARGAINING AGENT; SUBSTITUTIONARY DOCTRINE How does disaffiliation affect the CBA?

The agreement is binding on the parties for the period therein specified. The employees cannot revoke the
validly executed collective bargaining contract with their employer by the simple expedient of changing
their bargaining representative. Thus, when there occurs a shift in employees' union allegiance after the
execution of a bargaining contract with their employer, and the employees change their bargaining
representative, the contract continues to bind them up to its expiration date. The new agent, however, may
bargain for the shortening of the contract period.

Formulating the "substitutionary" doctrine, the only consideration involved was the employees' interest in
the existing bargaining agreement. The agent's interest never entered the picture. In fact, the justification
9 for said doctrine was: xxx that the majority of the employees, as an entity under the statute, is the true
party in interest to the contract, holding rights through the agency of the union representative. Thus, any
exclusive interest claimed by the agent is defeasible at the will of the principal.... (Emphasis supplied)

Stated otherwise, the "substitutionary" doctrine only provides that the employees cannot revoke the validly
executed collective bargaining contract with their employer by the simple expedient of changing their
bargaining agent. And it is in the light of this that the phrase "said new agent would have to respect said
contract" must be understood. It only means that the employees, thru their new bargaining agent, cannot
renege on their collective bargaining contract, except of course to negotiate with management for the
shortening thereof.

The "substitutionary" doctrine, therefore, cannot be invoked to support the contention that a newly
certified collective bargaining agent automatically assumes all the personal undertakings — like the no-
strike stipulation here — in the collective bargaining agreement made by the deposed union. When BBWU
bound itself and its officers not to strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the employees, not of the other unions
which possess distinct personalities. To consider UNION contractually bound to the no-strike stipulation
would therefore violate the legal maxim that res inter alios nec prodest nec nocet.

Latin for "a thing done between others does not harm or benefit others") is a law doctrine which
holds that a contract cannot adversely affect the rights of one who is not a party to the contract.

66
 [G.R. No. L-14689. July 26, 1960.]
GENERAL MARITIME STEVEDORES' UNION OF THE PHILIPPINES, ET
AL., petitioners, vs. SOUTH SEA SHIPPING LINE, ET AL., respondents

Doctrines:

- When there is a collective bargaining contract for more than a year, it is too early to hold a certifcation
election within a year from the effectivity of said bargaining agreement and that a two year bargaining
contract is not too long for the purpose of barring a certification election.

WHEN PRINCIPLE OF SUBSTITUTION MAY BE ADOPTED AND ENFORCED BY C.I.R. — Where the bargaining
contract is to run for more than two years, the principle of substitution may well be adopted and enforced
by the CIR to the effect that after two years of the life of the bargaining agreement, a certi<cation election
may be allowed by the CIR; and that if a bargaining agent other than the union or organization that executed
the contract is elected, said new agent would have to respect said contract but that it may bargain with the
management for the shortening of the life of the contract if it considers it too long, or refuse to renew the
contract pursuant to an automatic renewal clause.

FACTS : Acting on a petition dated October 23, 1953 of the United Seamen's Union of the Philippines, later
referred to as USUP, in case No. 43-MC, the CIR issued an order dated February 28, 1955, directing that
an election be held among the unlicensed members and crew of the respondent South Sea Shipping
Lines, In said order, the USUP and GMSU were considered eligible to be voted for

Certifcation election was held on April 15 and June 10, 1955, after which the CIR issued another order
dated June 17, 1955, certifying USUP as the exclusive bargaining representative of the laborers and
employees of the Shipping Lines.

On June 28, 1957, a collective bargaining agreement was entered into between the Shipping Line and the
USUP

Art. 10 of the agreement provided as follows: "This Agreement shall take effect on July 21, 1957, to continue
in full force and effect for two (2) years until July 20, 1959 and thereafter for another period of two (2) years,
unless either party shall notify the other in writing not less than sixty (60) days prior to the expiration date
hereof of its intention or election to terminate the agreement as of the end of the current term.

GMSU insists that the agreement entered into was but a renewal of an agreement between the USUP and
Shipping Line entered into sometime in 1955.

On April 30, 1958, that is a of the last certification election, GMSU and its co-petitioners <led with little more
than two years after the holding the CIR a petition for certi<cation election, Case No. 546-MC, later
numbered as Case No. 547-MC, alleging that there were two labor unions, to which were aGliated
unlicensed crew members of the Shipping Line, namely, the GMSU and the USUP; that as members of the
GMSU petitioners constituted 10% of all the unlicensed crew members of the Shipping Line;
and that there had not been a certi<cation election within twelve months before the filing of the petition.

67
The Shipping Line in its answer, expressed its attitude of strict neutrality and its willingness to abide by the
order of the CIR although in its amended answer, it also alleged that it considered the existing collective
bargaining agreement between itself and the USUP as binding until annulled.

The USUP intervened and filed a motion for dismissal of the petition claiming that there was an existing
collective bargaining agreement between itself and the Shipping Line entered into on June 28, 1957, for a
period of two years up to July 26, 1959, which period was reasonable, and which agreement contained
reasonable conditions of employment, and that the existence of such agreement barred another
certi<cation election. As already stated, the CIR granted the motion to dismiss and refused to give due course
to the GMSU's petition for certification election.

To support its order, the CIR invoked the "contract-bar rule", explaining that the then existing contract
between the Shipping Line and the USUP, which was for a period of two years, up to July 20, 1959,
contained provisions regarding wages, closed shops, check off, grievances, machinery and other conditions
regarding employment relationships. According to the CIR, these circumstances plus the fact that there was
no showing that the contracting union was company dominated support the validity and reasonableness
of the agreement between the Shipping Line and the USUP, the duly certified bargaining representative,
and that the existence of such contract barred the holding of a certification election.

"The 'contract-bar rule' is procedural which this Court in its discretion may
apply or waive as the facts of any given case may demand in the interest of
stability and fairness in collective bargaining agreements.

GMSU, however, equally maintains that it is mandatory for the CIR to order a
certi<cation election once a petition is signed and submitted by at least 10% of all the
workers in a bargaining unit; and it is also shown that no certi<cation election had been
held within twelve months prior to the <ling of such petition pursuant to the provisions
of Section 12 (b) and (c), Republic Act No. 875, the pertinent portions of which read:
"
(b) Whenever a question arising concerning the representation of employees, the Court may investigate
such controversy and certify to the parties in writing the name of the labor organization that has been
designated or selected for the appropriate bargaining unit. . . . Such a balloting shall be known as
'certification election' and the Court shall not order certifications in the same unit more often than once in
twelve months. The organization receiving the majority votes casts in such election shall be certified as the
exclusive bargaining representative of such employees."
"
(c) In an instance where a petition is filed by at least ten percent of the employees in the appropriate unit
requesting an election, it shall be mandatory on the Court to order an election for the purpose of
determining the representative of the employees for the appropriate bargaining unit.

ISSUE: WHETHER OR NOT UPON SUBMISSION OF A PETITION FOR CERTI<CATION ELECTION BY AT LEAST 10%
OF ALL THE WORKERS IN A BARGAINING UNION, IT IS MANDATORY FOR THE CIR TO ORDER A CERTI<CATION
ELECTION — WITH NO EXCEPTIONS, PURSUANT TO SECTION 12 (C), REPUBLIC ACT NO. 875 through the same
Justice, we made the following statement:
"The above command of the Court is not so absolute as it may appear at <rst glance. The statute itself

68
expressly recognizes one exception: When a certi<cation election had occurred within one year. And the
judicial administrative agencies have found two exceptions: where there is an unexpired bargaining
agreement not exceeding two years and when there is a pending charge of company domination of one of
the labor unions intending to participate in the election.

RULING : After reviewing the cases decided by the NLRB of the United States and our own
cases, we have arrived at the conclusion that it is reasonable and proper that when
there is a bargaining contract for more than a year, it is too early to hold a i
election within a year from the effectivity of said bargaining agreement; also that a two
year bargaining contract is not too long for the purpose of barring a certi<cation
election. For this purpose, a bargaining agreement may run for three, even four years,
but in such case, it is equally advisable that to decide whether or not within those three
or four years, a certi<cation election should not be held, may well be left to the sound
discretion of the CIR, considering the conditions involved in the case, particularly, the
terms and conditions of the bargaining contract.

We also hold that where the bargaining contract is to run for more than two years, the principle of
substitution may well be adopted and enforced by the CIR to the effect that after two years of the life of
bargaining agreement, a certi<cation election may be allowed by the CIR; that if a bargaining agent other
than the union or organization that executed the contract, is elected, said new agent would have to respect
said contract, but that it may bargain with the management for the shortening of the life of the contract if it
considers it too long, or refuse to renew the contract pursuant to an automatic renewal clause.

According to the claim or contention of the petitioners the bargaining agreement

of July 28, 1957 was but a renewal of the same or similar agreement of July 1955, so
that the bargaining agreement has been in existence for about <ve years, which is too
long a period within which a certification election has not been held. In view of the foregoing, we believe
and hold that the appealed order of the CIR dismissing the petition for certi<cation election and refusing to
allow the selection of a new bargaining agent, was valid under the circumstances obtaining at the time.

However, inasmuch as there has been a renewal of the bargaining agreement for
another two years and because it seems that the present agreement is but a renewal of
the one entered into way back in 1955, so that until the expiration of the present
agreement, about six years shall have passed, it is advisable that a new certi<cation
election be held. For this purpose, this case is hereby remanded to the CIR, so that the
petition for certi<cation can be entertained, admitted and given due course, and that a certi<cation election
be held, with the understanding that if a bargaining agent other than the one that negotiated and executed
the present bargaining contract, is elected, said new agent would have to respect the present bargaining
agreement, but without prejudice to its negotiating with the company for a shortening of the period of the
life of the contract, refuse to renew it when it expires, if it so desires, and otherwise
represent and protect the interest of the members of the bargaining unit, all of course, within the terms and
purview of the bargaining contract. No cost

69
 [G.R. No. L-24711. April 30, 1968.]
BENGUET CONSOLIDATED, INC. , p
laintiff-appellant, vs. BCI EMPLOYEES & WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION
OF FREE LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA,
defendants-appellees

DOCTRINE:

"PRINCIPLE OF SUBSTITUTION", MEANING OF. — The principle of substitution, formulated by the National
Labor Relations Board, counterpart of our Court of Industrial Relations, means that where there occurs a
shift in employees' union allegiance after the execution of a collective bargaining contract with their
employer, the employees can change their agent - the labor union, but the collective bargaining contract
which is still subsisting, continues to bind the employees up to its expiration date. They may, however,
bargain for the shortening of said expiration date. And the only consideration for the "substitutionary"
doctrine is the employees' interest in the existing bargaining agreement; the agent's (Union's) interest
never enters into the picture.

UNDER "SUBSTITUTIONARY DOCTRINE", EMPLOYEES CANNOT RENEGE ON THEIR COLLECTIVE BARGAINING

CONTRACT; EXCEPTION. — THE "Substitutionary doctrine" provides that the employees cannot revoke the
validly executed collective bargaining contract with their employer by the simple expedient of changing
their bargaining agent. The new agent must respect the contract. The employees, thru their new bargaining
agent, cannot renege on the collective bargaining contract, except to negotiate with management for the
shortening thereof.

NEW COLLECTIVE BARGAINING AGENT DOES NOT AUTOMATICALLY ASSUME ALL PERSONAL
UNDERTAKINGS OF DEPOSED UNION; SUBSTITUTIONARY DOCTRINE, HELD INAPPLICABLE. — The
"Substitutionary doctrine" cannot be invoked to support the claim that a newly certified collective
bargaining agent automatically assumes all personal undertakings, such as the no-strike stipulation in this
case, assumed by the deposed union. When the BBWU bound itself and its officers not to strike, it could
not bind all the rival unions because the BBWU was the agent only of the employees, not of the other unions
which possess distinct personalities.

Where the defendants are not signatories to the contract, nor are they participants thereof, there can be
no liability on their own. The rule now is that for a labor union and/or its oIcers and members to be liable,
there must be clear proof of actual participation in, or authorization or ratiFcation of the illegal acts. The
rule of "vicarious liability" has since the passage of Republic Act 875 been expressly legislated out.

FACTS : The contending parties in this case — Benguet Consolidated, Inc., ("BENGUET") on the one hand,
and on the other BCI Employees & Workers Union ("UNION") and the Philippine Association of Free Labor
Unions ("PAFLU")

Benguet-Balatoc Workers Union ("BBWU") entered into a Collective Bargaining Contract, Exh. "Z"
("CONTRACT") with BENGUET effective for a period of four and a half (4-1/2) years, or from June 23, 1959 to
December 23, 1963. Embodied a No-Strike, No-Lockout clause.

About three years later, or on April 6, 1962, a certification election was conducted by the Department of
Labor among all the rank and File employees of BENGUET in the same collective bargaining units. UNION
obtained more than 50% of the total number of votes, defeating BBWU, and accordingly, the Court of

70
Industrial Relations, on August 18, 1962, certified UNION as the sole and exclusive collective
bargaining agent of all BENGUET employees as regards rates of pay, wages, hours of work and such other
terms and conditions of employment allowed them by law or contract.

UNION members of a resolution 2 directing its president to Fle a

notice of strike against BENGUET for:

1. Refusal] to grant any amount as monthly living allowance for the workers;

2.Violation of Agreements reached in conciliation meetings among

which is the taking down of investigation [sic] and statements of employees
without the presence of union representative;

3. Refusal to dismiss erring executive after aIdavits had been

presented, thereby company showing [sic] bias and partiality to company
personnel;

4. Discrimination against union members in the enforcement of

disciplinary actions.

The Notice of Strike 3 was Fled on December 28, 1962. Three months later, in the
evening of March 2, 1963, UNION members who were BENGUET employees in the
mining camps at Acupan, Antamok and Balatoc, went on strike

On May 2, 1963, the parties agreed to end the raging dispute. Accordingly,
BENGUET and UNION executed the AGREEMENT,

About a year later or on January 29, 1964, a collective bargaining contract

was finally executed between UNION-PAFLU and BENGUET

Meanwhile, as a result, allegedly, of the strike staged by UNION and its members,
BENGUET had to incur expenses for the rehabilitation of mine openings, repair of
mechanical equipment, cost of pumping water out of the mines, value of explosives,
tools and supplies lost and/or destroyed, and other miscellaneous expenses, all
amounting to P1,911,363.83. So, BENGUET sued UNION, PAFLU and their respective
Presidents to recover said amount in the Court of First Instance of Manila, on the sole
premise that said defendants breached their undertaking in the existing CONTRACT not to strike during the
effectivity thereof.

CONTENTION :

In answer to BENGUET's complaint, defendants unions and their respective

presidents put up the following defenses: (1) they were not bound by the CONTRACT
which BBWU, the defeated union, had executed with BENGUET; (2) the strike was due,
inter alia, to unfair labor practices of BENGUET; and (3) the strike was lawful and in the
exercise of the legitimate rights of UNION-PAFLU under Republic Act 875.

Issues having been joined, trial commenced. On February 23, 1965, the trial court

71
rendered judgment dismissing the complaint on the ground that the CONTRACT,
particularly the No-Strike clause, did not bind defendants.

The several errors assigned by BENGUET basically ask three questions:

ISSUE :

(1) Did the Collective Bargaining Contract executed between Benguet and
BBWU on June 23, 1959 and effective until December 23, 1963 automatically bind
UNION-PAFLU upon its certiFcation, on August 18, 1962, as sole bargaining
representative of all BENGUET employees?

In support of an aIrmative answer to the Frst question, BENGUET Frst invokes

the so-called "Doctrine of Substitution" referred to in General Maritime Stevedore's
Union v. South Sea Shipping Lines, L-14689, July 26, 1960. There it was remarked:

RULING : But worse, BENGUET's reliance upon the Principle of Substitution is totally
misplaced. In formulating the "substitutionary" doctrine, the only consideration involved was the
employees' interest in the existing bargaining agreement. The agent's interest never
entered the picture.

". . . that the ma

jority of the employees, as an entity under the statute, is the
true party in interest to the contract, holding rights through the agency of the
union representative. Thus, any exclusive interest claimed by the agent is
defeasible at the will of the principal . . ."

, the "substitutionary" doctrine only provides that the employees

cannot revoke the validly executed collective bargaining contract with their employer by
the simple expedient of changing their bargaining agent. And it is in the light of this that
the phrase "said new agent would have to respect said contract" must be understood. It
only means that the employees, thru their new bargaining agent, cannot renege on their
collective bargaining contract, except of course to negotiate with management for the
shortening thereof.

The "substitutionary" doctrine, therefore, cannot be invoked to support the

contention that a newly certiFed collective bargaining agent automatically assumes all
the personal undertakings — like the no-strike stipulation here — in the collective
bargaining agreement made by the deposed union. When BBWU bound itself and its
oIcers not to strike, it could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the employees, not
of the other unions which possess distinct personalities. To consider UNION
contractually bound to the no-strike stipulation would therefore violate the legal maxim
that res inter alios acta alios nec prodest nec nocet.

e respected unless and until the parties act otherwise.

72
 ANOTHER ISSUE : "In collective bargaining, the labor union or members of the board or committee signing
the contract shall be liable for non- fulFllment thereof."
(Emphasis supplied) There is no question, defendants were not signatories nor participants in the
CONTRACT.

The standing rule now is that for a labor union and/or its oIcials and members
to be liable, there must be clear proof of actual participation in or authorization or
ratiFcation of the illegal acts. 16 While the lower court found that some strikers and
picketers resorted to intimidation and actual violence, it also found that defendants
presented uncontradicted evidence that before and during the strike, the strike leaders
had time and again warned the strikers not to resort to violence but to conduct
peaceful picketing only.

Since defendants were not contractually bound by the no-strike clause in the
CONTRACT, for the simple reason that they were not parties thereto, they could not be
liable for breach of contract to plaintiff. The lower court therefore correctly absolved
them from liability.

VI. UNFAIR LABOR PRACTICE, DISPUTES, PROCEDURES AND JURISDICTIONS

a. Arbitration in general : Its Concept and Meaning

WHAT IS ARBITRATION? SUBMISSION OF ISSUES TO AN IMPARTIAL 3RD PERSON TO TAKE THE MATTER BASED
ON THE STRENGTH OF THE ARGUMANETS OF THE PARTIES.

VOLUNTARY ARBITRATION Section 3. Submission to voluntary arbitration. - Where grievance remains

unresolved, either party may serve notice upon the other of its decision to submit the issue to voluntary
arbitration. The notice shall state the issue or issues to be arbitrated, copy thereof furnished the board or
the voluntary arbitrator or panel of voluntary arbitrators named or designated in the collective bargaining
agreement.

If the party upon whom the notice is served fails or refuses to respond favorably within seven (7) days from
receipt thereof, the voluntary arbitrator or panel of voluntary arbitrators designated in the collective
bargaining agreement shall commence voluntary arbitration proceedings. Where the collective bargaining
agreement does not so designate, the board shall call the parties and appoint a voluntary arbitrator or
panel of voluntary arbitrators, who shall thereafter commence arbitration proceedings in accordance with
the proceeding paragraph.

In instances where parties fail to select a voluntary arbitrator or panel of voluntary arbitrators, the regional
branch of the Board shall designate the voluntary arbitrator or panel of voluntary arbitrators, as may be
necessary, which shall have the same force and effect as if the parties have selected the arbitrator. The
parties to a CBA will decide on the number of arbitrators who may hear a dispute only when the need for
it arises. Even the law itself does not specify the number of arbitrators. Their alternatives — whether to
have one or three arbitrators — have their respective advantages and disadvantages. In this matter, cost is
not the only consideration; full deliberation on the issues is another, and it is best accomplished in a hearing
conducted by three arbitrators.

73
In effect, the parties are afforded the latitude to decide for themselves the composition of the grievance
machinery as they find appropriate to a particular situation. Labor arbitration is the reference of a labor
dispute to a third party for determination on the basis of evidence and arguments presented by such
parties, who are bound to accept the decision. Voluntary arbitration has been defined as a contractual
proceeding whereby the parties to any dispute or controversy, in order to obtain a speedy and inexpensive
final disposition of the matter involved, select a judge of their own choice and by consent submit their
controversy to him for determination. Under voluntary arbitration, on the other hand, referral of a dispute
by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an
impartial third person for a final and binding resolution.

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

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

A voluntary arbitrator “is not a public tribunal imposed upon the parties by a superior authority which the
parties are obliged to accept. He has no general character to administer justice for a community which
transcends the parties. He is rather part of a system of selfgovernment created by and confined to the
parties.”

HOW VOLUNTARY ARBITRATOR IS CHOSEN A voluntary arbitrator is chosen by the parties themselves
(preferably accredited by the NCMB). The choice is usually influenced by the trust in the person’s fairness
and knowledge of the dynamics, including law, of labor-management relation.

The preferred method of selection is by mutual agreement of the parties. Alternative methods include the
selection or appointment by an administrative agency like the NCMB.

Parties in general may choose between the use of a temporary (when a dispute is already at hand; specific)
or permanent arbitrator (before a dispute arises; for a period of time, usually during the life of the CBA).
They have also a choice as to the number of arbitrators, either a sole arbitrator or a panel of arbitrators or
Arbitration Board. 11.

DISTINGUISHED FROM A COURT OF LAW

Court of Law Arbitration

Formal Informal

Follow precedents Not obliged

74
Rules of evidence observed Not observed

Decisions may be appealed to the higher court No comparable appeal recourse

Hear a great variety of cases Hear only industrial disputes

Services of a lawyer is essential due to complexity Not essential

Arbitration, in sum, is a non-technical and relatively inexpensive procedure for obtaining a quick solution to
industrial disputes by persons who have specialized knowledge of labor management relations.

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

Article. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks.

ARBITRABLE DISPUTES

In the field of labor relations, arbitration applies to two kinds of disputes: (1) contract-negotiation disputes;
and (2) contract interpretation disputes. Contract negotiation disputes are disputes as to the terms of a
collective bargaining agreement. Where there is an existing agreement to arbitrate such disputes, and a
bargaining deadlock or impasse has arisen, the disputants submit to an impartial outsider for settlement
the collective bargaining issue which they had been unable to settle by themselves, whether or not aided
by conciliators. Contract interpretation disputes are disputes arising under an existing collective bargaining
agreement, involving such matters as the interpretation and application of the contract, or alleged violation
of its provisions.

Arbitration of contract negotiation disputes is often known as arbitration of “interest,” while arbitration of
contract interpretation disputes is known as arbitration of “grievance” or “rights.”

75
All grievances submitted to the grievance machinery which are not settled thin 7 calendar days from the
date of their submission shall automatically be referred to voluntary arbitration prescribed in the CBA.

b. Voluntary Arbitration vs Compulsory Arbitration

c. Voluntary Arbitrator VS Labor Arbiter : Scope of Jurisdiction

Sevilla Trading Company vs A.V.A Tomas E. Semana et al. G.R 152456 April 28, 2004

76
Rule 43, Revised Rules of Civil Procedure

RULE 43

Appeals From the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals

Section 2. Cases not covered. — This Rule shall not apply to judgments or final orders issued under the
Labor Code of the Philippines. (n)

Section 3. Where to appeal. — An appeal under this Rule may be taken to the Court of Appeals within the
period and in the manner herein provided, whether the appeal involves questions of fact, of law, or mixed
questions of fact and law. (n

Section 4. Period of appeal. — The appeal shall be taken within fifteen (15) days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if publication is required by
law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in
accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration
shall be allowed.

Rule 65 Revised Rules of Civil Procedure

RULE 65

Certiorari, Prohibition and Mandamus

Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification
of non-forum shopping as provided in the third paragraph of section 3, Rule 46. (1a)

77
d.Intra- Union Disputes vs Inter-Uinion Disputes: Jurisdiction

inter union dispute

any conflict between and amng egitimate labor org involving representation qustionsfor purposes of
collective barganinig or to any ther conflict or dispute between legitimate labor unins.

Intra –Union Dispute

Any conflict between and among union member , including grievances arising for any violation og te rights
and conditions of memebershhip , violation of or disagreemant over any provision of the union’s constitution
and by-laws , or dispute arisisng form chartering or affiliatian of union.

Bautista vs Inciong G.R 52824 March 16, 1988

Diokno VS Cacdac ( 526 SCRA 441 , 2007 )

THIRD DIVISION

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, G.R. No. 168475

ANTONIO Z. VERGARA, JR., DANTE M. TONG,
JAIME C. MENDOZA, ROMEO M. MACAPULAY,
ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA,
ROMULO AQUINO, JESUS SAMIA, GAUDENCIO
CAMIT, DANTE PARAO, ALBERTO MABUGAT,
EDGARDO VILLANUEVA, JR., FRANCISCO Present:
ESCOTO, EDGARDO SEVILLA, FELICITO
MACASAET, and JOSE Z. TULLO, YNARES-SANTIAGO, J.
Petitioners, Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
- versus - NACHURA, JJ.

HON. HANS LEO J. CACDAC, in his capacity as

Director of the Bureau of Labor Relations,
DOLE, MANILA, MED-ARBITER TRANQUILINO C.
REYES, EDGARDO DAYA, PABLO LUCAS,
LEANDRO M. TABILOG, REYNALDO ESPIRITU,
JOSE VITO, ANTONIO DE LUNA, ARMANDO
YALUNG, EDWIN LAYUG, NARDS PABILONA,
REYNALDO REYES, EVANGELINE ESCALL,
ALBERTO ALCANTARA, ROGELIO CERVITILLO,
MARCELINO MORELOS, FAUSTINO ERMINO,
JIMMY S. ONG, ALFREDO ESCALL, NARDITO C.
ALVAREZ, JAIME T. VALERIANO, JOHNSON S.

78
 REYES, GAUDENCIO JIMENEZ, JR., GAVINO R.
VIDANES, ARNALDO G. TAYAO, BONIFACIO F.
CIRUJANO, EDGARDO G. CADVONA, MAXIMO
A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D.
ACORDA, JR., LEMUEL R. RAGASA, and GIL G. DE
VERA,
Respondents.

Promulgated:

July 4, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure,
seeking the nullification of the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No. 83061,
dated 17 June 2004 and 10 June 2005, respectively, which dismissed petitioners Petition for Certiorari and
denied their Motion for Reconsideration thereon.

The Facts

79
 The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor
organization which is the supervisory union of Meralco.Petitioners and private respondents are members
of FLAMES.

On 1 April 2003, the FLAMES Executive Board created the Committee on Election (COMELEC) for
the conduct of its union elections scheduled on 7 May 2003.[3] The COMELEC was composed of petitioner
Dante M. Tong as its chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as
members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime
T. Valeriano filed their respective certificates of candidacy. On 12 April 2003, the COMELEC rejected Jimmy
S. Ongs candidacy on the ground that he was not a member of FLAMES. Meanwhile, the certificates of
candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano were similarly rejected on the basis
of the exclusion of their department from the scope of the existing collective bargaining agreement
(CBA). The employees assigned to the aforesaid department are allegedly deemed disqualified from
membership in the union for being confidential employees.

On 24 April 2003, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano
(Ong, et al.), and a certain Leandro M. Tabilog filed a Petition[4] before the Med-Arbitration Unit of the
Department of Labor and Employment (DOLE). They prayed, inter alia, for the nullification of the order of
the COMELEC which disallowed their candidacy.[5] They further prayed that petitioners be directed to
render an accounting of funds with full and detailed disclosure of expenditures and financial transactions;
and that a representative from the Bureau of Labor Relations (BLR) be designated to act as chairman of the
COMELEC in lieu of petitioner Dante M. Tong.[6]

On 30 April 2003, DOLE-NCR Regional Director Alex E. Maraan issued an Order[7] directing DOLE personnel
to observe the conduct of the FLAMES election on 7 May 2003.[8]

On 2 May 2003, petitioners filed a Petition[9] with the COMELEC seeking the disqualification of private
respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna,
Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara,
Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.).Petitioners alleged that Daya, et
al., allowed themselves to be assisted by non-union members, and committed acts of disloyalty which are
inimical to the interest of FLAMES. In their campaign, they allegedly colluded with the officers of the
Meralco Savings and Loan Association (MESALA) and the Meralco Mutual Aid and Benefits Association
(MEMABA) and exerted undue influence on the members of FLAMES.

80
On 6 May 2003, the COMELEC issued a Decision,[10] declaring Daya, et al., officially disqualified to run
and/or to participate in the 7 May 2003 FLAMES elections. The COMELEC also resolved to exclude their
names from the list of candidates in the polls or precincts, and further declared that any vote cast in their
favor shall not be counted. According to the COMELEC, Daya, et al., violated Article IV, Section 4(a)(6)[11] of
the FLAMES Constitution and By-Laws (CBL) by allowing non-members to aid them in their campaign. Their
acts of solicitation for support from non-union members were deemed inimical to the interest of FLAMES.

On 7 May 2003, the COMELEC proclaimed the following candidates, including some of herein
petitioners as winners of the elections, to wit[12]:

NAME POSITION

Emilio E. Diokno President

Vicente P. Alcantara Executive Vice President External
Antonio Z. Vergara, Jr. Executive Vice President Internal
Alberto L. Mabugat Vice-President Organizing
Roberto D. Masiglat, Jr. Vice-President Education
Leandro C. Atienza Vice-President Chief Steward
Felito C. Macasaet Secretary
Edgardo R. Villanueva Asst. Secretary
Romulo C. Aquino Treasurer
Jesus D. Samia Asst. Treasurer
Gaudencio C. Camit Auditor
Rodante B. [Parao] Asst. Auditor
Jose Z. Tullo Central Coordinator
Bernardo C. Sevilla North Coordinator
Francis B. Escoto South Coordinator

On 8 May 2003, private respondents Daya, et al., along with Ong, et al., filed with the Med-
Arbitration Unit of the DOLE-NCR, a Petition[13] to: a) Nullify Order of Disqualification; b) Nullify Election
Proceedings and Counting of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election
to be Controlled and Supervised by the DOLE. The Petition was docketed as Case No. NCR-OD-0304-002-
LRD.

On 14 May 2003, another group led by private respondent Gaudencio Jimenez, Jr., along with
private respondents Johnson S. Reyes, Gavino R. Vidanes, Arnaldo G. Tayao, Bonifacio F. Cirujano, Edgardo
G. Cadavona, Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr., Lemuel R. Ragasa and Gil G. de
Vera (Jimenez, et al.) filed a Petition with the Med-Arbitration Unit of the DOLE-NCR against petitioners to

81
nullify the 7 May 2003 election on the ground that the same was not free, orderly, and peaceful. It was
docketed as Case No. NCR-OD-0305-004-LRD, which was subsequently consolidated with the Petition of
Daya, et al. and the earlier Petition of Ong, et al.

Meanwhile, the records show that a subsequent election was held on 30 June 2004, which was
participated in and won by herein private respondents Daya, et al. The validity of the 30 June
2004 elections was assailed by herein petitioners before the DOLE[14] and taken to the Court of Appeals in
CA-G.R. SP No. 88264 on certiorari, which case does not concern us in the instant Petition. The Court of
Appeals, in the aforesaid case, rendered a Decision[15]dated 12 January 2007, upholding the validity of
the 30 June 2004 elections, and the declaration of herein private respondents Daya, et al., as the duly
elected winners therein.

The Decision of the Med-Arbiter

On 7 July 2003, Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision[16] in favor of private
respondents, Daya, et al. However, the petition of Jimenez, et al., was dismissed because it was premature,
it appearing that the COMELEC had not yet resolved their protest prior to their resort to the Med-
Arbiter. Finally, the Petition of Ong, et al., seeking to declare themselves as bona fide members of FLAMES
was ordered dismissed.

The Med-Arbiter noted in his decision that during a conference which was held on 15 May 2003,
the parties agreed that the issue anent the qualifications of private respondents Ong, et al. had been
rendered moot and academic.[17]

The Med-Arbiter reversed the disqualification imposed by the COMELEC against private
respondents Daya, et al. He said that the COMELEC accepted all the allegations of petitioners against
private respondents Daya, et al., sans evidence to substantiate the same. Moreover, he found that the
COMELEC erred in relying on Article IV, Section 4(a) (6) of the CBL as basis for their disqualification. The
Med-Arbiter read the aforesaid provision to refer to the dismissal and/or expulsion of a member from
FLAMES, but not to the disqualification of a member as a candidate in a union election. He rationalized that
the COMELEC cannot disqualify a candidate on the same grounds for expulsion of members, which power
is vested by the CBL on the Executive Board. The Med-Arbiter also held that there was a denial of due
process because the COMELEC failed to receive private respondents Daya, et al.s motion for
reconsideration of the order of their disqualification. The COMELEC was also found to have refused to
receive their written protest in violation of the unions CBL.[18]

82
 Lastly, the Med-Arbiter defended his jurisdiction over the case. He concluded that even as the
election of union officers is an internal affair of the union, his office has the right to inquire into the merits
and conduct of the election when its jurisdiction is sought.[19]

The decretal portion of the Med-Arbiters Decision states, viz:

WHEREFORE, premises considered, the [P]etition to Nullify the Order of

Disqualification; Nullify Election proceedings and counting of Votes; and Declare a Failure
of Elections is hereby granted. The disqualification of [private respondent] Ed[gardo]
Daya, et al., is hereby considered as null and void.Perforce, the election of union officers
of FLAMES on May 7, 2003 is declared a failure and a new election is ordered conducted
under the supervision of the Department of Labor and Employment.

The [P]etition to conduct an accounting of union funds and to stop the release of
funds to [petitioner] Diokno, et al., is ordered dismissed for lack of merit.

And the Petition to Declare [private respondents] Jimmy Ong, Alfredo [E]scall,
Nardito Alvarez, and Jaime Valeriano as members of FLAMES is hereby ordered dismissed
for lack of merit.

The [P]etition to Nullify the election filed by [private respondents] Gaudencio

Jimenez, et al., is likewise ordered dismissed.[20]

Aggrieved, petitioners filed an appeal before the Director of the BLR.

The Ruling of the BLR Director

On 3 December 2003, the Director of the BLR issued a Resolution,[21] affirmingin toto the assailed Decision
of the Med-Arbiter.

Public respondent Director Hans Leo J. Cacdac ruled, inter alia, that the COMELECs reliance on Article IV,
Section 4(a) (6) of the CBL, as a ground for disqualifying private respondents Daya, et al., was premature. He
echoed the interpretation of the Med-Arbiter that the COMELEC erroneously resorted to the aforecited
provision which refers to the expulsion of a member from the union on valid grounds and with due process,
along with the requisite 2/3 vote of the Executive Board. Hence, the COMELEC cut short the expulsion
proceedings in disqualifying private respondents Daya, et al.[22] The BLR Director further held that the case
involves a question of disqualification on account of the alleged commission by private respondents
Daya, et al., of illegal campaign acts, which acts were not specifically mentioned in the guidelines for the
conduct of election as issued by the COMELEC. Likewise, on the alleged refusal of private respondents

83
Daya, et al., to submit to the jurisdiction of the COMELEC by failing to file a petition to nullify its order of
disqualification, the BLR Director deemed the same as an exception to the rule on exhaustion of
administrative remedies.Thus:

By themselves, such acts could not be taken as repugnant of COMELECs authority. Sensing
that they were prejudiced by the disqualification order, it was only incumbent upon
[private respondents Daya, et al.] to seek remedy before a body, which they thought has a
more objective perspective over the situation. In short, they opted to bypass the
administrative remedies within the union. Such a move could not be taken against [private
respondents Daya, et al.] considering that non-exhaustion of administrative remedies is
justified in instances where it would practically amount to a denial of justice, or would be
illusory or vain, as in the present controversy.[23]

The BLR Director disposed in this wise:

WHEREFORE, the appeal is DISMISSED for lack of merit. The Decision of Med-Arbiter
Tranquilino B. Reyes, DOLE-NCR, dated 7 July 2003 is AFFIRMED in its entirety.

Let the records of this case be returned to the DOLE-NCR for the immediate conduct of
election of officers of the First Line Association of Meralco Supervisory Employees
(FLAMES) under the supervision of DOLE-NCR personnel.[24]

Subsequently, petitioners sought a reversal of the 3 December 2003 Resolution, but the BLR Director issued
a Resolution dated 10 February 2003,[25] refusing to reverse his earlier Resolution for lack of merit.

Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari.

The Ruling of the Court of Appeals

The Court of Appeals found petitioners appeal to be bereft of merit.

The appellate court held that the provision relied upon by the COMELEC concerns the dismissal and/or
expulsion of union members, which power is vested in the FLAMES Executive Board, and not the
COMELEC. It affirmed the finding of the BLR Director that the COMELEC, in disqualifying private
respondents Daya, et al., committed a procedural shortcut. It held:

84
 Without the requisite two-thirds (2/3) vote of the Executive Board dismissing and/or
expelling private respondents for acts contemplated thereunder, the COMELEC was clearly
violating the unions constitution and bylaws (sic) by utilizing the aforequoted provision in
its said May 6, 2003 decision and, in the process, arrogating unto itself a power it did not
possess. As the document embodying the covenant between a union and its members and
the fundamental law governing the members rights and obligations, it goes without saying
that the constitution and bylaws (sic) should be upheld for as long as they are not contrary
to law, good morals or public policy.[26]

On the matter of the failure of private respondents Daya, et al. to come up with 30 percent (30%)
members support in filing the Petition to Nullify the COMELECs Decision before the Med-Arbiter, the Court
of Appeals said that the petition did not involve the entire membership of FLAMES, so there was no need
to comply with the aforesaid requirement. Furthermore, the appellate court applied the exception to the
rule on exhaustion of administrative remedies on the ground, inter alia, that resort to such a remedy would
have been futile, illusory or vain.[27] Indeed, the Court of Appeals emphasized that private respondents
Daya, et al., were directed by the COMELEC to file their Answer to the petition for their disqualification only
on 5 May 2003. Private respondents Daya, et al., filed their Answer on 6 May 2003. On the same day, the
COMELEC issued its Decision disqualifying them. A day after, the 7 May 2003 election was held. The Court
of Appeals further stressed that private respondents Daya, et al.s efforts to have their disqualification
reconsidered were rebuffed by the COMELEC; hence, they were left with no choice but to seek the
intervention of the BLR,[28] which was declared to have jurisdiction over intra-union disputes even at its
own initiative under Article 226[29] of the Labor Code.

Petitioners sought a reconsideration of the 17 June 2004 Decision of the Court of Appeals, but the
same was denied in a Resolution[30] dated 10 June 2005.

Hence, the instant Petition.

At the outset, petitioners contend that the instant Petition falls under the exceptions to the rule
that the Supreme Court is not a trier of facts. They implore this Court to make factual determination anent
the conduct of the 7 May 2003elections. They also question the jurisdiction of the BLR on the case at bar
because of the failure of private respondents Daya, et al., to exhaust administrative remedies within the
union. It is the stance of petitioner that Article 226[31] of the Labor Code which grants power to the BLR to
resolve inter-union and intra-union disputes is dead law, and has been amended by Section 14 of Republic
Act No. 6715, whereby the conciliation, mediation and voluntary arbitration functions of the BLR had been
transferred to the National Conciliation and Mediation Board.

85
 Petitioners similarly assert that the 7 May 2003 election was conducted in a clean, honest, and
orderly manner, and that private respondents, some of whom are not bona fide members of FLAMES, were
validly disqualified by the COMELEC from running in the election. They also rehashed their argument that
non-members of the union were allowed by private respondents Daya, et al., to participate in the
affair. They challenge the finding of the BLR Director that the reliance by the COMELEC on Article IV, Section
4(a)(6) of the CBL, was premature. Petitioners insist that the COMELEC had the sole and exclusive power
to pass upon the qualification of any candidate, and therefore, it has the correlative power to disqualify
any candidate in accordance with its guidelines.

For their part, private respondents Daya, et al., maintain that the Petition they filed before the
DOLE-NCR Med-Arbiter questioning the disqualification order of the COMELEC and seeking the nullification
of the 7 May 2003 election involves an intra-union dispute which is within the jurisdiction of the BLR. They
further claim that the COMELEC, in disqualifying them, mistakenly relied on a provision in the FLAMES CBL
that addresses the expulsion of members from the union, and no expulsion proceedings were held against
them. Finally, they underscore the finding of the appellate court that there was disenfranchisement among
the general membership of FLAMES due to their wrongful disqualification which restricted the members
choices of candidates. They reiterate the conclusion of the Court of Appeals that had the COMELEC
tabulated the votes cast in their favor, there would have been, at least, a basis for the declaration that they
lost in the elections.

Issues

Petitioners attribute to the Court of Appeals several errors to substantiate their Petition. [32] They all boil
down, though, to the question of whether the Court of Appeals committed grave abuse of discretion when
it affirmed the jurisdiction of the BLR to take cognizance of the case and then upheld the ruling of the BLR
Director and Med-Arbiter, nullifying the COMELECs order of disqualification of private respondents Daya et
al., and annulling the 7 May 2003 FLAMES elections.

The Courts Ruling

The Petition is devoid of merit.

We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of
the Labor Code is hereunder reproduced, to wit:

86
 ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor shall have original
and exclusive authority to act, at their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management relations in all workplaces whether
agricultural or nonagricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance
procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension
by agreement of the parties.

The amendment to Article 226, as couched in Republic Act No. 6715, [33]which is relied upon by
petitioners in arguing that the BLR had been divested of its jurisdiction, simply reads, thus:

Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby
amended to read as follows:

"The Bureau shall have fifteen (15) calendar days to act on labor cases before it,
subject to extension by agreement of the parties."

This Court in Bautista v. Court of Appeals,[34] interpreting Article 226 of the Labor Code, was explicit
in declaring that the BLR has the original and exclusive jurisdiction on all inter-union and intra-union
conflicts. We said that since Article 226 of the Labor Code has declared that the BLR shall have original and
exclusive authority to act on all inter-union and intra-union conflicts, there should be no more doubt as to
its jurisdiction. As defined, an intra-union conflict would refer to a conflict within or inside a labor union,
while an inter-union controversy or dispute is one occurring or carried on between or among
unions.[35] More specifically, an intra-union dispute is defined under Section (z), Rule I of the Rules
Implementing Book V of the Labor Code, viz:

(z) Intra-Union Dispute refers to any conflict between and among union members,
and includes all disputes or grievances arising from any violation of or disagreement over
any provision of the constitution and by-laws of a union, including cases arising from
chartering or affiliation of labor organizations or from any violation of the rights and
conditions of union membership provided for in the Code.

The controversy in the case at bar is an intra-union dispute. There is no question that this is one which
involves a dispute within or inside FLAMES, a labor union.At issue is the propriety of the disqualification of
private respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be
stressed that even as the dispute involves allegations that private respondents Daya, et al., sought the help

87
of non-members of the union in their election campaign to the detriment of FLAMES, the same does not
detract from the real character of the controversy. It remains as one which involves the grievance over the
constitution and bylaws of a union, and it is a controversy involving members of the union.Moreover, the
non-members of the union who were alleged to have aided private respondents Daya, et al., are not parties
in the case. We are, therefore, unable to understand petitioners persistence in placing the controversy
outside of the jurisdiction of the BLR. The law is very clear. It requires no further interpretation.The Petition
which was initiated by private respondents Daya, et al., before the BLR was properly within its cognizance,
it being an intra-union dispute. Indubitably, when private respondents Daya, et al., brought the case to the
BLR, it was an invocation of the power and authority of the BLR to act on an intra-union conflict.

After having settled the jurisdiction of the BLR, we proceed to determine if petitioners correctly raised the
argument that private respondents Daya, et al., prematurely sought the BLRs jurisdiction on the ground
that they failed to exhaust administrative remedies within the union. On this matter, we affirm the findings
of the Court of Appeals which upheld the application by the BLR Director of the exception to the rule of
exhaustion of administrative remedies.

In this regard, this Court is emphatic that before a party is allowed to seek the intervention of the court, it
is a pre-condition that he should have availed of all the means of administrative processes afforded
him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the
administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction
when such remedy should be exhausted first before the courts judicial power can be sought. The premature
invocation of courts judicial intervention is fatal to ones cause of action.[36]

Verily, there are exceptions to the applicability of the doctrine.[37] Among the established
exceptions are: 1) when the question raised is purely legal; 2) when the administrative body is in estoppel;
3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5)
when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is no other
plain, speedy, and adequate remedy; 8) when strong public interest is involved; 9) when the subject of the
proceeding is private land; 10) in quo warranto proceedings;[38] and 11) where the facts show that there
was a violation of due process.[39] As aptly determined by the BLR Director, private respondents Daya, et
al., were prejudiced by the disqualification order of the COMELEC. They endeavored to seek
reconsideration, but the COMELEC failed to act thereon.[40] The COMELEC was also found to have refused
to receive their written protest.[41] The foregoing facts sustain the finding that private respondents Daya, et
al., were deprived of due process. Hence, it becomes incumbent upon private respondents Daya, et al., to
seek the aid of the BLR. To insist on the contrary is to render their exhaustion of remedies within the union

88
as illusory and vain.[42] These antecedent circumstances convince this Court that there was proper
application by the Med-Arbiter of the exception to the rule of exhaustion of administrative remedies, as
affirmed by the BLR Director, and upheld by the Court of Appeals.

We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the
private respondents Daya, et al.s complaint filed before the Med-Arbiter failed to comply with the
jurisdictional requirement because it was not supported by at least thirty percent (30%) of the members of
the union.Section 1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%)
requirement only in cases where the issue involves the entire membership of the union, which is clearly not
the case before us. The issue is obviously limited to the disqualification from participation in the elections
by particular union members.

Having resolved the jurisdictional cobwebs in the instant case, it is now apt for this Court to address the
issue anent the disqualification of private respondents and the conduct of the 7 May 2003 elections.

On this matter, petitioners want this Court to consider the instant case as an exception to the rule that the
Supreme Court is not a trier of facts; hence, importuning that we make findings of fact anew. It bears
stressing that in a petition for review on certiorari, the scope of this Courts judicial review of decisions of
the Court of Appeals is generally confined only to errors of law,[43]and questions of fact are not
entertained. We elucidated on our fidelity to this rule, and we said:
Thus, only questions of law may be brought by the parties and passed upon by this Court
in the exercise of its power to review. Also, judicial review by this Court does not extend to
a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal has
based its determination.[44]

It is aphoristic that a re-examination of factual findings cannot be done through a petition for review
on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts;
it reviews only questions of law.[45] The Supreme Court is not duty-bound to analyze and weigh again the
evidence considered in the proceedings below.[46] This is already outside the province of the instant Petition
for Certiorari. While there may be exceptions to this rule, petitioners miserably failed to show why the
exceptions should be applied here. With greater force must this rule be applied in the instant case where
the factual findings of the Med-Arbiter were affirmed by the BLR Director, and then, finally, by the Court of
Appeals. The findings below had sufficient bases both in fact and in law. The uniform conclusion was that
private respondents Daya, et al., were wrongfully disqualified by the COMELEC; consequently, the FLAMES
election should be annulled.

89
On the issue of disqualification, there was a blatant misapplication by the COMELEC of the FLAMES CBL. As
has been established ad nauseam, the provision[47] relied upon by the COMELEC in disqualifying private
respondents Daya, et al., applies to a case of expulsion of members from the union.

In full, Article IV, Section 4 (a) (6) of the FLAMES CBL, provides, to wit:

Section 4(a). Any member may be DISMISSED and/or EXPELLED from the UNION, after due
process and investigation, by a two-thirds (2/3) vote of the Executive Board, for any of the
following causes:

xxxx

(6) Acting in a manner harmful to the interest and welfare of the UNIONand/or its
MEMBERS.[48]

We highlight five points, thus:

First, Article IV, Section 4(a)(6) of the FLAMES CBL, embraces exclusively the case of dismissal and/or
expulsion of members from the union. Even a cursory reading of the provision does not tell us that the
same is to be automatically or directly applied in the disqualification of a candidate from union elections,
which is the matter at bar. It cannot be denied that the COMELEC erroneously relied on Article IV, Section
4(a)(6) because the same does not contemplate the situation of private respondents Daya, et al. The latter
are not sought to be expelled or dismissed by the Executive Board. They were brought before the COMELEC
to be disqualified as candidates in the 7 May 2003 elections.

Second, the aforecited provision evidently enunciates with clarity the procedural course that
should be taken to dismiss and expel a member from FLAMES. The CBL is succinct in stating that the
dismissal and expulsion of a member from the union should be after due process and investigation, the
same to be exercised by two-thirds (2/3) vote of the Executive Board for any of the causes[49] mentioned
therein. The unmistakable directive is that in cases of expulsion and dismissal, due process must be
observed as laid down in the CBL.

Third, nevertheless, even if we maintain a lenient stance and consider the applicability of Article IV,
Section 4(a)(6) in the disqualification of private respondents Daya, et al., from the elections of 7 May 2003,
still, the disqualification made by the COMELEC pursuant to the subject provision was a rank disregard of
the clear due process requirement embodied therein. Nowhere do we find that private respondents

90
Daya, et al. were investigated by the Executive Board. Neither do we see the observance of the voting
requirement as regards private respondents Daya, et al. In all respects, they were denied due process.

Fourth, the Court of Appeals, the BLR Director, and the Med-Arbiter uniformly found that due
process was wanting in the disqualification order of the COMELEC. We are in accord with their
conclusion. If, indeed, there was a violation by private respondents Daya, et al., of the FLAMES CBL that
could be a ground for their expulsion and/or dismissal from the union, which in turn could possibly be made
a ground for their disqualification from the elections, the procedural requirements for their expulsion
should have been observed. In any event, therefore, whether the case involves dismissal and/or expulsion
from the union or disqualification from the elections, the proper procedure must be observed. The
disqualification ruled by the COMELEC against private respondents Daya, et al., must not be allowed to
abridge a clear procedural policy established in the FLAMES CBL. If we uphold the COMELEC, we are
countenancing a clear case of denial of due process which is anathema to the Constitution of
the Philippines which safeguards the right to due process.

Fifth, from another angle, the erroneous disqualification of private respondents Daya, et al.,
constituted a case of disenfranchisement on the part of the member-voters of FLAMES. By wrongfully
excluding them from the 7 May 2003 elections, the options afforded to the union members were
clipped. Hence, the mandate of the union cannot be said to have been rightfully determined. The factual
irregularities in the FLAMES elections clearly provide proper bases for the annulment of the union elections
of 7 May 2003.
On a final note, as it appears that the question of the qualifications of private respondents Ong, et
al. had been rendered moot and academic,[50] we do not find any reason for this Court to rule on the
matter. As borne out by the records, the question had been laid to rest even when the case was still before
the Med-Arbiter.[51]

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 17 June 2004, and
its Resolution dated 10 June 2005 in CA-G.R. SP No. 83061 are AFFIRMED. Costs against petitioners.

SO ORDERED.

91
 MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

Article 232 formerly Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor, shall have original and exclusive
authority to act, at their own initiative or upon request of either or both parties, on all inter-union and
intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management
relations in all workplaces, whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by
agreement of the parties. (As amended by Section 14, Republic Act No. 6715, March 21, 1989).

e. Intra-Corporate Disputes: Jurisdiction

REPUBLIC ACT NO. 8799 August 9, 2000

THE SECURITIES REGULATION CODE

The Commission’s jurisdiction over all cases enumerated under section 5 of Presidential Decree No. 902-A
is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided,
That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches
that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases
involving intra-corporate disputes submitted for final resolution which should be resolved within one (1)
year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30 June 2000 until finally disposed.

Section 5 of Presidential Decree No. 902-A

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with it as expressly granted
under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases
involving.

92
(a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers
or partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the
public and/or of the stockholder, partners, members of associations or organizations registered with the
Commission;

(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any or all of them and the corporation, partnership or association of
which they are stockholders, members or associates, respectively; and between such corporation,
partnership or association and the state insofar as it concerns their individual franchise or right to exist as
such entity; and

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations, partnerships or associations.

Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following
powers:chanroblesvirtuallawlibrary

(a) To issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which
it has jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall apply;

(b) To punish for contempt of the Commission, both direct and indirect, in accordance with the pertinent
provisions of, and penalties prescribed by, the Rules of Court;

(c) To compel the officers of any corporation or association registered by it to call meetings of stockholders
or members thereof under its supervision;

(d) To pass upon the validity of the issuance and use of proxies and voting trust agreements for absent
stockholders or members;

(e) To issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission
and in appropriate cases order search and seizure or cause the search and seizure of all documents, papers,
files and records as well as books of accounts of any entity or person under investigation as may be
necessary for the proper disposition of the cases before it;

(f) To impose fines and/or penalties for violation of this Decree or any other laws being implemented by
the Commission, the pertinent rules and regulations, its orders, decisions and/or rulings;

(g) To authorize the establishment and operation of stock exchanges, commodity exchanges and such other
similar organization and to supervise and regulate the same; including the authority to determine their
number, size and location, in the light of national or regional requirements for such activities with the view
to promote, conserve or rationalize investment;

(h) To pass upon, refuse or deny, after consultation with the Board of Investments, Department of Industry,
National Economic and Development Authority or any other appropriate government agency, the
application for registration of any corporation, partnership or association or any form of organization falling
within its jurisdiction, if their establishment, organization or operation will not be consistent with the
declared national economic policies.

93
(i) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of
corporations, partnerships or associations, upon any of the grounds provided by law, including the
following:chanroblesvirtuallawlibrary

[1] Fraud in procuring its certificate of registration;

[2] Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or
damage to the general public;

[3] Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts
which would amount to a grave violation of its franchise;

[4] Continuous inoperation for a period of at least five (5) years;

[5] Failure to file by-laws within the required period;

[6] Failure to file required reports in appropriate forms as determined by the Commission within the
prescribed period;

(j) To exercise such other powers as implied, necessary or incidental to the carrying out the express powers
granted to the Commission or to achieve the objectives and purposes of this Decree.

In the exercise of the foregoing authority and jurisdiction of the Commission, hearings shall be conducted
by the Commission or by a Commissioner or by such other bodies, boards, committees and/or any officer
as may be created or designated by the Commission for the purpose. The decision, ruling or order of any
such Commissioner, bodies, boards, committees and/or officer may be appealed to the Commission
sittingen banc within thirty (30) days after receipt by the appellant of notice of such decision, ruling or
order. The Commission shall promulgate rules of procedures to govern the proceedings, hearings and
appeals of cases falling within its jurisdiction.

The aggrieved party may appeal the order, decision or ruling of the Commission sitting en banc to the
Supreme Court by petition for petition for review in accordance with the pertinent provisions of the Rules
of Court.

Dy et al vs NLRC G.r 68544; October 27, 1986

Fortune Cement Corp v NLRC G.R 79726 January 24, 1991

G.R. No. 79762 January 24, 1991

FORTUNE CEMENT CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division) and ANTONIO M. LAGDAMEO, respondents.

De Leon, Diokno & Associates Law Offices for petitioner.

Romarie G. Villonco and George C. Nograles for private respondent.

94
GRIÑO-AQUINO, J.:

This is a petition for certiorari with prayer to annul the resolution dated May 29, 1987 of respondent
National Labor Relations Commission (NLRC) reversing the order dated December 3, 1985 of the Labor
Arbiter which dismissed private respondent Antonio M. Lagdameo's (Lagdameo for brevity) complaint for
Illegal Dismissal (NLRC NCR Case No. 1-228-85) against petitioner Fortune Cement Corporation (FCC for
brevity) for lack of jurisdiction.

Lagdameo is a registered stockholder of FCC.

On October 14, 1975, at the FCC Board of Directors' regular monthly meeting, he was elected Executive
Vice-President of FCC effective November 1, 1975 (p. 3, Rollo).

Some eight (8) years later, or on February 10, 1983, during a regular meeting, the FCC Board resolved
that all of its incumbent corporate officers, including Lagdameo, would be "deemed" retained in their
respective positions without necessity of yearly reappointments, unless they resigned or were terminated
by the Board (p. 4, Rollo).

At subsequent regular meetings held on June 14 and 21, 1983, the FCC Board approved and adopted a
resolution dismissing Lagdameo as Executive Vice-President of the company, effective immediately, for
loss of trust and confidence (p. 4, Rollo).

On June 21, 1983, Lagdameo filed with the National Labor Relations Commission (NLRC), National Capital
Region, a complaint for illegal dismissal against FCC (NLRC-NCR Case No. 1-228-85) alleging that his
dismissal was done without a formal hearing and investigation and, therefore, without due process (p.
63, Rollo).

On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the ground that his dismiss as a
corporate officer is a purely intra-corporate controversy over which the Securities and Exchange
Commission (SEC) has original and exclusive jurisdiction.

The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal, however, the NLRC set aside
the Labor Arbiter's order and remanded the case to the Arbitration Branch "for appropriate proceedings"
(NLRC Resolution dated April 30, 1987). The NLRC denied FCC's motion for reconsideration (p. 5, Rollo).
Dissatisfied, FCC filed this petition for certiorari.

We find merit in the petition.

The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a
corporate executive vice-president for illegal dismissal, resulting from a board resolution dismissing him
as such officer.

Section 5 of Presidential Decree No. 902-A vests in the SEC original and exclusive jurisdiction over this
controversy:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commissionover corporations, partnerships and other forms of associations registered with it as

95
 expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction
to hear and decide cases involving:

a) Devices and schemes employed by or any acts, of the board of directors, business associates,
its officers or partners, amounting to fraud and misrepresentation which may be detrimental to
the interest of the public and/or stockholders, partners, members of associations or organization
registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among

stockholders, members, or associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members or associates, respectively;
and between such corporation, partnership or association and the state insofar as it concerns
their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of

such corporations, partnership or associations." (Section 5, P.D. 902-A; Emphasis supplied.)

In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent NLRC held:

. . . . It is not disputed that complainant Lagdameo was an employee of respondent Fortune

Cement Corporation, being then the Executive Vice-President. For having been dismissed for
alleged loss of trust and confidence, complainant questioned his dismissal on such ground and
the manner in which he was dismissed, claiming that no investigation was conducted, hence,
there was and is denial of due process. Predicated on the above facts, it is clear to Us that a labor
dispute had arisen between the appellant and the respondent corporation, a dispute which falls
within the original and exclusive jurisdiction of the NLRC. A labor dispute as defined in the Labor
Code includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment regardless of whether or not the disputants stand in the
proximate relations of employers and employees." (pp. 16-17, Rollo).

The Solicitor General, declining to defend public respondent in its pleading entitled "Manifestation in Lieu
of Comment," aptly observed:

The position of "Executive Vice-President," from which private respondent Lagdameo claims to
have been illegally dismissed, is an elective corporate office. He himself acquired that position
through election by the corporation's Board of Directors, although he also lost the same as a
consequence of the latter's resolution.

Indeed the election, appointment and/or removal of an executive vice-president is a prerogative

vested upon a corporate board.

And it must be, not only because it is a practice observed in petitioner Fortune Cement
Corporation, but more so, because of an express mandate of law. (p. 65, Rollo.)

The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or
intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of

96
Directors may have in taking such action." The dispute between petitioner and Lagdameo is of the class
described in Section 5, par. (c) of Presidential Decree No. 902-A, hence, within the original and exclusive
jurisdiction of the SEC. The Solicitor General recommended that the petition be granted and NLRC-NCR
Case No. 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction (p. 95, Rollo).

In PSBA vs. Leaño (127 SCRA 778), this Court, confronted with a similar controversy, ruled that the SEC,
not the NLRC, has jurisdiction:

This is not a case of dismissal. The situation is that of a corporate office having been declared
vacant, and of Tan's not having been elected thereafter. The matter of whom to elect is a
prerogative that belongs to the Board, and involves the exercise of deliberate choice and the
faculty of discriminative selection. Generally speaking, the relationship of a person to a
corporation, whether as officer or as agent or employee is not determined by the nature of the
services performed, but by the incidents of the relationship as they actually exist.

Lagdameo claims that his dismissal was wrongful, illegal, and arbitrary, because the "irregularities"
charged against him were not investigated (p. 85, Rollo); that the case of PSBA vs. Leaño (supra) cited by
the Labor Arbiter finds no application to his case because it is not a matter of corporate office having
been declared vacant but one where a corporate officer was dismissed without legal and factual basis and
without due process; that the power of dismissal should not be confused with the manner of exercising
the same; that even a corporate officer enjoys security of tenure regardless of his rank (p. 97, Rollo); and
that the SEC is without power to grant the reliefs prayed for in his complaint (p. 106, Rollo).

The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the
other questions raised by Lagdameo. Thus did this Court rule in the case of Dy vs. National Labor
Relations Commission(145 SCRA 211) which involved a similar situation:

It is of no moment that Vailoces, in his amended complaint, seeks other reliefs which would
seemingly fall under the jurisdiction of the Labor Arbiter, because a closer look at these —
underpayment of salary and non-payment of living allowance — shows that they are actually part
of the perquisites of his elective position, hence, intimately linked with his relations with the
corporation.1âwphi1 The question of remuneration, involving as it does, a person who is not a
mere employee but a stockholder and officer, an integral part, it might be said, of the corporation,
is not a simple labor problem but a matter that comes within the area of corporate affairs and
management, and is in fact a corporate controversy in contemplation of the Corporation Code.
(Emphasis ours.)

WHEREFORE, the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter, having
been rendered without jurisdiction, is hereby reversed and set aside. The decision of the Labor Arbiter
dated December 3, 1985 dismissing NLRC-NCR Case No. 1-228-85 is affirmed, without prejudice to private
respondent Antonio M. Lagdameo's seeking recourse in the appropriate forum. No costs.

SO ORDERED.

CHECK-OFF DISPUTES : jurisdiction

97
 G.R. No. 80485 November 11, 1988
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,
vs.
DIRECTOR PURA FERRER-CALLEJA, RASIDALI C. ABDULLAH, ENFORCEMENT UNIT NCR ARBITRATION
BRANCH, REYNALDO SANTOS, ET AL., respondents.
The Government Corporate Counsel for petitioner.

The Solicitor General for public respondent.

P.B. Iyog & Associates Law Office for private respondents.

GANCAYCO, J.:

The center of controversy in this petition is whether or not the Bureau of Labor Relations has jurisdiction
over the case involving the validity and refund of check-off assessments made by a labor union against
the salaries of union members through the petitioner-employer. The other issue is whether or not
petitioner has been afforded due process.

The 388 private respondents are employees of petitioner who are members of the PNCC Tollways
Employees and Workers Union. The union, through its Executive Board, adopted on October 22, 1983
Executive Committee Resolution No. 001-83 providing for the affiliation of the union with the Central
Luzon Labor Congress. The union also engaged the services of Atty. Emmanuel Clave as labor advocate,
negotiator and adviser, with a compensation of 10% on any arbitration award, settlement, collective
bargaining agreement (CBA) negotiation gains, plus expenses in the performance of his responsibilities.
The said resolution provided that the advocate's fees due Atty. Clave, in any form, shall be subject to
"check-off" arrangement with the petitioner.

Subsequently, the union adopted Executive Board Resolution No. 012-S-84 making the affiliation regular
and the retainer of Atty. Clave as official.

The union passed Resolution No. 15-S-84 providing that each union member and all other rank and file
employees of petitioner's Tollways Division shall be assessed the sum of 10% of all monetary benefits that
may be due them as a result of collective bargaining, arbitration, and other forms of representation, and
that the sums assessed shall be collected by the union by means of the check-off arrangement with
petitioner and shall be paid to Atty. Clave, in accordance with the retainer agreement between Atty.
Clave and the union. Resolution No. 15-S-84 was subsequently modified which only affected the amount
of negotiation fees payable to Atty. Clave, from 10% down to 5%

After the promulgation of Resolution No. 15-S-84, the Acting President of the union issued a
Memorandum dated June 2, 1984, directing all union members to comply with said resolution and to
execute check-off authorization. The private respondents alleged that they did not comply with the
directive respondents of the Acting President, but the union officers stated that 167 employees
accomplished the authorization forms and sent them to the personnel department of petitioner.

98
Petitioner, relying on Resolution No. 001-83, Resolution No. 15-S-84, Resolution No. 1-S-84, the letter
dated January 4, 1984 by David Clave, and the letter dated October 1, 1983 by Cipriano Mangubat, CLCC
President, through the then Head of the Tollways Division, advanced the total amount of P120,000.00 to
Atty. Clave, as follows:

(1) P100,000.00 in August of 1984; and

(2) P20,000.00 in February of 1985.

Petitioner, pursuant to Resolution No. 001-83, Resolution No. 15-S-84, General Membership Resolution
No. 1-S-84, as well as the submitted individual check-off authorizations, deducted P20.00 monthly from
the salaries of its employees subject of said resolutions, effective March, 1985. The deduction was
increased to P30.00 monthly per employee, effective April, 1985. Petitioner was not able to check-off said
amounts against all of its rank and file employees for the Tollways Division.

On April 17, 1985, petitioner turned over the total sum of Sixty Thousand Pesos (P60,000.00) to Atty.
Clave coming from the check-off special assessments. On September 30, 1985, petitioner turned over to
said lawyer the sum of Ten Thousand Pesos (P10,000.00) also out of the check-off special assessments.

Petitioner stopped the said deductions effective April, 1986, at which time it had allegedly collected a
total amount of One Hundred Fifty-Five Thousand Eight Hundred Pesos (P1,55800.00) as assessment fees.

On July 11, 1985, the 388 private respondents, members of the then CDCP Union, now PNCC Employees
and Workers Union, filed a petition with the National Capital Region Director of the Department of Labor
and Employment (DOLE) against their own union officers and the petitioner. The petition asked for the
following reliefs:

(1) The issuance of a temporary restraining order enjoining petitioner, as their employer, from further
collecting special assessments from the salaries of the union members;

(2) The issuance of an order requiring the petitioner-employer to deposit with the Regional Office of
DOLE all sums of money in its possession collected from employees pursuant to said assessment;

(3) A declaration that the Resolution No. 15-S-84 of the Executive Board of the Union is null and void;

(4) The issuance of an order permanently enjoining the petitioner-employer from making deductions
from the employees' salaries by authority of Resolution No. 15-S-84; and

(5) The issuance of an order directing the petitioner-employer and/or the union officers to return the
amounts already deducted from their salaries pursuant to Resolution No. 15-S84.

The petition was certified to the Med-Arbiter for hearing and resolution. The summons supposedly sent
to the petitioner by the BLR was not served on responsible officials of petitioner. The records show that
the first summons was served by a private messengerial company; the second summons was served on
Armando Ancheta, a personnel assistant, on August 5, 1985; then upon Francisco Gabis, Jr., liaison officer,
on August 14, 1985; and finally on Mary Fernandez, a clerk, on September 9, 1985. Petitioner was not
able to file any pleading in the hearings of the case, and was unable to present its side.

99
On September 18, 1985, Atty. Clave moved to intervene and filed his position paper with the Med-
Arbiter. On October 14, 1985, public respondent Med-Arbiter issued an Order, which declared Resolution
No. 15-S-84 null and void and of no effect, ordered petitioner to stop collecting special assessments
against the salaries of union members and other rank and file employees of petitioner, and ordered
petitioner and the union, jointly and severally, to return to the employees concerned the amounts
deducted from their salaries pursuant to Resolution No. 15-S84. Atty. Clave filed an appeal with the BLR
on November 15, 1985. On June 30, 1986, the then Director of the Bureau of Labor Relations (BLR),
Cresencio B. Trajano, dismissed the appeal and affirmed the order of the
Med-Arbiter.

Public respondent BLR Director Pura Ferrer-Calleja issued a writ of execution on November 5, 1986,
directing the Enforcement Unit of the NCR Branch to collect from petitioner-employer and/or the CDCP
Union the sum of P257,400.00, the total amount of deductions made against the salaries of the
employees, or to satisfy said amount from the movable or immovable properties of the petitioner and/or
union which are not exempt from execution.

On December 29, 1986, petitioner filed an Urgent Motion for Reconsideration and to Quash Writ of
Execution on the ground that it was denied due process because it was never notified of the proceedings
and it had no opportunity to be heard. In an Order dated September 19, 1987, the Director of the BLR
denied the motion for reconsideration.

The Director of BLR issued an alias writ of execution dated October 13, 1987. Notice of this writ was
received by the petitioner on October 26, 1987 and subsequently the Enforcement Unit of the NCR
Arbitration Branch garnished the bank deposits of petitioner with the Philippine National Bank (PNB),
Buendia Avenue Branch and the Far East Bank and Trust Company, Shaw Boulevard Branch.

The responsible officials of petitioner who could have known of the case have left or were retired from
the petitioner after the EDSA Revolution of February, 1986. The new management of the petitioner was
never informed of this pending case, until petitioner received the first writ of execution. This case was
referred to the Office of the Government Corporate Counsel only on November 6, 1987.

Petitioner now questions the said orders of public respondents, as issued without jurisdiction, or in excess
of their jurisdiction and/or committed with grave abuse of discretion, because—

(1) There was a denial of petitioner's right to due process of law;

(2) The jurisdiction of the Med-Arbiter and the BLR covers only disputes between and among the union,
its officers and members, and that the BLR has no jurisdiction over matters where an interested party,
like the petitioner-employer herein, is involved;

(3) The petitioner-employer has no obligation to guarantee that the agent of private respondents, namely
the union acting through its officers, will faithfully comply with its obligation to its members;

(4) The 167 workers who submitted individual written authorizations for check-off are now estopped
from seeking a reimbursement from the petitioner;

100
(5) Petitioner has a just claim amounting to P190,000.00 against the union for advocate's fees paid to
Atty. Clave; and

(6) The amount of P257,400.00 stated in the Writ of Execution and the alias writ is not based on evidence
presented, and consequently, the public respondents acted with grave abuse of discretion in granting
that amount. The petitioner's records show that the amounts checked-off add up to only P155,800.00.

On November 23, 1987, this Court issued a temporary restraining order, enjoining the public respondents
from enforcing all the assailed orders, writs of executions and notices of garnishment in BLR Case No. A-
11-282-85 (NCR-LRD-M-7-275- 85). 1

On the issue of jurisdiction, the Court finds that respondent Director has jurisdiction over the
controversy. Under Article 241 of the Labor Code, the Bureau of Labor Relations has jurisdiction over
cases of reported violations thereof and to mete the appropriate penalty in disputes between and among
the union, its officers and members. The petition was for violation of said article which provides that "(n)o
special assessment or other extra-ordinary fees may be levied upon the members of a labor organization
unless authorized by a written resolution of a majority of all the members at a general membership
meeting duly called for the purpose. ..." 2

The principal relief sought in the case was for the nullification of Union Resolution No. 15-S-84. The
inclusion of petitioner as a co-respondent and the monetary claim against it is only incidental or ancillary
to the principal relief and is a consequence of petitioner having acted as a collection agent of the
respondent union officers. The action, therefore, is not essentially a money claim for underpayment of
wages that would fall under the jurisdiction of the labor arbiter. 3

The next issue is whether or not petitioner was afforded due process. The original claim of private
respondents was filed with the DOLE on July 11, 1985. Records of the BLR disclose that summons were
served upon minor employees of the petitioner, the last being on September 9, 1985. There followed
those abnormal times, the snap elections and the chaotic situation of the national elections culminating
in the EDSA Revolution of 1986. We can take judicial notice that the political upheaval of 1986 affected
the petitioner as a government-controlled corporation. There was a change of management. The
defective service of summons prevented the pending case from being brought to the attention of
petitioner's Legal Department. The eloquent non-appearance of petitioner in all the hearings establishing
a money claim against it is an indication of lack of sufficient notice regarding the case. It came to know of
the case only when the judgment against it was being executed.

Notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial
matter in any administrative or judicial proceedings. The service of summons is a very vital and
indispensable ingredient of due process.

In this case, the service of summons upon the minor subordinates of petitioner's Tollways Division is not
valid and binding. Under Section 15, Rule 14 of the Rules of Court, service of summons upon public
corporations must be made on its executive head or on such officer or officers as the law or the court
may direct. Under Section 13 of the same Rule, service upon a private corporation may be made on the
president, manager, secretary, cashier, agent or any of its directors.

101
The contention of public respondent is that petitioner had due notice and that technical rules are not
binding in proceedings under the Labor Code. 4 However, under Sections 4 and 5 of Rule IV of the Revised
Rules of the NLRC, service of such summons must be made as follows:

Section 4. Service of notices and resolutions. Notice of summons and copies of orders,
resolutions or decisions shall be served personally by the bailiff or duly authorized public
officer or by registered mail on the parties to the case; Provided, that where a party is
represented by counsel or authorized representative, service shall be made on the latter
... (Emphasis supplied.)

and

Section 5. Proof and completeness of service. The return is prima facie proof of the facts
indicated therein Service by registered mails is complete upon receipt by the addressee
or his agents. (Emphasis supplied.)

To determine the scope or meaning of such authorized representative or agents of parties on whom
summon served, the provisions of the Rules of Court should apply in a suppletory character. 5

Public respondents argue that as petitioner filed a motion for reconsideration of the order of respondent
calling for the issuance of the writ of execution there was no denial of the opportunity to be heard.
However, said motion was denied without even considering the merit of the same but on the technical
ground that it was filed out of time. Accordingly thereby petitioner was denied due process.

Petitioner should be afforded its day in court. It must be given the opportunity to prove its contention
that what was actually collected as check-off assessments from union members is only P155,800.00 and
not P257,400.00 as assessed by public respondents. Its advance payments to the labor advocate must
also be considered.

In sum, the Court holds that petitioner was not duly notified of the pending case because of defective
service of summons. It was derived of its right to be heard and to present evidence which are essential
ingredients of due process of law.

WHEREFORE AND BY REASON OF THE FOREGOING, the restraining order issued by this Court in favor of
petitioner is made permanent, and all the assailed orders of October 14, 1985, June 30, 1986, November
5, 1986, September 12, 1987 and October 13, 1987, writs of execution and notices of garnishment in BLR
Case No. A-11-282-85 (NCR-LRD-M-7-275-85) against petitioner only are SET ASIDE for being null and
void. This decision is immediately executory.

SO ORDERED.

Disputed on violation of CBA : Jurisdiction

SECOND DIVISION

102
 LANDTEX INDUSTRIES and G.R. No. 150278
WILLIAM GO,

G.R. No. 76989 September 29, 1987

MANILA MANDARIN EMPLOYEES UNION, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, and MELBA C. BELONCIO, respondents.

G.R. No. 76989 September 29, 1987

MANILA MANDARIN EMPLOYEES UNION, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, and MELBA C. BELONCIO, respondents.

GUTIERREZ, JR., J.:

This is a petition to review on certiorari the National Labor Relations Commission's (NLRC) decision which
modified the Labor Arbiter's decision and ordered the Manila Mandarin Employees Union to pay the
wages and fringe benefits of Melba C. Beloncio from the time she was placed on forced leave until she is
actually reinstated, plus ten percent (10%) thereof as attorney's fees. Manila Mandarin Hotel was ordered
to reinstate Beloncio and to pay her whatever service charges may be due her during that period, which
amount would be held in escrow by the hotel.

The petition was filed on January 19, 1987. The private respondent filed her comment on March 7, 1987
while the Solicitor General filed a comment on June 1, 1987 followed by the petitioner's reply on August
22, 1987. We treat the comment as answer and decide the case on its merits.

The facts of the case are undisputed.

Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel since 1976 and at
the time of her dismissal, assistant head waitress at the hotel's coffee shop, was expelled from the
petitioner Manila Mandarin Employees Union for acts allegedly inimical to the interests of the union. The
union demanded the dismissal from employment of Beloncio on the basis of the union security clause of
their collective bargaining agreement and the Hotel acceded by placing Beloncio on forced leave effective
August 10, 1984.

The union security clause of the collective bargaining agreement provides:

Section 2. Dismissals.

xxx xxx xxx

103
 b) Members of the Union who cease to be such members and/or who fail to maintain
their membership in good standing therein by reason of their resignation from the Union
and/or by reason of their expulsion from the Union in accordance with the Constitution
and By-Laws of the Union, for non-payment of union dues and other assessment for
organizing, joining or forming another labor organization shall, upon written notice of
such cessation of membership or failure to maintain membership in the Union and upon
written demand to the company by the Union, be dismissed from employment by the
Company after complying with the requisite due process requirement; ... (Emphasis
supplied) (Rollo, p. 114)

Two days before the effective date of her forced leave or on August 8, 1984, Beloncio filed a complaint
for unfair labor practice and illegal dismissal against herein petitioner-union and Manila Mandarin Hotel
Inc. before the NLRC, Arbitration Branch.

Petitioner-union filed a motion to dismiss on grounds that the complainant had no cause of action against
it and the NLRC had no jurisdiction over the subject matter of the complaint.

This motion was denied by the Labor Arbiter.

After the hearings that ensued and the submission of the parties' respective position papers, the Labor
Arbiter held that the union was guilty of unfair labor practice when it demanded the separation of
Beloncio. The union was then ordered to pay all the wages and fringe benefits due to Beloncio from the
time she was on forced leave until actual reinstatement, and to pay P30,000.00 as exemplary damages
and P10,000.00 as attorney's fees. The charge against the hotel was dismissed.

The Union then appealed to the respondent NLRC which modified the Labor Arbiter's decision as earlier
stated.

A subsequent motion for reconsideration and a second motion for reconsideration were denied.

Hence, this present petition.

The petitioner raises the following assignment of errors:

THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE PRESENT CONTROVERSY
INVOLVED INTRA-UNION CONFLICTS AND THEREFOR IT HAS NO JURISDICTION OVER THE
SUBJECT-MATTER THEREOF.

II

THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING PETITIONER LIABLE FOR THE
PAYMENT OF PRIVATE RESPONDENT'S SALARY AND FRINGE BENEFITS, AND AWARD OF
10% ATTORNEY'S FEES, AFTER FINDING AS UNMERITORIOUS HER PRETENDED CLAIMS OR
COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL DISMISSAL, AND DAMAGES. (Rollo,
pp. 6-9)

104
On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of discretion in the
NLRC conclusion that the dispute is not purely intra-union but involves an interpretation of the collective
bargaining agreement (CBA) provisions and whether or not there was an illegal dismissal. Under the CBA,
membership in the union may be lost through expulsion only if there is non-payment of dues or a
member organizes, joins, or forms another labor organization. The charge of disloyalty against Beloncio
arose from her emotional remark to a waitress who happened to be a union steward, "Wala akong tiwala
sa Union ninyo." The remark was made in the course of a heated discussion regarding Beloncio's efforts
to make a lazy and recalcitrant waiter adopt a better attitude towards his work.

We agree with the Solicitor General when he noted that:

... The Labor Arbiter explained correctly that "(I)f the only question is the legality of the
expulsion of Beloncio from the Union undoubtedly, the question is one cognizable by the
BLR (Bureau of Labor Relations). But, the question extended to the dismissal of Beloncio
or steps leading thereto. Necessarily, when the hotel decides the recommended
dismissal, its acts would be subject to scrutiny. Particularly, it will be asked whether it
violates or not the existing CBA. Certainly, violations of the CBA would be unfair labor
practice."

Article 250 of the Labor Code provides the following:

Art. 250. Unfair labor practices of labor organizations. — It shall be unfair

labor practice for a labor organization, its officers, agents or
representatives:

xxx xxx xxx

(b) To cause or attempt to cause an employer to discriminate against an

employee, including discrimination against an employee with respect to
whom membership in such organization has been denied or to terminate
an employee on any ground other than the usual terms and conditions
under which membership or continuation of membership is made
available to other members. (Emphasis supplied)

Article 217 of the Labor Code also provides:

Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) The
Labor Arbiters shall have the original and exclusive jurisdiction to hear
and decide ... the following cases involving all workers, whether
agricultural or nonagricultural;

(1) Unfair labor practice cases;

xxx xxx xxx

(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters. (Rollo, pp. 155-157.)

105
The petitioner also questions the factual findings of the public respondent on the reasons for Beloncio's
dismissal and, especially, on the argument that she was on forced leave; she was never dismissed; and
not having worked, she deserved no pay.

The Court finds nothing in the records that indicates reversible error, much less grave abuse of discretion,
in the NLRC's findings of facts.

It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC, which have
acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect but at times even finality if such findings are supported by substantial evidence. (Akay
Printing Press vs. Minister of Labor and Employment, 140 SCRA 381; Alba Patio de Makati vs. Alba Patio
de Makati Employees Association, 128 SCRA 253; Dangan vs. National Labor Relations Commission, 127
SCRA 706; De la Concepcion vs. Mindanao Portland Cement Corporation, 127 SCRA 647).

The petitioner now questions the decision of the National Labor Relations Commission ordering the
reinstatement of the private respondent and directing the Union to pay the wages and fringe benefits
which she failed to receive as a result of her forced leave and to pay attorney's fees.

We find no error in the questioned decision.

The Hotel would not have compelled Beloncio to go on forced leave were it not for the union's insistence
and demand to the extent that because of the failure of the hotel to dismiss Beloncio as requested, the
union filed a notice of strike with the Ministry of Labor and Employment on August 17, 1984 on the issue
of unfair labor practice. The hotel was then compelled to put Beloncio on forced leave and to stop
payment of her salary from September 1, 1984.

Furthermore, as provided for in the collective bargaining agreement between the petitioner-the Union
and the Manila Mandarin Hotel "the Union shall hold the Company free and blameless from any and all
liabilities that may arise" should the employee question the dismissal, as has happened in the case at bar.

It is natural for a union to desire that all workers in a particular company should be its dues-paying
members. Since it would be difficult to insure 100 percent membership on a purely voluntary basis and
practically impossible that such total membership would continuously be maintained purely on the merits
of belonging to the union, the labor movement has evolved the system whereby the employer is asked,
on the strength of collective action, to enter into what are now familiarly known as "union security"
agreements.

The collective bargaining agreement in this case contains a union security clause — a closed-shop
agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of
the contracting union who must continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and compulsory dues. By holding out to
loyal members a promise of employment in the closed-shop, it welds group solidarity. (National Labor
Union vs. Aguinaldo's Echague, Inc., 97 Phil. 184). It is a very effective form of union security agreement.

106
This Court has held that a closed-shop is a valid form of union security, and such a provision in a collective
bargaining agreement is not a restriction of the right of freedom of association guaranteed by the
Constitution. (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development Company,
Inc., 21 SCRA 561).

The Court stresses, however, that union security clauses are also governed by law and by principles of
justice, fair play, and legality. Union security clauses cannot be used by union officials against an
employer, much less their own members, except with a high sense of responsibility, fairness, prudence,
and judiciousness.

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

This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do his
work promptly and courteously so as to serve hotel customers in the coffee shop expeditiously and
cheerfully. Union membership does not entitle waiters, janitors, and other workers to be sloppy in their
work, inattentive to customers, and disrespectful to supervisors. The Union should have disciplined its
erring and troublesome members instead of causing so much hardship to a member who was only doing
her work for the best interests of the employer, all its employees, and the general public whom they
serve.

WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the National Labor Relations
Commission is AFFIRMED. Costs against the petitioner.

SO ORDERED.

107