G.R. No. 84433 June 2, 1992 ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M.

GECA, and 138 others, petitioners, vs. CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med. Arbiter PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et al., respondent.

NARVASA, C.J.: The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the denial by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia ni Kristo" (INK), all employed in the same company, at a certification election at which two (2) labor organizations were contesting the right to be the exclusive representative of the employees in the bargaining unit. That denial is assailed as having been done with grave abuse of discretion in the special civil action of certiorari at bar, commenced by the INK members adversely affected thereby. The certification election was authorized to be conducted by the Bureau of Labor Relations among the employees of Tri-Union Industries Corporation on October 20, 1987. The competing unions were Tri-Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEUOLALIA), and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers initially deemed to be qualified voters, only 240 actually took part in the election, conducted under the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were 141 members of the INK. The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of the two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably with established rule and practice, 1 for (c) a third choice: "NO UNION." The final tally of the votes showed the following results: TUPAS 1 TUEU-OLALIA 95 NO UNION 1 SPOILED 1 CHALLENGED 141 The challenged votes were those cast by the 141 INK members. They were segregated and excluded from the final count in virtue of an agreement between the competing unions, reached at the pre-election conference, that the INK members should not be allowed to vote "because they are not members of any union and refused to participate in the previous certification elections." The INK employees promptly made known their protest to the exclusion of their votes. They filed f a petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended

that the petitioners "do not have legal personality to protest the results of the election," because "they are not members of either contending unit, but . . . of the INK" which prohibits its followers, on religious grounds, from joining or forming any labor organization. . . ." The Med-Arbiter saw no merit in the INK employees 1 petition. By Order dated December 21, 1987, he certified the TUEU-OLALIA as the sole and exclusive bargaining agent of the rank-and-file employees. In that Order he decided the fact that "religious belief was (being) utilized to render meaningless the rights of the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor organization as the bargaining agent," and declared the petitioners as "not possessed of any legal personality to institute this present cause of action" since they were not parties to the petition for certification election. The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued that the Med-Arbiter had "practically disenfranchised petitioners who had an overwhelming majority," and "the TUEU-OLALIA certified union cannot be legally said to have been the result of a valid election where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall have cast their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that the petitioners are "bereft of legal personality to protest their alleged disenfrachisement" since they "are not constituted into a duly organized labor union, hence, not one of the unions which vied for certification as sole and exclusive bargaining representative." He also pointed out that the petitioners "did not participate in previous certification elections in the company for the reason that their religious beliefs do not allow them to form, join or assist labor organizations." It is this Decision of July 22, 1988 that the petitioners would have this Court annul and set aside in the present special civil action of certiorari. The Solicitor General having expressed concurrence with the position taken by the petitioners, public respondent NLRC was consequently required to file, and did thereafter file, its own comment on the petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the exercise of their religious belief opted not to join any labor organization as a consequence of which they themselves can not have a bargaining representative, then the right to be representative by a bargaining agent should not be denied to other members of the bargaining unit." Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining." This is made plain by no less than three provisions of the Labor Code of the Philippines. 2 Article 243 of the Code provides as follows: 3 ART. 243. Coverage and employees right to self-organization. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes or collective bargaining.Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to "interfere with, restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article 249 (a) makes it an unfair labor practice for a labor organization to "restrain or coerce employees in the exercise of their rights to self-organization . . . "

The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as amended, as might be expected Section 1, Rule II (Registration of Unions), Book V (Labor Relations) of the Omnibus Rules provides as follows; 4 Sec. 1. Who may join unions; exception. All persons employed in commercial, industrial and agricultural enterprises, including employees of government corporations established under the Corporation Code as well as employees of religious, medical or educational institutions, whether operating for profit or not, except managerial employees, shall have the right to self-organization and to form, join or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and without any definite employers people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. xxx xxx xxx The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes of collective bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and interests. 5 Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain membership therein. The right to form or join a labor organization necessarily includes the right to refuse or refrain from exercising said right. It is self-evident that just as no one should be denied the exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred right. The fact that a person has opted to acquire membership in a labor union does not preclude his subsequently opting to renounce such membership. 6 As early as 1974 this Court had occasion to expatiate on these self-evident propositions in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.: . . .What the Constitution and Industrial Peace Act recognize and guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and contents of a "right," it can be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for himself being prevented by law; second, power, whereby an employee may, as he pleases, join or refrain from joining an association. It is therefore the employee who should decide for himself whether he should join or not an association; and should he choose to join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any time (Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil. 1010, 1019). It is clear, therefore, that the right to join a union includes the right to abstain from joining any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al., L-19912, January 20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as what both the Constitution and the Industrial Peace Act have recognized, the guaranteed to the employee, is the "right" to join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the employee

the duty to join associations. The law does not enjoin an employee to sign up with any association. The right to refuse to join or be represented by any labor organization is recognized not only by law but also in the rules drawn up for implementation thereof. The original Rules on Certification promulgated by the defunct Court of Industrial Relations required that the ballots to be used at a certification election to determine which of two or more competing labor unions would represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of the employee voting, to the effect that he desires not to which of two or more competing labor unions would represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of the employee voting, to the effect that he desires not to be represented by any union. 8 And where only one union was involved, the ballots were required to state the question "Do you desire to be represented by said union?" as regards which the employees voting would mark an appropriate square, one indicating the answer, "Yes" the other, "No." To be sure, the present implementing rules no longer explicitly impose the requirement that the ballots at a certification election include a choice for "NO UNION" Section 8 (rule VI, Book V of the Omnibus Rules) entitled"Marketing and canvassing of votes," pertinently provides that: . . . (a) The voter must write a cross (X) or a check (/) in the square opposite the union of his choice. If only one union is involved, the voter shall make his cross or check in the square indicating "YES" or "NO." xxx xxx xxx Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly bars the inclusion of the choice of "NO UNION" in the ballots. Indeed it is doubtful if the employee's alternative right NOT to form, join or assist any labor organization or withdraw or resign from one may be validly eliminated and he be consequently coerced to vote for one or another of the competing unions and be represented by one of them. Besides, the statement in the quoted provision that "(i)f only one union is involved, the voter shall make his cross or check in the square indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO" votes may outnumber the "YES" votes indicating that the majority of the employees in the company do not wish to be represented by any union in which case, no union can represent the employees in collective bargaining. And whether the prevailing "NO" votes are inspired by considerations of religious belief or discipline or not is beside the point, and may not be inquired into at all. The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by which particular labor organization. If the results of the election should disclose that the majority of the workers do not wish to be represented by any union, then their wishes must be respected, and no union may properly be certified as the exclusive representative of the workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and conditions of employment. The minority employees who wish to have a union represent them in collective bargaining can do nothing but wait for another suitable occasion to petition for a certification election and hope that the results will be different. They may not and should not be permitted, however, to impose their will on the majority who do not desire to have a union certified as the exclusive workers' benefit in the bargaining unit upon the plea that they, the minority workers, are being denied the right of self-organization and collective bargaining.

As repeatedly stated, the right of self-organization embraces not only the right to form, join or assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union. That the INK employees, as employees in the same bargaining unit in the true sense of the term, do have the right of self-organization, is also in truth beyond question, as well as the fact that when they voted that the employees in their bargaining unit should be represented by "NO UNION," they were simply exercising that right of self-organization, albeit in its negative aspect. The respondents' argument that the petitioners are disqualified to vote because they "are not constituted into a duly organized labor union" "but members of the INK which prohibits its followers, on religious grounds, from joining or forming any labor organization" and "hence, not one of the unions which vied for certification as sole and exclusive bargaining representative," is specious. Neither law, administrative rule nor jurisprudence requires that only employees affiliated with any labor organization may take part in a certification election. On the contrary, the plainly discernible intendment of the law is to grant the right to vote to all bona fide employees in the bargaining unit, whether they are members of a labor organization or not. As held in Airtime Specialists, Inc. v. Ferrer-Calleja: 9 In a certification election all rank-and-file employees in the appropriate bargaining unit are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining." Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank-and-file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment for certification election. The law refers to "all" the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the "bargaining unit". Neither does the contention that petitioners should be denied the right to vote because they "did not participate in previous certification elections in the company for the reason that their religious beliefs do not allow them to form, join or assist labor organizations," persuade acceptance. No law, administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections. In denying the petitioners' right to vote upon these egregiously fallacious grounds, the public respondents exercised their discretion whimsically, capriciously and oppressively and gravely abused the same. WHEREFORE, the petition for certiorari is GRANTED; the Decision of the then Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987 (affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and SET ASIDE; and the petitioners are DECLARED to have legally exercised their right to vote, and their ballots should be canvassed and, if validly and properly made out, counted and tallied for the choices written therein. Costs against private respondents. SO ORDERED.

G.R. No. 122226 March 25, 1998 UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

MENDOZA, J.: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides: Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Division for lack of showing that respondent committed grave abuse of discretion. But petitioner filed a motion for reconsideration, pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. For this reason, the petition was referred to the Court en banc. The Issues in this Case Two questions are presented by the petition: (1) whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, 8 of the Constitution. In resolving these issues it would be useful to begin by defining who are "managerial employees" and considering the types of "managerial employees." Types of Managerial Employees The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." 1 As a class, managers constitute three levels of a pyramid:

Top management Middle Management First-Line Management (also called Supervisor) ==================== Operatives or Operating Employees FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Examples of first-line managers are the "foreman" or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers' principal responsibilities are to direct the activities that implement their organizations' policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager.
TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organization's interactions with its environment. Typical titles of top managers are "chief executive officer," "president," and "senior vice-president." Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management classification. 2

As can be seen from this description, a distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle managers) and

those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such rank-andfile employees. "Managerial employees" may therefore be said to fall into two distinct categories: the "managers" per se, who compose the former group described above, and the "supervisors" who form the latter group. Whether they belong to the first or the second category, managers, vis-a-vis employers, are, likewise, employees. 3 The first question is whether route managers are managerial employees or supervisors. Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees It appears that this question was the subject of two previous determinations by the Secretary of Labor and Employment, in accordance with which this case was decided by the med-arbiter. In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union (WATU) v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found: We examined carefully the pertinent job descriptions of the subject employees and other documentary evidence on record vis-a-vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that only those employees occupying the position of route manager and accounting manager are managerial employees. The rest i.e. quality control manager, yard/transport manager and warehouse operations manager are supervisory employees. To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes under paragraph (m), Article 212 of the Labor Code as amended. Designations or titles of positions are not controlling. In the instant case, nothing on record will support the claim that the quality control manager, yard/transport manager and warehouse operations manager are vested with said attributes. The warehouse operations manager, for example, merely assists the plant finance manager in planning, organizing, directing and controlling all activities relative to development and implementation of an effective management control information system at the sale offices. The exercise of authority of the quality control manager, on the other hand, needs the concurrence of the manufacturing manager. As to the route managers and accounting manager, we are convinced that they are managerial employees. Their job descriptions clearly reveal so. On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct Certification and/or Certification Election-Route Managers/Supervisory Employees of PepsiCola Products Phils.Inc., as follows:
The issue brought before us is not of first impression. At one time, we had the occasion to rule upon the status of route manager in the same company vis a vis the issue as to whether or not it is supervisory employee or a managerial employee. In the case of Workers Alliance Trade Unions (WATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-318-91 ), 15 November 1991, we ruled that a route manager is a managerial employee within the context of the definition of the law, and hence, ineligible to join, form or assist a union. We have once more passed upon the

logic of our Decision aforecited in the light of the issues raised in the instant appeal, as well as the available documentary evidence on hand, and have come to the view that there is no cogent reason to depart from our earlier holding. Route Managers are, by the very nature of their functions and the authority they wield over their subordinates, managerial employees. The prescription found in Art. 245 of the Labor Code, as amended therefore, clearly applies to them. 4

Citing our ruling in Nasipit Lumber Co. v. National Labor Relations Commission, 5 however, petitioner argues that these previous administrative determinations do not have the effect of res judicata in this case, because "labor relations proceedings" are "non-litigious and summary in nature without regard to legal technicalities." 6 Nasipit Lumber Co. involved a clearance to dismiss an employee issued by the Department of Labor. The question was whether in a subsequent proceeding for illegal dismissal, the clearance was res judicata. In holding it was not, this Court made it clear that it was referring to labor relations proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a creation of the Department of labor to carry out the Labor Code provisions on security of tenure and termination of employment. The proceeding subsequent to the filing of an application for clearance to terminate employment was outlined in Book V, Rule XIV of the Rules and Regulations Implementing the Labor Code. The fact that said rule allowed a procedure for the approval of the clearance with or without the opposition of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the proceeding. The clearance requirement was therefore necessary only as an expeditious shield against arbitrary dismissal without the knowledge and supervision of the Department of Labor. Hence, a duly approved clearance implied that the dismissal was legal or for cause (Sec. 2). 7

But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as 1956, inBrillantes v. Castro, 8 we sustained the dismissal of an action by a trial court on the basis of a prior administrative determination of the same case by the Wage Administration Service, applying the principle of res judicata. Recently, in Abad v. NLRC 9 we applied the related doctrine of stare decisis in holding that the prior determination that certain jobs at the Atlantic Gulf and Pacific Co., were project employments was binding in another case involving another group of employees of the same company. Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the doctrine of res judicata applies . . . to judicial or quasi judicial proceedings and not to the exercise of administrative powers." 10 Now proceedings for certification election, such as those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore, decisions rendered in such proceedings can attain finality. 11 Thus, we have in this case an expert's view that the employees concerned are managerial employees within the purview of Art. 212 which provides: (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. At the very least, the principle of finality of administrative determination compels respect for the finding of the Secretary of Labor that route managers are managerial employees as defined by law in the absence of anything to show that such determination is without substantial evidence to support it. Nonetheless, the Court, concerned that employees who are otherwise supervisors may

wittingly or unwittingly be classified as managerial personnel and thus denied the right of selforganization, has decided to review the record of this case. DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial evidence. The nature of the job of route managers is given in a four-page pamphlet, prepared by the company, called "Route Manager Position Description," the pertinent parts of which read: A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives. B. PRINCIPAL ACCOUNTABILITIES 1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers. 1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all outlets. 1.1.5 maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill. 1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration 1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures incl. but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.2 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by required route ride documents/reports & back check/spot check at least 2 days a week to be supported by required documents/reports. 2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandizing [sic] techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic.

2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business ethics. 12

Earlier in this opinion, reference was made to the distinction between managers per se (top managers and middle managers) and supervisors (first-line managers). That distinction is evident in the work of the route managers which sets them apart from supervisors in general. Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to them, route managers are responsible for the success of the company's main line of business through management of their respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation of their individual teams and areas which the work of supervisors does not entail. The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the simple direction or supervision of operating employees to accomplish objectives set by those above them. They are not mere functionaries with simple oversight functions but business administrators in their own right. An idea of the role of route managers as managers per se can be gotten from a memo sent by the director of metro sales operations of respondent company to one of the route managers. It reads: 13 03 April 1995 To : CESAR T . REOLADA From : REGGIE M. SANTOS Subj : SALARY INCREASE Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an increase of 10%. This represents the added managerial responsibilities you will assume due to the recent restructuring and streamlining of Metro Sales Operations brought about by the continuous losses for the last nine (9) months. Let me remind you that for our operations to be profitable, we have to sustain the intensity and momentum that your group and yourself have shown last March. You just have to deliver the desired volume targets, better negotiated concessions, rationalized sustaining deals, eliminate or reduced overdues, improved collections, more cash accounts, controlled operating expenses, etc. Also, based on the agreed set targets, your monthly performance will be closely monitored. You have proven in the past that your capable of achieving your targets thru better planning, managing your group as a fighting team, and thru aggressive selling. I am looking forward to your success and I expect that you just have to exert your doubly best in turning around our operations from a losing to a profitable one! Happy Selling!!

( S g d . ) R . M . S A N T O S The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug, although entitled "RM's Job Description," is only a summary of performance standards. It does not show whether route managers are managers per se or supervisors. Obviously, these performance standards have to be related to the specific tasks given to route managers in the four-page "Route Manager Position Description," and, when this is done, the managerial nature of their jobs is fully revealed. Indeed, if any, the card indicates the great latitude and discretion given to route managers from servicing and enhancing company goodwill to supervising and auditing accounts, from trade (new business) development to the discipline, training and monitoring of performance of their respective sales teams, and so forth, if they are to fulfill the company's expectations in the "key result areas." Article 212(m) says that "supervisory employees are those who, in the interest of the employer, effectivelyrecommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment." Thus, their only power is to recommend. Certainly, the route managers in this case more than merely recommend effective management action. They perform operational, human resource, financial and marketing functions for the company, all of which involve the laying down of operating policies for themselves and their teams. For example, with respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are charged, among other things, with expanding the dealership base of their respective sales areas, maintaining the goodwill of current dealers, and distributing the company's various promotional items as they see fit. It is difficult to see how supervisors can be given such responsibility when this involves not just the routine supervision of operating employees but the protection and expansion of the company's business vis-a-vis its competitors. While route managers do not appear to have the power to hire and fire people (the evidence shows that they only "recommended" or "endorsed" the taking of disciplinary action against certain employees), this is because this is a function of the Human Resources or Personnel Department of the company. 14 And neither should it be presumed that just because they are given set benchmarks to observe, they are ipso facto supervisors. Adequate control methods (as embodied in such concepts as "Management by Objectives [MBO]" and "performance appraisals") which require a delineation of the functions and responsibilities of managers by means of ready reference cards as here, have long been recognized in management as effective tools for keeping businesses competitive.

This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code, prohibiting managerial employees from forming, assisting or joining any labor organization, is constitutional in light of Art. III, 8 of the Constitution which provides: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. As already stated, whether they belong to the first category (managers per se) or the second category (supervisors), managers are employees. Nonetheless, in the United States, as Justice Puno's separate opinion notes, supervisors have no right to form unions. They are excluded from the definition of the term "employee" in 2(3) of the Labor-Management Relations Act of 1947. 15 In the Philippines, the question whether managerial employees have a right of self-organization has arisen with respect to first-level managers or supervisors, as shown by a review of the course of labor legislation in this country. Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the Industrial Peace Act (R.A. No. 875). In accordance with the general definition above, this law defined "supervisor" as follows: Sec. 2. . . .
(k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment. 16

The right of supervisors to form their own organizations was affirmed:

Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to selforganization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. 17

For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize for purposes of labor relations. 18 Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the term "manager." But, using the commonly-understood concept of "manager," as above stated, it is apparent that the law used the term "supervisors" to refer to the sub-group of "managerial employees" known as front-line managers. The other sub-group of "managerial employees," known as managers per se, was not covered. However, in Caltex Filipino Managers and Supervisors Association v. Court of Industrial Relations, 19 the right of all managerial employees to self-organization was upheld as a general proposition, thus:

It would be going too far to dismiss summarily the point raised by respondent Company that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rank and file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The record of respondent Company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. To predicate under such circumstances that agreement inevitably marks their relationship, ignoring that discord would not be unusual, is to fly in the face of reality.
. . . The basic question is whether the managerial personnel can organize. What respondent Company failed to take into account is that the right to self-organization is not merely a statutory creation. It is fortified by our Constitution. All are free to exercise such right unless their purpose is contrary to law. Certainly it would be to attach unorthodoxy to, not to say an emasculation of, the concept of law if managers as such were precluded from organizing. Having done so and having been duly registered, as did occur in this case, their union is entitled to all the rights under Republic Act No. 875. Considering what is denominated as unfair labor practice under Section 4 of such Act and the facts set forth in our decision, there can be only one answer to the objection raised that no unfair labor practice could be committed by respondent Company insofar as managerial personnel is concerned. It is, as is quite obvious, in the negative. 20

Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted in the main opinion, 21 clearly indicates: CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by the Company Payroll Position Title Assistant to Mgr. National Acct. Sales Jr. Sales Engineer Retail Development Asst. Staff Asst. 0 Marketing Sales Supervisor Supervisory Assistant Jr. Supervisory Assistant Credit Assistant Lab. Supvr. Pandacan

Jr. Sales Engineer B Operations Assistant B Field Engineer Sr. Opers. Supvr. MIA A/S Purchasing Assistant Jr. Construction Engineer Sr. Sales Supervisor Deport Supervisor A Terminal Accountant B Merchandiser Dist. Sales Prom. Supvr. Instr. Merchandising Asst. Dist. Accountant B Sr. Opers. Supervisor Jr. Sales Engineer A Asst. Bulk Ter. Supt. Sr. Opers. Supvr. Credit Supervisor A Asst. Stores Supvr. A Ref. Supervisory Draftsman Refinery Shift Supvr. B Asst. Supvr. A Operations (Refinery) Refinery Shift Supvr. B Asst. Lab. Supvr. A (Refinery) St. Process Engineer B (Refinery)

Asst. Supvr. A Maintenance (Refinery) Asst. Supvr. B Maintenance (Refinery) Supervisory Accountant (Refinery) Communications Supervisor (Refinery) Finally, also deemed included are all other employees excluded from the rank and file unions but not classified as managerial or otherwise excludable by law or applicable judicial precedents. Right of Self-Organization of Managerial Employees under the Labor Code Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and middle managers by assimilating them with the supervisory group under the broad phrase "managerial personnel," provided the lynchpin for later laws denying the right of self-organization not only to top and middle management employees but to front line managers or supervisors as well. Following the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction between the first and second sub-groups of managerial employees. Instead of treating the terms "supervisor" and "manager" separately, the law lumped them together and called them "managerial employees," as follows: Art. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees, or to effectively recommend such managerial actions. All employees not falling within this definition are considered rank and file employees for purposes of this Book. 22

The definition shows that it is actually a combination of the commonly understood definitions of both groups of managerial employees, grammatically joined by the phrase "and/or." This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code denied supervisors their right to self-organize as theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the dictum in the Caltex case on its head by prohibiting all types of managers from forming unions. The explicit general prohibition was contained in the then Art. 246 of the Labor Code. The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided: Supervisory unions and unions of security guards to cease operation. All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically canceled. However, existing collective agreements with such unions, the life of which extends beyond the date of effectivity of the Code, shall be respected until their expiry date insofar as the economic benefits granted therein are concerned.

Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or assist the rank and file labor organization, and if none exists, to form or assist in the forming of such rank and file organization. The determination of who are managerial employees and who are not shall be the subject of negotiation between representatives of the supervisory union and the employer. If no agreement is reached between the parties, either or both of them may bring the issue to the nearest Regional Office for determination. The Department of Labor continued to use the term "supervisory unions" despite the demise of the legal definition of "supervisor" apparently because these were the unions of front line managers which were then allowed as a result of the statutory grant of the right of self-organization under the Industrial Peace Act. Had the Department of Labor seen fit to similarly ban unions of top and middle managers which may have been formed following the dictum in Caltex, it obviously would have done so. Yet it did not, apparently because no such unions of top and middle managers really then existed. Real Intent of the 1986 Constitutional Commission This was the law as it stood at the time the Constitutional Commission considered the draft of Art. III, 8. Commissioner Lerum sought to amend the draft of what was later to become Art. III, 8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the words "people" and "to" the following: WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as follows: "The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary to law shall not be abridged." 23

Explaining his proposed amendment, he stated: MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted to all persons whether or not they are employed in the government. Under that provision, we allow unions in the government, in government-owned and controlled corporations and in other industries in the private sector, such as the Philippine Government Employees' Association, unions in the GSIS, the SSS, the DBP and other government-owned and controlled corporations. Also, we have unions of supervisory employees and of security guards. But what is tragic about this is that after the 1973 Constitution was approved and in spite of an express recognition of the right to organize in P.D. No. 442, known as the Labor Code, the right of government workers, supervisory employees and security guards to form unions was abolished. And we have been fighting against this abolition. In every tripartite conference attended by the government, management and workers, we have always been insisting on the return of these rights. However, both the government and employers opposed our proposal, so nothing came out of this until this week when we approved a provision which states: Notwithstanding any provision of this article, the right to self-organization shall not be denied to government employees. We are afraid that without any corresponding provision covering the private sector, the security guards, the supervisory employees or majority employees [sic] will still be excluded, and that is the purpose of this amendment.

I will be very glad to accept any kind of wording as long as it will amount to absolute recognition of private sector employees, without exception, to organize. THE PRESIDENT. What does the Committee say? FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by Commissioner Rodrigo is well-taken. Perhaps, we can lengthen this a little bit more to read: "The right of the people WHETHER UNEMPLOYED OR EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS. I want to avoid also the possibility of having this interpreted as applicable only to the employed. MR. DE LOS REYES. Will the proponent accept an amendment to the amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in the private sector is recognized.24

Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees, and security guards, who had the right to organize under the Industrial Peace Act, had been denied this right by the Labor Code, and (2) there was a need to reinstate the right of these employees. In consonance with his objective to reinstate the right of government, security, and supervisory employees to organize, Lerum then made his proposal: MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this Commission, my amendment will now read as follows: "The right of the people INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form associations, unions, or societies for purposes not contrary to law shall not be abridged. In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say? FR. BERNAS. The Committee accepts. THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 25

The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then Art. 246 of the Labor Code. Did he simply want "any kind of wording as long as it will amount to absolute

recognition of private sector employees, without exception, to organize"? 26 Or, did he instead intend to have his words taken in the context of the cause which moved him to propose the amendment in the first place, namely, the denial of the right of supervisory employees to organize, because he said, "We are afraid that without any corresponding provision covering the private sector, security guards, supervisory employees or majority [of] employees will still be excluded, and that is the purpose of this amendment"? 27 It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to organize. For even though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial employees" in general from forming unions, the fact was that in explaining his proposal, he repeatedly referred to "supervisory employees" whose right under the Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy that Commissioner Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the Labor Code which put together, under the broad phrase "managerial employees," top and middle managers and supervisors. Instead, his repeated use of the term "supervisory employees," when such term then was no longer in the statute books, suggests a frame of mind that remained grounded in the language of the Industrial Peace Act. Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to organize, despite the fact that the Industrial Peace Act did not expressly provide for the right of top and middle managers to organize. If Lerum was aware of the Caltex dictum, then his insistence on the use of the term "supervisory employees" could only mean that he was excluding other managerial employees from his proposal. If, on the other hand, he was not aware of the Caltex statement sustaining the right to organize to top and middle managers, then the more should his repeated use of the term "supervisory employees" be taken at face value, as it had been defined in the then Industrial Peace Act. At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors and not to other managerial employees is clear from the following account of Commissioner Joaquin G. Bernas, who writes: In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum explained that the modification included three categories of workers: (1) government employees, (2) supervisory employees, and (3) security guards. Lerum made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code. The provisions referred to were: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization.
Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. 28

Implications of the Lerum Proposal In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by including labor unions in the guarantee of organizational right should be taken in the context of statements that his aim was the removal of the statutory ban against security guards and supervisory employees joining labor organizations. The approval by the Constitutional Commission of his proposal can only mean, therefore, that the Commission intended the absolute right to organize of government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no

similar absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers. As to them the right of self-organization may be regulated and even abridged conformably to Art. III, 8. Constitutionality of Art. 245 Finally, the question is whether the present ban against managerial employees, as embodied in Art. 245 (which superseded Art. 246) of the Labor Code, is valid. This provision reads:
Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. 29

This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides separate definitions of the terms "managerial" and "supervisory employees," as follows: Art. 212. Definitions. . . . (m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rankand-file employees for purposes of this Book. Although the definition of "supervisory employees" seems to have been unduly restricted to the last phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase "effectively recommends" remains the same. In fact, the distinction between top and middle managers, who set management policy, and front-line supervisors, who are merely responsible for ensuring that such policies are carried out by the rank and file, is articulated in the present definition. 30 When read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the Constitutional Commission in framing Art. III, 8 of the fundamental law. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to the condition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in his ponencia inPhilips Industrial Development, Inc. v. NLRC: 31 In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the

rationale behind the ineligibility of managerial employees to form, assist or joint a labor union equally applies to them. In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus:
. . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company-dominated with the presence of managerial employees in Union membership. 32

To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to organize. But the same reason for denying them the right to organize justifies even more the ban on managerial employees from forming unions. After all, those who qualify as top or middle managers are executives who receive from their employers information that not only is confidential but also is not generally available to the public, or to their competitors, or to other employees. It is hardly necessary to point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the decision in that case. WHEREFORE, the petition is DISMISSED. SO ORDERED. Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez and Purisima, JJ., concur.

Separate Opinions

DAVIDE, JR., J., concurring and dissenting; I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973 Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of the 1973 Constitution provided as follows: Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be abridged.

This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of Rights, 1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations, and Human Rights, with a modification, however, consisting of the insertion of the word union between the words "associations" and "societies." Thus the proposed Section 7 provided as follows: Sec. 7. The right of the people to form associations, unions, or societies for purposes not contrary to law shall not be abridged (emphasis supplied). Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of Rights, expounded on the nature of the proposed provision, in this wise: Section 7 preserves the old provision not because it is strictly needed but because its removal might be subject to misinterpretation. It reads: xxx xxx xxx
It strictly does not prepare the old provision because it adds the word UNION, and in the explanation we received from Commissioner Lerum, the term envisions not just unions in private corporations but also in the government. This preserves our link with the Malolos Constitution as far as the right to form associations or societies for purposes not contrary to law is concerned. 2

During the period of individual amendments, Commissioner Lerum introduced an amendment to the proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that time, the section read: Sec. 7. The right of the people including those employed in the public and private sectors to form associations, unions or societies for purposes not contrary to law shall not be abridged. Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there having been no objection from the floor, the Lerum amendment was approved, thus: MR. LERUM: . . . In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read: Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon): What does the Committee say? FR. BERNAS: The Committee accepts.

THE PRESIDING OFFICER (Mr. Bengzon): The Committee has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 3

The Committee on Style then recommended that commas be placed after the words people and sectors, while Commissioner Lerum likewise moved to place the word unions before the word associations. 4 Section 7, which was subsequently renumbered as Section 8 as presently appearing in the text ratified in the plebiscite of 2 February 1987, then read as follows: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rank-and-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974. With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715 6 amended the new Article 245 (originally Article 246) to read, as follows:
Sec. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. 7

With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition against any law prohibiting managerial employees from joining, assisting or forming unions or labor organizations, the first sentence then of the present Article 245 of the Labor Code must be struck down as unconstitutional. 9 However, due to an obvious conflict of interest being closely identified with the interests of management in view of the inherent nature of their functions, duties and responsibilities managerial employees may only be eligible to join, assist or form unions or labor organizations of their own rank, and not those of the supervisory employees nor the rank-and-file employees. In the instant case, the petitioner's name United Pepsi-Cola Supervisory Union (UPSU) indubitably attests that it is a union of supervisory employees. In light of the earlier discussion, the route managers who aremanagerial employees, cannot join or assist UPSU. Accordingly, the

Med-Arbiter and public respondent Laguesma committed no error in denying the petition for direct certification or for certification election. I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public respondent holding that since the route managers of private respondent Pepsi-Cola Products Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any other organization" should be SET ASIDE for being violative of Section 8 of Article III of the Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision dismissing the petition for direct certification or for a certification election should be AFFIRMED. PUNO, J., separate concurring; With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8, Article III of the 1987 Constitution for reasons discussed below. A. Types of Employees. For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3) categories of employees. They are managerial, supervisory and rank-and-file, thus: Art. 212 (m). "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. "Supervisory employees" are those who, in the interest of the employer, effectively recommended such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rankand-file employees for purposes of this Book. The test of "managerial" or "supervisory" status depends on whether a person possesses authority to act in the interest of his employer and whether such authority is not routinary or clerical in nature but requires the use of independent judgment. 1 The rank-and-file employee performs work that is routinary and clerical in nature. The distinction between these employees is significant because supervisory and rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot. B. The Exclusion of Managerial Employees: Its Historical Roots in the United States. The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S. Congress in 1935, was the first law that regulated labor relations in the United States and embodied its national labor policy. 2 The purpose of the NLRA was to eliminate obstructions to the free flow of commerce through the practice of collective bargaining. The NLRA also sought to protect the workers' full freedoms of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection. 3 The NLRA established the right of employees to organize, required employers to bargain with employees collectively through employee-elected representatives, gave employees the right to engage in concerted activities for collective bargaining purposes or other mutual aid or protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-management matters. 4 The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly equal position with unions in bargaining and labor relations procedures. 5

The NLRA did not make any special provision for "managerial employees." 6 The privileges and benefits of the Act were conferred on "employees." Labor organizations thus clamored for the inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were also employees. Although traditionally, supervisors were regarded as part of management, the NLRB was constrained to recognize supervisors as employees under the coverage of the law. Supervisors were then granted collective bargaining rights. 7 Nonetheless, the NLRB refused to consider managers as covered by the law. 8 The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment feared that their unionization would break down industrial discipline as it would blur the traditional distinction between management and labor. They felt it necessary to deny supervisory personnel the right of collective bargaining to preserve their loyalty to the interests of their employers. 9 Several amendments were later made on the NLRA but the exclusion of managers and supervisors from its coverage was preserved. Until now managers and supervisors are excluded from the law. 10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those whom it chooses for positions of responsibility, entailing action on the employers' behalf. A supervisor's and manager's ability to control the work of others would be compromised by his sharing of employee status with them. 11 C. Historical Development in the Philippines. Labor-management relations in the Philippines were first regulated under the Industrial Peace Act 12 which took effect in 1953. Hailed as the Magna Carta of Labor, it was modelled after the NLRA and LMRA of the United States. 13 Most of the basic principles of the NLRA have been carried over to the Industrial Peace Act and the Labor Code. 14 This is significant because we have ruled that where our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act are given persuasive effects in the application of Philippine law. 15 The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining labor organizations. Section 3 of said law merely provided: Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to selforganization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a "supervisor" but not a "manager." Thus: Sec. 2. . . . (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment.

In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and form labor organizations of their own. 16 Soon we grappled with the right of managers to organize. In a case involving Caltex managers, we recognized their right to organize, viz:
It would be going too far to dismiss summarily the point raised by respondent company, that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rankand-file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The records of respondent company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. 17

The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees from joining labor organizations. Supervisory unions were no longer recognized nor allowed to exist and operate as such. 18 We affirmed this statutory change in Bulletin Publishing Corp. v. Sanchez. 19 Similarly, Article 246 of the Labor Code expressly prohibited managerial employees from forming, assisting and joining labor organizations, to wit: Art. 246. Ineligibility of managerial employees to join any labor organization. Managerial employees are not eligible to join, assist or form any labor organization. In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the very type of employees who, by the nature of their positions and functions, have been decreed disqualified from bargaining with management. This prohibition is based on the rationale that if managerial employees were to belong or be affiliated with a union, the union might not be assured of their loyalty in view of evident conflict of interest or that the union can be company-dominated with the presence of managerial employees in the union membership. 20 In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representative, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves become union members. 21 The prohibition on managerial employees to join, assist or form labor organizations was retained in the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not abrogate, much less amend the prohibition on managerial employees to join labor organizations. The express prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored to supervisory employees the right to join labor organizations of their own. 22 Article 246 now reads: Art. 246. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently Article 245 of the Labor Code.

Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor organizations has a social and historical significance in our labor relations law. This significance should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the said Article. With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the Constitutional Commission does not suffice. It is generally recognized that debates and other proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of the people. 23 Judge Cooley has stated that:
When the inquiry is directed to ascertaining the mischief designed to be remedied, or the purpose sought to be accomplished by a particular provision, it may be proper to examine the proceedings of the convention which framed the instrument. Where the proceedings clearly point out the purpose of the provision, the aid will be valuable and satisfactory; but where the question is one of abstract meaning, it will be difficult to derive from this source much reliable assistance in interpretation. Every member of such a convention acts upon such motives and reasons as influence him personally, and the motions and debates do not necessarily indicate the purpose of a majority of a convention in adopting a particular clause. It is quite possible for a particular clause to appear so clear and unambiguous to the members of the convention as to require neither discussion nor illustration; and the few remarks made concerning it in the convention might have a plain tendency to lead directly away from the meaning in the minds of the majority. It is equally possible for a part of the members to accept a clause in one sense and a part in another. And even if we were certain we had attained to the meaning of the convention, it is by no means to be allowed a controlling force, especially if that meaning appears not to be the one which the words would most naturally and obviously convey. For as the constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark and abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that was the sense designed to be conveyed. 24

It is for this reason that proceedings of constitutional conventions are less conclusive of the proper construction of the instrument than are legislative proceedings of the proper construction of the statute. 25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it is the intent of the people that is being ascertained through the discussions and deliberations of their representatives. 26 The proper interpretation of constitutional provisions depends more on how it was understood by the people adopting it than in the framers' understanding thereof. 27 Thus, debates and proceedings of the constitutional convention are never of binding force. They may be valuable but are not necessarily decisive. 28 They may shed a useful light upon the purpose sought to be accomplished or upon the meaning attached to the words employed. And the courts are free to avail themselves of any light that may be derived from such sources, but they are not bound to adopt it as the sole ground of their decision. 29 Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed intent or spirit declared in constitutional convention proceedings. D. Freedom of Association The right of association flows from freedom of expression. 30 Like the right of expression, the exercise of the right of association is not absolute. It is subject to certain limitations.

Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article 243 provides: Art. 243. Coverage of employees' right to self-organization. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to selforganization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Article 243 guarantees the right to self-organization and association to "all persons." This seemingly all-inclusive coverage of "all persons," however, actually admits of exceptions. Article 244 31 of the Labor Code mandates that all employees in the civil service, i.e, those not employed in government corporations established under the Corporation Code, may only form associations but may not collectively bargain on terms and conditions fixed by law. An employee of a cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining and negotiation vis-a-vis the cooperative. 32 An owner cannot bargain with himself or his coowners. 33 Employees in foreign embassies or consulates or in foreign international organizations granted international immunities are also excluded from the right to form labor organizations. 34 International organizations are organized mainly as a means for conducting general international business in which the member-states have an interest and the immunities granted them shield their affairs from political pressure or control by the host country and assure the unimpeded performance of their functions. 35 Confidential employees have also been denied the right to form labor-organizations. Confidential employees do not constitute a distinct category for purposes of organizational right. Confidentiality may attach to a managerial or non-managerial position. We have, however, excluded confidential employees from joining labor organizations following the rationale behind the disqualification of managerial employees in Article 245. In the case of National Association of Trade Unions-Republic Planters' Bank Supervisors Chapter v. Torres, 36 we held:
In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Article 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of" the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. 37

E. The disqualification extends only to labor organizations. It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join "labor organizations." A labor organization is defined under the Labor Code as:

Art. 212 (g). "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with the employer concerning terms and conditions of employment. A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a right given to a labor organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing with the employer, on the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and other terms and conditions of employment, even if the employees' group is not registered with the DOLE. 38 Any labor organization which may or may not be a union may deal with the employer. This explains why a workers' Organization does not always have to be a labor union and why employer-employee collective interactions are not always collective bargaining. 39 In the instant case, it may be argued that managerial employees' labor organization will merely "deal with the employer concerning terms and conditions of employment" especially when top management is composed of aliens, following the circumstances in the Caltex case. Although the labor organization may exist wholly for the purpose of dealing with the employer concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to become a legitimate labor organization and engage in collective bargaining. Once a labor organization registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242 and 263 (b) of the Labor Code. And these include the right to strike and picket. Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising their right of association. What it prohibits is merely the right to join labor organizations. Managerial employees may form associations or organizations so long as they are not labor organizations. The freedom of association guaranteed under the Constitution remains and has not been totally abrogated by Article 245. To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-president, general managers and everyone, with the exception of the directors, may go on strike or picket the employer. 40 Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be enforced against the owner of the company. 41 The basic opposing forces in the industry will not be management and labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry between these two groups. 42 And this will certainly bring ill-effects on our economy. The framers of the Constitution could not have intended a major upheaval of our labor and socioeconomic systems. Their intent cannot be made to override substantial policy considerations and create absurd or impossible situations. 43 A constitution must be viewed as a continuously operative charter of government. It must not be interpreted as demanding the impossible or the impracticable; or as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation that would make the constitutional provision and the statute consistent with reason, justice and the public interest. 45

I vote to dismiss the petition. VITUG, J., separate concurring and dissenting; The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are: (1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment ("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of petitioner union to be managerial employees and thus ineligible to form or join labor organizations; and (2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987 Constitution, which expresses that "(t)he right of the people, including those employed in public and private sectors to form unions, associations or societies for purposes not contrary to law shall not be abridged." The case originated from a petition for direct certification or certification election among route managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United Pepsi-Cola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered with the Department of Labor and Employment under Registration Certificate No. NCRUR-3-1421-95. Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a previous petition for direct certification 1 filed by the same route managers through the Pepsi-Cola Employees Association (PCEA-Supervisory) which petition had already been denied by Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., Inc., 2 that route managers were managerial employees. In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the petition of the Union, stating that the issue on the proper classification and status of route managers had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE. The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma denied the Union's motion for reconsideration. The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of registration. The Court, after considering the petition and the comments thereon filed by both public and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by public respondent. Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-avis Section 8, Article III, of the 1987 Constitution. There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds.

There are, in the hierarchy of management, those who fall below the level of key officers of an enterprise whose terms and conditions of employment can well be, indeed are not infrequently, provided for in collective bargaining agreements. To this group belong the supervisory employees. The "managerial employees," upon the other hand, and relating the matter particularly to the Labor Code, are those "vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees" as distinguished from the supervisory employees whose duties in these areas are so designed as to verily be implementary to the policies or rules and regulations already outstanding and priorly taken up and passed upon by management. The managerial level is the source, as well as prescribes the compliance, of broad mandates which, in the field of labor relations, are to be carried out through the next rank of employees charged with actually seeing to the specific personnel action required. In fine, the real authority, such as in hiring or firing of employees, comes from management and exercised by means of instructions, given in general terms, by the "managerial employees;" the supervisory employees, although ostensibly holding that power, in truth, however, only act in obedience to the directives handed down to them. The latter unit, unlike the former, cannot be considered the alter ego of the owner of enterprise. The duties and responsibilities of the members of petitioner union, shown by their "job description" below PCPPI RM's JOB DESCRIPTION A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION To contribute to the growth and profitability of PCPPI via well-selected, trained and motivated Route Sales Team who sell, collect and merchandise, following the Pepsi Way, and consistent with Company policies and procedures as well as the corporate vision of Customer Satisfaction. B. SPECIFIC JOB DESCRIPTION: KEY RESULT AREAS STANDARD OR PERFORMANCE SALES VOLUME *100% Vs. NRC Target _____% NTG DISTRIBUTION * Product Availability 70% Pepsi 80% Seven-Up 40% Mirinda 65% Mt. Dew 5% Out of Stock

ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.) MANAGEMENT 80:20 Cash to Credit Ratio DSO assigned Std. to Division by the District ASSET MANAGEMENT 30 cases for ice-coolers 80 cases for electric coolers BLOWAGA on Division Vehicles 60 cases on Rolling/Permanent Kiosks TRADE DEVELOPMENT 100% Buying Customers Based on master list that bought once 5 months payback on concessions 4 CED's/Rte. EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL b). 280 cases/route/day c). 15% cost-to-sales ratio ROUTE MANAGEMENT 3 Days on RR/Wk Days on BC-SC- Financial & Co. Assets Days on TD 75% Load Factor 18 Productive Calls CUSTOMER SATISFACTION Customer Complaint attended to within the next working day HUMAN RESOURCE 5% Absentism Excl. VL

MANAGEMENT (approved) 3 Documented RR/ Week using SLM's Training Log ADMINISTRATIVE Complete, timely and accurate MANAGEMENT reports. PCPPI RM's BASIC DAILY ACTIVITIES A. AT THE SALES OFFICE 1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME) 2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M. 3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING) 4. DAILY BRIEFING WITH THE DM 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's a). ATTENDANCE/GROOMING b). OPERATIONAL DIRECTIONS & PRIORITIES c). ANNOUNCEMENT 6. RM's PRESENCE DURING CHECK-OUT a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) c). PROPER HANDLING OF SELLING/MDSG. MATERIALS d). YESTERDAY's FINAL SETTLEMENT REVIEW 7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION 8. ATTENDS TO PRODUCT COMPLAINTS (GFM) 9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING (on Saturdays) B. FIELD WORK

ROUTE RIDE 1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.) 2. SALESMAN's CPC 3. ROUTE COVERAGE EVALUATION 4. LOAD FACTOR 5. SALESMAN's ROUTING SYSTEM EVALUATION BC/SC 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY a). MERCHANDISING b). SERVICING c). RM's TERRITORY FAMILIARITY d). KEY ACCOUNTS GOODWILL TRADE DEVELOPMENT 1. PREPARATION PRIOR TO CALL 2. ACTUAL CALL 3. POST CALL ANALYSIS (HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE) 4. FOLLOW-UP ACTION C. AT CLOSE OF DAY 1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS 2. RM-SLM DEBRIEFING 3. SLR DISCUSSION (BASED ON A.M. SLR) 4. COORDINATES WITH DM ON PLANS & PROGRAMS

5. PREPARATIONS FOR NEXT DAY's ACTIVITIES 3 convey no more than those that are aptly consigned to the "supervisory" group by the relatively small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder reproduced for easy reference, thus A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful management of your job and the management of your people. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives. B. PRINCIPAL ACCOUNTABILITIES 1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers. 1.1.4 Inspect and ensure that all merchandising objectives are achieved in all outlets. 1.1.5 Maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions. 1.1.7 Develop and maintain dealer goodwill.

1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration 1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures include but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by required route ride documents/reports & back check/spot check at least 2 days a week to be supported by required documents/reports. 2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandising techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic. 2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business ethics. offer nothing at all that can approximate the authority and functions of those who actually and genuinely hold the reins of management. I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the Labor Code. The Constitution acknowledges "the right of the people, including those employed in the public and private sectors, to form unions, associations or societies for purposes not contrary to law . . . ." 4 Perforce, petitioner claims, that part of Article 245 5 of the Labor Code which states: "Managerial employees are not eligible to join, assist or form any labor organization," being in direct collision with the Constitutional provision, must now be declared abrogated in the law. Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right "to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to possible legislative judgment such as may be appropriate or, to put it in the language of the Constitution itself, to "purposes not contrary to law." Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the State may, by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most basic rights of individuals. The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly, the prohibition to form labor organizations on the part of managerial employees narrows down their freedom of association. The very nature of managerial functions, however, should preclude those who exercise them from taking a position adverse to the interest they are bound to serve and protect. The mere opportunity to undermine that interest can validly be restrained. To say that the right of managerial employees to form a "labor organization" within the context and ambit of the Labor Code should be deemed totally separable from the right to bargain collectively is not justified by related provisions of the Code. For instance
Art. 212. Definitions. 7 . . .

(g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. xxx xxx xxx

(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinely or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Art. 263. . . . (b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a consequence as to be deemed whole but that each of its express provisions equally should be given the intended effect. I find it hard to believe that the fundamental law could have envisioned the use by managerial employees of coercive means against their own employers over matters entrusted by the latter to the former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on the part of the person to whom that trust and confidence is reposed must be avoided and when, unfortunately, it does still arise its containment can rightly be decreed. Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the most commonly used business vehicle the corporation which prescribes the tenure of office, as well as the duties and functions, including terms of employment (governed in most part by the Articles of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate officers for both the statutory officers,i.e., the president, the treasurer and the corporate secretary, and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who are deemed essential for effective management of the enterprise. I cannot imagine these officers as being legally and morally capable of associating themselves into a labor organization and asserting collective bargaining rights against the very entity in whose behalf they act and are supposed to act. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution. WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and the order of 22 September 1995, of public respondent. Kapunan, Panganiban and Quisumbing, JJ., concur and dissent.

Separate Opinions DAVIDE, JR., J., concurring and dissenting;

I concur with the majority that the "route managers" of private respondent Pepsi-Cola Products Philippines, Inc. are managerial employees. However, I respectfully submit that contrary to the majority's holding, Article 245 of the Labor Code is unconstitutional, as it abridges Section 8, Article III of the Constitution. Section 8, Article III of the 1987 Constitution was taken from Section 7, Article IV of the 1973 Constitution which, in turn, was lifted from Section 6, Article III of the 1935 Constitution. Section 7 of the 1973 Constitution provided as follows: Sec. 7. The right to form associations or societies for purpose not contrary to law shall not be abridged. This Section was adopted in Section 7 of Proposed Resolution No. 486 of the 1986 Constitutional Commission, entitled Resolution to Incorporate in the New Constitution an Article on the Bill of Rights, 1 submitted by the Committee on Citizenship, Bill of Rights, Political Rights and Obligations, and Human Rights, with a modification, however, consisting of the insertion of the word union between the words "associations" and "societies." Thus the proposed Section 7 provided as follows: Sec. 7. The right of the people to form associations, unions, or societies for purposes not contrary to law shall not be abridged (emphasis supplied). Commissioner Joaquin G. Bernas, in his sponsorship speech on the proposed Article on the Bill of Rights, expounded on the nature of the proposed provision, in this wise: Section 7 preserves the old provision not because it is strictly needed but because its removal might be subject to misinterpretation. It reads: xxx xxx xxx
It strictly does not prepare the old provision because it adds the word UNION, and in the explanation we received from Commissioner Lerum, the term envisions not just unions in private corporations but also in the government. This preserves our link with the Malolos Constitution as far as the right to form associations or societies for purposes not contrary to law is concerned. 2

During the period of individual amendments, Commissioner Lerum introduced an amendment to the proposed section consisting of the insertion of the clause "WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS, which, after consulting other Commissioners, he modified his proposed amendment to read: "INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS." At that time, the section read: Sec. 7. The right of the people including those employed in the public and private sectors to form associations, unions or societies for purposes not contrary to law shall not be abridged. Pertinently to this dispute Commissioner Lerum's intention that the amendment "automatically abolish" Articles 245 and 246 of the Labor Code. The Committee accepted the amendment, and there having been no objection from the floor, the Lerum amendment was approved, thus: MR. LERUM: . . . In proposing that amendment I ask to make of record that I want the following provisions of the Labor Code to be automatically abolished, which read:

Art. 245. Security guards and other personnel employed for the protection and security of the person, properties and premises of the employers shall not be eligible for membership in a labor organization. Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. THE PRESIDING OFFICER (Mr. Bengzon): What does the Committee say? FR. BERNAS: The Committee accepts. THE PRESIDING OFFICER (Mr. Bengzon): The Committee has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 3

The Committee on Style then recommended that commas be placed after the words people and sectors, while Commissioner Lerum likewise moved to place the word unions before the word associations. 4 Section 7, which was subsequently renumbered as Section 8 as presently appearing in the text ratified in the plebiscite of 2 February 1987, then read as follows: The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. It is then indubitably clear from the foregoing that the intent of the Constitutional Commission was to abrogate the law prohibiting managerial employees from joining, assisting, or forming unions or labor organizations. In this regard, there is absolutely no need to decipher the intent of the framers of the 1987 Constitution vis-a-vis Article 245 (originally 246) of the Labor Code, there being no ambiguity or vagueness in the wording of the present Section 8, Article III of the 1987 Constitution. The provision is clear and written in simple language; neither were there any confusing debates thereon. More importantly, the purpose of Commissioner Lerum's amendments was unequivocal: he did not merely intend an implied repeal, but an express repeal of the offending article of the Labor Code. The approval of the amendments left no doubt whatsoever, as faithfully disclosed in the Records of the Constitutional Commission, that all employees meaning rank-and-file, supervisory and managerial whether from the public or the private sectors, have the right to form unions for purposes not contrary to law. The Labor Code referred to by Commissioner Lerum was P.D. No. 442, promulgated on 1 May 1974. With the repeal of Article 239 by Executive Order No. 111 issued on 24 December 1986, 5 Article 246 (as mentioned by Commissioner Lerum) became Article 245. Thereafter, R.A. No. 6715 6 amended the new Article 245 (originally Article 246) to read, as follows:
Sec. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. 7

With the abrogation of the former Article 246 of the Labor Code, 8 and the constitutional prohibition against any law prohibiting managerial employees from joining, assisting or forming unions or labor organizations, the first sentence then of the present Article 245 of the Labor Code must be struck down as unconstitutional. 9 However, due to an obvious conflict of interest being closely identified with the interests of management in view of the inherent nature of their functions, duties and responsibilities managerial employees may only be eligible to join, assist or form unions or labor organizations of their own rank, and not those of the supervisory employees nor the rank-and-file employees. In the instant case, the petitioner's name United Pepsi-Cola Supervisory Union (UPSU) indubitably attests that it is a union of supervisory employees. In light of the earlier discussion, the route managers who aremanagerial employees, cannot join or assist UPSU. Accordingly, the Med-Arbiter and public respondent Laguesma committed no error in denying the petition for direct certification or for certification election. I thus vote to GRANT, IN PART, the instant petition. That portion of the challenged resolution of public respondent holding that since the route managers of private respondent Pepsi-Cola Products Philippines, Inc., are managerial employees, they are "not eligible to assist, join or form a union or any other organization" should be SET ASIDE for being violative of Section 8 of Article III of the Constitution, while that portion thereof denying petitioner's appeal from the Med-Arbiter's decision dismissing the petition for direct certification or for a certification election should be AFFIRMED. PUNO, J., separate concurring; With due respect, it is my submission that Article 245 of the Labor Code was not repealed by section 8, Article III of the 1987 Constitution for reasons discussed below. A. Types of Employees. For purposes of applying the law on labor relations, the Labor Code in Article 212 (m) defines three (3) categories of employees. They are managerial, supervisory and rank-and-file, thus: Art. 212 (m). "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. "Supervisory employees" are those who, in the interest of the employer, effectively recommended such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rankand-file employees for purposes of this Book. The test of "managerial" or "supervisory" status depends on whether a person possesses authority to act in the interest of his employer and whether such authority is not routinary or clerical in nature but requires the use of independent judgment. 1 The rank-and-file employee performs work that is routinary and clerical in nature. The distinction between these employees is significant because supervisory and rank-and-file employees may form, join or assist labor organizations. Managerial employees cannot. B. The Exclusion of Managerial Employees: Its Historical Roots in the United States. The National Labor Relations Act (NLRA), also known as the Wagner Act, enacted by the U.S. Congress in 1935, was the first law that regulated labor relations in the United States and embodied its national labor policy. 2 The purpose of the NLRA was to eliminate obstructions to the free flow of

commerce through the practice of collective bargaining. The NLRA also sought to protect the workers' full freedoms of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection. 3 The NLRA established the right of employees to organize, required employers to bargain with employees collectively through employee-elected representatives, gave employees the right to engage in concerted activities for collective bargaining purposes or other mutual aid or protection, and created the National Labor Relations Board (NLRB) as the regulatory agency in labor-management matters. 4 The NLRA was amended in 1947 by the Labor Management Relations Act (LMRA), also known as the Taft-Hartley Act. This Act sought to lessen industrial disputes and placed employers in a more nearly equal position with unions in bargaining and labor relations procedures. 5 The NLRA did not make any special provision for "managerial employees." 6 The privileges and benefits of the Act were conferred on "employees." Labor organizations thus clamored for the inclusion of supervisory personnel in the coverage of the Act on the ground that supervisors were also employees. Although traditionally, supervisors were regarded as part of management, the NLRB was constrained to recognize supervisors as employees under the coverage of the law. Supervisors were then granted collective bargaining rights. 7 Nonetheless, the NLRB refused to consider managers as covered by the law. 8 The LMRA took away the collective bargaining rights of supervisors. The sponsors of the amendment feared that their unionization would break down industrial discipline as it would blur the traditional distinction between management and labor. They felt it necessary to deny supervisory personnel the right of collective bargaining to preserve their loyalty to the interests of their employers. 9 Several amendments were later made on the NLRA but the exclusion of managers and supervisors from its coverage was preserved. Until now managers and supervisors are excluded from the law. 10 Their exclusion hinges on the theory that the employer is entitled to the full loyalty of those whom it chooses for positions of responsibility, entailing action on the employers' behalf. A supervisor's and manager's ability to control the work of others would be compromised by his sharing of employee status with them. 11 C. Historical Development in the Philippines. Labor-management relations in the Philippines were first regulated under the Industrial Peace Act 12 which took effect in 1953. Hailed as the Magna Carta of Labor, it was modelled after the NLRA and LMRA of the United States. 13 Most of the basic principles of the NLRA have been carried over to the Industrial Peace Act and the Labor Code. 14 This is significant because we have ruled that where our labor statutes are based on statutes in foreign jurisdiction, the decisions of the high courts in those jurisdictions construing and interpreting the Act are given persuasive effects in the application of Philippine law. 15 The Industrial Peace Act did not carry any provision prohibiting managerial employees from joining labor organizations. Section 3 of said law merely provided: Sec. 3. Employees' Right to Self-Organization. Employees shall have the right to selforganization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not be eligible for membership in a

labor organization of employees under their supervision but may form separate organizations of their own. Significantly, the Industrial Peace Act did not define a manager or managerial employee. It defined a "supervisor" but not a "manager." Thus: Sec. 2. . . . (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires the use of independent judgment. In 1972, we interpreted Section 3 of the Industrial Peace Act to give supervisors the right to join and form labor organizations of their own. 16 Soon we grappled with the right of managers to organize. In a case involving Caltex managers, we recognized their right to organize, viz:
It would be going too far to dismiss summarily the point raised by respondent company, that of the alleged identity of interest between the managerial staff and the employing firm. That should ordinarily be the case, especially so where the dispute is between management and the rankand-file. It does not necessarily follow though that what binds the managerial staff to the corporation forecloses the possibility of conflict between them. There could be a real difference between what the welfare of such group requires and the concessions the firm is willing to grant. Their needs might not be attended to then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The records of respondent company, even the very case cited by it, is proof enough of their uneasy and troubled relationship. Certainly the impression is difficult to erase that an alien firm failed to manifest sympathy for the claims of its Filipino executives. 17

The Industrial Peace Act was repealed in 1975 by P.D. 442, the Labor Code of the Philippines. The Labor Code changed existing jurisprudence when it prohibited supervisory and managerial employees from joining labor organizations. Supervisory unions were no longer recognized nor allowed to exist and operate as such. 18 We affirmed this statutory change in Bulletin Publishing Corp. v. Sanchez. 19 Similarly, Article 246 of the Labor Code expressly prohibited managerial employees from forming, assisting and joining labor organizations, to wit: Art. 246. Ineligibility of managerial employees to join any labor organization. Managerial employees are not eligible to join, assist or form any labor organization. In the same Bulletin case, the Court applied Article 246 and held that managerial employees are the very type of employees who, by the nature of their positions and functions, have been decreed disqualified from bargaining with management. This prohibition is based on the rationale that if managerial employees were to belong or be affiliated with a union, the union might not be assured of their loyalty in view of evident conflict of interest or that the union can be company-dominated with the presence of managerial employees in the union membership. 20 In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representative, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves become union members. 21 The prohibition on managerial employees to join, assist or form labor organizations was retained in the Labor Code despite substantial amendments made in 1989 by R.A. 6715, the Herrera-Veloso Law. R.A. 6715 was passed after the effectivity of the 1987 Constitution and this law did not

abrogate, much less amend the prohibition on managerial employees to join labor organizations. The express prohibition in Article 246 remained. However, as an addendum to this same Article, R.A. 6715 restored to supervisory employees the right to join labor organizations of their own. 22 Article 246 now reads: Art. 246. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. Article 246 became Article 245 after then Article 244 was repealed by E.O. 111. Article 246 is presently Article 245 of the Labor Code. Indeed, Article 245 of the Labor Code prohibiting managerial employees from joining labor organizations has a social and historical significance in our labor relations law. This significance should be considered in deciphering the intent of the framers of the 1987 Constitution vis-a-vis the said Article. With due respect, I do not subscribe to the view that section 8, Article III of the Constitution abrogated Article 245 of the Labor Code. A textual analysis of section 8, Article III of the Constitution will not justify this conclusion. With due respect, the resort by Mr. Justice Davide to the deliberations of the Constitutional Commission does not suffice. It is generally recognized that debates and other proceedings in a constitutional convention are of limited value and are an unsafe guide to the intent of the people. 23 Judge Cooley has stated that:
When the inquiry is directed to ascertaining the mischief designed to be remedied, or the purpose sought to be accomplished by a particular provision, it may be proper to examine the proceedings of the convention which framed the instrument. Where the proceedings clearly point out the purpose of the provision, the aid will be valuable and satisfactory; but where the question is one of abstract meaning, it will be difficult to derive from this source much reliable assistance in interpretation. Every member of such a convention acts upon such motives and reasons as influence him personally, and the motions and debates do not necessarily indicate the purpose of a majority of a convention in adopting a particular clause. It is quite possible for a particular clause to appear so clear and unambiguous to the members of the convention as to require neither discussion nor illustration; and the few remarks made concerning it in the convention might have a plain tendency to lead directly away from the meaning in the minds of the majority. It is equally possible for a part of the members to accept a clause in one sense and a part in another. And even if we were certain we had attained to the meaning of the convention, it is by no means to be allowed a controlling force, especially if that meaning appears not to be the one which the words would most naturally and obviously convey. For as the constitution does not derive its force from the convention which framed, but from the people who ratified it, the intent to be arrived at is that of the people, and it is not to be supposed that they have looked for any dark and abstruse meaning in the words employed, but rather that they have accepted them in the sense most obvious to the common understanding, and ratified the instrument in the belief that was the sense designed to be conveyed. 24

It is for this reason that proceedings of constitutional conventions are less conclusive of the proper construction of the instrument than are legislative proceedings of the proper construction of the statute. 25 In the statutes, it is the intent of the legislature that is being sought, while in constitutions, it is the intent of the people that is being ascertained through the discussions and deliberations of their representatives. 26 The proper interpretation of constitutional provisions depends more on how it was understood by the people adopting it than in the framers' understanding thereof. 27

Thus, debates and proceedings of the constitutional convention are never of binding force. They may be valuable but are not necessarily decisive. 28 They may shed a useful light upon the purpose sought to be accomplished or upon the meaning attached to the words employed. And the courts are free to avail themselves of any light that may be derived from such sources, but they are not bound to adopt it as the sole ground of their decision. 29 Clearly then, a statute cannot be declared void on the sole ground that it is repugnant to a supposed intent or spirit declared in constitutional convention proceedings. D. Freedom of Association The right of association flows from freedom of expression. 30 Like the right of expression, the exercise of the right of association is not absolute. It is subject to certain limitations. Article 243 of the Labor Code reiterates the right of association of people in the labor sector. Article 243 provides: Art. 243. Coverage of employees' right to self-organization. All persons employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational institutions whether operating for profit or not, shall have the right to selforganization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. Article 243 guarantees the right to self-organization and association to "all persons." This seemingly all-inclusive coverage of "all persons," however, actually admits of exceptions. Article 244 31 of the Labor Code mandates that all employees in the civil service, i.e, those not employed in government corporations established under the Corporation Code, may only form associations but may not collectively bargain on terms and conditions fixed by law. An employee of a cooperative who is a member and co-owner thereof cannot invoke the right of collective bargaining and negotiation vis-a-vis the cooperative. 32 An owner cannot bargain with himself or his coowners. 33 Employees in foreign embassies or consulates or in foreign international organizations granted international immunities are also excluded from the right to form labor organizations. 34 International organizations are organized mainly as a means for conducting general international business in which the member-states have an interest and the immunities granted them shield their affairs from political pressure or control by the host country and assure the unimpeded performance of their functions. 35 Confidential employees have also been denied the right to form labor-organizations. Confidential employees do not constitute a distinct category for purposes of organizational right. Confidentiality may attach to a managerial or non-managerial position. We have, however, excluded confidential employees from joining labor organizations following the rationale behind the disqualification of managerial employees in Article 245. In the case of National Association of Trade Unions-Republic Planters' Bank Supervisors Chapter v. Torres, 36 we held:
In the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the

disqualification found in Article 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of" the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. 37

E. The disqualification extends only to labor organizations. It must be noted that Article 245 of the Labor Code deprives managerial employees of their right to join "labor organizations." A labor organization is defined under the Labor Code as: Art. 212 (g). "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with the employer concerning terms and conditions of employment. A labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and conditions of employment. To bargain collectively is a right given to a labor organization once it registers itself with the Department of Labor and Employment (DOLE). Dealing with the employer, on the other hand, is a generic description of interaction between employer and employees concerning grievances, wages, work hours and other terms and conditions of employment, even if the employees' group is not registered with the DOLE. 38 Any labor organization which may or may not be a union may deal with the employer. This explains why a workers' Organization does not always have to be a labor union and why employer-employee collective interactions are not always collective bargaining. 39 In the instant case, it may be argued that managerial employees' labor organization will merely "deal with the employer concerning terms and conditions of employment" especially when top management is composed of aliens, following the circumstances in the Caltex case. Although the labor organization may exist wholly for the purpose of dealing with the employer concerning terms and conditions of employment, there is no prohibition in the Labor Code for it to become a legitimate labor organization and engage in collective bargaining. Once a labor organization registers with the DOLE and becomes legitimate, it is entitled to the rights accorded under Articles 242 and 263 (b) of the Labor Code. And these include the right to strike and picket. Notably, however, Article 245 does not absolutely disqualify managerial employees from exercising their right of association. What it prohibits is merely the right to join labor organizations. Managerial employees may form associations or organizations so long as they are not labor organizations. The freedom of association guaranteed under the Constitution remains and has not been totally abrogated by Article 245. To declare Article 245 of the Labor Code unconstitutional cuts deep into our existing industrial life and will open the floodgates to unionization at all levels of the industrial hierarchy. Such a ruling will wreak havoc on the existing set-up between management and labor. If all managerial employees will be allowed to unionize, then all who are in the payroll of the company, starting from the president, vice-president, general managers and everyone, with the exception of the directors, may go on strike or picket the employer. 40 Company officers will join forces with the supervisors and rank-and-file. Management and labor will become a solid phalanx with bargaining rights that could be enforced against the owner of the company. 41 The basic opposing forces in the industry will not be management and

labor but the operating group on the one hand and the stockholder and bondholder group on the other. The industrial problem defined in the Labor Code comes down to a contest over a fair division of the gross receipts of industry between these two groups. 42 And this will certainly bring ill-effects on our economy. The framers of the Constitution could not have intended a major upheaval of our labor and socioeconomic systems. Their intent cannot be made to override substantial policy considerations and create absurd or impossible situations. 43 A constitution must be viewed as a continuously operative charter of government. It must not be interpreted as demanding the impossible or the impracticable; or as effecting the unreasonable or absurd.44 Courts should always endeavour to give such interpretation that would make the constitutional provision and the statute consistent with reason, justice and the public interest. 45 I vote to dismiss the petition. VITUG, J., separate concurring and dissenting; The pivotal issues raised in the case at bar, aptly stated by the Office of the Solicitor General, are: (1) Whether or not public respondent, Undersecretary of the Department of Labor and Employment ("DOLE") Bienvenido E. Laguesma, gravely abused his discretion in categorizing the members of petitioner union to be managerial employees and thus ineligible to form or join labor organizations; and (2) Whether or not the provision of Article 245 of the Labor Code, disqualifying managerial employees from joining, assisting or forming any labor organization, violates Section 8, Article III, of the 1987 Constitution, which expresses that "(t)he right of the people, including those employed in public and private sectors to form unions, associations or societies for purposes not contrary to law shall not be abridged." The case originated from a petition for direct certification or certification election among route managers/supervisory employees of Pepsi-Cola Products Phils., Inc. ("Pepsi"), filed by the United Pepsi-Cola Supervisory Union ("Union"), claiming to be a legitimate labor organization duly registered with the Department of Labor and Employment under Registration Certificate No. NCRUR-3-1421-95. Pepsi opposed the petition on the thesis that the case was no more than a mere duplication of a previous petition for direct certification 1 filed by the same route managers through the Pepsi-Cola Employees Association (PCEA-Supervisory) which petition had already been denied by Undersecretary Laguesma. The holding reiterated a prior decision in Workers Alliance Trade Unions ("WATU") vs. Pepsi-Cola Products Phils., Inc., 2 that route managers were managerial employees. In its decision, dated 05 May 1995, Med-Arbiter Brigida C. Fadrigon dismissed for lack of merit the petition of the Union, stating that the issue on the proper classification and status of route managers had already been ruled with finality in the previous decisions, aforementioned, rendered by DOLE. The union appealed the decision. In his resolution of 31 August 1995, Undersecretary Laguesma dismissed the appeal, saying that there was no compelling reason to abandon the ruling in the two old cases theretofore decided by DOLE. In his order of 22 September 1995, Undersecretary Laguesma denied the Union's motion for reconsideration. The Union went to this Court, via a petition for certiorari, assailing the cancellation of its certificate of registration. The Court, after considering the petition and the comments thereon filed by both public

and private respondents, as well as the consolidated reply of petitioner, dismissed the case in its resolution of 08 July 1996 on the premise that no grave abuse of discretion had been committed by public respondent. Undaunted, the Union moved, with leave, for the reconsideration of the dismissal of its petition by the Court En Banc. In its resolution of 16 June 1997, the case was referred to the Court En Banc en consulta with the movant's invocation of unconstitutionality of Article 245 of the Labor Code vis-avis Section 8, Article III, of the 1987 Constitution. There is merit, in my view, in petitioner's motion for reconsideration but not on constitutional grounds. There are, in the hierarchy of management, those who fall below the level of key officers of an enterprise whose terms and conditions of employment can well be, indeed are not infrequently, provided for in collective bargaining agreements. To this group belong the supervisory employees. The "managerial employees," upon the other hand, and relating the matter particularly to the Labor Code, are those "vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees" as distinguished from the supervisory employees whose duties in these areas are so designed as to verily be implementary to the policies or rules and regulations already outstanding and priorly taken up and passed upon by management. The managerial level is the source, as well as prescribes the compliance, of broad mandates which, in the field of labor relations, are to be carried out through the next rank of employees charged with actually seeing to the specific personnel action required. In fine, the real authority, such as in hiring or firing of employees, comes from management and exercised by means of instructions, given in general terms, by the "managerial employees;" the supervisory employees, although ostensibly holding that power, in truth, however, only act in obedience to the directives handed down to them. The latter unit, unlike the former, cannot be considered the alter ego of the owner of enterprise. The duties and responsibilities of the members of petitioner union, shown by their "job description" below PCPPI RM's JOB DESCRIPTION A. GENERAL/OVERALL OBJECTIVE OF THIS POSITION To contribute to the growth and profitability of PCPPI via well-selected, trained and motivated Route Sales Team who sell, collect and merchandise, following the Pepsi Way, and consistent with Company policies and procedures as well as the corporate vision of Customer Satisfaction. B. SPECIFIC JOB DESCRIPTION: KEY RESULT AREAS STANDARD OR PERFORMANCE SALES VOLUME *100% Vs. NRC Target _____% NTG

DISTRIBUTION * Product Availability 70% Pepsi 80% Seven-Up 40% Mirinda 65% Mt. Dew 5% Out of Stock ACCOUNTS RECEIVABLE 65% Current (Incl. Legal & Col.) MANAGEMENT 80:20 Cash to Credit Ratio DSO assigned Std. to Division by the District ASSET MANAGEMENT 30 cases for ice-coolers 80 cases for electric coolers BLOWAGA on Division Vehicles 60 cases on Rolling/Permanent Kiosks TRADE DEVELOPMENT 100% Buying Customers Based on master list that bought once 5 months payback on concessions 4 CED's/Rte. EXPENSE MANAGEMENT a). 5% Absentism rate Excl. VL b). 280 cases/route/day c). 15% cost-to-sales ratio ROUTE MANAGEMENT 3 Days on RR/Wk Days on BC-SC- Financial & Co. Assets

 Days on TD 75% Load Factor 18 Productive Calls CUSTOMER SATISFACTION Customer Complaint attended to within the next working day HUMAN RESOURCE 5% Absentism Excl. VL MANAGEMENT (approved) 3 Documented RR/ Week using SLM's Training Log ADMINISTRATIVE Complete, timely and accurate MANAGEMENT reports. PCPPI RM's BASIC DAILY ACTIVITIES A. AT THE SALES OFFICE 1. PRACTICES BLOWAGA ON SERVICE VEHICLE (AT HOME) 2. REPORTS FOR WORK ON OR BEFORE 6:15 A.M. 3. REPORTS IN CLEAN AND NEAT UNIFORM (GOOD GROOMING) 4. DAILY BRIEFING WITH THE DM 5. CONDUCTS SKILLS ENHANCEMENT OR HUDDLES WITH RST's a). ATTENDANCE/GROOMING b). OPERATIONAL DIRECTIONS & PRIORITIES c). ANNOUNCEMENT 6. RM's PRESENCE DURING CHECK-OUT a). SLM PRACTICES BLOWAGA ON ROUTE TRUCK b). PRIVATE COUNSELING WITH RST (AM & PM IF NECESSARY) c). PROPER HANDLING OF SELLING/MDSG. MATERIALS

d). YESTERDAY's FINAL SETTLEMENT REVIEW 7. UPDATE REPORTS, MONITORS, DOCUMENTS & TELEPHONE CONMATION 8. ATTENDS TO PRODUCT COMPLAINTS (GFM) 9. CONDUCTS ADMINISTRATIVE INVESTIGATION OR ATTENDS DM's MEETING (on Saturdays) B. FIELD WORK ROUTE RIDE 1. CHECKS SLMS. TRAINING LOG (PROGRESS & DEV'T.) 2. SALESMAN's CPC 3. ROUTE COVERAGE EVALUATION 4. LOAD FACTOR 5. SALESMAN's ROUTING SYSTEM EVALUATION BC/SC 1. FINANCIAL & ASSET VERIFICATION, CONFIRMATION & AUDIT 2. BACKCHECKS FIRST 5 CUSTOMERS SERVED FOR THE DAY a). MERCHANDISING b). SERVICING c). RM's TERRITORY FAMILIARITY d). KEY ACCOUNTS GOODWILL TRADE DEVELOPMENT 1. PREPARATION PRIOR TO CALL 2. ACTUAL CALL 3. POST CALL ANALYSIS (HOW DID I FARE? WHY? WHAT ACTIONS TO TAKE) 4. FOLLOW-UP ACTION

C. AT CLOSE OF DAY 1. MAINTAINS & UPDATES CORRECT & ACCURATE RECORDS & REPORTS 2. RM-SLM DEBRIEFING 3. SLR DISCUSSION (BASED ON A.M. SLR) 4. COORDINATES WITH DM ON PLANS & PROGRAMS 5. PREPARATIONS FOR NEXT DAY's ACTIVITIES 3 convey no more than those that are aptly consigned to the "supervisory" group by the relatively small unit of "managerial" employees. Certain portions of a pamphlet, the so-called "Route Manager Position Description" referred to by Mr. Justice Vicente Mendoza, in his ponencia, hereunder reproduced for easy reference, thus A. BASIC PURPOSE A Manager achieves objectives through others. As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful management of your job and the management of your people. These then are your functions as Pepsi-Cola Route Manager. Within these functions managing your job and managing your people you are accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve your sales objectives. B. PRINCIPAL ACCOUNTABILITIES 1.0 MANAGING YOUR JOB The Route Manager is accountable for the following: 1.1 SALES DEVELOPMENT 1.1.1 Achieve the sales plan. 1.1.2 Achieve all distribution and new account objectives. 1.1.3 Develop new business opportunities thru personal contacts with dealers.

1.1.4 Inspect and ensure that all merchandising objectives are achieved in all outlets. 1.1.5 Maintain and improve productivity of all cooling equipment and kiosks. 1.1.6 Execute and control all authorized promotions. 1.1.7 Develop and maintain dealer goodwill. 1.1.8 Ensure all accounts comply with company suggested retail pricing. 1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to maximize utilization of resources. 1.2 Administration 1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles before check-in. 1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an accurate and timely basis. 1.2.3 Ensure proper implementation of the various company policies and procedures include but not limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection; accident; attendance. 1.2.4 Ensure collection of receivables and delinquent accounts. 2.0 MANAGING YOUR PEOPLE The Route Manager is accountable for the following: 2.1 Route Sales Team Development 2.1.1 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least 3 days a week, to be supported by required route ride documents/reports & back check/spot check

at least 2 days a week to be supported by required documents/reports. 2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of effective sales and merchandising techniques of the salesmen and helpers. Conduct group training at least 1 hour each week on a designated day and of specific topic. 2.2 Code of Conduct 2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the universal standards of unquestioned business ethics. offer nothing at all that can approximate the authority and functions of those who actually and genuinely hold the reins of management. I submit, with due respect, that the members of petitioning union, not really being "managerial employees" in the true sense of the term, are not disqualified from forming or joining labor organizations under Article 245 of the Labor Code. I shall now briefly touch base on the constitutional question raised by the parties on Article 245 of the Labor Code. The Constitution acknowledges "the right of the people, including those employed in the public and private sectors, to form unions, associations or societies for purposes not contrary to law . . . ." 4 Perforce, petitioner claims, that part of Article 245 5 of the Labor Code which states: "Managerial employees are not eligible to join, assist or form any labor organization," being in direct collision with the Constitutional provision, must now be declared abrogated in the law. Frankly, I do not see such a "direct collision." The Constitution did not obviously grant a limitless right "to form unions, associations or societies" for it has clearly seen it fit to subject its exercise to possible legislative judgment such as may be appropriate or, to put it in the language of the Constitution itself, to "purposes not contrary to law." Freedom of association, like freedom of expression, truly occupies a choice position in the hierarchy of constitutional values. Even while the Constitution itself recognizes the State's prerogative to qualify this right, heretofore discussed, any limitation, nevertheless, must still be predicated on the existence of a substantive evil sought to be addressed. 6 Indeed, in the exercise of police power, the State may, by law, prescribe proscriptions, provided reasonable and legitimate of course, against even the most basic rights of individuals. The restriction embodied in Article 245 of the Labor Code is not without proper rationale. Concededly, the prohibition to form labor organizations on the part of managerial employees narrows down their freedom of association. The very nature of managerial functions, however, should preclude those who exercise them from taking a position adverse to the interest they are bound to serve and protect. The mere opportunity to undermine that interest can validly be restrained. To say that the right of managerial employees to form a "labor organization" within the

context and ambit of the Labor Code should be deemed totally separable from the right to bargain collectively is not justified by related provisions of the Code. For instance
Art. 212. Definitions. 7 . . .

(g) "Labor organization" means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. xxx xxx xxx (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinely or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Art. 263. . . . (b) Workers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. The maxim "ut res magis quam pereat" requires not merely that a statute should be given such a consequence as to be deemed whole but that each of its express provisions equally should be given the intended effect. I find it hard to believe that the fundamental law could have envisioned the use by managerial employees of coercive means against their own employers over matters entrusted by the latter to the former. Whenever trust and confidence is a major aspect of any relationship, a conflict of interest on the part of the person to whom that trust and confidence is reposed must be avoided and when, unfortunately, it does still arise its containment can rightly be decreed. Article 245 of the Labor Code indeed aligns itself to the Corporation Code, the basic law on by far the most commonly used business vehicle the corporation which prescribes the tenure of office, as well as the duties and functions, including terms of employment (governed in most part by the Articles of Incorporation, the By-laws of the Corporation, or resolutions of the Board of Directors), of corporate officers for both the statutory officers,i.e., the president, the treasurer and the corporate secretary, and the non-statutory officers, i.e., those who occupy positions created by the corporate by-laws who are deemed essential for effective management of the enterprise. I cannot imagine these officers as being legally and morally capable of associating themselves into a labor organization and asserting collective bargaining rights against the very entity in whose behalf they act and are supposed to act. I submit, accordingly, that, firstly, the members of petitioner union or the so-called route managers, being no more than supervisory employees, can lawfully organize themselves into a labor union within the meaning of the Labor Code, and that, secondly, the questioned provision of Article 245 of the Labor Code has not been revoked by the 1987 Constitution.

WHEREFORE, I vote, given all the foregoing, for the reversal of the resolution of 31 August 1995, and the order of 22 September 1995, of public respondent. Kapunan, Panganiban and Quisumbing, JJ., concur and dissent. G.R. No. 162025 August 3, 2010

TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA BREWERY, Petitioner, vs. ASIA BREWERY, INC., Respondent. DECISION VILLARAMA, JR., J.: For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 dated November 22, 2002 and Resolution2 dated January 28, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the petition of respondent company and reversing the Voluntary Arbitrators Decision3 dated October 14, 1999. The facts are: Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and distribution of beer, shandy, bottled water and glass products. ABI entered into a Collective Bargaining Agreement (CBA),4 effective for five (5) years from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive bargaining representative of ABIs rank-and-file employees. On October 3, 2000, ABI and BLMA-INDEPENDENT signed a renegotiated CBA effective from August 1, 2000 to 31 July 2003.5 Article I of the CBA defined the scope of the bargaining unit, as follows: Section 1. Recognition. The COMPANY recognizes the UNION as the sole and exclusive bargaining representative of all the regular rank-and-file daily paid employees within the scope of the appropriate bargaining unit with respect to rates of pay, hours of work and other terms and conditions of employment. The UNION shall not represent or accept for membership employees outside the scope of the bargaining unit herein defined. Section 2. Bargaining Unit. The bargaining unit shall be comprised of all regular rank-and-file dailypaid employees of the COMPANY. However, the following jobs/positions as herein defined shall be excluded from the bargaining unit, to wit: 1. Managers 2. Assistant Managers 3. Section Heads 4. Supervisors 5. Superintendents

6. Confidential and Executive Secretaries 7. Personnel, Accounting and Marketing Staff 8. Communications Personnel 9. Probationary Employees 10. Security and Fire Brigade Personnel 11. Monthly Employees 12. Purchasing and Quality Control Staff6 [emphasis supplied.] Subsequently, a dispute arose when ABIs management stopped deducting union dues from eightyone (81) employees, believing that their membership in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who formed part of the Quality Control Staff. Twenty (20) checkers are assigned at the Materials Department of the Administration Division, Full Goods Department of the Brewery Division and Packaging Division. The rest are secretaries/clerks directly under their respective division managers.7 BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right to selforganization and brought the matter to the grievance machinery. As the parties failed to amicably settle the controversy, BLMA-INDEPENDENT lodged a complaint before the National Conciliation and Mediation Board (NCMB). The parties eventually agreed to submit the case for arbitration to resolve the issue of "[w]hether or not there is restraint to employees in the exercise of their right to self-organization."8 In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-INDEPENDENT after finding that the records submitted by ABI showed that the positions of the subject employees qualify under the rank-and-file category because their functions are merely routinary and clerical. He noted that the positions occupied by the checkers and secretaries/clerks in the different divisions are not managerial or supervisory, as evident from the duties and responsibilities assigned to them. With respect to QA Sampling Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI failed to establish with sufficient clarity their basic functions as to consider them Quality Control Staff who were excluded from the coverage of the CBA. Accordingly, the subject employees were declared eligible for inclusion within the bargaining unit represented by BLMA-INDEPENDENT.9 On appeal, the CA reversed the Voluntary Arbitrator, ruling that: WHEREFORE, foregoing premises considered, the questioned decision of the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT: a) the 81 employees are excluded from and are not eligible for inclusion in the bargaining unit as defined in Section 2, Article I of the CBA; b) the 81 employees cannot validly become members of respondent and/or if already members, that their membership is violative of the CBA and that they should disaffiliate from respondent; and

c) petitioner has not committed any act that restrained or tended to restrain its employees in the exercise of their right to self-organization. NO COSTS. SO ORDERED.10 BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a certification election was held on August 10, 2002 wherein petitioner Tunay na Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining representative of ABIs rank-and-file employees claiming interest in the outcome of the case, petitioner filed with the CA an omnibus motion for reconsideration of the decision and intervention, with attached petition signed by the union officers.11 Both motions were denied by the CA.12 The petition is anchored on the following grounds: (1) THE COURT OF APPEALS ERRED IN RULING THAT THE 81 EMPLOYEES ARE EXCLUDED FROM AND ARE NOT ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;] (2) THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81 EMPLOYEES CANNOT VALIDLY BECOME UNION MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM RESPONDENT; (3) THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT PETITIONER (NOW PRIVATE RESPONDENT) HAS NOT COMMITTED ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELFORGANIZATION.13 Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.14 Confidential employees are thus excluded from the rank-and-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial employees because if allowed to be affiliated with a Union, the latter might not be assured of their loyalty in view of evident conflict of interests and the Union can also become company-denominated with the presence of managerial employees in the Union membership.15Having access to confidential information, confidential employees may also become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement.16 In Philips Industrial Development, Inc. v. NLRC,17 this Court held that petitioners "division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems" are confidential employees not included within the

rank-and-file bargaining unit.18 Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. RoldanConfesor,19 we declared that legal secretaries who are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation, fall under the category of confidential employees and hence excluded from the bargaining unit composed of rank-and-file employees.20 Also considered having access to "vital labor information" are the executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager.21 In the present case, the CBA expressly excluded "Confidential and Executive Secretaries" from the rank-and-file bargaining unit, for which reason ABI seeks their disaffiliation from petitioner. Petitioner, however, maintains that except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted to monthly paid positions, the following secretaries/clerks are deemed included among the rank-and-file employees of ABI:22 NAME C1 ADMIN DIVISION 1. Angeles, Cristina C. 2. Barraquio, Carina P. 3. Cabalo, Marivic B. 4. Fameronag, Leodigario C. 1. Abalos, Andrea A. 2. Algire, Juvy L. 3. Anouevo, Shirley P. 4. Aviso, Rosita S. 5. Barachina, Pauline C. 6. Briones, Catalina P. 7. Caralipio, Juanita P. 8. Elmido, Ma. Rebecca S. 9. Giron, Laura P. 10. Mane, Edna A. xxxx C2 BREWERY DIVISION 1. Laloon, Daisy S. 1. Arabit, Myrna F. 2. Burgos, Adelaida D. 3. Menil, Emmanuel S. 4. Nevalga, Marcelo G. 1. Mapola, Ma. Esraliza T. 2. Velez, Carmelito A. Brewhouse Bottling Production Bottling Production Bottling Production Bottling Production Bottling Maintenance Bottling Maintenance Mr. William Tan Mr. Julius Palmares Mr. Julius Palmares Mr. Julius Palmares Mr. Julius Palmares Mr. Ernesto Ang Mr. Ernesto Ang DEPARTMENT Transportation Transportation Transportation Transportation Materials Materials Materials Materials Materials Materials Materials Materials Materials Materials IMMEDIATE SUPERIOR Mr. Melito K. Tan Mr. Melito K. Tan Mr. Melito K. Tan Mr. Melito K. Tan Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co Mr. Andres G. Co

1. Bordamonte, Rhumela D. 2. Deauna, Edna R. 3. Punongbayan, Marylou F. 4. Saguan, Lennie Y. 1. Alcoran, Simeon A. 2. Cervantes, Ma. Sherley Y. 3. Diongco, Ma. Teresa M. 4. Mabilangan, Evelyn M. 5. Rivera, Aurora M. 6. Salandanan, Nancy G. 1. Magbag, Ma. Corazon C.

Bottled Water Bottled Water Bottled Water Bottled Water Full Goods Full Goods Full Goods Full Goods Full Goods Full Goods Tank Farm/ Cella Services

Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Faustino Tetonche Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Tsoi Wah Tung Mr. Manuel Yu Liat

1. Capiroso, Francisca A. 1. Alconaba, Elvira C. 2. Bustillo, Bernardita E. 3. Catindig, Ruel A. 4. Sison, Claudia B. xxxx C3 PACKAGING DIVISION 1. Alvarez, Ma. Luningning L. 2. Caiza, Alma A. 3. Cantalejo, Aida S. 4. Castillo, Ma. Riza R. 5. Lamadrid, Susana C. 6. Mendoza, Jennifer L.

Quality Assurance Engineering Electrical Civil Works Utilities

Ms. Regina Mirasol Mr. Clemente Wong Mr. Jorge Villarosa Mr. Roger Giron Mr. Venancio Alconaba

GP Administration GP Technical GP Engineering GP Production GP Production GP Technical

Ms. Susan Bella Mr. Chen Tsai Tyan Mr. Noel Fernandez Mr. Tsai Chen Chih Mr. Robert Bautista Mr. Mel Oa

As can be gleaned from the above listing, it is rather curious that there would be several secretaries/clerks for just one (1) department/division performing tasks which are mostly routine and clerical. Respondent insisted they fall under the "Confidential and Executive Secretaries" expressly excluded by the CBA from the rank-and-file bargaining unit. However, perusal of the job descriptions of these secretaries/clerks reveals that their assigned duties and responsibilities involve routine activities of recording and monitoring, and other paper works for their respective departments while secretarial tasks such as receiving telephone calls and filing of office correspondence appear to have been commonly imposed as additional duties.23 Respondent failed to indicate who among these numerous secretaries/clerks have access to confidential data relating to management policies that could give rise to potential conflict of interest with their Union membership. Clearly, the rationale under our previous rulings for the exclusion of executive secretaries or division secretaries would have little or no significance considering the lack of or very limited access to confidential information of these secretaries/clerks. It is not even farfetched that the job category may exist only on paper since they are all daily-paid workers. Quite understandably, petitioner had earlier expressed the view

that the positions were just being "reclassified" as these employees actually discharged routine functions. We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-file employees and not confidential employees. With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine Technician, there seems no dispute that they form part of the Quality Control Staff who, under the express terms of the CBA, fall under a distinct category. But we disagree with respondents contention that the twenty (20) checkers are similarly confidential employees being "quality control staff" entrusted with the handling and custody of company properties and sensitive information. Again, the job descriptions of these checkers assigned in the storeroom section of the Materials Department, finishing section of the Packaging Department, and the decorating and glass sections of the Production Department plainly showed that they perform routine and mechanical tasks preparatory to the delivery of the finished products.24 While it may be argued that quality control extends to post-production phase -- proper packaging of the finished products -- no evidence was presented by the respondent to prove that these daily-paid checkers actually form part of the companys Quality Control Staff who as such "were exposed to sensitive, vital and confidential information about [companys] products" or "have knowledge of mixtures of the products, their defects, and even their formulas" which are considered trade secrets. Such allegations of respondent must be supported by evidence.25 Consequently, we hold that the twenty (20) checkers may not be considered confidential employees under the category of Quality Control Staff who were expressly excluded from the CBA of the rankand-file bargaining unit. Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two (2) criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential employee rule."26 There is no showing in this case that the secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, respondent claimed, this is not per se ground for their exclusion in the bargaining unit of the daily-paid rank-andfile employees.27 Not being confidential employees, the secretaries/clerks and checkers are not disqualified from membership in the Union of respondents rank-and-file employees. Petitioner argues that respondents act of unilaterally stopping the deduction of union dues from these employees constitutes unfair labor practice as it "restrained" the workers exercise of their right to selforganization, as provided in Article 248 (a) of the Labor Code. Unfair labor practice refers to "acts that violate the workers right to organize." The prohibited acts are related to the workers right to self organization and to the observance of a CBA. For a charge of unfair labor practice to prosper, it must be shown that ABI was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x

x"28 from ABIs act in discontinuing the union dues deduction from those employees it believed were excluded by the CBA. Considering that the herein dispute arose from a simple disagreement in the interpretation of the CBA provision on excluded employees from the bargaining unit, respondent cannot be said to have committed unfair labor practice that restrained its employees in the exercise of their right to self-organization, nor have thereby demonstrated an anti-union stance. WHEREFORE, the petition is GRANTED. The Decision dated November 22, 2002 and Resolution dated January 28, 2004 of the Court of Appeals in CA-G.R. SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers and secretaries/clerks of respondent company are hereby declared rank-and-file employees who are eligible to join the Union of the rank-and-file employees. No costs. SO ORDERED. MARTIN S. VILLARAMA, JR. Associate Justice WE CONCUR: CONCHITA CARPIO MORALES Associate Justice Chairperson ARTURO D. BRION Associate Justice ROBERTO A. ABAD Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONCHITA CARPIO MORALES Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice LUCAS P. BERSAMIN Associate Justice

G.R. No. 161690

July 23, 2008

S.S. VENTURES INTERNATIONAL, INC., Petitioner, vs. S.S. VENTURES LABOR UNION (SSVLU) and DIR. HANS LEO CACDAC, in His capacity as Director of the Bureau of Labor Relations (BLR), Respondents. DECISION VELASCO, JR., J.: Petitioner S.S. Ventures International, Inc. (Ventures), a PEZA-registered export firm with principal place of business at Phase I-PEZA-Bataan Export Zone, Mariveles, Bataan, is in the business of manufacturing sports shoes. Respondent S.S. Ventures Labor Union (Union), on the other hand, is a labor organization registered with the Department of Labor and Employment (DOLE) under Certificate of Registration No. RO300-00-02-UR-0003. On March 21, 2000, the Union filed with DOLE-Region III a petition for certification election in behalf of the rank-and-file employees of Ventures. Five hundred forty two (542) signatures, 82 of which belong to ______________________ * Additional member as per Special Order No. 509 dated July 1, 2008. terminated Ventures employees, appeared on the basic documents supporting the petition. On August 21, 2000, Ventures filed a Petition1 to cancel the Unions certificate of registration invoking the grounds set forth in Article 239(a) of the Labor Code.2 Docketed as Case No. RO3000008-CP-002 of the same DOLE regional office, the petition alleged the following: (1) The Union deliberately and maliciously included the names of more or less 82 former employees no longer connected with Ventures in its list of members who attended the organizational meeting and in the adoption/ratification of its constitution and by-laws held on January 9, 2000 in Mariveles, Bataan; and the Union forged the signatures of these 82 former employees to make it appear they took part in the organizational meeting and adoption and ratification of the constitution; (2) The Union maliciously twice entered the signatures of three persons namely: Mara Santos, Raymond Balangbang, and Karen Agunos; (3) No organizational meeting and ratification actually took place; and (4) The Unions application for registration was not supported by at least 20% of the rankand-file employees of Ventures, or 418 of the total 2,197-employee complement. Since more or less 82 of the 5003signatures were forged or invalid, then the remaining valid signatures would only be 418, which is very much short of the 439 minimum (2197 total employees x 20% = 439.4) required by the Labor Code.4 In its Answer with Motion to Dismiss,5 the Union denied committing the imputed acts of fraud or forgery and alleged that: (1) the organizational meeting actually took place on January 9, 2000 at the Shoe City basketball court in Mariveles; (2) the 82 employees adverted to in Ventures petition were

qualified Union members for, although they have been ordered dismissed, the one-year prescriptive period to question their dismissal had not yet lapsed; (3) it had complied with the 20%-member registration requirement since it had 542 members; and (4) the "double" signatures were inadvertent human error. In its supplemental reply memorandum6 filed on March 20, 2001, with attachments, Ventures cited other instances of fraud and misrepresentation, claiming that the "affidavits" executed by 82 alleged Union members show that they were deceived into signing paper minutes or were harassed to signing their attendance in the organizational meeting. Ventures added that some employees signed the "affidavits" denying having attended such meeting. In a Decision dated April 6, 2001, Regional Director Ana C. Dione of DOLE-Region III found for Ventures, the dispositive portion of which reads: Viewed in the light of all the foregoing, this office hereby grants the petition. WHEREFORE, this office resolved to CANCEL Certificate of Registration No. [RO300-00-02-UR-0003] dated 28 February 2000 of respondent S.S. Ventures Labor Union-Independent. So Ordered.7 Aggrieved, the Union interposed a motion for reconsideration, a recourse which appeared to have been forwarded to the Bureau of Labor Relations (BLR). Although it would later find this motion to have been belatedly filed, the BLR, over the objection of Ventures which filed a Motion to Expunge, gave it due course and treated it as an appeal. Despite Ventures motion to expunge the appeal,8 the BLR Director rendered on October 11, 2002 a decision9 in BLR-A-C-60-6-11-01, granting the Unions appeal and reversing the decision of Dione. The fallo of the BLRs decision reads: WHEREFORE, the appeal is hereby GRANTED. The Decision of Director Ana C. Dione dated 6 April 2001 is hereby REVERSED and SET ASIDE. S.S. Ventures Labor Union-Independent shall remain in the roster of legitimate labor organizations. SO ORDERED.10 Ventures sought reconsideration of the above decision but was denied by the BLR. Ventures then went to the Court of Appeals (CA) on a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 74749. On October 20, 2003, the CA rendered a Decision,11 dismissing Ventures petition. Ventures motion for reconsideration met a similar fate.12 Hence, this petition for review under Rule 45, petitioner Ventures raising the following grounds: I. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN DISREGARDING THE SUBSTANTIAL AND OVERWHELMING EVIDENCE ADDUCED BY THE PETITIONER SHOWING THAT RESPONDENT UNION PERPETRATED FRAUD, FORGERY, MISREPRESENTATION AND MISSTATEMENTS IN CONNECTION WITH THE ADOPTION AND RATIFICATION OF ITS CONSTITUTION AND BY-

LAWS, AND IN THE PREPARATION OF THE LIST OF MEMBERS WHO TOOK PART IN THE ALLEGED ORGANIZATIONAL MEETING BY HOLDING THAT: A. THE 87 AFFIDAVITS OF ALLEGED UNION MEMBERS HAVE NO EVIDENTIARY WEIGHT. B. THE INCLUSION OF THE 82 EMPLOYEES IN THE LIST OF ATTENDEES TO THE JANUARY 9, 2000 MEETING IS AN INTERNAL MATTER WITHIN THE AMBIT OF THE WORKERS RIGHT TO SELF-ORGANIZATION AND OUTSIDE THE SPHERE OF INFLUENCE (OF) THIS OFFICE (PUBLIC RESPONDENT IN THIS CASE) AND THE PETITIONER. II. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN IGNORING AND DISREGARDING THE BLATANT PROCEDURAL LAPSES OF THE RESPONDENT UNION IN THE FILING OF ITS MOTION FOR RECONSIDERATION AND APPEAL. A. BY GIVING DUE COURSE TO THE MOTION FOR RECONSIDERATION FILED BY THE RESPONDENT UNION DESPITE THE FACT THAT IT WAS FILED BEYOND THE REGLEMENTARY PERIOD. B. BY ADMITTING THE APPEAL FILED BY ATTY. ERNESTO R. ARELLANO AND HOLDING THAT THE SAME DOES NOT CONSTITUTE FORUM SHOPPING UNDER SUPREME COURT CIRCULAR NO. 28-91. III. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN INVOKING THE CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION AND ILO CONVENTION NO. 87 TO JUSTIFY THE MASSIVE FRAUD, MISREPRESENTATION, MISSTATEMENTS AND FORGERY COMMITTED BY THE RESPONDENT UNION.13 The petition lacks merit. The right to form, join, or assist a union is specifically protected by Art. XIII, Section 314 of the Constitution and such right, according to Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code, shall not be abridged. Once registered with the DOLE, a union is considered a legitimate labor organization endowed with the right and privileges granted by law to such organization. While a certificate of registration confers a union with legitimacy with the concomitant right to participate in or ask for certification election in a bargaining unit, the registration may be canceled or the union may be decertified as the bargaining unit, in which case the union is divested of the status of a legitimate

labor organization.15 Among the grounds for cancellation is the commission of any of the acts enumerated in Art. 239(a)16 of the Labor Code, such as fraud and misrepresentation in connection with the adoption or ratification of the unions constitution and like documents. The Court, has in previous cases, said that to decertify a union, it is not enough to show that the union includes ineligible employees in its membership. It must also be shown that there was misrepresentation, false statement, or fraud in connection with the application for registration and the supporting documents, such as the adoption or ratification of the constitution and by-laws or amendments thereto and the minutes of ratification of the constitution or by-laws, among other documents.17 Essentially, Ventures faults both the BLR and the CA in finding that there was no fraud or misrepresentation on the part of the Union sufficient to justify cancellation of its registration. In this regard, Ventures makes much of, first, the separate hand-written statements of 82 employees who, in gist, alleged that they were unwilling or harassed signatories to the attendance sheet of the organizational meeting. We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written statements submitted by Ventures on March 20, 2001, or seven months after it filed its petition for cancellation of registration, partake of the nature of withdrawal of union membership executed after the Unions filing of a petition for certification election on March 21, 2000. We have in precedent cases18 said that the employees withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the same. Now then, if a withdrawal from union membership done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to assume that such withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it concluded that the affidavits of retraction of the 82 members had no evidentiary weight. It cannot be over-emphasized that the registration or the recognition of a labor union after it has submitted the corresponding papers is not ministerial on the part of the BLR. Far from it. After a labor organization has filed the necessary registration documents, it becomes mandatory for the BLR to check if the requirements under Art. 23419 of the Labor Code have been sedulously complied with.20 If the unions application is infected by falsification and like serious irregularities, especially those appearing on the face of the application and its attachments, a union should be denied recognition as a legitimate labor organization. Prescinding from these considerations, the issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that its application for registration and the supporting documents thereof are prima facie free from any vitiating irregularities. Second, Ventures draws attention to the inclusion of 82 individuals to the list of participants in the January 9, 2000 organizational meeting. Ventures submits that the 82, being no longer connected with the company, should not have been counted as attendees in the meeting and the ratification proceedings immediately afterwards. The assailed inclusion of the said 82 individuals to the meeting and proceedings adverted to is not really fatal to the Unions cause for, as determined by the BLR, the allegations of falsification of signatures or misrepresentation with respect to these individuals are without basis.21 The Court need not delve into the question of whether these 82 dismissed individuals were still Union members qualified to vote and affix their signature on its application for registration and supporting documents. Suffice it to say that, as aptly observed by the CA, the procedure for acquiring or losing union membership and the determination of who are qualified or disqualified to be members are matters internal to the union and flow from its right to self-organization.

To our mind, the relevancy of the 82 individuals active participation in the Unions organizational meeting and the signing ceremonies thereafter comes in only for purposes of determining whether or not the Union, even without the 82, would still meet what Art. 234(c) of the Labor Code requires to be submitted, to wit: Art. 234. Requirements of Registration.Any applicant labor organization x x x shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: xxxx (c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate. The BLR, based on its official records, answered the poser in the affirmative. Wrote the BLR: It is imperative to look into the records of respondent union with this Bureau pursuant to our role as a central registry of union and CBA records under Article 231 of the Labor Code and Rule XVII of the rules implementing Book V of the Labor Code, as amended x x x. In its union records on file with this Bureau, respondent union submitted the names of [542] members x x x. This number easily complied with the 20% requirement, be it 1,928 or 2,202 employees in the establishment. Even subtracting the 82 employees from 542 leaves 460 union members, still within 440 or 20% of the maximum total of 2,202 rank-and-file employees. Whatever misgivings the petitioner may have with regard to the 82 dismissed employees is better addressed in the inclusion-exclusion proceedings during a pre-election conference x x x. The issue surrounding the involvement of the 82 employees is a matter of membership or voter eligibility. It is not a ground to cancel union registration. (Emphasis added.) The bare fact that three signatures twice appeared on the list of those who participated in the organizational meeting would not, to our mind, provide a valid reason to cancel Certificate of Registration No. RO300-00-02-UR-0003. As the Union tenably explained without rebuttal from Ventures, the double entries are no more than "normal human error," effected without malice. Even the labor arbiter who found for Ventures sided with the Union in its explanation on the absence of malice.22 The cancellation of a unions registration doubtless has an impairing dimension on the right of labor to self-organization. Accordingly, we can accord concurrence to the following apt observation of the BLR: "[F]or fraud and misrepresentation [to be grounds for] cancellation of union registration under Article 239 [of the Labor Code], the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members."23
1avv phi 1

In its Comment, the Union points out that for almost seven (7) years following the filing of its petition, no certification election has yet been conducted among the rank-and-file employees. If this be the case, the delay has gone far enough and can no longer be allowed to continue. The CA is right when it said that Ventures should not interfere in the certification election by actively and persistently opposing the certification election of the Union. A certification election is exclusively the concern of employees and the employer lacks the legal personality to challenge it.24 In fact, jurisprudence frowns on the employers interference in a certification election for such interference unduly creates the impression that it intends to establish a company union.25

Ventures allegations on forum shopping and the procedural lapse supposedly committed by the BLR in allowing a belatedly filed motion for reconsideration need not detain us long. Suffice it to state that this Court has consistently ruled that the application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice.26 So it must be in this case. WHEREFORE, the petition is DENIED. The Decision and Resolution dated October 20, 2003 and January 19, 2004, respectively, of the CA are AFFIRMED. S.S. Ventures Labor Union shall remain in the roster of legitimate labor organizations, unless it has in the meantime lost its legitimacy for causes set forth in the Labor Code. Costs against petitioner. SO ORDERED. G.R. No. 178647 February 13, 2009

GENERAL SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS, Petitioner, vs. COCA-COLA BOTTLERS PHILS., INC. (GENERAL SANTOS CITY), THE COURT OF APPEALS and THE NATIONAL LABOR RELATIONS COMMISSION, Respondents. RESOLUTION NACHURA, J.: In this Petition for Review on Certiorari under Rule 45 of the Revised Rules on Civil Procedure, petitioner General Santos Coca-Cola Plant Free Workers Union-Tupas (Union) is seeking the reversal of the April 18, 2006 Decision1and May 30, 2007 Resolution2 of the Court of Appeals in CAG.R. SP No. 80916. The CA affirmed the January 31, 2003 and August 29, 2003 Resolutions3 of the National Labor Relations Commission (NLRC) in favor of respondent Coca-Cola Bottlers Phil., Inc. (CCBPI). Sometime in the late 1990s, CCBPI experienced a significant decline in profitability due to the Asian economic crisis, decrease in sales, and tougher competition. To curb the negative effects on the company, it implemented three (3) waves of an Early Retirement Program.4 Meanwhile, there was an inter-office memorandum sent to all of CCBPIs Plant Human Resources Managers/Personnel Officers, including those of the CCBPI General Santos Plant (CCBPI Gen San) mandating them to put on hold "all requests for hiring to fill in vacancies in both regular and temporary positions in [the] Head Office and in the Plants." Because several employees availed of the early retirement program, vacancies were created in some departments, including the production department of CCBPI Gen San, where members of petitioner Union worked. This prompted petitioner to negotiate with the Labor Management Committee for filling up the vacancies with permanent employees. No resolution was reached on the matter.5 Faced with the "freeze hiring" directive, CCBPI Gen San engaged the services of JLBP Services Corporation (JLBP), a company in the business of providing labor and manpower services, including janitorial services, messengers, and office workers to various private and government offices.6 On January 21, 2002, petitioner filed with the National Conciliation and Mediation Board (NCMB), Regional Branch 12, a Notice of Strike on the ground of alleged unfair labor practice committed by CCBPI Gen San for contracting-out services regularly performed by union members ("union busting"). After conciliation and mediation proceedings before the NCMB, the parties failed to come to an amicable settlement. On July 3, 2002, CCBPI filed a Petition for Assumption of Jurisdiction with the Office of the Secretary of Labor and Employment. On July 26, 2002, the Secretary of Labor

issued an Order enjoining the threatened strike and certifying the dispute to the NLRC for compulsory arbitration.7
1avvphi1

In a Resolution8 dated January 31, 2003, the NLRC ruled that CCBPI was not guilty of unfair labor practice for contracting out jobs to JLBP. The NLRC anchored its ruling on the validity of the "Goingto-the-Market" (GTM) system implemented by the company, which called for restructuring its selling and distribution system, leading to the closure of certain sales offices and the elimination of conventional sales routes. The NLRC held that petitioner failed to prove by substantial evidence that the system was meant to curtail the right to self-organization of petitioners members. Petitioner filed a motion for reconsideration, which the NLRC denied in a Resolution9 dated August 29, 2003. Hence, petitioner filed a Petition for Certiorari before the CA. The CA issued the assailed Decision10 on April 18, 2006 upholding the NLRCs finding that CCBPI was not guilty of unfair labor practice. The CA based its decision on the validity of CCBPIs contracting out of jobs in its production department. It held that the contract between CCBPI and JLBP did not amount to labor-only contracting. It found that JLBP was an independent contractor and that the decision to contract out jobs was a valid exercise of management prerogative to meet exigent circumstances. On the other hand, petitioner failed to adduce evidence to prove that contracting out of jobs by the company resulted in the dismissal of petitioners members, prevented them from exercising their right to self-organization, led to the Unions demise or that their group was singled out by the company. Consequently, the CA declared that CCBPI was not guilty of unfair labor practice. Its motion for reconsideration having been denied,11 petitioner now comes to this Court seeking the reversal of the CA Decision. The petition is bereft of merit. Hence, we deny the Petition. Under Rule 45 of the Revised Rules on Civil Procedure, only questions of law may be raised in a Petition for Review on Certiorari.12 There is a question of law if the issue raised is capable of being resolved without need of reviewing the probative value of the evidence. The resolution of the issue must rest solely on what the law provides on a given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. If the query requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to one another, the issue in that query is factual.13 An examination of the issues raised by petitioner reveals that they are questions of fact. The issues raised, i.e., whether JLBP is an independent contractor, whether CCBPIs contracting-out of jobs to JLBP amounted to unfair labor practice, and whether such action was a valid exercise of management prerogative, call for a re-examination of evidence, which is not within the ambit of this Courts jurisdiction. Moreover, factual findings of the NLRC, an administrative agency deemed to have acquired expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the CA.14 Furthermore, we find no reversible error in the assailed Decision.
1avv phi 1

It is true that the NLRC erroneously concluded that the contracting- out of jobs in CCBPI Gen San was due to the GTM system, which actually affected CCBPIs sales and marketing departments, and

had nothing to do with petitioners complaint. However, this does not diminish the NLRCs finding that JLBP was a legitimate, independent contractor and that CCBPI Gen San engaged the services of JLBP to meet business exigencies created by the freeze-hiring directive of the CCBPI Head Office. On the other hand, the CA squarely addressed the issue of job contracting in its assailed Decision and Resolution. The CA itself examined the facts and evidence of the parties15 and found that, based on the evidence, CCBPI did not engage in labor-only contracting and, therefore, was not guilty of unfair labor practice. The NLRC found and the same was sustained by the CA that the companys action to contractout the services and functions performed by Union members did not constitute unfair labor practice as this was not directed at the members right to self-organization. Article 248 of the Labor Code provides: ART. 248. UNFAIR LABOR PRACTICE OF EMPLOYERS. It shall be unlawful for an employer to commit any of the following unfair labor practices: xxx (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; xxx Unfair labor practice refers to "acts that violate the workers right to organize." The prohibited acts are related to the workers right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices.16 Both the NLRC and the CA found that petitioner was unable to prove its charge of unfair labor practice. It was the Union that had the burden of adducing substantial evidence to support its allegations of unfair labor practice,17which burden it failed to discharge. WHEREFORE, the foregoing premises considered, the Petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 80916 are AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR: CONSUELO YNARES-SANTIAGO Associate Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ Associate Justice MINITA V. CHICO-NAZARIO Associate Justice

DIOSDADO M. PERALTA Associate Justice ATTESTATION I attest that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

G.R. No. 110399 August 15, 1997 SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President,petitioners, vs. HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MEDARBITER AND SAN MIGUEL CORPORATION, respondents.

ROMERO, J.: This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-7091 1 entitled "In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner." The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election. The antecedent facts are undisputed: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for Direct Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.

On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature. On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company's Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC 2 case. Said Order reads in part: . . . Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining. In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court's ruling. Consequently, they are not allowed to participate in the certification election.
WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election. 3

Hence this petition. For resolution in this case are the following issues: 1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term "confidential employees" who may be prohibited from joining a union.

There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245 4 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. 5 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 6 The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. 7 "Management should not be required to handle labor relations matters through employees who are represented by the union with which the company is required to deal and who in the normal performance of their duties may obtain advance information of the company's position with regard to contract negotiations, the disposition of grievances, or other labor relations matters." 8 There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 9 the Court held that "if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership." The same rationale was applied to confidential employees in "Golden Farms, Inc. v. Ferrer-Calleja" 10 and in the more recent case of "Philips Industrial Development, Inc. v. NLRC" 11 which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them. 12 An important element of the "confidential employee rule" is the employee's need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employee's necessary access to confidential labor relations information. 13 It is the contention of respondent corporation that Supervisor employees 3 and 4 and the exempt employees come within the meaning of the term "confidential employees" primarily because they answered in the affirmative when asked "Do you handle confidential data or documents?" in the Position Questionnaires submitted by the Union. 14In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to "labor relations." 15 Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such

duties, said access does not render the employee a confidential employee. 16 "If access to confidential labor relations information is to be a factor in the determination of an employee's confidential status, such information must relate to the employer's labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit representing employees of the union or association." 17 "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information 18 or technical trade secrets, will not render an employee a confidential employee." 19 Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require. 2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. To administer efficient system of evaluation of products in the outlets. 4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. 5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant. 20 It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer's internal business operations. As held in Westinghouse Electric Corporation v.National Labor Relations Board, 21 "an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer's internal business operations and which is not related to the field of labor relations." It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to "all" workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through representatives of their choosing. 22 In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle "confidential data" as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. 23

In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out. It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. This Court finds the contention of the petitioner meritorious. An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 24 A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. 25 It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the Constitution. 27 The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v.Calleja-Ferrer where all non-academic rank and file employee of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted. SO ORDERED.

G.R. No. 161933

April 22, 2008

STANDARD CHARTERED BANK EMPLOYEES UNION (SCBEU-NUBE), petitioner, vs. STANDARD CHARTERED BANK and ANNEMARIE DURBIN, in her capacity as Chief Executive Officer, Philippines, Standard Chartered Bank, respondents. DECISION AUSTRIA-MARTINEZ, J.: For resolution is an appeal by certiorari filed by petitioner under Rule 45 of the Rules of Court, assailing the Decision1 dated October 9, 2002 and Resolution2 dated January 26, 2004 issued by the Court of Appeals (CA), dismissing their petition and affirming the Secretary of Labor and Employment's Orders dated May 31, 2001 and August 30, 2001. Petitioner and the Standard Chartered Bank (Bank) began negotiating for a new Collective Bargaining Agreement (CBA) in May 2000 as their 1998-2000 CBA already expired. Due to a deadlock in the negotiations, petitioner filed a Notice of Strike prompting the Secretary of Labor and Employment to assume jurisdiction over the labor dispute. On May 31, 2001, Secretary Patricia A. Sto. Tomas of the Department of Labor and Employment (DOLE) issued an Order with the following dispositive portion: WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank and the Standard Chartered Bank Employees Union are directed to execute their collective bargaining agreement effective 01 April 2001 until 30 March 2003 incorporating therein the foregoing dispositions and the agreements they reached in the course of negotiations and conciliation. All other submitted issues that were not passed upon are dismissed. The charge of unfair labor practice for bargaining in bad faith and the claim for damages relating thereto are hereby dismissed for lack of merit. Finally, the charge of unfair labor practice for gross violation of the economic provisions of the CBA is hereby dismissed for want of jurisdiction. SO ORDERED.3 Both petitioner and the Bank filed their respective motions for reconsideration, which were denied by the Secretary per Order dated August 30, 2001.4 Petitioner sought recourse with the CA via a petition for certiorari, and in the assailed Decision dated October 9, 20025 and Resolution dated January 26, 2004,6 the CA dismissed their petition and affirmed the Secretary's Orders. Hence, herein petition based on the following grounds: I.

THE COURT A QUO ERRED IN DECIDING THAT THERE WAS NO BASIS FOR REVISING THE SCOPE OF EXCLUSIONS FROM THE APPROPRIATE BARGAINING UNIT UNDER THE CBA. II. THE COURT A QUO ERRED IN DECIDING THAT A ONE-MONTH OR LESS TEMPORARY OCCUPATION OF A POSITION (ACTING CAPACITY) DOES NOT MERIT ADJUSTMENT IN REMUNERATION.7 The resolution of this case has been overtaken by the execution of the parties' 2003-2005 CBA. While this would render the case moot and academic, nevertheless, the likelihood that the same issues will come up in the parties' future CBA negotiations is not far-fetched, thus compelling its resolution. Courts will decide a question otherwise moot if it is capable of repetition yet evading review.[8] The CBA provisions in dispute are the exclusion of certain employees from the appropriate bargaining unit and the adjustment of remuneration for employees serving in an acting capacity for one month. In their proposal, petitioner sought the exclusion of only the following employees from the appropriate bargaining unit all managers who are vested with the right to hire and fire employees, confidential employees, those with access to labor relations materials, Chief Cashiers, Assistant Cashiers, personnel of the Telex Department and one Human Resources (HR) staff.9 In the previous 1998-2000 CBA,10 the excluded employees are as follows: A. All covenanted and assistant officers (now called National Officers) B. One confidential secretary of each of the: 1. Chief Executive, Philippine Branches 2. Deputy Chief Executive/Head, Corporate Banking Group 3. Head, Finance 4. Head, Human Resources 5. Manager, Cebu 6. Manager, Iloilo 7. Covenanted Officers provided said positions shall be filled by new recruits. C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in any other branch that the BANK may establish in the country. D. Personnel of the Telex Department

E. All Security Guards F. Probationary employees, without prejudice to Article 277 (c) of the Labor Code, as amended by R.A. 6715, casuals or emergency employees; and G. One (1) HR Staff11 The Secretary, however, maintained the previous exclusions because petitioner failed to show that the employees sought to be removed from the list qualify for exclusion.12 With regard to the remuneration of employees working in an acting capacity, it was petitioner's position that additional pay should be given to an employee who has been serving in a temporary/acting capacity for one week. The Secretary likewise rejected petitioner's proposal and instead, allowed additional pay for those who had been working in such capacity for one month. The Secretary agreed with the Bank's position that a restrictive provision would curtail management's prerogative, and at the same time, recognized that employees should not be made to work in an acting capacity for long periods of time without adequate compensation. The Secretary's disposition of the issues raised by petitioner were affirmed by the CA.13 The Court sustains the CA. Whether or not the employees sought to be excluded from the appropriate bargaining unit are confidential employees is a question of fact, which is not a proper issue in a petition for review under Rule 45 of the Rules of Court.14 This holds more true in the present case in which petitioner failed to controvert with evidence the findings of the Secretary and the CA. The disqualification of managerial and confidential employees from joining a bargaining unit for rank and file employees is already well-entrenched in jurisprudence. While Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.15 In this case, the question that needs to be answered is whether the Bank's Chief Cashiers and Assistant Cashiers, personnel of the Telex Department and HR staff are confidential employees, such that they should be excluded. As regards the qualification of bank cashiers as confidential employees, National Association of Trade Unions (NATU) Republic Planters Bank Supervisors Chapter v. Torres16 declared that they are confidential employees having control, custody and/or access to confidential matters, e.g., the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, and therefore, disqualified from joining or assisting a union; or joining, assisting or forming any other labor organization.17 Golden Farms, Inc. v. Ferrer-Calleja18 meanwhile stated that "confidential employees such as accounting personnel, radio and telegraph operators who, having access to confidential information, may become the source of undue advantage. Said employee(s) may act as spy or spies of either party to a collective bargaining agreement."19

Finally, in Philips Industrial Development, Inc. v. National Labor Relations Commission,20 the Court designatedpersonnel staff, in which human resources staff may be qualified, as confidential employees because by the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Petitioner insists that the foregoing employees are not confidential employees; however, it failed to buttress its claim. Aside from its generalized arguments, and despite the Secretary's finding that there was no evidence to support it, petitioner still failed to substantiate its claim. Petitioner did not even bother to state the nature of the duties and functions of these employees, depriving the Court of any basis on which it may be concluded that they are indeed confidential employees. As aptly stated by the CA: While We agree that petitioner's proposed revision is in accordance with the law, this does not necessarily mean that the list of exclusions enumerated in the 1998-2000 CBA is contrary to law. As found by public respondent, petitioner failed to show that the employees sought to be removed from the list of exclusions are actually rank and file employees who are not managerial or confidential in status and should, accordingly, be included in the appropriate bargaining unit. Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex department and one (1) HR Staff have mutuality of interest with the other rank and file employees, then they are rightfully excluded from the appropriate bargaining unit. x x x21(Emphasis supplied) Petitioner cannot simply rely on jurisprudence without explaining how and why it should apply to this case. Allegations must be supported by evidence. In this case, there is barely any at all. There is likewise no reason for the Court to disturb the conclusion of the Secretary and the CA that the additional remuneration should be given to employees placed in an acting capacity for one month. The CA correctly stated: Likewise, We uphold the public respondent's Order that no employee should be temporarily placed in a position (acting capacity) for more than one month without the corresponding adjustment in the salary. Such order of the public respondent is not in violation of the "equal pay for equal work" principle, considering that after one (1) month, the employee performing the job in an acting capacity will be entitled to salary corresponding to such position. xxxx In arriving at its Order, the public respondent took all the relevant evidence into account and weighed both parties arguments extensively. Thus, public respondent concluded that a restrictive provision with respect to employees being placed in an acting capacity may curtail management's valid exercise of its prerogative. At the same time, it recognized that employees should not be made to perform work in an acting capacity for extended periods of time without being adequately compensated. x x x22 Thus, the Court reiterates the doctrine that: [T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires that it shall raise only questions of law. The factual findings by quasi-judicial agencies, such as the Department of Labor and Employment, when supported by substantial evidence, are

entitled to great respect in view of their expertise in their respective fields. Judicial review of labor cases does not go so far as to evaluate the sufficiency of evidence on which the labor official's findings rest. It is not our function to assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal, particularly where the findings of both the trial court (here, the DOLE Secretary) and the appellate court on the matter coincide, as in this case at bar. The Rule limits that function of the Court to the review or revision of errors of law and not to a second analysis of the evidence. x x x Thus, absent any showing of whimsical or capricious exercise of judgment, and unless lack of any basis for the conclusions made by the appellate court be amply demonstrated, we may not disturb such factual findings.23 WHEREFORE, the petition is DENIED. SO ORDERED. G.R. No. 116194 February 2, 2000

SUGBUANON RURAL BANK, INC., petitioner, vs. HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC. ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL EMPLOYEES UNION-TRADE UNIONS CONGRESS OF THE PHILIPPINES,respondents. QUISUMBING, J.: In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the April 27, 1994 Resolution of the Department of Labor and Employment, affirming the order of the Med-Arbiter, dated December 9, 1993, which denied petitioner's motion to dismiss respondent union's petition for certification election. Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with principal office in Cebu City and a branch in Mandaue City. Private respondent SRBI Association of Professional, Supervisory, Office, and Technical Employees Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of the Philippines (TUCP).
1wphi1.nt

On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the union. On October 26, 1993, the union filed a petition for certification election of the supervisory employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a labor organization dulyregistered with the Labor Department; (2) SRBI employed 5 or more supervisory employees; (3) a majority of these employees supported the petition: (4) there was no existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no certification election had been held in SRBI during the past 12 months prior to the petition. On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-certification election conference between SRBI and APSOTEU-TUCP was set for November 15, 1993.

On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a certification election on two grounds. First, that the members of APSOTEU-TUCP were in fact managerial or confidential employees. Thus, following the doctrine in Philips Industrial Development Corporation v. National Labor Relations Commission,1 they were disqualified from forming, joining, or assisting any labor organization. Petitioner attached the job descriptions of the employees concerned to its motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-and-file employees of SRBI, there was a violation of the principle of separation of unions enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2 The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members were not managerial employees but merely supervisory employees. The members attached their affidavits describing the nature of their respective duties. The union pointed out that Article 245 of the Labor Code expressly allowed supervisory employees to form, join, or assist their own unions. On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-exclusion proceedings in preparation for the certification election on December 16, 1993. SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was denied for lack of merit. The certification election was ordered. On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994. His order identified the following SRBI personnel as the voting supervisory employees in the election: the Cashier of the Main Office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the Loans Department. On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-Arbiter denied the same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter cancelled the certification election scheduled for June 29, 1994 in order to address the motion for reconsideration. The Med-Arbiter later denied petitioner's motion for reconsideration, SRBI appealed the order of denial to the DOLE Secretary on December 16, 1993.. On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation of the respondent union's registration. It averred that the APSOTEU-TUCP members were actually managerial employees who were prohibited by law from joining or organizing unions. On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that APSOTEU-TUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and privileges granted by law to a legitimate labor organization, including the right to file a petition for certification election. He also held that until and unless a final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the legal right to represent its members for collective bargaining purposes. Furthermore, the question of whether the APSOTEU-TUCP members should be considered as managerial or confidential employees should not be addressed in the proceedings involving a petition for certification election but best threshed out in other appropriate proceedings.

On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on July 7, 1994. The Med-Arbiter scheduled the holding of certification elections on August 12, 1994. Hence the instant petition grounded on the following assignments of error: I RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED: A: IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT UNION'S PETITION FOR CERTIFICATION ELECTION. II RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT: A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION. B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY APPLY TO THEM. III IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND REPRESENTATIONS. Considering petitioner's assigned errors, we find two core issues for immediate resolution: (1) Whether or not the members of the respondent union are managerial employees and/or highly-placed confidential employees, hence prohibited by law from joining labor organizations and engaging in union activities? (2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon the filing of a petition for certification election by a registered union, despite the petitioner's appeal pending before the DOLE Secretary against the issuance of the union's registration? The other issues based on the assigned errors could be resolved easily after the core issues are settled.

Respecting the first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee" and "supervisory employees" as follows: Art. 212. Definitions (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book (Emphasis supplied). Petitioner submitted detailed job descriptions to support its contention that the union members are managerial employees and/or confidential employees proscribed from engaging in labor activities.3 Petitioner vehemently argues that the functions and responsibilities of the employees involved constitute the "very core of the bank's business, lending of money to clients and borrowers, evaluating their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and endorsing delinquent accounts to counsel for collection."4 Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor Relations Commission,6 to sustain its submission. InTabacalera, we sustained the classification of a credit and collection supervisor by management as a managerial/supervisory personnel. But in that case, the credit and collection supervisor "had the power to recommend the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase."7 For this reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to show that the employees in question were vested with similar powers. At best they only had recommendatory powers subject to evaluation, review, and final decision by the bank's management. The job description forms submitted by petitioner clearly show that the union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate and execute management policies which are normally expected of management officers. Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a managerial employee because the said employee had managerial powers, similar to the supervisor in Tabaculera. Their powers included recommending the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase.8 Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner did not possess managerial powers and duties. We are, therefore, constrained to conclude that they are not managerial employees. Now may the said bank personnel be deemed confidential employees? Confidential employees are those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies [specifically in the field of labor relations].9 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his superior officer; and that officer must handle the prescribed responsibilities relating to labor relations.10 Art. 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees.12 The confidential-employee rule justifies

exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations.13 It must be stressed, however, that when the employee does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union.14 Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential capacities and have complete access to the bank's confidential data. They form the core of the bank's management team. Petitioner explains that: . . . Specifically: (1) the Head of the Loans Department initially approves the loan applications before they are passed on to the Board for confirmation. As such, no loan application is even considered by the Board and approved by petitioner without his stamp of approval based upon his interview of the applicant and determination of his (applicant's) credit standing and financial capacity. The same holds true with respect to renewals or restructuring of loan accounts. He himself determines what account should be collected, whether extrajudicially or judicially, and settles the problems or complaints of borrowers regarding their accounts; (2) the Cashier is one of the approving officers and authorized signatories of petitioner. He approves the opening of accounts, withdrawals and encashment, and acceptance of check deposits. He deals with other banks and, in the absence of the regular Manager, manages the entire office or branch and approves disbursements of funds for expenses; and (3) the Accountant, who heads the Accounting Department, is also one of the authorized signatories of petitioner and, in the absence of the Manager or Cashier, acts as substitute approving officer and assumes the management of the entire office. She handles the financial reports and reviews the debit/credit tickets submitted by the other departments.15 Petitioner's explanation, however, does not state who among the employees has access to information specifically relating to its labor to relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the bank's Board of Directors may not be so classified. True, the board of directors is responsible for corporate policies, the exercise of corporate powers, and the general management of the business and affairs of the corporation. As secretary of the bank's governing body. Patricia Maluya serves the bank's management, but could not be deemed to have access to confidential information specifically relating to SRBI's labor relations policies, absent a clear showing on this matter. Thus, while petitioner's explanation confirms the regular duties of the concerned employees, it shows nothing about any duties specifically connected to labor relations. As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the Labor Code is the right to be certified as the exclusive representative of all employees in an appropriate bargaining unit for purposes of collective bargaining. Having complied with the requirements of Art. 234, it is our view that respondent union is a legitimate labor union. Article 257 of the Labor Code mandates that a certification election shallautomatically be conducted by the MedArbiter upon the filing of a petition by a legitimate labor organization.16Nothing is said therein that prohibits such automatic conduct of the certification election if the management appeals on the issue of the validity of the union's registration. On this score, petitioner's appeal was correctly dismissed. Petitioner argues that giving due course to respondent union's petition for certification election would violate the separation of unions doctrine.17 Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was not filed by ALU. Nor was it filed by TUCP, which is a national labor federation of with which respondent union is affiliated. Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to this effect. What the records instead reveal is that respondent union was initially assisted by ALU during its preliminary stages of organization. A

local union maintains its separate personality despite affiliation with a larger national federation.18 Petitioner alleges that ALU seeks to represent both respondent union and the rank-andfile union. Again, we find nothing in the records to support this bare assertion. The law frowns on a union where the membership is composed of both supervisors and rank-and-file employees, for fear that conflicts of interest may arise in the areas of discipline, collective bargaining, and strikes.19 However, in the present case, none of the members of the respondent union came from the rank-and-file employees of the bank. Taking into account the circumstances in this case, it is our view that respondent Undersecretary committed no reversible error nor grave abuse of discretion when he found the order of the MedArbiter scheduling a certification election in order. The list of employees eligible to vote in said certification election was also found in order, for none was specifically disqualified from union membership.
1w phi 1.nt

WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs. SO ORDERED. G.R. No. 164301 October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent. RESOLUTION LEONARDO-DE CASTRO, J.: In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration1 of our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in the then existing collective bargaining agreement (CBA)2 of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union). To recall, the Union Shop Clause involved in this long standing controversy provided, thus: ARTICLE II xxxx Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank.3 (Emphases supplied.) The bone of contention between the parties was whether or not the "absorbed" FEBTC employees fell within the definition of "new employees" under the Union Shop Clause, such that they may be required to join respondent union and if they fail to do so, the Union may request BPI to terminate

their employment, as the Union in fact did in the present case. Needless to state, BPI refused to accede to the Unions request. Although BPI won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code allows the existence of such provision. On review with this Court, we upheld the appellate courts ruling and disposed of the case as follows: WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be.4 Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now BPI continues to protest the inclusion of said employees in the Union Shop Clause. In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly intended to limit the application of the Union Shop Clause only to new employees who were hired as non-regular employees but later attained regular status at some point after hiring. FEBTC employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.5 Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and safeguarded from diminution" but such absorbed employees "cannot and should not be treated in exactly the same way as old BPI employees for there are substantial differences between them."6 Although petitioner admits that there are similarities between absorbed and new employees, they insist there are marked differences between them as well. Thus, adopting Justice Brions stance, petitioner contends that the absorbed FEBTC employees should be considered "a sui generis group of employees whose classification will not be duplicated until BPI has another merger where it would be the surviving corporation."7 Apparently borrowing from Justice Carpio, petitioner propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the right of the absorbed employees to abstain from joining labor organizations.8 Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In opposition to petitioners arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of employment contracts to the surviving corporation, and the consensual nature of employment contracts as valid bases for the conclusion that former FEBTC employees should be deemed new employees.10 The Union argues that the creation of employment relations between former FEBTC employees and BPI (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their wages, power of dismissal and of control over the employees conduct) occurred after the merger, or to be more precise, after the Securities and Exchange Commissions (SEC) approval of the merger.11 The Union likewise points out that BPI failed to offer any counterargument to the Courts reasoning that: The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employee's right or freedom of association, is not to protect the union for the union's sake. Laws and jurisprudence promote unionism and afford certain protections to the certified

bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. x x x. x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice.12 While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC employees security of tenure. Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with the dictates of social justice and the State policy of according full protection to labor to deem employment contracts as automatically assumed by the surviving corporation in a merger, even in the absence of an express stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that: To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared policies on work, labor and employment, and the specific FEBTC-BPI situation i.e., a merger with complete "body and soul" transfer of all that FEBTC embodied and possessed and where both participating banks were willing (albeit by deed, not by their written agreement) to provide for the affected human resources by recognizing continuity of employment should point this Court to a declaration that in a complete merger situation where there is total takeover by one corporation over another and there is silence in the merger agreement on what the fate of the human resource complement shall be, the latter should not be left in legal limbo and should be properly provided for, by compelling the surviving entity to absorb these employees. This is what Section 80 of the Corporation Code commands, as the surviving corporation has the legal obligation to assume all the obligations and liabilities of the merged constituent corporation. Not to be forgotten is that the affected employees managed, operated and worked on the transferred assets and properties as their means of livelihood; they constituted a basic component of their corporation during its existence. In a merger and consolidation situation, they cannot be treated without consideration of the applicable constitutional declarations and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that they are treated in accordance with the legal requirements of mergers and consolidation, read in light of the social justice, economic and social provisions of our Constitution. Hence, there is a need for the surviving corporation to take responsibility for the affected employees and to absorb them into its workforce where no appropriate provision for the merged corporation's human resources component is made in the Merger Plan.13 By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of employees affected by a merger and avoids confusion regarding the status of their various benefits which were among the chief objections of our dissenting colleagues. However, nothing in this Resolution shall impair the right of an employer to terminate the employment of the absorbed employees for a lawful or authorized cause or the right of such an employee to resign, retire or otherwise sever his employment, whether before or after the merger, subject to existing contractual obligations. In this manner, Justice Brions theory of automatic

assumption may be reconciled with the majoritys concerns with the successor employers prerogative to choose its employees and the prohibition against involuntary servitude.
1avv phi1

Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed FEBTC employees are covered by the Union Shop Clause. Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the surviving corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged corporations and the persons that deal with them.14 Such a legal fiction cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we stated in the Decision that: In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees" only refers to those who are initially hired as non-regular employees for possible regular employment. The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment.15 Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their respective business operations until the SEC issues the certificate of merger and in the event no such certificate is issued, they shall hold each other blameless for the non-consummation of the merger.16 We likewise previously noted that BPI made its assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC approved the merger.17 In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger. What is material is that all of these legal consequences of the merger took place during the life of an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause. From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised of BPIs rank and file employees); and (c) become regular employees without distinguishing as to the manner they acquire their regular status. Consequently, the number of such employees may adversely affect the majority status of the Union and even its existence itself, as already amply explained in the Decision.

Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular and permanent from the beginning of their employment with the surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant the exclusion of the absorbed employees from the application of the Union Shop Clause. In the Decision, we noted that: Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated.18 Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy of management. For if the former FEBTC employees had no say in the merger of its former employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise could not prevent BPI from proceeding with the merger which undisputedly affected the number of employees in the bargaining unit that the Union represents and may negatively impact on the Unions majority status. In this instance, we should be guided by the principle that courts must place a practical and realistic construction upon a CBA, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.19 We now come to the question: Does our affirmance of our ruling that former FEBTC employees absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which we expressly upheld in this Resolution? We answer in the negative. In Rance v. National Labor Relations Commission,20 we held that: It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has construed security of tenure as meaning that "the employer shall not terminate the services of an employee except for a just cause or when authorized by" the Code. x x x (Emphasis supplied.) We have also previously held that the fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due process is observed.21 Even as we now recognize the right to continuous, unbroken employment of workers who are absorbed into a new company pursuant to a merger, it is but logical that their employment may be terminated for any causes provided for under the law or in jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that termination of employment by virtue of a union security clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar,23 we explained the rationale for this policy in this wise:

Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of the Labor Code]."Admittedly, the enforcement of a closed-shop or union security provision in the CBA as a ground for termination finds no extension within any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "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 'closed shop' as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-a-vis the employer."24 (Emphasis supplied.) Although it is accepted that non-compliance with a union security clause is a valid ground for an employees dismissal, jurisprudence dictates that such a dismissal must still be done in accordance with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit: The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos 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. 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 employer's decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality. 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. x x x26 (Emphases supplied.) In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period from notice of finality of the Decision given to the affected FEBTC employees to join the Union before the latter can request petitioner to terminate the formers employment, petitioner must still accord said employees the twin requirements of notice and hearing on the possibility that they may have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no material change in the situation of the parties in the interim. WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is AFFIRMED, subject to the qualifications that:

(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust Company (FEBTC) employees upon effectivity of the merger without break in the continuity of their employment, even without express stipulation in the Articles of Merger; and (b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, given to former FEBTC employees to join the respondent, said employees shall be accorded full procedural due process before their employment may be terminated. SO ORDERED. G.R. No. 181531 July 31, 2009

NATIONAL UNION OF WORKERS IN HOTELS, RESTAURANTS AND ALLIED INDUSTRIESMANILA PAVILION HOTEL CHAPTER, Petitioner, vs. SECRETARY OF LABOR AND EMPLOYMENT, BUREAU OF LABOR RELATIONS, HOLIDAY INN MANILA PAVILION HOTEL LABOR UNION AND ACESITE PHILIPPINES HOTEL CORPORATION, Respondents. DECISION CARPIO MORALES, J.: National Union of Workers in Hotels, Restaurants and Allied Industries Manila Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the reversal of the Court of Appeals November 8, 2007 Decision1and of the Secretary of Labor and Employments January 25, 2008 Resolution2 in OS-A-9-52-05 which affirmed the Med-Arbiters Resolutions dated January 22, 20073 and March 22, 2007.4 A certification election was conducted on June 16, 2006 among the rank-and-file employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with the following results: EMPLOYEES IN VOTERS LIST = 353 TOTAL VOTES CAST = NUWHRAIN-MPHC = HIMPHLU = NO UNION = SPOILED = SEGREGATED = 346 151 169 1 3 22

In view of the significant number of segregated votes, contending unions, petitioner, NUHWHRAINMPHC, and respondent Holiday Inn Manila Pavillion Hotel Labor Union (HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to decide which among those votes would be opened and tallied. Eleven (11) votes were initially segregated because they were cast by dismissed employees, albeit the legality of their dismissal was still pending before the Court of Appeals. Six other votes were segregated because the employees who cast them were already

occupying supervisory positions at the time of the election. Still five other votes were segregated on the ground that they were cast by probationary employees and, pursuant to the existing Collective Bargaining Agreement (CBA), such employees cannot vote. It bears noting early on, however, that the vote of one Jose Gatbonton (Gatbonton), a probationary employee, was counted. By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 out of the 22 segregated votes, specially those cast by the 11 dismissed employees and those cast by the six supposedly supervisory employees of the Hotel. Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and Employment (SOLE), arguing that the votes of the probationary employees should have been opened considering that probationary employee Gatbontons vote was tallied. And petitioner averred that respondent HIMPHLU, which garnered 169 votes, should not be immediately certified as the bargaining agent, as the opening of the 17 segregated ballots would push the number of valid votes cast to 338 (151 + 169 + 1 + 17), hence, the 169 votes which HIMPHLU garnered would be one vote short of the majority which would then become 169. By the assailed Resolution of January 22, 2007, the Secretary of Labor and Employment (SOLE), through then Acting Secretary Luzviminda Padilla, affirmed the Med-Arbiters Order. It held that pursuant to Section 5, Rule IX of the Omnibus Rules Implementing the Labor Code on exclusion and inclusion of voters in a certification election, the probationary employees cannot vote, as at the time the Med-Arbiter issued on August 9, 2005 the Order granting the petition for the conduct of the certification election, the six probationary employees were not yet hired, hence, they could not vote. The SOLE further held that, with respect to the votes cast by the 11 dismissed employees, they could be considered since their dismissal was still pending appeal. As to the votes cast by the six alleged supervisory employees, the SOLE held that their votes should be counted since their promotion took effect months after the issuance of the above-said August 9, 2005 Order of the Med-Arbiter, hence, they were still considered as rank-and-file. Respecting Gatbontons vote, the SOLE ruled that the same could be the basis to include the votes of the other probationary employees, as the records show that during the pre-election conferences, there was no disagreement as to his inclusion in the voters list, and neither was it timely challenged when he voted on election day, hence, the Election Officer could not then segregate his vote. The SOLE further ruled that even if the 17 votes of the dismissed and supervisory employees were to be counted and presumed to be in favor of petitioner, still, the same would not suffice to overturn the 169 votes garnered by HIMPHLU. In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive bargaining agent was proper. Petitioners motion for reconsideration having been denied by the SOLE by Resolution of March 22, 2007, it appealed to the Court of Appeals. By the assailed Decision promulgated on November 8, 2007, the appellate court affirmed the ruling of the SOLE. It held that, contrary to petitioners assertion, the ruling in Airtime Specialist, Inc. v. Ferrer Calleja5 stating that in a certification election, all rank-and-file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote, is inapplicable to the case at bar. For, the appellate court continued, the six probationary employees were not yet employed by the Hotel at the time the August 9, 2005 Order granting the certification election was issued. It thus

held that Airtime Specialist applies only to situations wherein the probationary employees were already employed as of the date of filing of the petition for certification election. Respecting Gatbontons vote, the appellate court upheld the SOLEs finding that since it was not properly challenged, its inclusion could no longer be questioned, nor could it be made the basis to include the votes of the six probationary employees. The appellate court brushed aside petitioners contention that the opening of the 17 segregated votes would materially affect the results of the election as there would be the likelihood of a run-off election in the event none of the contending unions receive a majority of the valid votes cast. It held that the "majority" contemplated in deciding which of the unions in a certification election is the winner refers to the majority of valid votes cast, not the simple majority of votes cast, hence, the SOLE was correct in ruling that even if the 17 votes were in favor of petitioner, it would still be insufficient to overturn the results of the certification election. Petitioners motion for reconsideration having been denied by Resolution of January 25, 2008, the present recourse was filed. Petitioners contentions may be summarized as follows: 1. Inclusion of Jose Gatbontons vote but excluding the vote of the six other probationary employees violated the principle of equal protection and is not in accord with the ruling in Airtime Specialists, Inc. v. Ferrer-Calleja; 2. The time of reckoning for purposes of determining when the probationary employees can be allowed to vote is not August 9, 2005 the date of issuance by Med-Arbiter Calabocal of the Order granting the conduct of certification elections, but March 10, 2006 the date the SOLE Order affirmed the Med-Arbiters Order. 3. Even if the votes of the six probationary employees were included, still, HIMPHLU could not be considered as having obtained a majority of the valid votes cast as the opening of the 17 ballots would increase the number of valid votes from 321 to 338, hence, for HIMPHLU to be certified as the exclusive bargaining agent, it should have garnered at least 170, not 169, votes. Petitioner justifies its not challenging Gatbontons vote because it was precisely its position that probationary employees should be allowed to vote. It thus avers that justice and equity dictate that since Gatbontons vote was counted, then the votes of the 6 other probationary employees should likewise be included in the tally. Petitioner goes on to posit that the word "order" in Section 5, Rule 9 of Department Order No. 40-03 reading "[A]ll employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of certification election shall be allowed to vote" refers to an order which has already become final and executory, in this case the March 10, 2002 Order of the SOLE. Petitioner thus concludes that if March 10, 2006 is the reckoning date for the determination of the eligibility of workers, then all the segregated votes cast by the probationary employees should be opened and counted, they having already been working at the Hotel on such date.

Respecting the certification of HIMPHLU as the exclusive bargaining agent, petitioner argues that the same was not proper for if the 17 votes would be counted as valid, then the total number of votes cast would have been 338, not 321, hence, the majority would be 170; as such, the votes garnered by HIMPHLU is one vote short of the majority for it to be certified as the exclusive bargaining agent. The relevant issues for resolution then are first, whether employees on probationary status at the time of the certification elections should be allowed to vote, and second, whether HIMPHLU was able to obtain the required majority for it to be certified as the exclusive bargaining agent. On the first issue, the Court rules in the affirmative. The inclusion of Gatbontons vote was proper not because it was not questioned but because probationary employees have the right to vote in a certification election. The votes of the six other probationary employees should thus also have been counted. As Airtime Specialists, Inc. v. FerrerCalleja holds: In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining." Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as basis for eligibility in supporting the petition for certification election. The law refers to "all" the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the "bargaining unit." (Emphasis supplied) Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended Rule XI of the Omnibus Rules Implementing the Labor Code, provides: Rule II Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial, industrial and agricultural enterprises, including employees of government owned or controlled corporations without original charters established under the Corporation Code, as well as employees of religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor unions for purposes of collective bargaining: provided, however, that supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but may form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor unions for purposes of collective bargaining. Alien employees with valid working permits issued by the Department may exercise the right to self-organization and join or assist labor unions for purposes of collective bargaining if they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs. For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on the first day of his/her service, be eligible for membership in any labor organization. All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection and other legitimate purposes except collective bargaining. (Emphasis supplied)

The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon. A law is read into, and forms part of, a contract. Provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy.6 Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely to support their position that probationary employees hired after the issuance of the Order granting the petition for the conduct of certification election must be excluded, should not be read in isolation and must be harmonized with the other provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz: Rule XI xxxx Section 5. Qualification of voters; inclusion-exclusion. - All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of a certification election shall be eligible to vote. An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election. (Emphasis supplied) xxxx Section 13. Order/Decision on the petition. - Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: (a) the name of the employer or establishment; (b) the description of the bargaining unit; (c) a statement that none of the grounds for dismissal enumerated in the succeeding paragraph exists; (d) the names of contending labor unions which shall appear as follows: petitioner union/s in the order in which their petitions were filed, forced intervenor, and no union; and (e) a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order. (Emphasis supplied) xxxx

Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained. (Emphasis supplied) In light of the immediately-quoted provisions, and prescinding from the principle that all employees are, from the first day of their employment, eligible for membership in a labor organization, it is evident that the period ofreckoning in determining who shall be included in the list of eligible voters is, in cases where a timely appeal has been filed from the Order of the MedArbiter, the date when the Order of the Secretary of Labor and Employment, whether affirming or denying the appeal, becomes final and executory. The filing of an appeal to the SOLE from the Med-Arbiters Order stays its execution, in accordance with Sec. 21, and rationally, the Med-Arbiter cannot direct the employer to furnish him/her with the list of eligible voters pending the resolution of the appeal. During the pendency of the appeal, the employer may hire additional employees. To exclude the employees hired after the issuance of the Med-Arbiters Order but before the appeal has been resolved would violate the guarantee that every employee has the right to be part of a labor organization from the first day of their service. In the present case, records show that the probationary employees, including Gatbonton, were included in the list of employees in the bargaining unit submitted by the Hotel on May 25, 2006 in compliance with the directive of the Med-Arbiter after the appeal and subsequent motion for reconsideration have been denied by the SOLE, rendering the Med-Arbiters August 22, 2005 Order final and executory 10 days after the March 22, 2007 Resolution (denying the motion for reconsideration of the January 22 Order denying the appeal), and rightly so. Because, for purposes of self-organization, those employees are, in light of the discussion above, deemed eligible to vote. A certification election is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining. Collective bargaining, refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.7 The significance of an employees right to vote in a certification election cannot thus be overemphasized. For he has considerable interest in the determination of who shall represent him in negotiating the terms and conditions of his employment. Even if the Implementing Rules gives the SOLE 20 days to decide the appeal from the Order of the Med-Arbiter, experience shows that it sometimes takes months to be resolved. To rule then that only those employees hired as of the date of the issuance of the Med-Arbiters Order are qualified to vote would effectively disenfranchise employees hired during the pendency of the appeal. More importantly, reckoning the date of the issuance of the Med-Arbiters Order as the cut-off date would render inutile the remedy of appeal to the SOLE.
1avv ph!1

But while the Court rules that the votes of all the probationary employees should be included, under the particular circumstances of this case and the period of time which it took for the appeal to be decided, the votes of the six supervisory employees must be excluded because at the time the

certification elections was conducted, they had ceased to be part of the rank and file, their promotion having taken effect two months before the election. As to whether HIMPHLU should be certified as the exclusive bargaining agent, the Court rules in the negative. It is well-settled that under the so-called "double majority rule," for there to be a valid certification election, majority of the bargaining unit must have voted AND the winning union must have garnered majority of the valid votes cast. Prescinding from the Courts ruling that all the probationary employees votes should be deemed valid votes while that of the supervisory employees should be excluded, it follows that the number of valid votes cast would increase from 321 to 337. Under Art. 256 of the Labor Code, the union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the sole and exclusive bargaining agent of all the workers in the appropriate bargaining unit. This majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170. HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU was not able to obtain a majority vote. The position of both the SOLE and the appellate court that the opening of the 17 segregated ballots will not materially affect the outcome of the certification election as for, so they contend, even if such member were all in favor of petitioner, still, HIMPHLU would win, is thus untenable. It bears reiteration that the true importance of ascertaining the number of valid votes cast is for it to serve as basis for computing the required majority, and not just to determine which union won the elections. The opening of the segregated but valid votes has thus become material. To be sure, the conduct of a certification election has a two-fold objective: to determine the appropriate bargaining unit and to ascertain the majority representation of the bargaining representative, if the employees desire to be represented at all by anyone. It is not simply the determination of who between two or more contending unions won, but whether it effectively ascertains the will of the members of the bargaining unit as to whether they want to be represented and which union they want to represent them. Having declared that no choice in the certification election conducted obtained the required majority, it follows that a run-off election must be held to determine which between HIMPHLU and petitioner should represent the rank-and-file employees. A run-off election refers to an election between the labor unions receiving the two (2) highest number of votes in a certification or consent election with three (3) or more choices, where such a certified or consent election results in none of the three (3) or more choices receiving the majority of the valid votes cast; provided that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast.8 With 346 votes cast, 337 of which are now deemed valid and HIMPHLU having only garnered 169 and petitioner having obtained 151 and the choice "NO UNION" receiving 1 vote, then the holding of a run-off election between HIMPHLU and petitioner is in order. WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2007 and Resolution dated January 25, 2008 of the Court of Appeals affirming the Resolutions dated January 22, 2007 and March 22, 2007, respectively, of the Secretary of Labor and Employment in OS-A-9-52-05 are ANNULLED and SET ASIDE. The Department of Labor and Employment-Bureau of Labor Relations is DIRECTED to cause the holding of a run-off election between petitioner, National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter (NUWHRAIN-MPC), and respondent Holiday Inn Manila Pavilion Hotel Labor Union (HIMPHLU).

SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson MINITA V. CHICO NAZARIO* Associate Justice TERESITA J. LEONARDO-DE CASTRO** Associate Justice

DIOSDADO M. PERALTA*** Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBING Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice G.R. No. 127374 January 31, 2002

PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO and FRANCISCO DAKILA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER EMERSON TUMANON, PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER (now UNIFIED PAFLU) and SERAFIN AYROSO, respondents. x---------------------------------------------------------x G.R. No. 127431 January 31, 2002 PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO CABANIAS, PEPITO RODILLAS, SHARON CASTILLO, DANILO CARBONEL, MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA, RICARDO LUMBA, JOSEPH MARISOL, NERISA MORTEL,

TEOFILO QUIRONG, LEONARDO REYES, MANUEL CADIENTE and HERMINIA RIOSA, petitioners, vs. PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER (now UNIFIED PAFLU) and NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, respondents. BELLOSILLO, J.: This is a petition for certiorari1 seeking to set aside the 31 July 1996 Decision2 of the National Labor Relations Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc., Mariles C. Romulo3 and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and Workers Association-PAFLU4 guilty of unfair labor practice and ordering them to pay private respondent Philippine Association of Free Labor Union (PAFLU) September5 P150,000.00 as damages. Petitioners likewise seek the reversal of the 31 October 1996 Resolution of the NLRC denying their Motion for Reconsideration. In November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor. Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU's supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation. PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association - National Congress of Workers (PSEA-NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW. On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment. Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of PSI's audited financial statement. Ayroso explained that with the dismissal of PSEA-WATU's election protest the time was ripe for the parties to enter into a collective bargaining agreement. On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEA's disaffiliation from PAFLU and its subsequent affiliation with NCW. Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI's refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable for interfering with its employees' union activities.6 Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA's organizational meeting thereby confirming his illicit participation in union activities. Ayroso

added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.7 The two (2) complaints were thereafter consolidated. On 1 February 1995 PAFLU amended its complaint by including the elected officers of PSEAPAFLU as additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.8 PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. On the other hand, PSEA-NCW took the cudgels for its officers who were being sued in their capacities as former officers of PSEA-PAFLU and asserted that since PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint. In support of this assertion, PSEA-NCW submitted in evidence a Katunayan signed by 111 out of 120 rank and file employees of PSI disauthorizing Ayroso or PAFLU from instituting any action in their behalf.9 In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice. The Decision explained that despite PSEA-PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file employees, the company knowingly sanctioned and confederated with Dakila in actively assisting a rival union. This, according to the Labor Arbiter, was a classic case of interference for which PSI could be held responsible. As PSEA-NCW's personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid. Ayroso's legal personality to file the complaint was sustained on the ratiocination that under the Labor Code no petition questioning the majority status of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day period immediately before the expiry date of such five (5)-year term of the collective bargaining agreement that the parties may enter into. Accordingly, judgment was rendered ordering PSI, PSEA-PAFLU and their officers to pay PAFLU P150,000.00 in damages.10 PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA could not validly separate from PAFLU, join another national federation and subsequently enter into a collective bargaining agreement with its employer-company.11 Petitioners separately moved for reconsideration but both motions were denied. Hence, these petitions for certiorari filed by PSI and PSEA-NCW together with their respective officers pleading for a reversal of the NLRC's Decision which they claimed to have been rendered in excess of jurisdiction. In due time, both petitions were consolidated. In these petitions, petitioner PSEA together with its officers argued that by virtue of their disaffiliation PAFLU as a mere agent had no authority to represent them before any proceedings. They further asserted that being an independent labor union PSEA may freely serve the interest of all its members and readily disaffiliate from its mother federation when circumstances so warrant. This right, they averred, was consistent with the constitutional guarantee of freedom of association.12

For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain collectively with PSEA-NCW was actuated, to a large extent, by PAFLU's behavior. Having heard no objections or protestations from PAFLU relative to PSEA's disaffiliation, they reckoned that PSEA's subsequent association with NSW was done bona fide.13 The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted. In hisManifestation, the Solicitor General argued against the Labor Arbiter's assumption of jurisdiction citing the following as reasons: first, there was no employer-employee relationship between complainant Ayroso and PSI over which the Labor Arbiter could rightfully assert his jurisdiction; second, since the case involved a dispute between PAFLU as mother federation and PSEA as local union, the controversy fell within the jurisdiction of the Bureau of Labor Relations; and lastly, the relationship of principal-agent between PAFLU and PSEA had been severed by the local union through the lawful exercise of its right of disaffiliation.14 Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of PSEA's disaffiliation. To be more precise, may PSEA, which is an independent and separate local union, validly disaffiliate from PAFLU pending the settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSI's rank and file employees? At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly lies with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter.15 Nonetheless, with due recognition of this fact, we deem it proper to settle the controversy at this instance since to remand the case to the BLR would only mean intolerable delay for the parties. The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.16we upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves. Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence. Such dictum has been punctiliously followed since then.17 Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions becomes clearly apparent. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. Surely, this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation, but it is a case where almost all local union members decided to disaffiliate.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEANCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members. There is a further consideration that likewise argues for the granting of the petitions. It stands unchallenged that PAFLU instituted the complaint for unfair labor practice against the wishes of workers whose interests it was supposedly protecting. The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union. Recreant to its mission, PAFLU cannot simply ignore the demands of the local chapter and decide for its welfare. PAFLU might have forgotten that as an agent it could only act in representation of and in accordance with the interests of the local union. The complaint then for unfair labor practice lodged by PAFLU against PSI, PSEA and their respective officers, having been filed by a party which has no legal personality to institute the complaint, should have been dismissed at the first instance for failure to state a cause of action. Policy considerations dictate that in weighing the claims of a local union as against those of a national federation, those of the former must be preferred. Parenthetically though, the desires of the mother federation to protect its locals are not altogether to be shunned. It will however be to err greatly against the Constitution if the desires of the federation would be favored over those of its members. That, at any rate, is the policy of the law. For if it were otherwise, instead of protection, there would be disregard and neglect of the lowly workingmen. WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders and Workers Association-NCW, together with their respective officers, are GRANTED. The Decision of the National Labor Relations Commission of 31 July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine Skylanders and Workers Association-NCW, Philippine Skylanders, Inc. and their respective officers, guilty of unfair labor practice and ordering them to pay damages to private respondent Philippine Association of Free Labor Unions (PAFLU) September (now UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying reconsideration is REVERSED and SET ASIDE. No costs. SO ORDERED. G.R. No. 110007 October 18, 1996 HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HON. JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF DAVAO COLLEGE UNION-KALIPUNAN NG MANGGAGAWANG PILIPINO (KAMAPI), respondents.

NARVASA, C.J.:p A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational institution, and the affiliate labor organization representing its employees, respondent Holy Cross of Davao College Union-KAMAPI (hereafter KAMAPI). Shortly before the expiration of the agreement, KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his union's desire to renew the agreement, withal seeking its extension for two months, or until July 31,

1989, on the ground that the teachers were still on summer vacation and union activities necessary or incident to the negotiation of a new agreement could not yet be conducted. 1 Holy Cross President Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the collective bargaining agreement. 2 On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of electing a new set of union officers, at which Rodolfo Gallera won election as president. To the surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated discussions for the union's disaffiliation from the KAMAPI Federation. Gallera's group subsequently formed a separate organization known as the Holy Cross of Davao College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the expiry date of the two-month extension it had sought. 3 Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees the corresponding union dues and special assessments (payable by union members), and agency fees (payable by non-members), in accordance with the check-off clause of the CBA, 4 prompting KAMAPI, on September 1, 1989, to demand an explanation. In the meantime, there ensued between the two unions a full-blown action on the basic issue of representation, which was to last for some two years. It began with the filing by the new union (headed by Gallera) of a petition for certification election in the Office of the Med-Arbiter. 5 KAMAPI responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI also advised Holy Cross of the election of a new set officers who would also comprise its negotiating panel. 6 The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered the dismissal of the petition for certification election, which action was eventually sustained by this Court in appropriate proceedings. After its success in the certification election case KAMAPI presented, on April 11, 1991, revised bargaining proposals to Holy Cross; 7 and on July 11, 1991, it sent a letter to the School asking for its counter-proposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect; and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counterproposals as regards the terms of a new CBA. In response, Holy Cross declared that it would take no action towards a new CBA without a "definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired on May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's request). Said Article provides inter alia for the automatic extension of the CBA for another period of three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification or amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the meaning and import of said Article I had earlier been sought by the College president, Emilio Palma Gil. 8 KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice of strike with the National Mediation and Conciliation Board. 9

KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on October 2, 1991. Several conciliation meetings were thereafter held between them, and when these failed to bring about any amicable settlement, the parties agreed to submit the case to voluntary arbitration. 10 Both parties being of the view that the dispute did indeed revolve around the interpretation of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following issues presented by them for resolution to the voluntary arbitrator: a. Whether or not the CBA which expired on May 31, 1989 was automatically renewed and did not serve merely as a holdover CBA; and b. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao College. On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI. Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary Arbitrator ruled that the request for extension filed by KAMAPI constituted seasonable notice of its intention to renew, modify or amend the agreement, which it could not however pursue because of the absence of the teachers who were then on summer vacation. 11 He rejected the contention of Holy Cross that KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining proposals, opining that the delay was partly attributable to the School's prolonged inaction on KAMAPI's request for extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic renewal of the CBA because it ceased to implement the check-off provision embodied in the CBA, declaring said School's argument that a "definitive ruling" by the DOLE on the correct interpretation of the automatic-extension clause of the old CBA was a condition precedent to negotiations for a new CBA to be a mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven that it was the legally-empowered bargaining agent of the school employees. In the dispositive portion of his award, the Voluntary Arbitrator ordered Holy Cross to: 1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains the collective bargaining agent of the permanent and regular teachers of said educational institution; (and) 2. pay to the Union the amount equivalent to the uncollected union dues from August 1989 up to the time respondent shall have concluded a new CBA with the Union, it appearing that respondent stopped complying with the CBA's check-off provisions as of said date. 12 The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao City, to make the proper computation of the union dues to be paid by management to the complainant union. Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the following grounds, viz.: 13 1. That the voluntary arbitrator erred and acted in grave abuse of discretion amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the uncollected union dues to private respondent which was not even an issue submitted for voluntary arbitration, resulting in serious violation of due process.

2. That the voluntary arbitrator erred in considering that petitioner refused to negotiate with (the) Union, contrary to the records and evidence presented in the case. The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's permanent and regular teachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to pronouncing that reasoned conclusion to have been made so whimsically, capriciously, oppressively, or unjustifiably in other words, attended by grave abuse of discretion amounting to lack or excess of jurisdiction as to call for extension of the Court's correcting hand through the extraordinary writ of certiorari. Said finding should therefore be, and is hereby, sustained. Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining agreement, Holy Cross contends that this was not one of the issues raised in the arbitration proceedings; that said issue was therefore extraneous and improper; and that even assuming the contrary, it (Holy Cross) had not in truth violated the CBA. Holy Cross asserts that it could not comply with the check-off provision because contrary to established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every 8th day of the month, a list of employees from whom union dues and the corresponding agency fees were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent with whom it would deal a matter settled only upon its receipt of a copy of this Court's Resolution on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to the union the uncollected employees' dues or agency fees would amount to the union's unjust enrichment. 14 KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately connected with those submitted for resolution and necessary for complete adjudication of the rights and obligations of the parties; 15 and that said position paper had alleged the manifest bad faith of management in not providing information as to who were regular employees, thereby precluding determination of teachers eligible for union membership. Disregarding the objection of failure to seasonably set up the check-off question the factual premises thereof not being indisputable, and technical objections of this sort being generally inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from their salaries as union dues (with respect to union members) or agency fees (as regards those not union members) in accordance with the check-off provisions of the collective bargaining contract (CBA) which it claims to have been automatically extended. 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 its employees, deducts union dues or agency fees from the latter's wages and remits them directly to the union. 16 Its desirability to a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of the individual laborers. 17 When so stipulated in a collective bargaining agreement, or authorized in writing by the employees concerned the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct sums equivalent to the amount of union dues from the employees' wages for direct remittance to the union, in order to facilitate the collection of

funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local union which continues to represent the employees under the terms of a CBA, and not to the parent association from which it has disaffiliated. 18 The legal basis of check-off is thus found in statute or in contract. 19 Statutory limitations on checkoffs generally require written authorization from each employee to deduct wages; however, a resolution approved and adopted by a majority to the union members at a general meeting will suffice when the right to check-off has been recognized by the employer, including collection of reasonable assessments in connection with mandatory activities of the union, or other special assessments and extraordinary fees. 20 Authorization to effect a check-off of union dues is co-terminous with the union affiliation or membership of employees. 21 On the other hand, the collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of the Labor Code. No requirement of written authorization from the non-union employee is imposed. The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union. 22 No provision of law makes the employer directly liable for the payment to the labor organization of union dues and assessments that the former fails to deduct from its employees' salaries and wages pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may constitute a violation of a contractual commitment for which it may incur liability for unfair labor practice. 23 But it does not by that omission, incur liability to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees for non-union employees. Check-offs in truth impose an extra burden on the employer in the form of additional administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance. But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues or agency fees from the employer, these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union. Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate that the union itself undertake the collection of union dues and assessments from its members (and agency fees from non-union employees); this, of course, without prejudice to suing the employer for unfair labor practice. There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the union dues and assessments, and agency fees that it had failed to deduct from its employees' salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to the college comptroller every 8th day of the month, a list of employees from whose pay union dues and the corresponding agency fees were to be deducted. WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union

dues and agency fees from August 1989 up to the time a new collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary Arbitrator is hereby AFFIRMED. SO ORDERED. G.R. No. 170112 April 30, 2008

DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO OCAMPO, JR., petitioners, vs. DEL PILAR ACADEMY EMPLOYEES UNION, respondents. DECISION NACHURA, J.: Before this Court is a petition for review on certiorari assailing the July 19, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 86868, and its September 28, 2005 Resolution2 denying the motion for reconsideration. Following are the factual antecedents. Respondent Del Pilar Academy Employees Union (the UNION) is the certified collective bargaining representative of teaching and non-teaching personnel of petitioner Del Pilar Academy (DEL PILAR), an educational institution operating in Imus, Cavite. On September 15, 1994, the UNION and DEL PILAR entered into a Collective Bargaining Agreement (CBA)3granting salary increase and other benefits to the teaching and non-teaching staff. Among the salient provisions of the CBA are: ARTICLE V SALARY INCREASE SECTION 1. Basic Pay the ACADEMY and the UNION agreed to maintain the wage increase in absolute amount as programmed in the computation prepared by the ACADEMY and dated 30 June 1994 initialed by the members of the bargaining panel of both parties, taking into account increases in tuition fees, if any. SECTION 2. The teaching load of teachers shall only be Twenty-Three (23) hours per week effective this school year and any excess thereon shall be considered as overload with pay. SECTION 3. Overloadpay (sic) will be based on the Teachers Basic Monthly Rate. SECTION 4. The ACADEMY agrees to grant longevity pay as follows: P100.00 for every 5 years of continuous service. The longevity shall be integrated in the basic salary within three (3) years from the effectivity of this agreement. ARTICLE VI

VACATION LEAVE WITH PAY SECTION 1. Every faculty member who has rendered at least six (6) consecutive academic semester of service shall be entitled to the 11th month and 12th month pay as summer vacation leave with pay. They may, however, be required to report [and] undergo briefings or seminars in connection with their teaching assignments for the ensuing school year. SECTION 2. Non-teaching employees who shall have rendered at least one (1) year of service shall be entitled to fifteen days leave with pay. The UNION then assessed agency fees from non-union employees, and requested DEL PILAR to deduct said assessment from the employees salaries and wages. DEL PILAR, however, refused to effect deductions claiming that the non-union employees were not amenable to it. In September 1997, the UNION negotiated for the renewal of the CBA. DEL PILAR, however, refused to renew the same unless the provision regarding entitlement to two (2) months summer vacation leave with pay will be amended by limiting the same to teachers, who have rendered at least three (3) consecutive academic years of satisfactory service. The UNION objected to the proposal claiming diminution of benefits. DEL PILAR refused to sign the CBA, resulting in a deadlock. The UNION requested DEL PILAR to submit the case for voluntary arbitration, but the latter allegedly refused, prompting the UNION to file a case for unfair labor practice with the Labor Arbiter against DEL PILAR; Eduardo Espejo, its president; and Eliseo Ocampo, Jr., chairman of the Board of Trustees. Traversing the complaint, DEL PILAR denied committing unfair labor practices against the UNION. It justified the non-deduction of the agency fees by the absence of individual check off authorization from the non-union employees. As regards the proposal to amend the provision on summer vacation leave with pay, DEL PILAR alleged that the proposal cannot be considered unfair for it was done to make the provision of the CBA conformable to the DECS Manual of Regulations for Private Schools.4 On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a Decision, viz.: Reviewing the records of this case and the law relative to the issues at hand, we came to the conclusion that it was an error on [the] part of [DEL PILAR] not to have collected agency fee due other workers who are non-union members but are included in the bargaining unit being represented by [the UNION]. True enough as was correctly quoted by [the UNION] Art. 248, to wit: Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agency may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agreement: Provided, that the individual authorization required under Article [241], paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. As it is, [DEL PILARs] unwarranted fear re-individual dues [without] authorization for nonunion members has no basis in fact or in law. For receipt of CBA benefits brought about by the CBA negotiated with [petitioners], they are duty bound to pay agency fees which may lawfully be deducted sans individual check-off authorization. Being [recipients] of said benefits, they should share and be made to pay the same considerations imposed upon the

union members. [DEL PILAR], therefore, was in error in refusing to deduct corresponding agency fees which lawfully belongs to the union. Anent the proposal to decrease the coverage of the 11th and 12th month vacation with pay, we do not believe that such was done in bad faith but rather in an honest attempt to make perfect procession following the DECS Manuals. Moreso, it is of judicial notice that in the course of negotiation, almost all provisions are up for grabs, amendments or change. This is something normal in the course of a negotiation and does not necessarily connote bad faith as each every one (sic) has the right to negotiate reward or totally amend the provisions of the contract/agreement. All told while there was error on [the] part of [DEL PILAR] for the first issue, [it] came through in the second. But as it is, we do not believe that a finding of unfair labor practice can be had considering the lack of evidence on record that said acts were done to undermine the union or stifle the members right to self organization or that the [petitioners] were in bad faith. If at all, its (sic) error may have been the result of a mistaken notion that individual check-off authorization is needed for it to be able to validly and legally deduct assessment especially after individual[s] concerned registered their objection. On the other hand, it is not error to negotiate for a better term in the CBA. So long as [the] parties will agree. It must be noted that a CBA is a contract between labor and management and is not simply a litany of benefits for labor. Moreso, for unfair labor practice to prosper, there must be a clear showing of acts aimed at stifling the workers right to self-organization. Mere allegations and mistake notions would not suffice. ACCORDINGLY, premises considered, the charge of unfair labor practice is hereby Dismissed for want of basis. SO ORDERED.5 On appeal, the National Labor Relations Commission (NLRC) affirmed the Arbiters ruling. In gist, it upheld the UNIONs right to agency fee, but did not consider DEL PILARs failure to deduct the same an unfair labor practice.6 The UNIONs motion for reconsideration having been denied,7 it then went to the CA via certiorari. On July 19, 2005, the CA rendered the assailed decision, affirming with modification the resolutions of the NLRC. Like the Arbiter and the NLRC, the CA upheld the UNIONs right to collect agency fees from non-union employees, but did not adjudge DEL PILAR liable for unfair labor practice. However, it ordered DEL PILAR to deduct agency fees from the salaries of non-union employees. The dispositive portion of the CA Decision reads: WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is hereby MODIFIED. Private respondent Del Pilar Academy is ordered to deduct the agency fees from non-union members who are recipients of the collective bargaining agreement benefits. The agency fees shall be equivalent to the dues and other fees paid by the union members. SO ORDERED.8 DEL PILAR filed a motion for reconsideration of the decision, but the CA denied the same on September 28, 2005.9

Before us, DEL PILAR impugns the CA Decision on the following grounds: I. IN PROMULGATING THE CHALLENGED DECISION AND RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED THE FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF THE EMPLOYEES WAS NOT A BENEFIT ARISING FROM A COLLECTIVE BARGAINING AGREEMENT, BUT WAS MANDATED BY THE DIRECTIVE OF A GOVERNMENTAL DEPARTMENT; and II. CONSIDERING THE ANNUAL SALARY INCREASE OF NON-UNION MEMBERS WAS NOT A BENEFIT ARISING FROM THE CBA, THEIR INDIVIDUAL WRITTEN AUTHORIZATIONS ARE STILL REQUIRED TO ALLOW PETITIONER ACADEMY TO LEGALLY DEDUCT THE SAME FROM THEIR RESPECTIVE SALARY.10 The issue here boils down to whether or not the UNION is entitled to collect agency fees from nonunion members, and if so, whether an individual written authorization is necessary for a valid check off. The collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248(e) of the Labor Code, thus: Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed reasonable fees equivalent to the dues and other fees paid by the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement. Provided, That the individual authorization required under Article 241, paragraph (o) of this Code shall not apply to the non-members of recognized collective bargaining agent. When so stipulated in a collective bargaining agreement or authorized in writing by the employees concerned, the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct the sum equivalent to the amount of union dues, as agency fees, from the employees' wages for direct remittance to the union. The system is referred to as check off.11 No requirement of written authorization from the non-union employees is necessary if the non-union employees accept the benefits resulting from the CBA.12 DEL PILAR admitted its failure to deduct the agency fees from the salaries of non-union employees, but justifies the non-deduction by the absence of individual written authorization. It posits that Article 248(e) is inapplicable considering that its employees derived no benefits from the CBA. The annual salary increase of its employee is a benefit mandated by law, and not derived from the CBA. According to DEL PILAR, the Department of Education, Culture and Sports (DECS) required all educational institutions to allocate at least 70% of tuition fee increases for the salaries and other benefits of teaching and non-teaching personnel; that even prior to the execution of the CBA in September 1994, DEL PILAR was already granting annual salary increases to its employees. Besides, the non-union employees objected to the deduction; hence, a written authorization is indispensable to effect a valid check off. DEL PILAR urges this Court to reverse the CA ruling insofar as it ordered the deduction of agency fees from the salaries of non-union employees, arguing that such conclusion proceeds from a misplaced premise that the salary increase arose from the CBA. The argument cannot be sustained. Contrary to what DEL PILAR wants to portray, the grant of annual salary increase is not the only provision in the CBA that benefited the non-union employees. The UNION negotiated for other benefits, namely, limitations on teaching assignments to 23 hours per week, additional

compensation for overload units or teaching assignments in excess of the 23 hour per week limit, and payment of longevity pay. It also negotiated for entitlement to summer vacation leave with pay for two (2) months for teaching staff who have rendered six (6) consecutive semesters of service. For the non-teaching personnel, the UNION worked for their entitlement to fifteen (15) days leave with pay.13 These provisions in the CBA surely benefited the non-union employees, justifying the collection of, and the UNIONs entitlement to, agency fees. Accordingly, no requirement of written authorization from the non-union employees is needed to effect a valid check off. Article 248(e) makes it explicit that Article 241, paragraph (o),14 requiring written authorization is inapplicable to non-union members, especially in this case where the nonunion employees receive several benefits under the CBA. As explained by this Court in Holy Cross of Davao College, Inc. v. Hon. Joaquin15 viz.: The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union. By this jurisprudential yardstick, this Court finds that the CA did not err in upholding the UNIONs right to collect agency fees. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 86868, are AFFIRMED. SO ORDERED. G.R. No. 170112 April 30, 2008

DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO OCAMPO, JR., petitioners, vs. DEL PILAR ACADEMY EMPLOYEES UNION, respondents. DECISION NACHURA, J.: Before this Court is a petition for review on certiorari assailing the July 19, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 86868, and its September 28, 2005 Resolution2 denying the motion for reconsideration. Following are the factual antecedents. Respondent Del Pilar Academy Employees Union (the UNION) is the certified collective bargaining representative of teaching and non-teaching personnel of petitioner Del Pilar Academy (DEL PILAR), an educational institution operating in Imus, Cavite.

On September 15, 1994, the UNION and DEL PILAR entered into a Collective Bargaining Agreement (CBA)3granting salary increase and other benefits to the teaching and non-teaching staff. Among the salient provisions of the CBA are: ARTICLE V SALARY INCREASE SECTION 1. Basic Pay the ACADEMY and the UNION agreed to maintain the wage increase in absolute amount as programmed in the computation prepared by the ACADEMY and dated 30 June 1994 initialed by the members of the bargaining panel of both parties, taking into account increases in tuition fees, if any. SECTION 2. The teaching load of teachers shall only be Twenty-Three (23) hours per week effective this school year and any excess thereon shall be considered as overload with pay. SECTION 3. Overloadpay (sic) will be based on the Teachers Basic Monthly Rate. SECTION 4. The ACADEMY agrees to grant longevity pay as follows: P100.00 for every 5 years of continuous service. The longevity shall be integrated in the basic salary within three (3) years from the effectivity of this agreement. ARTICLE VI VACATION LEAVE WITH PAY SECTION 1. Every faculty member who has rendered at least six (6) consecutive academic semester of service shall be entitled to the 11th month and 12th month pay as summer vacation leave with pay. They may, however, be required to report [and] undergo briefings or seminars in connection with their teaching assignments for the ensuing school year. SECTION 2. Non-teaching employees who shall have rendered at least one (1) year of service shall be entitled to fifteen days leave with pay. The UNION then assessed agency fees from non-union employees, and requested DEL PILAR to deduct said assessment from the employees salaries and wages. DEL PILAR, however, refused to effect deductions claiming that the non-union employees were not amenable to it. In September 1997, the UNION negotiated for the renewal of the CBA. DEL PILAR, however, refused to renew the same unless the provision regarding entitlement to two (2) months summer vacation leave with pay will be amended by limiting the same to teachers, who have rendered at least three (3) consecutive academic years of satisfactory service. The UNION objected to the proposal claiming diminution of benefits. DEL PILAR refused to sign the CBA, resulting in a deadlock. The UNION requested DEL PILAR to submit the case for voluntary arbitration, but the latter allegedly refused, prompting the UNION to file a case for unfair labor practice with the Labor Arbiter against DEL PILAR; Eduardo Espejo, its president; and Eliseo Ocampo, Jr., chairman of the Board of Trustees. Traversing the complaint, DEL PILAR denied committing unfair labor practices against the UNION. It justified the non-deduction of the agency fees by the absence of individual check off authorization from the non-union employees. As regards the proposal to amend the provision on summer vacation

leave with pay, DEL PILAR alleged that the proposal cannot be considered unfair for it was done to make the provision of the CBA conformable to the DECS Manual of Regulations for Private Schools.4 On October 2, 1998, Labor Arbiter Nieves V. De Castro rendered a Decision, viz.: Reviewing the records of this case and the law relative to the issues at hand, we came to the conclusion that it was an error on [the] part of [DEL PILAR] not to have collected agency fee due other workers who are non-union members but are included in the bargaining unit being represented by [the UNION]. True enough as was correctly quoted by [the UNION] Art. 248, to wit: Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agency may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agreement: Provided, that the individual authorization required under Article [241], paragraph (o) of this Code shall not apply to the non-members of the recognized collective bargaining agent. As it is, [DEL PILARs] unwarranted fear re-individual dues [without] authorization for nonunion members has no basis in fact or in law. For receipt of CBA benefits brought about by the CBA negotiated with [petitioners], they are duty bound to pay agency fees which may lawfully be deducted sans individual check-off authorization. Being [recipients] of said benefits, they should share and be made to pay the same considerations imposed upon the union members. [DEL PILAR], therefore, was in error in refusing to deduct corresponding agency fees which lawfully belongs to the union. Anent the proposal to decrease the coverage of the 11th and 12th month vacation with pay, we do not believe that such was done in bad faith but rather in an honest attempt to make perfect procession following the DECS Manuals. Moreso, it is of judicial notice that in the course of negotiation, almost all provisions are up for grabs, amendments or change. This is something normal in the course of a negotiation and does not necessarily connote bad faith as each every one (sic) has the right to negotiate reward or totally amend the provisions of the contract/agreement. All told while there was error on [the] part of [DEL PILAR] for the first issue, [it] came through in the second. But as it is, we do not believe that a finding of unfair labor practice can be had considering the lack of evidence on record that said acts were done to undermine the union or stifle the members right to self organization or that the [petitioners] were in bad faith. If at all, its (sic) error may have been the result of a mistaken notion that individual check-off authorization is needed for it to be able to validly and legally deduct assessment especially after individual[s] concerned registered their objection. On the other hand, it is not error to negotiate for a better term in the CBA. So long as [the] parties will agree. It must be noted that a CBA is a contract between labor and management and is not simply a litany of benefits for labor. Moreso, for unfair labor practice to prosper, there must be a clear showing of acts aimed at stifling the workers right to self-organization. Mere allegations and mistake notions would not suffice. ACCORDINGLY, premises considered, the charge of unfair labor practice is hereby Dismissed for want of basis. SO ORDERED.5

On appeal, the National Labor Relations Commission (NLRC) affirmed the Arbiters ruling. In gist, it upheld the UNIONs right to agency fee, but did not consider DEL PILARs failure to deduct the same an unfair labor practice.6 The UNIONs motion for reconsideration having been denied,7 it then went to the CA via certiorari. On July 19, 2005, the CA rendered the assailed decision, affirming with modification the resolutions of the NLRC. Like the Arbiter and the NLRC, the CA upheld the UNIONs right to collect agency fees from non-union employees, but did not adjudge DEL PILAR liable for unfair labor practice. However, it ordered DEL PILAR to deduct agency fees from the salaries of non-union employees. The dispositive portion of the CA Decision reads: WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The assailed resolution of the NLRC dated April 30, 2004 is hereby MODIFIED. Private respondent Del Pilar Academy is ordered to deduct the agency fees from non-union members who are recipients of the collective bargaining agreement benefits. The agency fees shall be equivalent to the dues and other fees paid by the union members. SO ORDERED.8 DEL PILAR filed a motion for reconsideration of the decision, but the CA denied the same on September 28, 2005.9 Before us, DEL PILAR impugns the CA Decision on the following grounds: I. IN PROMULGATING THE CHALLENGED DECISION AND RESOLUTION, THE HON. COURT OF APPEALS DISREGARDED THE FACT THAT THE ANNUAL INCREASE IN THE SALARIES OF THE EMPLOYEES WAS NOT A BENEFIT ARISING FROM A COLLECTIVE BARGAINING AGREEMENT, BUT WAS MANDATED BY THE DIRECTIVE OF A GOVERNMENTAL DEPARTMENT; and II. CONSIDERING THE ANNUAL SALARY INCREASE OF NON-UNION MEMBERS WAS NOT A BENEFIT ARISING FROM THE CBA, THEIR INDIVIDUAL WRITTEN AUTHORIZATIONS ARE STILL REQUIRED TO ALLOW PETITIONER ACADEMY TO LEGALLY DEDUCT THE SAME FROM THEIR RESPECTIVE SALARY.10 The issue here boils down to whether or not the UNION is entitled to collect agency fees from nonunion members, and if so, whether an individual written authorization is necessary for a valid check off. The collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248(e) of the Labor Code, thus: Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed reasonable fees equivalent to the dues and other fees paid by the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement. Provided, That the individual authorization required under Article 241, paragraph (o) of this Code shall not apply to the non-members of recognized collective bargaining agent.

When so stipulated in a collective bargaining agreement or authorized in writing by the employees concerned, the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct the sum equivalent to the amount of union dues, as agency fees, from the employees' wages for direct remittance to the union. The system is referred to as check off.11 No requirement of written authorization from the non-union employees is necessary if the non-union employees accept the benefits resulting from the CBA.12 DEL PILAR admitted its failure to deduct the agency fees from the salaries of non-union employees, but justifies the non-deduction by the absence of individual written authorization. It posits that Article 248(e) is inapplicable considering that its employees derived no benefits from the CBA. The annual salary increase of its employee is a benefit mandated by law, and not derived from the CBA. According to DEL PILAR, the Department of Education, Culture and Sports (DECS) required all educational institutions to allocate at least 70% of tuition fee increases for the salaries and other benefits of teaching and non-teaching personnel; that even prior to the execution of the CBA in September 1994, DEL PILAR was already granting annual salary increases to its employees. Besides, the non-union employees objected to the deduction; hence, a written authorization is indispensable to effect a valid check off. DEL PILAR urges this Court to reverse the CA ruling insofar as it ordered the deduction of agency fees from the salaries of non-union employees, arguing that such conclusion proceeds from a misplaced premise that the salary increase arose from the CBA. The argument cannot be sustained. Contrary to what DEL PILAR wants to portray, the grant of annual salary increase is not the only provision in the CBA that benefited the non-union employees. The UNION negotiated for other benefits, namely, limitations on teaching assignments to 23 hours per week, additional compensation for overload units or teaching assignments in excess of the 23 hour per week limit, and payment of longevity pay. It also negotiated for entitlement to summer vacation leave with pay for two (2) months for teaching staff who have rendered six (6) consecutive semesters of service. For the non-teaching personnel, the UNION worked for their entitlement to fifteen (15) days leave with pay.13 These provisions in the CBA surely benefited the non-union employees, justifying the collection of, and the UNIONs entitlement to, agency fees. Accordingly, no requirement of written authorization from the non-union employees is needed to effect a valid check off. Article 248(e) makes it explicit that Article 241, paragraph (o),14 requiring written authorization is inapplicable to non-union members, especially in this case where the nonunion employees receive several benefits under the CBA. As explained by this Court in Holy Cross of Davao College, Inc. v. Hon. Joaquin15 viz.: The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union. By this jurisprudential yardstick, this Court finds that the CA did not err in upholding the UNIONs right to collect agency fees. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 86868, are AFFIRMED.

SO ORDERED. CABEU-NFL moved for a reconsideration but its motion was denied by the CA in its Resolution dated January 21, 2009.16 Hence this petition. In its Memorandum,17 CABEU-NFL raised the following: ISSUES I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE HONORABLE COURT OF APPEALS REVERSED THE FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) WHICH HELD RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE.18 II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT GAVE DUE COURSE TO RESPONDENTS PETITION FOR CERTIORARI WITHOUT COMPLYING WITH THE JURISDICTIONAL REQUIREMENTS UNDER RULE 65, SECTION 1 AND SUPREME COURT CIRCULAR NO. 04-94, ON CERTIFICATION ON NON-FORUM SHOPPING.19 In sum, the petition raises three (3) issues for the Courts consideration which are whether or not the CA erred: (1) in giving due course to the petition for certiorari despite service of the copy of the petition to CABEU-NFLs counsel and not to itself ; (2) in giving due course to the petition for certiorari despite the failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in absolving CAB of unfair labor practice. CABEU-NFL insists that the CA erred in giving due course to the petition for certiorari because respondent CAB served a copy of its CA petition to CABEU-NFLs counsel and not to CABEU-NFL itself. CABEU-NFL, likewise, harps on the failure of CAB to indicate CABEU-NFLs full address in the said petition as required in petitions forcertiorari, citing Section 1, Rule 6520 in relation to Section 3, Rule 46.21 Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair labor practice on the ground of its refusal to bargain collectively. CABEU-NFL claims to be the duly certified bargaining agent of the CAB rank-and-file employees such that it requested to bargain through a letter-request which was subsequently turned down by CAB in its letter-response. Anchored on the admission in the CAB letter-response of a supposed CBA with CABELA, CABEU-NFL charges that such act constitutes a violation of CABs duty to bargain collectively under Article 253 of the Labor Code22 and consequently an act of unfair labor practice prohibited under Article 248 (g) of the Labor Code.23 CABEU-NFL also submits that CAB violated the prohibition against forum shopping when it filed its petition in the CA. CABEU-NFL claims that the failure of CABs counsel to disclose to the CA the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 constituted forum shopping, a sufficient ground to dismiss the said petition. In its Memorandum,24 CAB claims that service of the copy of the petition for certiorari to CABEUNFLs counsel was sufficient. It vehemently denies its alleged failure to indicate CABEU-NFLs name and address in its petition. CAB also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 "were initiated exclusively by members of CABEU and by CABEU itself, respectively, and not by CAB."25 CAB further argues that there was no identity of issues or causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it was constrained to negotiate and conclude in good faith a new CBA with CABELA, the newly established union by workers who disassociated from CABEU-NFL. CAB emphasizes that it declined further negotiations with CABEU-NFL in good faith because to continue with it would serve no practical purpose. Considering that the NCMB has yet to resolve CABs query in its letter-response, CAB was left without any choice but accede to the demands of CABELA. In concluding a CBA with CABELA, CAB claims that it acted in the best interest of the rank-and-file workers which belied bad faith. THE COURTS RULING The petition lacks merit. On the technical issues, CABEU-NFLs insistence that service of the copy of the CA petition should have been made to it, rather than to its counsel, is unavailing. On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such counsel pursuant to Section 2, Rule 13.26 With respect to the alleged failure of CAB to indicate the address of CABEU-NFL in the CA petition, it appears that CABEU-NFL is misleading the Court. A perusal of the petition27 filed before the CA reveals that CAB indeed indicated both the name28 and address29 of CABEU-NFL. Moreover, the indication in said petition by CAB that CABEU-NFL could be served with court processes through its counsel was substantial compliance with the Rules.30 The Court, likewise, cannot sustain CABEU-NFLs contention on forum shopping against CAB. By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.31 In the case at bench, CABEU-NFL merely raised the fact of the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition for certiorari32 filed before the CA without demonstrating any similarity in the causes of action between the said cases and the present case. The CA, citing the ruling in Tboli Agro-Industrial Development, Inc. v. Solilapsi33 as authority, points out that: This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-G.R. No. 03017 involve because: "As a general rule, courts are not authorized to take judicial notice in the adjudication of cases pending before them of the contents of other cases even when such cases have been tried or are pending in the same court and notwithstanding the fact that both cases may have been tried or are actually pending before the same judge. Courts may be required to take judicial notice of the decisions of the appellate courts but not of the decisions of the coordinate trial courts, or even of a decision or the facts involved in another case tried by the same court itself, unless the parties

introduce the same in evidence or the court, as a matter of convenience, decides to do so. Besides, judicial notice of matters which ought to be known to judges because of their judicial functions is only discretionary upon the court. It is not mandatory." In the absence of evidence to show that the issues involved in these cases are the same, this Court cannot give credence to private respondents claim of forum shopping. The Court now proceeds to determine whether or not respondent CAB was guilty of acts constituting unfair labor practice by refusing to bargain collectively. The Court rules in the negative. CAB is being accused of violating its duty to bargain collectively supposedly because of its act in concluding a CBA with CABELA, another union in the bargaining unit, and its failure to resume negotiations with CABEU-NFL. The concept of unfair labor practice is provided in Article 247 of the Labor Code which states: Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. xxx xxx xxx

The Labor Code, likewise, enumerates the acts constituting unfair labor practices of the employer, thus: Article 248. Unfair Labor Practices of Employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: xxx xxx xxx

(g) To violate the duty to bargain collectively as prescribed by this Code. For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x" in suspending negotiations with CABEU-NFL. Notably, CAB believed that CABEUNFL was no longer the representative of the workers.34 It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA."35 Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices. Furthermore, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the burden of proof to present substantial evidence to support the allegation of unfair labor practice.36 Apparently, CABEU-NFL refers only to the circumstances mentioned in the letterresponse, namely, the execution of the supposed CBA between CAB and CABELA and the request to suspend the negotiations, to conclude that bad faith attended CABs actions. The Court is of the

view that CABEU-NFL, in simply relying on the said letter-response, failed to substantiate its claim of unfair labor practice to rebut the presumption of good faith. Moreover, as correctly determined by the LA, the filing of the complaint for unfair labor practice was premature inasmuch as the issue of collective bargaining is still pending before the NCMB. In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be protected. The Court is, likewise, guided by the goal of attaining industrial peace by the proper application of the law. Thus, it cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has no valid support to its claims. It is not within this Courts power to rule beyond the ambit of the law.37 WHEREFORE, the petition is DENIED. SO ORDERED. G.R. Nos. 158930-31 March 3, 2008

UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner, vs. NESTL PHILIPPINES, INCORPORATED, respondent. x------------------------------------------x G.R. Nos. 158944-45 March 3, 2008

NESTL PHILIPPINES, INCORPORATED, petitioner, vs. UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), respondent. RESOLUTION CHICO-NAZARIO, J.: On 22 August 2006, this Court promulgated its Decision1 in the above-entitled cases, the dispositive part of which reads WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestl be declared to have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-DFA-KMU and Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs.

Subsequent thereto, Nestl Philippines, Incorporated (Nestl) filed a Motion for Clarification2 on 20 September 2006; while Union of Filipro Employees Drug, Food and Allied Industries Union Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September 2006, filed a Motion for Partial Reconsideration3 of the foregoing Decision. The material facts of the case, as determined by this Court in its Decision, may be summarized as follows: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file employees of Nestl belonging to the latters Alabang and Cabuyao plants. On 4 April 2001, as the existing collective bargaining agreement (CBA) between Nestl and UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed Nestl of their intent to "open [our] new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001."6 In response thereto, Nestl informed them that it was also preparing its own counter-proposal and proposed ground rules to govern the impending conduct of the CBA negotiations. On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only)7, Nestl reiterated its stance that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom."8 Dialogue between the company and the union thereafter ensued. On 14 August 2001, however, Nestl requested9 the National Conciliation and Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive mediation proceedings between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite fifteen (15) meetings between them, the parties failed to reach any agreement on the proposed CBA. Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice of Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of a bargaining deadlock pertaining to economic issues, i.e., "retirement (plan), panel composition, costs and attendance, and CBA".11 On 07 November 2001, anotherNotice of Strike12 was filed by the union, this time predicated on Nestls alleged unfair labor practices, that is, bargaining in bad faith by setting pre-conditions in the ground rules and/or refusing to include the issue of the Retirement Plan in the CBA negotiations. The result of a strike vote conducted by the members of UFE-DFA-KMU yielded an overwhelming approval of the decision to hold a strike.13 On 26 November 2001, prior to holding the strike, Nestl filed with the DOLE a Petition for Assumption of Jurisdiction,14 praying for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the current labor dispute in order to effectively enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestls Cabuyao Plant in Laguna. On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the subject labor dispute. The fallo of said Order states that: CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the labor dispute at the Nestl Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as amended.

Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease and desist from committing any act that might lead to the further deterioration of the current labor relations situation. The parties are further directed to meet and convene for the discussion of the union proposals and company counter-proposals before the National Conciliation and Mediation Board (NCMB) who is hereby designated as the delegate/facilitator of this Office for this purpose. The NCMB shall report to this Office the results of this attempt at conciliation and delimitation of the issues within thirty (30) days from the parties receipt of this Order, in no case later than December 31, 2001. If no settlement of all the issues is reached, this Office shall thereafter define the outstanding issues and order the filing of position papers for a ruling on the merits. UFE-DFA-KMU sought reconsideration16 of the above but nonetheless moved for additional time to file its position paper as directed by the Assumption of Jurisdiction Order. On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration. On 15 January 2002, despite the order enjoining the conduct of any strike or lockout and conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at Nestls Cabuyao Plant went on strike. In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the members of UFE-DFA-KMU to return-to-work within twenty-four (24) hours from receipt of such Order; (2) Nestl to accept back all returning workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from committing acts inimical to the ongoing conciliation proceedings leading to the further deterioration of the situation; and (4) the submission of their respective position papers within ten (10) days from receipt thereof. But notwithstanding the Return-to-Work Order, the members of UFE-DFA-KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine National Police (PNP) for the enforcement of said order. On 7 February 2002, Nestl and UFE-DFA-KMU filed their respective position papers. Nestl addressed several issues concerning economic provisions of the CBA as well as the non-inclusion of the issue of the Retirement Plan in the collective bargaining negotiations. On the other hand, UFEDFA-KMU limited itself to the issue of whether or not the retirement plan was a mandatory subject in its CBA negotiations. On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised by Nestl but not covered by its initial position paper by way of a Supplemental Position Paper. UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, one of which was aManifestation with Motion for Reconsideration of the Order dated February 11, 2002 assailing the Order of February 11, 2002 for supposedly being contrary to law, jurisprudence and the evidence on record. The union posited that Sec. Sto. Tomas "could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute,"17 and that the Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA deadlock. On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU.

Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals, alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the Orders of 11 February 2002 and 8 March 2002. In the interim, in an attempt to finally resolve the crippling labor dispute between the parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with an Order19 dated 02 April 2002, ruling that: a. we hereby recognize that the present Retirement Plan at the Nestl Cabuyao Plant is a unilateral grant that the parties have expressly so recognized subsequent to the Supreme Courts ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is therefore not a mandatory subject for bargaining; b. the Unions charge of unfair labor practice against the Company is hereby dismissed for lack of merit; c. the parties are directed to secure the best applicable terms of the recently concluded CBSs between Nestl Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the terms and conditions of the Nestl Cabuyao Plant CBA; d. all union demands that are not covered by the provisions of the CBAs of the other eight (8) bargaining units in the Company are hereby denied; e. all existing provisions of the expired Nestl Cabuyao Plant CBA without any counterpart in the CBAs of the other eight bargaining units in the Company are hereby ordered maintained as part of the new Nestl Cabuyao Plant CBA; f. the parties shall execute their CBA within thirty (30) days from receipt of this Order, furnishing this Office a copy of the signed Agreement; g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the first day six months after the expiration on June 4, 2001 of the superceded CBA). UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied on 6 May 2002. For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition for Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the DOLE, having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. On 27 February 2003, the appellate court promulgated its Decision on the twin petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU, the dispositive part thereof stating WHEREFORE, in view of the foregoing, there being grave abuse on the part of the public respondent in issuing all the assailed Orders, both petitions are hereby GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled: "IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-

CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB-RBIV-LAG-NS-11-10-039 01) are hereby ANNULLED and SET ASIDE. Private respondent is hereby directed to resume the CBA negotiations with the petitioner.20 Both parties appealed the aforequoted ruling. Nestl essentially assailed that part of the decision finding the DOLE Secretary to have gravely abused her discretion amounting to lack or excess of jurisdiction when she ruled that the Retirement Plan was not a valid issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast, questioned the appellate courts decision finding Nestl free and clear of any unfair labor practice. Since the motions for reconsideration of both parties were denied by the Court of Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU and Nestl separately filed the instant Petitions for Review on Certiorariunder Rule 45 of the Rules of Court, as amended. G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestl seeking to reverse the Court of Appeals Decision insofar as the appellate courts failure to find Nestl guilty of unfair labor practice was concerned; while G.R. No. 158944-45 was instituted by Nestl against UFE-DFA-KMU likewise looking to annul and set aside the part of the Court of Appeals Decision declaring that: 1) the Retirement Plan was a valid collective bargaining issue; and 2) the scope of the power of the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the labor dispute between UFE-DFA-KMU and Nestl was limited to the resolution of questions and matters pertaining merely to the ground rules of the collective bargaining negotiations to be conducted between the parties. On 29 March 2004, this Court resolved21 to consolidate the two petitions inasmuch as they (1) involved the same set of parties; (2) arose from the same set of circumstances, i.e., from several Orders issued by then DOLE Secretary, Hon. Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over the labor dispute between Nestl and UFE-DFA-KMU, Alabang and Cabuyao Divisions;22 and (3) similarly assailed the same Decision and Resolution of the Court of Appeals. After giving due course to the instant consolidated petitions, this Court promulgated on 22 August 2006 its Decision, now subject of UFE-DFA-KMUs Motion for Partial Reconsideration and Nestls Motion for Clarification. In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court address and discuss anew points or arguments that have basically been passed upon in this Courts 22 August 2006 Decision. Firstly, it questions this Courts finding that Nestl was not guilty of unfair labor practice, considering that the transaction speaks for itself,i.e, res ipsa loquitor. And made an issue again is the question of whether or not the DOLE Secretary can take cognizance of matters beyond the amended Notice of Strike. As to Nestls prayer for clarification, the corporation seeks elucidation respecting the dispositive part of this Courts Decision directing herein parties to resume negotiations on the retirement compensation package of the concerned employees. It posits that "[i]n directing the parties to negotiate the Retirement Plan, the Honorable Court x x x might have overlooked the fact that here, the Secretary of Labor had already assumed jurisdiction over the entire 2001-2004 CBA controversy x x x." As to the charge of unfair labor practice: The motion does not put forward new arguments to substantiate the prayer for reconsideration of this Courts Decision except for the sole contention that the transaction speaks for itself, i.e., res ipsa

loquitor. Nonetheless, even a perusal of the arguments of UFE-DFA-KMU in its petition and memorandum in consideration of the point heretofore raised will not convince us to change our disposition of the question of unfair labor practice. UFE-DFA-KMU argues therein that Nestls "refusal to bargain on a very important CBA economic provision constitutes unfair labor practice."23 It explains that Nestl set as a precondition for the holding of collective bargaining negotiations the non-inclusion of the issue of Retirement Plan. In its words, "respondent Nestl Phils., Inc. insisted that the Union should first agree that the retirement plan is not a bargaining issue before respondent Nestl would agree to discuss other issues in the CBA."24 It then concluded that "the Court of Appeals committed a legal error in not ruling that respondent company is guilty of unfair labor practice. It also committed a legal error in failing to award damages to the petitioner for the ULP committed by the respondent."25 We are unconvinced still. The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code, as amended, which state ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours, of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms of conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an agreement. The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of credibility. The effect of an employers or a unions individual actions is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the finding of the NLRC.26 For a charge of unfair labor practice to prosper, it must be shown that Nestl was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. While the law makes it an obligation for the employer and the employees to bargain

collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement. Herein, the union merely bases its claim of refusal to bargain on a letter28 dated 29 May 2001 written by Nestl where the latter laid down its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom." But as we have stated in this Courts Decision, said letter is not tantamount to refusal to bargain. In thinking to exclude the issue of Retirement Plan from the CBA negotiations, Nestl, cannot be faulted for considering the same benefit as unilaterally granted, considering that eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted benefit. This is not a case where the employer exhibited an indifferent attitude towards collective bargaining, because the negotiations were not the unilateral activity of the bargaining representative. Nestls desire to settle the dispute and proceed with the negotiation being evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at good-faith bargaining. In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The corporation simply wanted to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was in the nature of a unilaterally granted benefit. An employers steadfast insistence to exclude a particular substantive provision is no different from a bargaining representatives perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith.[fn24 p.10] It is but natural that at negotiations, management and labor adopt positions or make demands and offer proposals and counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-KMU, Nestle could have refused to bargain with the former but it did not. And the managements firm stand against the issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point of stalemate. The foregoing things considered, this Court replicates below its clear disposition of the issue: The concept of "unfair labor practice" is defined by the Labor Code as: ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION THEREOF. Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. x x x x. The same code likewise provides the acts constituting unfair labor practices committed by employers, to wit: ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. It shall be unlawful for an employer to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right to selforganization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement. Provided, That the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining agent; [The article referred to is 241, not 242. CAA] (f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations associations or partnerships who have actually participated, authorized or ratified unfair labor practices shall be held criminally liable. (Emphasis supplied.) Herein, Nestl is accused of violating its duty to bargain collectively when it purportedly imposed a pre-condition to its agreement to discuss and engage in collective bargaining negotiations with UFE-DFA-KMU. A meticulous review of the record and pleadings of the cases at bar shows that, of the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the second that the ground of unfair labor practice was alleged. Worse, the 7 November 2001 Notice of Strike

merely contained a general allegation that Nestl committed unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in the ground rules (Retirement issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU Position Paper; DOLE original records, p. 146.) In contrast, Nestl, in its Position Paper, did not confine itself to the issue of the non-inclusion of the Retirement Plan but extensively discussed its stance on other economic matters pertaining to the CBA. It is UFE-DFA-KMU, therefore, who had the burden of proof to present substantial evidence to support the allegation of unfair labor practice. A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum (in G.R. Nos. 158930-31) will readily disclose the need for the presentation of evidence other than its bare contention of unfair labor practice in order to make certain the propriety or impropriety of the ULP charge hurled against Nestl. Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code: x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably." (Emphasis supplied.) In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of Strike nor the records of these cases substantiate a finding of unfair labor practice. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. (Tiu v. National Labor Relations Commission, G.R. No. 123276, 18 August 1997, 277 SCRA 681, 688.) Employers are accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) This mass of privileges comprises the so-called management prerogatives. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In this connection, the rule is that good faith is always presumed. As long as the companys exercise of the same is in good faith to advance its interest and not for purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) There is no per se test of good faith in bargaining. (Hongkong Shanghai Banking Corporation Employees Union v. National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad faith is an inference to be drawn from the facts. (Hongkong Shanghai Banking Corporation Employees Union v. National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Herein, no proof was presented to exemplify bad faith on the part of Nestl apart from mere allegation. Construing arguendo that the content of the aforequoted letter of 29 May 2001 laid down a pre-condition to its agreement to bargain with UFE-DFA-KMU, Nestls inclusion in its Position Paper of its proposals affecting other matters covered by the CBA negates the claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of Nestl, the award of moral and exemplary damages is unavailing. As to the jurisdiction of the DOLE Secretary under the amended Notice of Strike:

This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE Secretary should not have gone beyond the disagreement on the ground rules of the CBA negotiations. The union doggedly asserts that the entire labor dispute between herein parties concerns only the ground rules. Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock as the basis for the filing of its Notice of Strike; and at the time of the filing of the first Notice of Strike, several conciliation conferences had already been undertaken where both parties had already exchanged with each other their respective CBA proposals. In fact, during the conciliation meetings before the NCMB, but prior to the filing of the notices of strike, the parties had already delved into matters affecting the meat of the collective bargaining agreement. The Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit: x x x The records disclose that the Union filed two Notices of Strike. The First is dated October 31, 2001 whose grounds are cited verbatim hereunder: "A. Bargaining Deadlock 1. Economic issues (specify) 1. Retirement 2. Panel Composition 3. Costs and Attendance 4. CBA" The second Notice of Strike is dated November 7, 2001 and the cited ground is like quoted verbatim below: "B. Unfair Labor Practices (specify) Bargaining in bad faith Setting pre-condition in the ground rules (Retirement issue)" Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to and took the place of the first Notice of Strike. In fact, our Assumption of Jurisdiction Order dated November 29, 2001 specifically cited the two (2) Notices of Strike without any objection on the part of the Union x x x.29 Had the parties not been at the stage where the substantive provisions of the proposed CBA had been put in issue, the union would not have based thereon its initial notice to strike. This Court maintains its original position in the Decision that, based on the Notices of Strike filed by UFE-DFAKMU, the Secretary of the DOLE rightly decided on matters of substance. That the union later on changed its mind is of no moment because to give premium to such would make the legally mandated discretionary power of the Dole Secretary subservient to the whims of the parties.

As to the point of clarification on the resumption of negotiations respecting the Retirement Plan: As for the supposed confusion or uncertainty of the dispositive part of this Courts Decision, Nestle moves for clarification of the statement "The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussion hereinabove set forth. No costs." The entire fallo of this Courts Decision reads: WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestl be declared to have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-DFA-KMU and Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs. Nestle interprets the foregoing as an order for the parties to resume negotiations by themselves respecting the issue of retirement benefits due the employees of the Cabuyao Plant. Otherwise stated, Nestle posits that the dispositive part of the Decision directs the parties to submit to a voluntary mode of dispute settlement. A read-through of this Courts Decision reveals that the ambiguity is more ostensible than real. This Courts Decision of 22 August 2006 designated marked boundaries as to the implications of the assailed Orders of the Secretary of the DOLE. We said therein that 1) the Retirement Plan is still a valid issue for herein parties collective bargaining negotiations; 2) the Court of Appeals committed reversible error in limiting to the issue of the ground rules the scope of the power of the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestl is not guilty of unfair labor practice. Nowhere in our Decision did we require parties to submit to negotiate by themselves the tenor of the retirement benefits of the concerned employees of Nestl, precisely because the Secretary of the DOLE had already assumed jurisdiction over the labor dispute subject of herein petitions. Again, we spell out what encompass the Secretarys assumption of jurisdiction power. The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. And, as a matter of necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise submitted to him for resolution. In the case at bar, the issue of retirement benefits was specifically what was presented before the Secretary of the DOLE; hence, We reject Nestls interpretation. Our decision is crystal and cannot be interpreted any other way. The Secretary having already assumed jurisdiction over the labor dispute subject of these consolidated petitions, the issue concerning the retirement benefits of the concerned employees must be remanded back to him for proper disposition. All told, in consideration of the points afore-discussed and the fact that no substantial arguments have been raised by either party, this Court remains unconvinced that it should modify or reverse in any way its disposition of herein cases in its earlier Decision. The labor dispute between the Nestle and UFE-DFA-KMU has dragged on long enough. As no other issues are availing, let this Resolution write an ending to the protracted labor dispute between Nestl and UFE-DFA-KMU (Cabuyao Division).

WHEREFORE, premises considered, the basic issues of the case having been passed upon and there being no new arguments availing, the Motion for Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit. Let these cases be remanded to the Secretary of the Department of Labor and Employment for proper disposition, consistent with the discussions in this Courts Decision of 22 August 2006 and as hereinabove set forth. No costs. SO ORDERED. G.R. No. 158930-31 August 22, 2006 UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), Petitioner, vs. NESTL PHILIPPINES, INCORPORATED, Respondent. x-----------------------------------x G.R. No. 158944-45 August 22, 2006 NESTL PHILIPPINES, INCORPORATED Petitioner, vs. UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS KILUSANG MAYO UNO (UFE-DFA-KMU), Respondent. DECISION CHICO-NAZARIO, J.: The Case Before the Court are two (2) petitions for review on certiorari under Rule 45 of the Rules of Court, as amended. Both seek to annul and set aside the joint: (1) Decision1 dated 27 February 2003, and (2) Resolution2 dated 27 June 2003, of the Court of Appeals in CA-G.R. SP No. 698053 and No. 71540.4 G.R. No. 158930-31 was filed by Union of Filipro Employees Drug, Food and Allied Industries Unions Kilusang Mayo Uno (UFE-DFA-KMU) against Nestl Philippines, Incorporated (Nestl) seeking the reverse of the Court of Appeals Decision in so far as the latters failure to adjudge Nestl guilty of unfair labor practice is concerned, as well as the Resolution of 27 June 2003 denying its Partial Motion for Reconsideration; G.R. No. 158944-45 was instituted by Nestl against UFE-DFAKMU similarly seeking to annul and set aside the Decision and Resolution of the Court of Appeals declaring 1) the Retirement Plan a valid collective bargaining issue; and 2) the scope of assumption of jurisdiction power of the Secretary of the DOLE to be limited to the resolution of questions and matters pertaining merely to the ground rules of the collective bargaining negotiations to be conducted between the parties. In as much as the cases involve the same set of parties; arose from the same set of circumstances, i.e., from several Orders issued by then Secretary of the Department of Labor and Employment (DOLE), Hon. Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over the labor dispute between Nestl and UFE-DFA-KMU, Alabang and Cabuyao Divisions;5 and likewise assail the same Decision and Resolution of the Court of Appeals, the Court ordered the consolidation of the two petitions.6

The Facts From the record and the pleadings filed by the parties, we cull the following material facts in this case: On 4 April 2001, in consideration of the impending expiration of the existing collective bargaining agreement (CBA) between Nestl and UFE-DFA-KMU7 on 5 June 2001,8 in a letter denominated as a Letter of Intent, the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU, Ernesto Pasco and Diosdado Fortuna, respectively, informed Nestl of their intent to "open our new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001."9 In a letter10 dated 10 April 2001, Nestl acknowledged receipt of the aforementioned letter. It also informed UFE-DFA-KMU that it was preparing its own counter-proposal and proposed ground rules that shall govern the conduct of the collective bargaining negotiations. On 29 May 2001, in another letter addressed to the UFE-DFA-KMU (Cabuyao Division), Nestl underscored its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom."11 In addition, it clarified that with the closure of the Alabang Plant, the CBA negotiations will only be applicable to the covered employees of the Cabuyao Plant; hence, the Cabuyao Division of UFE-DFA-KMU became the sole bargaining unit involved in the subject CBA negotiations. Thereafter, dialogue between the company and the union ensued. In a letter dated 14 August 2001, Nestl, claiming to have reached an impasse in said dialogue, requested12 the National Conciliation and Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive mediation proceedings between it and UFE-DFA-KMU. Nestl alleged that despite fifteen (15) meetings between them, the parties failed to reach any agreement on the proposed CBA. The request was docketed as NCMB-RBIV-CAB-PM-08-035-01. Conciliation proceedings nevertheless proved ineffective. Complaining, in essence, of bargaining deadlock pertaining to economic issues, i.e., "retirement (plan), panel composition, costs and attendance, and CBA,"13UFE-DFA-KMU filed a Notice of Strike14 on 31 October 2001 with the NCMB docketed as NCMB-RBIV-LAG-NS-10-037-01. One week later, or on 07 November 2001, another Notice of Strike15 was filed by the UFE-DFA-KMU docketed as NCMB-RBIV-LAG-NS-11-10-039-01, this time predicated on Nestls alleged unfair labor practices i.e., bargaining in bad faith in that it was setting pre-conditions in the ground rules by refusing to include the issue of the Retirement Plan in the CBA negotiations. A strike vote was then conducted by UFE-DFA-KMU on 22 November 2001. The result was an overwhelming approval of the decision to hold a strike.16 On 26 November 2001, in view of the looming strike, Nestl filed with the DOLE a Petition for Assumption of Jurisdiction,17 docketed as OS-AJ-0023-01, fundamentally praying that the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, assume jurisdiction over the current labor dispute as mandated by Article 263 (g) of the Labor Code, as amended, thereby effectively enjoining any impending strike at the Nestl Cabuyao Plant in Laguna. On 29 November 2001, Sec. Sto. Tomas issued an Order18 in OS-AJ-0023-01, NCMB-RBIV-CAVPM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01 & NCMB-RBIV-LAG-NS-11-10-039-01 assuming jurisdiction over the subject labor dispute between the parties, the fallo thereof stating that:

CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the labor dispute at the Nestl Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as amended. Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease and desist from committing any act that might lead to the further deterioration of the current labor relations situation. The parties are further directed to meet and convene for the discussion of the union proposals and company counter-proposals before the National Conciliation and Mediation Board (NCMB) who is hereby designated as the delegate/facilitator of this Office for this purpose. The NCMB shall report to this Office the results of this attempt at conciliation and delimitation of the issues within thirty (30) days from the parties receipt of this Order, in no case later than December 31, 2001. If no settlement of all the issues is reached, this Office shall thereafter define the outstanding issues and order the filing of position papers for a ruling on the merits. UFE-DFA-KMU sought reconsideration19 of the abovequoted Assumption of Jurisdiction Order on the assertion that: i. Article 263 (g) of the Labor Code, as amended, is invalid and unconstitutional as it is in derogation of the provisions dealing on protection to labor, social justice, the bill of rights, and, generally accepted principle of international law; ii. compulsory arbitration as a mode of dispute settlement provided for in the Labor Code and sourced from the 1935 and 1973 constitutions has been discarded and deleted by the New Charter which instituted in its stead free collective bargaining; iii. that ILO condemns the continuous exercise by the Secretary of Labor of the power of compulsory arbitration; iv. granting that the law is valid, the Secretary has unconstitutionally applied the law; v. that the company is a business enterprise not belonging to an industry indispensable to the national interest considering that it is only one among a number of companies in the country producing milk and nutritional products; that the Cabuyao plant is only one of the six (6) Nestle plants in the country and could rely on its highly automated Cagayan de Oro plant for buffer stocks; vi. that the Secretary acted with grave abuse of discretion in issuing the assailed order without the benefit of a prior notice and inquiry. In the interregnum, the union interposed a motion for extension of time20 to file its position paper as directed by the Assumption of Jurisdiction Order of 29 November 2001. In an Order21 dated 14 January 2002, Sec. Sto. Tomas denied the aforequoted motion for reconsideration in this wise: This is not the first time that this Office had occasion to resolve the grounds and arguments now being raised x x x. In a more recent case In re: labor dispute at Toyota Motor Philippines Corporation x x x this Office ruled:

The constitutionality of the power of the Secretary of Labor under Article 263 (g) of the Labor Code to assume jurisdiction over a labor dispute in an industry indispensable to the national interest has been upheld as an exercise of police power of the constitution. x x x. xxxx As ruled by the Supreme Court in the Philtread case: Article 263 (g) of the Labor Code does not violate the workers constitutional right to strike. xxxxxx The foregoing article clearly does not interfere with the workers right to strike but merely regulates it, when in the exercise of such right, national interests will be affected. On 15 January 2002, despite the injunction22 contained in Sec. Sto. Tomas Assumption of Jurisdiction Order and conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at the Nestl Cabuyao Plant went on strike. On 16 January 2002, in consideration of the above, Sec. Sto. Tomas issued yet another Order23 directing: (1) the members of UFE-DFA-KMU to return-to-work within twenty-four (24) hours from receipt of such Order; (2) Nestl to accept back all returning workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from committing acts inimical to the on-going conciliation proceedings leading to the further deterioration of the situation; and (4) the submission of their respective position papers within ten (10) days from receipt thereof. Notwithstanding the Return-To-Work Order, the members of UFE-DFA-KMU continued with their strike and refused to go back to work as instructed. Thus, Sec. Sto. Tomas sought the assistance of the Philippine National Police (PNP) for the enforcement of said order. At the hearing called on 7 February 2002, Nestl and UFE-DFA-KMU filed their respective position papers. In its position paper,24 Nestl addressed several issues allegedly pertaining to the current labor dispute, i.e., economic provisions of the CBA as well as the non-inclusion of the issue of the Retirement Plan in the collective bargaining negotiations. UFE-DFA-KMU, in contrast, limited itself to tackling the solitary issue of whether or not the retirement plan was a mandatory subject in its CBA negotiations with the company on the contention "that the Order of Assumption of Jurisdiction covers only the issue of Retirement Plan."25 On 8 February 2002, Nestl moved that UFE-DFA-KMU be declared to have waived its right to present arguments respecting the other issues raised by the company on the ground that the latter chose to limit itself to discussing only one (1) issue. Sec. Sto. Tomas, in an Order26 dated 11 February 2002, however, did not see fit to grant said motion. She instead allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised by Nestl but not covered by its initial position paper paper by way of a Supplemental Position Paper. UFE-DFA-KMU afterward filed several pleadings: (1) an Urgent Motion to File a Reply dated 13 February 2002; (2) a Motion for Time to File Supplemental Position Paper dated 22 February 2002; and (3) a Manifestation with Motion for Reconsideration of the Order dated February 11, 2002 dated 27 February 2002. The latter pleading was an absolute contradiction of the second one praying for additional time to file the subject supplemental position paper. In said Manifestation, UFE-DFA-KMU explained that it "realized that the Order of February 11, 2002 appears to be contrary to law and

jurisprudence and is not in conformity with existing laws and the evidence on record,"27 as the Secretary of the DOLE "could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute."28 UFE-DFA-KMU then went on to clarify that the Amended Notice of Strike did not cite, as one of the grounds, the CBA deadlock. On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU. Frustrated with the foregoing turn of events, UFE-DFA-KMU filed a petition for certiorari29 with application for the issuance of a temporary restraining order or a writ of preliminary injunction before the Court of Appeals. The petition was predicated on the question of whether or not the DOLE Secretary committed grave abuse of discretion in issuing the Orders of 11 February 2002 and 8 March 2002. Meanwhile, in an attempt to finally resolve the crippling labor dispute between the parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with an Order30 dated 02 April 2002, in the main, ruling that: a. we hereby recognize that the present Retirement Plan at the Nestl Cabuyao Plant is a unilateral grant that the parties have expressly so recognized subsequent to the Supreme Courts ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is therefore not a mandatory subject for bargaining; b. the Unions charge of unfair labor practice against the Company is hereby dismissed for lack of merit; c. the parties are directed to secure the best applicable terms of the recently concluded CBs between Nestl Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the terms and conditions of the Nestl Cabuyao Plant CBA; d. all union demands that are not covered by the provisions of the CBAs of the other eight (8) bargaining units in the Company are hereby denied; e. all existing provisions of the expired Nestl Cabuyao Plant CBA without any counterpart in the CBAs of the other eight bargaining units in the Company are hereby ordered maintained as part of the new Nestl Cabuyao Plant CBA; f. the parties shall execute their CBA within thirty (30) days from receipt of this Order, furnishing this Office a copy of the signed Agreement; g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the first day six months after the expiration on June 4, 2001 of the superceded CBA). Not surprisingly, UFE-DFA-KMU moved to reconsider the aforequoted position of the DOLE. On 6 May 2002, the Secretary of the DOLE, Hon. Sto. Tomas, issued the last of the assailed Orders.31 This order resolved to deny the preceding motion for reconsideration of UFE-DFA-KMU.

Undaunted still, UFE-DFA-KMU, for the second time, went to the Court of Appeals likewise via a petition forcertiorari seeking to annul, on the ground of grave abuse of discretion, the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the DOLE. The Court of Appeals, acting on the twin petitions for certiorari, determined the issues in favor of UFE-DFA-KMU in a joint Decision dated 27 February 2003. The dispositive part thereof states that: WHEREFORE, in view of the foregoing, there being grave abuse on the part of the public respondent in issuing all the assailed Orders, both petitions are hereby GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled: "IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIVLAG-NS-10-037-01, NCMB-RBIV-LAG-NS-11-10-03901) are hereby ANNULLED and SET ASIDE. Private respondent is hereby directed to resume the CBA negotiations with the petitioner.32 Dissatisfied, both parties separately moved for the reconsideration of the abovequoted decision with Nestl basically assailing that part of the decision finding the DOLE Secretary to have gravely abused her discretion when she ruled that the Retirement Plan is not a valid issue for collective bargaining negotiations; while UFE-DFA-KMU questions, in essence, the appellate courts decision in absolving Nestl of the charge of unfair labor practice. The parties efforts were all for naught as the Court of Appeals stood pat in its earlier pronouncements and denied the motions for reconsideration in a joint Resolution dated 27 June 2003. Hence, these petitions for review on certiorari separately filed by the parties. Said petitions were ordered consolidated in a Supreme Court Resolution dated 29 March 2004. The Issues UFE-DFA-KMUs petition for review docketed as G.R. No. 158930-31, is predicated on the following alleged errors: I. THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN NOT HOLDING THAT RESPONDENT IS GUILTY OF UNFAIR LABOR PRACTICE IN REFUSING TO PROCEED WITH THE CBA NEGOTIATIONS UNLESS PETITIONER FIRST ADMITS THAT THE RETIREMENT PLAN IN THE COMPANY IS A NON-CBA MATTER; and II. THE CONTENTION THAT THERE IS NO EVIDENCE OF UNFAIR LABOR PRACTICE ON RESPONDENT NESTLS PART AND THAT PETITIONER DID NOT RAISE THE ISSUE OF ULP IN ITS ARGUMENTS BEFORE THE COURT OF APPEALS IS GROSSLY ERRONEOUS. 33 Whereas in G.R. No. 158944-45, petitioner Nestl challenges the conclusion of the Court of Appeals on the basis of the following issues: I.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE POWERS GRANTED TO THE SECRETARY OF LABOR TO RESOLVE NATIONAL INTEREST DISPUTES UNDER ARTICLE 263 (G) OF THE LABOR CODE MAY BE LIMITED BY A (SECOND) NOTICE OF STRIKE; and II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN ANNULING THE SECRETARY OF LABORS JUDGMENT ON THE RETIREMENT PLAN ISSUE WHICH WAS MERELY A PART OF THE COMPLETE RESOLUTION OF THE LABOR DISPUTE.34 On the whole, the consolidated cases only raise three (3) fundamental issues for deliberation by this Court, that is, whether or not the Court of Appeals committed reversible error, first, in finding the Secretary of Labor and Employment to have gravely abused her discretion in her pronouncement that the Retirement Plan was not a proper subject to be included in the CBA negotiations between the parties; hence, non-negotiable; second, in holding that the assumption powers of the Secretary of Labor and Employment should have been limited merely to the grounds alleged in the second Notice of Strike; and third, in not ruling that Nestl was guilty of unfair labor practice despite allegedly setting a pre-condition to bargaining the non-inclusion of the Retirement Plan as an issue in the collective bargaining negotiations. The Courts Ruling Foremost for our resolution is the matter of the non-inclusion of the Retirement Plan in the CBA negotiations between Nestl and UFE-DFA-KMU (Cabuyao Division). In finding the Secretary of the DOLE to have gravely abused her discretion in holding that the Retirement Plan isnot a valid CBA issue, the Court of Appeals explained that: Although the Union, thru its President Diosdado Fortuna, signed a Memorandum of Agreement dated October 8, 1998 together with the private respondent which clearly states that the "Company agree to extend the following unilateral grants which shall not form part of the CBA" (citation omitted) however, the same document made a proviso that "reference on the Retirement Plan in the CBA signed on July 4, 1995, shall be maintained," x x x thus, this Court is of the belief and so holds that the Retirement Plan is still a valid CBA issue, hence, it could not be argued that the true intention of the parties is that the Retirement Plan, although referred in the CBA, would not in any way form part of the CBA (citation omitted) as it could be clearly inferred by this Court that it is to be used as an integral part of the CBA and to be used as a topic for future bargaining, in consonance with the ruling of the Supreme Court in the previous Nestl Case that "the Retirement Plan was a collective bargaining issue right from the start."35 In filing the present petition, Nestle is of the view that after the 1991 Supreme Court Decision was promulgated, there was obviously an agreement by the parties to no longer consider the Retirement Plan as a negotiable item subject to bargaining. Rather, said benefit would be regarded as a unilateral grant outside the ambit of negotiation. Nestl justifies such contention by directing the Courts attention to the Ground Rules for 1998 Alabang/Cabuyao Factories CBA Negotiation (citation omitted) signed by it and the representatives of UFE-DFA-KMU where both sides "expressly" recognized Nestls prerogative to initiate unilateral grants which are not negotiable. It likewise cited the Memorandum of Agreement36 entered into by the parties on 08 October 1998, which also "categorically" referred to the Retirement Plan as one of the unilateral grants alluded to in the aforementioned Ground Rules. Nestle then concluded that:

Indeed, the foregoing uncontroverted documents very clearly established the clear agreement of the parties, after the 1991 Supreme Court Decision, to remove the Retirement Plan from the scope of bargaining negotiation, and leave the matter upon the sole initiative and discretion of Nestl.37 In contrast, UFE-DFA-KMU posits that there is nothing in either of the documents aboveclaimed that proves that it agreed "to treat the Retirement Plan as a unilateral grant of the company which is outside the scope of the CBA and hence, not a proper subject of bargaining." It explained that the MOA alluded to by Nestl merely speaks of the improvement38 or the review for the improvement39 of the current Retirement Plan and nothing else. UFE-DFA-KMU rationalizes that: Had the objective of the parties been to consider the Retirement Plan as not a subject for collective bargaining, they would have stated so in categorical terms. Or, they could have deleted the said benefit from the CBA. Unfortunately for petitioner, the documents relied upon by it do not state that the Retirement Plan is no longer a bargainable item. The said benefit was not also removed or deleted from the CBA. If ever, what was "unilaterally granted" by petitioner company as appearing on the above-stated letter and MOA were the "improvements" on the Retirement Plan. The Retirement Plan could not have been unilaterally granted by the said letter and MOA since the said Plan predates the said letter and MOA by over two decades. UFE-DFA-KMU concludes that "[s]ince the Retirement Plan did not derive its existence from the letter and MOA x x x, the nature of the Retirement Plan was not altered or changed by the subsequent issuance by petitioner company of the said letter and MOA. The Retirement Plan remained a CBA item which is a proper subject of collective bargaining pursuant to the 1991 ruling of this Honorable Court."40 We agree. The present issue is not one of first impression. In Nestl Philippines, Inc. v. NLRC,41 ironically involving the same parties herein, this Court has had the occasion to affirm that a retirement plan is consensual in nature. By way of background, the parties therein resorted to a "slowdown" and walked out of the factory prompting the management to shut down its operations. Collective bargaining negotiations were conducted but a deadlock was subsequently declared. The Secretary of Labor assumed jurisdiction over the labor dispute and issued a return-to-work order. The NLRC thereafter issued its resolution modifying Nestls existing "non-contributory" Retirement Plan. The company filed a petition for certiorari alleging grave abuse of discretion on the part of the NLRC as Nestl was arguing that since its Retirement Plan is non-contributory, it should be a non-issue in CBA negotiations. Nestl had the sole and exclusive prerogative to define the terms of the plan as the employees had no vested and demandable rights thereon the grant of such not being a contractual obligation but simply gratuitous. In a ruling contrary to Nestls position, this Court, through Madame Justice GrioAquino, declared that: The companys [Nestl] contention that its retirement plan is non-negotiable, is not well-taken. The NLRC correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and promote industrial peace, gives

"a consensual character" to the plan so that it may not be terminated or modified at will by either party (citation omitted). The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA salary increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay are noncontributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Unions demand to increase the benefits due the employees under said plan, is a valid CBA issue. x xx xxxx x x x [E]mployees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; other citation omitted). [Emphases supplied.]42 In the case at bar, it cannot be denied that the CBA that was about to expire at that time contained provisions respecting the Retirement Plan. As the latter benefit was already subject of the existing CBA, the members of UFE-DFA-KMU were only exercising their prerogative to bargain or renegotiate for the improvement of the terms of the Retirement Plan just like they would for all the other economic, as well as non-economic benefits previously enjoyed by them. Precisely, the purpose of collective bargaining is the acquisition or attainment of the best possible covenants or terms relating to economic and non-economic benefits granted by employers and due the employees. The Labor Code has actually imposed as a mutual obligation of both parties, this duty to bargain collectively. The duty to bargain collectively is categorically prescribed by Article 252 of the said code. It states: ART. 252. MEANING OF DUTY TO BARGAIN COLLECTIVELY. The duty to bargain collectively means the performance of a mutual obligation to meet and confer promptly and expeditiously and in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreement if requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession. Further, Article 253, also of the Labor Code, defines the parameter of said obligation when there already exists a CBA, viz: ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A COLLECTIVE BARGAINING AGREEMENT. The duty to bargain collectively shall also mean that either party shall not terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the sixty day period and/or until a new agreement is reached by the parties. And, in demanding that the terms of the Retirement Plan be opened for renegotiation, the members of UFE-DFA-KMU are acting well within their rights as we have, indeed, declared that the Retirement Plan is consensual in character; and so, negotiable.

Contrary to the claim of Nestl that the categorical mention of the terms unilateral agreement in the letter and the MOA signed by the representatives of UFE-DFA-KMU, had, for all intents and purposes worked to estop UFE-DFA-KMU from raising it as an issue in the CBA negotiations, our reading of the same, specifically Paragraph 6 and subparagraph 6.2: 6. Additionally, the COMPANY agree to extend the following unilateral grants which shall not form part of the Collective Bargaining Agreement (CBA): xxxx 6.2. Review for improvement of the COMPANYs Retirement Plan and the reference on the Retirement Plan in the Collective Bargaining Agreement signed on 4 July 1995 shall be maintained. 43 hardly persuades us that the members of UFE-DFA-KMU have agreed to treat the Retirement Plan as a benefit the terms of which are solely dependent on the inclination of the Nestl and remove the subject benefit from the ambit of the CBA. The characterization unilaterally imposed by Nestl on the Retirement Plan cannot operate to divest the employees of their "vested and demandable right over existing benefits voluntarily granted by their employer."44 Besides, the contention that UFE-DFAKMU has "abandoned" or forsaken our earlier pronouncement vis--vis the consensual nature of a retirement plan is quite inconsistent with, nay, is negated by its conduct in doggedly asking for a renegotiation of said benefit. Worth noting, at this point, is the fact that the aforequoted paragraph 6 and its subparagraphs, particularly subparagraph 6.2, highlights an undeniable fact that Nestl recognizes that the Retirement Plan is part of the existing Collective Bargaining Agreement. Nestl further rationalizes that a ruling declaring the Retirement Plan a valid CBA negotiation issue will inspire other bargaining units to demand for greater benefits in accordance with their respective appetites. Suffice it to say that the consensual nature of the Retirement Plan neither gives the union members the unfettered right nor the unbridled prerogative to demand more than what the company can viably give. As regards the scope of the assumption powers of the Secretary of the DOLE, the appellate court ruled that Sec. Sto. Tomas assumption of jurisdiction powers should have been limited to the disagreement on the ground rules of the collective bargaining negotiations. The Court of Appeals referred to the minutes of the meeting held on 30 October 2001. That the representative Nestl was recorded to have stated that "we are still discussing ground rules and not yet on the CBA negotiations proper, a deadlock cannot be declared,"45 was a telling fact. The Court of Appeals, thus, declared that the Secretary "should not have ruled on the questions and issues relative to the substantive aspect of the CBA simply because there was no conflict on the CBA yet."46 UFE-DFA-KMU agrees in the above and contends that the requisites of judicial inquiry require, first and foremost the presence of an actual case controversy. It then concludes that "[i]f the courts of law cannot act and decide in the absence of an actual case or controversy, so should be (sic) also the Honorable DOLE Secretary."47 Nestle, however, contradicts the preceding disquisitions on the ground that such referral to the minutes of the meeting was erroneous and misleading. It avers that the Court of Appeals failed to consider the circumstance surrounding said utterance that the statement was made during the preventive mediation proceedings and the UFE-DFA-KMU had not yet filed any notice of strike. It further emphasizes that it was UFE-DFA-KMU who first alleged bargaining deadlock as the basis for

the filing of its Notice of Strike. Finally, Nestl clarifies that before the first Notice of Strike was filed, several conciliation conferences had already been undertaken where both parties had exchanges of their respective CBA proposals. In this, we agree with Nestl. Declaring the Secretary of the DOLE to have acted with grave abuse of discretion for ruling on substantial matters or issues and not restricting itself merely on the ground rules, the appellate court and UFE-DFA-KMU would have us treat the subject labor dispute in a piecemeal fashion. The power granted to the Secretary of the DOLE by Paragraph (g) of Article 263 of the Labor Code, to wit: ART. 263. STRIKES, PICKETING, AND LOCKOUTS. xxxx (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. xxxx authorizes her to assume jurisdiction over a labor dispute, causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and correlatively, to decide the same. In the case at bar, the Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit: x x x The records disclose that the Union filed two Notices of Strike. The First is dated October 31, 2001 whose grounds are cited verbatim hereunder: "A. Bargaining Deadlock 1. Economic issues (specify) 1. Retirement 2. Panel Composition 3. Costs and Attendance 4. CBA"

The second Notice of Strike is dated November 7, 2001 and the cited ground is like quoted verbatim below: "B. Unfair Labor Practices (specify) Bargaining in bad faith Setting pre-condition in the ground rules (Retirement issue)" Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to and took the place of the first Notice of Strike. In fact, our Assumption of Jurisdiction Order dated November 29, 2001 specifically cited the two (2) Notices of Strike without any objection on the part of the Union x x x.48 Thus, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE rightly decided on matters of substance. Further, it is a fact that during the conciliation meetings before the NCMB, but prior to the filing of the notices of strike, the parties had already delved into matters affecting the meat of the collective bargaining agreement. The appellate courts reliance on the statement49 of the representative of Nestl in ruling that the labor dispute had yet to progress from the discussion of the ground rules of the CBA negotiations is clearly misleading; hence, erroneous. Nevertheless, granting for the sake of argument that the meetings undertaken by the parties had not gone beyond the discussion of the ground rules, the issue of whether or not the Secretary of the DOLE could decide issues incidental to the subject labor dispute had already been answered in the affirmative. The Secretarys assumption of jurisdiction power necessarily includes matters incidental to the labor dispute, that is, issues that are necessarily involved in the dispute itself, not just to those ascribed in the Notice of Strike; or, otherwise submitted to him for resolution. As held in the case of International Pharmaceuticals, Inc. v. Sec. of Labor and Employment,50 "x x x [t]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction."51 Accordingly, even if not exactly on the ground upon which the Notice of Strike is based, the fact that the issue is incidental to the resolution of the subject labor dispute or that a specific issue had been submitted to the Secretary of the DOLE for her resolution, validly empowers the latter to take cognizance of and resolve the same. Secretary Sto. Tomas correctly assumed jurisdiction over the questions incidental to the current labor dispute and those matters raised by the parties. In any event, the query as to whether or not the Retirement Plan is to be included in the CBA negotiations between the parties ineluctably dictates upon the Secretary of the DOLE to go into the substantive matter of the CBA negotiations. Lastly, the third issue pertains to the alleged reversible error committed by the Court of Appeals in holding, albeit impliedly, Nestl free and clear from any unfair labor practice. UFE-DFA-KMU argues that Nestls "refusal to bargain on a very important CBA economic provision constitutes unfair labor practice."52 It explained that Nestl set as a precondition for the holding of collective bargaining negotiations the non-inclusion of the issue of Retirement Plan. In its words, "respondent Nestl Phils., Inc. insisted that the Union should first agree that the retirement plan is not a bargaining issue before respondent Nestl would agree to discuss other issues in the CBA."53 It then concluded that "the Court of Appeals committed a legal error in not ruling that respondent company is guilty of unfair

labor practice. It also committed a legal error in failing to award damages to the petitioner for the ULP committed by the respondent."54 Nestl refutes the above argument and asserts that it was only before the Court of Appeals, and in the second Petition for Certiorari at that, did UFE-DFA-KMU raise the matter of unfair labor practice. It reasoned that the subject of unfair labor practice should have been threshed out with the appropriate labor tribunal. In justifying the failure of the Court of Appeals to find it guilty of unfair labor practice, it stated that: Under the circumstances, therefore, there was no way for the Court of Appeals to make a ruling on the issues of unfair labor practice and damages, simply because there was nothing to support or justify such action. Although petitioner was afforded by the Secretary the opportunity to be heard and more, it simply chose to omit the said issues in the proceedings below.55 We are persuaded. The concept of "unfair labor practice" is defined by the Labor Code as: ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION THEREOF. Unfair labor practices violate the constitutional right of workers and employees to selforganization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labormanagement relations. x x x x. The same code likewise provides the acts constituting unfair labor practices committed by employers, to wit: ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement.

Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective agreement. Provided, That the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining agent; [The article referred to is 241, not 242. CAA] (f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations associations or partnerships who have actually participated, authorized or ratified unfair labor practices shall be held criminally liable. [Emphasis supplied.] Herein, Nestl is accused of violating its duty to bargain collectively when it purportedly imposed a pre-condition to its agreement to discuss and engage in collective bargaining negotiations with UFEDFA-KMU. A meticulous review of the record and pleadings of the cases at bar shows that, of the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the second that the ground of unfair labor practice was alleged. Worse, the 7 November 2001 Notice of Strike merely contained a general allegation that Nestl committed unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in the ground rules (Retirement issue)."56 On the contrary, Nestl, in its Position Paper, did not confine itself to the issue of the non-inclusion of the Retirement Plan but extensively discussed its stance on other economic matters pertaining to the CBA. Basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.57By imputing bad faith unto the actuations of Nestl, it was UFE-DFA-KMU, therefore, who had the burden of proof to present substantial evidence to support the allegation of unfair labor practice. A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum (in G.R. Nos. 158930-31) will readily disclose that it failed to discharge said onus probandi as there is still a need for the presentation of evidence other than its bare contention of unfair labor practice in order to make certain the propriety or impropriety of the unfair labor practice charge hurled against Nestl. Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code: x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably." [Emphasis supplied.] Except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of Strike nor the records of these cases substantiate a finding of unfair labor practice. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief.58 In its letter59 to UFE-DFA-KMU of 29 May 2001, though Nestl underscored its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects

of CBA negotiations and therefore shall be excluded therefrom," such attitude is not tantamount to refusal to bargain. This is especially true when it is viewed in the light of the fact that eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilateral grant. Nestl, therefore, cannot be faulted for considering the same benefit as unilaterally granted. To be sure, it must be shown that Nestl was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted x x x"60 in disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. There is no per se test of good faith in bargaining.61 Good faith or bad faith is an inference to be drawn from the facts,62 to be precise, the crucial question of whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. Necessarily, a determination of the validity of the Nestls proposition involves an appraisal of the exercise of its management prerogative. Employers are accorded rights and privileges to assure their self-determination and independence and reasonable return of capital.63 This mass of privileges comprises the so-called management prerogatives.64 In this connection, the rule is that good faith is always presumed. As long as the companys exercise of the same is in good faith to advance its interest and not for purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld.65 Construing arguendo that the content of the aforequoted letter of 29 May 2001 laid down a precondition to its agreement to bargain with UFE-DFA-KMU, Nestls inclusion in its Position Paper of its proposals affecting other matters covered by the CBA contradicts the claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of Nestl, the award of moral and exemplary damages is unavailing. It must be remembered at all times that the Philippine Constitution, while inexorably committed towards the protection of the working class from exploitation and unfair treatment, nevertheless mandates the policy of social justice so as to strike a balance between an avowed predilection for labor, on the one hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg, on the other. Indeed, we should not be unmindful of the legal norm that justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence.66 In sum, from the facts and evidence extant in the records of these consolidated petitions, this Court finds that 1) the Retirement Plan is still a valid issue for herein parties collective bargaining negotiations; 2) the Court of Appeals committed reversible error in limiting to the issue of the ground rules the scope of the power of the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestl is not guilty of unfair labor practice. As no other issues are availing, this ponencia writes finis to the protracted labor dispute between Nestl and UFE-DFA-KMU (Cabuyao Division). WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestl be declared to have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-DFA-

KMU and Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs. SO ORDERED. MINITA V. CHICO-NAZARIO Associate Justice WE CONCUR: ARTEMIO V. PANGANIBAN Chief Justice Chairperson CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Associate Justice ROMEO J. CALLEJO, SR. Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairmans Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ARTEMIO V. PANGANIBAN Chief Justice G.R. Nos. 174040-41 September 22, 2010

INSULAR HOTEL EMPLOYEES UNION-NFL, Petitioner, vs. WATERFRONT INSULAR HOTEL DAVAO, Respondent. DECISION PERALTA, J.: Before this Court is a petition for review on certiorari,1 under Rule 45 of the Rules of Court, seeking to set aside the Decision2 dated October 11, 2005, and the Resolution3 dated July 13, 2006 of the Court of Appeals (CA) in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision reversed the Decision4 dated the April 5, 2004 of the Accredited Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo). The facts of the case, as culled from the records, are as follows: On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent the Department of Labor and Employment (DOLE), Region XI, Davao City, a Notice of Suspension of Operations5 notifying the same that it will suspend its operations for a period of six months due to

severe and serious business losses. In said notice, respondent assured the DOLE that if the company could not resume its operations within the six-month period, the company would pay the affected employees all the benefits legally due to them. During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees Union (DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of letters asking management to reconsider its decision. In a letter6 dated November 8, 2000, Rojas intimated that the members of the Union were determined to keep their jobs and that they believed they too had to help respondent, thus: xxxx Sir, we are determined to keep our jobs and push the Hotel up from sinking. We believe that we have to help in this (sic) critical times. Initially, we intend to suspend the re-negotiations of our CBA. We could talk further on possible adjustments on economic benefits, the details of which we are hoping to discuss with you or any of your emissaries. x x x7 In another letter8 dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to wit: We would like to thank you for giving us the opportunity to meet [with] your representatives in order for us to air our sentiments and extend our helping hands for a possible reconsideration of the company's decision. The talks have enabled us to initially come up with a suggestion of solving the high cost on payroll. We propose that 25 years and above be paid their due retirement benefits and put their length of service to zero without loss of status of employment with a minimum hiring rate. Thru this scheme, the company would be able to save a substantial amount and reduce greatly the payroll costs without affecting the finance of the families of the employees because they will still have a job from where they could get their income. Moreover, we are also open to a possible reduction of some economic benefits as our gesture of sincere desire to help. We are looking forward to a more fruitful round of talks in order to save the hotel.9 In another letter10 dated November 20, 2000, Rojas sent respondent more proposals as a form of the Union's gesture of their intention to help the company, thus: 1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced. 2) Pay all the employees their benefits due, and put the length of service to zero with a minimum hiring rate. Payment of benefits may be on a staggered basis or as available. 3) Night premium and holiday pays shall be according to law. Overtime hours rendered shall be offsetted as practiced. 4) Reduce the sick leaves and vacation leaves to 15 days/15days.

5) Emergency leave and birthday off are hereby waived. 6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks and double meal allowance. The cook drinks be stopped as practiced. 7) We will shoulder 50% of the group health insurance and family medical allowance be reduced to 1,500.00 instead of 3,000.00. 8) The practice of bringing home our uniforms for laundry be continued. 9) Fixed manning shall be implemented, the rest of manpower requirements maybe sourced thru WAP and casual hiring. Manpower for fixed manning shall be 145 rank-and-file union members. 10) Union will cooperate fully on strict implementation of house rules in order to attain desired productivity and discipline. The union will not tolerate problem members. 11) The union in its desire to be of utmost service would adopt multi-tasking for the hotel to be more competitive. It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be adopted and that all provisions therein shall remain enforced except for those mentioned in this proposal. These proposals shall automatically supersede the affected provisions of the CBA.11 In a handwritten letter12 dated November 25, 2000, Rojas once again appealed to respondent for it to consider their proposals and to re-open the hotel. In said letter, Rojas stated that manpower for fixed manning shall be one hundred (100) rank-and-file Union members instead of the one hundred fortyfive (145) originally proposed. Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a Manifesto13concretizing their earlier proposals. After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and Vice-Presidents, Exequiel J. Varela Jr. and Avelino C. Bation, Jr., signed a Memorandum of Agreement14 (MOA) wherein respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in its Manifesto. Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth in the terms of the MOA. Moreover, as agreed upon in the MOA, a new pay scale was also prepared by respondent. The retained employees individually signed a "Reconfirmation of Employment"15 which embodied the new terms and conditions of their continued employment. Each employee was assisted by Rojas who also signed the document. On June 15, 2001, respondent resumed its business operations. On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National Federation of Labor (NFL), filed a Notice of Mediation16 before the National Conciliation and

Mediation Board (NCMB), Region XI, Davao City. In said Notice, it was stated that the Union involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of Labor." The issue raised in said Notice was the "Diminution of wages and other benefits through unlawful Memorandum of Agreement." On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees Union-NFL (IHEU-NFL), represented by Joves, signed a Submission Agreement17 wherein they chose AVA Alfredo C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was the determination of whether or not there was a diminution of wages and other benefits through an unlawful MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several Special Powers of Attorney (SPA) which were, however, undated and unnotarized. On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second Preliminary Conference,18 raising the following grounds: 1) The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL have no authority to represent the Union; 2) The individuals who executed the special powers of attorney in favor of the person who filed the instant complaint have no standing to cause the filing of the instant complaint; and 3) The existence of an intra-union dispute renders the filing of the instant case premature.19 On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied any existence of an intra-union dispute among the members of the union. Cullo, however, confirmed that the case was filed not by the IHEU-NFL but by the NFL. When asked to present his authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in the SPAs. The hearing officer directed both parties to elevate the aforementioned issues to AVA Olvida.20 The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again raised its objections, specifically arguing that the persons who signed the complaint were not the authorized representatives of the Union indicated in the Submission Agreement nor were they parties to the MOA. AVA Olvida directed respondent to file a formal motion to withdraw its submission to voluntary arbitration. On October 16, 2002, respondent filed its Motion to Withdraw.21 Cullo then filed an Opposition22 where the same was captioned: NATIONAL FEDERATION OF LABOR And 79 Individual Employees, Union Members, Complainants, -versusWaterfront Insular Hotel Davao, Respondent. In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit:

xxxx 2. Respondent must have been lost when it said that the individuals who executed the SPA have no standing to represent the union nor to assail the validity of Memorandum of Agreement (MOA). What is correct is that the individual complainants are not representing the union but filing the complaint through their appointed attorneys-in-fact to assert their individual rights as workers who are entitled to the benefits granted by law and stipulated in the collective bargaining agreement.23 On November 11, 2002, AVA Olvida issued a Resolution24 denying respondent's Motion to Withdraw. On December 16, 2002, respondent filed a Motion for Reconsideration25 where it stressed that the Submission Agreement was void because the Union did not consent thereto. Respondent pointed out that the Union had not issued any resolution duly authorizing the individual employees or NFL to file the notice of mediation with the NCMB. Cullo filed a Comment/Opposition26 to respondent's Motion for Reconsideration. Again, Cullo admitted that the case was not initiated by the IHEU-NFL, to wit: The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB duly furnishing respondent, copy of which is hereto attached as Annex "A" for reference and consideration of the Honorable Voluntary Arbitrator. There is no mention there of Insular Hotel Employees Union, but only National Federation of Labor (NFL). The one appearing at the Submission Agreement was only a matter of filling up the blanks particularly on the question there of Union; which was filled up with Insular Hotel Employees Union-NFL. There is nothing there that indicates that it is a complainant as the case is initiated by the individual workers and National Federation of Labor, not by the local union. The local union was not included as party-complainant considering that it was a party to the assailed MOA.27 On March 18, 2003, AVA Olvida issued a Resolution28 denying respondent's Motion for Reconsideration. He, however, ruled that respondent was correct when it raised its objection to NFL as proper party-complainant, thus: Anent to the real complainant in this instant voluntary arbitration case, the respondent is correct when it raised objection to the National Federation of Labor (NFL) and as proper party-complainants. The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the recognized and incumbent bargaining agent of the rank-and-file employees of the respondent hotel. In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members. However, since the NFL is the mother federation of the local union, and signatory to the existing CBA, it can represent the union, the officers, the members or union and officers or members, as the case may be, in all stages of proceedings in courts or administrative bodies provided that the issue of the case will involve labor-management relationship like in the case at bar. The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads: WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November 11, 2002 is modified in so far as the party-complainant is concerned; thus, instead of "National Federation of Labor and 79 individual employees, union members," shall be "Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated

August 29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11, 2002, No further motion of the same nature shall be entertained.29 On May 9, 2003, respondent filed its Position Paper Ad Cautelam,30 where it declared, among others, that the same was without prejudice to its earlier objections against the jurisdiction of the NCMB and AVA Olvida and the standing of the persons who filed the notice of mediation. Cullo, now using the caption "Insular Hotel Employees Union-NFL, Complainant," filed a Comment31 dated June 5, 2003. On June 23, 2003, respondent filed its Reply.32 Later, respondent filed a Motion for Inhibition33 alleging AVA Olvida's bias and prejudice towards the cause of the employees. In an Order34 dated July 25, 2003, AVA Olvida voluntarily inhibited himself out of "delicadeza" and ordered the remand of the case to the NCMB. On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator for the selection of a new voluntary arbitrator. In a letter35 dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the individual union members have no standing to file the notice of mediation before the NCMB. Respondent stressed that the complaint should have been filed by the Union. On September 12, 2003, the NCMB sent both parties a Notice36 asking them to appear before it for the selection of the new voluntary arbitrator. Respondent, however, maintained its stand that the NCMB had no jurisdiction over the case. Consequently, at the instance of Cullo, the NCMB approved ex parte the selection of AVA Montejo as the new voluntary arbitrator. On April 5, 2004, AVA Montejo rendered a Decision37 ruling in favor of Cullo, the dispositive portion of which reads: WHEREOF, in view of the all the foregoing, judgment is hereby rendered: 1. Declaring the Memorandum of Agreement in question as invalid as it is contrary to law and public policy; 2. Declaring that there is a diminution of the wages and other benefits of the Union members and officers under the said invalid MOA. 3. Ordering respondent management to immediately reinstate the workers wage rates and other benefits that they were receiving and enjoying before the signing of the invalid MOA; 4. Ordering the management respondent to pay attorneys fees in an amount equivalent to ten percent (10%) of whatever total amount that the workers union may receive representing individual wage differentials. As to the other claims of the Union regarding diminution of other benefits, this accredited voluntary arbitrator is of the opinion that she has no authority to entertain, particularly as to the computation thereof. SO ORDERED.38

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so far as it did not categorically order respondent to pay the covered workers their differentials in wages reckoned from the effectivity of the MOA up to the actual reinstatement of the reduced wages and benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831. Respondent, for its part, questioned among others the jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into with the officers of the Union was valid. Respondent's petition was docketed as CA-G.R. SP No. 83657. Both cases were consolidated by the CA. On October 11, 2005, the CA rendered a Decision39 ruling in favor of respondent, the dispositive portion of which reads: WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657 is hereby GRANTED, while the petition in CA-G.R. SP No. 83831 is DENIED. Consequently, the assailed Decision dated April 5, 2004 rendered by AVA Rosalina L. Montejo is hereby REVERSED and a new one entered declaring the Memorandum of Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties are DIRECTED to comply with the terms and conditions thereof. SO ORDERED.40 Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution41dated July 13, 2006. Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit: I. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN FINDING THAT THE ACCREDITED VOLUNTARY ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE THE NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE SUBMISSION AGREEMENT DULY SIGNED BY THE PARTIES AND THEIR LEGAL COUNSELS THAT MENTIONS THE NAME OF THE LOCAL UNION. II. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR BY DISREGARDING THE PROVISIONS OF THE CBA SIMPLY BECAUSE IT BELIEVED THE UNPROVEN ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS SUFFERING FROM FINANCIAL CRISIS. III. THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN CONCLUDING THAT ARTICLE 100 OF THE LABOR CODE APPLIES ONLY TO BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE LABOR CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS ENJOYED BY EMPLOYEES FROM ITS ADOPTION HENCEFORTH.42 The petition is not meritorious. Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the case was submitted to voluntary arbitration, the parties signed a Submission Agreement which

mentioned the name of the local union and not only NFL. Cullo, thus, contends that the CA committed error when it ruled that the voluntary arbitrator had no jurisdiction over the case simply because the Notice of Mediation did not state the name of the local union thereby disregarding the Submission Agreement which states the names of local union as Insular Hotel Employees UnionNFL.43 In its Memorandum,44 respondent maintains its position that the NCMB and Voluntary Arbitrators had no jurisdiction over the complaint. Respondent, however, now also contends that IHEU-NFL is a non-entity since it is DIHFEU-NFL which is considered by the DOLE as the only registered union in Waterfront Davao.45 Respondent argues that the Submission Agreement does not name the local union DIHFEU-NFL and that it had timely withdrawn its consent to arbitrate by filing a motion to withdraw. A review of the development of the case shows that there has been much confusion as to the identity of the party which filed the case against respondent. In the Notice of Mediation46 filed before the NCMB, it stated that the union involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor." In the Submission Agreement,47 however, it stated that the union involved was "INSULAR HOTEL EMPLOYEES UNION-NFL." Furthermore, a perusal of the records would reveal that after signing the Submission Agreement, respondent persistently questioned the authority and standing of the individual employees to file the complaint. Cullo then clarified in subsequent documents captioned as "National Federation of Labor and 79 Individual Employees, Union Members, Complainants" that the individual complainants are not representing the union, but filing the complaint through their appointed attorneys-in-fact.48 AVA Olvida, however, in a Resolution dated March 18, 2003, agreed with respondent that the proper party-complainant should be INSULAR HOTEL EMPLOYEES UNION-NFL, to wit: x x x In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members.49 The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads: WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November 11, 2002, is modified in so far as the party complainant is concerned, thus, instead of "National Federation of Labor and 79 individual employees, union members," shall be "Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11, 2002.50 After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted "Insular Hotel Employees UnionNFL et. al.,Complainant" as the caption in all his subsequent pleadings. Respondent, however, was still adamant that neither Cullo nor the individual employees had authority to file the case in behalf of the Union. While it is undisputed that a submission agreement was signed by respondent and "IHEU-NFL," then represented by Joves and Cullo, this Court finds that there are two circumstances which affect its validity: first, the Notice of Mediation was filed by a party who had no authority to do so; second, that respondent had persistently voiced out its objection questioning the authority of Joves, Cullo and the individual members of the Union to file the complaint before the NCMB.

Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after this step that a submission agreement may be entered into by the parties concerned. Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation, to wit: Who may file a notice or declare a strike or lockout or request preventive mediation. Any certified or duly recognized bargaining representative may file a notice or declare a strike or request for preventive mediation in cases of bargaining deadlocks and unfair labor practices. The employer may file a notice or declare a lockout or request for preventive mediation in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may file a notice, request preventive mediation or declare a strike, but only on grounds of unfair labor practice. From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice or request for preventive mediation. It is curious that even Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union but by individual members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed before it. Even though respondent signed a Submission Agreement, it had, however, immediately manifested its desire to withdraw from the proceedings after it became apparent that the Union had no part in the complaint. As a matter of fact, only four days had lapsed after the signing of the Submission Agreement when respondent called the attention of AVA Olvida in a "Manifestation with Motion for a Second Preliminary Conference"51 that the persons who filed the instant complaint in the name of Insular Hotel Employees Union-NFL had no authority to represent the Union. Respondent cannot be estopped in raising the jurisdictional issue, because it is basic that the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. In Figueroa v. People,52 this Court explained that estoppel is the exception rather than the rule, to wit: Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that time, no considerable period had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not sustain the defense of "estoppel by laches" unless it further appears that the party, knowing his rights, has not sought to enforce them until the condition of the party pleading laches has in good faith become so changed that he cannot be restored to his former state, if the rights be then enforced, due to loss of evidence, change of title, intervention of equities, and other causes. In applying the principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein considered the patent and revolting inequity and unfairness of having the judgment creditors go up their Calvary once more after more or less 15 years.The same, however, does not obtain in the instant case. We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied rarelyonly from necessity, and only in extraordinary circumstances. The doctrine must be applied with great care and the equity must be strong in its favor.When misapplied, the doctrine of estoppel may be a most effective weapon for the accomplishment of injustice. x x x (Italics supplied.)53

The question to be resolved then is, do the individual members of the Union have the requisite standing to question the MOA before the NCMB? On this note, Tabigue v. International Copra Export Corporation (INTERCO)54 is instructive: Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration as called for in the CBA, the same does not lie.The pertinent portion of the CBA reads: In case of any dispute arising from the interpretation or implementation of this Agreement or any matter affecting the relations of Labor and Management, the UNION and the COMPANY agree to exhaust all possibilities of conciliation through the grievance machinery. The committee shall resolve all problems submitted to it within fifteen (15) days after the problems ha[ve] been discussed by the members. If the dispute or grievance cannot be settled by the Committee, or if the committee failed to act on the matter within the period of fifteen (15) days herein stipulated, the UNION and the COMPANY agree to submit the issue to Voluntary Arbitration. Selection of the arbitrator shall be made within seven (7) days from the date of notification by the aggrieved party. The Arbitrator shall be selected by lottery from four (4) qualified individuals nominated by in equal numbers by both parties taken from the list of Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the Company and the Union representatives within ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of the Arbitrator shall be final and binding upon the parties. However, the Arbitrator shall not have the authority to change any provisions of the Agreement.The cost of arbitration shall be borne equally by the parties. Petitioners have not, however, been duly authorized to represent the union. Apropos is this Courts pronouncement in Atlas Farms, Inc. v. National Labor Relations Commission, viz: x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators designated in advance by parties to a CBA. Consequently, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. (Emphasis and underscoring supplied.)55 If the individual members of the Union have no authority to file the case, does the federation to which the local union is affiliated have the standing to do so? On this note, Coastal Subic Bay Terminal, Inc. v. Department of Labor and Employment56 is enlightening, thus: x x x A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency, where the former acts in representation of the latter. Hence, local unions are considered principals while the federation is deemed to be merely their agent. x x x57 Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that NFL had no authority to file the complaint in behalf of the individual employees, to wit: Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the case. Waterfront contents that the Notice of Mediation does not mention the name of the Union but merely referred to the National Federation of Labor (NFL) with which the Union is affiliated. In the subsequent pleadings, NFL's legal counsel even confirmed that the case was not filed by the union but by NFL and the individual employees named in the SPAs which were not even dated nor notarized.

Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the local union and the labor federation or national union with which the former was affiliated is generally understood to be that of agency, where the local is the principal and the federation the agency. Being merely an agent of the local union, NFL should have presented its authority to file the Notice of Mediation. While We commend NFL's zealousness in protecting the rights of lowly workers, We cannot, however, allow it to go beyond what it is empowered to do. As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining representative and an employer may file a notice of mediation, declare a strike or lockout or request preventive mediation. The Collective Bargaining Agreement (CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining representative of all permanent employees. The inclusion of the word "NFL" after the name of the local union merely stresses that the local union is NFL's affiliate. It does not, however, mean that the local union cannot stand on its own. The local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. The spring cannot rise higher than its source, so to speak.58 In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the only recognized bargaining unit in their establishment. While the resolution of the said argument is already moot and academic given the discussion above, this Court shall address the same nevertheless. While the November 16, 2006 Certification59 of the DOLE clearly states that "IHEU-NFL" is not a registered labor organization, this Court finds that respondent is estopped from questioning the same as it did not raise the said issue in the proceedings before the NCMB and the Voluntary Arbitrators. A perusal of the records reveals that the main theory posed by respondent was whether or not the individual employees had the authority to file the complaint notwithstanding the apparent non-participation of the union. Respondent never put in issue the fact that DIHFEU-NFL was not the same as IHEU-NFL. Consequently, it is already too late in the day to assert the same. Anent the second issue raised by Cullo, the same is again without merit. Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo anchors his position on the denial by the Wage Board of respondent's petition for exemption from Wage Order No. RTWPB-X1-08 on the ground that it is a distressed establishment.60 In said denial, the Board ruled: A careful analysis of applicant's audited financial statements showed that during the period ending December 31, 1999, it registered retained earnings amounting to P8,661,260.00. Applicant's interim financial statements for the quarter ending June 30, 2000 cannot be considered, as the same was not audited. Accordingly, this Board finds that applicant is not qualified for exemption as a distressed establishment pursuant to the aforecited criteria.61 In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the hotel's operation and financial viability, to wit: x x x We cannot close Our eyes to the impending financial distress that an employer may suffer should the terms of employment under the said CBA continue. If indeed We are to tilt the balance of justice to labor, then We would be inclined to favor for the nonce petitioner Waterfront. To uphold the validity of the MOA would mean the continuance of the hotel's operation and financial viability. Otherwise, the eventual permanent closure of the hotel would only result to prejudice of the employees, as a consequence thereof, will necessarily lose their jobs.62

In its petition before the CA, respondent submitted its audited financial statements63 which show that for the years 1998, 1999, until September 30, 2000, its total operating losses amounted to P48,409,385.00. Based on the foregoing, the CA was not without basis when it declared that respondent was suffering from impending financial distress. While the Wage Board denied respondent's petition for exemption, this Court notes that the denial was partly due to the fact that the June 2000 financial statements then submitted by respondent were not audited. Cullo did not question nor discredit the accuracy and authenticity of respondent's audited financial statements. This Court, therefore, has no reason to question the veracity of the contents thereof. Moreover, it bears to point out that respondent's audited financial statements covering the years 2001 to 2005 show that it still continues to suffer losses.64 Finally, anent the last issue raised by Cullo, the same is without merit. Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only to benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 of the Labor Code provides: PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this Code. On this note, Apex Mining Company, Inc. v. NLRC65 is instructive, to wit: Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not, in other words, purport to apply to situations arising after the promulgation date of the Labor Code x x x.66 Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent that the same does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees. InRivera v. Espiritu,67 this Court ruled that the right to free collective bargaining, after all, includes the right to suspend it, thus: A CBA is "a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement." The primary purpose of a CBA is the stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. In construing a CBA, the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve. The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latters closure.We find no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same.
1aw phi 1

In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10year suspension of the CBA. Either case was the unions exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it.68 Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws specifically provides that "the results of the collective bargaining negotiations shall be subject to ratification and approval by majority vote of the Union members at a meeting convened, or by plebiscite held for such special purpose."69 Accordingly, it is undisputed that the MOA was not subject to ratification by the general membership of the Union. The question to be resolved then is, does the non-ratification of the MOA in accordance with the Union's constitution prove fatal to the validity thereof? It must be remembered that after the MOA was signed, the members of the Union individually signed contracts denominated as "Reconfirmation of Employment."70 Cullo did not dispute the fact that of the 87 members of the Union, who signed and accepted the "Reconfirmation of Employment," 71 are the respondent employees in the case at bar. Moreover, it bears to stress that all the employees were assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract. Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition, it bears to stress that specific provisions of the new contract also made reference to the MOA. Thus, the individual members of the union cannot feign knowledge of the execution of the MOA. Each contract was freely entered into and there is no indication that the same was attended by fraud, misrepresentation or duress. To this Court's mind, the signing of the individual "Reconfirmation of Employment" should, therefore, be deemed an implied ratification by the Union members of the MOA. In Planters Products, Inc. v. NLRC,71 this Court refrained from declaring a CBA invalid notwithstanding that the same was not ratified in view of the fact that the employees had enjoyed benefits under it, thus: Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a collective [bargaining] agreement are required to furnish copies of the appropriate Regional Office with accompanying proof of ratification by the majority of all the workers in a bargaining unit. This was not done in the case at bar. But we do not declare the 1984-1987 CBA invalid or void considering that the employees have enjoyed benefits from it. They cannot receive benefits under provisions favorable to them and later insist that the CBA is void simply because other provisions turn out not to the liking of certain employees. x x x. Moreover, the two CBAs prior to the 1984-1987 CBA were not also formally ratified, yet the employees are basing their present claims on these CBAs. It is iniquitous to receive benefits from a CBA and later on disclaim its validity.72 Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain benefits previously enjoyed by the members of the Union, it cannot escape this Court's attention that it was the execution of the MOA which paved the way for the re-opening of the hotel, notwithstanding its financial distress. More importantly, the execution of the MOA allowed respondents to keep their jobs. It would certainly be iniquitous for the members of the Union to sign new contracts prompting the re-opening of the hotel only to later on renege on their agreement on the fact of the non-ratification of the MOA. In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with respondent's management. The Constitution and By-Laws of DIHFEU-NFL clearly provide that the

president is authorized to represent the union on all occasions and in all matters in which representation of the union may be agreed or required.73 Furthermore, Rojas was properly authorized under a Board of Directors Resolution74 to negotiate with respondent, the pertinent portions of which read: SECRETARY's CERTIFICATE I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting of the Board of Directors of the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly constituted, the following resolutions were unanimously approved: RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be approved ratified and adopted; RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-NFL, be hereby authorized to negotiate with Waterfront Insular Hotel Davao and to work for the latter's acceptance of the proposals contained in DIHFEU-NFL Manifesto; and RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any and all documents to implement, and carry into effect, his foregoing authority.75 Withal, while the scales of justice usually tilt in favor of labor, the peculiar circumstances herein prevent this Court from applying the same in the instant petition. Even if our laws endeavor to give life to the constitutional policy on social justice and on the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.76 WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005, and the Resolution dated July 13, 2006 of the Court of Appeals in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657, are AFFIRMED. SO ORDERED. G.R. No. 186557 August 25, 2010

NEGROS METAL CORPORATION, Petitioner, vs. ARMELO J. LAMAYO, Respondent. DECISION CARPIO MORALES, J.: Armelo J. Lamayo (respondent) began working for Negros Metal Corporation (petitioner or the company) in September 1999 as a machinist. Sometime in May 2002, while respondent was at the companys foundry grinding some tools he was using, William Uy, Sr. (Uy), company manager, called his attention why he was using the grinder there to which he replied that since the machine there was bigger, he would finish his work faster.

Respondents explanation was found unsatisfactory, hence, he was, via memorandum, charged of loitering and warned.1 Taking the warning as a three-day suspension as penalized under company rules, respondent reported for work after three days, only to be meted with another 10-day suspension2 from May 30 to June 10, 2002, for allegedly failing to sign the memorandum suspending him earlier. After serving the second suspension, respondent reported for work on June 11, 2002 but was informed by Uy that his services had been terminated and that he should draft his resignation letter, drawing respondent to file on June 17, 2002 a complaint3 for illegal dismissal. In lieu of a position paper, petitioner submitted a Manifestation4 contending that the complaint should be dismissed because the Labor Arbiter had no jurisdiction over it since, under their Collective Bargaining Agreement5 (CBA), such matters must first be brought before the companys grievance machinery. By Decision6 of December 29, 2004, the Labor Arbiter, brushing aside petitioners position, held that respondent was illegally dismissed. The dispositive portion of the said Decision reads: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. DECLARING that complainant was illegally dismissed by respondents; 2. ORDERING respondent to pay complainant the total amount of P178,978.48 representing payment for separation pay, back wages and 13th month pay, plus 10% thereof as attorneys fees in the amount ofP17,897.85, or in the total amount of ONE HUNDRED NINETY SIX THOUSAND EIGHTH HUNDRED SEVENTY SIX PESOS & 33/100 (P196,876.33) the same to be deposited with the Cashier of this Office, within ten (10) calendar days from receipt of this Decision. On petitioners appeal, the National Labor Relations Commission (NLRC), by Resolution7 of March 30, 2006, set aside the ruling of, and remanded the case to, the Labor Arbiter for disposition based on the companys grievance procedure. It held that based on a letter of the company union president Arturo Ronquillo (Ronquillo), respondent invoked the CBA provision on grievance procedure. Respondents Motion for Reconsideration was denied by the NLRC by Resolution8 of June 27, 2006. He thereupon appealed to the Court of Appeals. By Decision9 of March 25, 2008, the appellate court set aside the NLRC Resolutions and reinstated the Labor Arbiters Decision. It held that the Labor Arbiter had jurisdiction to hear the complaint; that as respondents dismissal did not proceed from the parties interpretation of or implementation of the CBA, it is not covered by the grievance machinery procedure; that the laws and rules governing illegal dismissal are not to be found in the parties CBA but in the labor statutes, hence, the Labor Arbiter had jurisdiction; and that although the option to go through the grievance machinery was stated in Ronquillos letter10 to petitioner, respondent denied having made that option as he had ceased to be a member of the union, as evidenced by a March 20, 2001 Certification11 of the unions past president Alex Sanio that he had resigned effective March 18, 2001. The appellate court went on to hold that, at that point, it was too late to direct the parties to go through the grievance machinery. In holding that respondent was illegally dismissed, the appellate court noted that he was not allowed to go back to work after serving two suspensions, without affording him the requisite notice and

hearing; and that respondents failure to seek reinstatement did not negate his claim for illegal dismissal, there being nothing wrong in opting for separation pay in lieu of reinstatement. Petitioners motion for reconsideration having been denied by Resolution12 of January 21, 2009, it interposed the present petition for review on certiorari, maintaining that the grievance machinery procedure should have been followed first before respondents complaint for illegal dismissal could be given due course. The petition fails. Articles 217, 261, and 262 of the Labor Code outline the jurisdiction of labor arbiters and voluntary arbitrators as follows: Art. 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (emphasis and underscoring supplied) xxxx

Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide allunresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policiesreferred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. (emphasis and underscoring supplied) ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators,upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (emphasis and underscoring supplied) Under Art. 217, it is clear that a labor arbiter has original and exclusive jurisdiction over termination disputes. On the other hand, under Article 261, a voluntary arbitrator has original and exclusive jurisdiction over grievances arising from the interpretation or enforcement of company policies. As a general rule then, termination disputes should be brought before a labor arbiter, except when the parties, under Art. 262, unmistakably express that they agree to submit the same to voluntary arbitration.13 In the present case, the CBA provision on grievance machinery being invoked by petitioner does not expressly state that termination disputes are included in the ambit of what may be brought before the companys grievance machinery. Thus, the pertinent provision in the parties CBA reads: Article IV GRIEVANCE MACHINERY Section 1. The parties hereto agree on principle that all disputes between labor and management may be settled through friendly negotiations that the parties have the same interest in the continuity of work until all points in dispute shall have been discussed and settled. x x x For this purpose, a grievance is defined as anydisagreement between the UNION and the EMPLOYER or between a worker or group of workers on one hand and the EMPLOYER on the one hand as to the application and interpretation of any of the provisions of this contract. Other matters subject of collective bargaining or regulated by existing labor laws shall not be considered as grievances. (emphasis and underscoring supplied) Even assuming, however, that the suspension of an employee may be considered as a "disagreement" which bears on the "application and interpretation of any of the provisions" of the CBA, respondent could not have bound himself to bring the matter of his suspension to grievance procedure or voluntary arbitration in light of the documented fact that he had resigned from the union

more than a year before his suspension, not to mention the fact that he denied having a hand in the preparation of the union president Ronquillos letter invoking the grievance procedure. In fine, the labor tribunal had original and exclusive jurisdiction over respondents complaint for illegal dismissal.
1avvphi1

On the merits, as did the appellate court, the Court sustains the Labor Arbiters ruling that respondent was illegally dismissed absent a showing that he was accorded due process when he was summarily terminated. The Court is not a trier of facts. It is not tasked to review the evidence on record, documentary and testimonial, and reassess the probative weight thereof, especially in view of the well-entrenched rule that findings of fact of administrative officials, such as labor arbiters, who have acquired expertise on account of their specialized jurisdiction are accorded by the courts not only respect but, most often, with finality, particularly when affirmed on appeal. WHEREFORE, the petition is DENIED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice
Search

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 178229 October 23, 2009

MIGUEL A. PILAPIL, EDUARDO GODEN, GAUDENCIO C. BAURA, ISMAEL ESPANOLA, JEREMIAS B. CUBIAN NELSON A. CAL, RAMON G. GILLO, MARIO ENEGENTE, MARLON C. ERONICO, JULIAN C. RODADO, JR., RO LANIA, ERNESTO P. NARVASA, RICKY PROCHINA, VICTORINO ARGOMIDO, JR., CLEMENTE D. BUTAD, RAM OLE, JOSEPH Y. BUENO, GEORGE B. DAGAAS, ROGER C. ABAYATA, ARTEMIO A. MENDEZ, ROGELIO VILL RODULFO SARANDONA, BONIFACIO L. MINOZA, ROGILDO M. LANGUAY, ALBERTO O. CAIBIGAN, ALBERT ZARCO, MANUEL W. ABECIA, REYNO D. BATOMALAQUE, LEO DEMETRIO, ELPIDIO N. MUNEZ, MAXIMO ED CLEMENTE M. SURBAN, ARTURO G. BEDUYA, ERNESTO M. ABADINES, CELSO S. ALABAT, SR., DOMINAR LAGUNZAD, ANTONIO P. CABALO, DARIO Y. AXALAN, NERIO A. BAGOLOR, SR., NOMERTO M. AYSO, ROD BALA, LORETO BUENO, DAMIANO E. SAJOL, CONRADO A. MA, GUILLERMO S. BABAO, FERNANDITO MON FEDERICO S. GETIGAN, SR., ARMANDO P. MACAPAZ, ALBERTO T. RESULA, JR., GABRIEL Q. LOPEZ, RICA SAJOL, EDILBERTO L. ERABON, JR., LINO L. BARONG, RODRIGO P. JUMILLA, FELICIANO S. ANG SIO, JES ANDRADE, JOEL U. ROBILLO, RUSTICO Y. CUYNO, ARSENIO P. MANEGO, JULIUS R. TAYABAS, BIENVENID MACADINE, EDGARDO M. PEROMINGAN, GRACIANO M. JALBUNA, JOVEN BAILLO, TEODORO S. MAGPUS Q. AGRAVANTE, FELIX P. BALBUTIN, ANDREO C. ARGOMIDO, BIENVENIDO A. SAYSON, ARTEMIO T. CALE MARCELINO E. TAMPOS, JORGE BETO, PEREGRINO CAHARIAN, SANTOS E. LUNGAY, PORFERIO ROBLES G. SERATO, CARLITO FERNANDEZ, NESTOR B. BUNCALAN, CEFERINO P. DOMINGO, ERNESTO T. PANTIL LEONARDO B. QUIZO, ALFREDO M. FULGUERINAS, EDGARDO C. LAGUNA, LAUREANO C. MOSQUITE, JR. ALEJANDRO C. SALAMANES, CARLITO B. MAGLACION, MARIO L. LAVESORES, ALEX D. MAMACANG, DIO

BATERBONIA, JOSE A. NAVARRO, ALBERTO T. LEBANTE, AGUSTIN B. VENENOSO, LEO TILOS, EDGARDO ALBERTO E. ESPERA, TEODORO SOCOBOS, ROGELIO P. DANAS, DIOMEDES G. AYOP, MANSUETO S. GAM EDGARDO CAMPOSO, CIRILO S. LADICA, LEONARDO J. BANGGOS, ORLANDO A. LACERONA, REYNALDO LENILO O. HUISO, ARTEMIO B. TAGA AMO, NICANOR T. TORREFIEL, SEVERINO T. SANIEL, BARTOLOME D DOMINGO P. HUEVOS, JR., REYNALDO CALUPAS, SONNY M. INTIA, MODESTO G. COMANDA, SANTIAGO S SIMON V. MARTINETE, NAZARIO B. AGUSTINO, VICENTE MONTEHERMOSO, DANIEL N. ALBARICO, PEDRO TORREON, ANTONIO AMIMITA, CONCORDIO PELIGRO (DECEASED), ALFREDO T. TORRALBA, SAMUEL CA WILFREDO M. PUWEBLO, ROSENDO BULLANDAY, RAMON PANDAY, MEDARDO P. ARCELO, ROGELIO S. L FRANCISCO G. MALABAD, SOTERO M. BACALSO, FRANCISCO O. SUCAYRE, RAMIR B. ORDANIEL, LUCIAN GARCIA, SATURNINO COJANO, NICANOR S. ESTOQUE, JR., SAMUEL D. OCULAR, JUAN S. SARDOMA, CAR PANGANORON, SR., ADRIANO B. ABABA, FELIPE HILLA, ELMER S. LLANTO, RECAREDO E. AMESONA, JO TOQUIB, ROLANDO C. ARCENO, JULIUS BUCAO, SR., SAMUEL BODIONGAN, PEPTIO TARCELO, LEO O. ER GENESITO A. SIGUE, LEO LUNA, HENRY T. PONTEMAYOR, ALBERTO TINAMBACAN, RODRIGO MANALO, SEGUNDINO I. GESALAN, WILFREDO A. GURREA, VICENTE MUNOZ, FRANCISCO YANGKEE, ANTONIO BAL ROMIE BASINDAHAN, RENALDO TAPIA, GEROSIMO LICARDO, ARMANDO S. LEE, MANUEL L. PELENIO, EL ALCALDE, WILFREDO G. MERQUITA, SEVERINO P. REGIDOR, ALBERTO B. JABAGAT, DANIEL B. GALACE, A. OROZCO, EDGARDO A. PILAPIL, BARTOLOME P. SALANGO, BUENAVENTURA ANINON, ROLANDO C. PE RODOLFO L. ALONZO, ROBERTO S. LULU, APOLINARIO NEGRIDO, GIOVANIE H. CANATOY, DEOMEDES G ROMEO A. TAYAPAN, SR., ENRIQUE L. LUMAPAS, JR., ALBERTO S. MACALOLOT, ISABELO LEJARE, JOSE DUERME, EMILIO PATOLA, RODRIGO ABIERA, TEODORO A. BAO, MARCELINO A. ABARCA, WILLIAM G. YU REYNALDO C. MARANON, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), FIFTH DIVISION; AND C. ALCANTARA & SONS, INC., ALCANTARA, President, and NELIA CLAUDIO, Vice-President for Finance & Administration,Respondents. DECISION CARPIO MORALES, J.:

Petitioners, 188 in all, were employees of C. Alcantara and Sons, Inc. (CASI) and members of the Nagkahiusang Ma Alsons, Southern Philippines Federation of Labor (NAMAAL-SPFL or the union). NAMAAL-SPFL and CASI forged a bargaining agreement (CBA) effective January 10, 1995 up to December 31, 1999.

On the proposal of NAMAAL-SPFL, negotiation for the modification of the CBA was commenced but ended in a dead

On July 8 1998, NAMAAL-SPFL filed a Notice of Strike before the National Conciliation and Mediation Board (NCMB ground of "deadlock in collective bargaining."

As conciliation efforts failed, a vote was conducted in which majority of the employees voted for the holding of a strike SPFL, led by its president Felixberto Irag, thereupon staged a strike at 11:00 P.M. of August 23, 1998. With makeshif huge streamers and banners, the strikers barricaded the main private road leading to, and prevented ingress to and e the CASI compound, thereby paralyzing CASIs operations.

On August 26, 1998, CASI, amid received reports that the strikers harassed and intimidated its managerial and super employees entering the compound, filed a petition to declare the strike illegal before the National Labor Relations Co (NLRC), RAB No. XI, Davao City, docketed as NLRC Case No. RAB-11-08-010664-98, against the officers and mem union, excluding petitioners, who were alleged to be responsible for some of the prohibited and illegal activities during

CASI alleged that the striker-respondents conducted illegal activities and violated the "no-strike-no-lock-out clause" o prayed for the issuance of a writ of preliminary injunction with a prayer for the issuance of a temporary restraining ord ex-parte and writ of preliminary injunction.

The NLRC issued a TRO but the strikers defied it. The NLRC later issued a Writ of Preliminary Injunction ordering the union officers and their agents and sympathizers to lift their barricades and remove all obstructions to the CASI prem attempt to enforce the writ on two occasions was foiled by the strikers. The third attempt to enforce was met with viol confrontation during which at least 23 non-striking workers were injured. After still several attempts, with the assistan officials of Davao and some church representatives, the writ was finally enforced on October 28, 1998.

CASI thereupon resumed operations. On November 7, 1998, it sent letters directing petitioners to return to work withi days from receipt thereof, with the caveat that if they dont, it would take necessary measures for the protection of its Petitioners ignored CASIs directive.

By Decision dated June 29, 1999, Labor Arbiter (LA) Antonio M. Villanueva declared the strike illegal. On appeal, the affirmed the LAs decision with modification, prompting NAMAAL-SPFL to file a petition for certiorari before the Court In the meantime, or on October 21, 2001, 61 of the present petitioners wrote CASI stating:

Until now we have not found any job equal to the positions we held in Alsons. We understand that many of the striker returned to work, including some of those who were convicted of illegal strike. Thus, the picketing had been lifted.

We awaited for [sic] the outcome of the strike since August 23, 1998, and only recently we were informed that we we among those included in the case filed by the Company against the Nagkahiusang Mamumu-o sa Alsons(NMAAL)-S For these reasons, we are therefore voluntarily offering to return to work.3 (Underscoring supplied) By letter of January 4, 2002, CASI, through counsel, refused the offer in this wise: xxxx

We are informed that sometime in 1998, all the striking workers/members of NAMAAL-SPFL, were advised by our cli to work as the company had resumed operations after the preliminary injunction issued by the National Labor Relatio Commission (5th Division) was implemented despite your violent opposition thereto. Several management representa to the extent of personally relaying the companys resumption of operations to you and the other striking members of SPFL. The common reply was the stand of the union through your president Felixberto Irag that you will not return to the strike case shall have been decided. This reply we understand, was premised on the assurance by Irag that all of reinstated with full payment of strike duration pays. Because of your adamant refusal to heed the request of managem client was constrained to make do with the workers who returned to work. Thus presently, the company is operating s with these ample number of workers.

As you must be aware, the strike was declared illegal by Labor Arbiter Antonio Villanueva of the Davao City Branch o in his decision dated June 29, 1999. Said decision was affirmed with partial modification by the NLRC (5th Division) o November 8, 1999. Your union then filed a petition for certiorari before the Court of Appeals last July 10, 2000 where presently pending resolution. Since it is your desire to wait until the case is decided, so be it. In the light of the foregoing, our client regrets that it cannot accede to your request.4 (Underscoring supplied)

Petitioners thereupon filed separate complaints5 (NLRC Case No. RAB-1-02-00164-02 and related cases) for constru dismissal which were consolidated. In the meantime or on March 20, 2002, the Court of Appeals affirmed the NLRC decision finding the strike illegal.6

By Decision of December 27, 2002, LA Miriam A. Libron-Barroso found in NLRC Case No. RAB-11-02-00164-02 and

cases that petitioners had abandoned their jobs and were not constructively dismissed, but that CASI failed to perform operative act to declare complainants to have abandoned their jobs pursuant to the rules. Thus the LA disposed:

WHEREFORE, premises considered, judgment is hereby rendered dismissing for lack of merit the complaint for cons dismissal. However, complainants dismissal being improper, respondent C. Alcantara and Sons, Inc. is hereby order the above-mentioned complainanants the total amount of PESOS: TWENTY TWO MILLION EIGHT HUNDRED FOU THOUSAND SIX HUNDRED NINETY SIX and 77/100 (P22,814,696.77) representing separation pay.

The monetary award of Samuel Ocular shall be computed during the execution stage for his failure to state in the com date of his employment. All other claims are dismissed for lack of merit. SO ORDERED.7

Both petitioners and CASI appealed to the NLRC.8 The NLRC, finding merit only in the appeal of CASI, nullified the D the LA.

Their Motion for Reconsideration9 having been denied,10 petitioners assailed the dismissal of their complaint for const dismissal via Certiorari11 before the Court of Appeals which it dismissed by Decision12 of September 21, 2006. Hence, the present Petition for Review13 contending that contrary to the findings of the Court of Appeals, I. X X X ARTICLE 264 (A) OF THE LABOR CODE IS SQUARELY APPLICABLE IN THE CASE AT BAR. II. X X X THE PETITIONERS WERE EITHER ACTUALLY OR CONSTRUCTIVELY DISMISSED. III. X X X THE PETITIONERS DID NOT ABANDON THEIR EMPLOYMENT.

IV. X X X THE PETITIONERS ARE ENTITLED TO REINSTATEMENT, BACKWAGES, DAMAGES AND ATTORNEY FEES AS PRAYED FOR IN THE PETITION.14 (Underscoring supplied) The petition is bereft of merit.

Petitioners citation in their favor of Article 264 (A) of the Labor Code which provides that "mere participation of a work lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been h employer during such lawful strike" is misplaced. First, the strike in which petitioners participated was declared illegal petitioners were not dismissed for their participation in the strike but for abandonment of their jobs.

For abandonment to exist, it is essential that (a) the employee must have failed to report for work or must have been without valid or justifiable reason; and (b) there must have been a clear intention to sever the employer-employee rel manifested by some overt acts.15

In petitioners case, despite the directive cum caveat of CASI for them to report back for work within two days from re thereof, they failed to comply therewith. After three years, as reflected above, they offered to return to work. Their inte sever the employer-employee relationship with CASI is manifested, however, by the length of time they refused to ret for they had, in the interim, been looking for other jobs.

Petitioners justification for their delay in heeding CASIs directive that they had been "recently" informed that they w parties to the case filed by CASI against the union does not persuade. As the Court of Appeals observed, petitioner never summoned to appear in said case, [but e]ven granting that they were confused, they would have verified from t

counsel if they were part of those sued [but] they did not x x x."16

In fine, as petitioners were not constructively dismissed for they abandoned their jobs, they are not entitled to reinstat backwages, damages, and attorneys fees. WHEREFORE, the petition is DENIED. Costs against petitioners. SO ORDERED. G.R. No. 166879 August 14, 2009

A. SORIANO AVIATION, Petitioner, vs. EMPLOYEES ASSOCIATION OF A. SORIANO AVIATION, JULIUS S. VARGAS IN HIS CAPACITY AS UNION PRESIDENT, REYNALDO ESPERO, JOSEFINO ESPINO, GALMIER BALISBIS, GERARDO BUNGABONG, LAURENTE BAYLON, JEFFREY NERI, ARTURO INES, REYNALDO BERRY, RODOLFO RAMOS, OSWALD ESPION, ALBERT AGUILA, RAYMOND BARCO, REYNANTE AMIMITA, SONNY BAWASANTA, MAR NIMUAN AND RAMIR LICUANAN, Respondents. DECISION CARPIO MORALES, J.: On May 22, 1997, A. Soriano Aviation (petitioner or the company) which is engaged in providing transportation of guests to and from Amanpulo and El Nido resorts in Palawan, and respondent Employees Association of A. Soriano Aviation (the Union), the duly-certified exclusive bargaining agent of the rank and file employees of petitioner, entered into a Collective Bargaining Agreement (CBA) effective January 1, 1997 up to December 31, 1999. The CBA included a "No-Strike, NoLock-out" clause. On May 1 & 12, and June 12, 1997, which were legal holidays and peak season for the company, eight mechanics-members of respondent Union, its herein co-respondents Albert Aguila (Aguila), Reynante Amimita (Amimita), Galmier Balisbis (Balisbis), Raymond Barco (Barco), Gerardo Bungabong (Bungabong), Josefino Espino (Espino), Jeffrey Neri (Neri) and Rodolfo Ramos, Jr. (Ramos), refused to render overtime work. Petitioner treated the refusal to work as a concerted action which is a violation of the "No-Strike, NoLockout" clause in the CBA. It thus meted the workers a 30-day suspension. It also filed on July 31, 1997 a complaint for illegal strike against them, docketed as NLRC Case No. 07-05409-97, which was later dismissed at its instance in order to give way to settlement, without prejudice to its re-filing should settlement be unavailing. The attempted settlement between the parties having been futile, the Union filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) on October 3, 1997, attributing to petitioner the following acts: (1) union busting, (2) illegal dismissal of union officer, (3) illegal suspension of eight mechanics, (4) violation of memorandum of agreement, (5) coercion of employees and interrogation of newly-hired mechanics with regard to union affiliation, (6)

discrimination against the aircraft mechanics, (7) harassment through systematic fault-finding, (8) contractual labor, and (9) constructive dismissal of the Union President, Julius Vargas (Vargas). As despite conciliation no amicable settlement of the dispute was arrived at, the Union went on strike on October 22, 1997. Meanwhile, pursuant to its reservation in NLRC Case No. 07-05409-97, petitioner filed a Motion to Re-Open the Case which was granted by Labor Arbiter Manuel P. Asuncion by Order of October 21, 1997. By Decision1 dated September 28, 1998 rendered in petitioners complaint in NLRC Case No. 0705409-97, the Labor Arbiter declared that the newly implemented work-shift schedule was a valid exercise of management prerogative and the refusal of herein individual respondents to work on three consecutive holidays was a form of protest by the Union, hence, deemed a concerted action. Noting that the Union failed to comply with the formal requirements prescribed by the Labor Code in the holding of strike, the strike was declared illegal. The Union appealed to the NLRC which dismissed it in a per curiam Decision2 dated September 14, 1999, and the subsequent motion for reconsideration was denied by Resolution dated November 11, 1999. In the interim or on June 16, 1998, eight months into the "second strike," petitioner filed a complaint against respondents before the Labor Arbiter, praying for the declaration as illegal of the strike on account of their alleged pervasive and widespread use of force and violence and for the loss of their employment, citing the following acts committed by them: publicly shouting of foul and vulgar words to company officers and non-striking employees; threatening of officers and non-striking employees with bodily harm and dousing them with water while passing by the strike area; destruction of or inflicting of damage to company property, as well as private property of company officers; and putting up of placards and streamers containing vulgar and insulting epithets including imputing crime on the company. By Decision3 of June 15, 2000, Labor Arbiter Ramon Valentin C. Reyes declared the "second strike" illegal. Taking judicial notice of the September 28, 1998 Decision of Labor Arbiter Asuncion, he noted that as the Union went on the "first strike" on a non-strikeable issue the questioned change of work schedule, it violated the "No-Strike, No-Lockout" clause in the CBA and, in any event, the Union failed to comply with the requirements for a valid strike. The Labor Arbiter went on to hold that the Union deliberately resorted to the use of violent and unlawful acts in the course of the "second strike," hence, the individual respondents were deemed to have lost their employment. On appeal, the National Labor Relations Commission (NLRC) affirmed in toto the Labor Arbiters decision, by Resolution4 dated October 31, 2001. It held that even if the strike were legal at the onset, the commission of violent and unlawful acts by individual respondents in the course thereof rendered it illegal. Its motion for reconsideration having been denied by Resolution5 dated December 14, 2001, the Union appealed to the Court of Appeals. By the assailed Decision of April 16, 2004,6 the appellate court reversed and set aside the NLRC ruling, holding that the acts of violence committed by the Union members in the course of the strike were not, as compared to the acts complained of in Shell Oil Workers Union v. Shell Company of

the Philippines,7 First City Interlink Transportation Co., Inc., v. Roldan-Confesor8 and Maria Cristina Fertilizer Plant Employees Association v. Tandaya, 9 (this case was applied by the Labor Arbiter in his Decision of September 28, 2008) where the acts of violence resulted in loss of employment, concluded that the acts in the present case were not as serious or pervasive as in these immediately-cited cases to call for loss of employment of the striking employees. Specifically, the appellate court noted that at the time petitioner filed its complaint in June 1998, almost eight months had already elapsed from the commencement of the strike and, in the interim, the alleged acts of violence were committed only during nine non-consecutive days, viz: one day in October, two days in November, four days in December, all in 1997, and two days in January 1998. To the appellate court, these incidents did not warrant the conversion of an otherwise legal strike into an illegal one, and neither would it result in the loss of employment of the strikers. For, so the appellate court held, the incidents consisted merely of name-calling and using of banners imputing negligence and criminal acts to the company and its officers, which do not indicate a degree of violence that could be categorized as grave or serious to warrant the loss of employment of the individual strikers found to be responsible. By Resolution of January 25, 2005, the appellate court denied petitioners motion for reconsideration, hence, the present petition. Petitioner insists that, contrary to the appellate courts finding, the questioned acts of the strikers were of a serious character, widespread and pervasive; and that the Unions imputation of crime and negligence on its part, and the prolonged strike resulted in its loss of goodwill and business, particularly the termination of its lease and air-service contract with Amanpulo, the loss of its aftersales repair service agreement with Bell Helicopters, the loss of its accreditation as the Beechcraft service facility, and the decision of El Nido to put up its own aviation company. Apart from the acts of violence committed by the strikers, petitioner bases its plea that the strike should be declared illegal on the violation of the "No-Strike-No-Lockout" clause in the CBA, the strike having arisen from non-strikeable issues. Petitioner proffers that what actually prompted the holding of the strike was the implementation of the new shift schedule, a valid exercise of management prerogative. In issue then is whether the strike staged by respondents is illegal due to the alleged commission of illegal acts and violation of the "No Strike-No Lockout" clause of the CBA and, if in the affirmative, whether individual respondents are deemed to have lost their employment status on account thereof. The Court rules in the affirmative. The Court notes that, as found by the Labor Arbiter in NLRC Case No. 07-05409-97, the first strike or the mechanics refusal to work on 3 consecutive holidays was prompted by their disagreement with the management-imposed new work schedule. Having been grounded on a non-strikeable issue and without complying with the procedural requirements, then the same is a violation of the "No Strike-No Lockout Policy" in the existing CBA. Respecting the second strike, where the Union complied with procedural requirements, the same was not a violation of the "No Strike- No Lockout" provisions, as a "No Strike-No Lockout" provision in the Collective Bargaining Agreement (CBA) is a valid stipulation but may be invoked only by employer when the strike is economic in nature or one which is conducted to force wage or other concessions from the employer that are not mandated to be granted by the law. It would be inapplicable to prevent a strike which is grounded on unfair labor practice.10 In the present case, the Union believed in good faith that petitioner committed unfair labor practice when it went on strike on account of the 30-day suspension meted to the striking

mechanics, dismissal of a union officer and perceived union-busting, among others. As held in Malayang Samahan ng mga Manggaggawa sa M. Greenfield v. Ramos:11 On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-union conflict between the federation and the local union, it bears reiterating that when respondent company dismissed the union officers, the issue was transformed into a termination dispute and brought respondent company into the picture. Petitioners believed in good faith that in dismissing them upon request by the federation, respondent company was guilty of unfair labor practice in that it violated the petitioners right to self-organization. The strike was staged to protest respondent companys act of dismissing the union officers. Even if the allegations of unfair labor practice are subsequently found out to be untrue, the presumption of legality of the strike prevails. (Emphasis supplied) Be that as it may, the Court holds that the second strike became invalid due to the commission of illegal action in its course. It is hornbook principle that the exercise of the right of private sector employees to strike is not absolute. Thus Section 3 of Article XIII of the Constitution provides: SECTION 3. x x x It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. (Emphasis and underscoring supplied) Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal. Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which are injurious to the right to property renders a strike illegal. And so is picketing or the obstruction to the free use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion as to constitute nuisance.12 Apropos is the following ruling in Sukhothai Cuisine v. Court of Appeals:13 Well-settled is the rule that even if the strike were to be declared valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal. Among such limits are the prohibited activities under Article 264 of the Labor Code, particularly paragraph (e), which states that no person engaged in picketing shall: a) commit any act of violence, coercion, or intimidation or b) obstruct the free ingress to or egress from the employer's premises for lawful purposes, or c) obstruct public thoroughfares. The following acts have been held to be prohibited activities: where the strikers shouted slanderous and scurrilous words against the owners of the vessels; where the strikers used unnecessary and obscene language or epithets to prevent other laborers to go to work, and circulated libelous statements against the employer which show actual malice; where the protestors used abusive and

threatening language towards the patrons of a place of business or against co-employees, going beyond the mere attempt to persuade customers to withdraw their patronage; where the strikers formed a human cordon and blocked all the ways and approaches to the launches and vessels of the vicinity of the workplace and perpetrated acts of violence and coercion to prevent work from being performed; and where the strikers shook their fists and threatened non-striking employees with bodily harm if they persisted to proceed to the workplace. Permissible activities of the picketing workers do not include obstruction of access of customers. (emphasis supplied) The appellate court found in the present case, as in fact it is not disputed, that the acts complained of were the following:14 1. On 29 October 1997, while Robertus M. Cohen, personnel manager of the Company, was eating at the canteen, petitioner Rodolfo Ramos shouted "insults and other abusive, vulgar and foul-mouthed word" with the use of a megaphone, such as, "sige, ubusin mo yung pagkain," "kapal ng mukha mo;" that when he left the canteen to go back to his office he was splashed with water from behind so that his whole back was drenched; that when he confronted that strikers at the picket line accompanied by three (3) security guards, to find out who was responsible, he was told by petitioner Oswald Espion who was then holding a thick piece of wood approximately two (2) feet long to leave. 2. On the same day, 29 October 1997, petitioners Julius Vargas, Jeffrey Neri, and Rodolfo Ramos, together with Jose Brin, shouted to Capt. Ben Hur Gomez, the chief operating officer of the Company, in this wise, "Matanda ka na, balatuba ka pa rin. Mangungurakot ka sa kompanya!" 3. In the morning of 11 November 1997, petitioner Ramos was reported to have shouted to Mr. Maximo Cruz, the Mechanical and Engineering Manager of the Company, "Max, magresign ka na, ang baho ng bunganga mo!" 4. In the afternoon of the same day, 11 November 1997, petitioner Jeffrey Neri was said to have shouted these words "Max, mag-resign ka na, ang baho ng bunganga mo!" to Mr. Maximo Cruz; 5. On 12 November 1997. petitioners Julius Vargas, Jeffrey Neri, Oswald Espion, Raymond Barco, together with Jose Brin, were reported to have shouted to Capt. Gomez and Mr. Maximo Cruz, "Matanda ka na, balatuba ka pa rin! Max, ang baho ng bunganga mo, kasing baho ng ugali mo!" 6. On the same day, 12 November 1997, petitioner Oswald Espion was said to have shouted to the non-striking employees and officers of the Company, "putang-ina ninyo!" 7. Also, on 12 November 1997, petitioner Oswald Espion was reported to have thrown gravel and sand to the car owned by Celso Villamor Gomez, lead man of the Company, as the said car was traveling along company premises near the picket line; (apart from the marks of mud, gravel and sand found on the entire body of the car, no heavy damages, however, appears to have been sustained by the car)." 8. On 08 December 1997, petitioners Julius Vargas, Rey Espero, Rey Barry, Galmier Balisbis, Rodolfo Ramos, Sonny Bawasanta and Arturo Ines, together with Jose Brin, shouted, "Max, ang sama mo talaga, lumabas ka dito at pipitpitin ko ang mukha mo!" "Cohen, inutil ka talaga. Nagpahaba ka pa ng balbas para kang tsonggo!" Cohen, lumabas ka dito at hahalikan kita."

9. On 10 December 1997, petitioners Vargas and Espion were reported to have shouted to Mr. Maximino Cruz, "Hoy, Max Cruz, wala kang alam dyan, huwag kang poporma-porma dyan!" and then flashed the "dirty finger" at him; 10. On 15 December 1997, petitioner Neri was said to have shouted to non-striking employees at the canteen, "Hoy, mga iskerol, kain lang ng kain, mga putangina ninyo!" 11. Also on 15 December 1997, petitioners Vargas, Neri, Espion, Mar Nimuan, Ramir Licuanan, Albert Aguila and Sonny Bawasanta, together with Jose Brin, splashed water over Edmund C. Manibog, Jr., security guard of the Company; 12. On 20 December 1997, the strikers admittedly lit and threw firecrackers purportedly outside the Company premises, as part of a noise barrage, while the Company was having its Christmas party inside the Company premises; 13. On 14 January 1998, when Chris A. Oballas, collector of the Company, boarded a public utility jeepney where Jose Brin, a striker, was also passenger, Jose Brin was said to have shouted to the other passengers and driver of the jeepney, "Mga pasahero, driver, itong tao ito sherol, ang kapal ng mukha. Iyong pinagtrabahuhan namin kinakain nito, ibenebent[a] kami nito, hudas ito! Mga pasahero, tingnan niyo, hindi makatingin-tingin sa akin, hindi makapagsalita. Hoy, tingin ka sa akin, napahiya ka sa mga ginagawa mo ano?" and, that when Chris Oballas was alighting from the jeepney, he was kicked on his leg by Jose Brin; and, 14. On 15 January 1998, while Julio Tomas, Avionics Technician of the Company, and his girlfriend, Elizabeth Gali, also an employee of the Company, were waiting for their ride, several union members shouted to Elizabeth Gali, Beth iwanan mo na yang taong yan, walang kwentang tao yan!" "Beth, paano na yung pinagsamahan natin?" irked, Julio Tomas upon boarding the passenger jeepney with his girlfriend threw a P2.00 coin in the direction of the picketers, the coin hit the windshield of a privately-owned jeepney belonging to petitioner Espion which was parked alongside the premises of the strike area; The act of Tomas, provoked the petitioners Espion and Amimita to follow Tomas, who when left alone inside the tricycle after his girlfriend took a separate tricycle to her home, was approached by petitioners Espion and Amimita; petitioner Espion then threw a P2.00 coin at him, and while pointing a baseball bat to his face shouted, "Huwag mong uulitin yung ginawa mo kundi tatamaan ka sa akin!" (Emphasis and italics in the original) The Court notes that the placards and banners put up by the striking workers in the company premises read: "ANDRES SORIANO AVIATION, INC. CAUGHT IN THE ACT, ATTEMPTING TO BRIBE GOVERNMENT OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH," "ASAI DETERIORATING SAFETY RECORD KILLS 2 DEAD + VARIOUS (IN PLANE CRASH) FLIGHT MISHAPS BEWARE," "FLY AT YOUR OWN RISK," "ANDRES SORIANO AVIATION, INC. DETERIORATING SAFETY RECORD KILLS INNOCENT PEOPLE IN PLANE CRASH, THE CAUSE: UNTRAINED MECHANICS DOING AIRCRAFT RELEASE, THE RESULT: SLIPSHOD MAINTENANCE AND SLOPPY PLANE INSPECTION," "WANNA FLY BLIND?," "BENHUR GOMEZ DRAGS COMPANY TO DEBT AND SHAMEFUL EXPERIENCE (MAHIYA KA NAMAN, OY!)," "A. SORIANO AVIATION, INC., DEAD PEOPLE IN PLANE CRASH," "ELY BONIFACIO (MASAKIT ANG TOTOO) MAGNANAKAW NG PIYESA, PALITAN NA RIN! TINGNAN NYO KUNG NAGNANAKAW," "MEKANIKO DE EROPLANO Y HUELGA UN VIAJE DE PELIGRO, AIRCRAFT MANAGEMENT BULOK; "A. SORIANO AVIATION KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROC." "(ELY BONIFACIO-PATALSIKIN NA RIN," "MANDARAMBONG" "MUKHANG KWARTA," "SAAN MO DINALA ANG DORNIER SPECIAL TOOLS? IKAW HA!)," "ELY BONIFACIO

KAWATAN BANTAY SALAKAY," "AMANPULO AND EL NIDO GUESTS, BEWARE OF ASAI FLIGHTS, AIRCRAFT MECHANICS STILL ON STRIKE," "GOING TO BORACAY AND EL NIDO IS GOOD BUT FLYING WITH A. SORIANO AVIATION? THINK TWICE!" "ACHTUNG: A SORIANO AVIATION DEAD PEOPLE IN PLANE CRASH INSURANCE ENTITLEMENTS DENIED DUE TO CAR VIOLATIONS," "UNDRESS SORIANO AVIATION, INC. UNRELIABLE FIXED BASED OPERATOR KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROCEDURES." It cannot be gainsaid that by the above-enumerated undisputed acts, the Union committed illegal acts during the strike. The Union members repeated name-calling, harassment and threats of bodily harm directed against company officers and non-striking employees and, more significantly, the putting up of placards, banners and streamers with vulgar statements imputing criminal negligence to the company, which put to doubt reliability of its operations, come within the purview of illegal acts under Art. 264 and jurisprudence. That the alleged acts of violence were committed in nine non-consecutive days during the almost eight months that the strike was on-going does not render the violence less pervasive or widespread to be excusable. Nowhere in Art. 264 does it require that violence must be continuous or that it should be for the entire duration of the strike.
1avvphil

The appellate court took against petitioner its filing of its complaint to have the strike declared illegal almost eight months from the time it commenced. Art. 264 does not, however, state for purposes of having a strike declared as illegal that the employer should immediately report the same. It only lists what acts are prohibited. It is thus absurd to expect an employer to file a complaint at the first instance that an act of violence is alleged to be committed, especially, as in the present case, when an earlier complaint to have the refusal of the individual respondents to work overtime declared as an illegal strike was still pending an issue resolved in its favor only on September 25, 1998. The records show that the Union went on strike on October 22, 1997, and the first reported harassment incident occurred on October 29, 1997, while the last occurred in January, 1998. Those instances may have been sporadic, but as found by the Labor Arbiter and the NLRC, the display of placards, streamers and banners even up to the time the appeal was being resolved by the NLRC works against the Unions favor. The acts complained of including the display of placards and banners imputing criminal negligence on the part of the company and its officers, apparently with the end in view of intimidating the companys clientele, are, given the nature of its business, that serious as to make the "second strike" illegal. Specifically with respect to the putting up of those banners and placards, coupled with the name-calling and harassment, the same indicates that it was resorted to to coerce the resolution of the dispute the very evil which Art. 264 seeks to prevent. While the strike is the most preeminent economic weapon of workers to force management to agree to an equitable sharing of the joint product of labor and capital, it exerts some disquieting effects not only on the relationship between labor and management, but also on the general peace and progress of society and economic well-being of the State.15 If such weapon has to be used at all, it must be used sparingly and within the bounds of law in the interest of industrial peace and public welfare. As to the issue of loss of employment of those who participated in the illegal strike, Sukhothai16 instructs:

In the determination of the liabilities of the individual respondents, the applicable provision is Article 264(a) of the Labor Code: Art. 264. Prohibited Activities (a) x x x xxxx x x x x Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during an illegal strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. xxxx In Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc., this Court explained that the effects of such illegal strikes, outlined in Article 264, make a distinction between workers and union officers who participate therein: an ordinary striking worker cannot be terminated for mere participation in an illegal. There must be proof that he or she committed illegal acts during a strike. A union officer, on the other hand, may be terminated from work when he knowingly participates in an illegal strike, and like other workers, when he commits an illegal act during an illegal strike. In all cases, the striker must be identified. But proof beyond reasonable doubt is not required. Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty of dismissal, may suffice.17 (Emphasis supplied) The liability for prohibited acts has thus to be determined on an individual basis. A perusal of the Labor Arbiters Decision, which was affirmed in toto by the NLRC, shows that on account of the staging of the illegal strike, individual respondents were all deemed to have lost their employment, without distinction as to their respective participation.
1awph!1.e+

Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in the case of union officers or knowingly participated in the commission of violent acts during the illegal strike in the case of union members, the records do not indicate. While respondent Julius Vargas was identified to be a union officer, there is no indication if he knowingly participated in the illegal strike. The Court not being a trier of facts, the remand of the case to the NLRC is in order only for the purpose of determining the status in the Union of individual respondents and their respective liability, if any. WHEREFORE, the petition is GRANTED. The Court of Appeals Decision and Resolution dated April 16, 2004 and January 25, 2005, respectively, are REVERSED and SET ASIDE. The Resolutions dated October 31, 2001 and December 14, 2001 of the National Labor Relations Commission affirming the Decision of the Labor Arbiter in NLRC-NCR Case No. 00-06-04890-98 are AFFIRMED with the MODIFICATION in light of the foregoing discussions. The case is accordingly REMANDED to the National Labor Relations Commission for the purpose of determining the Union status and respective liabilities, if any, of the individual respondents. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice