Full Text Cases Art 242, 249-251

LABOR LAW II FULL TEXT ART 249-2581
1. G.R. No. 85333 February 26, 1990
CARMELITO L. PALACOL, ET AL., petitioners,

vs.
PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA
CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES),
INC., respondents.
GANCAYCO, J.:
Can a special assessment be validly deducted by a labor union from the lump-sum pay of its
members, granted under a collective bargaining agreement (CBA), notwithstanding a subsequent
disauthorization of the same by a majority of the union members? This is the main issue for
resolution in the instant petition for certiorari.
As gleaned from the records of the case, the pertinent facts are as follows:
On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to
as the Union), as the collective bargaining agent of all regular salesmen, regular helpers, and
relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola
Bottlers (Philippines), Inc. (hereinafter referred to as the Company) concluded a new collective
bargaining agreement with the latter. 1 Among the compensation benefits granted to the
employees was a general salary increase to be given in lump sum including recomputation of
actual commissions earned based on the new rates of increase.
On the same day, the president of the Union submitted to the Company the ratification by the
union members of the new CBA and authorization for the Company to deduct union dues
equivalent to P10.00 every payday or P20.00 every month and, in addition, 10% by way of
special assessment, from the CBA lump-sum pay granted to the union members. The last one
among the aforementioned is the subject of the instant petition.
As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the
special assessment sought to be levied is "to put up a cooperative and credit union; purchase
vehicles and other items needed for the benefit of the officers and the general membership; and
for the payment for services rendered by union officers, consultants and others." 2 There was also
an additional proviso stating that the "matter of allocation ... shall be at the discretion of our
incumbent Union President."
This "Authorization and CBA Ratification" was obtained by the Union through a secret
referendum held in separate local membership meetings on various dates. 3 The total membership
of the Union was about 800. Of this number, 672 members originally authorized the 10% special
assessment, while 173 opposed the same. 4
Subsequently however, one hundred seventy (170) members of the Union submitted documents
to the Company stating that although they have ratified the new CBA, they are withdrawing or
disauthorizing the deduction of any amount from their CBA lump sum. Later, 185 other union
1
members submitted similar documents expressing the same intent. These members, numbering
355 in all (170 + 185), added to the original oppositors of 173, turned the tide in favor of
disauthorization for the special assessment, with a total of 528 objectors and a remainder of 272
supporters. 5
On account of the above-mentioned disauthorization, the Company, being in a quandary as to

whom to remit the payment of the questioned amount, filed an action for interpleader with the
Bureau of Labor Relations in order to resolve the conflicting claims of the parties concerned.
Petitioners, who are regular rank-and-file employees of the Company and bona fide members of
the Union, filed a motion/complaint for intervention therein in two groups of 161 and 94,
respectively. They claimed to be among those union members who either did not sign any
individual written authorization, or having signed one, subsequently withdrew or retracted their
signatures therefrom.
Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to
Article 222(b) of the Labor Code. Article 222(b) provides as follows:
ART. 222. Appearances and Fees. —
xxx xxx xxx
(b) No attorney's fees, negotiation fees or similar charges of any

kind arising from any collective bargaining negotiations or
conclusion of the collective agreement shall be imposed on any
individual member of the contracting union; Provided, however,
that attorney's fees may be charged against union funds in an
amount to be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of membership in a labor organization. —
xxx xxx xxx
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization duly signed
by the employee. The authorization should specifically state the
amount, purpose and beneficiary of the deduction;
As authority for their contention, petitioners cited Galvadores v. Trajano, 6 wherein it was ruled
that no check-offs from any amount due employees may be effected without individual written
authorizations duly signed by the employees specifically stating the amount, purpose, and
beneficiary of the deduction.
2
In its answer, the Union countered that the deductions not only have the popular indorsement and
approval of the general membership, but likewise complied with the legal requirements of
Article 241 (n) and (o) of the Labor Code in that the board resolution of the Union imposing the
questioned special assessment had been duly approved in a general membership meeting and that
the collection of a special fund for labor education and research is mandated.
Article 241(n) of the Labor Code states that —
ART. 241. Rights and conditions of membership in a labor organization. —
xxx xxx xxx
(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless authorized by a written resolution of a
majority of all the members at a general membership meeting duly called for the
purpose. The secretary of the organization shall record the minutes of the meeting
including the list of all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessments or fees. The record shall
be attested to by the president;
Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988
whereby he directed the Company to remit the amount it had kept in trust directly to the rank-
and-file personnel without delay.
On appeal to the Bureau of Labor Relations, however, the order of the Med-Arbiter was reversed
and set aside by the respondent-Director in a resolution dated August 19, 1988 upholding the
claim of the Union that the special assessment is authorized under Article 241 (n) of the Labor
Code, and that the Union has complied with the requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting
to lack or excess of jurisdiction when she held Article 241 (n) of the Labor Code to be the
applicable provision instead of Article 222(b) in relation to Article 241(o) of the same law.
According to petitioners, a cursory examination and comparison of the two provisions of Article
241 reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a
special assessment is not a matter of major policy affecting the entire union membership but is
one which concerns the individual rights of union members.
Petitioners further assert that assuming arguendo that Article 241(n) should prevail over
paragraph (o), the Union has nevertheless failed to comply with the procedure to legitimize the
questioned special assessment by: (1) presenting mere minutes of local membership meetings
instead of a written resolution; (2) failing to call a general membership meeting; (3) having the
minutes of three (3) local membership meetings recorded by a union director, and not by the
union secretary as required; (4) failing to have the list of members present included in the
3
minutes of the meetings; and (5) failing to present a record of the votes cast. 7 Petitioners
concluded their argument by citing Galvadores.
After a careful review of the records of this case, We are convinced that the deduction of the
10% special assessment by the Union was not made in accordance with the requirements
provided by law.
Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the
instant case. The principle "that employees are protected by law from unwarranted practices that
diminish their compensation without their known edge and consent" 8 is in accord with the
constitutional principle of the State affording full protection to labor. 9
The respondent-Union brushed aside the defects pointed out by petitioners in the manner of
compliance with the legal requirements as "insignificant technicalities." On the contrary, the
failure of the Union to comply strictly with the requirements set out by the law invalidates the
questioned special assessment. Substantial compliance is not enough in view of the fact that the
special assessment will diminish the compensation of the union members. Their express consent
is required, and this consent must be obtained in accordance with the steps outlined by law,
which must be followed to the letter. No shortcuts are allowed.
The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of
Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers to "check-off" of a
special assessment. Both provisions must be complied with. Under paragraph (n), the Union
must submit to the Company a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. In addition, the secretary of the organization
must record the minutes of the meeting which, in turn, must include, among others, the list of all
the members present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of
paragraph (n). It held local membership meetings on separate occasions, on different dates and at
various venues, contrary to the express requirement that there must be a general membership
meeting. The contention of the Union that "the local membership meetings are precisely the very
general meetings required by law" 10 is untenable because the law would not have specified a
general membership meeting had the legislative intent been to allow local meetings in lieu of the
latter.
It submitted only minutes of the local membership meetings when what is required is a written
resolution adopted at the general meeting. Worse still, the minutes of three of those local
meetings held were recorded by a union director and not by the union secretary. The minutes
submitted to the Company contained no list of the members present and no record of the votes
cast. Since it is quite evident that the Union did not comply with the law at every turn, the only
conclusion that may be made therefrom is that there was no valid levy of the special assessment
pursuant to paragraph (n) of Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that a special assessment may be validly checked-off. Even assuming that the
4
special assessment was validly levied pursuant to paragraph (n), and granting that individual
written authorizations were obtained by the Union, nevertheless there can be no valid check-off
considering that the majority of the union members had already withdrawn their individual
authorizations. A withdrawal of individual authorizations is equivalent to no authorization at all.
Hence, the ruling in Galvadores that "no check-offs from any amounts due employees may be
effected without an individual written authorization signed by the employees ... " is applicable.
The Union points out, however, that said disauthorizations are not valid for being collective in
form, as they are "mere bunches of randomly procured signatures, under loose sheets of
paper." 11 The contention deserves no merit for the simple reason that the documents containing
the disauthorizations have the signatures of the union members. The Court finds these retractions
to be valid. There is nothing in the law which requires that the disauthorization must be in
individual form.
Moreover, it is well-settled that "all doubts in the implementation and interpretation of the
provisions of the Labor Code ... shall be resolved in favor of labor."12 And as previously stated,
labor in this case refers to the union members, as employees of the Company. Their mere desire
to establish a separate bargaining unit, albeit unproven, cannot be construed against them in
relation to the legality of the questioned special assessment. On the contrary, the same may even
be taken to reflect their dissatisfaction with their bargaining representative, the respondent-
Union, as shown by the circumstances of the instant petition, and with good reason.
The Med-Arbiter correctly ruled in his Order that:
The mandate of the majority rank and file have (sic) to be respected considering
they are the ones directly affected and the realities of the high standards of
survival nowadays. To ignore the mandate of the rank and file would enure to
destabilizing industrial peace and harmony within the rank and file and the
employer's fold, which we cannot countenance.
Moreover, it will be recalled that precisely union dues are collected from the
union members to be spent for the purposes alluded to by respondent. There is no
reason shown that the regular union dues being now implemented is not sufficient
for the alleged expenses. Furthermore, the rank and file have spoken in
withdrawing their consent to the special assessment, believing that their regular
union dues are adequate for the purposes stated by the respondent. Thus, the rank
and file having spoken and, as we have earlier mentioned, their sentiments should
be respected.
Of the stated purposes of the special assessment, as embodied in the board resolution of the
Union, only the collection of a special fund for labor and education research is mandated, as
correctly pointed out by the Union. The two other purposes, namely, the purchase of vehicles and
other items for the benefit of the union officers and the general membership, and the payment of
services rendered by union officers, consultants and others, should be supported by the regular
union dues, there being no showing that the latter are not sufficient to cover the same.
5
The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b)
of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney's
fees, negotiations fees and similar charges arising out of the conclusion of a collective bargaining
agreement from being imposed on any individual union member. The collection of the special
assessment partly for the payment for services rendered by union officers, consultants and others
may not be in the category of "attorney's fees or negotiations fees." But there is no question that
it is an exaction which falls within the category of a "similar charge," and, therefore, within the
coverage of the prohibition in the aforementioned article. There is an additional proviso giving
the Union President unlimited discretion to allocate the proceeds of the special assessment. Such
a proviso may open the door to abuse by the officers of the Union considering that the total
amount of the special assessment is quite considerable — P1,027,694.33 collected from those
union members who originally authorized the deduction, and P1,267,863.39 from those who did
not authorize the same, or subsequently retracted their authorizations. 13 The former amount had
already been remitted to the Union, while the latter is being held in trust by the Company.
The Court, therefore, stakes down the questioned special assessment for being a violation of
Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code.
WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the
Bureau of Labor Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while
the order of the Med-Arbiter dated February 17, 1988 is reinstated, and the respondent Coca-
Cola Bottlers (Philippines), Inc. is hereby ordered to immediately remit the amount of
P1,267,863.39 to the respective union members from whom the said amount was withheld. No
pronouncement as to costs. This decision is immediately executory.
SO ORDERED.
6
2. DUARDO J. MARIO, JR., MA. G.R. No. 149763

MELVYN P. ALAMIS, NORMA P.
COLLANTES, and FERNANDO
PEDROSA,
Petitioners, Promulgated:
- versus -
July 7, 2009
GIL Y. GAMILLA, RENE LUIS
TADLE, NORMA S. CALAGUAS,
MA. LOURDES C. MEDINA,
EDNA B. SANCHEZ, REMEDIOS
GARCIA, MAFEL YSRAEL,
ZAIDA GAMILLA, and AURORA
DOMINGO,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
Assailed in this Petition for Review on Certiorari,[1] under Rule 45 of the Rules of Court,
are (1) the Decision[2] dated 16 March 2001 of the Court of Appeals in CA-G.R. SP No.
60657, dismissing petitioners Petition for Certiorari under Rule 65 of the Rules of Court; and (2)
the Resolution[3] dated 30 August 2001 of the appellate court in the same case denying
petitioners Motion for Reconsideration.
I
FACTS
The Petition at bar arose from the following factual and procedural antecedents.
(1) Case No. NCR-OD-M-9412-022
At the time when the numerous controversies in the instant case first came about,
petitioners Atty. Eduardo J. Mario, Jr., Ma. Melvyn P. Alamis, Norma P. Collantes, and
Fernando Pedrosa were among the executive officers and directors (collectively called the Mario
Group) of the University of Sto. Tomas Faculty Union (USTFU), a labor union duly organized
and registered under the laws of the Republic of the Philippines and the bargaining representative
of the faculty members of the University of Santo Tomas (UST).[4]
7
Respondents Gil Y. Gamilla, Rene Luis Tadle, Norma S. Calaguas, Ma. Lourdes C.
Medina, Edna B. Sanchez, Remedios Garcia, Mafel Ysrael, Zaida Gamilla, and Aurora
Domingo were UST professors and USTFU members.
The 1986 Collective Bargaining Agreement (CBA) between UST and USTFU expired
on 31 May 1988. Thereafter, bargaining negotiations ensued between UST and the Mario Group,
which represented USTFU. As the parties were not able to reach an agreement despite their
earnest efforts, a bargaining deadlock was declared and USTFU filed a notice of
strike. Subsequently, then Secretary of the Department of Labor and Employment (DOLE)
Franklin Drilon assumed jurisdiction over the dispute, which was docketed as NCMB-NCR-NS-
02-117-89. The DOLE Secretary issued an Order on 19 October 1990, laying the terms and
conditions for a new CBA between the UST and USTFU. In accordance with said Order, the
UST and USTFU entered into a CBA in 1991, which was to be effective for the period of 1 June
1988 to 31 May 1993 (hereinafter 1988-1993 CBA). In keeping with Article 253-A[5] of the
Labor Code, as amended, the economic provisions of the 1988-1993 CBA were subject to
renegotiation for the fourth and fifth years.
Accordingly, on 10 September 1992, UST and USTFU executed a Memorandum of

Agreement (MOA),[6] whereby UST faculty members belonging to the collective bargaining unit
were granted additional economic benefits for the fourth and fifth years of the 1988-1993 CBA,
specifically, the period from 1 June 1992 up to 31 May 1993. The relevant portions of the MOA
read:
MEMORANDUM OF AGREEMENT
xxxx
1.0. The University hereby grants additional benefits to Faculty

Members belonging to the collective bargaining unit as defined in Article I,
Section 1 of the Collective Bargaining Agreement entered into between the
parties herein over and above the benefits now enjoyed by the said faculty
members, which additional benefits shall amount in the aggregate
to P42,000,000.00[.]
2.0. Under this Agreement the University shall grant salary increases, to wit:
2.1. THIRTY (P30.00) PESOS per lecture unit per month to covered faculty
members retroactive to June 1, 1991;
2.2. Additional THIRTY (P30.00) PESOS per lecture unit per month on top of the salary
increase granted in [paragraph] 2.1 hereof to the said faculty
members effective June 1, 1992;
2.3. In the case of a covered faculty member whose compensation is computed on a

basis other than lecture unit per month, he shall receive salary increases that are
8
equivalent to those provided in paragraphs 2.1 and 2.2 hereof, with the amount of
salary increases being arrived at by using the usual method of computing the said
faculty members basic pay;
3.0. The UNIVERSITY shall likewise restore to the faculty members the
amounts corresponding to the deductions in salary that were taken from the pay
checks in the second half of June, 1989 and in the first half of July, 1989,
provided that said deductions in salary relate to the union activities that were held
in the aforestated payroll periods, and provided further that the amounts involved
shall be taken from the P42 Million (sic) economic package.
4.0. A portion of the P42,000,000.00 economic package amounting

to P2,000,000.00 shall be used to satisfy all obligations that remained outstanding
and unpaid in the May 17, 1986 Collective Bargaining Agreement.
5.0. Any unspent balance of the aggregate of P42,000,000.00 as of October 15,

1992, shall, within two weeks, be remitted to the Union[:]
5.1. The unspent balance mentioned in paragraph 5.0 inclusive of earnings but
exclusive of check-offs, shall be used for the salary increases herein granted up to
May 31, 1993, for increases in hospitalization, educational and retirement
benefits, and for other economic benefits.
6.0. The benefits herein granted constitute the entire and complete package of
economic benefits granted by the UNIVERSITY to the covered faculty members
for the balance of the term of the existing collective bargaining agreement.
7.0. It is clearly understood and agreed upon that the aggregate sum of P42
million is chargeable against the share of the faculty members in the
incremental proceeds of tuition fees collected and still to be collected;
Provided, however, that he (sic) commitment of the UNIVERSITY to pay the
aggregate sum of P42 million shall subsist even if the said amount exceeds the
proportionate share that may accrue to the faculty members in the tuition fee
increases that the UNIVERSITY may be authorized to collect in School-Year
1992-1993, and, Provided, finally, that the covered faculty members shall still be
entitled to their proportionate share in any undistributed portion of the
incremental proceeds of the tuition fee increases in School-Year 1992-1993,
and incremental proceeds are, by law and pertinent Department of Education
Culture and Sports (DECS) regulations, required to be allotted for the
payment of salaries, wages, allowances and other benefits of teaching and
non-teaching personnel for the UNIVERSITY.
8.0. With this Agreement, the parties confirm that[:]
8.1. the University has complied with the requirements of the law relative to the release
and distribution of the incremental proceeds of tuition fee increases as these
9
incremental proceeds pertain to the faculty share in the tuition fee increase
collected during the School-Year 1991-1992; and,
8.2. the economic benefits herein granted constitute the full and complete financial
obligation of the UNIVERSITY to the members of its faculty for the period June
1, 1991 to May 31, 1993, pursuant to the provisions of the existing Collective
Bargaining Agreement.
9.0. Subject to the provisions of law, and without reducing the amounts of salary
increases granted under paragraphs 2.0, 2.1, 2.2 and 2.3[,] the UNION shall have
the right to a pro-rata lump sum check-off of all sums of money due and
payable to it from the package of economic benefits granted under this
Agreement, provided that there is an authorization of a majority of the members
of the UNION and provided, further, that the P42 million economic package
herein granted shall not in any way be exceeded.
10.0. This Agreement shall be effective for a period of two (2) years, starting June
1, 1991 and ending on May 31, 1993, provided, however, that if for any reason no
new collective bargaining agreement is entered into at the expiration date hereof,
this Agreement, together with the March 18, 1991 Collective Bargaining
Agreement, shall remain in full force and effect until such time as a new
collective bargaining agreement shall have been executed by the parties.
xxxx
UNIVERSITY OF SANTO TOMAS UST FACULTY UNION

BY: BY:
(signed) (signed)
FR. TERESO M. CAMPILLO, JR., O.P. ATTY. EDUARDO J.
Treasurer MARINO, JR.
President
Attested by[:]
(signed)
REV. FR. ROLANDO DELA ROSA, O.P. (Emphasis ours.)
On 12 September 1992, the majority of USTFU members signed individual instruments

of ratification,[7] which purportedly signified their consent to the economic benefits granted
under the MOA. Said instruments uniformly recited:
RATIFICATION OF THE UST-USTFU MEMORANDUM OF AGREEMENT

DATED SEPTEMBER 10, 1992 GRANTING A PACKAGE OF THE P42
MILLION FACULTY BENEFITS WITH PROVISION FOR CHECK-OFF.
September 12, 1992
10
Date
TO WHOM IT MAY CONCERN:
I, the undersigned UST faculty member, aware that the law requires
ratification and that without ratification by majority of all faculty members
belonging to the collective bargaining unit, the Memorandum of Agreement
between the University of Santo Tomas and the UST Faculty Union (or USTFU)
dated September 10, 1992 may be questioned and all the faculty benefits granted
therein may be cancelled, do hereby ratify the said agreement.
Under the Agreement, the University shall pay P42 million over a period
of two (2) years from June 1, 1991 up to May 31, 1992.
In consideration of the efforts of the UST Faculty Union as the faculty

members sole and exclusive collective bargaining representative in obtaining the
said P42 million package of economic benefits, a check-off of ten percent
thereof covering union dues, and special assessment for Labor Education
Fund and attorneys fees from USTFU members and agency fee from non-
members for the period of the Agreement is hereby authorized to be made in one
lump sum effective immediately, provided that two per cent (sic) shall be for [the]
administration of the Agreement and the balance of eight per cent (sic) shall be
for attorneys fees to be donated, as pledged by the USTFU lawyer to the
Philippine Foundation for the Advancement of the Teaching Profession, Inc.
whose principal purpose is the advancement of the teaching profession and
teachers welfare, and provided further that the deductions shall not be taken from
my individual monthly salary but from the total package of P42 million due under
the Agreement.
_________________________
Signature of Faculty Member (Emphasis
ours.)
USTFU, through its President, petitioner Atty. Mario, wrote a letter[8] dated 1 October
1992 to the UST Treasurer requesting the release to the union of the sum of P4.2 million, which
was 10% of the P42 million economic benefits package granted by the MOA to faculty members
belonging to the collective bargaining unit. The P4.2 million was sought by USTFU in
consideration of its efforts in obtaining the said P42 million economic benefits package. UST
remitted the sum of P4.2 million to USTFU on 9 October 1992.[9]
After deducting from the P42 million economic benefits package the P4.2 million check-
off to USTFU, the amounts owed to UST, and the salary increases and bonuses of the covered
faculty members, a net amount of P6,389,145.04 remained. The remaining amount was
distributed to the faculty members on 18 November 1994.
11
On 15 December 1994, respondents[10] filed with the Med-Arbiter, DOLE-National

Capital Region (NCR), a Complaint for the expulsion of the Mario Group as USTFU officers and
directors, which was docketed as Case No. NCR-OD-M-9412-022.[11] Respondents alleged in
their Complaint that the Mario Group violated the rights and conditions of membership in
USTFU, particularly by: 1) investing the unspent balance of the P42 million economic benefits
package given by UST without prior approval of the general membership; 2) simultaneously
holding elections viva voce; 3) ratifying the CBA involving the P42 million economic benefits
package; and 4) approving the attorneys/agency fees worth P4.2 million in the form of check-
off. Respondents prayed that the Mario Group be declared jointly and severally liable for
refunding all collected attorneys/agency fees from individual members of USTFU and the
collective bargaining unit; and that, after due hearing, the Mario group be expelled as USTFU
officers and directors.
On 16 December 1994, UST and USTFU, represented by the Mario Group, entered into a
new CBA, effective 1 June 1993 to 31 May 1998 (1993-1998 CBA). This new CBA was
registered with the DOLE on 20 February 1995.
Respondents[12] filed with the Med-Arbiter, DOLE-NCR, on 18 October 1995, another

Complaint against the Mario Group for violation of the rights and conditions of union
membership, which was docketed as Case No. NCR-OD-M-9510-028.[13] The Complaint
primarily sought to invalidate certain provisions of the 1993-1998 CBA negotiated by the Mario
Group for USTFU and the registration of said CBA with the DOLE.

On 24 September 1996, petitioner Norma Collantes, as USTFU Secretary-General,
posted notices in some faculty rooms at UST, informing the union members of a general
assembly to be held on 5 October 1996. Part of the agenda for said date was the election of new
USTFU officers. The following day, 25 September 1996, respondents wrote a letter[14] to the
USTFU Committee on Elections, urging the latter to re-schedule the elections to ensure a free,
clean, honest, and orderly election and to afford the union members the time to prepare
themselves for the same. The USTFU Committee on Elections failed to act positively on
respondents letter, and neither did they adopt and promulgate the rules and regulations for the
conduct of the scheduled election.
Thus, on 1 October 1996, respondents[15] filed with the Med-Arbiter, DOLE-NCR, an

Urgent Ex-Parte Petition/Complaint, which was docketed as Case No. NCR-OD-M-9610-
001.[16] Respondents alleged in their Petition/Complaint that the general membership meeting
called by the USTFU Board of Directors on 5 October 1996, the agenda of which included the
election of union officers, was in violation of the provisions of the Constitution and By-Laws of
12
USTFU. Respondents prayed that the DOLE supervise the conduct of the USTFU elections, and
that they be awarded attorneys fees.
On 4 October 1996, the Med-Arbiter DOLE-NCR, issued a Temporary Restraining Order

(TRO) enjoining the holding of the USTFU elections scheduled the next day.
Also on 4 October 1996, the UST Secretary General headed a general faculty assembly
attended by USTFU members, as well as USTFU non-members, but who were members of the
collective bargaining unit. During said assembly, respondents were among the elected officers of
USTFU (collectively referred to as the Gamilla Group).Petitioners filed with the Med-Arbiter,
DOLE-NCR, a Petition seeking injunctive reliefs and the nullification of the results of the 4
October 1994 election. The Petition was docketed as Case No. NCR-OD-M-9610-016.
In a Decision dated 11 February 1997 in Case No. NCR-OD-M-9610-016, the Med-

Arbiter DOLE-NCR, nullified the election of the Gamilla Group as USTFU officers on 4
October 1996 for having been conducted in violation of the Constitution and By-Laws of the
union. This ruling of the Med-Arbiter was affirmed on appeal by the Bureau of Labor Relations
(BLR) in a Resolution issued on 15 August 1997. Respondents were, thus, prompted to file a
Petition for Certiorari before this Court, docketed as G.R. No. 131235.
While G.R. No. 131235 was pending, the term of office of the Gamilla Group as USTFU
officers expired on 4 October 1999. The Gamilla Group then scheduled the next election of
USTFU officers on 14 January 2000.
On 16 November 1999, the Court promulgated its Decision in G.R. No. 131235,
affirming the BLR Resolution dated 15 August 1997 which ruled that the purported election of
USTFU officers held on 4 October 1996 was void for violating the Constitution and By-Laws of
the union.[17]
On 15 November 1996, respondents[18] filed before the Med-Arbiter, DOLE-NCR, a fourth

Complaint/Petition against the Mario Group, as well as the Philippine Foundation for the
Advancement of the Teaching Profession, Inc., Security Bank Corporation, and Bank of the
Philippine Islands, which was docketed as Case No. NCR-OD-M-9611-009.[19] Respondents
claimed in their latest Complaint/Petition that they were the legitimate USTFU officers, having
been elected on 4 October 1996. They prayed for an order directing the Mario Group to cease
and desist from using the name of USTFU and from performing acts for and on behalf of the
USTFU and the rest of the members of the collective bargaining unit.
13
DOLE Department Order No. 9 took effect on 21 June 1997, amending the Rules
Implementing Book V of the Labor Code, as amended. Thereunder, jurisdiction over the
complaints for any violation of the union constitution and by-laws and the conditions of union
membership was vested in the Regional Director of the DOLE.[20] Pursuant to said Department
Order, all four Petitions/Complaints filed by respondents against the Mario Group,
particularly, Case No. NCR-OD-M-9412-022, Case No. NCR-OD-M-9510-028, Case No. NCR-
OD-M-9610-001, and Case No. NCR-OD-M-9611-009 were consolidated and indorsed to the
Office of the Regional Director of the DOLE-NCR.
On 27 May 1999, the DOLE-NCR Regional Director rendered a Decision[21] in the

consolidated cases in respondents favor.
In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the DOLE-

NCR Regional Director adjudged the Mario Group, as the executive officers of USTFU, guilty of
violating the provisions of the USTFU Constitution and By-laws by failing to collect union dues
and to conduct a general assembly every three months. The DOLE-NCR Regional Director also
ruled that the Mario Group violated Article 241(c)[22] and (l)[23] of the Labor Code when they did
not submit a list of union officers to the DOLE; when they did not submit/provide DOLE and the
USTFU members with copies of the audited financial statements of the union; and when they
invested in a bank, without prior consent of USTFU members, the sum of P9,766,570.01, which
formed part of the P42 million economic benefits package.
Additionally, the DOLE-NCR Regional Director declared that the check-off of P4.2
million collected by the Mario Group, as negotiation fees, was invalid. According to the MOA
executed on 10 September 1992 by UST and USTFU, the P42 million economic benefits
package was chargeable against the share of the faculty members in the incremental proceeds of
tuition fees collected and still to be collected. Under Republic Act No. 6728,[24] 70% of the
tuition fee increases should be allotted to academic and non-academic personnel. Given that the
records were silent as to how much of the P42 million economic benefits package was obtained
through negotiations and how much was from the statutory allotment of 70% of the tuition fee
increases, the DOLE-NCR Regional Director held that the entire amount was within the statutory
allotment, which could not be the subject of negotiation and, thus, could not be burdened by
negotiation fees.
The DOLE-NCR Regional Director further found that the principal subject of Case No.
NCR-OD-M-9610-001 (i.e., violation by the Mario Group of the provisions on election of
officers in the Labor Code and the USTFU Constitution and By-Laws) had been superseded by
the central event in Case No. NCR-OD-M-9611-009 (i.e., the subsequent election of another set
of USTFU officers consisting of the Gamilla Group). While there were two sets of USTFU
officers vying for legitimacy, the eventual ruling of the DOLE-NCR Regional Director, for the
expulsion of the Mario Group from their positions as USTFU officers, practically
extinguished Case No. NCR-OD-M-9611-009.
14
The decretal portion of the 27 May 1999 Decision of the DOLE-NCR Regional Director
reads:
WHEREFORE, premises considered, judgment is hereby rendered:
a) Expelling [the Mario Group] from their positions as officers

of USTFU, and hereby order them under pain of contempt, to cease and desist
from performing acts as such officers;
b) Ordering [the Mario Group] to jointly and severally refund to

USTFU the amount of P4.2 M checked-off as attorneys fees from the P42 M
economic package;
c) Ordering [the Mario Group] to account for:

c.1. P2.0 M paid to USTFU in satisfaction of the remaining
obligation of the University under the 1986 CBA;
c.2. P7.0 M as consideration of the Compromise
Agreement entered into by USTFU involving certain
labor cases;
c.3. Interest/earnings of the P9,766,570.01 balance of the
P42 M invested/deposited by [the Mario Group] with
the PCI Capital Corporation.
d) Ordering conduct of election of Union officers under the supervision of

this Department.[25]
Petitioners interposed an appeal[26] before the BLR, which was docketed as BLR-A-TR-
52-25-10-99.
In the meantime, the election of USTFU officers was held as scheduled on 14 January
2000,[27] in which the Gamilla Group claimed victory.[28] On 3 March 2000, the Gamilla group,
as the new USTFU officers, entered into a Memorandum of Agreement[29] with the UST, which
provided for the economic benefits to be granted to the faculty members of the UST for the years
1999-2001. Said Agreement was ratified by the USTFU members on 9 March 2000.
On the same day, 9 March 2000, the BLR promulgated its Decision[30] in BLR-A-TR-52-
25-10-99, the fallo of which provides:
WHEREFORE, the appeal is GRANTED IN PART. Accordingly, the decision

appealed from is hereby MODIFIED to the effect that appellant USTFU officers
are hereby ordered to return to the general membership the amount of P4.2
million they have collected by way of attorneys fees.
Let the entire records of this case be remanded to the Regional Office of origin for
the immediate conduct of election of officers of USTFU. The election shall be
15
held under the control and supervision of the Regional Office, in accordance with
Section 1 (b), Rule XV of Department Order No. 9, unless the parties mutually
agree to a different procedure consistent with ensuring integrity and fairness in the
electoral exercise.
The BLR found no basis for the order of the DOLE-NCR Regional Director to the Mario Group
to account for the amounts of P2 million and P7 million supposedly paid by UST to USTFU. The
BLR clarified that UST paid USTFU a lump sum of P7 million. The P2 million of this lump sum
was the payment by UST of its outstanding obligations to USTFU under the 1986 CBA. This
amount was subsequently donated by USTFU members to the Philippine Foundation for the
Advancement of the Teaching Profession, Inc.The remaining P5 million of the lump sum was the
consideration for the settlement of an illegal dismissal case between UST and the Mario
Group. Hence, the P5 million legally belonged to the Mario Group, and there was no need to
make it account for the same. As to the interest earnings of the sum of P9,766,570.01 that was
invested by the Mario Group in a bank, the BLR ruled that the same was included in the amount
of P6,389,145.04 that was distributed to the faculty members on 18 November 1994.
The BLR, however, agreed in the finding of the DOLE-NCR Regional Director that the P42
million economic benefits package was sourced from the faculty members share in the tuition fee
increases under Republic Act No. 6728. Under said law, 70% of tuition fee increases shall go to
the payment of salaries, wages, allowances, and other benefits of teaching and non-teaching
personnel. As was held in the decision[31] and subsequent resolution[32] of the Supreme Court
in Cebu Institute of Technology v. Ople, the law has already provided for the minimum
percentage of tuition fee increases to be allotted for teachers and other school personnel. This
allotment is mandatory and cannot be diminished, although it may be increased by collective
bargaining. It follows that only the amount beyond that mandated by law shall be subject to
negotiation fees and attorney's fees for the simple reason that it was only this amount that the
school employees had to bargain for.
The BLR further reasoned that the P4.2 million collected by the Mario Group was in the nature
of attorneys fees or negotiation fees and, therefore, fell under the general prohibition against such
fees in Article 222(b)[33] of the Labor Code, as amended. Also, the exception to charging against
union funds was not applicable because the P42 million economic benefits package under the 10
September 1992 MOA was not union fund, as the same was intended not for the union coffers,
but for the members of the entire bargaining unit. The fact that the P4.2 million check-off was
approved by the majority of USTFU members was immaterial in view of the clear command of
Article 222(b) that any contract, agreement, or arrangement of any sort, contrary to the
prohibition contained therein, shall be null and void.
Lastly, as to the alleged failure of the Mario Group to perform some of its duties, the BLR held
that the change of USTFU officers can best be decided, not by outright expulsion, but by the
general membership through the actual conduct of elections.
16
Petitioners Motion for Partial Reconsideration[34] of the foregoing Decision was denied by the
BLR in a Resolution[35] dated 13 June 2000.
Aggrieved once again, petitioners filed with the Court of Appeals a Petition
for Certiorari[36] under Rule 65 of the Rules of Court, which was docketed as CA-G.R. SP No.
60657. In a Resolution dated 26 September 2000, the Court of Appeals directed respondents to
file their Comment; and, in order not to render moot and academic the issues in the Petition,
enjoined respondents and all those acting for and on their behalf from enforcing, implementing,
and effecting the BLR Decision dated 9 March 2000.
On 16 March 2001, the Court of Appeals rendered its Decision in CA-G.R. SP No.
60657, favoring respondents.
According to the Court of Appeals, the BLR did not commit grave abuse of discretion,
amounting to lack or excess of jurisdiction, in ruling that the P42 million economic benefits
package was merely the share of the faculty members in the tuition fee increases pursuant to
Republic Act No. 6728. The appellate court explained:
It is too plain to see that the 60% of the proceeds is to be allocated

specifically for increase in salaries or wages of the members of the faculty and all
other employees of the school concerned. Under Section 5(2) of Republic Act
6728, the amount had been increased to 70% of the tuition fee increases which
was specifically allocated to the payment of salaries, wages, allowances and other
benefits of teaching and non-teaching personnel of the school[,] except
administrators who are principal stockholders of the school and to cover increases
as provided for in the collective bargaining agreements existing or in force at the
time the law became effective[.]
xxxx
It is too plain to see, too, that under the Memorandum of Agreement

between UST and the Union, x x x, the P42,000,000.00 economic package
granted by the UST to the Union was in compliance with the mandates of the law
and pertinent Department of Education, Culture and Sports regulation (sic)
required to be allotted following the payment of salaries, wages, allowances and
other benefits of teaching and non-teaching personnel of the University[.]
xxxx
Whether or not UST implemented the mandate of Republic Act 6728

voluntarily or through the efforts and prodding of the Union does not and cannot
change or alter a whit the nature of the economic package or the purpose or
purposes of the allocation of the said amount. For, if we acquiesced to and
sustained Petitioners stance, we will thereby be leaving the compliance by the
17
private educational institutions of the mandate of Republic Act 6728 at the will,
mercy, whims and caprices of the Union and the private educational
institution. This cannot and should not come to pass.
With our foregoing findings and disquisitions, We thus agree with the
[BLR] that the aforesaid amount of P42,000,000.00 should not answer for any
attorneys fees claimed by the Petitioners. x x x.
xxxx
Moreover, [Section 5 of Rule X of] the CBL of the Union provides that:
Section 5. Special assessments or other extraordinary fees such as

for payment of attorneys fees shall be made only upon such a
resolution duly ratified by the general membership by secret
balloting. x x x.
Also, Article 241(n)[37] of the Labor Code, as amended, provides that no special
assessment shall be levied upon the members of the union unless authorized by a
written resolution of a majority of all the members at a general membership
meeting duly called for the purpose[.]
xxxx
In ABS-CBN Supervisors-Employees Union Members versus ABS-CBN

Broadcasting Corporation, 304 SCRA 489, our Supreme Court declared that
Article 241(n) of the Labor Code, as amended, speaks of three (3) requisites, to
wit: (1) authorization by a written resolution of the majority of all members at the
general membership meeting called for the purpose; (2) secretarys record of the
minutes of the meeting; and (3) individual written authorization for check-off
duly signed by the employee concerned.
Contrary to the provisions of Articles 222(b) and 241(n) of the Labor Code, as
amended, and Section 5, Rule X of [the] CBL of the Union, no resolution ratified
by the general membership of [the] USTFU through secret balloting which
embodied the award of attorneys fees was submitted. Instead, the Petitioners
submitted copies of the form for the ratification of the MOA and the check-off for
attorneys fees.
xxxx
The aforementioned ratification with check-off form embodied the: (a) ratification
of the MOA; (b) check-off of union dues; and (c) check-off of a special
assessment, i.e., attorneys fees and labor education fund. x x x. Patently, the CBL
was not complied with.
Worse, the check-off for union dues and attorneys fees were included in the
ratification of the MOA. The members were thus placed in a situation where,
18
upon ratification of the MOA, not only the check-off of union dues and special
assessment for labor education fund but also the payment of attorneys fees were
(sic) authorized.[38]
In like manner, the Court of Appeals found no grave abuse of discretion, amounting to lack or
excess of jurisdiction, on the part of the BLR in ordering the conduct of elections under the
control and supervision of the DOLE-NCR. Said the appellate court:
We agree with the Petitioners that the elections of officers of the Union,
before the Decision of the [BLR], had been unfettered by any intervention of the
DOLE. However, We agree with the Decision of the [BLR] for two (2) specific
reasons, namely: (a) the parties are given an opportunity to first agree on a
different procedure to ensure the integrity and fairness of the electoral exercise,
before the DOLE, may supervise the election[.]
xxxx
Under Article IX of the CBL, the Board of Officers of the Union shall create a
Committee on Elections, Comelec for brevity, composed of a chairman and two
(2) members appointed by the Board of Officers[.]
xxxx
It, however, appears that the term of office of the Petitioners had already expired
in September of 1996. In fact, an election of officers was scheduled on October 6,
1996. However, on October 4, 1996, [respondents] and the members of the faculty
of UST, both union member and non-union member, elected [respondents] as the
new officers of the USTFU. The same was, however, (sic) nullified by the
Supreme Court, on November 16, 1999. However, as the term of office of the
[respondents] had expired, on October 4, 1999, there is nothing to nullify
anymore. By virtue of an election, held on January 14, 2000, the [respondents]
were elected as the new officers of the Union, which election was not contested
by the Petitioners or any other group in the union.
xxxx
We are thus faced with a situation where one set of officers claim to be the
legitimate and incumbent officers of the Union, pursuant to the CBL of the Union,
and another set of officers who claim to have been elected by the members of the
faculty of the Union thru an election alleged to have been supervised by the
DOLE which situation partakes of and is akin to the nature of an intra-union
dispute[.] x x x.
Undeniably, the CBL gives the Board of Officers the right to create and appoint
members of the Comelec. However, the CBL has no application to a situation
where there are two (2) sets of officers, one set claiming to be the legitimate
19
incumbent officers holding over to their positions who have not exercised their
powers and functions therefor and another claiming to have been elected in an
election supervised by the DOLE and, at the same time, exercising the powers and
functions appended to their positions. In such a case, the BLR, which has
jurisdiction over the intra-union dispute, can validly order the immediate conduct
of election of officers, otherwise, internecine disputes and blame-throwing will
derail an orderly and fair election. Indeed, Section 1(b), [Rule XV], Book V of the
Implementing Rules and Regulations of the Labor Code, as amended, by
Department Order No. 09, Series of 1997,[39] provides that, in the absence of any
agreement among the members or any provision in the constitution and by-laws of
the labor organization, in an election ordered by the Regional Director, the
chairman of the committee shall be a representative of the Labor Relations
Division of the Regional Office[.][40]
Ultimately, the Court of Appeals decreed:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied

due course and is hereby DISMISSED.[41]
Petitioners moved for reconsideration[42] of the Decision dated 16 March 2001 of the
Court of Appeals, but it was denied by the said court in its Resolution[43] dated 30 August 2001.
Petitioners elevated the case to this Court via the instant Petition, invoking the following
assignment of errors:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS

COMMITTED SERIOUS ERROR AND GRAVELY ABUSED ITS
DISCRETION WHEN IT UPHELD THE APPLICATION BY THE
HONORABLE DIRECTOR OF THE BUREAU OF LABOR RELATIONS OF
THE PROVISIONS OF REPUBLIC ACT NO. 6728 TO THE P42 MILLION
CBA PACKAGE OF ECONOMIC BENEFITS OBTAINED BY THE UST
FACULTY UNION FROM THE UNIVERSITY OF SANTO TOMAS.
II.

DISCRETION WHEN IT DISALLOWED THE LUMP-SUM CHECK-OFF
AMOUNTING TO P4.2 MILLION BY RULING THAT THE P42 MILLION
CBA ECONOMIC PACKAGE OBTAINED BY THE UST FACULTY UNION
WAS MERELY AN ALLOCATION OF THE SEVENTY PER CENT (70%) OF
20
THE TUITION INCREASES AUTHORIZED BY LAW AND THE

DEPARTMENT OF EDUCATION, CULTURE AND SPORTS.
III.

DISCRETION WHEN IT DISREGARDED THE PROVISIONS ON ELECTION
OF UNION OFFICERS IN THE CONSTITUTION AND BY-LAWS OF THE
UST FACULTY UNION AND INSTEAD UPHELD THE DIRECTIVE OF THE
HONORABLE DIRECTOR OF THE BUREAU OF LABOR RELATIONS TO
CONDUCT THE ELECTION OF UNION OFFICERS UNDER THE CONTROL
AND SUPERVISION OF THE REGIONAL DIRECTOR FOR THE
NATIONAL CAPITAL REGION OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT.
Essentially, in order to arrive at a final disposition of the instant case, this Court is tasked
to determine the following: (1) the nature of the P42 million economic benefits package granted
by UST to USTFU; (2) the legality of the 10% check-off collected by the Mario Group from
the P42 million economic benefits package; and (3) the validity of the BLR order for USTFU to
conduct election of union officers under the control and supervision of the DOLE-NCR Regional
Director.
II
RULING
(1) The P42 million economic benefits package
Petitioners argue that the P42 million economic benefits package granted to the covered
faculty members were additional benefits, which resulted from a long and arduous process of
negotiations between the Mario Group and UST. The BLR and the Court of Appeals were in
error for considering the said amount as purely sourced from the allocation by UST of 70%
percent of the incremental proceeds of tuition fee increases, in accordance with Republic Act No.
6728. Said law was improperly applied as a general law that decrees the allocation by all private
schools of 70% of their tuition fee increases to the payment of salaries, wages, allowances and
other benefits of their teaching & non-teaching personnel. It is clear from the title of the law
itself that it only covers government assistance to students and teachers in private
education. Section 5 of Republic Act No. 6728 unequivocally limits the scope of the law to
tuition fee supplements and subsidies extended by the Government to students in private high
schools. Thus, the petitioners maintain that Republic Act No. 6728 has no application to the
MOA executed on 10 September 1992 between UST and USTFU, through the efforts of the
Mario Group.
21
The Court disagrees with petitioners stance.
The provisions of Republic Act No. 6728 were not arbitrarily applied by the DOLE-NCR
Regional Director, the BLR, or the Court of Appeals to the P42 million economic benefits
package granted by UST to USTFU, considering that the parties themselves stipulated in Section
7 of the MOA they signed on 10 September 1992 that:
7.0. It is clearly understood and agreed upon that the aggregate sum of P42
million is chargeable against the share of the faculty members in the
incremental proceeds of tuition fees collected and still to be collected[;]
Provided, however, that he (sic) commitment of the UNIVERSITY to pay the
aggregate sum of P42 million shall subsist even if the said amount exceeds the
proportionate share that may accrue to the faculty members in the tuition fee
increases that the UNIVERSITY may be authorized to collect in SchoolYear
1992-1993, and, Provided, finally, that the covered faculty members shall still be
entitled to their proportionate share in any undistributed portion of the
incremental proceeds of the tuition fee increases in School-Year 1992-1993,
and which incremental proceeds are, by law and pertinent Department of
Education Culture and Sports (DECS) regulations, required to be allotted
for the payment of salaries, wages, allowances and other benefits of teaching
and non-teaching personnel for the UNIVERSITY.[44] (Emphases supplied.)
The law in the aforequoted Section 7 of the MOA can only refer to Republic Act No.
6728, otherwise known as the Government Assistance to Students and Teachers in Private
Education Act." Republic Act No. 6728 was enacted in view of the declared policy of the State,
in conformity with the mandate of the Constitution, to promote and make quality education
accessible to all Filipino citizens, as well as the recognition of the State of the complementary
roles of public and private educational institutions in the educational system and the invaluable
contribution that the private schools have made and will make to education.[45] The said statute
primarily grants various forms of financial aid to private educational institutions such as tuition
fee supplements, assistance funds, and scholarship grants.[46]
One such form of financial aid is provided under Section 5 of Republic Act No. 6728,
which states:
SEC. 5. Tuition Fee Supplement for Student in Private High School.

(1) Financial assistance for tuition for students in private high schools shall be
provided by the government through a voucher system in the following manner:
(a) For students enrolled in schools charging less than one thousand five hundred
pesos (P1,500) per year in tuition and other fees during school year 1988-89 or
such amount in subsequent years as may be determined from time to time by the
State Assistance Council: The Government shall provide them with a voucher
equal to two hundred ninety pesos P290.00: Provided, That the student pays in
22
the 1989-1990 school year, tuition and other fees equal to the tuition and other
fees paid during the preceding academic year: Provided, further, That the
Government shall reimburse the vouchers from the schools concerned within sixty
(60) days from the close of the registration period: Provided, furthermore, That
the student's family resides in the same city or province in which the high school
is located unless the student has been enrolled in that school during the previous
academic year.
(b) For students enrolled in schools charging above one thousand five hundred
pesos (P1,500) per year in tuition and other fees during the school year 1988-1989
or such amount in subsequent years as may be determined from time to time by
the State Assistance Council, no assistance for tuition fees shall be granted by
the Government: Provided, however, That the schools concerned may raise
their tuition fee subject to Section 10 hereof.
(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be
granted and tuition fees under subparagraph (c) may be increased, on the
condition that seventy percent (70%) of the amount subsidized, allotted for
tuition fee or of the tuition fee increases shall go to the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching
personnel except administrators who are principal stockholders of the
school, and may be used to cover increases as provided for in the collective
bargaining agreements existing or in force at the time when this Act is
approved and made effective: Provided, That government subsidies are not used
directly for salaries of teachers of nonsecular subjects. At least twenty percent
(20%) shall go to the improvement or modernization of buildings, equipment,
libraries, laboratories, gymnasia and similar facilities and to the payment of other
costs of operation. For this purpose, schools shall maintain a separate record of
accounts for all assistance received from the government, any tuition fee increase,
and the detailed disposition and use thereof, which record shall be made available
for periodic inspection as may be determined by the State Assistance Council,
during business hours, by the faculty, the non-teaching personnel, students of the
school concerned, and Department of Education, Culture and Sports and other
concerned government agencies. (Emphases ours.)
Although Section 5 of Republic Act No. 6728 does speak of government assistance to
students in private high schools, it is not limited to the same. Contrary to petitioners puerile
claim, Section 5 likewise grants an unmistakable authority to private high schools to increase
their tuition fees, subject to the condition that seventy (70%) percent of the tuition fee increases
shall go to the payment of the salaries, wages, allowances, and other benefits of their teaching
and non-teaching personnel. The said allocation may also be used to cover increases in
the salaries, wages, allowances, and other benefits of school employees as provided for in the
CBAs existing or in force at the time when Republic Act No. 6728 was approved and made
effective.
23
Contrary to petitioners argument, the right of private schools to increase their tuition fee -
- with their corresponding obligation to allocate 70% of said increase to the payment of the
salaries, wages, allowances, and other benefits of their employees -- is not limited to private high
schools. Section 9[47] of Republic Act No. 6728, on Further Assistance to Students
in Private Colleges and Universities, is crystal clear in providing that:
d) Government assistance and tuition increases as described in this Section shall
be governed by the same conditions as provided under Section 5 (2).
Indeed, a private educational institution under Republic Act No. 6728 still has the
discretion on the disposition of 70% of the tuition fee increase. It enjoys the privilege of
determining how much increase in salaries to grant and the kind and amount of allowances and
other benefits to give. The only precondition is that 70% percent of the incremental tuition fee
increase goes to the payment of salaries, wages, allowances and other benefits of teaching and
non-teaching personnel.[48]
In this case, UST and USTFU stipulated in their 10 September 1992 MOA that the P42
million economic benefits package granted by UST to the members of the collective bargaining
unit represented by USTFU, was chargeable against the 70% allotment from the proceeds of the
tuition fee increases collected and still to be collected by UST. As observed by the DOLE-NCR
Regional Director, and affirmed by both the BLR and the Court of Appeals, there is no showing
that any portion of the P42 million economic benefits package was derived from sources other
than the 70% allotment from tuition fee increases of UST.
Given the lack of evidence to the contrary, it can be conclusively presumed that the
entire P42 million economic benefits package extended to USTFU came from the 70% allotment
from tuition fee increases of UST. Preceding from this presumption, any deduction from the P42
million economic benefits package, such as the P4.2 million claimed by the Mario Group as
attorneys/agency fees, should not be allowed, because it would ultimately result in the reduction
of the statutorily mandated 70% allotment from the tuition fee increases of UST.
The other reasons for disallowing the P4.2 million attorneys/agency fees collected by the
Mario Group from the P42 million economic benefits package are discussed in the immediately
succeeding paragraphs.
(2) The P4.2 Million Check-off
Petitioners contend that the P4.2 million check-off, from the P42 million economic benefits
package, was lawfully made since the requirements of Article 222(b) of the Labor Code, as
amended, were complied with by the Mario Group. The individual paychecks of the covered
faculty employees were not reduced and the P4.2 million deducted from the P42 million
economic benefits package became union funds, which were then used to pay attorneys fees,
negotiation fees, and similar charges arising from the CBA. In addition, the P4.2 million
24
constituted a special assessment upon the USTFU members, the requirements for which were
properly observed. The special assessment was authorized in writing by the general membership
of USTFU during a meeting in which it was included as an item in the agenda. Petitioners fault
the Court of Appeals for disregarding the authorization of the special assessment by USTFU
members. There is no law that prohibits the insertion of a written authorization for the special
assessment in the same instrument for the ratification of the 10 September 1992 MOA. Neither is
there a law prescribing a particular form that needs to be accomplished for the authorization of
the special assessment. The faculty members who signed the ratification of the MOA, which
included the authorization for the special assessment, have high educational attainment, and there
is ample reason to believe that they affixed their signatures thereto with full comprehension of
what they were doing.
Again, the Court is not persuaded.
The pertinent legal provisions on a check-off are found in Articles 222(b) and 241(n) and (o) of
the Labor Code, as amended.
Article 222(b) states:
(b) No attorney's fees, negotiation fees or similar charges of any kind arising from
any collective bargaining negotiations or conclusion of the collective agreement
shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against unions
funds in an amount to be agreed upon by the parties. Any contract, agreement or
arrangement of any sort to the contrary shall be null and void.
Article 241(n) reads:
(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless authorized by a written resolution of a
majority of all the members at a general membership meeting duly called for the
purpose. The secretary of the organization shall record the minutes of the meeting
including the list of all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessment or fees. The record shall
be attested to by the president.
And Article 241(o) provides:
(o) Other than for mandatory activities under the Code, no special assessments,
attorney's fees, negotiation fees or any other extraordinary fees may be checked
off from any amount due to an employee without an individual written
25
authorization duly signed by the employee. The authorization should specifically

state the amount, purpose and beneficiary of the deduction.
Article 222(b) of the Labor Code, as amended, prohibits the payment of attorney's fees
only when it is effected through forced contributions from the employees from their own
funds as distinguished from union funds.[49] Hence, the general rule is that attorneys fees,
negotiation fees, and other similar charges may only be collected from union funds, not from the
amounts that pertain to individual union members. As an exception to the general rule, special
assessments or other extraordinary fees may be levied upon or checked off from any amount due
an employee for as long as there is proper authorization by the employee.
A check-off is a process or device whereby the employer, on agreement with the Union,
recognized as the proper bargaining representative, or on prior authorization from the employees,
deducts union dues or agency fees from the latter's wages and remits them directly to the
Union. Its desirability in a labor organization is quite evident. The Unionis assured thereby of
continuous funding. As this Court has acknowledged, the system of check-off is primarily for the
benefit of the Union and, only indirectly, for the individual employees.[50]
The Court finds that, in the instant case, the P42 million economic benefits package
granted by UST did not constitute union funds from whence the P4.2 million could have been
validly deducted as attorneys fees. The P42 million economic benefits package was not intended
for the USTFU coffers, but for all the members of the bargaining unit USTFU represented,
whether members or non-members of the union. A close reading of the terms of the MOA
reveals that after the satisfaction of the outstanding obligations of UST under the 1986 CBA, the
balance of the P42 million was to be distributed to the covered faculty members of the collective
bargaining unit in the form of salary increases, returns on paycheck deductions; and increases in
hospitalization, educational, and retirement benefits, and other economic benefits. The deduction
of the P4.2 million, as alleged attorneys/agency fees, from the P42 million economic benefits
package effectively decreased the share from said package accruing to each member of the
collective bargaining unit.
Petitioners line of argument that the amount of P4.2 million became union funds after its
deduction from the P42 million economic benefits package and, thus, could already be used to
26
pay attorneys fees, negotiation fees, or similar charges from the CBA is absurd. Petitioners
reasoning is evidently flawed since the attorneys fees may only be paid from union funds; yet the
amount to be used in paying for the same does not become union funds until it is actually
deducted as attorneys fees from the benefits awarded to the employees. It is just a roundabout
argument. What the law requires is that the funds be already deemed union funds even before the
attorneys fees are deducted or paid therefrom; it does not become union funds after the deduction
or payment. To rule otherwise will also render the general prohibition stated in Article 222(b)
nugatory, because all that the union needs to do is to deduct from the total benefits awarded to
the employees the amount intended for attorneys fees and, thus, convert the latter to union funds,
which could then be used to pay for the said attorneys fees.
The Court further determines that the requisites for a valid levy and check-off of special
assessments, laid down by Article 241(n) and (o), respectively, of the Labor Code, as amended,
have not been complied with in the case at bar. To recall, these requisites are: (1) an
authorization by a written resolution of the majority of all the union members at the general
membership meeting duly called for the purpose; (2) secretary's record of the minutes of the
meeting; and (3) individual written authorization for check-off duly signed by the employee
concerned.[51]
Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws mandates that:
Section 5. Special assessments or other extraordinary fees such as for payment of

attorneys fees shall be made only upon a resolution duly ratified by the general
membership by secret balloting.
In an attempt to comply with the foregoing requirements, the Mario Group caused the
majority of the general membership of USTFU to individually sign a document, which embodied
the ratification of the MOA between UST and USTFU, dated 10 September 1992, as well as the
authorization for the check-off of P4.2 million, from the P42 million economic benefits package,
as payment for attorneys fees. As held by the Court of Appeals, however, the said documents
constitute unsatisfactory compliance with the requisites set forth in the Labor Code, as amended,
and in the USTFU Constitution and By-Laws, even though individually signed by a majority of
USTFU members.
The inclusion of the authorization for a check-off of union dues and special assessments
for the Labor Education Fund and attorneys fees, in the same document for the ratification of the
10 September 1992 MOA granting the P42 million economic benefits package, necessarily
vitiated the consent of USTFU members. For sure, it is fairly reasonable to assume that no
individual member of USTFU would casually turn down the substantial and lucrative award
27
of P42 million in economic benefits under the MOA.However, there was no way for any
individual union member to separate his or her consent to the ratification of the MOA from his or
her authorization of the check-off of union dues and special assessments. As it were, the
ratification of the MOA carried with it the automatic authorization of the check-off of union dues
and special assessments in favor of the union. Such a situation militated against the legitimacy of
the authorization for the P4.2 million check-off by a majority of USTFU membership. Although
the law does not prescribe a particular form for the written authorization for the levy or check-off
of special assessments, the authorization must, at the very least, embody the genuine consent of
the union member.
The failure of the Mario Group to strictly comply with the requirements set forth by the
Labor Code, as amended, and the USTFU Constitution and By-Laws, invalidates the questioned
special assessment. Substantial compliance is not enough in view of the fact that the special
assessment will diminish the compensation of the union members. Their express consent is
required, and this consent must be obtained in accordance with the steps outlined by law, which
must be followed to the letter. No shortcuts are allowed.[52]
Viewed in this light, the Court does not hesitate to declare as illegal the check-off of P4.2
million, from the P42 million economic benefits package, for union dues and special assessments
for the Labor Education Fund and attorneys fees. Said amount rightfully belongs to and should
be returned by petitioners to the intended beneficiaries thereof, i.e., members of the collective
bargaining unit, whether or not members of USTFU. This directive is without prejudice to the
right of petitioners to seek reimbursement from the other USTFU officers and directors, who
were part of the Mario Group, and who were equally responsible for the illegal check-off of the
aforesaid amount.
(3) Election of new officers
Having been overtaken by subsequent events, the Court need no longer pass upon the
issue of the validity of the order of BLR for USTFU to conduct its long overdue election of
union officers, under the control and supervision of the DOLE-NCR Regional Director.
The BLR issued such an order since USTFU then had two groups, namely, the Mario
Group and the Gamilla Group, each claiming to be the legitimate officers of USTFU.
The DOLE-NCR Regional Director, in his Decision dated 27 May 1999, decreed that
the Mario Group be expelled from their positions as USTFU officers. But then, the BLR, in its
Decision promulgated on 9 March 2000, declared that the change of officers could best be
decided, not by expulsion, but by the general membership of the union through the conduct of
election, under the control and supervision of the DOLE-NCR Regional Director. In its assailed
Decision dated 16 March 2001, the Court of Appeals agreed with the BLR judgment in its ruling
that the conduct of an election, under the control and supervision of the DOLE-NCR Regional
28
Director, is necessary to settle the question of who, as between the officers of the Mario Group
and of the Gamilla Group, are the legitimate officers of the USTFU.
The Court points out, however, that neither the Decision of the BLR nor of the Court of
Appeals took into account the fact that an election of USTFU officers was already conducted
on 14 January 2000, which was won by the Gamilla Group. There is nothing in the records to
show that the said election was contested or made the subject of litigation. The Gamilla Group
had exercised their powers as USTFU officers during their elected term. Since the term of union
officers under the USTFU Constitution and By-Laws was only for three years, then the term of
the Gamilla Group already expired in 2003. It is already beyond the jurisdiction of this Court, in
the present Petition, to still look into the subsequent elections of union officers held after 2003.
The election of the Gamilla Group as union officers in 2000 should have already been
recognized by the BLR and the Court of Appeals. The order for USTFU to conduct another
election was only a superfluity. The issue of who between the officers of the Mario Group and of
the Gamilla Group are the legitimate USTFU officers has been rendered moot by the succeeding
events in the case.
WHEREFORE, premises considered, the Petition for Review under Rule 45 of the
Rules of Court is hereby DENIED. The Decision dated 16 March 2001 and the Resolution
dated 30 August 2001 of the Court of Appeals in CA-G.R. SP No. 60657, are
hereby AFFIRMED WITH MODIFICATIONS. Petitioners are hereby ORDEREDto
reimburse, jointly and severally, to the faculty members of the University of Sto. Tomas,
belonging to the collective bargaining unit, the amount of P4.2 million checked-off as union dues
and special assessments for the Labor Education Fund and attorneys fees, with legal interest
of 6% per annum from 15 December 1994, until the finality of this decision. The order for the
conduct of election for the officers of the University of Sto. Tomas Faculty Union, under the
control and supervision of the Regional Director of the Department of Labor and Employment-
National Capital Region, is hereby DELETED. No costs.
SO ORDERED.
29
3. 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 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.
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:
30
(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
31
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.
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;
32
(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;
(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.
33
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.
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.
34
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.
4. G.R. No. 76988 January 31, 1989
GENERAL RUBBER AND FOOTWEAR CORPORATION, petitioner,

vs.
THE HON. FRANKLIN DRILON IN HIS CAPACITY AS THE MINISTER OF LABOR
& EMPLOYMENT and THE GENERAL RUBBER WORKERS' UNION-
NATU, respondents.
RESOLUTION
The present petition involves the question of whether or not union members who did not ratify a
waiver of accrued wage differentials are bound by the ratification made by a majority of the
union members.
On 26 December 1984, Wage Order No. 6 was issued, increasing the statutory minimum wage
rate (by P2.00) and the mandatory cost of living allowance (by P3.00 for non-agricultural
workers) in the private sector, to take effect on 1 November 1984, Petitioner General Rubber and
Footwear Corporation applied to the National Wages Council ("Council") for exemption from
the provisions of Wage Order No. 6. The Council, in an Order dated 4 March 1985, denied
petitioner's application, stating in part that:
[Y]ou are hereby ordered to pay your covered employees the daily increase in
statutory minimum wage rate of P 2.00 and living allowance of P3.00 effective
November 1, 1984. ...
This decision is final. 1 (Emphasis supplied)
Petitioner filed a Motion for Reconsideration of this Order on 27 May 1985.
On 25 May 1985, some members of respondent General Rubber Workers' Union-NATU, led by
one Leopoldo Sto. Domingo, declared a strike against petitioner. 2 Three (3) days later, on 28
May 1985, petitioner and Sto. Domingo, the latter purporting to represent the striking workers,
entered into a Return-to-Work Agreement ("Agreement"), Article 4 of which provided:
4. The COMPANY agrees to implement in full Wage Order No. 6 effective May
30, 1985, and agrees to withdraw the Motion for Reconsideration which it filed
with the National Wages Council in connection with the Application for
Exemption. In consideration, the UNION, its officers and members, agrees not to
35
demand or ask from the COMPANY the corresponding differential pay from
November 1, 1984 to May 29 1985 arising out of the non-compliance of said wage
order during the said period. 3 (Emphasis supplied)
This agreement was subsequently ratified on 30 July 1985 in a document entitled "Sama-samang
Kapasyahan sa Pagpapatibay ng Return-to-Work Agreement" 4 by some two hundred and sixty-
eight (268) members of respondent union, each member signing individually the instrument of
ratification.
Before the ratification of the Agreement, petitioner filed, on 5 June 1985, a Motion with the
Council withdrawing its pending Motion for Reconsideration of the Council's Order of 4 March
1985. By a letter dated 13 June 1985, the Council allowed the withdrawal of petitioner's Motion
for Reconsideration, which letter in part stated:
In view of your compliance with Wage Order No. 6 effective May 30,
1985 pursuant to the Return to Work Agreement ... , this Council interposes no
objection to your Motion to Withdraw ... 5 (Emphasis supplied)
Meanwhile, there were some one hundred (100) members of the union who were unhappy over
the Agreement, who took the view that the Council's Order of 4 March 1985 bad become final
and executory upon the withdrawal of petitioner's Motion for Reconsideration and who would
not sign the instrument ratifying the Agreement. On 10 July 1985, these minority union members
with respondent union acting on their behalf, applied for a writ of execution of the Council's
Order. 6
Petitioner opposed the Motion for a writ of execution, contending that the Council's approval of
its deferred compliance with the implementation of the Wage Order,7 together with the majority
ratification of the Agreement by the individual workers, 8 bound the non-ratifying union
members represented by respondent union.
Respondent union countered that the Agreement — despite the majority ratification — was not
binding on the union members who had not consented thereto, upon the ground that ratification
or non-ratification of the Agreement, involving as it did money claims, was a personal right
under the doctrine of "Kaisahan ng Manggagawa sa La Campana v. Honorable Judge Ulpiano
Sarmiento and La Campana." 9
Finding for the Union members represented by respondent union, the then Ministry (now
Department) of Labor and Employment, in an order dated 20 September 1985 issued by National
Capital Region Director Severo M. Pucan, directed the issuance of a writ of execution and
required petitioner to pay the minority members of respondent union their claims for differential
pay under Wage Order No. 6, which totalled P90,090.00. 10
Petitioner then moved to quash the writ of execution upon the ground that the Council's order
could not be the subject of a writ of execution, having been superseded by the Agreement. 11 In
another Order dated 15 January 1986. Director Pucan, reversed his previous order and sustained
petitioner's contention that the minority union members represented by respondent union were
36
bound by the majority ratification, holding that the Council's 20 September 1985 Order sought to
be enforced by writ of execution should not have been issued. 12
Respondent union filed a Motion for Reconsideration, which was treated as an appeal to the
Minister of Labor. In a decision dated 19 December 1986, the Minister of Labor set aside the
appealed Order of Director Pucan. The Minister's decision held that:
It is undisputed that the 100 numbers did not sign and ratify the Return-to-Work
Agreement and therefore they cannot be bound by the waiver of benefits therein.
This, in essence, is the ruling of the High Tribunal in the La Campana case.
Accordingly, the benefits under Wage Order No. 6 due them by virtue of the final
and executory Order of the National Wages Council dated March 4, 1985 subsists
in their favor and can be subject for execution.
xxx xxx xxx
The writ of execution dated September 20, 1985 ... was clearly based on the final
Order of the National Wages Council sought to be enforced in a Motion for
Execution filed by the union. While the Return-to-Work Agreement was
mentioned in the writ, the respondent allegedly failing 'to comply with the above-
stated Agreement which had become final and executory,' we find the Agreement
indeed not the basis for the issuance of the writ.
WHEREFORE, the Order of the Director dated January 15, 1986 is hereby set
aside. Let a writ of execution be issued immediately to enforce the payment of the
differential pay under Wage Order No. 6 from November 1, 1984 to May 29,
1985 of the 100 workers who did not sign any waiver, in compliance with the
final Order of the National Wages Council. The entire record is hereby remanded
to the Regional Director, National Capital Region for this purpose.
SO ORDERED . 13 (Emphasis supplied)
Not pleased with the adverse decision of the Minister, petitioner filed the instant Petition
for Certiorari.
Petitioner argues once again that the National Wages Council's Order of 4 March 1985 did not
become final and executory because it had been superseded by the Return-to-Work Agreement
signed by petitioner corporation and the union. At the same time, petitioner also argues that the
Return-to-Work Agreement could not be enforced by a writ of execution, because it was a
contractual document and not the final and executory award of a public official or agency.
Petitioner's contention is more clever than substantial. The core issue is whether or not Article 4
of the Return-to-Work Agreement quoted above, could be deemed as binding upon all members
of the union, without regard to whether such members had or had not in fact individually signed
and ratified such Agreement. Article 4 of that Agreement provided for, apparently, a quid pro
quo arrangement: petitioner agreed to implement in full Wage Order No. 6 starting 30 May
1985 (and not 1 November 1984, as provided by the terms of Wage Order No. 6) and to
37
withdraw its previously filed Motion for Reconsideration with the National Wages Council; in
turn, the union and its members would refrain from requiring the company to pay the differential
pay (increase in pay) due under Wage Order No. 6 corresponding to the preceding seven-month
period from 1 November 1984 to 29 May 1985.
Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento, (supra) is practically on all fours

with the instant case. In La Campana, what was at stake was the validity of a compromise
agreement entered into between the union and the company. In that compromise agreement, the
union undertook to dismiss and withdraw the case it had filed with the then Court of Industrial
Relations, and waived its right to execute any final judgment rendered in that case. The CIR had
in that case, rendered a judgment directing reinstatement of dismissed workers and payment of
ten (10) years backwages. The Secretary of Labor held that that compromise agreement was void
for lack of ratification by the individual members of the union. The Supreme Court upheld the
decision of the Secretary of Labor, stating among other things that:
Generally, a judgment on a compromise agreement puts an end to a litigation and

is immediately executory. However, the Rules [of Court] require a special
authority before an attorney can compromise the litigation of [his] clients. The
authority to compromise cannot lightly be presumed and should be duly
established by evidence. (Esso Philippine, Inc. v. MME, 75 SCRA 91).
As aptly held by the Secretary of Labor, the records are bereft of showing that the
individual members consented to the said agreement. Now were the members
informed of the filing of the civil case before the Court of First Instance. If the
parties to said agreement acted in good faith, why did they not furnish the Office
of the president with a copy of the agreement when they knew all the while that
the labor case was then pending appeal therein? Undoubtedly, the compromise
agreement was executed to the prejudice of the complainants who never
consented thereto, hence, it is null and void. The judgment based on such
agreement does not bind the individual members or complainants who are not
parties thereto nor signatories therein.
Money claims due to laborers cannot be the object of settlement or compromise

effected by a union or counsel without the specific individual consent of each
laborer concerned. The beneficiaries are the individual complainants themselves.
The union to which they belong can only assist them but cannot decide for
them. Awards in favor of laborers after long years of litigation must be attended to
with mutual openness and in the best of faith. (Danao Development Corp. v.
NLRC, 81 SCRA 487-505). Only thus can we really give meaning to the
constitutional mandate of giving laborers maximum protection and security. It is
about time that the judgment in Case No. 584-V(7) be fully implemented
considering the unreasonable delay in the satisfaction thereof. This unfortunate
incident may only weaken the workingmen's faith in the judiciary's capacity to
give them justice when due. 14
xxx xxx xxx
38
(Emphasis supplied)
In the instant case, there is no dispute that private respondents had not ratified the Return-to-
Work Agreement. It follows, and we so hold, that private respondents cannot be held bound by
the Return-to-Work Agreement. The waiver of money claims, which in this case were accrued
money claims, by workers and employees must be regarded as a personal right, that is, a right
that must be personally exercised. For a waiver thereof to be legally effective, the individual
consent or ratification of the workers or employees involved must be shown. Neither the officers
nor the majority of the union had any authority to waive the accrued rights pertaining to the
dissenting minority members, even under a collective bargaining agreement which provided for a
"union shop." The same considerations of public policy which impelled the Court to reach the
conclusion it did in La Campana, are equally compelling in the present case. The members of the
union need the protective shield of this doctrine not only vis-a-vis their employer but also, at
times, vis-a-vis the management of their own union, and at other times even against their own
imprudence or impecuniousness.
It should perhaps be made clear that the Court is not here saying that accrued money claims
can never be effectively waived by workers and employees. What the Court is saying is that, in
the present case, the private respondents never purported to waive their claims to accrued
differential pay. Assuming that private respondents had actually and individually purported to
waive such claims, a second question would then have arisen: whether such waiver could be
given legal effect or whether, on the contrary, it was violative of public policy. 15 Fortunately, we
do not have to address this second question here.
Since Article 4 of the Return-to-Work Agreement was not enforceable against the non-
consenting union members, the Order of the National Wages Council dated 4 March 1985
requiring petitioner to comply with Wage Order No. 6 from 1 November 1984 onward must be
regarded as having become final and executory insofar as the non-consenting union members
were concerned. Enforcement by writ of execution of that Order was, therefore, proper. It
follows further that the decision of 19 December 1986 of the respondent Minister of Labor, far
from constituting a grave abuse of discretion or an act without or in excess of jurisdiction, was
fully in accordance with law as laid down in La Campana and here reiterated.
WHEREFORE, the Court Resolved to DISMISS the Petition for certiorari for lack of merit.
Costs against petitioner.
39
5. GENERAL MILLING G.R. No. 149552

CORPORATION,
Petitioner,
- versus - Present:
PUNO, C.J.,
ERNESTO CASIO, ROLANDO IGOT, Chairperson,
MARIO FAMADOR, NELSON LIM, CARPIO MORALES,
FELICISIMO BOOC, PROCOPIO LEONARDO-DE CASTRO,
OBREGON, JR., and ANTONIO BERSAMIN, and
ANINIPOK, VILLARAMA, JR., JJ.
Respondents,
and
VIRGILIO PINO, PAULINO

CABREROS, MA. LUNA P.
JUMAOAS, DOMINADOR BOOC,
FIDEL VALLE, BARTOLOME
AUMAN, REMEGIO CABANTAN, Promulgated:
LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO
PANILAG, March 10, 2010
Respondents.
x---------------------------------------------------x
DECISION
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision[1] dated March 30, 2001 and Resolution[2] dated July 18, 2001 of the
Court of Appeals in CA-G.R. SP No. 40280, setting aside the Voluntary Arbitration
Award[3] dated August 16, 1995 of the National Conciliation and Mediation Board (NCMB),
Cebu City, in VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-Morada
(Canonoy-Morada) dismissed the Complaint filed by respondents Ernesto Casio, Rolando Igot,
Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr. and Antonio Aninipok
(Casio, et al.) against petitioner General Milling Corporation (GMC) for unfair labor practice,
illegal suspension, illegal dismissal, and payment of moral and exemplary damages.
The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was
the sole and exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu
City. On November 30, 1991, IBM-Local 31, through its officers and board members, namely,
40
respondents Virgilio Pino,[4] Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc,
Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and
Antonio Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with
GMC. The effectivity of the said CBA was retroactive to August 1, 1991.[5]
The CBA contained the following union security provisions:
Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers

employed by the Company with the exception of those who are specifically
excluded by law and by the terms of this Agreement must be members in good
standing of the Union within thirty (30) days upon the signing of this agreement
and shall maintain such membership in good standing thereof as a condition of
their employment or continued employment.
Section 6. The Company, upon written request of the Union, shall terminate the
services of any employee/worker who fails to fulfill the conditions set forth in
Sections 3 and 4 thereof, subject however, to the provisions of the Labor Laws of
the Philippines and their Implementing Rules and Regulations. The Union shall
absolve the Company from any and all liabilities, pecuniary or otherwise, and
responsibilities to any employee or worker who is dismissed or terminated in
pursuant thereof.[6]
Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75
to P201.50, and length of service varying from eight to 25 years.[7] Casio was elected IBM-Local
31 President for a three-year term in June 1991, while his co-respondents were union shop
stewards.
In a letter[8] dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional Director for
Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits of GMC employees
Basilio Inoc and Juan Potot, charging Casio, et al. with acts inimical to the interest of the
union. Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within
which to file their answers or counter-affidavits. However, Casio, et al. refused to acknowledge
receipt of Gabianas letter.
Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-
Local 31, issued a Resolution[9] expelling Casio, et al. from the union. Pertinent portions of the
Resolution are reproduced below:
41
Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio

Aninipok, Mario Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio
have refused to acknowledge receipt of the letter-complaint dated February 24,
1992, requiring them to file their answer[s] or counter-affidavits as against the
charge of acts inimical to the interest of the union and that in view of such refusal
to acknowledge receipt, a copy of said letter complaint was dropped or left in
front of E. Casio;
Whereas, the three (3)[-]day period given to file their answer or counter-
affidavit have already lapsed prompting the union Board to investigate the
charge ex parte;
Whereas, after such ex parte investigation the said charge has been more
than adequately substantiated by the affidavits/witnesses and documentary
exhibits presented.
NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that

Ernesto Casio, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio
Aninipok, Mario Famador and Nelson Lim be expelled as union member[s] of
good standing effectively immediately.
RESOLVED FURTHER, to furnish copy of this Resolution to the GMC

Management for their information and guidance with the recommendation as it is
hereby recommended to dismiss the above-named employees from work.
Gabiana then wrote a letter[10] dated March 10, 1992, addressed to Eduardo Cabahug
(Cabahug), GMC Vice-President for Engineering and Plant Administration, informing the
company of the expulsion of Casio, et al. from the union pursuant to the Resolution dated
February 29, 1992 of IBM-Local 31 officers and board members.Gabiana likewise requested that
Casio, et al. be immediately dismissed from their work for the interest of industrial peace in the
plant.
Gabiana followed-up with another letter[11] dated March 19, 1992, inquiring from
Cabahug why Casio, et al. were still employed with GMC despite the request of IBM-Local 31
that Casio, et al. be immediately dismissed from service pursuant to the closed shop provision in
the existing CBA. Gabiana reiterated the demand of IBM-Local 31 that GMC dismiss Casio, et
al., with the warning that failure of GMC to do so would constitute gross violation of the existing
CBA and constrain the union to file a case for unfair labor practice against GMC.
42
Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to
Gabianas request to terminate the employment of Casio, et al. GMC issued a Memorandum
dated March 24, 1992 terminating the employment of Casio, et al. effective April 24, 1992 and
placing the latter under preventive suspension for the meantime.
On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike
with the NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the
strike the illegal dismissal of union officers and members, discrimination, coercion, and union
busting. The NCMB-RO held conciliation proceedings, but no settlement was reached among the
parties.[12]
Casio, et al. next sought recourse from the National Labor Relations Commission
(NLRC) Regional Arbitration Branch VII by filing on August 3, 1992 a Complaint against GMC
and Pino, et al. for unfair labor practice, particularly, the termination of legitimate union officers,
illegal suspension, illegal dismissal, and moral and exemplary damages. Their Complaint was
docketed as NLRC Case No. RAB-VII-08-0639-92.[13]
Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary
arbitration, the Labor Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to
the NCMB-RO. Prior to undergoing voluntary arbitration before the NCMB-RO, however, the
parties agreed to first submit the case to the grievance machinery of IBM-Local 31. On
September 7, 1994, Casio, et al. filed their Complaint with Pino, the Acting President of IBM-
Local 31. Pino acknowledged receipt of the Complaint and assured Casio, et al. that they would
be seasonably notified of whatever decision and/or action the Board may have in the instant
case.[14] When the IBM-Local 31 Board failed to hold grievance proceedings on the Complaint of
Casio, et al., NCMB Voluntary Arbitrator Canonoy-Morada assumed jurisdiction over the
same. The Complaint was docketed as VA Case No. AC 389-01-01-95.
Based on the Position Papers and other documents submitted by the parties,[15] Voluntary
Arbitrator Canonoy-Morada rendered on August 16, 1995 a Voluntary Arbitration Award
dismissing the Complaint in VA Case No. AC 389-01-01-95 for lack of merit, but granting
separation pay and attorneys fees to Casio, et al. The Voluntary Arbitration Award presented the
following findings: (1) the termination by GMC of the employment of Casio, et al. was in valid
compliance with the closed shop provision in the CBA; (2) GMC had no competence to
determine the good standing of a union member; (3) Casio, et al. waived their right to due
43
process when they refused to receive Gabianas letter dated February 24, 1992, which required
them to submit their answer to the charges against them; (4) the preventive suspension of
Casio, et al. by GMC was an act of self-defense; and (5) the IBM-Local 31 Resolution dated
February 29, 1992 expelling Casio, et al. as union members, also automatically ousted them as
union officers.[16] The dispositive portion of the Voluntary Arbitration Award reads:
WHEREFORE, above premises considered, this case filed by [Casio, et

al.] is hereby ordered DISMISSED for lack of merit.
Since the dismissal is not for a cause detrimental to the interest of the
company, respondent General Milling Corporation is, nonetheless, ordered to pay
separation pay to all [Casio, et al.] within seven (7) calendar days upon receipt of
this order at the rate of one-half month per year of service reckoned from the time
of their employment until the date of their separation on March 24, 1992, thus:
Employee Date Hired Rate/Month Service Total

(1/2 mo/yr
of service)
Casio April 24/74 P2,636.29 x 18 years = P47,453.22

Igot May 1980 P2,472.75 x 12 years = P29,673.00
Famador Feb. 1977 P2,498.92 x 15 years = P37,483.80
Lim Aug. 1975 P2,466.21 x 17 years = P41,925.57
Booc Aug. 1978 P2,498.92 x 14 years = P34,984.88
Obregon May 1984 P2,273.23 x 08 years = P18,185.84
Aninipok Sept. 1967 P2,616.01 x 25 years = P65,400.25
The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of
the total amount due them; and shall be shared proportionately by all of the same
[Casio, et al.].
All other claims are hereby denied.[17]
Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the Court of
Appeals by way of a Petition for Certiorari under Rule 65 of the Rules of Court to have said
Award set aside.
The Court of Appeals granted the writ of certiorari and set aside the Voluntary
Arbitration Award. The appellate court ruled that while the dismissal of Casio, et al., was made
by GMC pursuant to a valid closed shop provision under the CBA, the company, however, failed
to observe the elementary rules of due process in implementing the said dismissal. Consequently,
44
Casio, et al. were entitled to reinstatement with backwages from the time of their dismissal up to
the time of their reinstatement. Nevertheless, the Court of Appeals did not hold GMC liable to
Casio, et al. for moral and exemplary damages and attorneys fees, there being no showing that
their dismissal was attended by bad faith or malice, or that the dismissal was effected in a
wanton, oppressive, or malevolent manner, given that GMC merely accommodated the request
of IBM-Local 31. The appellate court, instead, made Pino, et al. liable to Casio, et al., for moral
and exemplary damages and attorneys fees, since it was on the basis of the imputations and
actuations of Pino, et al. that Casio, et al. were illegally dismissed from employment. The Court
of Appeals thus decreed:
WHEREFORE, the assailed award is hereby SET ASIDE, and private

respondent General Milling Corporation is hereby ordered to reinstate [Casio, et
al.] to their former positions without loss of seniority rights, and to pay their full
backwages, solidarily with [Pino, et al.]. Further, [Pino, et al.] are ordered to
indemnify each of [Casio, et al.] in the form of moral and exemplary damages in
the amounts of P50,000.00 and P30,000.00, respectively, and to pay attorneys
fees.[18]
The Motion for Reconsideration of GMC was denied by the Court of Appeals in the Resolution
dated July 18, 2001.
Hence, GMC filed the instant Petition for Review, arguing that:
THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF
JURISDICTION WHEN IT SET ASIDE THE AWARD OF THE VOLUNTARY
ARBITRATOR, AND IN AWARDING REINSTATEMENT AND FULL
BACKWAGES TO [Casio, et al.].
II

OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT SAID THAT PETITIONER GMC FAILED TO ACCORD DUE
PROCESS TO [Casio, et al.].
III
45

OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF
JURISDICTION WHEN IT DID NOT ABSOLVE PETITIONER GMC OF ANY
LIABILITY AND INSTEAD RULED THAT IT WAS SOLIDARILY LIABLE
WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL
BACKWAGES TO [Casio, et al.].
At this point, we take note that Pino, et al. did not appeal from the decision of the Court
of Appeals.
GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, the
Court of Appeals departed from the principle of conclusiveness of the trial judges findings. GMC
also claims that the findings of the Voluntary Arbitrator as to the legality of the termination from
employment of Casio, et al. are well supported by evidence.GMC further insists that before IBP-
Local 31 expelled Casio, et al. from the union and requested GMC to dismiss Casio, et al. from
service pursuant to the closed shop provision in the CBA, IBP-Local 31 already accorded
Casio, et al. due process, only that Casio, et al. refused to avail themselves of such
opportunity. GMC additionally maintains that Casio, et al. were expelled by IBP-Local 31 for
acts inimical to the interest of the union, and GMC had no authority to inquire into or rule on
which employee-member is or is not loyal to the union, this being an internal affair of the
union. Thus, GMC had to rely on the presumption that Pino, et al. regularly performed their
duties and functions as IBP-Local 31 officers and board members, when the latter investigated
and ruled on the charges against Casio, et al.[19] GMC finally asserts that Pino, et al., the IBP-
Local 31 officers and board members who resolved to expel Casio, et al. from the union, and not
GMC, should be held liable for the reinstatement of and payment of full backwages to Casio, et
al. for the company had acted in good faith and merely complied with the closed shop provision
in the CBA.
On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces of
evidence supporting the findings of the Voluntary Arbitrator. Casio, et al. contends that to accord
them due process, GMC itself, as the employer, should have held proceedings distinct and
separate from those conducted by IBM-Local 31. GMC cannot justify its failure to conduct its
own inquiry using the argument that such proceedings would constitute an intrusion by the
company into the internal affairs of the union. The claim of GMC that it had acted in good faith
when it dismissed Casio, et al. from service in accordance with the closed shop provision of the
46
CBA is inconsistent with the failure of the company to accord the dismissed employees their
right to due process.
In general, in a petition for review on certiorari as a mode of appeal under Rule 45 of the
Rules of Court, the petitioner can raise only questions of law - the Supreme Court is not the
proper venue to consider a factual issue as it is not a trier of facts. A departure from the general
rule may be warranted where the findings of fact of the Court of Appeals are contrary to the
findings and conclusions of the trial court [or quasi-judicial agency, as the case may be], or when
the same is unsupported by the evidence on record.[20]
Whether Casio, et al. were illegally dismissed without any valid reason is a question of
fact better left to quasi-judicial agencies to determine. In this case, the Voluntary Arbitrator was
convinced that Casio, et al. were legally dismissed; while the Court of Appeals believed the
opposite, because even though the dismissal of Casio, et al. was made by GMC pursuant to a
valid closed shop provision in the CBA, the company still failed to observe the elementary rules
of due process. The Court is therefore constrained to take a second look at the evidence on record
considering that the factual findings of the Voluntary Arbitrator and the Court of Appeals are
contradictory.
There are two aspects which characterize the concept of due process under the Labor
Code: one is substantive whether the termination of employment was based on the provision of
the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the
manner in which the dismissal was effected.[21]
After a thorough review of the records, the Court agrees with the Court of Appeals. The
dismissal of Casio, et al. was indeed illegal, having been done without just cause and the
observance of procedural due process.
In Alabang Country Club, Inc. v. National Labor Relations Commission,[22] the Court laid
down the grounds for which an employee may be validly terminated, thus:
Under the Labor Code, an employee may be validly terminated on the

following grounds: (1) just causes under Art. 282; (2) authorized causes under
Art. 283; (3) termination due to disease under Art. 284, and (4) termination by the
employee or resignation under Art. 285.
47
Another cause for termination is dismissal from employment due to

the enforcement of the union security clause in the CBA. x x x. (Emphasis
ours.)
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 as a condition 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.[23]
Union security clauses are recognized and explicitly allowed under Article 248(e) of the
Labor Code, which provides that:
Art. 248. Unfair Labor Practices of Employers. x x x
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization. Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are already
members of another union at the time of the signing of the collective
bargaining agreement. (Emphasis supplied.)
It is State policy to promote unionism to enable workers to negotiate with management on an

even playing field and with more persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed stipulations for union shop and
48
closed shop as means of encouraging workers to join and support the union of their choice in the
protection of their rights and interest vis--vis the employer.[24]
Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal
import as the statutory provisions on dismissal under the Labor Code, since a CBA is the law
between the company and the union and compliance therewith is mandated by the express policy
to give protection to labor.[25]
In terminating the employment of an employee by enforcing the union security clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.[26]
There is no question that in the present case, the CBA between GMC and IBM-Local 31
included a maintenance of membership and closed shop clause as can be gleaned from Sections 3
and 6 of Article II. IBM-Local 31, by written request, can ask GMC to terminate the employment
of the employee/worker who failed to maintain its good standing as a union member.
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional
Director for Visayas and Mindanao, twice requested GMC, in the letters dated March 10 and 19,
1992, to terminate the employment of Casio, et al. as a necessary consequence of their expulsion
from the union.
It is the third requisite that there is sufficient evidence to support the decision of IBM-
Local 31 to expel Casio, et al. which appears to be lacking in this case.
The full text of the individual but identical termination letters,[27] served by GMC on
Casio, et al., is very revealing. They read:
To: [Employees Name]
From: Legal Counsel
Subject: Dismissal Upon Union Request Thru
CBA Closed Shop Provision
The company is in receipt of two letters dated March 10, 1992 and March 19,
1992 respectively from the union at the Mill in Lapulapu demanding the
49
termination of your employment pursuant to the closed shop provision of our

existing Collective Bargaining Agreement. It appears from the attached
resolutions that you have been expelled from union membership and has thus
ceased to become a member in good standing. The resolutions are signed by the
same officers who executed and signed our existing CBA, copies of the letters and
resolutions are enclosed hereto for your reference.
The CBA in Article II provides the following:
Section 3. MAINTENANCE OF MEMBERSHIP All

employees/workers employed by the Company with the exception
of those who are specifically excluded by law and by the terms of
this Agreement must be members in good standing of the Union
within thirty (30) days upon the signing of this agreement and shall
maintain such membership in good standing thereof as a condition
of their employment or continued employment.
Section 6. The Company, upon written request of the Union, shall

terminate the services of any employee/worker who fails to fulfill
the conditions set forth in Sections 3 and 4 thereof, subject
however, to the provisions of the Labor Laws of the Philippines
and their Implementing Rules and Regulations. The Union shall
absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is
dismissed or terminated in pursuant thereof.
The provisions of the CBA are clear enough. The termination of employment
on the basis of the closed shop provision of the CBA is well recognized in law
and in jurisprudence.
There is no valid ground to refuse to terminate. On the other hand as pointed out
in the unions strongly demanding letter dated March 19, 1992, the company
could be sued for unfair labor practice. While we would have wanted not to
accommodate the unions request, we are left with no other option. The terms
of the CBA should be respected. To refuse to enforce the CBA would result in the
breakdown of industrial peace and the end of harmonious relations between the
union and management. The company would face the collective anger and enmity
of its employees who are union members.
In the light of the unions very insistent demand, verbal and in writing and to avoid
the union accusation of coddling you, and considering the explicitly mandatory
language of the closed shop provision of the CBA, the company is constrained to
terminate your employment, to give you ample time to look and find another
employment, and/or exert efforts to become again a member of good standing of
your union, effective April 24, 1992.
50
In the meantime, to prevent serious danger to the life and property of the company
and of its employees, we are placing you under preventive suspension beginning
today.
It is apparent from the aforequoted letter that GMC terminated the employment of
Casio, et al. relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling
Casio, et al. from IBM-Local 31; Gabianas Letters dated March 10 and 19, 1992 demanding that
GMC terminate the employment of Casio, et al. on the basis of the closed shop clause in the
CBA; and the threat of being sued by IBM-Local 31 for unfair labor practice. The letter made no
mention at all of the evidence supporting the decision of IBM-Local 31 to expel Casio, et al.
from the union. GMC never alleged nor attempted to prove that the company actually looked into
the evidence of IBM-Local 31 for expelling Casio, et al. and made a determination on the
sufficiency thereof. Without such a determination, GMC cannot claim that it had terminated the
employment of Casio, et al. for just cause.
The failure of GMC to make a determination of the sufficiency of evidence supporting

the decision of IBM-Local 31 to expel Casio, et al. is a direct consequence of the non-observance
by GMC of procedural due process in the dismissal of employees.
As a defense, GMC contends that as an employer, its only duty was to ascertain that
IBM-Local 31 accorded Casio, et al. due process; and, it is the finding of the company that IBM-
Local 31 did give Casio, et al. the opportunity to answer the charges against them, but they
refused to avail themselves of such opportunity.
This argument is without basis.
The Court has stressed time and again that allegations must be proven by sufficient
evidence because mere allegation is definitely not evidence.[28] Once more, in Great Southern
Maritime Services Corporation. v. Acua,[29] the Court declared:
Time and again we have ruled that in illegal dismissal cases like the
present one, the onus of proving that the employee was not dismissed or if
dismissed, that the dismissal was not illegal, rests on the employer and failure to
discharge the same would mean that the dismissal is not justified and therefore
illegal. Thus, petitioners must not only rely on the weakness of respondents
evidence but must stand on the merits of their own defense. A party alleging
a critical fact must support his allegation with substantial evidence for any
51
decision based on unsubstantiated allegation cannot stand as it will offend

due process. x x x. (Emphasis supplied.)
The records of this case are absolutely bereft of any supporting evidence to substantiate
the bare allegation of GMC that Casio, et al. were accorded due process by IBM-Local 31. There
is nothing on record that would indicate that IBM-Local 31 actually notified Casio, et al. of the
charges against them or that they were given the chance to explain their side. All that was stated
in the IBM-Local 31 Resolution dated February 29, 1992, expelling Casio, et al. from the union,
was that a copy of the said letter complaint [dated February 24, 1992] was dropped or left in
front of E. Casio.[30] It was not established that said letter-complaint charging Casio, et al. with
acts inimical to the interest of the union was properly served upon Casio, that Casio willfully
refused to accept the said letter-notice, or that Casio had the authority to receive the same letter-
notice on behalf of the other employees similarly accused. Its worthy to note that Casio, et al.
were expelled only five days after the issuance of the letter-complaint against them. The Court
cannot find proof on record when the three-day period, within which Casio, et al. was supposed
to file their answer or counter-affidavits, started to run and had expired. The Court is likewise
unconvinced that the said three-day period was sufficient for Casio, et al. to prepare their
defenses and evidence to refute the serious charges against them.
Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of
IBM-Local 31, in expelling Casio, et al. from the union, do not enjoy the presumption of
regularity in the performance of official duties, because the presumption applies only to public
officers from the highest to the lowest in the service of the Government, departments, bureaus,
offices, and/or its political subdivisions.[31]
More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills,
[32]
Inc., the Court issued the following reminder to employers:
The power to dismiss is a normal prerogative of the employer. However,

this is not without limitations. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon the
request of a labor union pursuant to the Collective Bargaining Agreement. x x
x. Dismissals must not be arbitrary and capricious. Due process must be observed
in dismissing an employee because it affects not only his position but also his
means of livelihood. Employers should therefore respect and protect the rights of
their employees, which include the right to labor. x x x.
52
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v.

Ramos[33] that:
While respondent company may validly dismiss the employees expelled

by the union for disloyalty under the union security clause of the collective
bargaining agreement upon the recommendation by the union, this dismissal
should not be done hastily and summarily thereby eroding the employees right to
due process, self-organization and security of tenure. The enforcement of union
security clauses is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due process. Even on the
assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by
respondent company. (Emphases supplied.)
The twin requirements of notice and hearing constitute the essential elements of
procedural due process. The law requires the employer to furnish the employee sought to be
dismissed with two written notices before termination of employment can be legally effected: (1)
a written notice apprising the employee of the particular acts or omissions for which his
dismissal is sought in order to afford him an opportunity to be heard and to defend himself with
the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of
the employers decision to dismiss him. This procedure is mandatory and its absence taints the
dismissal with illegality.[34]
Irrefragably, GMC cannot dispense with the requirements of notice and hearing before
dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the
CBA. The rights of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own union are not
wiped away by a union security clause or a union shop clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards
his rights but also from his own union the leadership of which could yield to the temptation of
swift and arbitrary expulsion from membership and hence dismissal from his job.[35]
In the case at bar, Casio, et al. did not receive any other communication from GMC,
except the written notice of termination dated March 24, 1992. GMC, by its own admission, did
not conduct a separate and independent investigation to determine the sufficiency of the evidence
supporting the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the
demand of IBP-Local 31 to dismiss Casio, et al.
53
The very same circumstances took place in Liberty Cotton Mills, wherein the Court held
that the employer-company acted in bad faith in dismissing its workers without giving said
workers an opportunity to present their side in the controversy with their union, thus:
While respondent company, under the Maintenance of Membership

provision of the Collective Bargaining Agreement, is bound to dismiss any
employee expelled by PAFLU for disloyalty, upon its written request, this
undertaking should not be done hastily and summarily. The company acted in
bad faith in dismissing petitioner workers without giving them the benefit of
a hearing. It did not even bother to inquire from the workers concerned and
from PAFLU itself about the cause of the expulsion of the petitioner
workers. Instead, the company immediately dismissed the workers on May 30,
1964 after its receipt of the request of PAFLU on May 29, 1964 in a span of only
one day stating that it had no alternative but to comply with its obligation under
the Security Agreement in the Collective Bargaining Agreement, thereby
disregarding the right of the workers to due process, self-organization and security
of tenure.[36] (Emphasis ours.)
In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did
GMC fail to make a determination of the sufficiency of evidence to support the decision of IBM-
Local 31 to expel Casio, et al., but also to accord the expelled union members procedural due
process, i.e., notice and hearing, prior to the termination of their employment
Consequently, GMC cannot insist that it has no liability for the payment of backwages
and damages to Casio, et al., and that the liability for such payment should fall only upon
Pino, et al., as the IBP-Local 31 officers and board members who expelled Casio, et al. GMC
completely missed the point that the expulsion of Casio, et al. by IBP-Local 31 and the
termination of employment of the same employees by GMC, although related, are two separate
and distinct acts. Despite a closed shop provision in the CBA and the expulsion of Casio, et
al. from IBP-Local 31, law and jurisprudence imposes upon GMC the obligation to accord
Casio, et al. substantive and procedural due process before complying with the demand of IBP-
Local 31 to dismiss the expelled union members from service. The failure of GMC to carry out
this obligation makes it liable for illegal dismissal of Casio, et al.
In Malayang Samahan ng mga Manggagawa sa M. Greenfield,[37] the Court held that

notwithstanding the fact that the dismissal was at the instance of the federation and that the
federation undertook to hold the company free from any liability resulting from the dismissal of
54
several employees, the company may still be held liable if it was remiss in its duty to accord the
would-be dismissed employees their right to be heard on the matter.
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages
and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount
to be awarded shall be equivalent to one month salary for every year of service. Under Republic
Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual reinstatement but if
reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Thus, Casio, et al. are entitled to backwages
and separation pay considering that reinstatement is no longer possible because the positions
they previously occupied are no longer existing, as declared by GMC.[38]
Casio, et al., having been compelled to litigate in order to seek redress for their illegal
dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary
award.[39]
WHEREFORE, the instant petition is hereby DENIED. The assailed decision of the Court of
Appeals dated March 30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.
SO ORDERED.
55
6. LEGEND INTERNATIONAL G.R. No. 169754

RESORTS LIMITED,
Petitioner,
Present:
- versus - CORONA, C.J., Chairperson,

VELASCO, JR.,
NACHURA,⃰
DEL CASTILLO, and
KILUSANG MANGGAGAWA PEREZ, JJ.
NG LEGENDA (KML-
INDEPENDENT), Promulgated:
Respondent. February 23, 2011
x-------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the September 18, 2003 Decision of the Court of Appeals
in CA-G.R. SP No. 72848 which found no grave abuse of discretion on the part of the Office of the
Secretary of the Department of Labor and Employment (DOLE) which ruled in favor of Kilusang
Manggagawa ng Legenda (KML). Also assailed is the September 14, 2005 Resolution denying
petitioners motion for reconsideration.
Factual Antecedents
On June 6, 2001, KML filed with the Med-Arbitration Unit of the DOLE, San Fernando, Pampanga, a
Petition for Certification Election[1] docketed as Case No. RO300-0106-RU-001. KML alleged that it is a
legitimate labor organization of the rank and file employees of Legend International Resorts Limited
(LEGEND). KML claimed that it was issued its Certificate of Registration No. RO300-0105-UR-002 by
the DOLE on May 18, 2001.
LEGEND moved to dismiss[2] the petition alleging that KML is not a legitimate labor organization
because its membership is a mixture of rank and file and supervisory employees in violation of Article
245 of the Labor Code. LEGEND also claimed that KML committed acts of fraud and misrepresentation
when it made it appear that certain employees attended its general membership meeting on April 5, 2001
56
when in reality some of them were either at work; have already resigned as of March 2001; or were
abroad.
In its Comment,[3] KML argued that even if 41 of its members are indeed supervisory employees and
therefore excluded from its membership, the certification election could still proceed because the required
number of the total rank and file employees necessary for certification purposes is still sustained. KML
also claimed that its legitimacy as a labor union could not be collaterally attacked in the certification
election proceedings but only through a separate and independent action for cancellation of union
registration. Finally, as to the alleged acts of misrepresentation, KML asserted that LEGEND failed to
substantiate its claim.
Ruling of the Med-Arbiter
On September 20, 2001, the Med-Arbiter[4] rendered judgment[5] dismissing for lack of merit the petition
for certification election. The Med-Arbiter found that indeed there were several supervisory employees in
KMLs membership. Since Article 245 of the Labor Code expressly prohibits supervisory employees
from joining the union of rank and file employees, the Med-Arbiter concluded that KML is not a
legitimate labor organization. KML was also found to have fraudulently procured its registration
certificate by misrepresenting that 70 employees were among those who attended its organizational
meeting on April 5, 2001 when in fact they were either at work or elsewhere.
KML thus appealed to the Office of the Secretary of the DOLE.
Ruling of the Office of the Secretary of DOLE
On May 22, 2002, the Office of the Secretary of DOLE rendered its Decision[6] granting KMLs appeal
thereby reversing and setting aside the Med-Arbiters Decision. The Office of the Secretary of DOLE held
that KMLs legitimacy as a union could not be collaterally attacked, citing Section 5,[7] Rule V of
Department Order No. 9, series of 1997.
The Office of the Secretary of DOLE also opined that Article 245 of the Labor Code merely provides for
the prohibition on managerial employees to form or join a union and the ineligibility of supervisors to join
the union of the rank and file employees and vice versa. It declared that any violation of the provision of
Article 245 does not ipso facto render the existence of the labor organization illegal. Moreover, it held that
Section 11, paragraph II of Rule XI which provides for the grounds for dismissal of a petition for
certification election does not include mixed membership in one union.
57
The dispositive portion of the Office of the Secretary of DOLEs Decision reads:
WHEREFORE, the appeal is hereby GRANTED and the order of the Med-Arbiter dated
20 September 2001 is REVERSED and SET ASIDE.
Accordingly, let the entire record of the case be remanded to the regional office of origin
for the immediate conduct of the certification election, subject to the usual pre-election
conference, among the rank and file employees of LEGEND INTERNATIONAL
RESORTS LIMITED with the following choices:
1. KILUSANG MANGGAGAWA NG LEGENDA (KML-

INDEPENDENT); and
2. NO UNION.
Pursuant to Rule XI, Section II.1 of D.O. No. 9, the employer is hereby directed
to submit to the office of origin, within ten days from receipt of the decision, the certified
list of employees in the bargaining unit for the last three (3) months prior to the issuance
of this decision.
SO DECIDED.[8]
LEGEND filed its Motion for Reconsideration[9] reiterating its earlier arguments. It also alleged
that on August 24, 2001, it filed a Petition[10] for Cancellation of Union Registration of KML docketed as
Case No. RO300-0108-CP-001 which was granted[11] by the DOLE Regional Office No. III of San
Fernando, Pampanga in its Decision[12] dated November 7, 2001.
In a Resolution[13] dated August 20, 2002, the Office of the Secretary of DOLE denied
LEGENDs motion for reconsideration. It opined that Section 11, paragraph II(a), Rule XI of Department
Order No. 9 requires a final order of cancellation before a petition for certification election may be
dismissed on the ground of lack of legal personality. Besides, it noted that the November 7, 2001
Decision of DOLE Regional Office No. III of San Fernando, Pampanga in Case No. RO300-0108-CP-
001 was reversed by the Bureau of Labor Relations in a Decision dated March 26, 2002.
Ruling of the Court of Appeals
Undeterred, LEGEND filed a Petition for Certiorari[14] with the Court of Appeals docketed as CA-G.R.
SP No. 72848. LEGEND alleged that the Office of the Secretary of DOLE gravely abused its discretion
58
in reversing and setting aside the Decision of the Med-Arbiter despite substantial and overwhelming
evidence against KML.
For its part, KML alleged that the Decision dated March 26, 2002 of the Bureau of Labor
Relations in Case No. RO300-0108-CP-001 denying LEGENDs petition for cancellation and upholding
KMLs legitimacy as a labor organization has already become final and executory, entry of judgment
having been made on August 21, 2002.[15]
The Office of the Secretary of DOLE also filed its Comment[16] asserting that KMLs legitimacy cannot be
attacked collaterally. Finally, the Office of the Secretary of DOLE stressed that LEGEND has no legal
personality to participate in the certification election proceedings.
On September 18, 2003, the Court of Appeals rendered its Decision[17] finding no grave abuse of
discretion on the part of the Office of the Secretary of DOLE. The appellate court held that the issue on
the legitimacy of KML as a labor organization has already been settled with finality in Case No. RO300-
0108-CP-001. The March 26, 2002 Decision of the Bureau of Labor Relations upholding the legitimacy
of KML as a labor organization had long become final and executory for failure of LEGEND to appeal
the same. Thus, having already been settled that KML is a legitimate labor organization, the latter could
properly file a petition for certification election. There was nothing left for the Office of the Secretary of
DOLE to do but to order the holding of such certification election.
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, and finding that no grave abuse of

discretion amounting to lack or excess of jurisdiction has been committed by the
Department of Labor and Employment, the assailed May 22, 2002 Decision and August
20, 2002 Resolution in Case No. RO300-106-RU-001 are UPHELD and
AFFIRMED. The instant petition is DENIED due course and, accordingly, DISMISSED
for lack of merit.[18]
LEGEND filed a Motion for Reconsideration[19] alleging, among others, that it has appealed to the Court
of Appeals the March 26, 2002 Decision in Case No. RO300-0108-CP-001 denying its petition for
cancellation and that it is still pending resolution.
On September 14, 2005, the appellate court denied LEGENDs motion for reconsideration.
59
Hence, this Petition for Review on Certiorari raising the lone assignment of error, viz:
WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERRORS IN THE APPLICATION OF LAW IN DENYING THE
PETITIONERS PETITION FOR CERTIORARI.[20]
Petitioners Arguments
LEGEND submits that the Court of Appeals grievously erred in ruling that the March 26, 2002 Decision
denying its Petition for Cancellation of KMLs registration has already become final and executory. It
asserts that it has seasonably filed a Petition for Certiorari[21] before the CA docketed as CA-G.R. SP No.
72659 assailing said Decision. In fact, on June 30, 2005, the Court of Appeals granted the petition,
reversed the March 26, 2002 Decision of the Bureau of Labor Relations and reinstated the November 7,
2001 Decision of the DOLE Regional Office III ordering the cancellation of KMLs registration.
Finally, LEGEND posits that the cancellation of KMLs certificate of registration should retroact to the
time of its issuance.[22] It thus claims that the petition for certification election and all of KMLs activities
should be nullified because it has no legal personality to file the same, much less demand collective
bargaining with LEGEND.[23]
LEGEND thus prays that the September 20, 2001 Decision of the Med-Arbiter dismissing KMLs petition
for certification election be reinstated.[24]
Respondents Arguments
In its Comment filed before this Court dated March 21, 2006, KML insists that the Decision of the
Bureau of Labor Relations upholding its legitimacy as a labor organization has already attained
finality[25] hence there was no more hindrance to the holding of a certification election. Moreover, it
claims that the instant petition has become moot because the certification election sought to be prevented
had already been conducted.
Our Ruling
The petition is partly meritorious.
60
LEGEND has timely appealed the March 26, 2002

Decision of the Bureau of Labor Relations to the Court
of Appeals.
We cannot understand why the Court of Appeals totally disregarded LEGENDs allegation in its
Motion for Reconsideration that the March 26, 2002 Decision of the Bureau of Labor Relations has not
yet attained finality considering that it has timely appealed the same to the Court of Appeals and which at
that time is still pending resolution. The Court of Appeals never bothered to look into this allegation and
instead dismissed outright LEGENDs motion for reconsideration. By doing so, the Court of Appeals in
effect maintained its earlier ruling that the March 26, 2002 Decision of the Bureau of Labor Relations
upholding the legitimacy of KML as a labor organization has long become final and executory for failure
of LEGEND to appeal the same.
This is inaccurate. Records show that (in the cancellation of registration case) LEGEND has
timely filed on September 6, 2002 a petition for certiorari[26] before the Court of Appeals which was
docketed as CA-G.R. SP No. 72659 assailing the March 26, 2002 Decision of the Bureau of Labor
Relations. In fact, KML received a copy of said petition on September 10, 2002[27] and has filed its
Comment thereto on December 2, 2002.[28] Thus, we find it quite interesting for KML to claim in its
Comment (in the certification petition case) before this Court dated March 21, 2006[29] that the Bureau of
Labor Relations Decision in the petition for cancellation case has already attained finality. Even in its
Memorandum[30] dated March 13, 2007 filed before us, KML is still insisting that the Bureau of Labor
Relations Decision has become final and executory.
Our perusal of the records shows that on June 30, 2005, the Court of Appeals rendered its
Decision[31] in CA-G.R. SP No. 72659 reversing the March 26, 2002 Decision of the Bureau of Labor
Relations and reinstating the November 7, 2001 Decision of the Med-Arbiter which canceled the
certificate of registration of KML.[32] On September 30, 2005, KMLs motion for reconsideration was
denied for lack of merit.[33] On November 25, 2005, KML filed its Petition for Review
on Certiorari[34] before this Court which was docketed as G.R. No. 169972.However, the same was
denied in a Resolution[35] dated February 13, 2006 for having been filed out of time. KML moved for
reconsideration but it was denied with finality in a Resolution[36] dated June 7, 2006. Thereafter, the said
Decision canceling the certificate of registration of KML as a labor organization became final and
executory and entry of judgment was made on July 18, 2006.[37]
The cancellation of KMLs certificate of registration

should not retroact to the time of its issuance.
61
Notwithstanding the finality of the Decision canceling the certificate of registration of KML, we
cannot subscribe to LEGENDs proposition that the cancellation of KMLs certificate of registration should
retroact to the time of its issuance. LEGEND claims that KMLs petition for certification election filed
during the pendency of the petition for cancellation and its demand to enter into collective bargaining
agreement with LEGEND should be dismissed due to KMLs lack of legal personality.
This issue is not new or novel. In Pepsi-Cola Products Philippines, Inc. v. Secretary of
[38]
Labor, we already ruled that:
Anent the issue of whether or not the Petition to cancel/revoke registration is a

prejudicial question to the petition for certification election, the following ruling in the
case of Association of the Court of Appeals Employees (ACAE) v. Hon. Pura Ferrer-
Calleja, x x x is in point, to wit:
x x x It is well-settled rule that a certification proceedings is not a

litigation in the sense that the term is ordinarily understood, but an
investigation of a non-adversarial and fact finding character. (Associated
Labor Unions (ALU) v. Ferrer-Calleja, 179 SCRA 127
[1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183
SCRA 451 [1990]. Thus, the technical rules of evidence do not apply if
the decision to grant it proceeds from an examination of the sufficiency
of the petition as well as a careful look into the arguments contained in
the position papers and other documents.
At any rate, the Court applies the established rule correctly

followed by the public respondent that an order to hold a certification
election is proper despite the pendency of the petition for
cancellation of the registration certificate of the respondent
union. The rationale for this is that at the time the respondent union
filed its petition, it still had the legal personality to perform such act
absent an order directing the cancellation.[39] (Emphasis supplied.)
In Capitol Medical Center, Inc. v. Hon. Trajano,[40] we also held that the pendency of a petition
for cancellation of union registration does not preclude collective bargaining.[41]Citing the Secretary of
Labor, we held viz:
That there is a pending cancellation proceedings against the

respondent Union is not a bar to set in motion the mechanics of collective
bargaining. If a certification election may still be ordered despite the pendency of a
petition to cancel the unions registration certificate x x x more so should the
collective bargaining process continue despite its pendency. [42] (Emphasis supplied.)
62
In Association of Court of Appeals Employees v. Ferrer-Calleja,[43] this Court was tasked to

resolve the issue of whether the certification proceedings should be suspended pending [the petitioners]
petition for the cancellation of union registration of the UCECA[44].[45] The Court resolved the issue in the
negative holding that an order to hold a certification election is proper despite the pendency of the
petition for cancellation of the registration certificate of the respondent union. The rationale for this
is that at the time the respondent union filed its petition, it still had the legal personality to perform such
act absent an order directing a cancellation.[46] We reiterated this view in Samahan ng Manggagawa sa
Pacific Plastic v. Hon. Laguesma[47] where we declared that a certification election can be conducted
despite pendency of a petition to cancel the union registration certificate. For the fact is that at the
time the respondent union filed its petition for certification, it still had the legal personality to perform
such act absent an order directing its cancellation.[48]
Based on the foregoing jurisprudence, it is clear that a certification election may be conducted
during the pendency of the cancellation proceedings. This is because at the time the petition for
certification was filed, the petitioning union is presumed to possess the legal personality to file the
same. There is therefore no basis for LEGENDs assertion that the cancellation of KMLs certificate of
registration should retroact to the time of its issuance or that it effectively nullified all of KMLs activities,
including its filing of the petition for certification election and its demand to collectively bargain.
The legitimacy of the legal personality of KML cannot

be collaterally attacked in a petition for certification
election.
We agree with the ruling of the Office of the Secretary of DOLE that the legitimacy of the legal
personality of KML cannot be collaterally attacked in a petition for certification election proceeding. This
is in consonance with our ruling in Laguna Autoparts Manufacturing Corporation v. Office of the
Secretary, Department of Labor and Employment[49] that such legal personality may not be subject to a
collateral attack but only through a separate action instituted particularly for the purpose of assailing
it.[50] We further held therein that:
This is categorically prescribed by Section 5, Rule V of the Implementing Rules of Book

V, which states as follows:
SEC. 5.[51] Effect of registration. The labor organization or

workers association shall be deemed registered and vested with legal
personality on the date of issuance of its certificate of registration. Such
63
legal personality cannot thereafter be subject to collateral attack but may

be questioned only in an independent petition for cancellation in
accordance with these Rules.
Hence, to raise the issue of the respondent unions legal personality is not proper
in this case. The pronouncement of the Labor Relations Division Chief, that the
respondent union acquired a legal personality x x x cannot be challenged in a petition for
certification election.
The discussion of the Secretary of Labor and Employment on this point is also
enlightening, thus:
. . . Section 5, Rule V of D.O. 9 is instructive on the matter. It

provides that the legal personality of a union cannot be the subject of
collateral attack in a petition for certification election, but may be
questioned only in an independent petition for cancellation of union
registration. This has been the rule since NUBE v. Minister of Labor, 110
SCRA 274 (1981). What applies in this case is the principle that once a
union acquires a legitimate status as a labor organization, it continues as
such until its certificate of registration is cancelled or revoked in an
independent action for cancellation.
Equally important is Section 11, Paragraph II, Rule IX of D.O. 9,

which provides for the dismissal of a petition for certification election
based on the lack of legal personality of a labor organization only in the
following instances: (1) appellant is not listed by the Regional Office or
the BLR in its registry of legitimate labor organizations; or (2) appellants
legal personality has been revoked or cancelled with finality. Since
appellant is listed in the registry of legitimate labor organizations, and its
legitimacy has not been revoked or cancelled with finality, the granting
of its petition for certification election is proper.[52]
[T]he legal personality of a legitimate labor organization x x x cannot be subject to a collateral

attack. The law is very clear on this matter. x x x The Implementing Rules stipulate that a labor
organization shall be deemed registered and vested with legal personality on the date of issuance of its
certificate of registration. Once a certificate of registration is issued to a union, its legal personality cannot
be subject to a collateral attack. In may be questioned only in an independent petition for cancellation in
accordance with Section 5 of Rule V, Book V of the Implementing Rules.[53]
WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED. The Decision
of the Court of Appeals dated September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms the
May 22, 2002 Decision and August 20, 2002 Resolution of the Office of the Secretary of Department of
Labor and Employment is AFFIRMED. The Decision of the Court of Appeals insofar as it declares that
64
the March 26, 2002 Decision of the Bureau of Labor Relations in Case No. RO300-0108-CP-001
upholding that the legitimacy of KML as a labor organization has long become final and executory for
failure of LEGEND to appeal the same, is REVERSED and SET ASIDE.
SO ORDERED.
7. [G.R. No. 169717, March 16 : 2011]
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF

UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS
(SMCC-SUPER), ZACARRIAS JERRY VICTORIO - UNION PRESIDENT,
PETITIONER,VS. CHARTER CHEMICAL AND COATING CORPORATION,
RESPONDENT.
DECISION
The right to file a petition for certification election is accorded to a labor organization provided
that it complies with the requirements of law for proper registration. The inclusion of supervisory
employees in a labor organization seeking to represent the bargaining unit of rank-and-file
employees does not divest it of its status as a legitimate labor organization. We apply these
principles to this case.
This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeal's
March 15, 2005 Decision[1] in CA-G.R. SP No. 58203, which annulled and set aside the January
13, 2000 Decision[2] of the Department of Labor and Employment (DOLE) in OS-A-6-53-99
(NCR-OD-M-9902-019) and the September 16, 2005 Resolution[3] denying petitioner union's
motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the
Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification
election among the regular rank-and-file employees of Charter Chemical and Coating
Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, National
Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to Dismiss[4] on the
ground that petitioner union is not a legitimate labor organization because of (1) failure to
comply with the documentation requirements set by law, and (2) the inclusion of supervisory
employees within petitioner union.[5]
Med-Arbiter's Ruling
65
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision[6] dismissing the petition
for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor
organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi at
Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon
at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union
secretary and attested to by the union president as required by Section 235 of the Labor
Code[7] in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The
union registration was, thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner union consisted of 12
batchman, mill operator and leadman who performed supervisory functions. Under Article 245
of the Labor Code, said supervisory employees are prohibited from joining petitioner union
which seeks to represent the rank-and-file employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union has no right to file a
petition for certification election for the purpose of collective bargaining.
Department of Labor and Employment's Ruling
On July 16, 1999, the DOLE initially issued a Decision[8] in favor of respondent company
dismissing petitioner union's appeal on the ground that the latter's petition for certification
election was filed out of time. Although the DOLE ruled, contrary to the findings of the Med-
Arbiter, that the charter certificate need not be verified and that there was no independent
evidence presented to establish respondent company's claim that some members of petitioner
union were holding supervisory positions, the DOLE sustained the dismissal of the petition for
certification after it took judicial notice that another union, i.e., Pinag-isang
Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition
for certification election on January 16, 1998. The Decision granting the said petition became
final and executory on September 16, 1998 and was remanded for immediate implementation.
Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a
certification election in an unorganized establishment should be filed prior to the finality of the
decision calling for a certification election. Considering that petitioner union filed its petition
only on February 14, 1999, the same was filed out of time.
On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13,
2000 Decision, the DOLE found that a review of the records indicates that no certification
election was previously conducted in respondent company. On the contrary, the prior
certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating
Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the
DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner union's
petition for certification election, viz:
WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this
Office dated 16 July 1999 is MODIFIED to allow the certification election among the regular
rank-and-file employees of Charter Chemical and Coating Corporation with the following
choices:
66
1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for

Empowerment and Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of origin for the immediate
conduct of a certification election, subject to the usual pre-election conference.
SO DECIDED.[9]
Court of Appeal's Ruling
On March 15, 2005, the CA promulgated the assailed Decision, viz:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated
January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET ASIDE.
SO ORDERED.[10]
In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the
Med-Arbiter that petitioner union failed to comply with the documentation requirements under
the Labor Code. It, likewise, upheld the Med-Arbiter's finding that petitioner union consisted of
both rank-and-file and supervisory employees. Moreover, the CA held that the issues as to the
legitimacy of petitioner union may be attacked collaterally in a petition for certification election
and the infirmity in the membership of petitioner union cannot be remedied through the
exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in Toyota
Motor Philippines v. Toyota Motor Philippines Corporation Labor Union.[11] Thus, considering
that petitioner union is not a legitimate labor organization, it has no legal right to file a petition
for certification election.
Issues
Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount
to lack of jurisdiction in granting the respondent [company's] petition for certiorari (CA G.R.
No. SP No. 58203) in spite of the fact that the issues subject of the respondent company['s]
petition was already settled with finality and barred from being re-litigated.
II
to lack of jurisdiction in holding that the alleged mixture of rank-and-file and supervisory
employee[s] of petitioner [union's] membership is [a] ground for the cancellation of petitioner
[union's] legal personality and dismissal of [the] petition for certification election.
III
67
to lack of jurisdiction in holding that the alleged failure to certify under oath the local charter
certificate issued by its mother federation and list of the union membership attending the
organizational meeting [is a ground] for the cancellation of petitioner [union's] legal personality
as a labor organization and for the dismissal of the petition for certification election.[12]
Petitioner Union's Arguments
Petitioner union claims that the litigation of the issue as to its legal personality to file the subject
petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this
decision, the DOLE ruled that petitioner union complied with all the documentation
requirements and that there was no independent evidence presented to prove an illegal mixture of
supervisory and rank-and-file employees in petitioner union. After the promulgation of this
Decision, respondent company did not move for reconsideration, thus, this issue must be deemed
settled.
Petitioner union further argues that the lack of verification of its charter certificate and the
alleged illegal composition of its membership are not grounds for the dismissal of a petition for
certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor
are they grounds for the cancellation of a union's registration under Section 3, Rule VIII of said
issuance. It contends that what is required to be certified under oath by the local union's secretary
or treasurer and attested to by the local union's president are limited to the union's constitution
and by-laws, statement of the set of officers, and the books of accounts.
Finally, the legal personality of petitioner union cannot be collaterally attacked but may be
questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book
IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands
International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.[13]
Respondent Company's Arguments
Respondent company asserts that it cannot be precluded from challenging the July 16, 1999
Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently
reversed its earlier ruling and, from this decision, respondent company timely filed its motion for
reconsideration.
On the issue of lack of verification of the charter certificate, respondent company notes that
Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as
amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified
under oath.
It also contends that petitioner union is not a legitimate labor organization because its
composition is a mixture of supervisory and rank-and-file employees in violation of Article 245
of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines
vs. Toyota Motor Philippines Labor Union[14] continues to be good case law. Thus, the illegal
68
composition of petitioner union nullifies its legal personality to file the subject petition for
certification election and its legal personality may be collaterally attacked in the proceedings for
a petition for certification election as was done here.
Our Ruling
The petition is meritorious.
The issue as to the legal personality of

petitioner union is not barred by the
July 16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to petitioner union's legal personality has been
timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and
now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied
with the documentation requirements of the Labor Code and that the evidence was insufficient to
establish that there was an illegal mixture of supervisory and rank-and-file employees in its
membership. Nonetheless, the petition for certification election was dismissed on the ground that
another union had previously filed a petition for certification election seeking to represent
the same bargaining unit in respondent company.
Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its
previous ruling. It upheld the right of petitioner union to file the subject petition for certification
election because its previous decision was based on a mistaken appreciation of facts.[15] From
this adverse decision, respondent company timely moved for reconsideration by reiterating its
previous arguments before the Med-Arbiter that petitioner union has no legal personality to file
the subject petition for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties
timely moved for reconsideration. The issue then as to the legal personality of petitioner union to
file the certification election was properly raised before the DOLE, the appellate court and now
this Court.
The charter certificate need not be

certified under oath by the local union's
secretary or treasurer and attested to
by its president.
Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 9481[16] which took
effect on June 14, 2007.[17] This law introduced substantial amendments to the Labor Code.
However, since the operative facts in this case occurred in 1999, we shall decide the issues under
the pertinent legal provisions then in force (i.e., R.A. No. 6715,[18] amending Book V of the
Labor Code, and the rules and regulations[19] implementing R.A. No. 6715, as amended by D.O.
No. 9,[20]
series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.[21]
69
In the main, the CA ruled that petitioner union failed to comply with the requisite documents for
registration under Article 235 of the Labor Code and its implementing rules. It agreed with the
Med-Arbiter that the Charter Certificate, Sama-samang Pahayag ng Pagsapi
at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon
at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be
accorded the status of a legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by
D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter -- A duly registered federation or national
union may directly create a local/chapter by submitting to the Regional Office or to the Bureau
two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter;
(b) The names of the local/chapter's officers, their addresses, and the principal office of the
local/chapter; and
(c) The local/chapter's constitution and by-laws provided that where the local/chapter's
constitution and by-laws [are] the same as [those] of the federation or national union, this fact
shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or the
Treasurer of the local/chapter and attested to by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga
Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are
not among the documents that need to be submitted to the Regional Office or Bureau of Labor
Relations in order to register a labor organization. As to the charter certificate, the above-quoted
rule indicates that it should be executed under oath. Petitioner union concedes and the records
confirm that its charter certificate was not executed under oath. However, in San Miguel
Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San
Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-
FFW),[22] which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled -
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the
Court ruled that it was not necessary for the charter certificate to be certified and attested by the
local/chapter officers. Id. While this ruling was based on the interpretation of the previous
Implementing Rules provisions which were supplanted by the 1997 amendments, we
believe that the same doctrine obtains in this case. Considering that the charter certificate is
prepared and issued by the national union and not the local/chapter, it does not make sense to
have the local/chapter's officers x x x certify or attest to a document which they had no
hand in the preparation of.[23] (Emphasis supplied)
70
In accordance with this ruling, petitioner union's charter certificate need not be executed under
oath. Consequently, it validly acquired the status of a legitimate labor organization upon
submission of (1) its charter certificate,[24] (2) the names of its officers, their addresses, and its
principal office,[25] and (3) its constitution and by-laws[26]-- the last two requirements having
been executed under oath by the proper union officials as borne out by the records.
The mixture of rank-and-file and supervisory

employees in petitioner union does not
nullify its legal personality as a legitimate
labor organization.
The CA found that petitioner union has for its membership both rank-and-file and supervisory
employees. However, petitioner union sought to represent the bargaining unit consisting of rank-
and-file employees. Under Article 245[27] of the Labor Code, supervisory employees are not
eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate
court ruled that petitioner union cannot be considered a legitimate labor organization pursuant
to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor
Union[28] (hereinafter Toyota).
Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as
upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and
leadman, are supervisory employees. However, petitioner union failed to present any rebuttal
evidence in the proceedings below after respondent company submitted in evidence the job
descriptions[29] of the aforesaid employees. The job descriptions indicate that the aforesaid
employees exercise recommendatory managerial actions which are not merely routinary but
require the use of independent judgment, hence, falling within the definition of supervisory
employees under Article 212(m)[30] of the Labor Code. For this reason, we are constrained to
agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of
both rank-and-file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not
divest it of its status as a legitimate labor organization. The appellate court's reliance on Toyota is
misplaced in view of this Court's subsequent ruling in Republic v. Kawashima Textile Mfg.,
Philippines, Inc.[31] (hereinafter Kawashima). In Kawashima, we explained at length how and
why the Toyota doctrine no longer holds sway under the altered state of the law and rules
applicable to this case, viz:
R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-
mingling of supervisory and rank-and-file employees] would bring about on the legitimacy
of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules)
which supplied the deficiency by introducing the following amendment to Rule II (Registration
of Unions):
71
"Sec. 1. Who may join unions. - x x x 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 x x x. (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz:
"Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office
which has jurisdiction over the principal office of the employer. The petition shall be in writing
and under oath.
Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to
bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require; and provided further, that the appropriate bargaining unit of the rank-
and-file employees shall not include supervisory employees and/or security
guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and duly
registered labor organization from exercising its right to file a petition for certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court,
citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held:
"Clearly, based on this provision, a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a
legitimate labor organization. Not being one, an organization which carries a mixture of
rank-and-file and supervisory employees cannot possess any of the rights of a legitimate
labor organization, including the right to file a petition for certification election for the
purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of
an order allowing a certification election, to inquire into the composition of any labor
organization whenever the status of the labor organization is challenged on the basis of
Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at least twenty-
seven (27) supervisory employees in Level Five positions, the union could not, prior to purging
itself of its supervisory employee members, attain the status of a legitimate labor organization.
72
Not being one, it cannot possess the requisite personality to file a petition for certification
election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification election was one
for supervisory employees, but in which the membership included rank-and-file employees, the
Court reiterated that such labor organization had no legal right to file a certification election to
represent a bargaining unit composed of supervisors for as long as it counted rank-and-file
employees among its members.
It should be emphasized that the petitions for certification election involved

in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively;
hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by
Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the
requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules - that the petition for
certification election indicate that the bargaining unit of rank-and-file employees has not been
mingled with supervisory employees - was removed. Instead, what the 1997 Amended Omnibus
Rules requires is a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall
contain, among others, the following: x x x (c) The description of the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997
Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule
VI, to wit:
"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national

union may directly create a local/chapter by submitting to the Regional Office or to the Bureau
two (2) copies of the following: a) a charter certificate issued by the federation or national union
indicating the creation or establishment of the local/chapter; (b) the names of the local/chapter's
officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's
constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the
same as that of the federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or the
Treasurer of the local/chapter and attested to by its President."
which does not require that, for its creation and registration, a local or chapter submit a list of its
members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-
73
PGTWO in which the core issue was whether mingling affects the legitimacy of a labor
organization and its right to file a petition for certification election. This time, given the altered
legal milieu, the Court abandoned the view in Toyota and Dunlop and reverted to its
pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization, the Labor Code does not provide for the
effects thereof. Thus, the Court held that after a labor organization has been registered, it may
exercise all the rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is
not among the grounds for cancellation of its registration, unless such mingling was brought
about by misrepresentation, false statement or fraud under Article 239 of the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products
Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-
FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local
or chapter to provide a list of its members, it would be improper for the DOLE to deny
recognition to said local or chapter on account of any question pertaining to its individual
members.
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a
petition for cancellation of union registration filed by the employer in 1999 against a rank-and-
file labor organization on the ground of mixed membership: the Court therein reiterated its ruling
in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the
grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or
fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor
Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as
interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set
the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and
the rules.[32] [Underline supplied]
The applicable law and rules in the instant case are the same as those in Kawashima because the
present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was
still in effect. Hence, Kawashima applies with equal force here. As a result, petitioner union was
not divested of its status as a legitimate labor organization even if some of its members were
supervisory employees; it had the right to file the subject petition for certification election.
The legal personality of petitioner union

cannot be collaterally attacked by respondent
company in the certification election proceedings.
Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the
certification election proceedings. As we explained in Kawashima:
Except when it is requested to bargain collectively, an employer is a mere bystander to any

petition for certification election; such proceeding is non-adversarial and merely investigative,
for the purpose thereof is to determine which organization will represent the employees in their
74
collective bargaining with the employer. The choice of their representative is the exclusive
concern of the employees; the employer cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it;
not even a mere allegation that some employees participating in a petition for certification
election are actually managerial employees will lend an employer legal personality to block the
certification election. The employer's only right in the proceeding is to be notified or informed
thereof.
The amendments to the Labor Code and its implementing rules have buttressed that policy even
more.[33]
WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16,
2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET
ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-
6-53-99 (NCR-OD-M-9902-019) is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
75

Full Text Cases Art 242, 249-251

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LABOR LAW II FULL TEXT ART 249-2581

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

CARMELITO L. PALACOL, ET AL., petitioners,

On account of the above-mentioned disauthorization, the Company, being in a quandary as to

ART. 222. Appearances and Fees. —

xxx xxx xxx

(b) No attorney's fees, negotiation fees or similar charges of any

On the other hand, Article 241(o) mandates that:

ART. 241. Rights and conditions of membership in a labor organization. —

xxx xxx xxx

Article 241(n) of the Labor Code states that —

ART. 241. Rights and conditions of membership in a labor organization. —

xxx xxx xxx

Hence, the instant petition.

The Med-Arbiter correctly ruled in his Order that:

2. DUARDO J. MARIO, JR., MA. G.R. No. 149763

(1) Case No. NCR-OD-M-9412-022

Accordingly, on 10 September 1992, UST and USTFU executed a Memorandum of

1.0. The University hereby grants additional benefits to Faculty

2.3. In the case of a covered faculty member whose compensation is computed on a

4.0. A portion of the P42,000,000.00 economic package amounting

5.0. Any unspent balance of the aggregate of P42,000,000.00 as of October 15,

8.0. With this Agreement, the parties confirm that[:]

UNIVERSITY OF SANTO TOMAS UST FACULTY UNION

On 12 September 1992, the majority of USTFU members signed individual instruments

RATIFICATION OF THE UST-USTFU MEMORANDUM OF AGREEMENT

September 12, 1992

TO WHOM IT MAY CONCERN:

In consideration of the efforts of the UST Faculty Union as the faculty

On 15 December 1994, respondents[10] filed with the Med-Arbiter, DOLE-National

(2) Case No. NCR-OD-M-9510-028

Respondents[12] filed with the Med-Arbiter, DOLE-NCR, on 18 October 1995, another

(3) Case No. NCR-OD-M-9610-001

Thus, on 1 October 1996, respondents[15] filed with the Med-Arbiter, DOLE-NCR, an

On 4 October 1996, the Med-Arbiter DOLE-NCR, issued a Temporary Restraining Order

(4) Case No. NCR-OD-M-9610-016

In a Decision dated 11 February 1997 in Case No. NCR-OD-M-9610-016, the Med-

(5) Case No. NCR-OD-M-9611-009

On 15 November 1996, respondents[18] filed before the Med-Arbiter, DOLE-NCR, a fourth

On 27 May 1999, the DOLE-NCR Regional Director rendered a Decision[21] in the

In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the DOLE-

WHEREFORE, premises considered, judgment is hereby rendered:

a) Expelling [the Mario Group] from their positions as officers

b) Ordering [the Mario Group] to jointly and severally refund to

c) Ordering [the Mario Group] to account for:

d) Ordering conduct of election of Union officers under the supervision of

WHEREFORE, the appeal is GRANTED IN PART. Accordingly, the decision

It is too plain to see that the 60% of the proceeds is to be allocated

It is too plain to see, too, that under the Memorandum of Agreement

Whether or not UST implemented the mandate of Republic Act 6728

Section 5. Special assessments or other extraordinary fees such as

In ABS-CBN Supervisors-Employees Union Members versus ABS-CBN

Ultimately, the Court of Appeals decreed:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

THE TUITION INCREASES AUTHORIZED BY LAW AND THE

WHETHER OR NOT THE HONORABLE COURT OF APPEALS

(1) The P42 million economic benefits package

The Court disagrees with petitioners stance.

SEC. 5. Tuition Fee Supplement for Student in Private High School.

(2) The P4.2 Million Check-off