LABOR RELATIONS

PART 1- BASIC CONCEPTS Labor Standards vs. Labor Relations LABOR STANDARDS law is that labor law which prescribes terms and conditions of employment like Book in Book IV, Title I and Book VI of the Labor Code. These Books of the Labor Code deal with working conditions, wages, working conditions for women, minors, househelpers and homeworkers, medical and dental services, occupational health and safety, termination and retirement. On the other hand, LABOR RELATIONS law is that labor law which regulates the relations between employers and workers like Book V of the Labor Code which deals with labor organizations, collective bargaining, unfair labor practices and strikes and lockouts. Labor standards laws and labor relations laws are not mutually exclusive; they are complement to each other. Thus, the law on strikes and lockouts which is an example of labor relations law includes some provisions on the security of tenure of workers who go on strike or who are locked out. These provisions are examples of labor standards law. LVN vs. PHIL. MUSICIAN GUILD Facts: Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures seek a review by certiorari of an order of the Court of Industrial Relations certifying the Philippine Musicians Guild (FFW), petitioner therein and respondent herein, as the sole and exclusive bargaining agency of all musicians working with said companies, as well as with the Premiere Productions, Inc. The Philippine Musicians Guild (FFW), hereafter referred to as the Guild, averred that it is a duly registered legitimate labor organization; that LVN Pictures, Inc., Sampaguita Pictures, Inc., and Premiere Productions, Inc. are corporations, duly organized under the Philippine laws, engaged in the making of motion pictures and in the processing and distribution thereof; that said companies employ musicians for the purpose of making music recordings, without which a motion picture is incomplete; that 95% of all the musicians playing for the musical recordings of said companies are members of the Guild; and that the same has no knowledge of the existence of any other legitimate labor organization representing musicians in said companies. Premised upon these allegations, the Guild prayed that it be certified as the sole and exclusive bargaining agency for all musicians working in the aforementioned companies. The LVN Pictures, Inc. maintains that a petition for certification cannot be entertained when the existence of employer-employee relationship between the parties is contested. However, this claim is neither borne out by any legal provision nor supported by any authority. So long as, after due hearing, the parties are found to bear said relationship, as in the case at bar, it is proper to pass upon the merits of the petition for certification. They further urged that a certification is improper in the present case because said alleged musicians-employees represent a majority of the other numerous employees of the film companies constituting a proper bargaining unit under section 12 (a) of RANo. 875. Issue: Whether or not the musicians in question are employees of the film companies. YES Held: As a normal and usual course of procedure employed by the companies when a picture is to be made, the producer invariably chooses, from the musical directors, one who will furnish the musical background for a film. The musical director may compose his own music specially written for or adapted to the picture. He engages his own men and pays the corresponding compensation of the musicians under him.

1 When the music is ready for recording, the musicians are summoned through 'call slips' in the name of the film company. The film company provides the studio for the use of the musicians for that particular recording. During the recording sessions, the motion picture director, who is an employee of the company, supervises the recording of the musicians and tells what to do in every detail. Hence, the work of the musicians is an integral part of the entire motion picture since they not only furnish the music but are also called upon to appear in the finished picture. What legal relationship exists between the musicians and the company in the light of the foregoing facts? The lower court applied R.A. Act 875, which is substantially the same as and patterned after the Wagner Act. In the case of NLRB vs. Hearts Publication, the US Supreme Court said the Wagner Act was designed to avert the 'substantial obstruction to the free flow of commerce which results from strikes and other forms of industrial unrest by eliminating the causes of the unrest. Strikes and industrial unrest result from the refusal of employers' to bargain collectively and the inability of workers to bargain successfully for improvement in their working conditions. Hence, the purposes of the Act are to encourage collective bargaining and to remedy the workers' inability to bargaining power, by protecting the exercise of full freedom of association and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment.' In other words, the scope of the term 'employee' must be understood with reference to the purposes of the Act and the facts involved in the economic relationship. Where all the conditions of relation require protection, protection ought to be given. By declaring a worker an employee of the person for whom he works and by recognizing and protecting his rights as such, we eliminate the cause of industrial unrest and consequently we promote industrial peace, because we enable him to negotiate an agreement which will settle disputes regarding conditions of employment, through the process of collective bargaining. The work of the musical director and musicians is a functional and integral part of the enterprise performed at the same studio substantially under the direction and control of the company. In other words, to determine whether a person who performs work for another is the latter's employee or an independent contractor, the National Labor Relations relied on 'the right to control' test. Under this test an employer-employee relationship exist where the person for whom the services are performed reserves the right to control not only the end to be achieved, but also the means to be used in reaching the end. The right of control of the film company over the musicians is shown (1) by calling the musicians through 'call slips' in the name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing transportation and meals to musicians; and (4) by supervising and directing in detail, through the motion picture director, the performance of the musicians before the camera, in order to suit the music they are playing to the picture which is being flashed on the screen. Thus, the members of the Philippine Musicians Guild are employees of the three film companies and, therefore, entitled to right of collective bargaining under Republic Act No. 875. The musical directors have no such control over the musicians involved in the present case. Said musical directors control neither the music to be played, nor the musicians playing it. The film companies summon the musicians to work, through the musical directors. The film companies, through the musical directors, fix the date, the time and the place of work. The film companies, not the musical directors, provide the transportation to and from the studio. The film companies furnish meal at dinner time.

What is more in the language of the order appealed from "during the recording sessions, the motion picture director who is an employee of the company" not the musical director "supervises the recording of the musicians and tells them what to do in every detail". The motion picture director not the musical director "solely directs and performance of the musicians before the camera". The motion picture director "supervises the performance of all the actors, including the musicians who appear in the scenes, so that in the actual performance to be shown in the screen, the musical director's intervention has stopped." It is well settled that "an employer-employee relationship exists . . . where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end . . . ." The decisive nature of said control over the "means to be used", is illustrated in the case of Gilchrist Timber Co., in which, by reason of said control, the employer-employee relationship was held to exist between the management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned control over the means to be used" in reading the desired end is possessed and exercised by the film companies over the musicians in the cases before us. DY KEH BENG vs. INTERNATIONAL LABOR Facts: A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and (4), Republic Act No. 875, by dismissing on September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was filed for in behalf of the International Labor and Marine Union of the Philippines and two of its members, Solano and Tudla. In his answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee because the latter came to the establishment only when there was work which he did on pakiaw basis, each piece of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special defense of simple extortion committed by the head of the labor union, Bienvenido Onayan. According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, respectively, and that except in the event of illness, their work with the establishment was continuous although their services were compensated on piece basis. According to Dy Keh Beng, however, Solano was not his employee for the following reasons: (1) Solano never stayed long enought at Dy's establishment; (2) Solano had to leave as soon as he was through with the (3) order given him by Dy; (4) When there were no orders needing his services there was nothing for him to do; (5) When orders came to the shop that his regular workers could not fill it was then that Dy went to his address in Caloocan and fetched him for these orders; and (6) Solano's work with Dy's establishment was not continuous. According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not employees under RA 875, where an employee is referred to as: "shall include any employee and shag not be limited to the employee of a particular employer unless the Act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment,"

2 while an employer "includes any person acting in the interest of an employer, directly or indirectly but shall not include any labor organization (otherwise than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization." Issue: Whether there existed an employee-employer relation between petitioner Dy Keh Beng and the respondents Solano and Tudla. YES Held: While the Court upholds the control test under which an employer-employee relationship exists "where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end, " it finds no merit with petitioner's arguments that the private respondents "did not meet the control test in the fight of the ... definition of the terms employer and employee, because there was no evidence to show that petitioner had the right to direct the manner and method of respondent's work; and that "Solano worked on a pakiaw basis" and he stayed in the establishment only when there was work. It should be borne in mind that the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, it is natural to expect that those working under Dy would have to observe, among others, Dy's requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the men he employed. As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees with the Hearing Examiner that "circumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation. Judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in our country, is, in fact, a labor contract -between employers and employees, between capitalists and laborers. There is no showing that the Court of Industrial Relations abused its discretion when it concluded that the findings of fact made by the Hearing Examiner were supported by evidence on the record. Section 6, Republic Act 875 provides that in unfair labor practice cases, the factual findings of the Court of Industrial Relations are conclusive on the Supreme Court, if supported by substantial evidence. This provision has been put into effect in a long line of decisions where the Supreme Court did not reverse the findings of fact of the Court of Industrial Relations when they were supported by substantial evidence. RJL MARTINEZ FISHING vs. NLRC Facts: Petitioner corporations, RJL Fishing Corporation and/or Peninsula Fishing Corporation, are principally engaged in the deep-sea fishing business. Since 1978, private respondents were employed by them as stevedores at Navotas Fish Port for the unloading of tuna fish catch from petitioners' vessels and then loading them on refrigerated vans for shipment abroad. On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others, upon the premise that they are petitioners' regular employees, filed a complaint against petitioners for non-payment of overtime pay, premium pay, legal holiday pay, emergency allowance, service incentive leave pay and night shift differential. Claiming that they were dismissed from employment on March 29, 1981 as a retaliatory measure for their having failed the said complaint private respondents filed on the said complaint, private respondents filed on April 21, 1981 another complaint against

petitioners for Illegal Dismissal and for Violation of Article 118 of the Labor Code, as amended. In disputing any employer-employee relationship between them, petitioners contend that private respondents are contract laborers whose work terminated upon completion of each unloading, and that in the absence of any boat arrivals, private respondents did not work for petitioners but were free to work or seek employment with other fishing boat operators. On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling that the latter are extra workers. He further ruled that Antonio Boticario had executed an employment contract under which he agreed to act as a labor contractor and that the other private respondents are his men. On April 19, 1982, they filed an appeal before respondent NLRC, which took cognizance thereof. In its Decision of November 26, 1982, the NLRC reversed the findings of the Labor Arbiter. Issue: Whether or not there is an employer-employee relationship between the parties. YES Held: The issue of the existence of an employer-employee relationship between the parties is actually a question of fact, and the finding of the NLRC on this point is bonding upon us, the exceptions to the general rule being absent in this case. Besides the continuity of employment is not the determining factor, but rather whether the work of the laborer is part of the regular business or occupation of the employer. The SC is in accord with the findings of respondent NLRC in this regard. Although it may be that private respondents alternated their employment on different vessels when they were not assigned to petitioners' boats, that did not affect their employee status. The evidence also establishes that petitioners had a fleet of fishing vessels with about 65 ship captains, and as private respondents contended, when they finished with one vessel, they were instructed to wait for the next. The employer-employee relationship between the parties herein is not co-terminous with each loading and unloading job. Petitioners are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, their activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessel and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. The employment contract signed by Antonio Boticario, which described him as "labor contractor", is not really so inasmuch as wages continued to be paid by petitioners and he and the other workers were uniformly paid. He was merely asked the petitioners to recruit other workers. Considering the length of time that private respondents have worked for petitioner since 1978 there is justification to conclude that they were engaged to perform activities usually necessary or desirable in the usual business or trade of petitioners and are, therefore, regular employees. As such, they are entitled to the benefits awarded them by respondent NLRC. PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS vs. COA Facts: The true criterion to determine whether a corporation is public or private is found in the ttality of the relation of the corporation to the State. If the corporation is created by the State as the latter's own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public, otherwise, it is private.

3 The petitioner was incorporated as a juridical entity over one hundred years ago by virtue of Act No. 1285, enacted on January 19, 1905, by the Philippine Commission. The petitioner, at the time it was created, was composed of animal aficionados and animal propagandists. The objects of the petitioner, as stated in Section 2 of its charter, shall be to enforce laws relating to cruelty inflicted upon animals or the protection of animals in the Philippine Islands, and generally, to do and perform all things which may tend in any way to alleviate the suffering of animals and promote their welfare. For the purpose of enhancing its powers in promoting animal welfare and enforcing laws for the protection of animals, the petitioner was initially imbued under its charter with the power to apprehend violators of animal welfare laws. In addition, the petitioner was to share one-half (1/2) of the fines imposed and collected through its efforts for violations of the laws related thereto. Subsequently, however, the power to make arrests as well as the privilege to retain a portion of the fines collected for violation of animal-related laws were recalled by virtue of Commonwealth Act (C.A.) No. 148. CA 148 limited the powers of PSPCA by giving it the authority to denounce to regular peace officers any violation of the laws enacted for the prevention of cruelty to animals and the protection of animals and to cooperate with said peace officers in the prosecution of transgressors of such laws.

n December 1, 2003, an audit team from respondent Commission on Audit (COA) visited the office of the petitioner to conduct an audit survey pursuant to COA Office Order No. 2003-051 dated November 18, 20035 addressed to the petitioner. The petitioner demurred on the ground that it was a private entity not under the jurisdiction of COA, citing Section 2(1) of Article IX of the Constitution which specifies the general jurisdiction of the COA. The COA General Counsel issued a Memorandum asserting that the petitioner was subject to its audit authority. Petitioner thereafter filed with the respondent COA a Request for Re-evaluation insisting that it was a private domestic corporation. Acting on the said request, the General Counsel of respondent COA affirmed her earlier opinion that the petitioner was a government entity that was subject to the audit jurisdiction of respondent COA. Issue: Whether or not the petitioner qualifies as a government agency that may be subject to audit by respondent COA. Held: First, the Court agrees with the petitioner that the "charter test" cannot be applied. Essentially, the "charter test" as it stands today provides: The test to determine whether a corporation is government owned or controlled, or private in nature is simple. Is it created by its own charter for the exercise of a public function, or by incorporation under the general corporation law? Those with special charters are government corporations subject to its provisions, and its employees are under the jurisdiction of the Civil Service Commission, and are compulsory members of the Government Service Insurance System. xxx The petitioner is correct in stating that the charter test is predicated, at best, on the legal regime established by the Constitution. And since the underpinnings of the charter test had been introduced by the 1935 Constitution and not earlier, it follows that the test cannot apply to the petitioner, which was incorporated by virtue of Act No. 1285, enacted on January 19, 1905. Settled is the rule that laws in general have no retroactive effect, unless the contrary is provided. All statutes are to be construed as having only a prospective operation, unless the purpose and intention of the legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In case of doubt, the doubt must be resolved against the retrospective effect.

In a legal regime where the charter test doctrine cannot be applied, the mere fact that a corporation has been created by virtue of a special law does not necessarily qualify it as a public corporation. What then is the nature of the petitioner as a corporate entity? What legal regime governs its rights, powers, and duties? As stated, at the time the petitioner was formed, the applicable law was the Philippine Bill of 1902, and, emphatically, as also stated above, no proscription similar to the charter test can be found therein. The textual foundation of the charter test, which placed a limitation on the power of the legislature, first appeared in the 1935 Constitution. However, the petitioner was incorporated in 1905 by virtue of Act No. 1258, a law antedating the Corporation Law (Act No. 1459) by a year, and the 1935 Constitution, by thirty years. There being neither a general law on the formation and organization of private corporations nor a restriction on the legislature to create private corporations by direct legislation, the Philippine Commission at that moment in history was well within its powers in 1905 to constitute the petitioner as a private juridical entity. The amendments introduced by C.A. No. 148 made it clear that the petitioner was a private corporation and not an agency of the government. This was evident in Executive Order No. 63, issued by then President of the Philippines Manuel L. Quezon, declaring that the revocation of the powers of the petitioner to appoint agents with powers of arrest "corrected a serious defect" in one of the laws existing in the statute books. As a curative statute, and based on the doctrines so far discussed, C.A. No. 148 has to be given retroactive effect, thereby freeing all doubt as to which class of corporations the petitioner belongs, that is, it is a quasi-public corporation, a kind of private domestic corporation, which the Court will further elaborate on under the fourth point. Second, a reading of petitioners charter shows that it is not subject to control or supervision by any agency of the State, unlike governmentowned and -controlled corporations. No government representative sits on the board of trustees of the petitioner. Like all private corporations, the successors of its members are determined voluntarily and solely by the petitioner in accordance with its by-laws, and may exercise those powers generally accorded to private corporations, such as the powers to hold property, to sue and be sued, to use a common seal, and so forth. It may adopt by-laws for its internal operations: the petitioner shall be managed or operated by its officers "in accordance with its bylaws in force." As incorporated by this Act, said society shall have the power to add to its organization such and as many members as it desires, to provide for and choose such officers as it may deem advisable, and in such manner as it may wish, and to remove members as it shall provide. It shall have the right to sue and be sued, to use a common seal, to receive legacies and donations, to conduct social enterprises for the purpose of obtaining funds, to levy dues upon its members and provide for their collection to hold real and personal estate such as may be necessary for the accomplishment of the purposes of the society, and to adopt such by-laws for its government as may not be inconsistent with law or this charter. Third. The employees of the petitioner are registered and covered by the Social Security System at the latters initiative, and not through the Government Service Insurance System, which should be the case if the employees are considered government employees. This is another indication of petitioners nature as a private entity. Section 1 of Republic Act No. 1161, as amended by Republic Act No. 8282, otherwise known as the Social Security Act of 1997, defines the employer:

4 Employer Any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government: Provided, That a self-employed person shall be both employee and employer at the same time. Fourth. The respondents contend that the petitioner is a "body politic" because its primary purpose is to secure the protection and welfare of animals which, in turn, redounds to the public good. This argument, is, at best, specious. The fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone, make the entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions of a public character, incorporated solely for the public good. This class of corporations may be considered quasi-public corporations, which are private corporations that render public service, supply public wants, or pursue other eleemosynary objectives. While purposely organized for the gain or benefit of its members, they are required by law to discharge functions for the public benefit. Examples of these corporations are utility, railroad, warehouse, telegraph, telephone, water supply corporations and transportation companies. It must be stressed that a quasi-public corporation is a species of private corporations, but the qualifying factor is the type of service the former renders to the public: if it performs a public service, then it becomes a quasi-public corporation. The true criterion, therefore, to determine whether a corporation is public or private is found in the totality of the relation of the corporation to the State. If the corporation is created by the State as the latters own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private. Applying the above test, provinces, chartered cities, and barangays can best exemplify public corporations. They are created by the State as its own device and agency for the accomplishment of parts of its own public works. It is clear that the amendments introduced by C.A. No. 148 revoked the powers of the petitioner to arrest offenders of animal welfare laws and the power to serve processes in connection therewith. Fifth. The respondents argue that since the charter of the petitioner requires the latter to render periodic reports to the Civil Governor, whose functions have been inherited by the President, the petitioner is, therefore, a government instrumentality. This contention is inconclusive. By virtue of the fiction that all corporations owe their very existence and powers to the State, the reportorial requirement is applicable to all corporations of whatever nature, whether they are public, quasi-public, or private corporationsas creatures of the State, there is a reserved right in the legislature to investigate the activities of a corporation to determine whether it acted within its powers. In other words, the reportorial requirement is the principal means by which the State may see to it that its creature acted according to the powers and functions conferred upon it. x x x The corporation is a creature of the state. It is presumed to be incorporated for the benefit of the public. It received certain special privileges and franchises, and holds them subject to the laws of the state and the limitations of its charter. Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. There is a reserve[d] right in the legislature to investigate its contracts and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a state, having chartered a corporation to make use of certain franchises, could not, in the exercise of sovereignty, inquire how these franchises had been employed, and whether they

had been abused, and demand the production of the corporate books and papers for that purpose. The defense amounts to this, that an officer of the corporation which is charged with a criminal violation of the statute may plead the criminality of such corporation as a refusal to produce its books. To state this proposition is to answer it. While an individual may lawfully refuse to answer incriminating questions unless protected by an immunity statute, it does not follow that a corporation vested with special privileges and franchises may refuse to show its hand when charged with an abuse of such privileges. FEATI UNIVERSITY vs. BAUTISTA Facts: On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU hereinafter referred to as Faculty Club wrote a letter to Mrs. Victoria L. Araneta, President of petitioner Feati University hereinafter referred to as University informing her of the organization of the Faculty Club into a registered labor union. The Faculty Club is composed of members who are professors and/or instructors of the University. On January 22, 1963, the President of the Faculty Club sent another letter containing 26 demands that have connection with the employment of the members of the Faculty Club by the University, and requesting an answer within ten days from receipt thereof. The President of the University answered the two letters, requesting that she be given at least 30 days to study thoroughly the different phases of the demands. Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the President of the Faculty Club demanding proof of its majority status and designation as a bargaining representative. On February 1, 1963, the President of the Faculty Club again wrote the President of the University rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with the Bureau of Labor alleging as reason therefor the refusal of the University to bargain collectively. The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts to conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes in the University. Despite further efforts of the officials from the Department of Labor to effect a settlement of the differences between the management of the University and the striking faculty members no satisfactory agreement was arrived at. On March 21, 1963, the President of the Philippines certified to the Court of Industrial Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875. CASE NO. G.R. NO. L-21278 On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183-MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR. CASE G.R. NO. L-21462 This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club as a labor union, praying that it be certified as the sole and exclusive bargaining representative of all employees of the University. This petition was opposed by the University, and at the same time it filed a motion to dismiss said petition. But before Judge Baltazar Villanueva could act on the petition

5 for certification election and the motion to dismiss the same, Faculty Club filed a motion to withdraw said petition upon the ground that the issue raised in Case No. 1183-MC were absorbed by Case No. 41-IPA which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April 6, 1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L21278, issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises. CASE G.R. NO. L-21500 This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA relates to the strike staged by the members of the Faculty Club and the dispute was certified by the President of the Philippines to the CIR. The University filed a motion to dismiss that case upon the ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S. Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification; and in that same order Judge Bautista ordered the strikers to return to work and the University to take them back under the last terms and conditions existing before the dispute arose; and enjoined the University from dismissing any employee or laborer without previous authority from the court. On April 1, 1963, the University filed a motion for reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated, this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises. Issue (1): Whether or not the definition of employer in RA875 covers an educational institution like Feati University. YES Held: It is true that the SC has ruled that certain educational institutions and other juridical entities are beyond the purview of RA875 in the sense that the CIR has no jurisdiction to take cognizance of ULP charges against them, but the principal reason in ruling in those cases is that those entities are not organized, maintained and operated for profit and do not declare dividends to stockholders. In the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the UST, and LaConsolacion College, this Court was not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to charitable, or non-profit organizations which include educational institutions not operated for profit. There are members of this Court who hold the view that the Industrial Peace Act would apply also to non-profit organizations or entities, the only exception being the Government, including any political subdivision or instrumentality thereof, in so far as governmental functions are concerned. However, in the Far Eastern University case this Court is unanimous in supporting the view that an educational institution that is operated for profit comes within the scope of the Industrial Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any organization or entity whatever may be its purpose when it was created.

TEST: Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. In this case, Feati University itself admits that it has declared dividends. CIR also found that the University is not for strictly educational purposes and that "It realizes profits and parts of such earning is distributed as dividends to private stockholders or individuals. Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic Act No. 875 is applicable to herein petitioner Feati University. RA 875, Sec 2(c): The term employer includes any person acting in the interest of an employer, directly or indirectly, but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor organization. It will be noted that in defining the term "employer" the Act uses the word "includes" and not the word "means". In using the word "includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term "employer", namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". This Court, however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No. 875. RA 875 does not give a comprehensive but only a complementary definition of the term "employer". The term encompasses those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term "employer" has been given several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire." The Workmen's Compensation Act defines employer as including "every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer of laborers employed there." The Minimum Wage Law states that "employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and the government corporations." The Social Security Act defines employer as "any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." None of these definitions may the University be excluded. The University engaged the services of the professors, provided them work,

6 and paid them compensation or salary for their services. Even if the University may be considered as a lessee of services under a contract between it and the members of its Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that there has been an agreement on the part of one person to perform a certain service in return for compensation to be paid by an employer. Issue (2): Whether or not the members of the Faculty Club are independent contractors (If they are, then they are not employees within the purview of the said Act.) NO Held: RA 875, Section 2 (d): The term "employee" shall include any employee and shall not be limited to the employee of a particular employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment. This definition, by the use of the term include is again complementary. This Court has defined the term "employer" as "one who employs the services of others; one for whom employees work and who pays their wages or salaries. Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their services. They are, therefore, employees of the University. The contention of the University that the professors and/or instructors are independent contractors, because the University does not exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of the members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their services by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory. All these indicate that the university has control over their work; and professors are, therefore, employees and not independent contractors. Moreover, even if university professors are considered independent contractors, still they would be covered by RA 875. This law modelled after the Wagner Act, or the National Labor Relations Act, of the United States, did not exclude "independent contractors" from the orbit of "employees". It was in the subsequent legislation the Labor Management Relation Act (Taft-Harley Act) that "independent contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors, and others were excluded. ASSOCIATED LABOR UNION vs. BORROMEO Original action for certiorari and prohibition, with preliminary injunction, to annul writs of preliminary injunction issued in Case No. R9414 of the Court of First Instance of Cebu, entitled "Cebu Home and Industrial Supply and Antonio Lua vs. Associated Labor Union", and to restrain the Honorable Jose C. Borromeo, as Judge of that Court, from hearing said case. Petitioner herein, Associated Labor Union hereinafter referred to as ALU is a duly registered labor organization. Among the members thereof are employees of Superior Gas and Equipment Company of

Cebu, Inc. hereinafter referred to as SUGECO a domestic corporation with offices at Juan Luna Street, Cebu City and a factory plant in Basak, Mandaue, province of Cebu. On January 1, 1965, ALU and SUGECO entered into a collective bargaining contract, effective up to January 1, 1966. Negotiations for the renewal of the contract between ALU and SUGECO were begun prior to the date last mentioned. While said negotiations were going on, late in February, 1966, twelve (12) SUGECO employees resigned from ALU. Thereupon, the negotiations stopped. On March 1, 1966, ALU wrote SUGECO requesting that the twelve (12) resigned employees be not allowed to report for work unless they produced a clearance from ALU; but this request was immediately rejected by SUGECO, upon the ground that it would cause irreparable injury, that the bargaining contract had lapsed already, and that SUGECO could no longer demand said clearance from its employees. SUGECO intimated, however, that, should the twelve (12) men rejoin ALU, negotiations "for the renewal of the collective bargaining contract" could be resumed. On the same date, ALU wrote SUGECO charging that the latter was bargaining in bad faith and that its supervisors had campaigned for the resignation of ALU members, as well as serving notice that, unless these unfair labor practice acts were stopped immediately and a collective bargaining contract between SUGECO and ALU forthwith entered into, the latter would declare a strike and establish the corresponding picket lines "in any place where your business may be found." Counsel for SUGECO replied to the ALU, on March 3, 1966, stating that, with the resignation of the aforementioned ALU members, ALU no longer represented the majority of the SUGECO employees for purposes of negotiation and recognition. On March 4, 1966, ALU struck and picketed the SUGECO plant in Mandaue. The next day, March 5, SUGECO commenced Civil Case No. R9221 of the Court of First Instance of Cebu, against ALU, to restrain the same from picketing said plant and the SUGECO offices at Cebu City and elsewhere in the Philippines. Forthwith, the Honorable Amador E. Gomez, as Judge of the Court of First Instance of Cebu, Branch II, caused to be issued, ex parte, the writ of preliminary injunction prayed for by SUGECO. On the same date, ALU preferred, in the Court of Industrial Relations hereinafter referred to as CIR unfair labor practice charges against SUGECO, its general manager, Concepcion Y. Lua hereinafter referred to as Mrs. Lua and its two (2) supervisors, alleging, inter alia, that these respondents had coerced and exerted pressure upon the aforementioned ALU members to resign, as they did resign from ALU, and that their resignations were seized upon by SUGECO to refuse further negotiations with ALU. On April 29, 1966, an acting prosecutor of the CIR filed therein against SUGECO the corresponding complaint for unfair labor practice. Meanwhile, ALU had moved for a reconsideration of the order of Judge Gomez, dated March 5, 1966, sanctioning the issuance of the writ of preliminary injunction against ALU. This motion was later denied by Judge Jose C. Borromeo, who presided Branch IV of the Court of First Instance of Cebu. Hence, on May 9, 1966, ALU instituted Case No. L25999 of the Supreme Court, for certiorari and prohibition, with preliminary injunction, against Judges Gomez and Borromeo and the SUGECO, and prayed therein that the CFI of Cebu be declared without jurisdiction over the subject-matter of said Case No. R-9221; that the writ of preliminary injunction therein issued be annulled; that Judges Gomez and Borromeo be directed to dismiss said case; and that, meanwhile, they be ordered to desist from further proceedings in said case, and from enforcing the writ aforementioned. On May 16, 1966, we issued the writ of preliminary injunction sought by ALU in L-25999. Subsequently, or on February 9, 1967, we rendered judgment therein in favor of ALU, annulling the writ of preliminary injunction issued in said Case No. R-9221, on March 5, 1966, directing respondent Judges to

7 dismiss the same, and declaring permanent the writ of preliminary injunction issued by us on May 16, 1966. Soon after the issuance of the latter writ, ALU resumed the picketing of the SUGECO plant in Mandaue. Moreover, it began to picket the house of Mrs. Lua, SUGECO's general manager, and her husband Antonio Lua hereinafter referred to as Mr. Lua at Abellana Street, Cebu City, and the store of the Cebu Home and Industrial Supply hereinafter referred to as Cebu Home at Gonzalez Street, Cebu City. The Cebu Home, which belongs to and is managed by Mr. Lua, deals in general merchandise, among which are oxygen, acetylene and cooking gas produced by SUGECO. On June 21, 1966, Cebu Home and Mr. Lua hereinafter referred to as respondents filed a complaint, docketed as Civil Case No. 9414 of the CFI of Cebu, against ALU, to restrain the latter from picketing the store and residence aforementioned and to recover damages. Thereupon, Judge Borromeo issued an order requiring the ALU to show cause why the writ sought should not be issued. In a memorandum filed on June 25, 1966 and a motion to dismiss dated June 29, 1966, the ALU assailed the Court's jurisdiction to hear the case upon the ground that it had grown out of a labor dispute. On July 25, 1966, Judge Borromeo denied ALU's motion to dismiss Case No. R-9414 and to reconsider his order and dissolve the writ of preliminary injunction of June 30, 1966. Thereupon, or on August 26, 1966, ALU commenced the present action for certiorari and prohibition with preliminary injunction, to annul the writs of preliminary injunction issued, on June 30 and July 22, 1966, in Case No. R-9414 and to restrain the lower court from hearing the same. ALU maintains that the lower Court has no jurisdiction over Case No. R9414 because it had grown out of a labor dispute, is intimately connected with an unfair labor practice case pending before the CIR and involves a strike the injunction against which had already been lifted by the Supreme Court in G.R. No. L-25999.7 Moreover, ALU claims that even if the lower court had jurisdiction over Case No. R-9414, the writs of preliminary injunction issued therein are null and void, not only because of said lack of jurisdiction, but, also, because it failed to observe the requirements of Sec. 9(f) of Republic Act No. 875, as well as the provisions of Sec. 9 (d) (5) of the same Act, requiring findings of facts on matters enumerated therein. Upon the other hand, respondents argue that the issue in the lower court does not fall within the jurisdiction of the CIR, there being no employer-employee relationship and "no labor dispute" between the ALU members and Cebu Home; and that, at any rate, the SUGECO products distributed and sold by Cebu Home, came, not from the SUGECO plant in Mandaue, but from other parts of the Philippines. Respondents further deny that the residence of Mr. Lua was being used as a place to store and refill SUGECO gas for resale. Respondents' pretense is untenable. To begin with, Section 5 (a) of Republic Act No. 8758 vests in the Court of Industrial Relations exclusive jurisdiction over the prevention of any unfair labor practice. Moreover, for an issue "concerning terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment" to partake of the nature of a "labor dispute", it is not necessary that "the disputants stand in the proximate relation of employer and employee." Then, again, in order to apply the provisions of Sec. 9 of Republic Act No. 875, governing the conditions under which "any restraining order" or "temporary or permanent injunction" may issue in any "case involving or growing out of a labor dispute", it is not indispensable that the persons involved in the case be "employees of the same employer", although this is the usual case. Sec. 9, likewise, governs cases involving persons: 1) "who are engaged in the same industry, trade, craft, or

occupation"; or 2) "who ... have direct or indirect interests therein", or 3) "who are members of the same or an affiliated organization of employers or employees"; or 4) "when the case involves any conflicting or competing interests in a "labor dispute" (as hereinbefore defined) or "persons participating or interested" therein (as hereinafter defined)". Furthermore, "a person or association shall be held to be a person participating or interested in a labor dispute if relief is sought against him or it" and "he or it is engaged in the same industry, trade, craft, or occupation in which such dispute occurs, or has a direct or indirect interest therein, or is a member, officer, or agent of any association composed in whole or in part of employees or employers engaged in such industry, trade, craft, or occupation." Now, then, there is no dispute regarding the existence of a labor dispute between the ALU and SUGECO-Cebu; that SUGECO's general manager, Mrs. Lua, is the wife of the owner and manager of Cebu Home, Antonio Lua; and that Cebu Home is engaged in the marketing of SUGECO products. It is, likewise, clear that as managing member of the conjugal partnership between him and his wife, Mr. Lua has an interest in the management by Mrs. Lua of the business of SUGECO and in the success or failure of her controversy with the ALU, considering that the result thereof may affect the condition of said conjugal partnership. Similarly, as a distributor of SUGECO products, the Cebu Home has, at least, an indirect interest in the labor dispute between SUGECO and the ALU and in Case No. R-9221. In other words, respondents herein have an indirect interest in said labor dispute, for which reason, we find that Section 9 of Republic Act No. 875 squarely applies to Case No. R-9414. Besides, the ALU introduced evidence to the effect that the SUGECO products had been brought to Cebu Home and were being distributed in the latter, as a means to circumvent, defeat or minimize the adverse effects of the picketing conducted in the SUGECO plant and offices in Mandaue and Cebu City respectively by ALU. It is true that respondents averred that said products were purchased by Cebu Home before the strike was declared against SUGECO and that some of said products were obtained from SUGECO in other parts of the country; but, even if true, these circumstances did not place the picketing of the Cebu Home beyond the pale of the aforesaid Section 9 of Republic Act No. 875 because, as distributor of SUGECO products, Cebu Home was engaged in the same trade as SUGECO. Neither does the claim that some SUGECO products marketed by Cebu Home had come, not from the Mandaue plant, but from other parts of the Philippines, detract from the applicability of said provisions, considering that ALU had struck against SUGECO and had announced, as early as March 1, 1966 or three (3) days before it struck its intent to picket "any place where your business may be found" and that SUGECO in Cebu is a sister company of SUGECO elsewhere in the Philippines. Apart from the foregoing, it will be recalled that, prior to the expiration of the collective bargaining contract between ALU and SUGECO, on January 1, 1966, negotiations had started for the renewal of said contract; that during said negotiations, late in February 1966, twelve (12) SUGECO employees resigned from ALU, owing according to charges preferred by ALU and confirmed by a complaint filed by a CIR prosecutor to unfair labor practices allegedly committed by SUGECO and its supervisors who, it was also claimed, had induced and coerced said employees to quit the ALU, which they did; that, thereupon, SUGECO stopped negotiating with ALU alleging that, with the resignation of said twelve (12) members, ALU no longer represented a majority of the SUGECO employees; that on March 4, 1966, ALU declared a strike and picketed the SUGECO plant in Mandaue; that the next day, SUGECO filed Case No. R-9221 of the CFI of Cebu, which forthwith issued a writ of preliminary injunction restraining ALU from picketing, not only the plant, but, also, the SUGECO offices elsewhere in the Philippines; that said injunction was dissolved by the Supreme Court on May 16, 1966; and that the premises of respondents herein were not

8 picketed until after our injunction was enforced, subsequently to May 16, 1966. This factual background reveals that, from sometime before January 1, 1966 when negotiations for the renewal of the collective bargaining agreement between SUGECO and ALU were begun to sometime after May 16, 1966, or, at least, from late in February 1966 when the aforementioned unfair labor practices were allegedly committed by SUGECO to sometime before June 21, 1966, there was ample opportunity to store SUGECO products in respondents' premises. There was, therefore, reasonable ground for the ALU to believe or suspect that SUGECO was using said premises to circumvent and blunt the ALU strike and picketing in the SUGECO plant in Mandaue or to defeat or offset the adverse effects of both. Respondent Judge seemed to be of the opinion that, for the subjectmatter of Case No. 9414 to be within the exclusive jurisdiction of the CIR, it was necessary to establish, as a fact, the truth of ALU's contention that respondents' premises were being used as an outlet for SUGECO products. Such view suffers from a basic flaw. It overlooks the fact that the jurisdiction of a court or quasi-judicial or administrative organ is determined by the issues raised by the parties, not by their success or failure in proving the allegations in their respective pleadings. Said view would require the reception of proof, as a condition precedent to the assumption of jurisdiction, when precisely jurisdiction must exist before evidence can be taken, since the authority to receive it is in itself an exercise of jurisdiction. Moreover, it fails to consider that, to affect the jurisdiction of said court, or organ, the main requirement is that the issue raised be a genuine one. In other words, the question posed must be one that is material to the right of action or which could affect the result of the dispute or controversy. Such is, manifestly, the nature of ALU's contention in the lower court, which should have, accordingly, granted the motion to dismiss and lifted the writs of preliminary injunction complained of. Finally, respondents herein have not alleged, let alone proved, that the conditions enumerated in Section 9 (d) of Republic Act No. 875, as a prerequisite to an injunction in labor disputes, have been complied with. Such failure is, as has been repeatedly held fatal to the validity of said injunction. BAUTISTA vs. INCIONG The facts as found by the National Capital Region Director of the then ministry of Labor Region IV are as follows: Petitioner was employed by ALU as 'Organizer' in 1972 with a starting salary of P250 a month. As such he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other co-organizers were in Cainta, Rizal attending a certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but was informed of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of abandonment of work. Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P 370.

Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the petitioner was merely accomodated by the respondent union after he was dismissed by his former employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as such. In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in holding that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to the benefits that he is praying for. We agree with the petitioner. There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines Zamora, , (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee realtionship: In determining the existence of an employer-employee relationship, the elements that are generally considered are the following : (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is the most important element. In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis got deputy Minister Inciong's decision. We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper in order. As we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the case of Balaquezon EWTU v. Zamora, (97 SCRA 5):

9 It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay. This means that a monetary award is to be paid to the employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation. RIGHT TO SELF ORGANIZATION The right to self-organization is granted to the employee by both the Constitution and by the Labor Code. Thus, it is both constitutionally guaranteed as well as statutorily guaranteed. Being a primordial Constitutional Right, it prevails most of the time over the right to property of the employer. 1987 CONSTITUTION Art. III Sec. 8 - 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. Art. XIII Sec. 3 - x x x It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. xxx LABOR CODE Article 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 selforganization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. EXTENT of RIGHT (1) includes right to refuse/refrain from exercising right to selforganization (2) includes right to raise issues to the ERs in behalf of the EEs (3) includes right to disaffiliate Article 244. Right of employees in the public service. Employees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective employers. All other employees in the civil service shall have the right to form associations for purposes not contrary to law. Article 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. Managerial employees: NOT ELIGIBLE to join, assist or form any labor organization; one who is vested with powers or prerogatives: to lay down and execute management policies; and/ or to hire, transfer, suspend, layoff, recall, discharge, assign, or discipline employees. Supervisory employees: NOT ELIGIBLE for membership in a labor organization of rank and file employees; BUT MAY join, assist, or form separate labor organization of their own rank and file union and the supervisors union operating within the same establishmen t may join the same federation or national union; Those who: (1) effectively RECOMMENDS such managerial actions; (2) If the exercise of such authority is not merely routinary or clerical in nature; (3) But requires the use of INDEPENDENT JUDGMENT.

Why cant supervisors join a union of rank and- file? The intent of the law is to avoid a situation where supervisors would merge with the rank and file, or where the supervisors' labor organization would represent conflicting interests, especially where, as in the case at bar, the supervisors will be commingling with those employees whom they directly supervise in their own bargaining unit. Members of the supervisory union might refuse to carry out disciplinary measures against their co-member rank and file employees. Supervisors have the right to form their own union or labor organization. What the law prohibits is a union whose membership comprises of supervisors merging with the rank and file employees because this is where conflict of interests may arise in the areas of discipline, collective bargaining and strikes. Article 269. Prohibition against aliens; exceptions. All aliens, natural or juridical, as well as foreign organizations are strictly prohibited from engaging directly or indirectly in all forms of trade union activities without prejudice to normal contacts between Philippine labor unions and recognized international labor centers: Provided, however, That aliens working in the country with valid permits issued by the Department of Labor and Employment, may exercise the right to selforganization and join or assist labor organizations of their own choosing for purposes of collective bargaining: Provided, further, That said aliens are nationals of a country which grants the same or similar rights to Filipino workers. Exceptions: 1. They have valid permits 2. Reciprocity: That said aliens are nationals of a country which grants the same or similar rights to Filipino workers Security Guards Under RA 6715, security guards may now join a labor organization of the rank and file or that of the supervisory union, depending on their rank. Workers with NO RIGHT TO SELF-ORGANIZATION 1. Managerial and Confidential Employees Confidential Employees by necessary implication, ONLY has right to organize for mutual aid and protection Cooperative members If individual is also an employee and member of cooperative, cant exercise right; but if only employee but not a member of cooperative, can exercise right. Non-employees EEs outside the bargaining unit EEs outside the bargaining unit who became union members shall be automatically deemed removed from the list of membership of said union.

10 Sec. 3. High-level employees whose functions are normally considered as policy-making or managerial or whose duties are of a highly confidential nature shall not be eligible to join the organization of rankand-file government employees. Sec. 4. The Executive Order shall not apply to the members of the Armed Forces of the Philippines, including police officers, policemen, firemen and jail guards. II. Protection of the Right to Organize Sec. 5. Government employees shall not be discriminated against in respect of their employment by reason of their membership in employees' organizations or participation in the normal activities of their organization. Their employment shall not be subject to the condition that they shall not join or shall relinquish their membership in the employees' organizations. Sec. 6. Government authorities shall not interfere in the establishment, functioning or administration of government employees' organizations through acts designed to place such organizations under the control of government authority. III. Registration of Employees' Organization Sec. 7. Government employees' organizations shall register with the Civil Service Commission and the Department of Labor and Employment. The application shall be filed with the Bureau of Labor Relations of the Department which shall process the same in accordance with the provisions of the Labor Code of the Philippines, as amended. Applications may also be filed with the Regional Offices of the Department of Labor and Employment which shall immediately transmit the said applications to the Bureau of Labor Relations within three (3) days from receipt thereof. Sec. 8. Upon approval of the application, a registration certificate be issued to the organization recognizing it as a legitimate employees' organization with the right to represent its members and undertake activities to further and defend its interest. The corresponding certificates of registration shall be jointly approved by the Chairman of the Civil Service Commission and Secretary of Labor and Employment. IV. Sole and Exclusive Employees' Representatives Sec. 9. The appropriate organizational unit shall be the employers unit consisting of rank-and-file employees unless circumstances otherwise require. Sec. 10. The duly registered employees' organization having the support of the majority of the employees in the appropriate organizational unit shall be designated as the sole and exclusive representative of the employees. Sec. 11. A duly registered employees' organization shall be accorded voluntary recognition upon a showing that no other employees' organization is registered or is seeking registration, based on records of the Bureau of Labor Relations, and that the said organizations has the majority support of the rank-and-file employees in the organizational unit. Sec. 12. Where there are two or more duly registered employees' organizations in the appropriate organizational unit, the Bureau of Labor Relations shall, upon petition, order the conduct of a certification election and shall certify the winner as the exclusive representative of the rank-and-file employees in said organization unit.

2.

3. 4.

EO NO. 180PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES I. Coverage Sec. 1. This Executive Order applies to all employees of all branches, subdivisions, instrumentalities, and agencies, of the Government, including government-owned or controlled corporations with original charters. For this purpose, employees, covered by this Executive Order shall be referred to as "government employees". Sec. 2. All government employees can form, join or assist employees' organizations of their own choosing for the furtherance and protection of their interests. They can also form, in conjunction with appropriate government authorities, labor-management committees, works councils and other forms of workers' participation schemes to achieve the same objectives.

Sec. 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiations between duly recognized employees' organizations and appropriate government authorities. VI. Peaceful Concerted Activities and Strikes Sec. 14. The Civil Service laws and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress. xxx FEU-DR. NICANOR REYES MEDICAL FOUNDATION vs. TRAJANO The petitioner, Far Eastern University-Dr. Nicanor Reyes Memorial Foundation, Inc., has a work force of about 350 rank and file employees, majority of whom are members of private respondent Alliance of Filipino Workers. On February 13, 1986, private respondent filed a Petition for Consent and/or Certification Election with The Ministry of Labor and Employment. The petitioner opposed the petition on the ground that a similar petition involving the same issues and the same parties is pending resolution before the Supreme Court, docketed as G.R. No. L-49771. In its position paper, private respondent admitted: that as early as May 10, 1976, private respondent filed a similar petition for certification election with the Ministry of Labor and Employment but the petition was denied by the MED Arbiter and the Secretary of Labor on appeal, on the ground that the petitioner was a non-stock, non-profit medical institution, therefore, its employees may not form, join, or organize a union pursuant to Article 244 of the Labor Code; that private respondent filed a petition for certiorari with the Supreme Court (docketed as G.R. No. L-49771) assailing the constitutionality of Article 244 of the Labor Code; that pending resolution of the aforesaid petition, or on May 1, 1980, Batas Pambansa Bilang 70 was enacted amending Article 244 of the Labor Code, thus granting even employees of non-stock, non-profit institutions the right to form, join and organize labor unions of their choice; and that in the exercise of such right, private respondent filed another petition for certification election with the Ministry of Labor and Employment (NCR-LRD-N-2-050-86). On April 17, 1986, the Med Arbiter issued an Order granting the petition, declaring that a certification election be conducted to determine the exclusive bargaining representative of all the rank and file employees of the petitioner. Respondent Director affirmed said Order on appeal. Hence, this petition, raising the issue of whether or not respondent Director gravely abused his discretion in granting the petition for certification election, despite the pendency of a similar petition before the Supreme Court (G.R. No. 49771) which involves the same parties for the same cause. The Petition is devoid of merit. At the time private respondent filed its petition for certification election on February 13, 1986, Article 244 of the Labor Code was already amended by Batas Pambansa Bilang 70, to wit: Art. 244. Coverage and employees' right to self-organization. All persons employed in commercial, industrial and charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-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 the purpose of enhancing and defending their interests and for their mutual aid and protection.

11 Under this provision, there is no doubt that rank and file employees of non-profit medical institutions are now permitted to form, organize or join labor unions of their choice for purposes of collective bargaining. Since private respondent had complied with the requisites provided by law for calling a certification election, it was incumbent upon respondent Director to conduct such certification election to ascertain the bargaining representative of petitioner's employees. As held in Quimpo v. Dela Victoria, 46 SCRA 139, in order that the pendency of another action between the same parties for the same cause may be availed of as a ground to dismiss a case, there must be, between the action under consideration and the other action: (1) Identity of parties, or at least such as representing 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) the Identity on the two preceding particulars should be such that any judgment which may be rendered on the other action wig, regardless of which party is successful, amount to res judicata in the action under consideration. In the instant case, any judgment which may be rendered in the petition for certiorari pending before the Supreme Court (G. R. No. L-49771) wig not constitute res judicata in the petition for certification election under consideration, for while in the former, private respondent questioned the constitutionality of Article 244 of the Labor Code before its amendment, in the latter, private respondent invokes the same article as already amended. Petitioner, however, has pointed out that respondent Director should not have arrogated upon himself the power to declare the aforesaid petition for certiorari (G.R. No. L-49771) moot and academic, as the same is sub-judice and only the Supreme Court can decide the matter. The Director cannot be faulted for he had to make a decision. SAN JOSE CITY ELECTRIC SERVICE vs. MINISTRY OF LABOR On July 29, 1986, private respondent Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic Labor Organization (MAGKAISAADLO) filed a petition for direct certification election with the Regional Office No. 111 of the Department of Labor and Employment in San Fernando, Pampanga. The petition alleged that MAGKAISA-ADLO is a legitimate labor organization duly registered with the Ministry of Labor and Employment; that there are more or less fifty-four (54) rank and file employees in SAJELCO; that almost 62% of the employees sought to be represented have supported the filing of the petition; that there has been no valid certification election held in SAJELCO during the twelve (12) month period prior to the filing of the petition and that there is no other union in the bargaining unit. In its answer (pp. 19-21, Rollo), SAJELCO opposed the petition for direct certification election contending, inter alia, that the employees who sought to be represented by private respondent are membersconsumers of the Cooperative itself and at the same time composed the General Assembly which, pursuant to the By-laws is also the final arbiter of any dispute arising in the Cooperative. Thus: 5. That some, if not most, of the employees who sought to be represented by the petitioner, are member-consumers, and as such are members of the General or Special Assembly which is the final arbiter on any dispute which a member and/or the Board, or the Cooperative may have, and that such "some"of said alleged supporters, in their capacity as member-consumers, enjoy two personalities in that as employees and/or members of the General Assembly, and therefore cannot fairly and prudently represent such opposing personalities that merge into one juridical or natural person, and these special and unique status or personalities of the supposed supporters cannot qualify to be represented by the petitioner, without doing injustice, in equity and unfair status or advantage to those member-consumers who have not that destiny or status of becoming employees;

6. No valid and lawful representation can be obtained by petitioner in behalf of the supposed supporters, who are also member-consumer, that are bound by the Article of Incorporation, By-laws of the respondent Cooperative and pertinent Decrees and laws, to support and defend the basic policies of the Government on Electric Cooperatives; 7. There is no possible legal way by which to dismantle the personalities of some of the supporters of the petitioner, as employees, from their status as consumer-members, who are, under the By-laws, part and parcels of the General or Special Assembly that finally decides any dispute, and no reasonable or valid scale of justice could be invoked to divide a person who, in conscience, is also the other fellow against whom a remedy is sought for in allowing this to happen is tantamount to slaughtering a man to his own ends; x x x On September 5, 1986, the Med-Arbiter who was assigned to the case issued an Order (pp. 24-26, Rollo) granting the petition for direct certification election on the basis of the pleadings filed. The Order said that while some of the members of petitioner union are members of the cooperative, it cannot be denied that they are also employees within the contemplation of the Labor Code and are therefore entitled to enjoy all the benefits of employees, including the right to selforganization (pp. 25, Rollo). This Order was appealed by SAJELCO to the Bureau of Labor Relations. In its appeal, (pp. 27-36, Rollo) SAJELCO reiterated its position that: . . . upon the principle that in electric cooperative as in the case of respondent, there is a merger of the consumer-members that composed of the assembly and that of the rank-and-file members of the petitioners-into one person or juridical status thus rendering the proposed collective bargaining agent ineffective and/or uncalled for considering that a grievance machinery for employees and/or memberconsumers of the cooperative-has been provided for by the By-laws as a built-in over-all arbiter involving disputes affecting said cooperative; Respondent Director of the Bureau of Labor Relations dismissed the appeal and sustained the ruling of the Med-Arbiter in an order dated January 5, 1987. On February 19, 1987, SAJELCO filed the instant petition for certiorari praying that the order of respondent Director be set aside and another one rendered denying the holding or conduct of a certification election among the rank and file employees of SAJELCO. The only issue presented for resolution in this petition is whether or not the employees-members of an electric cooperative can organize themselves for purposes of collective bargaining. This Court had the occasion to rule on this issue in cases where it was held that: A cooperative, therefore, is by its nature different from an ordinary business concern being run either, by persons, partnerships or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the name of shares owned by its members they are entitled to cast one vote each in deciding upon the affair of the cooperative. Their share capital earn limited interests, They enjoy special privileges as exemption from income tax and sales taxes, preferential right to supply their products to State agencies and even exemption from minimum wage laws. An employee therefore of such a cooperative who is a member and coowner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. In the opinion of August 14, 1981 of the Solicitor General, he corectly opined that employees of cooperatives who are themselves members of the cooperative have no right to form or join labor organizations for purposes of collective bargaining for being themselves co-owners of the cooperative.

12 However, in so far as it involves cooperatives with employees who are not members or co-owners thereof, certainly such employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country. In this petition, San Jose City Electric Service Cooperative, Inc. (SAJELCO) claims that its employees are also members of the cooperative. It cited Section 17(18) of its By-laws which declares that: The Board shall also create positions for subordinate employees and fix their duties and remunerations. Only member-consumers or members of their immediate family shall be employed by the cooperative. The above-cited provision, however, mentions two types of employees, namely: the members-consumers and the members of their immediate families. As regards employees of SAJELCO who are membersconsumers, the rule is settled that they are not qualified to form, join or assist labor organizations for purposes of collective bargaining. The reason for withholding from employees of a cooperative who are members-co-owners the right to collective bargaining is clear: an owner cannot bargain with himself. However, employees who are not members-consumers may form, join or assist labor organizations for purposes of collective bargaining notwithstanding the fact that employees of SAJELCO who are not members-consumers were employed ONLY because they are members of the immediate family of members-consumers. The fact remains that they are not themselves members-consumers, and as such, they are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in Section 8, Article III and Section 3, Article XIII of the 1987 Constitution, Labor Code of the Philippines and other related laws. BENGUET ELECTRIC COOPERATIVE vs. FERRER-CALLEJA Facts: On June 21, 1985, Beneco Worker's Labor Union-Association of Democratic Labor Organizations (hereinafter referred to as BWLUADLO) filed a petition for direct certification as the sole and exclusive bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification election has been conducted for the last 12 months; that there is no existing collective bargaining representative of the rank and file employees sought to represented by BWLU- ADLO; and, that there is no collective bargaining agreement in the cooperative. An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as BELU) contending that it was certified as the sole and exclusive bargaining representative of the subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending resolution by the National Labor Relations Commission are two cases it filed against BENECO involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars any representation question. BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric cooperative engaged in providing electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing because they are members and joint owners of the cooperative. On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification election. However, the med-

arbiter limited the election among the rank and file employees of petitioner who are non-members thereof and without any involvement in the actual ownership of the cooperative. Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37) employees who are not members and without any involvement in the actual ownership of the cooperative. Issue: Whether employees of a cooperative are qualified to form or join a labor organization for purposes of collective bargaining. NO Under Article 256 of the Labor Code, to have a valid certification election, "at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit." BENECO asserts that the certification election held on October 1, 1986 was null and void since members-employees of petitioner cooperative who are not eligible to form and join a labor union for purposes of collective bargaining were allowed to vote. The Court finds the present petition meritorious. The right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. With respect, however, to employees who are neither members nor coowners of the cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by the 1987 Constitution and applicable statutes. Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor union of their own choice for purposes of collective bargaining would amount to a patent violation of their right to self-organization. Private respondent BELU concurs with the above contention of respondent director and, additionally, claims that since membership in petitioner cooperative is only nominal, the rank and file employees who are members thereof should not be deprived of their right to self-organization. The contentions are untenable. Contrary to respondents' claim, the fact that the members-employees of petitioner do not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor organization for the purpose of collective bargaining with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of collective bargaining. Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the constitutional protections afforded to labor, then there would be no hindrance for employers to grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim that since their employees are not stockholders [of the corporation], albeit in a minimal and involuntary manner, they are now also co-owners and thus disqualified to form unions." To allow this, BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which the Constitution endeavors to protect and which welfare it promises to promote."

13 This contention of respondent union is based on the erroneous presumption that membership in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise some of the rights and privileges given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter. Similarly, members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was precisely because of the special nature of cooperatives, that the Court held in the Davao City case that membersemployees thereof cannot form or join a labor union for purposes of collective bargaining. It is important to note that, in her order dated September 2, 1985, medarbiter Elnora V. Balleras made a specific finding that there are only thirty-seven (37) employees of petitioner who are not members of the cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form or join a labor union for purposes of collective bargaining. However, the minutes of the certification election show that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent union. Thus, even if We agree with respondent union's contention that the thirty seven (37) employees who were originally non-members of the cooperative can still vote in the certification election since they were only "forced and compelled to join the cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still null and void since even those who were already members of the cooperative at the time of the issuance of the med-arbiter's order, and therefore cannot claim that they were forced to join the union were allowed to vote in the election. In this case it cannot be determined whether or not respondent union was duly elected by the eligible voters of the bargaining unit since even employees who are ineligible to join a labor union within the cooperative because of their membership therein were allowed to vote in the certification election. Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion in certifying respondent union as the sole and exclusive bargaining representative of the rank and file employees of petitioner cooperative. INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION vs. CALLEJA Facts: A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case. As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam's communist rule confronted the international community. In response to this crisis, on 23 February 1981, an Agreement was forged between the Philippine Government and the United Nations High Commissioner for Refugees whereby an operating center for processing Indo-Chinese refugees for eventual resettlement to other countries was to be established in Bataan (Annex "A", Rollo, pp. 22-32). ICMC was one of those accredited by the Philippine Government to operate the refugee processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as a nonprofit agency involved in international humanitarian and voluntary work. It is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. As an international organization rendering voluntary and humanitarian services in the Philippines, its activities are parallel to those of the International Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC). On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministry of Labor and Employment a

Petition for Certification Election among the rank and file members employed by ICMC The latter opposed the petition on the ground that it is an international organization registered with the United Nations and, hence, enjoys diplomatic immunity. On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lack of jurisdiction. On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC. B. G.R. No. 89331 (The International Rice Research Institute [IRRI] Case). On 9 December 1959, the Philippine Government and the Ford and Rockefeller Foundations signed a Memorandum of Understanding establishing the International Rice Research Institute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting "basic research on the rice plant, on all phases of rice production, management, distribution and utilization with a view to attaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growing areas through improvement in quality and quantity of rice." Initially, IRRI was organized and registered with the Securities and Exchange Commission as a private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an international organization. The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI. On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of the Department of Labor and Employment (DOLE). IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an international organization and granting it immunity from all civil, criminal and administrative proceedings under Philippine laws. Issue: Whether or not the Secretary of Labor committed grave abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan. Held: There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI. Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides that ICMC shall have a status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17 May 1949, explicitly provides: Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case they have expressly waived their immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution.

14 Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of the specialized agencies, wherever located and by whomsoever held shall be immune from search, requisition, confiscation, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action. Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this particular instance." The foregoing opinions constitute a categorical recognition by the Executive Branch of the Government that ICMC and IRRI enjoy immunities accorded to international organizations, which determination has been held to be a political question conclusive upon the Courts in order not to embarrass a political department of Government. A brief look into the nature of international organizations and specialized agencies is in order. The term "international organization" is generally used to describe an organization set up by agreement between two or more states. Under contemporary international law, such organizations are endowed with some degree of international legal personality such that they are capable of exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting general international business in which the member states have an interest. The United Nations, for instance, is an international organization dedicated to the propagation of world peace. There are basically three propositions underlying the grant of international immunities to international organizations. These principles, contained in the ILO Memorandum are stated thus: 1) international institutions should have a status which protects them against control or interference by any one government in the performance of functions for the effective discharge of which they are responsible to democratically constituted international bodies in which all the nations concerned are represented; 2) no country should derive any national financial advantage by levying fiscal charges on common international funds; and 3) the international organization should, as a collectivity of States members, be accorded the facilities for the conduct of its official business customarily extended to each other by its individual member States. The theory behind all three propositions is said to be essentially institutional in character. "It is not concerned with the status, dignity or privileges of individuals, but with the elements of functional independence necessary to free international institutions from national control and to enable them to discharge their responsibilities impartially on behalf of all their members. The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member States of the organization, and to ensure the unhampered performance of their functions. ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic right.

The immunity granted being "from every form of legal process except in so far as in any particular case they have expressly waived their immunity," it is inaccurate to state that a certification election is beyond the scope of that immunity for the reason that it is not a suit against ICMC. A certification election cannot be viewed as an independent or isolated process. It could tugger off a series of events in the collective bargaining process together with related incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process," which includes "any penal, civil and administrative proceedings." The eventuality of Court litigation is neither remote and from which international organizations are precisely shielded to safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said to be standard provisions in the constitutions of international Organizations. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to proceedings in personam and proceedings in rem." We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a six-month probationary employment), the Court is now estopped from passing upon the question of DOLE jurisdiction petition over ICMC. We find no merit to said submission. Not only did the facts of said controversy occur between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding immunities, but also because ICMC in that case did not invoke its immunity and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly recognized as enjoying such immunity. Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the BLR Director, dated 15 February 1989, had not become final because of a Motion for Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715, which provides for direct appeals from the Orders of the MedArbiter to the Secretary of Labor in certification election cases either from the order or the results of the election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of discretion may be imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction, contrary to Kapisanan's allegations. KAPATIRAN SA MEAT AND CANNING DIVISION vs. CALLEJA The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027) hereinafter referred to as "TUPAS," seeks a review of the resolution dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations, dismissing its appeal from the Order dated November 17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah ordering a certification election to be conducted among the regular daily paid rank and file employees/workers of Universal Robina Corporation-Meat and Canning Division to determine which of the contending unions: a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or "TUPAS" for brevity); b) Meat and Canning Division New Employees and Workers United Labor Organization (or "NEW ULO" for brevity); c) No union shall be the bargaining unit of the daily wage rank and file employees in the Meat and Canning Division of the company. From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining representative of the workers in the Meat and Canning

15 Division of the Universal Robina Corporation, with a 3-year collective bargaining agreement (CBA) which was to expire on November 15, 1987. Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS filed an amended notice of strike on September 28, 1987 as a means of pressuring the company to extend, renew, or negotiate a new CBA with it. On October 8, 1987, the NEW ULO, composed mostly of workers belonging to the IGLESIA NI KRISTO sect, registered as a labor union. On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an injunction against the strike, resulting in an agreement to return to work and for the parties to negotiate a new CBA. The next day, October 13, 1987, NEW ULO, claiming that it has "the majority of the daily wage rank and file employees numbering 191," filed a petition for a certification election at the Bureau of Labor Relations. TUPAS moved to dismiss the petition for being defective in form and that the members of the NEW ULO were mostly members of the Iglesia ni Kristo sect which three (3) years previous refused to affiliate with any labor union. It also accused the company of using the NEW ULO to defeat TUPAS' bargaining rights. On November 17, 1987, the MedArbiter ordered the holding of a certification election within 20 days. TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it was able to negotiate a new 3-year CBA with ROBINA, which was signed on December 3, 1987 and to expire on November 15, 1990. On January 27, 1988, respondent BLR Director Calleja dismissed the appeal. After deliberating on the petition and the documents annexed thereto, We find no merit in the Petition. The public respondent did not err in dismissing the petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor union for being contrary to their religious beliefs, does not bar the members of that sect from forming their own union. The public respondent correctly observed that the "recognition of the tenets of the sect ... should not infringe on the basic right of self-organization granted by the constitution to workers, regardless of religious affiliation." The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a timely petition for certification election on October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a "certification election is the best forum in ascertaining the majority status of the contending unions wherein the workers themselves can freely choose their bargaining representative thru secret ballot." Since it has not been shown that this order is tainted with unfairness, this Court will not thwart the holding of a certification election. MANILA ELECTRIC COMPANY vs. SECRETARY OF LABOR On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter "STEAM-PCWF") a labor organization of staff and technical employees of MERALCO, filed a petition for certification election, seeking to represent regular employees of MERALCO who are: (a) non-managerial employees with Pay Grades VII and above; (b) nonmanagerial employees in the Patrol Division, Treasury Security Services Section, Secretaries who are automatically removed from the bargaining unit; and (c) employees within the rank and file unit who are automatically disqualified from becoming union members of any organization within the same bargaining unit.

Among others, the petition alleged that "while there exists a dulyorganized union for rank and file employees in Pay Grade I-VI, which is the MERALCO Employees and Worker's Association (MEWA) which holds a valid CBA for the rank and file employees, there is no other labor organization except STEAM-PCWF claiming to represent the MERALCO employees. The petition was premised on the exclusion/disqualification of certain MERALCO employees pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA. Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII and above are classified as managerial employees who, under the law, are prohibited from forming, joining or assisting a labor organization of the rank and file. As regards those in the Patrol Division and Treasury Security Service Section, MERALCO maintains that since these employees are tasked with providing security to the company, they are not eligible to join the rank and file bargaining unit, pursuant to Sec. 2(c), Rule V, Book V of the then Implementing Rules and Regulations of the Labor Code. As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends that since they are already beneficiaries of the MEWA-CBA, they may not be treated as a separate and distinct appropriate bargaining unit. MERALCO raised the same argument with respect to employees sought to be represented by STEAM-PCWF, claiming that these were already covered by the MEWA-CBA. On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing Collective Bargaining Agreement for rank and file employees, these employees have the right to form a union of their own, except those employees performing managerial functions. With respect to those employees who had resented their alleged involuntary membership in the existing CBA, the Med-Arbiter stated that the holding of a certification election would allow them to fully translate their sentiment on the matter, and thus directed the holding of a certification election. In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and FLAMES' desired representation of supervisory employees from Grades VII up. However, it believes that all that the Secretary of Labor has to do is to establish a demarcation line between supervisory and managerial rank, and not to classify outright the group of employees represented by STEAM-PCWF and FLAMES as rank and file employees. In questioning the Secretary of Labor's directive allowing security guards (Treasury/Patrol Services Section) to be represented by respondents, MERALCO contends that this contravenes the provisions of the recently passed RA 6715 and its implementing rules (specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies supervisory employees and security guards from membership in a labor organization of the rank and file. The Secretary of Labor's Resolution was obviously premised on the provisions of Art. 212, then par. (k), of the 1988 Labor Code defining "managerial" and "rank and file" employees, the law then in force when the complaint was filed. At the time, only two groups of employees were recognized, the managerial and rank and file. This explains the absence of evidence on job descriptions on who would be classified managerial employees. It is perhaps also for this reason why the Secretary of Labor limited his classification of the Meralco employees belonging to Pay Grades VII and up, to only two groups, the managerial and rank and file. However, pursuant to the Department of Labor's goal of strenghthening the constitutional right of workers to self-organization, RA 6715 was subsequently passed which reorganized the employee-ranks by including a third group, or the supervisory employees, and laying down

16 the distinction between supervisory employees and those of managerial ranks in Art. 212, renumbered par. [m], depending on whether the employee concerned has the power to lay down and execute management policies, in the case of managerial employees, or merely to recommend them, in case of supervisory employees. In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and up are supervisory (p. 10, Rollo). The records also show that STEAM-PCWF had "renounced its representation of the employees in Patrol Division, Treasury Security Service Section and rank and file employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other hand, had limited its representation to employees belonging to Pay Grades VII-XIV, generally accepted as supervisory employees. Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been recognized and accepted as supervisory. On the other hand, those employees who have been automatically disqualified have been directed by the Secretary of Labor to remain in the existing labor organization for the rank and file, (the condition in the CBA deemed as not having been written into the contract, as unduly restrictive of an employee's exercise of the right to self-organization). We shall discuss the rights of the excluded employees (or those covered by Sec. 2, Art. I, MEWA-CBA later. Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent supervisory employees only. In this regard, the authority given by the Secretary of Labor for the establishment of two labor organizations for the rank and file will have to be disregarded since We hereby uphold certification elections only for supervisory employees from Pay Grade VII and up, with STEAM-PCWF and FLAMES as choices. As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes of segregating the supervisory from the managerial employees, the required parameter is really not necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid down the corresponding guidelines. We shall now discuss the rights of the security guards to self-organize. MERALCO has questioned the legality of allowing them to join either the rank and file or the supervisory union, claiming that this is a violation of par. 2, Sec. 1, Rule II, and Sec. 2 (c), Rule V of Book V of the Implementing Rules of RA 6715. Both rules, barring security guards from joining a rank and file organization, appear to have been carried over from the old rules which implemented then Art. 245 of the Labor Code. Pres. Corazon C. Aquino issued E.O. No. 111 which eliminated the above-cited provision on the disqualification of security guards. What was retained was the disqualification of managerial employees. With the elimination, security guards were thus free to join a rank and file organization. As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory employees from membership in a labor organization of the rank-and-file employees. It does not include security guards in the disqualification. The implementing rules of RA 6715, therefore, insofar as they disqualify security guards from joining a rank and file organization are null and void, for being not germane to the object and purposes of EO 111 and RA 6715 upon which such rules purportedly derive statutory moorings. While therefore under the old rules, security guards were barred from joining a labor organization of the rank and file, under RA 6715, they may now freely join a labor organization of the rank and file or that of the supervisory union, depending on their rank. By accommodating supervisory employees, the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by favorably allowing them

free access to a labor organization, whether rank and file or supervisory, in recognition of their constitutional right to selforganization. We are aware however of possible consequences in the implementation of the law in allowing security personnel to join labor unions within the company they serve. The law is apt to produce divided loyalties in the faithful performance of their duties. Economic reasons would present the employees concerned with the temptation to subordinate their duties to the allegiance they owe the union of which they are members, aware as they are that it is usually union action that obtains for them increased pecuniary benefits. Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly abandon their duties, such as protection of property of their employer and the persons of its officials and employees, the control of access to the employer's premises, and the maintenance of order in the event of emergencies and untoward incidents. It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid possible conflict of interest in security personnel. UNITED PEPSI-COLA SUPERVISORY UNION vs. LAGUESMA Facts: 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 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, Sec. 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. Issue (1): Whether or not the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees. YES Held: 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. 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." 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.

17 The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational resources." Managers constitute three levels of a pyramid: 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 MIDDLE MANAGERS: 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 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 In the Case, entitled Worker's Alliance Trade Union (WATU) v. PepsiCola Products Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found: we find that only those employees occupying the position of route manager and accounting manager are managerial employees. Issue (2): Whether or not Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, Sec. 8 of the Constitution. NO Held: The real intent of Art. III, 8 is evident in Lerums proposal. 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. Nor is the guarantee of organizational right in Art. III, Sec. 8 infringed by a ban against managerial employees forming a union. The right guaranteed in Art. III, Sec. 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. 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. GENERAL RUBBER and FOOTWEAR CORPORATION vs. BUREAU OF LABOR RELATIONS Petitioner is a corporation engaged in the business of manufacturing rubber sandals and oilier rubber products. In 1985, the Samahang Manggagawa sa General Rubber Corporation ANGLO was formed by the daily paid rank and file employees as their union for collective bargaining, after the expiration on October 15, 1985 of the collective bargaining agreement previously executed by petitioner with General Rubber Workers Union (Independent) on October 15, 1982. Be it noted however that on July 17, 1985, the monthly paid employees of the petitioner-corporation, after forming their own collective bargaining unit the National Association of Trade Unions of Monthly Paid Employees-NATU, filed a petition for direct certification with tile Bureau of Labor Relations which petition was opposed by herein petitioner. On September 2, 1985, the Med-Arbiter issued an Order for the holding of

a certification election after finding that a certification election is in order in this case and observing that it is the fairest remedy to determine whether employees of petitioner desire to have a union or not. On appeal, the Bureau of Labor Relations denied both the appeal and motion for reconsideration interposed by petitioner and affirmed the ruling of the Med-Arbiter. Hence, the present petition, imputing serious error's of law and grave abuse of discretion on the part of the Bureau of Labor Relations in issuing the assailed order which sanctioned the creation of two (2) bargaining units within petitioner-corporation. Expounding on its position, petitioner argues that: 1. The order violates the thrust of the Labor Code insofar as formation of a bargaining unit is concerned. A policy is in favor of a larger unit and not the creation of smaller units in one establishment which might lead to formation, thus impractical. 2. Article 246 of the Labor Code explicitly provides that managerial employees are ineligible to join or form any labor organization. Since it has been shown by the petitioners that 30% of the monthly-paid employees are managers or employees exercising managerial functions, it was grave error for the Bureau of Labor Relations to allow these monthly paid employees to form a union and/or a bargaining unit. 3. The Bureau of Labor Relations overlooked the fact that these monthly-paid-employees are excluded from the first existing bargaining unit of the daily-paid rank and file employees because in the year 1963, when the employees of petitioner initially started to exercise their right to self-organization, herein petitioner bargained for the exclusion of the monthly-paid employees from the existing bargaining unit because they are performing vital functions of management. In view of this exclusion, petitioner took upon itself to take care of them and directly gave them the benefits or privileges without having to bargain for them or without the aid of the bargaining arm or force of a union. Petitioner's contentions are devoid of merit. Among other issues answered in the assailed order are the following findings of fact: Regarding the second issue, we deem it necessary to examine the respective functions of the employees. It appears therefrom that they perform supervisory functions. Verily they make recommendation petitions as to what Managerial actions to take in disciplinary cases. However, that fact alone does not make them managerial employees already, It is more a question of how effective are those recommendations which aspect has not been clearly established in this case. As defined in the Labor Code, a "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." Thus, employees who do not fall within this definition are considered rank-and-file employees. Lastly, we find that the third issue has been raised for the first time on appeal. It has been the policy of the Bureau to encourage the formation of an employer unit "unless circumstances otherwise require. The proliferation of unions in an employer unit is discouraged as a matter of policy unless there are compelling reasons which would deny a certain class of employees the right to self-organization for purposes of collective bargaining, This case does not fall squarely within the exception. It is undisputed that the monthlies who are rank-and-file have been historically excluded from the bargaining unit composed of daily-paid rank-and-filers that is, since 1963 when the existing rankand- file union was recognized. In fact, the collective bargaining agreement (CBA) which expired last 15 October 1985 provides as follows:

18 Section 1. Appropriate bargaining unit. This Agreement covers all regular employees and workers employed by the company at its factory in Malabon, Metro Manila. The words "employee," "laborer" and "workers" when used in this Agreement shall be deemed to refer to those employees within the bargaining unit. Employees who occupy managerial, confidential or technical positions, supervisors, contract employees, monthly-paid employees, security as wen as office personnel are excluded from the appropriate bargaining unit. In view of the above, the monthly-paid rank-and-file employees ran form a union of their own, separate and distinct from the existing rankand-file union composed of daily-paid workers. Thus, it can be readily seen from the above findings of the Bureau of labor Relations that the members of private respondent are not managerial employees as claimed by petitioners but merely considered as rank-and-file employees who have every right to self-organization or to be heard through a duly certified collective bargaining union. The Supervisory power of the members of private respondent union consists merely in recommending as to what managerial actions to take in disciplinary cases. These members of private respondent union do not fit the definition of managerial employees which We laid down in the case of Bulletin Publishing Corporation v. Sanchez (144 SCRA 628). These members of private respondent union are therefore not prohibited from forming their own collective bargaining unit since it has not been shown by petitioner that "the responsibilities (of these monthly-paid-employees) inherently require the exercise of discretion and independent judgment as supervisors" or that "they possess the power and authority to lay down or exercise management policies." Similarly, he held in the same case that "Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to loin or assist the rank-and-file labor organization, and if none exists, to form or assist in the forming of such rank-and-file organizations. Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions but there is no one to blame except petitioner itself for creating the situation it is in. From the beginning of the existence in 1963 of a bargaining limit for the employees up to the present, petitioner had sought to indiscriminately suppress the members of the private respondent"s right to self-organization provided for by law. Petitioner, in justification of its action, maintained that the exclusion of the members of the private respondent from the bargaining union of the rank-and-file or from forming their own union was agreed upon by petitioner corporation with the previous bargaining representatives namely: the General "Rubber Workers Union PTGWO the General Workers Union NAFLU and the General Rubber Workers Union (independent). Such posture has no leg to stand on. It has not been shown that private respondent was privy to this agreement. And even if it were so, it can never bind subsequent federations and unions particularly private respondent-union because it is a curtailment of the right to self-organization guaranteed by the labor laws. However, to prevent any difficulty. and to avoid confusion to all concerned and, more importantly, to fulfill the policy of the New Labor Code as well as to be consistent with Our ruling in the Bulletin case, supra, the monthlypaid rank-and-file employees should be allowed to join the union of the daily-paid-rank-and-file employees of petitioner so that they can also avail of the CBA benefits or to form their own rank-and-file union, without prejudice to the certification election that has been ordered. ENGINEERING EQUIPMENT vs. NLRC Respondent Ricardo Pili was an employee of petitioner Engineering Equipment, Inc. beginning December 11, 1973 until July 18, 1976 when his services were terminated. At that time, he was assigned as foreman in the Central Bank building construction project of the petitioner at Diliman, Quezon City. As a result of the termination of his services, Pili

filed a complaint for illegal dismissal against the petitioner before the Manila Labor Regional Office. No amicable settlement could be reached at the conciliation level. hence the case docketed as NLRC Case No. RB-IV-11874-77 entitled Ricardo Pili v. Engineering Equipment Inc. was certified for compulsory arbitration and assigned to the respondent Labor Arbiter. After a review of the conflicting evidence for both parties, the respondent Labor Arbiter issued the questioned decision which was in favor of the complainant. The Labor Arbiter's decision was affirmed by the NLRC. The records show that the petitioner company received a letter protest on June 24, 1976 from forty (40) of its construction workers complaining against respondent Ricardo Pili. The workers had eight (8) charges against Pili but four were considered minor or were ignored by the petitioner, so it investigated only four charges, to wit: (a) Interfering with the conduct of work properly within the competence of other foremen to supervise. (b) Ordering specific jobs to be done in a 'hit-or-miss' fashion to such extent that such jobs had to be later repaired and/ or completely redone. (c) Unauthorized establishment of a canteen inside the project premises, where he spent more time than what he devoted to supervision and direction of the workers under him. (d) Unauthorized possession of a deadly weapon (jungle bolo) on the project premises. Respondent NLRC decided in favor of the private respondent. The petitioner was ordered to reinstate the respondent with full backwages and without loss of seniority rights because the NLRC considered the evidence submitted by the petitioner inadequate to support just cause for dismissal. Petition granted. The petitioner terminated the services of respondent Pili not only for the reasons stated in the complaint of the forty (40) workers but also because he instigated labor unrest when he took reprisal action against its signatories. This is clearly stated in the petitioner's position paper filed with the public respondents. The records show that when respondent Pili learned of the lettercomplaint and the on-the-spot investigation being conducted by the labor relations manager of the firm, he threatened the signatories and told them they would be the ones separated from employment. The workers trooped to the petitioner's personnel department and threatened to file complaints against the firm with the Ministry of Labor. The unrest was averted when the workers were assured that the investigation of Pili would continue and that their having written a formal complaint would not be taken against them. The respondents are correct in stating that the best evidence to support the four charges would have been the presentation of some of the 40 worker-complainants as witnesses before the Ministry of Labor and Employment. However, the labor unrest caused by the respondent is supported by substantial evidence. Messrs. Romeo Cabrera and Normandie B. Pizarro testified on matters within their personal knowledge and about which they were the most qualified to testify. There is furthermore the admission of respondent Pili that he took a leave of absence for one month to let the heated atmosphere cool down. There was no need to go on leave if there was no charged atmosphere in the workplace. The petitioner may have been remiss in introducing as witnesses before the labor arbiter only the labor relations manager and the supervisor who conducted the investigation. There is one important point,

19 however, which the public respondents ignored. Whether or not foreman Pili had a jungle bolo strapped to his side while supervising construction workers in the Central Bank project, whether or not he interfered with the conduct of work assigned to other foremen, and whether or not he ordered jobs to be done in a hit-or-miss fashion that these had to be redone, the fact remains that no less than forty (40) construction workers felt sufficiently aggrieved at his improper behavior or conduct as to sign a formal letter of protest against him. And after he was investigated these same workers were threatened by the respondent, thus aggravating an already difficult situation. Under the circumstances, it would be expecting too much from the employer for the public respondents or this Court to order the reinstatement of Mr. Pili. The operation of the canteen by the respondent and his wife at the Central Bank project is admitted. The respondent's defense is that he was given permission by his superior to operate it and it had been in operation for some months before the petitioner investigated him about it. The records show that the private respondent was disciplined on the basis of the charge about the canteen not only because of its operation but also because he used some of his subordinates to maintain it. There was conflict of interest, not only as regards the time that he spent on this private business but also the use of services of workmen who should devote full-time to the company. Respondent NLRC also blamed the petitioner for not giving the private respondent an opportunity to meet his accusers face to face. The petitioner answered this alleged lack of due process by stating that it conducted a formal investigation but the respondent "after one or two questions did not appear anymore." He took a one month leave of absence of cool off the tense situation. Moreover, the petitioner states that confrontation was unwise at the start because emotions were running high and, moreover, the respondent himself pre-empted it when he took reprisal action against the signatories. We also note that the respondent NLRC did not categorically rule on whether or not Mr. Pili was a managerial employee and, therefore, whether or not the requirement of prior clearance to terminate was necessary. It is the nature of an employee's functions and not the nomenclature or title given to his job which determines whether he has rank-and-file or managerial status. Among the characteristics of managerial rank are: (1) He is not subject to the rigid observance of regular office hours; (2) His work requires the consistent exercise of discretion and judgment in its performance; (3) the output produced or the result accomplished cannot be standardized in relation to a given period of time; (4) He manages a customarily recognized department or subdivision of the establishment, customarily and regularly directing the work of other employees therein; (5) He either has the authority to hire or discharge other employees or his suggestions and recommendations as to hiring and discharging, advancement and promotion or other change of status of other employees are given particular weight; and (6) As a rule, he is not paid hourly wages nor subjected to maximum hours of work. At any rate, the employer has a right to dismiss an employee whose continuance in the service is inimical to the employer's interest, The law protects the rights of workers but it cannot authorize the oppression or self-destruction of the employer. The step taken by the employer in this case was a measure of self-protection. Under the facts of the case, we rule that the petitioner had valid grounds to terminate the services of the private respondent. However, we also take into account some equities of the case. The respondent had worked for almost three years with the petitioner. Top management should have become aware of the problem earlier instead of awaiting an explosive situation where forty (40) construction workers

prepare a formal protest against their foreman and question his competence and conduct. Considering the boundary line nature of the respondent's job whether or not it is managerial, it would have been more prudent for the firm, which has very competent counsel, to have asked for a prior clearance. In the light of the foregoing, we hold that the private respondent is entitled to full separation pay but not reinstatement with back wages. NATIONAL MERCHANDISING INDUSTRIAL RELATIONS CORPORATION vs. COURT OF

20 prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. It is to be noted, however, that the power to recommend, in order to qualify an employee as a supervisor, must not only be effective but the exercise of such authority should not be merely of a routinary or clerical nature but should require the use of independent judgment. In the case at bar, it appears in the first place that, as found by the trial court, there are no clear appointments in favor of the employees in question including the alleged power or recommend, and while Alfonso Panganiban, Personnel Manager of the petitioner company, declared that these employees as section heads could recommend the hiring, expulsion or dismissal of the workers under their respective shops, the fact remains that as admitted by him, no such recommendations have ever been made by them. There is also evidence that other employees have been appointed, transferred, or discharged and laid-off without any recommendation of the employees involved in these proceedings. Furthermore, such recommendatory powers are subject to evaluation, review and final action by the department heads and other higher executives of the company. It, therefore, appears that the conclusion of the trial court that the authority to recommend even if present, is not effective and not an exercise of independent judgment as required by law, is not incorrect. Neither is it borne by the records that the employees herein involved can responsibly direct those under them, for the evidence discloses that the service manager, Justo Sycip, is the one who gives work assignments to all personnel under the Repairs and Maintenance Department in which the employees herein concerned are working. The mere designation of these employees as chief mechanic, chief welder, chief painter and chief carpenter does not indicate more than the fact that they are the number one mechanic, welder, painter or carpenter among the many of the same category. TAGAYTAY HIGHLANDS vs. TAGAYTAY HIGHLANDS EMPLOYEES UNION On October 16, 1997, the Tagaytay Highlands Employees Union (THEU) Philippine Transport and General Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said to represent majority of the rank-and-file employees of THIGCI, filed a petition for certification election before the DOLE Mediation-Arbitration Unit, Regional Branch No. IV. THIGCI, in its Comment filed on November 27, 1997, opposed THEUs petition for certification election on the ground that the list of union members submitted by it was defective and fatally flawed as it included the names and signatures of supervisors, resigned, terminated and absent without leave (AWOL) employees, as well as employees of The Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192 signatories to the petition, only 71 were actual rankand-file employees of THIGCI. THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it annexed to its Comment to the petition for certification election. And it therein incorporated a tabulation showing the number of signatories to said petition whose membership in the union was being questioned as disqualified and the reasons for disqualification. THIGCI also alleged that some of the signatures in the list of union members were secured through fraudulent and deceitful means, and submitted copies of the handwritten denial and withdrawal of some of its employees from participating in the petition. Replying to THIGCIs Comment, THEU asserted that it had complied with all the requirements for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE Department Order No. 9, series of 1997,5 on account of which it was duly granted a

Through a petition filed in the Court of Industrial Relations, the National Merchandising Corporation asked for its aid in ascertaining, whether the Goodwill Labor Organization CCLU, which had sought to bargain collectively with it (the Company) for and in behalf of its employees, may properly act as bargaining agent for the latter. It was therein claimed that petitioner had in its employ 10 supervisors, 1 confidential employee, 3 salesmen, 22 office employees, and 54 mechanics, painters, carpenters, and laborers, and it doubts whether the aforesaid union represents a majority thereof. Respondent union answered maintaining its right to represent the Company's employees, and prayed the court for the holding of a certification election after all the employees entitled to vote shall have been determined. The parties entered into trial solely to determine the appropriate unit and bargaining agent for the employees. During the hearing, the Company and the Union agreed to the holding of a certification election, the appropriate bargaining unit or Employer Unit to be composed of all regular and temporary employees and laborers working in the different departments of the company, while a Casual Unit shall be constituted by the casual employees. However, aside from the 16 officers and employees who, by reason of their managerial, supervisory/or confidential positions, were to be excluded from the appropriate bargaining unit, the Company insisted in the non-inclusion therein of 8 employees allegedly performing supervisory functions. In its order of May 5, 1961, the court, finding them to be at most minor supervisory employees who work in close association with the few men under them, allowed their inclusion in the Employer Unit, and directed the Department of Labor to conduct secret-ballot-elections among the employees to determine the exclusive bargaining representative for the 2 groups constituting the Employer and Casual Units. Hence, the institution of the instant proceeding by the petitioner company on the sole issue of whether the 8 employees concerned are supervisors. SEC. 2. Definition. (k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer, suspend, layoff, 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. Petitioner now contends that neither the absence of power to hire, discharge, promote, transfer, discipline, etc. subordinate personnel, nor the lack of the use thereof, if present, is determinative of the supervisory status or classification of an employee under the Industrial Peace Act. It is proposed that to be classified as a supervisor, it would be sufficient that he has the power to recommend the hiring, dismissal, promotion, disciplining, etc. of personnel under him or responsibly direct them, which the employees involved in the cases allegedly have. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without

Certification of Affiliation by DOLE on October 10, 1997; and that Section 5, Rule V of said Department Order provides that the legitimacy of its registration cannot be subject to collateral attack, and for as long as there is no final order of cancellation, it continues to enjoy the rights accorded to a legitimate organization. THEU thus concluded in its Reply that under the circumstances, the Med-Arbiter should, pursuant to Article 257 of the Labor Code and Section 11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a certification election. By Order of January 28, 1998, DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification election among the rank-and-file employees of THIGCI. It ruled that the accompanying documents show that indeed petitioner union is a legitimate labor federation and its local/chapter was duly reported to this Office as one of its affiliate local/chapter. Passing on THIGCIs allegation that some of the union members are supervisory, resigned and AWOL employees or employees of a separate and distinct corporation, the Med-Arbiter held that the same should be properly raised in the exclusion-inclusion proceedings at the preelection conference. As for the allegation that some of the signatures were secured through fraudulent and deceitful means, he held that it should be coursed through an independent petition for cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed to submit the job descriptions of the questioned employees and other supporting documents to bolster its claim that they are disqualified from joining THEU. While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-and-file union, it does not provide what would be the effect if a rank-and-file union counts supervisory employees among its members, or vice-versa. Citing Toyota which held that "a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all," and the subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma which held that: "The Labor Code requires that in organized and unorganized establishments, a petition for certification election must be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization, particularly the right to file a petition for certification election, first and foremost, depends on whether or not the labor organization has attained the status of a legitimate labor organization." Petitioner contends that, quoting Toyota, "[i]t becomes necessary . . ., anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. Continuing, petitioner argues that without resolving the status of THEU, the DOLE Undersecretary "conveniently deferred the resolution on the serious infirmity in the membership of [THEU] and ordered the holding of the certification election" which is frowned upon as the following ruling of this Court shows: We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the membership of the respondent union can be remedied in "the pre-election conference thru the exclusioninclusion proceedings wherein those employees who are occupying rank-and-file positions will be excluded from the list of eligible voters." Public respondent gravely misappreciated the basic antipathy between the interest of supervisors and the interest of rank-and-file employees.

21 The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV of the "Rules to Implement the Labor Code" (Implementing Rules) which section reads: Sec. 5. Effect of registration. The labor organization or workers association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack, but may be questioned only in an independent petition for cancellation in accordance with these Rules. The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239 of the Labor Code. THEU, having been validly issued a certificate of registration, should be considered to have already acquired juridical personality which may not be assailed collaterally. As for petitioners allegation that some of the signatures in the petition for certification election were obtained through fraud, false statement and misrepresentation, the proper procedure is, as reflected above, for it to file a petition for cancellation of the certificate of registration, and not to intervene in a petition for certification election. Regarding the alleged withdrawal of union members from participating in the certification election, this Courts following ruling is instructive: "The best forum for determining whether there were indeed retractions from some of the laborers is in the certification election itself wherein the workers can freely express their choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees should in every possible instance be determined by secret ballot rather than by administrative or quasi-judicial inquiry. Such representation and certification election cases are not to be taken as contentious litigations for suits but as mere investigations of a non-adversary, fact-finding character as to which of the competing unions represents the genuine choice of the workers to be their sole and exclusive collective bargaining representative with their employer." As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given, as found by the court a quo, its failure to present substantial evidence that the assailed employees are actually occupying supervisory positions. While petitioner submitted a list of its employees with their corresponding job titles and ranks, there is nothing mentioned about the supervisors respective duties, powers and prerogatives that would show that they can effectively recommend managerial actions which require the use of independent judgment

REPUBLIC vs. KAWASHIMA TEXTILE MFG. On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for Certification Election to be conducted in the bargaining unit composed of 145 rank-and-file employees of respondent.5 Attached to its petition are a Certificate of Creation of Local/Chapter issued on January 19, 2000 by DOLE Regional Office No. IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by the national federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of Local/Chapter. Respondent filed a Motion to Dismiss the petition on the ground that KFWU did not acquire any legal personality because its membership of mixed rank-and-file and supervisory employees violated Article 245 of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court in Progressive Development Corporation v. Secretary, Department of Labor and Employment. Med-Arbiter Bactin found KFWUs legal personality defective and dismissed its petition for certification election, thus: We scrutinize the facts and evidences presented by the parties and arrived at a decision that at least two (2) members of [KFWU], namely: Dany I. Fernandez and Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under them. Being supervisory employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the union of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr., Chief Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen to the line engineers, mechanics and other non-skilled workers and responsible [for] the preparation and organization of maintenance shop fabrication and schedules, inventory and control of materials and supplies and tasked to implement training plans on line engineers and evaluate the performance of their subordinates. The above-stated actual functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are supervisory employees. Since petitioners members are mixture of rank and file and supervisory employees, petitioner union, at this point [in] time, has not attained the status of a legitimate labor organization. Petitioner should first exclude the supervisory employees from it membership before it can attain the status of a legitimate labor organization. KFWU appealed to the DOLE which the latter granted. The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court in Toyota Motor v. Toyota Motor Philippines Corporation Labor Union and Dunlop v. Secretary of Labor was misplaced, for while Article 245 declares supervisory employees ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the effect of such prohibited membership on the legitimacy of the labor organization and its right to file for certification election. However, on appeal by respondent, the CA reversed, thus: Since respondent union clearly consists of both rank and file and supervisory employees, it cannot qualify as a legitimate labor organization imbued with the requisite personality to file a petition for certification election. This infirmity in union membership cannot be corrected in the inclusionexclusion proceedings during the pre-election conference. The Republic filed the present petition to seek closure on two issues: First, whether a mixed membership of rank-and-file and supervisory employees in a union is a ground for the dismissal of a petition for certification election in view of the amendment brought about by D.O. 9, series of 1997, which deleted the phraseology in the old rule that "[t]he appropriate bargaining unit of the rank-and-file employee shall not include the supervisory employees and/or security guards;" and

22 Second, whether the legitimacy of a duly registered labor organization can be collaterally attacked in a petition for a certification election through a motion to dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc. The petition is imbued with merit. The key to the closure that petitioner seeks could have been R.A No. 9481.25 Sections 8 and 9 thereof provide: Section 8. Article 245 of the Labor Code is hereby amended to read as follows: "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 the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors' union operating within the same establishment may join the same federation or national union." Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows: "Art. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union." Moreover, under Section 4, a pending petition for cancellation of registration will not hinder a legitimate labor organization from initiating a certification election. Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read as follows: "Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election. In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts." Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to interfere with or thwart a petition for certification election filed by a legitimate labor organization, to wit: Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read as follows: "Art. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer's participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition." However, R.A. No. 9481 took effect only on June 14, 2007; hence, it applies only to labor representation cases filed on or after said date. As the petition for certification election subject matter of the present petition was filed by KFWU on January 24, 2000, R.A. No. 9481 cannot apply to it. There may have been curative labor legislations that were given retrospective effect, but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive rights and interests already vested would be impaired in the process. Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election on January 24, 2000 are R.A. No.

6715, amending Book V of the Labor Code, as amended, and the Rules and Regulations Implementing R.A. No. 6715, as amended by Department Order No. 9, series of 1997. It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court will now resolve the two issues raised by petitioner. If there is one constant precept in our labor laws be it Commonwealth Act No. 213 (1936),36 R.A. No. 875 (1953), P.D. No. 442 (1974), Executive Order (E.O.) No. 111 (1986), or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may exercise the right to be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining. What has varied over the years has been the degree of enforcement of this precept, as reflected in the shifting scope of administrative and judicial scrutiny of the composition of a labor organization before it is allowed to exercise the right of representation. One area of contention has been the composition of the membership of a labor organization, specifically whether there is a mingling of supervisory and rank-and-file employees and how such questioned mingling affects its legitimacy. It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited, to wit: Sec. 3. Employees right to self-organization. Employees shall have the right to self-organization 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 or 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. Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the legitimacy of the labor organization. Under Section 15, the only instance when a labor organization loses its legitimacy is when it violates its duty to bargain collectively; but there is no word on whether such mingling would also result in loss of legitimacy. The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in Bulletin v. Sanchez that supervisory employees who do not fall under the category of managerial employees may join or assist in the formation of a labor organization for rank-and-file employees, but they may not form their own labor organization. While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its implementing rules46 continued to recognize the right of supervisory employees, who do not fall under the category of managerial employees, to join a rank-and-file labor organization. Effective 1989, R.A. No. 6715 restored the prohibition against the questioned mingling in one labor organization, viz: Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read as follows: "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." Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition would bring about on the legitimacy of a labor organization. It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule

23 II: Sec. 1. Who may join unions. x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x and Rule V: Sec. 1. Where to file. A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath. Sec. 2. Who may file. Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization, shall contain, among others: xxxx (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election. Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held: Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. x x x In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election. In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members. It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases. But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules - that the petition for certification

election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees - was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus: Sec. 4. Forms and contents of petition. The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit. In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, which does not require that, for its creation and registration, a local or chapter submit a list of its members: Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapters constitution and by-laws; provided that where the local/chapters constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. Then came Tagaytay Highlands Intl. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlop and reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof.55 Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members. More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code. All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.

24 Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE granting the petition for certification election of KFWU. Now to the second issue of whether an employer like respondent may collaterally attack the legitimacy of a labor organization by filing a motion to dismiss the latters petition for certification election. Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees participating in a petition for certification election are actually managerial employees will lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be notified or informed thereof. SMCC-SUPER vs. CHARTER CHEMICAL and COATING CORP. Facts: On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, NCR. On April 14, 1999, respondent company filed an Answer with Motion to Dismiss on the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union. On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president as required by Section 235 of the Labor Code. The union registration was, thus, fatally defective. On July 16, 1999, the DOLE initially issued a Decision in favor of respondent company dismissing petitioner unions appeal on the ground that the latters petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the MedArbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent companys claim that some members of petitioner union were holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition for certification election on January 16, 1998. On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by the MedArbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner un ions petition for certification election.

On appeal, the CA nullified the decision of the DOLE, giving credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation requirements under the Labor Code. Petitioner Unions Arguments Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did not move for reconsideration, thus, this issue must be deemed settled. Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a unions registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local unions secretary or treasurer and attested to by the local unions president are limited to the unions constitution and by-laws, statement of the set of officers, and the books of accounts. Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO. Respondent Companys Arguments Respondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration. On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath. It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union continues to be good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as was done here. The petition is meritorious. Issue (1): Whether or not the issues subject of the respondent companys petition was already settled with finality and barred from being re-litigated. NO Held: A review of the records indicates that the issue as to petitioner unions legal personality has been timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and now this

25 Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company. Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject petition for certification election because its previous decision was based on a mistaken appreciation of facts. From this adverse decision, respondent company timely moved for reconsideration by reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject petition for certification election. The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court. Issue (2): Whether or not the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of the union membership attending the organizational meeting is a ground for the cancellation of petitioner unions legal personality as a labor organization and for the dismissal of the petition for certification election. NO Held: The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides: Section 1. Chartering and creation of a local chapter A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: (a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and (c) The local/chapters constitution and by-laws provided that where the local/chapters constitution and by-laws are the same as those of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumangayon at Nagratipika sa Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rank-andFile Union-FFW (MPPP-SMPP-SMAMRFU-FFW), which was decided under the auspices of D.O. No. 9, Series of 1997, the SC ruled In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, the Court ruled that it was not necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is

prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapters officers x x x certify or attest to a document which they had no hand in the preparation of. In accordance with this ruling, petitioner unions charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-laws26 the last two requirements having been executed under oath by the proper union officials as borne out by the records. Issue (3): Whether or not the alleged mixture of rank-and-file and supervisory employees of petitioner unions membership is a ground for the cancellation of petitioner unions legal personality and dismissal of the petition for certification election. NO Held: The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However, petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 245 of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union. Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in evidence the job descriptions of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory employees under Article 212(m) of the Labor Code. For this reason, we are constrained to agree with the MedArbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and supervisory employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate courts reliance on Toyota is misplaced in view of this Courts subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc. (hereinafter Kawashima). In Kawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz: R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition on the co-mingling of supervisory and rank-and-file employees would bring about on the legitimacy of a labor organization. It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions): "Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rankand-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x." and Rule V of the Omnibus Rules, viz: "Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath.

26 Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization, shall contain, among others: xxxx (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards." "Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election." In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members. It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases. But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit. The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashima applies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election. SAN MIGUEL FOODS vs. SMC SUPERVISORS AND EXEMPT UNION Facts: On October 5, 1990, petitioner union filed before the 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 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 case. Issue (1): Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. NO Held: 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 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. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. "Management should not be required to handle labor relations matters through employees who are represented by the union with which the company is required to deal and who in the normal performance of their duties may obtain advance information of

27 the company's position with regard to contract negotiations, the disposition of grievances, or other labor relations matters." There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 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 companydominated with the presence of managerial employees in Union membership." The same rationale was applied to confidential employees in "Golden Farms, Inc. v. Ferrer-Calleja" and in the more recent case of "Philips Industrial Development, Inc. v. NLRC" 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. 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. 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. In 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." 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. "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." "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information or technical trade secrets, will not render an employee a confidential employee." 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.

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, "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. 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. Issue (2): If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. YES Held: An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. 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. 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.

28 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. SAN MIGUEL vs. SAN MIGUEL Facts: In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma, the Court held that even if they handle confidential data regarding technical and internal business operations, supervisory employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement of grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having "community or mutuality of interests," constitute a single bargaining unit. They perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three plants have different locations as they did not impede the operations of a single bargaining representative. Pursuant to the Court's decision in G.R. No. 110399, the DOLE conducted pre-election conferences. However, there was a discrepancy in the list of eligible voters, i.e., petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while respondent listed 60 and 82, respectively. On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order directing Election Officer Cynthia Tolentino to proceed with the conduct of certification election in accordance with Section 2, Rule XII of D.O. No. 9. On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and Challenge to Voters, questioning the eligibility to vote by some of its employees on the grounds that some employees do not belong to the bargaining unit which respondent seeks to represent or that there is no existence of ER-EE relationship with petitioner. Specifically, it argued that certain employees should not be allowed to vote as they are: (1) confidential employees; (2) employees assigned to the live chicken operations, which are not covered by the bargaining unit; (3) employees whose job grade is level 4, but are performing managerial work and scheduled to be promoted; (4) employees who belong to the Barrio Ugong plant; (5) non-SMFI employees; and (6) employees who are members of other unions. On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that the employees in the submitted list are covered by the original petition for certification election and belong to the bargaining unit it seeks to represent and, likewise, directing petitioner to substantiate the allegations contained in its Omnibus Objections and Challenge to Voters. In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the Poultry Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in Calamba, Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga;

and (3) it submitted individual and separate declarations of the employees whose votes were challenged in the election. Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final tally showed that: number of eligible voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total number of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) "Yes" votes and 3 "No" votes. Based on the results, the Med-Arbiter issued the Order dated April 13, 1999, stating that since the "Yes" vote received 97% of the valid votes cast, respondent is certified to be the exclusive bargaining agent of the supervisors and exempt employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis. Issue (1): Whether or not the CA erred when it expanded the scope of the bargaining unit defined by the SC in G.R. No. 110399. NO Held: In G.R. No. 110399, the Court explained that the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit, which is not contrary to the one-company, one-union policy. An appropriate bargaining unit is 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. In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union United Lumber and General Workers of the Phils, the Court, taking into account the "community or mutuality of interests" test, ordered the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in Zapanta Valley, Kitcharao, Agusan Del Norte of the Mainit Lumber Development Company. It held that while the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interest. This is so because the basic test of an asserted bargaining units acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging Division. Their functions mesh with one another. One group needs the other in the same way that the company needs them both. There may be differences as to the nature of their individual assignments, but the distinctions are not enough to warrant the formation of a separate bargaining unit. Thus, applying the ruling to the present case, the Court affirms the finding of the CA that there should be only one bargaining unit for the employees in Cabuyao, San Fernando, and Otis of Magnolia Poultry Products Plant involved in "dressed" chicken processing and Magnolia Poultry Farms engaged in "live" chicken operations. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit. Issue (2): Whether or not the position of Payroll Master is included in the definition of a confidential employee. YES Held: Confidential employees are defined as those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate,

29 determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee - that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the "confidential employee rule." A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and protection of the employers property. Confidential employees, such as accounting personnel, should be excluded from the bargaining unit, as their access to confidential information may become the source of undue advantage. However, such fact does not apply to the position of Payroll Master and the whole gamut of employees who, as perceived by petitioner, has access to salary and compensation data. The CA correctly held that the position of Payroll Master does not involve dealing with confidential labor relations information in the course of the performance of his functions. Since the nature of his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit. 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 companydenominated with the presence of managerial employees in the union membership. Having 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.3 In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant, the scope of ones work necessarily involves labor relations, recruitment and selection of employees, access to employees' personal files and compensation package, and human resource management. As regards a Personnel Assistant, one's work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioners team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. SUGBUANON RURAL BANK vs. LAGUESMA Facts: Petitioner Sugbuanon Rural Bank, Inc., (SRBI) 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). On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR0064 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 duly-registered 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 MedArbiter gave due course to the petition. 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. NLRC, 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. 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. The Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusionexclusion proceedings in preparation for the certification election on December 16, 1993. Issue (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. NO 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. 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. 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." Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. NLRC and Panday v. NLRC to sustain its submission. In Tabacalera, 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." For this reason he was deemed to be a managerial employee.

30 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. 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. 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. Art. 245 of the Labor Code 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. The confidentialemployee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. 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. 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. 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. Issue (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. YES 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 shall automatically be conducted by the MedArbiter upon the filing of a petition by a legitimate labor organization. Nothing 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. 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. However, in the present case, none of the members of the respondent union came from the rank-and-file employees of the bank. SOCIAL SECURITY SYSTEM vs. COMMISSION ON AUDIT Facts: THE FUNDS contributed to the Social Security System (SSS) are not only imbued with public interest, they are part and parcel of the fruits of the workers labors pooled into one enormous trust fund under the administration of the System designed to insure against the vicissitudes and hazards of their working lives. In a very real sense, the trust funds are the workers property which they could turn to when necessity beckons and are thus more personal to them than the taxes they pay. It is therefore only fair and proper that charges against the trust fund be strictly scrutinized for every lawful and judicious opportunity to keep it intact and viable in the interest of enhancing the welfare of their true and ultimate beneficiaries. This is a petition for certiorari under Rule 64 of the 1997 Rules of Civil Procedure praying that this Court assess against the workers social security fund the amount of P5,000.00 as contract signing bonus of each official and employee of the SSS. The gratuity emanated from the collective negotiation agreement (CNA) executed on 10 July 1996 between the Social Security Commission (SSC) in behalf of the SSS and the Alert and Concerned Employees for Better SSS (ACCESS), the sole and exclusive negotiating agent for employees of the SSS. In particular, Art. XIII of the CNA provided - As a gesture of good will and benevolence, the Management agrees that once the Collective Negotiation Agreement is approved and signed by the parties, Management shall grant each official and employee of the SYSTEM the amount of P5,000.00 as contract signing bonus. To fund this undertaking, the SSC allocated P15M in the budgetary appropriation of the SSS. On 18 February 1997 the Department of Budget and Management (DBM) declared as illegal the contract signing bonus which the CNA authorized to be distributed among the personnel of the SSS. On 1 July 1997 the SSS Corporate Auditor disallowed fund releases for the signing bonus since it was "an allowance in the form of additional compensation prohibited by the Constitution." Two years later, in a letter dated 29 September 1999, ACCESS appealed the disallowance to the COA. On 5 July 2001 despite the delay in the filing of the appeal, a procedural matter which COA considered to be inconsequential, COA affirmed the disallowance and ruled that the grant of the signing bonus was improper. It held that the provision on the signing bonus in the CNA had no legal basis since Sec. 16 of RA 7658 (1989) had repealed the authority of the SSC to fix the compensation of its personnel. Hence the instant petition which, curiously, was filed in the name of the Social Security System (and not ACCESS) by authority of the officer-in-charge for the SSS11 through its legal staff. Issue: Whether or not the grant of the signing bonus to the employees and officers of SSS was improper. NO

31 The process of collective negotiations in the public sector does not encompass terms and conditions of employment requiring the appropriation of public funds - Sec. 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiations between duly recognized employees organizations and appropriate government authorities. More particularly Sec. 3. Those that require appropriation of funds, such as the following, are not negotiable: (a) Increase in salary emoluments and other allowances not presently provided for by law; (b) Facilities requiring capital outlays; (c) Car plan; (d) Provident fund; (e) Special hospitalization, medical and dental services; (f) Rice/sugar/other subsidies; (g) Travel expenses; (h) Increase in retirement benefits. Sec. 4. Matters that involve the exercise of management prerogatives, such as the following, are likewise not subject to negotiation: (a) Appointment; (b) Promotion; (c) Assignment/Detail; (d) Reclassification/ upgrading of position; (e) Revision of compensation structure; (f) Penalties imposed as a result of disciplinary actions; (g) Selection of personnel to attend seminar, trainings, study grants; (h) Distribution of work load; (I) External communication linkages. Petitioner however argues that the charter of SSS authorizes the SSC to fix the compensation of its employees and officers so that in reality the signing bonus is merely the fruit of the exercise of such fundamental power. On this issue, we have to explain the relevant amendments to the SSS charter in relation to the passage of RA 6758 (1989) entitled "An Act Prescribing a Revised Compensation and Position Classification in the Government and for other Purposes." When the signing bonus was bestowed upon each employee and officer of the SSS on 10 July 1996, which was earlier approved by the SSC on 3 July 1996, the governing charter of the SSS was RA 1161 as amended by Sec. 1, RA 2658, and Sec. 1, PD 735. Under this amended statute, the SSC was empowered to "appoint an actuary, and such other personnel as may be deemed necessary" and to "fix their compensation." The law also provided that "the personnel of the SSS shall be selected only from civil service eligibles and be subject to civil service rules and regulations." On 9 August 1989 Congress passed RA 6758 which took effect on 1 July 1989. Its goal was to "provide equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions." Towards this end, RA 6758 provided for the consolidation of allowances and compensation in the prescribed standardized salary rates except certain specified allowances and such other additional compensation as may be determined by the Department of Budget and Management. The law also repealed "all laws, decrees, executive orders, corporate charters, and other issuances or parts thereof, that exempt agencies from the coverage of the System, or that authorize and fix position classification, salaries, pay rates or allowances of specified positions, or groups of officials and employees or of agencies, which are inconsistent with the System, including the proviso under Section 2 and Section 16 of Presidential Decree No. 985." Although it was the clear policy intent of RA 6758 to standardize salary rates among government personnel, the Legislature under Secs. 12 and 17 of the law nonetheless saw the need for equity and justice in adopting the policy of non-diminution of pay when it authorized incumbents as of 1 July 1989 to receive salaries and/or allowances over and above those authorized by RA 6758. Evidently, while RA 6758 intended to do away with multiple allowances and other incentive packages and the resulting differences in

compensation among government personnel, the statute clearly did not revoke existing benefits being enjoyed by incumbents of government positions at the time of the passage of RA 6758 by virtue of Secs. 12 and 17 thereof. In previous rulings of this Court, among the financial and non-financial incentives which we allowed certain government employees to enjoy after the effectivity of RA 6758 were car plan benefits and educational funding assistance for incumbents of existing positions as of 1 July 1989 until such gratuity packages were gradually phased out. We have no doubt that RA 6758 modified, if not repealed, Sec. 3, par. (c), of RA 1161 as amended, at least insofar as it concerned the authority of SSC to fix the compensation of SSS employees and officers. This means that whatever salaries and other financial and non-financial inducements that the SSC was minded to fix for them, the compensation must comply with the terms of RA 6758. Consequently, only the remuneration which was being offered as of 1 July 1989, and which was then being enjoyed by incumbent SSS employees and officers, could be availed of exclusively by the same employees and officers separate from and independent of the prescribed standardized salary rates. Unfortunately, however, the signing bonus in question did not qualify under Secs. 12 and 17 of RA 6758. It was non-existent as of 1 July 1989 as it accrued only in 1996 when the CNA was entered into by and between SSC and ACCESS. The signing bonus therefore could not have been included in the salutary provisions of the statute nor would it be legal to disburse to the intended recipients. So we also rule in the instant case involving the charter of the SSS or RA 1161 as amended. This Court has been very consistent in characterizing the funds being administered by SSS as a trust fund for the welfare and benefit of workers and employees in the private sector. In United Christian Missionary v. Social Security Commission, we were unequivocal in declaring the funds contributed to the Social Security System by compulsion of law as funds belonging to the members which were merely held in trust by the government, and resolutely imposed the duty upon the trustee to desist from any and all acts which would diminish the property rights of owners and beneficiaries of the trust fund. Consistent with this declaration, it would indeed be very reasonable to construe the authority of the SSC to provide for the compensation of SSS personnel in accordance with the established rules governing the remuneration of trustees. On the basis of the foregoing pronouncement, we do not find the signing bonus to be a truly reasonable compensation. The gratuity was of course the SSCs gesture of good will and benevolence for the conclusion of collective negotiations between SSC and ACCESS, as the CNA would itself state, but for what objective? Agitation and propaganda which are so commonly practiced in private sector labormanagement relations have no place in the bureaucracy and that only a peaceful collective negotiation which is concluded within a reasonable time must be the standard for interaction in the public sector. This desired conduct among civil servants should not come, we must stress, with a price tag which is what the signing bonus appears to be. LABOR ORGANIZATION REGISTRATION Article 234 of Labor Code. Requirements of registration. - A federation, national union or industry or trade union center or an independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee;

32 (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings; (c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; (d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and (e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it. Section 2, Rule III of D.O. No. 40-03. Requirements for application. - A. The application for registration of an independent labor union shall be accompanied by the following documents: 1) the name of the applicant labor union, its principal address, the name of its officers and their respective addresses, approximate number of employees in the bargaining unit where it seeks to operate, with a statement that it is not reported as a chartered local of any federation or national union; 2) the minutes of the organizational meeting(s) and the list of employees who participated in the said meeting(s); 3) the name of all its members comprising at least 20% of the employees in the bargaining unit; 4) the annual financial reports if the applicant has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 5) the applicant's constitution and by-laws, minutes of its adoption or ratification, and the list of the members who participated in it. The list of ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting. In such a case, the factual circumstances of the ratification shall be recorded in the minutes of the organizational meeting(s). B. The application for registration of federations and national unions shall be accompanied by the following documents: 1) a statement indicating the name of the applicant labor union, its principal address, the name of its officers and their respective addresses; 2) the minutes of the organizational meeting(s) and the list of employees who participated in the said meeting(s); 3) the annual financial reports if the applicant union has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 4) the applicant union's constitution and by-laws, minutes of its adoption or ratification, and the list of the members who participated in it. The list of ratifying members shall be dispensed with where the constitution and by-laws was ratified or adopted during the organizational meeting(s). In such a case, the factual circumstances of the ratification shall be recorded in the minutes of the organizational meeting(s); 5) the resolution of affiliation of at least ten (10) legitimate labor organizations, whether independent unions or chartered locals, each of which must be a duly certified or recognized bargaining agent in the establishment where it seeks to operate; and 6) the name and addresses of the companies where the affiliates operate and the list of all the members in each company involved. Labor organizations operating within an identified industry may also apply for registration as a federation or national union within the specified industry by submitting to the Bureau the same set of documents.

C. The application for registration of a workers' association shall be accompanied by the following documents: 1) the name of the applicant association, its principal address, the name of its officers and their respective addresses; 2) the minutes of the organizational meeting(s) and the list of members who participated therein; 3) the financial reports of the applicant association if it has been in existence for one or more years, unless it has not collected any amount from the members, in which case a statement to this effect shall be included in the application; 4) the applicant's constitution and by-laws to which must be attached the names of ratifying members, the minutes of adoption or ratification of the constitution and by-laws and the date when ratification was made, unless ratification was done in the organizational meeting(s), in which case such fact shall be reflected in the minutes of the organizational meeting(s). D. Application for registration of a workers' association operating in more than one region shall be accompanied, in addition to the requirements in the preceding subsection, by a resolution of membership of each member association, duly approved by its board of directors. E. The report of creation of a chartered local shall be accompanied by a charter certificate issued by the federation or national union indicating the creation or establishment of the chartered local. Section 5. Certificate of Registration/Certificate of Creation of Chartered Local for change of name. - The certificate of registration and the certificate of creation of a chartered local issued to the labor organization for change of name shall bear the same registration number as the original certificate issued in its favor and shall indicate the following: (a) the new name of the labor organization; (b) its former name; (c) its office or business address; and (d) the date when the labor organization acquired legitimate personality as stated in its original certificate of registration/certificate of creation of chartered local. Section 6. Report of Affiliation with federations or national unions; Where to file. - The report of affiliation of an independently registered labor union with a federation or national union shall be filed with the Regional Office that issued its certificate of registration. Section 7. Requirements of affiliation. - The report of affiliation of independently registered labor unions with a federation or national union shall be accompanied by the following documents: (a) resolution of the labor union's board of directors approving the affiliation; (b) minutes of the general membership meeting approving the affiliation; (c) the total number of members comprising the labor union and the names of members who approved the affiliation; (d) the certificate of affiliation issued by the federation in favor of the independently registered labor union; and (e) written notice to the employer concerned if the affiliating union is the incumbent bargaining agent. If you are a union at the workplace level and you have an independent registration by virtue of Art. 234, can you still affiliate with a federation? Yes, you can still affiliate with the federation. In which case, you have potentially two personalities: You have your own independent registration and you have your registration of the federation. If you are expelled from the federation, you are still a union/labor organization organized under the Labor Code. But if you are not an independently registered union, if you are dismissed, or severed or resigned from the federation, you must immediately affiliate with another federation, otherwise you do not have personality.

33 A federation is an aggrupation of different unions on the workplace level, tenor of which must at least be the exclusive bargaining agent of that particular employer. The local (labor organization on the workplace level) that affiliated with the federation is the principal and the federation is the agent. The employees that are members of the union are the true principals, the union is their agent. But the local, with respect to the federation, is the principal, and the federation is the agent. That is why even if the bylaws and the constitution of the federation prohibit disaffiliation except towards the end of the CBA, the local can still disaffiliate, because the contract of principal and agent may be severed anytime, even if there is consideration. Agency can be terminated anytime. This is because this contract is based on confidence. Rule 4, Book 5, Sec. 8. Effect of Registration. - The labor union or worker's association shall be deemed registered and vested with legal personality from the time of the date of the issuance of a certificate of registration or certificate of affiliation x x x (whether it be independent registration under Art. 234 or registration by affiliation). Such legal personality may be questioned only through an independent petition for cancellation of union registration and not by way of collateral attack in petition for certification election proceedings. Personality of a labor organization cannot be attacked collaterally. When a union petitions for election to be chosen by the workers, it impleads the employer. The employer answers, there should be no election because there is no union, it has no personality. Thus, for the purpose of adjudication of rendering a union a non person, there must be a principal main action. Article 237. Additional requirements for federations or national unions. - Subject to Article 238, if the applicant for registration is a federation or a national union, it shall, in addition to the requirements of the preceding Articles, submit the following: (a) Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; and (b) The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved. CANCELLATION Article 239. Grounds for cancellation of union registration. - The following shall constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification and the list of members who took part in the ratification; (b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election; (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; (e) Acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any activity prohibited by law;

(f) Entering into collective bargaining agreements which provide terms and conditions of employment below minimum standards established by law; (g) Asking for or accepting attorneys fees or negotiation fees from employers; (h) Other than for mandatory activities under this Code, checking off special assessments or any other fees without duly signed individual written authorizations of the members; (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau; and (j) Failure to comply with requirements under Articles 237 and 238. This is not an exclusive list. Art. 241, says: "Any violation of the above rights and conditions of membership shall be a ground for cancellation of union registration or expulsion of officers from office, whichever is appropriate. x x x". So potentially, therefore, any of these provisions in 241 is a ground for cancellation of registration. So in relation to 239, you have 241. Therefore, failure to comply with Articles 234, 237, 239, and 241 sums up the grounds for cancellation of registration. What is important in the cancellation of registration is notice and hearing. Registration once issued is a vested right and therefore the union may not be deprived of the same without compliance with the requirements of due process. And due process is complied with if there is notice and hearing. RIGHTS AND CONDITIONS OF MEMBERSHIP Article 241. Rights and conditions of membership in a labor organization. The following are the rights and conditions of membership in a labor organization: (a) No arbitrary or excessive initiation fees shall be required of the members of a legitimate labor organization nor shall arbitrary, excessive or oppressive fine and forfeiture be imposed This is protection to the ordinary member of the union against his own union who might extract excessive or arbitrary fees. (b) The members shall be entitled to full and detailed reports from their officers and representatives of all financial transactions as provided for in the constitution and by-laws of the organization The right to a full and detailed financial reports. (c) The members shall directly elect their officers, including those of the national union or federation to which they or their union is affiliated, by secret ballot at intervals of five (5) years. No qualification requirements for candidacy to any position shall be imposed other than membership in good standing in subject labor organization. The secretary or any other responsible union officer shall furnish the Secretary of Labor and Employment with a list of the newly-elected officers, together with the appointive officers or agents who are entrusted with the handling of funds, within thirty (30) calendar days after the election of officers or from the occurrence of any change in the list of officers of the labor organization The right to directly elect their officers. Now the terms of the officers cannot be longer than 5 years. Why is is 5 years? To coincide with the term of the CBA. Another way is by representation. The whole point of this change is supposedly to end dynasties. If you are a big federation all over the Philippines, the only candidate that will win is someone who has the money to travel around. And who has the money to travel around? The candidate of the employer, not the candidate of the members. (d) The members shall determine by secret ballot, after due deliberation, any question of major policy affecting the entire membership of the organization, unless the nature of the organization or force majeure renders such secret ballot impractical, in which case, the board of directors of the organization may make the decision in behalf of the general membership Now, the union leaders do not want that to be the subject of voting by everybody and what do they do? They put it in

(e)

(f)

(g)

(h)

(i)

(j)

34 their articles of incorporation. They will say that "the union dues that will be checked off from every member of this federation shall not exceed 1 1/2 or 2% of the gross pay of the member" So as your salary increases, it also increases. And it is also proportionate, the bigger your salary, the bigger your union dues. Now, if it is in the constitution and by laws, do you still vote for it? No more because that is the terms and conditions of your agreement. You are supposed to have read that. If you don't agree, then you don't join, but if you do join, you are presumed to have agreed to that condition. No labor organization shall knowingly admit as members or continue in membership any individual who belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity No longer in force No person who has been convicted of a crime involving moral turpitude shall be eligible for election as a union officer or for appointment to any position in the union No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws This rule is here because during the organizational phase of a union, there are still no officers, there is still no treasurer, secretary. It is the organizers who start to collect money to fund the union's activities. After their organization, there is already an election of officers, these organizers get used to collecting. Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose Any organization will have to follow this as this is part of accounting. The funds of the organization shall not be applied for any purpose or object other than those expressly provided by its constitution and by-laws or those expressly authorized by written resolution adopted by the majority of the members at a general meeting duly called for the purpose Extraordinary expenditures must be approved by the members at a general meeting duly called for the purpose. Is it the absolute majority of the membership or is it just a quorum majority? It is just a quorum majority. Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of the financial records of the organization.

Any action involving the funds of the organization shall prescribe after three (3) years from the date of submission of the annual financial report to the Department of Labor and Employment or from the date the same should have been submitted as required by law, whichever comes earlier: Provided, That this provision shall apply only to a legitimate labor organization which has submitted the financial report requirements under this Code: Provided, further, that failure of any labor organization to comply with the periodic financial reports required by law and such rules and regulations promulgated thereunder six (6) months after the effectivity of this Act shall automatically result in the cancellation of union registration of such labor organization Every expenditure from the funds shall be credited by a receipt from the person to whom payment is made which shall state the date, place and purpose of the same. You must have evidence of the expenditure. (k) The officers of any labor organization shall not be paid any compensation other than the salaries and expenses due to their positions as specifically provided for in its constitution and bylaws, or in a written resolution duly authorized by a majority of all the members at a general membership meeting duly called for

(l)

the purpose. The minutes of the meeting and the list of participants and ballots cast shall be subject to inspection by the Secretary of Labor or his duly authorized representatives. Any irregularities in the approval of the resolutions shall be a ground for impeachment or expulsion from the organization The general rule is that the officers of the union are not paid. The exception is if the constitution and by-laws so provide or by the general membership by absolute majority vote then they shall so be paid. That is the rule. The treasurer of any labor organization and every officer thereof who is responsible for the account of such organization or for the collection, management, disbursement, custody or control of the funds, moneys and other properties of the organization, shall render to the organization and to its members a true and correct account of all moneys received and paid by him since he assumed office or since the last day on which he rendered such account, and of all bonds, securities and other properties of the organization entrusted to his custody or under his control. The rendering of such account shall be made: (1) At least once a year within thirty (30) days after the close of its fiscal year; (2) At such other times as may be required by a resolution of the majority of the members of the organization it is just a quorum majority. So there is a very small quantum of votes needed to command the treasurer to make the report. (3) Upon vacating his office. The account shall be duly audited and verified by affidavits and a copy thereof should be furnished to the Secretary of Labor. Why is this necessary? To put a closure to his accountability, and so that the incoming treasurer will not be penalized by the indiscretions of the predecessor, or so that the incoming treasurer will not be able to steal money and so is that predecessor, either way so there must be closure. That is why he is commanded upon vacating the office to produce a financial report. The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the Secretary of Labor. (m) The books of accounts and other records of the financial activities of any labor organization shall be open to inspection by any officer or member thereof during office hour The stockholders rights apply to this section. You cannot demand a copy, but you can copy at your own expense. And the union has the right to determine the time when they (books) are open for inspection, because if this right can just be exercised at will, then the officers will have nothing to do but just opening the books. (n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members in a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the president There is a need for voting and absolute majority. So there are even formal requirements when it comes to special assessment in addition to the secret ballot voting required by letter (d). (o) Other than for mandatory activities under the Code, no special assessments, attorneys fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction So when it is a special assessment or when it is atty's fees or negotiatition fees, or extraordinary fees, then aside from the secret ballot (in letter D), and the formal requirements (in letter

35 N the secretary has to write down all those who participated in the meeting, and the attestation of the president, etc), additional requirement of individual written authorization duly signed by the employee. Now what happens if all vote and write the written authority and there is only one who does not want? Then he cannot be covered by this special assessment; he cannot be checked off by the employer. (p) It shall be the duty of any labor organization and its officers to inform its members on the provisions of its constitution and bylaws, collective bargaining agreement, the prevailing labor relations system and all their rights and obligations under existing labor laws. These are mandatory activities for which you can collect for special assessment without necessarily going through the formalities of individual written authorization in letter O and N. For this purpose, registered labor organizations may assess reasonable dues to finance labor relations seminars and other labor education activities. That is a mandatory requirement. You can collect special assessment on that because that is mandated by the labor code. Any violation of the above rights and conditions of membership shall be a ground for cancellation of union registration or expulsion of officers from office, whichever is appropriate. At least thirty percent (30%) of the members of a union or any member or members specially concerned may report such violation to the Bureau. The Bureau shall have the power to hear and decide any reported violation to mete the appropriate penalty. Normally it is the officers who are being penalized, because is you cancel the registration of the Union, you are in effect, penalizing the members, that is why most often, it is the officers who are penalized. What bureau is it? Bureau of Labor Relations has the exclusive and original jurisdiction of what is called intra-union disputes, which arise under this Art. 241. Criminal and civil liabilities arising from violations of above rights and conditions of membership shall continue to be under the jurisdiction of ordinary courts. RIGHTS AND OBLIGATIONS OF LEGITIMATE LABOR ORGANIZATIONS Article 242. Rights of legitimate labor organizations. A legitimate labor organization shall have the right: (a) To act as the representative of its members for the purpose of collective bargaining when it acts as representative for purposes of collective bargaining, we will learn later on, that it is not only representing its union members, but it represents the entire barganing unit. (b) To be certified as the exclusive representative of all the employees in an appropriate bargaining unit for purposes of collective bargaining What do you mean by certified? First, you become part of the bargaining unit, and after your election, the BLR certifies that election. (c) To be furnished by the employer, upon written request, with its annual audited financial statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the date of receipt of the request, after the union has been duly recognized by the employer or certified as the sole and exclusive bargaining representative of the employees in the bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement, or during the collective bargaining negotiation Audited financial statement, there are two: the balance sheet, and profit and losses. You have a right to demand. Now, if you have not demanded within 30 days after you were certified, you can also ask for it during the negotiations or during collective bargaing negotiations, or within 60 days before the expiration of the existing CBA

36 The necessary incidental rights of a juridical person: (d) To own property, real or personal, for the use and benefit of the labor organization and its members; (e) To sue and be sued in its registered name; and (f) To undertake all other activities designed to benefit the organization and its members, including cooperative, housing, welfare and other projects not contrary to law. Notwithstanding any provision of a general or special law to the contrary, the income and the properties of legitimate labor organizations, including grants, endowments, gifts, donations and contributions they may receive from fraternal and similar organizations, local or foreign, which are actually, directly and exclusively used for their lawful purposes, shall be free from taxes, duties and other assessments. The exemptions provided herein may be withdrawn only by a special law expressly repealing this provision. DEFINITIONS Article 212 of Book V Labor Code. Definitions. (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. (h) "Legitimate labor organization" means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. Section 1 of D.O. No. 40-03. Definition of Terms. (cc) "Labor Organization" refers to any union or association of employees in the private sector which exists in whole or in part for the purpose of collective bargaining, mutual aid, interest, cooperation, protection, or other lawful purposes. (ee) "Legitimate Labor Organization" refers to any labor organization in the private sector registered or reported with the Department in accordance with Rules III and IV of these Rules. Section 1 of D.O. No. 40-03. Definition of Terms. (ccc) "Workers' Association" refers to an association of workers organized for the mutual aid and protection of its members or for any legitimate purpose other than collective bargaining. (ff) "Legitimate Workers' Association" refers to an association of workers organized for mutual aid and protection of its members or for any legitimate purpose other than collective bargaining registered with the Department in accordance with Rule III, Sections 2-C and 2-D of these Rules. Artile 212 of Book V Labor Code. Definitions. (j) "Bargaining representative" means a legitimate labor organization whether or not employed by the employer. First category, you have labor organization: What is determinative of labor organization? Not membership but purpose. The purpose must include (though not exclusively), in part or in whole, to bargain with the employer for better terms and employment of work, etc. The next category is a legitimate labor organization, whether by independent registration or by charter affiliation. The federation issues you a charter certificate, you have organizational meetings, draw constitution and bylaws and together with these three you submit to the DOLE. Legitimate labor organization includes any local thereof. The third category is the bargaining representative. After you have been elected in a certification election and you are certified by DOLE, you become a bargaining representative if you are a labor organization. UNIONS Section 1 of D.O. No. 40-03. Definition of Terms. (w) "Independent Union" refers to a labor organization operating at the enterprise level that acquired legal personality through independent registration under Article 234 of the Labor Code and Rule III, Section 2-A of these Rules. (i) "Chartered Local" refers to a labor organization in the private sector operating at the enterprise level that acquired legal personality through the issuance of a charter certificate by a duly registered federation or national union, and reported to the Regional Office in accordance with Rule III, Section 2-E of these Rules. (a) "Affiliate" refers to an independent union affiliated with a federation, national union or a chartered local which was subsequently granted independent registration but did not disaffiliate from its federation, reported to the Regional Office and the Bureau in accordance with Rule III, Sections 6 and 7 of these Rules. If you are an affiliate, it means that you are a local. But not just a local, you are have an independent registration under Article 234. When you talk about a chartered local as opposed to the affiliate, the chartered local does not have an independent registration. It is a legitimate labor organization because it is part of a federation, and the federation is a legitimate labor organization. One of the additional requirements for the registration of a federation over and above what 234 requires is found in Art 237. Article 237. Additional requirements for federations or national unions. - Subject to Article 238, if the applicant for registration is a federation or a national union, it shall, in addition to the requirements of the preceding Articles, submit the following: (a) Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; and (b) The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved. "Proof of the affiliation of at least 10 locals or chapters" a local may be called a chapter, a branch as in Art. 212 or it may be called affiliate under Sec. 1(a) of the Rules, except that we know that an affiliate has dual personality; a chartered local has only one personality. "each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates" Collective Bargaining Agent is the other terminology for Bargaining Representative (which is broader). Section 1 of D.O. No. 40-03. Definition of Terms. (kk) "National Union" or "Federation" refers to a group of legitimate labor unions in a private establishment organized for collective bargaining or for dealing with employers concerning terms and conditions of employment for their member unions or for participating in the formulation of social and employment policies, standards and programs, registered with the Bureau in accordance with Rule III, Section 2-B of these Rules. In terms of perfection of status, for purposes of collective bargaining, this is the sequence. You begin with this (labor organization), your purpose is collective bargaining. You register with the DOLE, you undergo election, and then now you have the fullness of the status of a labor organization.

Local, branch, chapter, affiliate. Local could be affiliate, it could be chapter. But you know that the affiliate has an independent registration, then it affiliates itself. Federation or a national union. A federation can have various locals or chapters from different industries. What's an example? NFL (Nat'l Federation of Labor), SPFL (Southern Phil. Federation of Labor). You can have a chapter from Pfizer, which is pharmaceutical. You can have a chapter from Davao Union Cement, which is manufacturing or from SM, which is retail. But if you are a national union, the example is PLDT Union. In PLDT union, the workplace is scattered all over the Philippines. You have workers in NCR, Legaspi, Bicol, Baguio, Davao. Those are various locals, and they are connected with the National Union. Another example is PALEA Phil. Airlines Employees Assoc. So it is just one ER with many chapters. Labor centers. What's an example of this? TUCP (Trade Union Center of the Philipppines), or TUPAS (Trade Unions of the Phil. and Allied Services). These are aggrupations or associations of federations and local independents bonded together under one constitution. Their purpose is to make common stands with respect to issues in labor or labor relations, wages, etc, for purposes of consultation* with the executive meaning tripartite formulation of policy, so groups combine, meet and agree with respect to policies in labor. What are those 3 sectors? From the employees (unions), from the employer, and from government. So they meet together. For purposes of determination of minimum wage, these three meet and distill the particular policies with respect to wages. They do not assist them to collective bargaining, but their members all participate in collective bargaining situations because they are aggrupations of workers that are organized. Unions could either be for CBA, or non-CBA. If it is for CBA, then it is covered principally by Book V. Other than Book V, you are just talking about activities more akin in the exercise of the right of association. But here (in Book V), this is protected already. Why? Because you can demand your employer to sit with you and agree on terms and conditions, you draw up a contract. If the employer does not sit down with you, then the employer may be held to account for exercise of ULP (unfair labor practice). When it comes to money claims, such arises out of an employeremployee where the employer underpays or fails to pay wages and other benefits. The cause of action belongs to the individual employee. If there is a union, it is the union who files the money claim. There is no need to list down all its members that it represents. The union can file a complaint, and later on if the money claim is awarded, then all the members who fit into the complaint and are similarly situated become the beneficiaries of the award. Supposed after the filing of the money claims complaint, the union loses its registration or its registration is cancelled. there is no need for substitution even if the registration of the union is cancelled. The case can go on, and all those union members who fit in the cause of action or similarly situated, they will be the beneficiaries of the award of the labor tribunal. In a money complaint, the personality of a labor union cannot be questioned because the personality of the union is not open to collateral attack. There must be a separate and distinct action for carrying out the cancellation of the union's registration. If there is already a ruling that the labor union's registration is cancelled, and it is still subject to appeal, the union is still functioning because the decision is not final and executory. Only when the decision is final and executory is the union deemed to have lost its personality, but then the case continues with the union members taking up the actions for the union.

37 Does the union have authority to compromise the money claim of its members? If it has the authority to bring an action to claim the underpayment and wage differentials of members, does it have authority to compromise the same? The union does not have authority to compromise them. It must be each member who must compromise his/her own money claim. Suppose the union, in a general membership meeting of all the members of the union, they vote by more than 2/3 majority that they will compromise their money claims, does that bind everyone? There must be individual written authorization. So those who refused to give the individual written authorization are not covered because money claims are personal to them, and it is only them who can surrender the same. ADAMSON & ADAMSON vs. COURT OF INDUSTRIAL RELATIONS Facts: The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the petitioner about its having organized on the same date that the Adamson and Adamson, Inc. Salesmen Association (FFW) advised the petitioner that the rank and file salesmen had formed their own union. The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter of Representation of the Supervisory Employees of Adamson and Adamson, Inc., Petitioner " thus prompting the filing of this petition for review on certiorari. Subsequently and during the pendency of the present petition, the rank and file employees formed their own union, naming it Adamson and Adamson Independent Workers (FFW). Issue: Whether or not a supervisor's union may affiliate with a federation with which unions of rank and-file employees of the same employer are also affiliated. Held: Section 3 of Republic Act No. 875, the Industrial Peace Act, as amended, states: Employees shall have the right to self-organization and to form join or assist labor organizations of their own choosing for the purpose 6f collective bargaining through representatives of their own and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or 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. The right of employees to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for mutual aid or protection is a fundamental right of labor that derives its existence from the Constitution. It is recognized and implemented through the abovecited Section 3 of the Industrial Peace Act as amended. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules and regulations implementing the constitutional mandates, we have always adopted the liberal approach which favors the exercise of labor rights. In deciding this case, we start with the recognized rule that the right of supervisory employees to organize under the Industrial Peace Act carries certain restrictions but the right itself may not be denied or unduly abridged. The supervisory employees of an employer cannot join any labor organization of employees under their supervision but may validly form a separate organization of their own. As stated in Caltex Filipino Managers and Supervisors Association v. Court of Industrial Relations (47 SCRA 112), it would be to attach unorthodoxy to, not to say an emasculation of, the concept of law if managers as such were precluded from organization. Thus, if Republic Act 875, in its Section 3, recognizes the right of supervisors to form a separate organization of their own, albeit they cannot be members of a labor organization of

employees under their supervision, that authority of supervisors to form a separate labor union carries with it the right to bargain collectively with the employer. We find without merit the contentions of petitioner that if affilation will be allowed, only one union will in fact represent both supervisors and rank-and-file employees of the petitioner; that there would be an indirect affiliation of supervisors and rank-and-file employees with one labor organization; that there would be emerging of two bargaining units; and that the respondent union will lose its independence because it becomes an alter ego of the federation. We agree with the Court of Industrial Relations when it ruled that: xxx xxx xxx The confusion seems to have stemmed from the prefix of FFW after the name of the local unions in the registration of both. Nonetheless, the inclusion of FWW in the registration is merely to stress that they are its affiliates at the time of registrations. It does not mean that said local unions cannot stand on their own Neither can it be construed that their personalities are so merged with the mother federation that for one difference or another they cannot pursue their own ways, independently of the federation. This is borne by the fact that FFW, like other federation is a legitimate labor organization separate and distinct from its locals and affiliates and to construe the registration certificates of the aforecited unions, along the line of the Company's argument. would tie up any affiliates to the shoe string of the federation. ... The Adamson and Adamson Supervisory Union and the Adamson and Adamson, Inc., Salesmen Association (FFW), have their own respective constitutions and by-laws. They are separately and independently registered of each other. Both sent their separate proposals for collective bar agreements with their employer. There could be no employer influence on rank-and-file organizational activities nor their could be any rank and file influence on the supervisory function of the supervisors because of the representation sought to be proscribed. TROPICAL HUT EMPLOYEES' UNION vs. TROPICAL HUT FOOD MARKET Facts: On January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated, referred to herein as respondent company, organized a local union called the Tropical Hut Employees Union, known for short as the THEU, elected their officers, adopted their constitution and by-laws and immediately sought affiliation with the National Association of Trade Unions (NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation. Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the Department of Labor in the name of the Tropical Hut Employees Union NATU. It appears, however, that NATU itself as a labor federation, was not registered with the Department of Labor. After several negotiations were conducted between THEU-NATU, represented by its local president and the national officers of the NATU, particularly Ignacio Lacsina, President, Pacifico Rosal, Executive VicePresident and Marcelino Lontok, Jr., Vice President, and respondent Tropical Hut Food Market, Incorporated, thru its President and General Manager, Cesar Azcona, Sr., a Collective Bargaining Agreement was concluded between the parties on April 1, 1968, the term of which expired on March 31, 1971. On May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining Agreement which ended on March 31, 1974. This new CBA incorporated the previous union-shop security clause and the attached check-off authorization form. Sometime in July, 1973, Arturo Dilag, incumbent President of THEUNATU, was appointed by the respondent company as Assistant Unit Manager. On July 24, 1973, he wrote the general membership of his

38 union that for reason of his present position, he was resigning as President of the THEU-NATU effective that date. As a consequence thereof, his Vice-President, Jose Encinas, assumed and discharged the duties of the presidency of the THEU-NATU. On December 19,1973, NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of the local union informing the NATU that THEU was disaffiliating from the NATU federation. On December 20, 1973, the Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general membership of the THEU, concerning the latter's disaffiliation from the NATU and its affiliation with the Confederation of General Workers (CGW). The letter was passed around among the members of the THEUNATU, to which around one hundred and thirty-seven (137) signatures appeared as having given their consent to and acknowledgment of the decision to disaffiliate the THEU from the NATU. On January 1, 1974, the general membership of the so-called THEUCGW held its annual election of officers, with Jose Encinas elected as President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed the respondent company of the result of the elections. On January 9, Pacifico Rosal, President of the Confederation of General Workers, wrote a letter in behalf of complainant THEU-CGW to the respondent company demanding the remittance of the union dues collected by the Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was refused by the respondent company. On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the latter to assume immediately the position of President of the THEU-NATU in place of Jose Encinas, but the position was declined by Mantos. On the same day, Lontok, Jr., informed Encinas in a letter, concerning the request made by the NATU federation to the respondent company to dismiss him (Encinas) in view of his violation of Section 3 of Article III of the Collective Bargaining Agreement. On January 15,1974, upon the request of NATU, respondent company applied for clearance with the Secretary of Labor to dismiss the other officers and members of THEU-CGW. The company also suspended them effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual complainants against private respondents for unfair labor practices. On January 19, 1974, Lontok, acting as temporary chairman, presided over the election of officers of the remaining THEU-NATU in an emergency meeting pending the holding of a special election to be called at a later date. In the alleged election, Arturo Dilag was elected acting THEU-NATU President together with the other union officers. On February 14, 1974, these temporary officers were considered as having been elected as regular officers for the year 1974. On February 24,1974, the secretary of THEU-NATU, notified the entire rank and file employees of the company that they will be given fortyeight (48) hours upon receipt of the notice within which to answer and affirm their membership with THEU-NATU. When the petitioner employees failed to reply, Arturo Dilag advised them thru letters dated February 26, March 2 and 5, 1974, that the THEU-NATU shall enforce the union security clause set forth in the CBA, and that he had requested respondent company to dismiss them. Respondent company, thereafter, wrote the petitioner employees demanding the latter's comment on Dilag's charges before action was taken thereon. However, no comment or reply was received from petitioners. Issue (1): Whether or not the disaffiliation of the local union from the national federation was valid. YES Held: The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and voluntary association, is free to serve the interest of all its members including the

freedom to disaffiliate when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association. All employees enjoy the right to self organization and to form and join labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for their mutual aid or protection. This is a fundamental right of labor that derives its existence from the Constitution. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or rules or regulations, We have always adopted the liberal approach which favors the exercise of labor rights. The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests independently of the federation. A local union owes its creation and continued existence to the will of its members and not to the federation to which it belongs. When the local union withdrew from the old federation to join a new federation, it was merely exercising its primary right to labor organization for the effective enhancement and protection of common interests. In the absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union a local may sever its relationship with its parent. There is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the federation, The alleged non-compliance of the local union with the provision in the NATU Constitution requiring the service of three months notice of intention to withdraw did not produce the effect of nullifying the disaffiliation for the following grounds: firstly, NATU was not even a legitimate labor organization, it appearing that it was not registered at that time with the Department of Labor, and therefore did not possess and acquire, in the first place, the legal personality to enforce its constitution and laws, much less the right and privilege under the Labor Code to organize and affiliate chapters or locals within its group, and secondly, the act of non-compliance with the procedure on withdrawal is premised on purely technical grounds which cannot rise above the fundamental right of self-organization. Issue (2): Whether or not the dismissal of petitioner employees resulting from their unions disaffiliation for the mother federation was illegal and constituted unfair labor practice on the part of respondent company and federation. YES Held: There is no merit in the contention of the respondents that the act of disaffiliation violated the union security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the collective bargaining agreements shows that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other terms and conditions of employment. Although NATU was designated as the sole bargaining agent in the check-off authorization form attached to the CBA, this simply means it was acting only for and in behalf of its affiliate. The NATU possessed the status of an agent while the local union remained the basic principal union which entered into contract with the respondent company. When the THEU disaffiliated from its mother federation, the former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security clause embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not applicable to the circumstances obtaining in this case. The CBA

39 imposes dismissal only in case an employee is expelled from the union for joining another federation or for forming another union or who fails or refuses to maintain membership therein. The case at bar does not involve the withdrawal of merely some employees from the union but of the whole THEU itself from its federation. Clearly, since there is no violation of the union security provision in the CBA, there was no sufficient ground to terminate the employment of petitioners. Public respondents considered the existence of Arturo Dilag's group as the remaining true and valid union. We, however, are inclined to agree instead with the Arbitrator's findings when he declared: ". . . . Much more, the so-called THEU-NATU under Dilag's group which assumes to be the original THEU-NATU has a very doubtful and questionable existence not to mention that the alleged president is performing supervisory functions and not qualified to be a bona fide member of the rank and file union." Records show that Arturo Dilag had resigned in the past as President of THEU-NATU because of his promotion to a managerial or supervisory position as Assistant Unit Manager of respondent Company. Petitioner Jose Encinas replaced Dilag as President and continued to hold such position at the time of the disaffiliation of the union from the federation. It is therefore improper and contrary to law for Dilag to reassume the leadership of the remaining group which was alleged to be the true union since he belonged to the managerial personnel who could not be expected to work for the betterment of the rank and file employees. Besides, managers and supervisors are prohibited from joining a rank and file union. Correspondingly, if a manager or supervisor organizes or joins a rank and file union, he will be required to resign therefrom. Public respondents further submit that several employees who disaffiliate their union from the NATU subsequently retracted and reaffirmed their membership with the THEU-NATU. Granting arguendo, that the fact of retraction is true, the evidence on record shows that the letters of retraction were executed on various dates beginning January 11, 1974 to March 8, 1974. This shows that the retractions were made more or less after the suspension pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-NATU President, who became THEUCGW President, and the suspension pending their dismissal of the other elected officers and members of the THEU-CGW on January 15, 1974. Finally, with regard to the process by which the workers were suspended or dismissed, this Court finds that it was hastily and summarily done without the necessary due process. The respondent company sent a letter to petitioners herein, advising them of NATU/Dilag's recommendation of their dismissal and at the same time giving them forty-eight (48) hours within which to comment. When petitioners failed to do so, respondent company immediately suspended them and thereafter effected their dismissal. This is certainly not in fulfillment of the mandate of due process, which is to afford the employee to be dismissed an opportunity to be heard. The prerogative of the employer to dismiss or lay-off an employee should be done without abuse of discretion or arbitrainess, for what is at stake is not only the employee's name or position but also his means of livelihood. Thus, the discharge of an employee from his employment is null and void where the employee was not formally investigated and given the opportunity to refute the alleged findings made by the company. Likewise, an employer can be adjudged guilty of unfair labor practice for having dismissed its employees in line with a closed shop provision if they were not given a proper hearing. In view of the fact that the dispute revolved around the mother federation and its local, with the company suspending and dismissing the workers at the instance of the mother federation then, the company's liability should be limited to the immediate reinstatement of

the workers. And since their dismissals were effected without previous hearing and at the instance of NATU, this federation should be held liable to the petitioners for the payment of their backwages, as what We have ruled in the Liberty Cotton Mills Case. VOLKSCHEL LABOR UNION vs. BUREAU OF LABOR RELATIONS Facts: Petitioner was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL for short). On August 1, 1975, both unions, using the name Volkschel Labor Union Associated Labor Union for Metal Workers, jointly entered into a collective bargaining agreement with respondent companies. One of the subjects dealt with is the payment of union dues which is provided for in Section 3, Article 1, of the CBA, which reads: Section 3. CHECK-OFF. The COMPANY agrees to make payroll deductions not softener than twice a month of UNION membership dues and such special assessments fees or fines as may be duly authorized by the UNION, provided that the same is covered by the individual check-off authorization of the UNION members. All said deductions shall be promptly transmitted within five (5) days by the COMPANY to the UNION Treasurer. The COMPANY shall prepare two (2) checks. One (1) check will be under the name of the local union as their local fund including local special assessment funds and the other check will be for the ALU Regional Office regarding the remittance of the UNION dues deduction. On March 10, 1976, a majority of petitioner's members decided to disaffiliate from respondent federation in order to operate on its own as an independent labor group pursuant to Article 241 (formerly Article 240) of the Labor Code of the Philippines, the pertinent portion of which reads: Incumbent affiliates of existing federations or national unions may disaffiliate only for the purpose of joining a federation or national union in the industry or region in which it properly belongs or for the purpose of operating as an independent labor group. Accordingly, a resolution was adopted and signed by petitioner's members revoking their check-off authorization in favor of ALUMETAL and notices thereof were served on ALUMETAL and respondent companies. Confronted with the predicament of whether or not to continue deducting from employees' wages and remitting union dues to respondent, ALUMETAL which wrote respondent companies advising them to continue deducting union dues and remitting them to said federation, respondent companies sought the legal opinion of the respondent Bureau as regards the controversy between the two unions. On November 11, 1976, Med-Arbiter George A. Eduvalla of respondent Bureau rendered a Resolution which in effect found the disaffiliation legal but at the same time gave the opinion that, petitioner's members should continue paying their dues to ALUMETAL in the concept of agency fees. Issue(1): Whether or not the petitioner union's disaffiliation from respondent federation valid. YES Held: The right of a local union to disaffiliate from its mother union is well-settled. In previous cases, it has been repeatedly held that a local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant. This right is consistent with the Constitutional guarantee of freedom of association. Petitioner contends that the disaffiliation was not due to any opportunists motives on its part. Rather it was prompted by the federation's deliberate and habitual dereliction of duties as mother federation towards petitioner union. Employees' grievances were

40 allegedly left unattended to by respondent federation to the detriment of the employees' rights and interests. In reversing the Med-Arbiter's resolution, respondent Bureau declared: the Department of Labor is set on a task to restructure the labor movement to the end that the workers will unite themselves along industry lines. Carried to its complete fruition, only one union for every industry will remain to bargain collectively for the workers. The clear policy therefore even now is to conjoin workers and worker groups, not to dismember them. 5 This policy is commendable. However, we must not lose sight of the constitutional mandate of protecting labor and the workers' right to self-organization. In the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. In the case at bar, it would go against the spirit of the labor law to restrict petitioner's right to self-organization due to the existence of the CBA. We agree with the Med-Arbiter's opinion that "A disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change of administrators of the contract nor even an amendment of the provisions thereof." But nowhere in the record does it appear that the contract entered into by the petitioner and ALUMETAL prohibits the withdrawal of the former from the latter. Issue (2): Whether or not respondent companies have the right to effect union dues collections despite revocation by the employees of the check-off authorization. NO Held: Under Section 3, Article I, of the CBA, the obligation of the respondent companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-off authorization of petitioner's members, In other words, ALUMETAL is entitled to receive the dues from respondent companies as long as petitioner union is affiliated with it and respondent companies are authorized by their employees (members of petitioner union) to deduct union dues. Without said affiliation, the employer has no link to the mother union. The obligation of an employee to pay union dues is coterminous with his affiliation or membership. "The employees' check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union concerned." A contract between an employer and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of the local of which the employees are members. Respondent companies therefore were wrong in continuing the checkoff in favor of respondent federation since they were duly notified of the disaffiliation and of petitioner's members having already rescinded their check-off authorization. LIBERTY COTTON MILLS WORKERS UNION vs. LIBERTY COTTON MILLS Facts: The Liberty Cotton Mills Workers Union, hereinafter referred to as the Union, adopted its Constitution and By-laws on January 1, 1959. On October 1, 1959, a Collective Bargaining Agreement was entered into by and between the Company and the Union represented by PAFLU. The CBA was amended on February 28, 1964. The Agreements bore the signatures of representatives of both the Company and the PAFLU, and the incumbent President of the local union. On March 13, 1964, while the Collective Bargaining Agreement was in full force, Marciano Castillo and Rafael Nepomuceno, President and Vice-President, respectively, of the local union, wrote PAFLU, its mother federation, complaining about the legal counsel assigned by the PAFLU to assist them in a ULP case (Case No. 4001) they filed against the Company. In said letter, the local union expressed its dissatisfaction and loss of confidence in the PAFLU lawyers, claiming that PAFLU never lifted a finger regarding this particular complaint.

On May 17, 1964, thirty two (32) out of the 36 members of the local union disaffiliated themselves from respondent PAFLU pursuant to their local union's Constitution and By-Laws, specifically Article X thereof, supra (p. 12 Record). A copy of the signed resolution of disaffiliation was furnished the Company as well as the Bureau of Labor Relations. The following day, the local union wrote the Company and required the turn-over of the checked-off dues directly to its Treasurer. On May 30,1964, the Company terminated the employment of the members expelled by the PAFLU. On the last day of May, 1964, counsel for the ousted workers wrote the Company requesting their reinstatement. This was denied by the Company; hence the complaint for unfair labor practice filed with the Court of Industrial Relations. After due hearing, the Court rendered its decision dismissing the complaint, but with a strong' recommendation for the reinstatement of complainant workers in respondent Company. Issue: Whether or not the dismissal of the complaining employees, petitioners herein, was justified or not. Held: The resolution of this question hinges on a precise and careful analysis of the Collective Bargaining Agreements. In these contracts it appears that PAFLU has been recognized as the sole bargaining agent for all the employees of the Company other than its supervisors and security guards. Moreover it likewise appears that "PAFLU, represented in this Act by its National Treasurer, and duly authorized representative, ... (was) acting for and in behalf of its affiliate, the Liberty Cotton Mills Workers Union and the employees of the Company, etc.' In other words, the PAFLU, acting for and in behalf of its affiliate, had the status of an agent while the local union remained the basic unit of the association free to serve the common interest of all its members including the freedom to disaffiliate when the circumstances warrant. This is clearly provided in its Constitution and By-Laws, specifically Article X on Union Affiliation, supra. This brings Us to the question of disaffiliation which was the root cause of the dismissal. It is claimed by PAFLU that the local union could not have validly disaffiliated from it as the Union Security Clause so provided. We have meticulously read the provision of the supposed union security clause and We cannot agree with both the stand of PAFLU and the respondent court. For while it is correct to say that a union security clause did exist, this clause was limited by the provision in the Unions' Constitution and By-Laws, which states: That the Liberty Cotton Mills Workers Union-PAFLU shall be affiliated with the PAFLU, and shall remain an affiliate as long as ten (10) or more of its members evidence their desire to continue the said local unions affiliation. Record shows that only four (4) out of its members remained for 32 out of the 36 members of the Union signed the resolution of disaffiliation on May 17, 1964, triggered by the alleged negligence of PAFLU in attending to the needs of its local union, particularly its failure to assign a conscientious lawyer to the local to attend to the ULP case they filed against the Company. The disaffiliation was, therefore, valid under the local's Constitution and By-Laws which, taken together with the Collective Bargaining Agreement, is controlling. The Court of Industrial Relations likewise held in its decision that the act of disaffiliation did not have any effect as the workers retracted from such act. Although the fact of retraction is true, We find that the respondent court failed to notice the fact that not all signatories to the resolution of disaffiliation dated May 17, 1964, took part in the retraction. Only a number of employees, 16 to be exact, retracted. Also, and this is a significant factor, the retraction is dated June 3, 1964, or four days after the petitioners herein had been dismissed. There is no use in saying that the retraction obliterated the act of disaffiliation when they were already out of the service when it was done. The disaffiliation, coming as it did from the greater majority of its members, is more than enough

41 to show the collective desire of the members of the Liberty Cotton Mills Workers Union to sever their relations from the mother federation. The right of disaffiliation is inherent in the compact and such act should not have been branded as an act of disloyalty, especially considering the cause which impelled the union to take such a step. Lastly, we will take up the process by which the workers were dismissed. We find that it was hastily and summarily done. The PAFLU received the resolution to disaffiliate on or about May 25, 1964, after which it wrote the Company about its stand, first on the 27th of May followed by its letter of the 29th requesting for the termination of petitioners herein for 'disloyalty in having instigated disaffiliation'. The Company the acting on the request of the mother federation sent notices of termination to the officers of the local union immediately on the day following, or on May 30, 1964, heavily relying on the CBA, viz: ... for disloyalty to the union shall be dismissed from employment by the Company upon request in writing by the Union, which shall hold the COMPANY free from any liability arising from or caused by such dismissal. While the above quoted provision may have been the basis for the Company's actuation, as in fact it was alleged by the Company in its Brief, We are of the opinion that such stipulation does not bind the courts much less released the Company from liability should a finding for unfair labor practice be positive. In the case at bar, however, considering that the dispute revolved around the mother federation and its local, with the company dismissing the workers at the instance of the mother federation, We believe that the Company's liability should be limited to the immediate reinstatement of the workers. Considering, however, that their dismissal was effected without previous hearing, and at the instance of PAFLU, this mother federation should be, as it is hereby, held liable to the petitioners for the payment of their back wages. Following the precedent of Mercury Drug Co. vs. CIR, of fixing an amount of net backwages and doing away with the protracted process of determining the complainants-workers' earnings elsewhere during the period of their illegal dismissal, the Court fixes the amount of backwages to be paid under this decision to the complainants-workers at three (3) years backwages without deduction or qualification.

PROGRESSIVE DEVELOPMENT CORPORATION vs. SECRETARY OF DOLE Facts: On June 19, 1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN)-TUCP (hereinafter referred to as Kilusan) filed with the DOLE a petition for certification election among the rank-and-file employees of the petitioner alleging that it is a legitimate labor federation and its local chapter, Progressive Development Employees Union, was issued charter certificate No. 90-6-1-153. Kilusan claimed that there was no existing CBA and that no other legitimate labor organization existed in the bargaining unit. Petitioner PDC filed its motion to dismiss dated July 11, 1990 contending that the local union failed to comply with Rule II Section 3, Book V of the Rules Implementing the Labor Code, as amended, which requires the submission of: (a) the constitution and bylaws; (b) names, addresses and list of officers and/or members; and (c) books of accounts. Additionally, it prayed that Med-Arbiter Edgardo dela Cruz inhibit himself from handling the case for the reason that he allegedly had prejudged the same. On July 16 , 1990, respondent Kilusan submitted a rejoinder to PDC's motion to dismiss claiming that it had submitted the necessary documentary requirements for registration, such as the constitution and by-laws of the local union, and the list of officers/members with their addresses. Kilusan further averred that no books of accounts could be submitted as the local union was only recently organized. In his September 5, 1990 resolution, Med Arbiter dela Cruz held that there was substantial compliance with the requirements for the formation of the chapter. He further stated that mere issuance of the charter certificate by the federation was sufficient compliance with the rules. Considering that the establishment was unorganized, he maintained that a certification election should be conducted to resolve the question of representation. Treating the motion for reconsideration filed by the PDC as an appeal to the Office of the Secretary, Undersecretary Laguesma held that the same was merely a "reiteration of the issues already ventilated in the proceedings before the Med-Arbiter, specifically, the matter involving the formal organization of the chapter." PDC's motion for reconsideration from the aforementioned ruling was likewise denied. Issue: When does a branch, local or affiliate of a federation become a legitimate labor organization? Held: Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR under Article 234 and 235. Moreover, section 4 of Rule II, Book V of the IRR requires that the application should be signed by at least 20% of the employees in the appropriate bargaining unit and be accompanied by a sworn statement of the applicant union that there is no certified bargaining agent or, where there is an existing collective bargaining agreement duly submitted to the DOLE, that the application is filed during the last 60 days of the agreement. The respondent Kilusan questions the requirements as too stringent in their application but the purpose of the law in prescribing these requisites must be underscored. Thus, in Philippine Association of Free Labor Unions v. Secretary of Labor, the Court declared: The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in Paragraph (b) of said section is not a limitation to the right of assembly or association, which may be exercised with or without said registration. The latter is merely a condition sine qua non for the acquisition of legal personality by the labor organizations, associations or unions and the possession of the "rights and privileges granted by law to legitimate labor organizations." The Constitution does not guarantee these rights and the privileges, much less said personality, which are mere statutory creations, for the possession and exercise of which registration is

42 required to protect both labor and the public against abuses, fraud or impostors who pose as organizers, although not truly accredited agents of the union they purport to represent. Such requirement is a valid exercise of the police power, because the activities in which labor organizations, associations and unions of workers are engaged affect public interest, which should be protected. Furthermore, the obligation to submit financial statements, as a condition for the non-cancellation of a certificate of registration, is a reasonable regulation for the benefit of the members of the organization, considering that the same generally solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge amounts of money due to them or to the organization. But when an unregistered union becomes a branch, local or chapter of a federation, some of the aforementioned requirements for registration are no longer required. The provisions governing union affiliation are found in Rule II, Section 3, Book V of the Implementing Rules, the relevant portions of which are cited below: Sec. 3. Union affiliation; direct membership with national union. An affiliate of a labor federation or national union may be a local or chapter thereof or an independently registered union. a) The labor federation or national union concerned shall issue a charter certificate indicating the creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor Relations within 30 days from issuance of such charter certificate. b) An independently registered union shall be considered an affiliate of a labor federation or national union after submission to the Bureau of the contract or agreement of affiliation within 30 days after its execution. xxx e) The local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of officers and books and accounts. For reporting purposes, the procedure governing the reporting of independently registered unions, federations or national unions shall be observed. Paragraph (a) refers to the local or chapter of a federation which did not undergo the rudiments of registration while paragraph (b) refers to an independently registered union which affiliated with a federation. Implicit in the foregoing differentiation is the fact that a local or chapter need not be independently registered. By force of law (in this case, Art. 212[h]); such local or chapter becomes a legitimate labor organization upon compliance with the aforementioned provisions of Section 3. Undoubtedly, the intent of the law in imposing lesser requirements in the case of the branch or local of a registered federation or national union is to encourage the affiliation of a local union with the federation or national union in order to increase the local union's bargaining powers respecting terms and conditions of labor. In the case at bar, the constitution and by-laws and list of officers submitted in the BLR, while attested to by the chapter's president, were not certified under oath by the secretary. Does such defect warrant the withholding of the status of legitimacy to the local or chapter? In the case of union registration, the rationale for requiring that the submitted documents and papers be certified under oath by the secretary or treasurer, as the case may be, and attested to by president is apparent. The submission of the required documents (and payment of P50.00 registration fee) becomes the Bureau's basis for approval of the application for registration. Upon approval, the labor union acquires legal personality and is entitled to all the rights and privileges granted by law to a legitimate labor organization. The employer naturally needs assurance that the union it is dealing with is a bona fide organization, one which has not submitted false statements or misrepresentations to

the Bureau. The inclusion of the certification and attestation requirements will in a marked degree allay these apprehensions of management. Not only is the issuance of any false statement and misrepresentation a ground for cancellation of registration (see Article 239 (a), (c) and (d)); it is also a ground for a criminal charge of perjury. The certification and attestation requirements are preventive measures against the commission of fraud. They likewise afford a measure of protection to unsuspecting employees who may be lured into joining unscrupulous or fly-by-night unions whose sole purpose is to control union funds or to use the union for dubious ends. Since the "procedure governing the reporting of independently registered unions" refers to the certification and attestation requirements contained in Article 235, paragraph 2, it follows that the constitution and by-laws, set of officers and books of accounts submitted by the local and chapter must likewise comply with these requirements. The same rationale for requiring the submission of duly subscribed documents upon union registration exists in the case of union affiliation. Moreover, there is greater reason to exact compliance with the certification and attestation requirements because, as previously mentioned, several requirements applicable to independent union registration are no longer required in the case of formation of a local or chapter. The policy of the law in conferring greater bargaining power upon labor unions must be balanced with the policy of providing preventive measures against the commission of fraud. A local or chapter therefore becomes a legitimate labor organization only upon submission of the following to the BLR: 1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and 2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of which are certified under oath by the secretary or treasurer, as the case may be, of such local or chapter, and attested to by its president. Absent compliance with these mandatory requirements, the local or chapter does not become a legitimate labor organization. In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the required documents under oath is fatal to its acquisition of a legitimate status. As borne out by the facts in this case, the formation of a local or chapter becomes a handy tool for the circumvention of union registration requirements. Absent the institution of safeguards, it becomes a convenient device for a small group of employees to foist a not-so-desirable federation or union on unsuspecting co-workers and pare the need for wholehearted voluntariness which is basic to free unionism. The records show that on June 16, 1990, Kilusan met with several employees of the petitioner. Kilusan took the initiative and encouraged the formation of a union which automatically became its chapter. On June 18, 1990, Kilusan issued a charter certificate in favor of PDEU-KILUSAN. It can be seen that Kilusan was moving very fast. On June 19, 1990, or just three days after the organizational meeting, Kilusan filed a petition for certification election accompanied by a copy each of the charter certificate, constitution and by-laws and minutes of the organizational meeting. Had the local union filed an application for registration, the petition for certification election could not have been immediately filed. The applicant union must firstly comply with the "20% signature" requirement and all the other requisites enumerated in Article 234. Moreover, since under Article 235 the BLR shall act on any application for registration within 30 days from its filing, the likelihood is remote that, assuming the union complied with all the requirements, the application would be approved on the same day it was filed.

43 It may likewise be argued that it was Kilusan (the mother union) and not the local union which filed the petition for certification election and, being a legitimate labor organization, Kilusan has the personality to file such petition. At this juncture, it is important to clarify the relationship between the mother union and the local union. In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, the Court held that the mother union, acting for and in behalf of its affiliate, had the status of an agent while the local union remained the basic unit of the association, free to serve the common interest of all its members subject only to the restraints imposed by the constitution and by-laws of the association. Thus, where as in this case the petition for certification election was filed by the federation which is merely an agent, the petition is deemed to be filed by the chapter, the principal, which must be a legitimate labor organization. The chapter cannot merely rely on the legitimate status of the mother union. The Court's conclusion should not be misconstrued as impairing the local union's right to be certified as the employees' bargaining agent in the petitioner's establishment. We are merely saying that the local union must first comply with the statutory requirements in order to exercise this right. Big federations and national unions of workers should take the lead in requiring their locals and chapters to faithfully comply with the law and the rules instead of merely snapping union after union into their folds in a furious bid with rival federations to get the most number of members. ASSOCIATED WORKERS UNION-PTGWO vs. NLRC Facts: On 26 October 1984, petitioner AWUPTGWO, the then bargaining representative of the dockworkers at South Harbor, Port Area, filed a Notice of Strike against respondent Metro Port Service, the then arrastre contractor in the South Harbor, on the issues of unfilled vacancies and union busting. This was docketed as NLRC Case No. NCRNS-10-288-84. On 3 April 1985, this case was certified in an Order by the then Minister of Labor and Employment to the NLRC for compulsory arbitration; the Order also forbade the holding of strikes or lock-outs. The case was docketed as Certified NLRC Case No. 0403-85. In the latter case, one of the demands raised by AWU was that Metro terminate the employment of respondents Adriano Yumul and ten others, for having organized, on 26 October 1984, the Associated Workers Union in Metroport (AWUM) among the rank-and-file employees of Metro, ostensibly as a local or chapter of AWU. AWU had earlier expelled individual respondents from membership in AWU for disloyalty and, pursuant to the closed-shop provision of the existing AWU-Metro CBA, sought the termination of their employment. Metro initially resisted AWU's request to terminate the employment of individual respondents, contending that the termination would be premature as individual respondents had not been afforded due process, and that the termination would be violative of the status quo agreement in NLRC Case No. NCR-NS-10-288-84. Metro, however, eventually relented and suspended individual respondents after AWU despite the express prohibition in the Order dated 3 April 1985 staged a strike against it. On 18 April 1985, Metro executed a Compromise Agreement with AWU to end the strike, item No. 2 of which stipulated: "At the instance of the union, Metro agrees to preventively suspend individual respondents effective immediately." As a result of Metro's implementation of the Agreement, individual respondents on filed a complaint against Metro, docketed as NLRC Case No. NCR-4-1372-85. Metro then filed a third-party complaint against AWU and its officers. Metro also filed a complaint for illegal strike with damages against AWU, docketed as NLRC Case No. NCR-4-1341-85. On 21 June 1985, Labor Arbiter Diosana in an Order directed Metro provisionally to reinstate individual respondents pending resolution of the issues raised therein, with which Order Metro complied.

On 15 July 1985, AWU filed a petition for injunction against Metro, docketed as NLRC Injunction Case No. 993, praying for issuance of a TRO stopping the implementation of the Order of provisional reinstatement, and for Metro's compliance with the Agreement providing for the suspension of individual respondents. On 1 August 1985, the NLRC directed Metro to comply with the Agreement, and Metro complied and re-suspended individual respondents. On 4 September 1986, the NLRC rendered a consolidated Decision. In Certified NLRC Case No. 0403-85, the NLRC ruled that: (a) respondent Metro cannot be compelled to fill up vacancies with AWU's recommendees; (b) respondent Metro cannot be held liable for union busting, the issue of the medically impaired workers having become moot and academic; and (c) the compulsory retirement of AWU's members who have reached the age of 60 years is a valid exercise of management prerogative. In NLRC Case No. NCR-4-1372-85, the NLRC, finding that AWU was a national union, and that individual respondents have the right to organize themselves into a local chapter thereof, the formation of which was a protected activity and could not be considered as disloyalty, held the suspension or dismissal of individual respondents as illegal and, in relation to NLRC Injuction Case No. 993, ordered their reinstatement with backwages, to be paid solidarily by AWU and respondent Metro. In NLRC Case No. NCR-4-1341-85, the NLRC found the strike staged by AWU not illegal, holding that AWU was of the belief, although erroneously, that it could validly stage a strike during the pendency of its motion for reconsideration of the Minister's Order dated 3 April 1985 enjoining a strike or lockout. Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc., by virtue of a Special Permit issued by the Philippine Ports Authority, started operations as the arrastre operator at the Manila South Harbor vice Metro. Individual respondents, in a Motion/Manifestation, prayed that Marina be included as party-respondent. On 27 July 1987, the NLRC in a Resolution denied AWU's and Metro's motions for reconsideration of the consolidated Decision but with the modification limiting Metro's liability for backwages to wages accruing up to July 20, 1986 and ordering Marina to reinstate individual respondents with backwages and allowances starting from 21 July 1986. Marina complied with the Resolution by reinstating individual respondents through its payroll retroactive to 21 July 1986. AWU thereafter in G.R. Nos. 87266-69 filed with the Court a Petition for certiorari on 14 March 1989 praying for the reversal of the decision of the NLRC. Marina, meantime, had gone to the Court on certiorari in G.R. Nos. 81256-59 on grounds of alleged denial of due process, its inclusion by the NLRC as a party in the NLRC case, and its being required to reinstate individual respondents with backwages. On 13 April 1988, Metro in G.R. No. 82705, claimed that it should not have been held solidary liable with AWU because it had merely suspended individual respondents pursuant to the Agreement dated 18 April 1985 it had executed with AWU and, later, had merely obeyed the Resolution of the NLRC ordering Metro to re-suspend individual respondents. In similarly dismissing Metro's petition, the Court in G.R. No. 82705, held that petitioner should be made solidarity liable with AWU for the backwages and allowances that the private respondents may have been entitled to during their suspension. The petitioner's liability, however, should not extend to the time that respondent NLRC ordered it to re-suspend the private respondents. Judgment was entered in G.R. Nos. 81256-59 and G.R. No. 82705 and the cases were remanded to the Labor Arbiter for execution. The Labor Arbiter issued a writ of execution against Marina to reinstate individual respondents, and to pay them the amount of P154,357 representing salary adjustments. Marina moved to quash the writ of execution questioning the award of P154,357, but without success. Marina

44 thereafter appealed to the NLRC. On 6 December 1989, the Executive Labor Arbiter issued a writ of execution requiring Marina: (a) to reinstate individual respondents and to pay them P154,357; and (b) to implement and honor the legality of the organization and registration of AWUM as the local chapter of AWU. Marina then once more went to the Court in G.R. Nos. 91223-26 and filed a Petition for certiorari to invalidate the writ of execution. Issue: Whether or not Metro can be compelled to fill up vacancies with AWU's recommendees. NO Held: In G.R. Nos. 87266-69, petitioner AWU has failed to show grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in NLRC No. NS-10-288-84. The NLRC was correct there in holding that respondent Metro cannot be compelled to fill up vacancies with AWU's recommendees, as the CBA between AWU and Metro granted the latter the right to "fill or not to fill-up vacancies"; that the issue of the medically impaired employees had already been raised in another Notice of Strike filed by AWU against respondent Metro on 16 September 1985, and both parties had agreed to abide by the recommendation and decision of an examining physician selected by them; and that the existing CBA grants respondent Metro the right to compulsorily retire any member of AWU who had reached 60 years of age, which right has been exercised by Metro. Issue: Whether or not there was a justified disaffiliation on the part of the individual respondents. NO Held: The NLRC misappreciated the relevant facts in NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993. While it is true that AWUM as a local union, being an entity separate and distinct from AWU, is free to serve the interest of all its members and enjoys the freedom to disaffiliate, such right to disaffiliate may be exercised, and is thus considered a protected labor activity, only when warranted by circumstances. Generally, a labor union may disaffiliate from the mother union to form a local or independent union only during the 60day freedom period immediately preceding the expiration of the CBA. Even before the onset of the freedom period (and despite the closedshop provision in the CBA between the mother union and management) disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of the members in the bargaining unit. This happens when there is a substantial shift in allegiance on the part of the majority of the members of the union. In such a case, however, the CBA continues to bind the members of the new or disaffiliated and independent union up to the CBA's expiration date. The record does not show that individual respondents had disaffiliated during the freedom period. The record does, however, show that only 11 members of AWU had decided to disaffiliate from AWU and form AWUM. Respondent Metro had about 4,000 employees, and around 2,000 of these were members of AWU. It is evident that individual respondents had failed to muster the necessary majority in order to justify their disaffiliation. Even then, in the absence of allegation by AWUM [MWU] of the exact number of its members, the Court presumes that only 20% of the employees of Metro had joined MWU. In sum, the attempted disaffiliation of the 11 private respondents from the petitioner mother union and the effort to organize either a new local of the mother union or an entirely new and separate union, did not, under the circumstances of this case, constitute protected activities of the 11 individual respondents. Issue: In view of the conclusion reached in G.R. Nos. 87266-69 (that AWU was justified in expelling the 11 individual respondents), the question now arises: how and to what extent does such conclusion affect the liability of Metro, and Marina (as successor-employer)?

Held: The pre-eminent fact is that the Court's Resolutions in G.R. Nos. 81256-59 and 82705 dismissing the Petitions are already final. The liabilities of Metro and Marina for reinstatement and backwages under the consolidated NLRC Decision have become fixed and definite, with the modification decreed by the Court in G.R. No. 82705 in so far as backwages were concerned. Thus, the conclusion we today have reached in G.R. Nos. 87266-69 cannot benefit Metro and Marina and will not dissolve their already fixed and definite liabilities. Turning to the question of the backwages due to the 11 individual respondents, three different time periods are relevant here and must be distinguished from one another: First Period: From 18 April 1985 to 21 June 1985: the Compromise Agreement between Metro and AWU to end the strike, in which Metro agreed to preventively suspend the 11 individual respondents, was effected on 18 April 1985 and implemented immediately. The Labor Arbiter on 21 June 1985 ordered Metro to reinstate provisionally the 11 individual respondents and Metro complied. Second Period: From 1 August 1985 up to 27 July 1987: the NLRC, pursuant to the urging of AWU, ordered Metro to re-suspend the individual respondents on 1 August 1985 and Metro again complied with this Order. Approximately two years later, on 27 July 1987, NLRC ordered Metro/Marina to reinstate the individual respondents and Marina complied by reinstating the individual respondents on the payroll, i.e., paying their salaries although they were not allowed to work on their jobs. Third Period: From 28 July 1987 to 18 September 1989: on 18 September 1989, the Labor Arbiter issued the questioned writ of execution ordering, among other things, Marina to reinstate formally the individual respondents. Under the consolidated NLRC Decision, Metro/Marina are liable for the backwages accruing during the First and Third Periods above indicated. In respect of the Second Period, however, the Court in G.R. No. 82705, as already pointed out earlier, held that Metro/Marina should not be held liable for backwages accruing during that period. Strictly speaking, in view of our conclusion above that AWU was justified in expelling individual respondents from its membership, neither AWU nor Metro/Marina would be liable to individual respondents for the backwages accruing during this Second Period. In the interest of substantial and expeditious justice, however, the Court believe that the backwages accruing during the 2nd Period should be paid and shared by AWU and by Metro/Marina, on a 50-50 basis. The Court established this equitable allocation of ultimate responsibility in order to forestall further litigation between AWU and Metro/Marina and individual respondents in respect of claims and countering claims for payment or reimbursement or contribution and to put a definite end to this prolonged and costly confrontation among the several parties. The equitable considerations which impel us to hold AWU liable for one-half () of the backwages during the Second Period include: (a) the fact that Metro had been reluctant to comply with the demand of AWU to terminate the services of individual respondents and had wanted to give the latter procedural due process, but gave in to the demands of AWU; (b) that AWU had pressed Metro very hard and indeed went on strike against Metro when Metro refused simply to terminate the services of the individual respondents; (c) that AWU, instead of waiting for final judicial determination of the legality of its expulsion of individual respondents, chose to importune the NLRC to issue the order requiring the re-suspension of the individual respondents on 1 August 1985, with which order Metro eventually complied.

45 Turning to Metro/Marina, apart from the finality of the Court's Resolutions in G.R. Nos. 81256-59 and 82705, there is independent basis for holding Metro/Marina responsible for reinstatement with backwages accruing throughout the three (3) periods above indicated. The equitable considerations which lead to hold Metro/Marina responsible for one-half () of the backwages accruing during the above Second Period relate to the failure of Metro to accord individual respondents procedural due process by giving them reasonable opportunity to explain their side before suspending or dismissing them. Such dismissal was accordingly in violation of the Labor Code. Notwithstanding AWU's closed-shop clause in the CBA, Metro was bound to conduct its own inquiry to determine the existence of substantial basis for terminating the employment of individual respondents. That AWU, disregarding the Minister of Labor and Employment's express order, had threatened to go on strike, and indeed actually went on strike, if Metro had continued with the services of individual respondents, did not relieve Metro from the duty to accord procedural due process to individual respondents. ACCORDINGLY, the Court Resolved: In G.R. Nos. 87266-69: (a) to DISMISS the Petition for Certiorari in respect of Certified NLRC Case No. 0403-855 (NCR-NS-10-288-84) for lack of merit; and (b) to GRANT partially the Petition for Certiorari in respect of NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993. The consolidated Decision of the NLRC dated 4 September 1986 ordering AWU and Marina to pay solidarily the backwages of individual respondents, as well as the NLRC Resolution of 27 July 1987 denying AWUs and Metro's Motions for Reconsideration, are hereby MODIFIED so as to require AWU and Metro/Marina to pay, on a 50-50 basis, to individual respondents the backwages which accrued during the Second Period, i.e., from 1 August 1985 up to 27 July 1987. In G.R. Nos. 91223-26: to GRANT partially the Petition. The Order of the Executive Labor Arbiter dated 6 December 1989 is hereby MODIFIED so as (a) to require AWU and Metro/Marina on a 50-50 basis to pay the salary differentials accruing during the period from 20 July 1986 up to 27 July 1987, and Marina alone to pay the salary differentials accruing from 28 July 1987 up to 31 October 1989, and so as (b) to delete the portion requiring Marina to recognize AWU. (MWU) as the local chapter of AWU. The TRO issued by the Court is hereby LIFTED to permit enforcement of the Order of the Executive Labor Arbiter. ELISCO-ELIROL LABOR UNION vs. NORIEL Facts: Sometime on February 1974, petitioner-Elisco Elirol Labor Union (NAFLU), negotiated and executed a CBA with respondent-Elizalde Steel Consolidated, Inc. Upon verification by individual petitioners at the Registration division, Bureau of Labor Relations, Department of Labor, the Elisco-Elirol Labor Union, the contracting party in said CBA, was not then registered and therefore not entitled to the benefits and privileges embodied in said CBA. On March 3, 1975, the member of petitionerappellant union in a general membership meeting decided in a resolution to register their union to protect and preserve the integrity and inviolability of the collective bargaining agreement between the Elisco Elirol Labor Union and the Elizalde Steel Consolidated, Inc. Said resolution of the members of petitioner union was passed upon by the officers and members of the Board of Directors, at a special meeting called for the purpose, resolution No. 6, s. 1975 was approved requesting the Acting Directors, Registration Division, Bureau of Labor Relations, to register the petitioner union. Petitioner union applied for registration with the BLR, hence, a certificate of registration was issued. With the issuance of the certificate, petitioner acquired a personality separate and distinct from any other labor union.

Steps were taken by petitioner-appellant to enforce the CBA as the principal party to the same representing the workers covered by such agreement immediately after the issuance of the certificate of registration. On June 10, 1975, at a special meeting called for the purpose, the general membership of petitioner union decided that their mother union, the National Federation of Labor Unions, can no longer safeguard the rights of its members insofar as working conditions and other terms of employment are concerned and that the interest and welfare of petitioner can be served best if it will stay independent and disaffiliated from said mother union, hence, the general membership adopted a resolution to disaffiliate from the NAFLU. On June 11, 1975, petitioner, acting through its President Hilario Riza informed respondents of said disaffiliation by means of a letter, and subsequently requested respondents to recognize petitioner as the sole and exclusive bargaining representative of the employees thereof. Respondent without any justifiable reason refused and continues to refuse to recognize petitioner as the exclusive bargaining representative of its employees, and, now actually dismissed the petitioner union's officers and board members. In this connection, a complaint for unfair labor practice was filed by petitioners against respondents for the latter's refusal to bargain collectively with petitioner. By virtue of said refusal of respondent company to recognize petitioner as the sole and exclusive bargaining representative of the employees, petitioners filed a petition before the Bureau of Labor Relations with Case No. LR-861 against respondents Elizalde Steel Consolidated, Inc. and the NAFLU be ordered to stop from presenting itself as the collective bargaining agent and pursuant thereto, a writ of preliminary mandatory and prohibitory injunction be issued. On August 19, 1975. the BLR, through Med-Arbiter Reynaldo Carta, before whom the case was heard, issued an Order dismissing the petition for lack of merit. Issue: Which of the two unions should be recognized as the sole and exclusive bargaining representative of the employees and ultimately recognized to administer and supervise the enforcement of the CBA. Held: PETITIONER. Petitioner-union contends, firstly, that it having the necessary interest and being the real party must be the sole union to be recognized and given authority to bargain with the company. To grant to the former mother union (NAFLU) the authority to administer and enforce their CBA without presumably any members in the bargaining unit is quite absurd. But to transfer also the authority to the newly formed union although the members of the same were the same members who composed then the local chapter of the mother union is also in violation of the CBA particularly article IV which is the union security clause, wherein it is a condition for a continued employment in the company to maintain membership in the Union. Theoretically therefore, when the employees disaffiliated from the mother union and formed themselves into a new union, their status as employees was also terminated. As such they could not therefore absolutely and legally claim that they still comprise the majority of the bargaining unit. Secondly, to vest, upon the new union the authority to bargain is in violation of the whole CBA, under the theory that when the mother union (NAFLU) entered and executed the same in its separate and distinct personality aside from the people composing the same. In fine, the CBA then was executed by and between the company and the (NAFLU) with the latter as an entity having its own capacity and personality different from the members composing the same. Lastly, to preserve and avoid unstability and disorder in the labor movement as correctly ruled by the med-arbiter, the status quo should be preserved, there being no compelling reason to alter the same. The Court finds the petition to be clearly meritorious and reverse the appealed resolution. Respondent director correctly perceived in his Resolution that "to grant to the former mother union (NAFLU) the authority to administer and enforce their CBA without presumably any

46 members in the bargaining unit is quite absurd" but fell unto the grave error of holding that "When the employees disaffiliated from the mother union and formed themselves into a new union, their status as employees was also terminated." His error was in not perceiving that the employees and members of the local union did not form a new union but merely registered the local union as was their right. Petitioner union, consisting of employees and members of the local union was the principal party to the agreement. NAFLU as the "mother union" in participation in the execution of the bargaining agreement with respondent company acted merely as agent of the local union, which remained the basic unit of the association existing principally and freely to serve the common interest of all its members, including the freedom to disaffiliated when the circumstances so warranted as in the present case. The "substitutionary" doctrine likewise fully supports petitioner's stand. Petitioner union to whom the employees owe their allegiance has from the beginning expressly avowed that it "does not intend to change and/or amend the provisions of the present CBA but only to be given the chance to enforce the same since there is a shift of allegiance in the majority of the employees at respondent company." In Benguet Consolidated vs. BCI Employees & W Union-PAFLU, "This principle, formulated by the NLRB as its initial compromise solution to the problem facing it when there occurs a shift in employees' union allegiance after the execution of a bargaining contract with their employer, merely states that even during the effectivity of a CBA executed between employer and employees thru their agent, the employees can change said agent but the contract continues to bind then up to its expiration date. They may bargain however for the shortening of said expiration date. In formulating the "substitutionary" doctrine, the only consideration involved as the employees' interest in the existing bargaining agreement. The agent's interest never entered the picture. In fact, the justification for said doctrine was: ... that the majority of the employees, as an entity under the statute, is the true party in interest to the contract, holding rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defeasible at the will of the principal." It need only be mentioned finally that the Secretary of Labor in his decision and order denying reconsideration in the sister unfair labor practice case and ordering respondent corporation to immediately lift the suspension and reinstate the complainant officers and board members of petitioner union has likewise adhered to the foregoing basic principles and settled jurisprudence in contrast to respondent director (as well as therein respondent NLRC which similarly adhered to the archaic and illogical view that the officers and board members of petitioner local union committed an "act of disloyalty" in disaffiliating from the mother union when practically all its members had so voted to disaffiliate and the mother union [as mere agent] no longer had any local union or members to represent), ruling that "Granting arguendo that the disaffiliation from the NAFLU is a legal cause for expulsion and dismissal, it could not detract from the fact that only 13 individual complainants out of almost 700 members who disaffiliated, were singled out for expulsion and recommended for dismissal. The actuation of NAFLU conclusively constitutes discrimination. Since the suspension of the complainants was effected at the instance of NAFLU, it should be held liable to the payment of back wages." It is expected that with this decision, any suspension or lay-off of the complainants officers and board members or employees of petitioner union arising from the respondents' misconception of the clearly applicable principles and jurisprudence upholding the primacy of the employees and their freely chosen local union as the true party in interest to the CBA will be forthwith rectified and set aside.