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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

131235 November 16, 1999 UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI, NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN, REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESAR REYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDES MEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA, NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITA ESPINA, ZENAIDA FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and LEONCIO CASAL, petitioners, vs. Dir. BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of Labor Relations, Med-Arbiter TOMAS F. FALCONITIN of The National Capital Region, Department of Labor and Employment (DOLE), EDUARDO J. MARIO JR., MA. MELVYN ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO ASUNCION, ZENAIDA BURGOS, ANTHONY CURA, FULVIO M. GUERRERO, MYRNA HILARIO, TERESITA MEER, FERNANDO PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN TIROL and ROSIE ALCANTARA,respondents. PANGANIBAN, J.: There is a right way to do the right thing at the right time for the right reasons, 1 and in the present case, in the right forum by the right parties. While grievances against union leaders constitute legitimate complaints deserving appropriate redress, action thereon should be made in the proper forum at the proper time and after observance of proper procedures. Similarly, the election of union officers should be conducted in accordance with the provisions of the union's constitution and bylaws, as well as the Philippine Constitution and the Labor Code. Specifically, while all legitimate faculty members of the University of Santo Tomas (UST) belonging to a collective bargaining unit may take part in a duly convened certification election, only bona fide members of the UST Faculty Union (USTFU) may participate and vote in a legally called election for union officers. Mob hysteria, however well-intentioned, is not a substitute for the rule of law. The Case The Petition for Certiorari before us assails the August 15, 1997 Resolution 2 of Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the election of USTFU officers conducted on October 4, 1996 and its election results as null and void ab initio. Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist from acting and performing the duties and functions of the legitimate officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant to [the] union's constitution and by-laws (CBL). The Temporary Restraining Order (TRO) issued by this Office on December 11, 1996 in connection with the instant petition, is hereby made and declared permanent. 3 Likewise challenged is the October 30, 1997 Resolution 4 of Director Bitonio, which denied petitioners' Motion for Reconsideration. The Facts The factual antecedents of the case are summarized in the assailed Resolution as follows: Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-year Collective Bargaining Agreement with its employer, the University of Santo Tomas (UST). The CBA was registered with the Industrial Relations Division, DOLE-NCR, on 20 February 1995. It is set to expire on 31 May 1998.

On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU, posted a notice addressed to all USTFU members announcing a general assembly to be held on 05 October 1996. Among others, the general assembly was called to elect USTFU's next set of officers. Through the notice, the members were also informed of the constitution of a Committee on Elections (COMELEC) to oversee the elections. (Annex "B", petition) On 01 October 1996, some of herein appellants filed a separate petition with the Med-Arbiter, DOLENCR, directed against herein appellees and the members of the COMELEC. Docketed as Case No. NCROD-M-9610-001, the petition alleged that the COMELEC was not constituted in accordance with USTFU's constitution and by-laws (CBL) and that no rules had been issued to govern the conduct of the 05 October 1996 election. On 02 October 1996, the secretary general of UST, upon the request of the various UST faculty club presidents (See paragraph VI, Respondents' Comment and Motion to Dismiss), issued notices allowing all faculty members to hold a convocation on 04 October 1996 (See Annex "C" Petition; Annexes "4" to "10", Appeal). Denominated as [a] general faculty assembly, the convocation was supposed to discuss the "state of the unratified UST-USTFU CBA" and "status and election of USTFU officers" (Annex "11", Appeal) On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary restraining order against herein appellees enjoining them from conducting the election scheduled on 05 October 1996. Also on 04 October 1996, and as earlier announced by the UST secretary general, the general faculty assembly was held as scheduled. The general assembly was attended by members of the USTFU and, as admitted by the appellants, also by "non-USTFU members [who] are members in good standing of the UST Academic Community Collective Bargaining Unit" (See paragraph XI, Respondents' Comment and Motion to Dismiss). On this occasion, appellants were elected as USTFU's new set of officers by acclamation and clapping of hands (See paragraphs 40 to 50, Annex "12", Appeal). The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not a member of USTFU, that the USTFU CBL and "the rules of the election be suspended and that the election be held [on] that day" (See paragraph 39, Idem.) On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the nullification of the results of the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary restraining order issued in Case No. NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the election as spurious for being violative of USTFU's CBL, specifically because the general assembly resulting in the election of appellants was not called by the Board of Officers of the USTFU; there was no compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the supposed elections were conducted without a COMELEC being constituted by the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were not by secret balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly was convened by faculty members some of whom were not members of USTFU, so much so that non-USTFU members were allowed to vote in violation of Section 1, Article V of the CBL. On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary restraining order, this time alleging that appellants had served the former a notice to vacate the union office. For their part, appellants moved to dismiss the original petition and the subsequent motion on jurisdictional grounds. Both the petition and the motion were captioned to be for "Prohibition, Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order." According to the appellants, the med-arbiter has no jurisdiction over petitions for prohibition, "including the ancillary remedies of restraining order and/or preliminary injunction, which are merely incidental to the main petition for PROHIBITION" (Paragraph XVIII3, Respondents' Comment and Motion to Dismiss). Appellants also averred that they now constituted the new set of union officers having been elected in accordance with law after the term of office of appellees had expired. They further maintained that appellees' scheduling of the 5 October 1996 elections was illegal because no rules and regulations governing the elections were promulgated as required by USTFU's CBL and that one of the members of the COMELEC was not a registered member of USTFU. Appellants likewise noted that the elections called by the appellees should have been postponed to allow the promulgation of rules and regulations and to "insure a free, clean, honest and orderly elections and to afford at the same time the greater majority of the general membership to participate" (See paragraph V, Idem). Finally, appellants contended that the holding of the general faculty assembly

on 04 October 1996 was under the control of the Council of College/Faculty Club Presidents in cooperation with the USTFU Reformist Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996. On 03 December 1996, appellants and UST allegedly entered into another CBA covering the period from 01 June 1996 to 31 May 2001 (Annex 11, appellants' Rejoinder to the Reply and Opposition). Consequently, appellees again moved for the issuance of a temporary restraining order to prevent appellants from making further representations that [they] had entered into a new agreement with UST. Appellees also reiterated their earlier stand that appellants were usurping the former's duties and functions and should be stopped from continuing such acts. On 11 December 1996, over appellants' insistence that the issue of jurisdiction should first be resolved, the med-arbiter issued a temporary restraining order directing the respondents to cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors of USTFU. In the meantime, appellants claimed that the new CBA was purportedly ratified by an overwhelming majority of UST's academic community on 12 December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what it denominated as appellees' petition for prohibition on the ground that this had become moot and academic. 5 Petitioners appealed the med-arbiter's Decision to the labor secretary, 6 who transmitted the records of the case to the Bureau of Labor Relations which, under Department Order No. 9, was authorized to resolve appeals of intra-union cases, consistent with the last paragraph of Article 241 of the Labor Code. 7 The Assailed Ruling Agreeing with the med-arbiter that the USTFU officers' purported election held on October 4, 1994 was void for having been conducted in violation of the union's Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners' contention that it was a legitimate exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union and its members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had not been convened or authorized by the USTFU. Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by the recognition of the newly "elected" set of officers by UST or by the alleged ratification of the new CBA by the general membership of the USTFU. Ruled Respondent Bitonio: This submission is flawed. The issue at hand is not collective bargaining representation but union leadership, a matter that should concern only the members of USTFU. As pointed out by the appellees, the privilege of determining who the union officers will be belongs exclusively to the members of the union. Said privilege is exercised in an election proceeding in accordance with the union's CBL and applicable law. To accept appellants' claim to legitimacy on the foregoing grounds is to invest in appellants the position, duties, responsibilities, rights and privileges of USTFU officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit the employer from interfering with the employees in the latter' exercise of their right to self-organization. To allow appellants to become USTFU officers on the strength of management's recognition of them is to concede to the employer the power of determining who should be USTFU's leaders. This is a clear case of interference in the exercise by USTFU members of their right to selforganization. 8 Hence, this Petition. 9 The Issues The main issue in this case is whether the public respondent committed grave abuse of discretion in refusing to recognize the officers "elected" during the October 4, 1996 general assembly. Specifically, petitioners in their Memorandum urge the Court to resolve the following questions: 10

(1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right in that General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding the elections of officers of the union[.] (2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty Assembly is valid pursuant to the constitutional right of the Collective Bargaining Unit to engage in "peaceful concerted activities" for the purpose of ousting the corrupt regime of the private respondents[.] (3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in behalf of the USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity of the suspension of the Constitution and By-Laws and the elections of October 4, 1996 in the General Faculty Assembly[.] The Courts Ruling The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio gravely abused his discretion in affirming the med-arbiter and in refusing to recognize the binding effect of the October 4, 1996 general assembly called by the UST administration. First Issue: Right to Self-Organization and Union Membership At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma 11 has held that challenges against rulings of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the memoranda in the instant case have been filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to resolve the present controversy directly, instead of remanding it to the Court of Appeals. Having disposed of the foregoing procedural matter, we now tackle the issues in the present case seriatim. Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. 12 Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union. 13 Corollary to this right is the prerogative not to join, affiliate with or assist a labor union. 14 Therefore, to become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. The procedure for union membership is usually embodied in the union's constitution and bylaws. 15 An employee who becomes a union member acquires the rights and the concomitant obligations that go with this new status and becomes bound by the union's rules and regulations. When a man joins a labor union (or almost any other democratically controlled group), necessarily a portion of his individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the members in order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a union dislikes the provisions of the by-laws, he may seek to have them amended or may withdraw from the union; otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-laws of a trade union. On joining a labor union, the constitution and by-laws become a part of the member's contract of membership under which he agrees to become bound by the constitution and governing rules of the union so far as it is not inconsistent with controlling principles of law. The constitution and by-laws of an unincorporated trade union express the terms of a contract, which define the privileges and rights secured to, and duties assumed by, those who have become members. The agreement of a member on joining a

union to abide by its laws and comply with the will of the lawfully constituted majority does not require a member to submit to the determination of the union any question involving his personal rights. 16 Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latter's incumbency impelled the October 4, 1996 election of the new set of USTFU officers. They assert that such exercise was pursuant to their right to self-organization. Petitioners' frustration over the performance of private respondents, as well as their fears of a "fraudulent" election to be held under the latter's supervision, could not justify the method they chose to impose their will on the union. Director Bitonio aptly elucidated: 17 The constitutional right to self-organization is better understood in the context of ILO Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention provides that workers' organizations shall have the right to draw up their constitution and rules and to elect their representatives in full freedom, free from any interference from public authorities. The freedom conferred by the provision is expansive; the responsibility imposed on union members to respect the constitution and rules they themselves draw up equally so. The point to be stressed is that the union's CBL is the fundamental law that governs the relationship between and among the members of the union. It is where the rights, duties and obligations, powers, functions and authority of the officers as well as the members are defined. It is the organic law that determines the validity of acts done by any officer or member of the union. Without respect for the CBL, a union as a democratic institution degenerates into nothing more than a group of individuals governed by mob rule. Union Election vs. Certification Election A union election is held pursuant to the union's constitution and bylaws, and the right to vote in it is enjoyed only by union members. A union election should be distinguished from a certification election, which is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective bargaining. 18 Specifically, the purpose of a certification election is to ascertain whether or not a majority of the employees wish to be represented by a labor organization and, in the affirmative case, by which particular labor organization. 19 In a certification election, all employees belonging to the appropriate bargaining unit can vote. 20 Therefore, a unionmember who likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the reverse is not always true; an employee belonging to the appropriate bargaining unit but who is not a member of the union cannot vote in the union election, unless otherwise authorized by the constitution and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-union activity. In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot properly be called a union election, because the procedure laid down in the USTFU's CBL for the election of officers was not followed. It could not have been a certification election either, because representation was not the issue, and the proper procedure for such election was not followed. The participation of non-union members in the election aggravated its irregularity. Second Issue: USTFU's Constitution and By Laws Violated The importance of a union's constitution and bylaws cannot be overemphasized. They embody a covenant between a union and its members and constitute the fundamental law governing the members' rights and obligations. 21 As such, the union's constitution and bylaws should be upheld, as long as they are not contrary to law, good morals or public policy. We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the October 4, 1996 election was tainted with irregularities because of the following reasons. First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo

Tomas. 22 It was not convened in accordance with the provision on general membership meetings as found in the USTFU's CBL, which reads: ARTICLE VIII-MEETINGS OF THE UNION Sec. 1. The Union shall hold regular general membership meetings at least once every three (3) months. Notices of the meeting shall be sent out by the Secretary-General at least ten (10) days prior to such meetings by posting in conspicuous places, preferably inside Company premises, said notices. The date, time and place for the meetings shall be determined by the Board of Officers. 23 Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was called and participated in by management and non-union members. By no legal fiat was such assembly transformed into a union activity by the participation of some union members. Second, there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the USTFU's CBL, which provide: ARTICLE IX - UNION ELECTION Sec. 1. There shall be a Committee on Election (COMELEC) to be created by the Board of Officers at least thirty (30) days before any regular or special election. The functions of the COMELEC include the following: a) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly election, whether regular or special; b) Pass upon qualifications of candidates; c) Rule on any question or protest regarding the conduct of the election subject to the procedure that may be promulgated by the Board of Officers; and d) Proclaim duly elected officers. Sec. 2. The COMELEC shall be composed of a chairman and two members all of whom shall be appointed by the Board of Officers. xxx xxx xxx 24 Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFU's CBL, as well as Article 241 (c) of the Labor Code. The foregoing infirmities considered, we cannot attribute grave abuse of discretion to Director Bitonio's finding and conclusion. In Rodriguez v. Director, Bureau of Labor Relations, 25 we invalidated the local union elections held at the wrong date without prior notice to members and conducted without regard for duly prescribed ground rules. We held that the proceedings were rendered void by the lack of due process undue haste, lack of adequate safeguards to ensure integrity of the voting, and the absence of the notice of the dates of balloting. Third Issue: Suspension of USTFU's CBL Petitioners contend that the October 4, 1996 assembly "suspended" the union's CBL. They aver that the suspension and the election that followed were in accordance with their "constituent and residual powers as members of the collective bargaining unit to choose their representatives for purposes of collective bargaining." Again they cite the numerous anomalies allegedly committed by the private respondents as USTFU officers. This argument does not persuade. First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming union members, since they represented management. Thus, Director Bitonio correctly observed:

Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson Labor Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a union's full freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not members of the union. The democratic principle that governance is a matter for the governed to decide upon applies to the labor movement which, by law and constitutional mandate, must be assiduously insulated against intrusions coming from both the employer and complete strangers if the "protection to labor clause" of the constitution is to be guaranteed. By appellant's own evidence, the general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was attended by members and non-members alike, and therefore was not a forum appropriate for transacting union matters. The person who moved for the suspension of USTFU's CBL was not a member of USTFU. Allowing a non-union member to initiate the suspension of a union's CBL, and non-union members to participate in a union election on the premise that the union's CBL had been suspended in the meantime, is incompatible with the freedom of association and protection of the right to organize. If there are members of the so-called "academic community collective bargaining unit" who are not USTFU members but who would nevertheless want to have a hand in USTFU's affairs, the appropriate procedure would have been for them to become members of USTFU first. The procedure for membership is very clearly spelled out in Article IV of USTFU's CBL. Having become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that "if a member of the union dislikes the provisions of the by-laws he may seek to have them amended or may withdraw from the union; otherwise he must abide by them." Under Article XVII of USTFU's CBL, there is also a specific provision for constitutional amendments. What is clear therefore is that USTFU's CBL provides for orderly procedures and remedies which appellants could have easily availed [themselves] of instead of resorting to an exercise of their so-called "residual power". 26 Second, the grievances of the petitioners could have been brought up and resolved in accordance with the procedure laid down by the union's CBL 27 and by the Labor Code. 28 They contend that their sense of desperation and helplessness led to the October 4, 1996 election. However, we cannot agree with the method they used to rectify years of inaction on their part and thereby ease bottled-up frustrations, as such method was in total disregard of the USTFU's CBL and of due process. The end never justifies the means. We agree with the solicitor general's observation that "the act of suspending the constitution when the questioned election was held is an implied admission that the election held on that date [October 4, 1996] could not be considered valid under the existing USTFU constitution . . .." 29 The ratification of the new CBA executed between the petitioners and the University of Santo Tomas management did not validate the void October 4, 1996 election. Ratified were the terms of the new CBA, not the issue of union leadership a matter that should be decided only by union members in the proper forum at the proper time and after observance of proper procedures. Epilogue In dismissing this Petition, we are not passing upon the merits of the mismanagement allegations imputed by the petitioners to the private respondents; these are not at issue in the present case. Petitioners can bring their grievances and resolve their differences with private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair treatment of union members by their own leaders. When the latter abuse and violate the rights of the former, they shall be dealt with accordingly in the proper forum after the observance of due process. WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED. Costs against petitioners. SO ORDERED. Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-77629 May 9, 1990 KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISMORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA), ROQUE JIMENEZ, MARIO C. RONGALEROS and OTHERS, petitioners, vs. HON. FRANKLIN M. DRILON, KIMBERLY-CLARK PHILIPPINES, INC., RODOLFO POLOTAN, doing business under the firm name "Rank Manpower Co." and UNITED KIMBERLY-CLARK EMPLOYEES UNION-PHILLIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (UKCEUPTGWO), respondents. KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVITISM AND NATIONALISMOLALIA (KILUSAN-OLALIA), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MANUEL AGUILAR, MA. ESTRELLA ALDA, CAPT. REY L. LANADA, COL. VIVENCIO MANAIG and KIMBERLY-CLARK PHILIPPINES, INC., respondents. REGALADO, J.: Before us are two consolidated petitions for certiorari filed by the above-named petitioner union (hereinafter referred to as KILUSAN-OLALIA, for conciseness) and individual complainants therein, to wit (a) G.R. 77629, which seeks to reverse and set aside the decision, dated November 13, 1986, 1 and the resolution, dated January 9, 1987, 2respectively handed down by the two former Ministers of Labor, both rendered in BLR Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the reversal of the resolutions of the National Labor Relations Commission, dated May 25, 1987 3and June 19,1987 4 issued in Injunction Case No. 1442 thereof. Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and General Workers' Organization (UKCEUPTGWO) which expired on June 30, 1986. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the aforementioned CBA, some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA)." On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in Regional Office No. IV, Ministry of Labor and Employment (MOLE), docketed as Case No. RO4-OD-M-415-86. 5 KIMBERLY and (UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed through an independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters. Pending resolution of the petition for certification election by the med-arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-86, 6 charging KIMBERLY with unfair labor practices based on the following alleged acts: (1) dismissal of union members (KILUSAN-OLALIA); (2) nonregularization of casuals/contractuals with over six months service; (3) non-implementation of appreciation bonus for 1982 and 1983; (4) non-payment of minimum wages; (5) coercion of employees; and (6) engaging in CBA negotiations despite the pendency of a petition for certification election. This was later amended to withdraw the charge of coercion but to add, as new charges, the dismissal of Roque Jimenez and the non-payment of backwages of the reinstated Emerito Fuentes . 7 Conciliation proceedings conducted by the bureau proved futile, and KILUSAN-OLALIA declared a strike at KIMBERLY's premises in San Pedro, Laguna on May 23, 1986.

On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over the labor dispute. On May 30, 1986, finding that the labor dispute would adversely affect national interest, then Minister Augusto S. Sanchez issued an assumption order, the dispositive portion whereof reads: Wherefore, premises considered, immediately upon receipt of this order, the striking union and its members are hereby enjoined to lift the picket and remove all obstacles to the free ingress to and egress from the company premises and to return to work, including the 28 contractual workers who were dismissed; likewise, the company is directed to resume its operations immediately thereafter and to accept all the employees back under the same terms and conditions of employment prevailing prior to the industrial action. Further, all issues in the notice of strike, as amended, are hereby assumed in this assumption order, except for the representation issue pending in Region IV in which the Med-Arbiter is also enjoined to decide the same the soonest possible time. 8 In obedience to said assumption order, KILUSAN-OLALIA terminated its strike and picketing activities effective June 1, 1986 after a compliance agreement was entered into by it with KIMBERLY. 9 On June 2, 1986, Med-Arbiter Bonifacio 1. Marasigan, who was handling the certification election case (RO4-OD-M-41586), issued an order 10 declaring the following as eligible to vote in the certification election, thus: 1. The regular rank-and-file laborers/employees of the respondent company consisting of 537 as of May 14, 1986 should be considered qualified to vote; 2. Those casuals who have worked at least six (6) months as appearing in the payroll months prior to the filing of the instant petition on April 21, 1986; and 3. Those contractual employees who are allegedly in the employ of an independent contractor and who have also worked for at least six (6) months as appearing in the payroll month prior to the filing of the instant petition on April 21, 1986. During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-PTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to challenge proceedings. The certification election was conducted on July I., 1986, with the following results: 11 1. KILUSAN-OLALIA = 246 votes 2. (UKCEU-PTGWO) = 266 votes 3. NO UNION = 1 vote 4. SPOILED BALLOTS = 4 votes 5. CHALLENGED BALLOTS = 64 votes TOTAL 581 votes On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" 12 on the ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no employer-employee relationship between the casual workers and the company, and that the med-arbiter has no jurisdiction to rule on the issue of the status of the challenged workers which is one of the issues covered by the assumption order. The med-arbiter opted not to rule on the protest until the issue of regularization has been resolved by MOLE. 13 On November 13, 1986, then Minister Sanchez rendered a decision in BLR Case No. NS-5-164-86, 14 the disposition wherein is summarized as follows:

1. The service contract for janitorial and yard maintenance service between KIMBERLY and RANK was declared legal; 2. The other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision; 3. UKCEU-PTGWO having garnered more votes than KILUSAN-OLALIA was certified as the exclusive bargaining representative of KIMBERLY's employees; 4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was ordered; 5. Roque Jimenez was ordered reinstated without backwages, the period when he was out of work being considered as penalty for his misdemeanor; 6. The decision of the voluntary arbitrator ordering the reinstatement of Ermilo Fuentes with backwages was declared as already final and unappealable; and 7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983. On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization of contractual workers, the appreciation bonus and the reinstatement of Roque Jimenez. 15 In a letter dated November 24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the implementation of the November 13, 1986 decision but only with respect to the regularization of the casual workers. 16 On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration questioning the authority of the Minister of Labor to assume jurisdiction over the representation issue. In the meantime, KIMBERLY and UKCEU-PTGWO continued with the negotiations on the new collective bargaining agreement (CBA), no restraining order or junctive writ having been issued, and on December 18, 1986, a new CBA was concluded and ratified by 440 out of 517 members of the bargaining unit. 17 In an order dated January 9, 1987, former Labor Minister Franklin Drilon denied both motions for reconsideration filed by KIMBERLY and KILUSAN-OLALIA. 18 On March 10, 1987, the new CBA executed between KIMBERLY and UKCEUPTGWO was signed. On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this Court docketed as G.R. No. 77629, seeking to set aside the aforesaid decision, dated November 13, 1986, and the order, dated January 9, 1987, rendered by the aforesaid labor ministers. On March 25, 1987, this Court issued in G.R. No. 77629 a temporary restraining order, enjoining respondents from enforcing and/or carrying out the decision and order above stated, particularly that portion (1) recognizing respondent UKCEU-PTGWO as the exclusive bargaining representative of all regular rank-and-file employees in the establishment of respondent company, (2) enforcing and/or implementing the alleged CBA which is detrimental to the interests of the members of the petitioner union, and (3) stopping respondent company from deducting monthly dues and other union assessments from the wages of all regular rank-and-file employees of respondent company and from remitting the said collection to respondent UKCEU-PTGWO issued in BLR Case No. NS-5-164-86, entitled, "In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the Department of Labor and Employment, Manila, 19 In its comment, 20 respondent company pointed out certain events which took place prior to the filing of the petition in G.R. No. 77629, to wit: 1. The company and UKCEU-PTGWO have concluded a new collective bargaining agreement which had been ratified by 440 out of 517 members of the bargaining unit; 2. The company has already granted the new benefits under the new CBA to all its regular employees, including members of petitioner union who, while refusing to ratify the CBA nevertheless readily accepted the benefits arising therefrom;

3. The company has been complying with the check-off provision of the CBA and has been remitting the union dues to UKCEU-PTGWO 4. The company has already implement the decision of November 13, 1986 insofar as the regularization of contractual employees who have rendered more than one (1) year of service as of the filing of the Notice of Strike on May 7, 1986 and are not engaged in janitorial and yard maintenance work, are concerned 5. Rank Manpower Company had already pulled out, reassigned or replaced the contractual employees engaged in janitorial and yard maintenance work, as well as those with less than one year service; and 6. The company has reinstated Roque Jimenez as of January 11, 1987. In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-OLALIA filed another notice of strike with the Bureau of Labor Relations charging respondent company with unfair labor practices. On May 8, 1987, the bureau dismissed and considered the said notice as not filed by reason of the pendency of the representation issue before this Court in G.R. No. 77629. KILUSAN-OLALIA moved to reconsider said order, but before the bureau could act on said motion, KILUSAN-OLALIA declared a strike and established a picket on respondent company's premises in San Pedro, Laguna on May 17, 1987. On May 18, 1987, KIMBERLY filed a petition for injunction with the National Labor Relations Commission (NLRC), docketed as Injunction Case No. 1442. A supplement to said petition was filed on May 19, 1987. On May 26, 1987, the commission en banc issued a temporary restraining order (TRO) on the basis of the ocular inspection report submitted by the commission's agent, the testimonies of KIMBERLY's witnesses, and pictures of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the ground of lack of jurisdiction. Immediately after the expiration of the first TRO on June 9, 1987, the striking employees returned to their picket lines and reestablished their barricades at the gate. On June 19, 1987, the commission en banc issued a second TRO. On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and prohibition with this Court, docketed as G.R. No. 78791, questioning the validity of the temporary restraining orders issued by the NLRC on May 26, 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said case an urgent motion for a TRO to restrain NLRC from implementing the questioned orders. An opposition, as well as a reply thereto, were filed by the parties. Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion for the issuance of a writ of preliminary injunction when the strikers returned to the strike area after the second TRO expired. After due hearing, the commission issued a writ of preliminary injunction on July 14, 1987, after requiring KIMBERLY to post a bond in the amount of P20,000.00. Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a second urgent motion for the issuance of a TRO by reason of the issuance of said writ of preliminary injunction, which motion was opposed by KIMBERLY. Thereafter, in its memorandum 22 filed on December 28, 1989 and in its motion for early resolution 23 filed on February 28, 1990, both in G.R. No. 78791, KILUSAN-OLALIA alleged that it had terminated its strike and picketing activities and that the striking employees had unconditionally offered to return to work, although they were refused admission by KIMBERLY. By reason of this supervening development, the petition in G.R. No. 78791, questioning the propriety of the issuance of the two temporary restraining orders and the writ of injunction therein, has been rendered moot and academic. In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the respondent Secretary of Labor and/or the former Minister of Labor have acted with grave abuse of discretion and/or without jurisdiction in (1) ruling on the issue of bargaining representation and declaring respondent UKCEU-PTGWO as the collective bargaining representative of all regular rank-and-file employees of the respondent company; (2) holding that petitioners are not entitled to vote in the certification election; (3) considering the regularization of petitioners (who are not janitors and maintenance employees) to be effective only on the date of the disputed decision; (4) declaring petitioners who are assigned janitorial and yard maintenance work to be employees of respondent RANK and not entitled to be regularized; (5) not awarding to petitioners differential pay arising out of such illegal work scheme; and (6) ordering the mere reinstatement of petitioner Jimenez. The issue of jurisdiction actually involves a question of whether or not former Minister Sanchez committed a grave abuse of discretion amounting to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the certified bargaining

representative of the regular employees of KIMBERLY, after ruling that the 64 casual workers, whose votes are being challenged, were not entitled to vote in the certification election. KILUSAN-OLALIA contends that after finding that the 64 workers are regular employees of KIMBERLY, Minister Sanchez should have remanded the representation case to the med-arbiter instead of declaring UKCEU-PTGWO as the winner in the certification election and setting aside the med-arbiter's order which allowed the 64 casual workers to cast their votes. Respondents argue that since the issues of regularization and representation are closely interrelated and that a resolution of the former inevitably affects the latter, it was necessary for the former labor minister to take cognizance of the representation issue; that no timely motion for reconsideration or appeal was made from his decision of November 13, 1986 which has become final and executory; and that the aforesaid decision was impliedly accepted by KILUSAN-OLALIA when it demanded from KIMBERLY the issuance of regular appointments to its affected members in compliance with said decision, hence petitioner employees are now stopped from questioning the legality thereof. We uphold the authority of former Minister Sanchez to assume jurisdiction over the issue of the regularization of the 64 casual workers, which fact is not even disputed by KILUSAN-OLALIA as may be gleaned from its request for an interim order in the notice of strike case (BLR-NS-5-164-86), asking that the regularization issue be immediately resolved. Furthermore, even the med-arbiter who ordered the holding of the certification election refused to resolve the protest on the ground that the issue raised therein correctly pertains to the jurisdiction of the then labor minister. No opposition was offered by KILUSAN-OLALIA. We hold that the issue of regularization was properly addressed to the discretion of said former minister. However, the matter of the controverted pronouncement by former Minister Sanchez, as reaffirmed by respondent secretary, regarding the winner in the certification election presents a different situation. It will be recalled that in the certification election, UKCEU-PTGWO came out as the winner, by garnering a majority of the votes cast therein with the exception of 64 ballots which were subject to challenge. In the protest filed for the opening and counting of the challenged ballots, KILUSAN-OLALIA raised the main and sole question of regularization of the 64 casual workers. The med-arbiter refused to act on the protest on the ground that the issue involved is within the jurisdiction of the then Minister of Labor. KILUSAN-OLALIA then sought an interim order for an early resolution on the employment status of the casual workers, which was one of the issues included in the notice of strike filed by KILUSAN-OLALIA in BLR Case No. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned decision finding that the workers not engaged in janitorial and yard maintenance service are regular employees but that they became regular only on the date of his decision, that is, on November 13, 1986, and, therefore, they were not entitled to vote in the certification election. On the basis of the results obtained in the certification election, Minister Sanchez declared UKCEU-PTGWO as the winner. The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service, became regular employees of KIMBERLY. We find and so hold that the former labor minister gravely abused his discretion in holding that those workers not engaged in janitorial or yard maintenance service attained the status of regular employees only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the certification election and choose their rightful bargaining representative. The Labor Code defines who are regular employees, as follows: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or under the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

The law thus provides for two. kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the mechanics, electricians, machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSAN-OLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn. The submission that the decision of November 13, 1986 has become final and executory, on the grounds that no timely appeal has been made therefrom and that KILUSAN-OLALIA has impliedly acceded thereto, is untenable. Rule 65 of the Rules of Court allows original petitions for certiorari from decisions or orders of public respondents provided they are filed within a reasonable time. We believe that the period from January 9, 1987, when the motions for reconsideration separately filed by KILUSAN-OLALIA and KIMBERLY were denied, to March 16, 1987, when the petition in G.R. No. 77629 was filed, constitutes a reasonable time for availing of such recourse. We likewise do not subscribe to the claim of respondents that KILUSAN-OLALIA has impliedly accepted the questioned decision by demanding compliance therewith. In the letter of KILUSAN-OLALIA dated November 24, 1986 24 addressed to the legal counsel of KIMBERLY, it is there expressly and specifically pointed out that KILUSAN-OLALIA intends to file a motion for reconsideration of the questioned decision but that, in the meantime, it was demanding the issuance of regular appointments to the casual workers who had been declared to be regular employees. The filing of said motion for reconsideration of the questioned decision by KILUSAN-OLALIA, which was later denied, sustains our position on this issue and denies the theory of estoppel postulated by respondents. On the basis of the foregoing circumstances, and as a consequence of their status as regular employees, those workers not perforce janitorial and yard maintenance service were performance entitled to the payment of salary differential, cost of living allowance, 13th month pay, and such other benefits extended to regular employees under the CBA, from the day immediately following their first year of service in the company. These regular employees are likewise entitled to vote in the certification election held in July 1, 1986. Consequently, the votes cast by those employees not performing janitorial and yard maintenance service, which form part of the 64 challenged votes, should be opened, counted and considered for the purpose of determining the certified bargaining representative. We do not find it necessary to disturb the finding of then Minister Sanchez holding as legal the service contract executed between KIMBERLY and RANK, with respect to the workers performing janitorial and yard maintenance service, which is supported by substantial and convincing evidence. Besides, we take judicial notice of the general practice adopted in several government and private institutions and industries of hiring a janitorial service on an independent contractor basis. Furthermore, the occasional directives and suggestions of KIMBERLY are insufficient to erode primary and continuous control over the employees of the independent contractor. 25 Lastly, the duties performed by these workers are not independent and integral steps in or aspects of the essential operations of KIMBERLY which is engaged in the manufacture of consumer paper products and cigarette paper, hence said workers cannot be considered regular employees. The reinstatement of Roque Jimenez without backwages involves a question of fact best addressed to the discretion of respondent secretary whose finding thereon is binding and conclusive upon this Court, absent a showing that he committed a grave abuse in the exercise thereof.

WHEREFORE, judgment is hereby rendered in G.R. No. 77629: 1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and count the 64 challenged votes, and that the union with the highest number of votes be thereafter declared as the duly elected certified bargaining representative of the regular employees of KIMBERLY; 2. Ordering KIMBERLY to pay the workers who have been regularized their differential pay with respect to minimum wage, cost of living allowance, 13th month pay, and benefits provided for under the applicable collective bargaining agreement from the time they became regular employees. All other aspects of the decision appealed from, which are not so modified or affected thereby, are hereby AFFIRMED. The temporary restraining order issued in G.R. No. 77629 is hereby made permanent. The petition filed in G.R. No. 78791 is hereby DISMISSED. SO ORDERED. Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 128845 June 1, 2000

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents. KAPUNAN, J.: Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is, of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle we uphold today.1wphi1.nt Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents.1 To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a. What is one's domicile? b. Where is one's home economy? c. To which country does one owe economic allegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?2 Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains: A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a promising career path all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after along period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. 3 When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" 4 of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties. On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired locally and classified as local hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires. 6 The Acting secretary upheld the point-of-hire classification for the distinction in salary rates: The Principle "equal pay for equal work" does not find applications in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms and conditions that are consistent with accepted international practice. Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of employees, hence, the difference in their salaries. The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School. 7 We cannot agree. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution8 in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith. International law, which springs from general principles of law,9 likewise proscribes discrimination. General principles of law include principles of equity, 10 i.e., the general principles of fairness and justice, based on the test of what is reasonable. 11 The Universal Declaration of Human Rights, 12 the International Covenant on Economic, Social, and Cultural Rights, 13 the International Convention on the Elimination of All Forms of Racial Discrimination, 14 the Convention against Discrimination in Education, 15 the Convention (No. 111) Concerning Discrimination in Respect of Employment and Occupation 16 all embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace the factory, the office or the field but include as well the manner by which employers treat their employees. The Constitution 18 also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. 20 Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes 21 the payment of lesser compensation to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work, which ensure, in particular: a. Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; xxx xxx xxx

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. 22 This rule applies to the School, its "international character" notwithstanding. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreignhires. 23 The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National Labor Relations Commission, 24 we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. (Emphasis supplied.) While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty to regulate the relations between labor and capital. 27 These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court. 1avvphi1 We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires. A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 30 The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. 31 It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are

reasonably related to their status as foreign-hires, and justify the exclusion of the former from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than local-hires. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 76989 September 29, 1987 MANILA MANDARIN EMPLOYEES UNION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, and MELBA C. BELONCIO, respondents. GUTIERREZ, JR., J.: This is a petition to review on certiorari the National Labor Relations Commission's (NLRC) decision which modified the Labor Arbiter's decision and ordered the Manila Mandarin Employees Union to pay the wages and fringe benefits of Melba C. Beloncio from the time she was placed on forced leave until she is actually reinstated, plus ten percent (10%) thereof as attorney's fees. Manila Mandarin Hotel was ordered to reinstate Beloncio and to pay her whatever service charges may be due her during that period, which amount would be held in escrow by the hotel. The petition was filed on January 19, 1987. The private respondent filed her comment on March 7, 1987 while the Solicitor General filed a comment on June 1, 1987 followed by the petitioner's reply on August 22, 1987. We treat the comment as answer and decide the case on its merits. The facts of the case are undisputed. Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel since 1976 and at the time of her dismissal, assistant head waitress at the hotel's coffee shop, was expelled from the petitioner Manila Mandarin Employees Union for acts allegedly inimical to the interests of the union. The union demanded the dismissal from employment of Beloncio on the basis of the union security clause of their collective bargaining agreement and the Hotel acceded by placing Beloncio on forced leave effective August 10, 1984. The union security clause of the collective bargaining agreement provides: Section 2. Dismissals. xxx xxx xxx b) Members of the Union who cease to be such members and/or who fail to maintain their membership in good standing therein by reason of their resignation from the Union and/or by reason of their expulsion from the Union in accordance with the Constitution and By-Laws of the Union, for non-payment of union dues and other assessment for organizing, joining or forming another labor organization shall, upon written notice of such cessation of membership or failure to maintain membership in the Union and upon written demand to the company by the Union, be dismissed from employment by the Company after complying with the requisite due process requirement; ... (Emphasis supplied) (Rollo, p. 114) Two days before the effective date of her forced leave or on August 8, 1984, Beloncio filed a complaint for unfair labor practice and illegal dismissal against herein petitioner-union and Manila Mandarin Hotel Inc. before the NLRC, Arbitration Branch. Petitioner-union filed a motion to dismiss on grounds that the complainant had no cause of action against it and the NLRC had no jurisdiction over the subject matter of the complaint. This motion was denied by the Labor Arbiter. After the hearings that ensued and the submission of the parties' respective position papers, the Labor Arbiter held that the union was guilty of unfair labor practice when it demanded the separation of Beloncio. The union was then ordered to pay all the wages and fringe benefits due to Beloncio from the time she was on forced leave until actual reinstatement, and to pay P30,000.00 as exemplary damages and P10,000.00 as attorney's fees. The charge against the hotel was dismissed.

The Union then appealed to the respondent NLRC which modified the Labor Arbiter's decision as earlier stated. A subsequent motion for reconsideration and a second motion for reconsideration were denied. Hence, this present petition. The petitioner raises the following assignment of errors: I THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE PRESENT CONTROVERSY INVOLVED INTRA-UNION CONFLICTS AND THEREFOR IT HAS NO JURISDICTION OVER THE SUBJECT-MATTER THEREOF. II THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING PETITIONER LIABLE FOR THE PAYMENT OF PRIVATE RESPONDENT'S SALARY AND FRINGE BENEFITS, AND AWARD OF 10% ATTORNEY'S FEES, AFTER FINDING AS UNMERITORIOUS HER PRETENDED CLAIMS OR COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL DISMISSAL, AND DAMAGES. (Rollo, pp. 69) On the issue of the NLRC jurisdiction over the case, the Court finds no grave abuse of discretion in the NLRC conclusion that the dispute is not purely intra-union but involves an interpretation of the collective bargaining agreement (CBA) provisions and whether or not there was an illegal dismissal. Under the CBA, membership in the union may be lost through expulsion only if there is non-payment of dues or a member organizes, joins, or forms another labor organization. The charge of disloyalty against Beloncio arose from her emotional remark to a waitress who happened to be a union steward, "Wala akong tiwala sa Union ninyo." The remark was made in the course of a heated discussion regarding Beloncio's efforts to make a lazy and recalcitrant waiter adopt a better attitude towards his work. We agree with the Solicitor General when he noted that: ... The Labor Arbiter explained correctly that "(I)f the only question is the legality of the expulsion of Beloncio from the Union undoubtedly, the question is one cognizable by the BLR (Bureau of Labor Relations). But, the question extended to the dismissal of Beloncio or steps leading thereto. Necessarily, when the hotel decides the recommended dismissal, its acts would be subject to scrutiny. Particularly, it will be asked whether it violates or not the existing CBA. Certainly, violations of the CBA would be unfair labor practice." Article 250 of the Labor Code provides the following: Art. 250. Unfair labor practices of labor organizations. It shall be unfair labor practice for a labor organization, its officers, agents or representatives: xxx xxx xxx (b) To cause or attempt to cause an employer to discriminate against an employee, including discrimination against an employee with respect to whom membership in such organization has been denied or to terminate an employee on any ground other than the usual terms and conditions under which membership or continuation of membership is made available to other members . (Emphasis supplied) Article 217 of the Labor Code also provides: Art. 217. Jurisdiction of Labor Arbiters and the Commission (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide ... the following cases involving all workers, whether agricultural or nonagricultural; (1) Unfair labor practice cases;

xxx xxx xxx (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Rollo, pp. 155-157.) The petitioner also questions the factual findings of the public respondent on the reasons for Beloncio's dismissal and, especially, on the argument that she was on forced leave; she was never dismissed; and not having worked, she deserved no pay. The Court finds nothing in the records that indicates reversible error, much less grave abuse of discretion, in the NLRC's findings of facts. It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence. (Akay Printing Press vs. Minister of Labor and Employment, 140 SCRA 381; Alba Patio de Makati vs. Alba Patio de Makati Employees Association, 128 SCRA 253; Dangan vs. National Labor Relations Commission, 127 SCRA 706; De la Concepcion vs. Mindanao Portland Cement Corporation, 127 SCRA 647). The petitioner now questions the decision of the National Labor Relations Commission ordering the reinstatement of the private respondent and directing the Union to pay the wages and fringe benefits which she failed to receive as a result of her forced leave and to pay attorney's fees. We find no error in the questioned decision. The Hotel would not have compelled Beloncio to go on forced leave were it not for the union's insistence and demand to the extent that because of the failure of the hotel to dismiss Beloncio as requested, the union filed a notice of strike with the Ministry of Labor and Employment on August 17, 1984 on the issue of unfair labor practice. The hotel was then compelled to put Beloncio on forced leave and to stop payment of her salary from September 1, 1984. Furthermore, as provided for in the collective bargaining agreement between the petitioner-the Union and the Manila Mandarin Hotel "the Union shall hold the Company free and blameless from any and all liabilities that may arise" should the employee question the dismissal, as has happened in the case at bar. It is natural for a union to desire that all workers in a particular company should be its dues-paying members. Since it would be difficult to insure 100 percent membership on a purely voluntary basis and practically impossible that such total membership would continuously be maintained purely on the merits of belonging to the union, the labor movement has evolved the system whereby the employer is asked, on the strength of collective action, to enter into what are now familiarly known as "union security" agreements. The collective bargaining agreement in this case contains a union security clause a closed-shop agreement. A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union who must continue to remain members in good standing to keep their jobs. It is "the most prized achievement of unionism." It adds membership and compulsory dues. By holding out to loyal members a promise of employment in the closed-shop, it welds group solidarity. (National Labor Union vs. Aguinaldo's Echague, Inc., 97 Phil. 184). It is a very effective form of union security agreement. This Court has held that a closed-shop is a valid form of union security, and such a provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development Company, Inc., 21 SCRA 561). The Court stresses, however, that union security clauses are also governed by law and by principles of justice, fair play, and legality. Union security clauses cannot be used by union officials against an employer, much less their own members, except with a high sense of responsibility, fairness, prudence, and judiciousness. A union member may not be expelled from her union, and consequently from her job, for personal or impetuous reasons or for causes foreign to the closed-shop agreement and in a manner characterized by arbitrariness and whimsicality.

This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus boy do his work promptly and courteously so as to serve hotel customers in the coffee shop expeditiously and cheerfully. Union membership does not entitle waiters, janitors, and other workers to be sloppy in their work, inattentive to customers, and disrespectful to supervisors. The Union should have disciplined its erring and troublesome members instead of causing so much hardship to a member who was only doing her work for the best interests of the employer, all its employees, and the general public whom they serve. WHEREFORE, the petition is hereby DISMISSED. The questioned decision of the National Labor Relations Commission is AFFIRMED. Costs against the petitioner. SO ORDERED. Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 158620 October 11, 2006

DEL MONTE PHILIPPINES, INC. and WARFREDO C. BALANDRA, petitioners, vs. MARIANO SALDIVAR, NENA TIMBAL, VIRGINIO VICERA, ALFREDO AMONCIO and NAZARIO S. COLASTE, respondents. DECISION TINGA, J.: The main issue for resolution herein is whether there was sufficient cause for the dismissal of a rank-and-file employee effectuated through the enforcement of a closed-shop provision in the Collective Bargaining Agreement (CBA) between the employer and the union. The operative facts are uncomplicated. The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers of petitioner Del Monte Philippines, Inc. (Del Monte) in Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-file employee of Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte and ALU entered into a Collective Bargaining Agreement (CBA) with an effective term of five (5) years from 1 September 1988 to 31 August 1993. 1 Timbal, along with four other employees (collectively, co-employees), were charged by ALU for disloyalty to the union, particularly for encouraging defections to a rival union, the National Federation of Labor (NFL). The charge was contained in a Complaint dated 25 March 1993, which specifically alleged, in relation to Timbal: "That on July 13, 1991 and the period prior or after thereto, said Nena Timbal personally recruited other bonafide members of the ALU to attend NFL seminars and has actually attended these seminars together with the other ALU members." 2 The matter was referred to a body within the ALU organization, ominously named "Disloyalty Board." The charge against Timbal was supported by an affidavit executed on 23 March 1993 by Gemma Artajo (Artajo), also an employee of Del Monte. Artajo alleged that she was personally informed by Timbal on 13 July 1991 that a seminar was to be conducted by the NFL on the following day. When Artajo demurred from attending, Timbal assured her that she would be given honorarium in the amount of P500.00 if she were to attend the NFL meeting and bring new recruits. Artajo admitted having attended the NFL meeting together with her own recruits, including Paz Piquero (Piquero). Artajo stated that after the meeting she was given P500.00 by Timbal.3 Timbal filed an Answer before the Disloyalty Board, denying the allegations in the complaint and the averments in Artajo's Affidavit. She further alleged that her husband, Modesto Timbal, had filed a complaint against Artajo for collection of a sum of money on 17 March 1993, or just six (6) days before Artajo executed her affidavit. She noted that the allegations against her were purportedly committed nearly two (2) years earlier, and that Artajo's act was motivated by hate and revenge owing to the filing of the aforementioned civil action.4 Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty of acts or conduct inimical to the interests of ALU, through a Resolution dated 7 May 1993.5 It found that the acts imputed to Timbal were partisan activities, prohibited since the "freedom period" had not yet commenced as of that time. Thus, the Disloyalty Board recommended the expulsion of Timbal from membership in ALU, and likewise her dismissal from Del Monte in accordance with the Union Security Clause in the existing CBA between ALU and Del Monte. The Disloyalty Board also reached the same conclusions as to the co-employees, expressed in separate resolutions also recommending their expulsion from ALU. 6 On 21 May 1993, the Regional Vice President of ALU adopted the recommendations of the Disloyalty Board and expelled Timbal7 and her co-employees from ALU.8 The ALU National President affirmed the expulsion.9 On 17 June 1993, Del Monte terminated Timbal and her co-employees effective 19 June 1993, noting that the termination was "upon demand of [ALU] pursuant to Sections 4 and 5 of Article III of the current Collective Bargaining Agreement."10

Timbal and her co-employees filed separate complaints against Del Monte and/or its Personnel Manager Warfredo C. Balandra and ALU with the Regional Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC) for illegal dismissal, unfair labor practice and damages.11 The complaints were consolidated and heard before Labor Arbiter Irving Pedilla. The Labor Arbiter affirmed that all five (5) were illegally dismissed and ordered Del Monte to reinstate complainants, including Timbal, to their former positions and to pay their full backwages and other allowances, though the other claims and charges were dismissed for want of basis.12 Only Del Monte interposed an appeal with the NLRC. 13 The NLRC reversed the Labor Arbiter and ruled that all the complainants were validly dismissed.14 On review, the Court of Appeals ruled that only Timbal was illegally dismissed. 15 At the same time, the appellate court found that Del Monte had failed to observe procedural due process in dismissing the coemployees, and thus ordered the company to pay P30,000.00 to each of the co-employees as penalties. The co-employees sought to file a Petition for Review16 with this Court assailing the ruling of the Court of Appeals affirming their dismissal, but the petition was denied because it was not timely filed.17 On the other hand, Del Monte, through the instant petition, assails the Court of Appeals decision insofar as it ruled that Timbal was illegally dismissed. Notably, Del Monte does not assail in this petition the award of P30,000.00 to each of the co-employees, and the ruling of the Court of Appeals in that regard should now be considered final. The reason offered by the Court of Appeals in exculpating Timbal revolves around the problematic relationship between her and Artajo, the complaining witness against her. As explained by the appellate court: However, the NLRC should have considered in a different light the situation of petitioner Nena Timbal. Timbal asserted before the NLRC, and reiterates in this petition, that the statements of Gemma Artajo, ALU's sole witness against her, should not be given weight because Artajo had an ax[e] to grind at the time when she made the adverse statements against her. Respondents never disputed the claim of Timbal that in the two (2) collection suits initiated by Timbal and her husband, Artajo testified for the defendant in the first case and she was even the defendant in the second case which was won by Timbal. We find it hard to believe that Timbal would so willingly render herself vulnerable to expulsion from the Union by revealing to an estranged colleague her desire to shift loyalty. The strained relationship between Timbal and Artajo renders doubtful the charge against the former that she attempted to recruit Artajo to join a rival union. Inasmuch as the respondents failed to justify the termination of Timbal's employment, We hold that her reinstatement to her former position in accordance with the September 27, 1996 decision of the Labor Arbiter is appropriate.18 The Labor Arbiter, in his favorable ruling to the dismissed employees, had noted that "complainant Timbal['s] x x x accuser has an axe to grind against her for an unpaid debt so that her testimony cannot be given credit." 19 The NLRC, in reversing the Labor Arbiter, did not see it fit to mention the circumstances of the apparent feud between Timbal and Artajo, except in the course of narrating Timbal's allegations. However, in the present petition, Del Monte utilizes a new line of argument in justifying Timbal's dismissal. While it does not refute the contemporaneous ill-will between Timbal and Artajo, it nonetheless alleges that there was a second witness, Paz Piquero, who testified against Timbal before the Disloyalty Board. 20 Piquero had allegedly corroborated Artajo's allegations and positively identified Timbal as among those present during the seminar of the NFL conducted on 14 July 1992 and as having given her transportation money after the seminar was finished. Del Monte asserts that Piquero was a disinterested witness against Timbal.21 Del Monte also submits two (2) other grounds for review. It argues that the decision of the Labor Arbiter, which awarded Timbal full backwages and other allowances, was inconsistent with jurisprudence which held that an employer who acted in good faith in dismissing employees on the basis of a closed-shop provision is not liable to pay full backwages.22 Finally, Del Monte asserts that it had, from the incipience of these proceedings consistently prayed that in the event that it were found with finality that the dismissal of Timbal and the others is illegal, ALU should be made liable to Del Monte pursuant to the CBA. The Court of Appeals is faulted for failing to rule upon such claim. For her part, Timbal observes that Piquero's name was mentioned for the first time in Del Monte's Motion for Partial Reconsideration of the decision of the Court of Appeals.23 She claims that both Piquero and Artajo were not in good terms with her after she had won a civil suit for the collection of a sum of money against their immediate superior, one Virgie Condeza.24 The legality of Timbal's dismissal is obviously the key issue in this case. We are particularly called upon to determine whether at this late stage, the Court may still give credence to the purported testimony of Piquero and justify Timbal's dismissal based on such testimony.

It bears elaboration that Timbal's dismissal is not predicated on any of the just or authorized causes for dismissal under Book Six, Title I of the Labor Code,25 but on the union security clause in the CBA between Del Monte and ALU. Stipulations in the CBA authorizing the dismissal of employees are of equal import as the statutory provisions on dismissal under the Labor Code, since "[a] CBA is the law between the company and the union and compliance therewith is mandated by the express policy to give protection to labor."26 The CBA, which covers all regular hourly paid employees at the pineapple plantation in Bukidnon,27 stipulates that all present and subsequent employees shall be required to become a member of ALU as a condition of continued employment. Sections 4 and 5, Article II of the CBA further state: ARTICLE II Section 4. Loss of membership in the UNION shall not be a ground for dismissal by the Company except where loss of membership is due to: 1. Voluntary resignation from [ALU] earlier than the expiry date of this [CBA]; 2. Non-payment of duly approved and ratified union dues and fees; and 3. Disloyalty to [ALU] in accordance with its Constitution and By-Laws as duly registered with the Department of Labor and Employment. Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its service in accordance with law, any member of the bargaining unit who loses his membership in [ALU] pursuant to the provisions of the preceding section. [ALU] assumes full responsibility for any such termination and hereby agrees to hold [Del Monte] free from any liability by judgment of a competent authority for claims arising out of dismissals made upon demand of [ALU], and [the] latter shall reimburse the former of such sums as it shall have paid therefor. Such reimbursement shall be deducted from union dues and agency fees until duly paid. 28 The CBA obviously adopts a closed-shop policy which mandates, as a condition of employment, membership in the exclusive bargaining agent. A "closed-shop" may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.29 A CBA provision for a closed-shop is a valid form of union security and it is not a restriction on the right or freedom of association guaranteed by the Constitution. 30 Timbal's expulsion from ALU was premised on the ground of disloyalty to the union, which under Section 4(3), Article II of the CBA, also stands as a ground for her dismissal from Del Monte. Indeed, Section 5, Article II of the CBA enjoins Del Monte to dismiss from employment those employees expelled from ALU for disloyalty, albeit with the qualification "in accordance with law." Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the enforcement of a closed-shop or union security provision in the CBA as a ground for termination finds no extension within any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-a-vis the employer."31 It might be suggested that since Timbal was expelled from ALU on the ground of disloyalty, Del Monte had no choice but to implement the CBA provisions and cause her dismissal. Similarly, it might be posited that any tribunal reviewing such dismissal is precluded from looking beyond the provisions of the CBA in ascertaining whether such dismissal was valid. Yet deciding the problem from such a closed perspective would virtually guarantee unmitigated discretion on the part of the union in terminating the employment status of an individual employee. What the Constitution does recognize is that all workers, whether union members or not, are "entitled to security of tenure." 32 The guarantee of security of tenure itself is implemented through legislation, which lays down the proper standards in determining whether such right was violated.33 Agabon v. NLRC34 did qualify that constitutional due process or security of tenure did not shield from dismissal an employee found guilty of a just cause for termination even if the employer failed to render the statutory notice and hearing requirement. At the same time, it should be understood that in the matter of determining whether cause exists for

termination, whether under Book Six, Title I of the Labor Code or under a valid CBA, substantive due process must be observed as a means of ensuring that security of tenure is not infringed. Agabon observed that due process under the Labor Code comprised of two aspects: "substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal."35 No serious dispute arose in Agabon over the observance of substantive due process in that case, or with the conclusion that the petitioners therein were guilty of abandonment of work, one of the just causes for dismissal under the Labor Code. The controversy in Agabon centered on whether the failure to observe procedural due process, through the non-observance of the two-notice rule, should lead to the invalidation of the dismissals. The Court ruled, over the dissents of some Justices, that the failure by the employer to observe procedural due process did not invalidate the dismissals for just cause of the petitioners therein. However, Agabondid not do away with the requirement of substantive due process, which is essentially the existence of just cause provided by law for a valid dismissal. Thus, Agabon cannot be invoked to validate a dismissal wherein substantive due process, or the proper determination of just cause, was not observed. Even if the dismissal of an employee is conditioned not on the grounds for termination under the Labor Code, but pursuant to the provisions of a CBA, it still is necessary to observe substantive due process in order to validate the dismissal. As applied to the Labor Code, adherence to substantive due process is a requisite for a valid determination that just or authorized causes existed to justify the dismissal.36 As applied to the dismissals grounded on violations of the CBA, observance of substantial due process is indispensable in establishing the presence of the cause or causes for dismissal as provided for in the CBA. Substantive due process, as it applies to all forms of dismissals, encompasses the proper presentation and appreciation of evidence to establish that cause under law exists for the dismissal of an employee. This holds true even if the dismissal is predicated on particular causes for dismissal established not by the Labor Code, but by the CBA. Further, in order that any CBA-mandated dismissal may receive the warrant of the courts and labor tribunals, the causes for dismissal as provided for in the CBA must satisfy to the evidentiary threshold of the NLRC and the courts. It is necessary to emphasize these principles since the immutable truth under our constitutional and labor laws is that no employee can be dismissed without cause. Agabon may have tempered the procedural due process requirements if just cause for dismissal existed, but in no way did it eliminate the existence of a legally prescribed cause as a requisite for any dismissal. The fact that a CBA may provide for additional grounds for dismissal other than those established under the Labor Code does not detract from the necessity to duly establish the existence of such grounds before the dismissal may be validated. And even if the employer or, in this case, the collective bargaining agent, is satisfied that cause has been established to warrant the dismissal, such satisfaction will be of no consequence if, upon legal challenge, they are unable to establish before the NLRC or the courts the presence of such causes. In the matter at bar, the Labor Arbiter the proximate trier of factsand the Court of Appeals both duly appreciated that the testimony of Artajo against Timbal could not be given credence, especially in proving Timbal's disloyalty to ALU. This is due to the prior animosity between the two engendered by the pending civil complaint filed by Timbal's husband against Artajo. Considering that the civil complaint was filed just six (6) days prior to the execution of Artajo's affidavit against Timbal, it would be plainly injudicious to presume that Artajo possessed an unbiased state of mind as she executed that affidavit. Such circumstance was considered by the Labor Arbiter, and especially the Court of Appeals, as they rendered a favorable ruling to Timbal. The NLRC may have decided against Artajo, but in doing so, it failed to provide any basis as to why Artajo's testimony should be believed, instead of disbelieved. No credible disputation was offered by the NLRC to the claim that Artajo was biased against Timbal; hence, we should adjudge the findings of the Labor Arbiter and the Court of Appeals as more cogent on that point. Before this Court, Del Monte does not even present any serious argument that Artajo's testimony against Timbal was free from prejudice. Instead, it posits that Piquero's alleged testimony against Timbal before the Disloyalty Board should be given credence, and that taken with Artajo's testimony, should sufficiently establish the ground of disloyalty for which Timbal should be dismissed. The Court sees the danger to jurisprudence and the rights of workers in acceding to Del Monte's position. The dismissal for cause of employees must be justified by substantial evidence, as appreciated by an impartial trier of facts. None of the trier of facts belowthe Labor Arbiter, the NLRC and the Court of Appeals saw fit to accord credence to Piquero's testimony, even assuming that such testimony was properly contained in the record. Even the NLRC decision, which was adverse to Timbal, made no reference at all to Piquero's alleged testimony. Del Monte is able to point to only one instance wherein Piquero's name and testimony appears on the record. It appears that among the several attachments to the position paper submitted by the ALU before the NLRC-RAB was a copy of the raw stenographic notes transcribed, apparently on 17 April 1993, during a hearing before the Disloyalty Board. The

transcription is not wholly legible, but there appears to be references therein to the name "Paz Piquero," and her apparent testimony before the Disloyalty Board. We are unable to reproduce with accuracy, based on the handwritten stenographic notes, the contents of this seeming testimony of Piquero, although Del Monte claims before this Court that Piquero had corroborated Artajo's claims during such testimony, "positively identified [Timbal's] presence in the NFL seminar on 14 July 1992," and "confirmed that Timbal gave Artajo P500.00 for recruiting participants in the NFL seminar." 37 There are evident problems on our part, at this late stage, in appreciating these raw stenographic notes adverting to the purported testimony of Piquero, especially as a means of definitively concluding that Timbal was guilty of disloyalty. Certainly, these notes cannot be appreciated as entries in the official record, which are presumed prima facie evidence of the facts therein stated,38 as such records can only be made by a public officer of the Philippines or by a person in the performance of a duty specially enjoined by law. These transcripts were not taken during a hearing conducted by any public office in the Philippines, but they were committed in the course of an internal disciplinary mechanism devised by a privately organized labor union. Unless the authenticity of these notes is duly proven before, and appreciated by the triers of fact, we cannot accord them any presumptive or conclusive value. Moreover, despite the fact that the apparent record of Piquero's testimony was appended to ALU's position paper, the position paper itself does not make any reference to such testimony, or even to Piquero's name for that matter. The position paper observes that "[t]his testimony of [Artajo] was directly corroborated by her actual attendance on July 14, 1992 at the agreed [venue]," but no mention is made that such testimony was also "directly corroborated" by Piquero. Then again, it was only Artajo, and not Piquero, who executed an affidavit recounting the allegations against Timbal. Indeed, we are inclined to agree with Timbal's observation in her Comment on the present petition that from the time the complaint was filed with the NLRC-RAB, Piquero's name and testimony were invoked for the first time only in Del Monte's motion for reconsideration before the Court of Appeals. Other than the handwritten reference made in the raw stenographic notes attached to ALU's position paper before the NLRC-RAB, Piquero's name or testimony was not mentioned either by ALU or Del Monte before any of the pleadings filed before the NLRC-RAB, the NLRC, and even with those submitted to the Court of Appeals prior to that court's decision. In order for the Court to be able to appreciate Piquero's testimony as basis for finding Timbal guilty of disloyalty, it is necessary that the fact of such testimony must have been duly established before the NLRC-RAB, the NLRC, or at the very least, even before the Court of Appeals. It is only after the fact of such testimony has been established that the triers of fact can come to any conclusion as to the veracity of the allegations in the testimony. It should be mentioned that the Disloyalty Board, in its Resolution finding Timbal guilty of disloyalty, did mention that Artajo's testimony "was corroborated by Paz Piquero who positively identified and testified that Nena Timbal was engaged in recruitment of ALU members at [Del Monte] to attend NFL seminars."39 The Disloyalty Board may have appreciated Piquero's testimony in its own finding that Timbal was guilty, yet the said board cannot be considered as a wholly neutral or dispassionate tribunal since it was constituted by the very organization that stood as the offended party in the disloyalty charge. Without impugning the integrity of ALU and the mechanisms it has employed for the internal discipline of its members, we nonetheless hold that in order that the dismissal of an employee may be validated by this Court, it is necessary that the grounds for dismissal are justified by substantial evidence as duly appreciated by an impartial trier of facts.40 The existence of Piquero's testimony was appreciated only by the Disloyalty Board, but not by any of the impartial tribunals which heard Timbal's case. The appreciation of such testimony by the Disloyalty Board without any similar affirmation or concurrence by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot satisfy the substantive due process requirement as a means of upholding Timbal's dismissal. All told, we see no error on the part of the Court of Appeals when it held that Timbal was illegally dismissed. We now turn to the second issue raised, whether the Labor Arbiter correctly awarded full backwages to Timbal. Del Monte cites a jurisprudential rule that an employer who acted in good faith in dismissing employees on the basis of a closed- shop provision may not be penalized even if the dismissal were illegal. Such a doctrine is admittedly supported by the early case of National Labor Union v. Zip Venetian Blind41 and the later decision in 1989 of Soriano v. Atienza,42 wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. However, the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code, as amended by Republic Act No. 6715, which took effect just five (5) days after Soriano was promulgated. It is now provided in the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary

equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." Thus, where reinstatement is adjudged, the award of backwages and other benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and extends up to the time said order of reinstatement is actually carried out.43 Rep. Act No. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. We explained in Ferrer v. NLRC:44 With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor Code was amended to read as follows: Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed workers to three (3) years "without deduction or qualification" to obviate the need for further proceedings in the course of execution, is no longer applicable. A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is that the employer may, however, deduct any amount which the employee may have earned during the period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by the illegally dismissed employee after his termination and before actual reinstatement should be ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor Relations Commission. Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it ineluctably follows that petitioners can receive their back wages computed from the moment their compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug Rule depending, of course, on when the employer will reinstate the employees. It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position, and to impress the idea that immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense plus incremental productivity to the company which lies in the hands of the employer. 45 The Labor Arbiter's ruling, which entitled Timbal to claim full backwages and other allowances, "without qualifications and diminutions, computed from the time [she was] illegally dismisse[d] up to the time [she] will be actually reinstated," conforms to Article 279 of the Labor Code. Hence, the Court of Appeals was correct in affirming the Labor Arbiter insofar as Timbal was concerned. Finally, we address the claim that the Court of Appeals erred when it did not rule on Del Monte's claim for reimbursement against ALU. We do observe that Section 5 of the CBA stipulated that "[ALU] assumes full responsibility of any such termination [of any member of the bargaining unit who loses his membership in ALU] and hereby agrees to hold [Del Monte] free from any liability by judgment of a competent authority for claims arising out of dismissals made upon demand of [ALU], and latter shall reimburse the former of such sums as it shall have paid therefore." 46 This stipulation does present a cause of action in Del Monte's favor should it be held financially liable for the dismissal of an employee by reason of expulsion from ALU. Nothing in this decision should preclude the operation of this provision in the CBA. At the same time, we are unable to agree with Del Monte that the Court of Appeals, or this Court, can implement this provision of the CBA and accordingly directly condemn ALU to answer for the financial remuneration due Timbal.

Before the Labor Arbiter, Del Monte had presented its cross-claim against ALU for reimbursement should it be made liable for illegal dismissal or unfair labor practice, pursuant to the CBA. The Labor Arbiter had actually passed upon this claim for reimbursement, stating that "[as] for the cross-claims of respondent DMPI and Tabusuares against the respondent ALU-TUCP, this Branch cannot validly entertain the same in the absence of employer-employee relationship between the former and the latter."47 We have examined Article 217 of the Labor Code,48 which sets forth the original jurisdiction of the Labor Arbiters. Article 217(c) states: Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. [Emphasis supplied.] In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary Arbitrator or panel of Voluntary Arbitrators the "original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement."49 Among those areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators are contract-interpretation and contract-implementation,50 the questions precisely involved in Del Monte's claim seeking enforcement of the CBA provision mandating restitution by ALU should the company be held financially liable for dismissals pursuant to the union security clause. In reconciling the grants of jurisdiction vested under Articles 261 and 217 of the Labor Code, the Court has pronounced that "the original and exclusive jurisdiction of the Labor Arbiter under Article 217(c) for money claims is limited only to those arising from statutes or contracts other than a Collective Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive jurisdiction over money claims 'arising from the interpretation or implementation of the Collective Bargaining Agreement and, those arising from the interpretation or enforcement of company personnel policies', under Article 261."51 Our conclusion that the Labor Arbiter in the instant case could not properly pass judgment on the cross-claim is further strengthened by the fact that Del Monte and ALU expressly recognized the jurisdiction of Voluntary Arbitrators in the CBA. Section 2, Article XXXI of the CBA provides: Section 2. In the event a dispute arises concerning the application of, or interpretation of this Agreement which cannot be settled pursuant to the [grievance procedure set forth in the] preceding Section, the dispute shall be submitted to an arbitrator agreed to by [Del Monte] and [ALU]. Should the parties fail to agree on the arbitrator, the same shall be drawn by lottery from a list of arbitrators furnished by the Bureau of Labor Relations of the Department of Labor and Employment. xxxx Thus, as the law indubitably precludes the Labor Arbiter from enforcing money claims arising from the implementation of the CBA, the CBA herein complementarily recognizes that it is the Voluntary Arbitrators which have jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise jurisdiction over Del Monte's cross-claim, and the Court of Appeals would have no basis had it acted differently. At the same time, even as we affirm the award of backwages against Del Monte, our ruling should not operate to prejudice in any way whatever causes of action Del Monte may have against ALU, in accordance with the CBA. WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against petitioner. SO ORDERED. Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 116194 February 2, 2000

SUGBUANON RURAL BANK, INC., petitioner, vs. HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND EMPLOYMENT, MED-ARBITER ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC. ASSOCIATION OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL EMPLOYEES UNION-TRADE UNIONS CONGRESS OF THE PHILIPPINES,respondents. QUISUMBING, J.: In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the April 27, 1994 Resolution of the Department of Labor and Employment, affirming the order of the Med-Arbiter, dated December 9, 1993, which denied petitioner's motion to dismiss respondent union's petition for certification election. Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with principal office in Cebu City and a branch in Mandaue City. Private respondent SRBI Association of Professional, Supervisory, Office, and Technical Employees Union (APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of the Philippines (TUCP).1wphi1.nt On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No. R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the union. On October 26, 1993, the union filed a petition for certification election of the supervisory employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a labor organization 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 Med-Arbiter gave due course to the petition. The pre-certification election conference between SRBI and APSOTEU-TUCP was set for November 15, 1993. On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the holding of a certification election on two grounds. First, that the members of APSOTEU-TUCP were in fact managerial or confidential employees. Thus, following the doctrine in Philips Industrial Development Corporation v. National Labor Relations Commission,1 they were disqualified from forming, joining, or assisting any labor organization. Petitioner attached the job descriptions of the employees concerned to its motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or ALU-TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-and-file employees of SRBI, there was a violation of the principle of separation of unions enunciated in Atlas Lithographic Services, Inc. v. Laguesma.2 The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members were not managerial employees but merely supervisory employees. The members attached their affidavits describing the nature of their respective duties. The union pointed out that Article 245 of the Labor Code expressly allowed supervisory employees to form, join, or assist their own unions. On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-exclusion proceedings in preparation for the certification election on December 16, 1993. SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was denied for lack of merit. The certification election was ordered.

On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994. His order identified the following SRBI personnel as the voting supervisory employees in the election: the Cashier of the Main Office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch, and the Acting Chief of the Loans Department. On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-Arbiter denied the same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later, the Med-Arbiter cancelled the certification election scheduled for June 29, 1994 in order to address the motion for reconsideration. The Med-Arbiter later denied petitioner's motion for reconsideration, SRBI appealed the order of denial to the DOLE Secretary on December 16, 1993.. On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the cancellation of the respondent union's registration. It averred that the APSOTEU-TUCP members were actually managerial employees who were prohibited by law from joining or organizing unions. On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that APSOTEUTUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and privileges granted by law to a legitimate labor organization, including the right to file a petition for certification election. He also held that until and unless a final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the legal right to represent its members for collective bargaining purposes. Furthermore, the question of whether the APSOTEU-TUCP members should be considered as managerial or confidential employees should not be addressed in the proceedings involving a petition for certification election but best threshed out in other appropriate proceedings. On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on July 7, 1994. The Med-Arbiter scheduled the holding of certification elections on August 12, 1994. Hence the instant petition grounded on the following assignments of error: I RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED: A: IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN THE PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION FOR AN APPROPRIATE BARGAINING AGENT; AND B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS THE RESPONDENT UNION'S PETITION FOR CERTIFICATION ELECTION. II RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION AND PALPABLY ERRED IN DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT: A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE LEGALLY DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION. B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION OF MANAGERIAL EMPLOYEES EQUALLY APPLY TO THEM. III IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY TO LAW AND ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED ADMISSIONS AND REPRESENTATIONS. Considering petitioner's assigned errors, we find two core issues for immediate resolution:

(1) Whether or not the members of the respondent union are managerial employees and/or highly-placed confidential employees, hence prohibited by law from joining labor organizations and engaging in union activities? (2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon the filing of a petition for certification election by a registered union, despite the petitioner's appeal pending before the DOLE Secretary against the issuance of the union's registration? The other issues based on the assigned errors could be resolved easily after the core issues are settled. Respecting the first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee" and "supervisory employees" as follows: Art. 212. Definitions (m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rankand-file employees for purposes of this Book (Emphasis supplied). Petitioner submitted detailed job descriptions to support its contention that the union members are managerial employees and/or confidential employees proscribed from engaging in labor activities. 3 Petitioner vehemently argues that the functions and responsibilities of the employees involved constitute the "very core of the bank's business, lending of money to clients and borrowers, evaluating their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and endorsing delinquent accounts to counsel for collection."4 Hence, they must be deemed managerial employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations Commission,5 and Panday v. National Labor Relations Commission,6 to sustain its submission. InTabacalera, we sustained the classification of a credit and collection supervisor by management as a managerial/supervisory personnel. But in that case, the credit and collection supervisor "had the power to recommend the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase."7 For this reason he was deemed to be a managerial employee. In the present case, however, petitioner failed to show that the employees in question were vested with similar powers. At best they only had recommendatory powers subject to evaluation, review, and final decision by the bank's management. The job description forms submitted by petitioner clearly show that the union members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate and execute management policies which are normally expected of management officers. Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a managerial employee because the said employee had managerial powers, similar to the supervisor in Tabaculera. Their powers included recommending the hiring and appointment of his subordinates, as well as the power to recommend any promotion and/or increase.8 Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner did not possess managerial powers and duties. We are, therefore, constrained to conclude that they are not managerial employees. Now may the said bank personnel be deemed confidential employees? Confidential employees are those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies [specifically in the field of labor relations].9 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employee and his superior officer; and that officer must handle the prescribed responsibilities relating to labor relations. 10 Art. 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees.12 The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. 13 It must be stressed, however, that when the employee does not have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union.14

Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential capacities and have complete access to the bank's confidential data. They form the core of the bank's management team. Petitioner explains that: . . . Specifically: (1) the Head of the Loans Department initially approves the loan applications before they are passed on to the Board for confirmation. As such, no loan application is even considered by the Board and approved by petitioner without his stamp of approval based upon his interview of the applicant and determination of his (applicant's) credit standing and financial capacity. The same holds true with respect to renewals or restructuring of loan accounts. He himself determines what account should be collected, whether extrajudicially or judicially, and settles the problems or complaints of borrowers regarding their accounts; (2) the Cashier is one of the approving officers and authorized signatories of petitioner. He approves the opening of accounts, withdrawals and encashment, and acceptance of check deposits. He deals with other banks and, in the absence of the regular Manager, manages the entire office or branch and approves disbursements of funds for expenses; and (3) the Accountant, who heads the Accounting Department, is also one of the authorized signatories of petitioner and, in the absence of the Manager or Cashier, acts as substitute approving officer and assumes the management of the entire office. She handles the financial reports and reviews the debit/credit tickets submitted by the other departments.15 Petitioner's explanation, however, does not state who among the employees has access to information specifically relating to its labor to relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the bank's Board of Directors may not be so classified. True, the board of directors is responsible for corporate policies, the exercise of corporate powers, and the general management of the business and affairs of the corporation. As secretary of the bank's governing body. Patricia Maluya serves the bank's management, but could not be deemed to have access to confidential information specifically relating to SRBI's labor relations policies, absent a clear showing on this matter. Thus, while petitioner's explanation confirms the regular duties of the concerned employees, it shows nothing about any duties specifically connected to labor relations. As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the Labor Code is the right to be certified as the exclusive representative of all employees in an appropriate bargaining unit for purposes of collective bargaining. Having complied with the requirements of Art. 234, it is our view that respondent union is a legitimate labor union. Article 257 of the Labor Code mandates that a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor organization.16Nothing is said therein that prohibits such automatic conduct of the certification election if the management appeals on the issue of the validity of the union's registration. On this score, petitioner's appeal was correctly dismissed. Petitioner argues that giving due course to respondent union's petition for certification election would violate the separation of unions doctrine.17 Note that the petition was filed by APSOTEU-TUCP, a legitimate labor organization. It was not filed by ALU. Nor was it filed by TUCP, which is a national labor federation of with which respondent union is affiliated. Petitioner says that respondent union is a mere alter ego of ALU. The records show nothing to this effect. What the records instead reveal is that respondent union was initially assisted by ALU during its preliminary stages of organization. A local union maintains its separate personality despite affiliation with a larger national federation.18 Petitioner alleges that ALU seeks to represent both respondent union and the rank-and-file union. Again, we find nothing in the records to support this bare assertion. The law frowns on a union where the membership is composed of both supervisors and rank-and-file employees, for fear that conflicts of interest may arise in the areas of discipline, collective bargaining, and strikes. 19 However, in the present case, none of the members of the respondent union came from the rank-and-file employees of the bank. Taking into account the circumstances in this case, it is our view that respondent Undersecretary committed no reversible error nor grave abuse of discretion when he found the order of the Med-Arbiter scheduling a certification election in order. The list of employees eligible to vote in said certification election was also found in order, for none was specifically disqualified from union membership.1wphi1.nt WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs. SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

Footnotes
1

210 SCRA 339 (1992). 205 SCRA 12 (1992). Records, pp. 80-82. Id. at 16. 152 SCRA 667 (1987). 209 SCRA 122 (1992). 152 SCRA 667, 674 (1987). Supra; 209 SCRA 122, 126 (1992).

San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, 277 SCRA 370, 374 (1997)citing Westinghouse Electric Corp. v. NLRB (CAS) 398 F2d. 689: Ladish Co., 178 NLRB 90 (1969), B.F. Goodrich Co., 115 NLRB 722.
9 10

Supra.

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.
11

Golden Farms, Inc. v. Ferrer-Calleja, 175 SCRA 471, 477 (1989); Bulletin Publishing Co. Inc. vs. Hon. Augusto Sanchez, etc., 144 SCRA 628, 634 (1986).
12 13

San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, supra, 375.

Id., at 376; National Association of Trade Unions-Republic Planters Bank Supervisor Chapter v. Torres, 239 SCRA 546, 560 (1994).
14 15

Rollo, pp. 13-14.

Emphasis supplied. Furusawa Rubber Philippines Inc. v. Secretary of Labor and Employment, 282 SCRA 635, 641 (1997); California Manufacturing Corp. v. Laguesma, 209 SCRA 606, 610-611, (1992).
16 17

Atlas Lithographic Services, Inc. v. Bienvenido Laguesma, et al., 205 SCRA 12 (1992).

Pambansang Kapatiran Ng Mga Anak Pawis sa Formey Plastic National Workers Brotherhood v. Secretary of Labor, 253 SCRA 96, 103 (1995).
18 19

Philippine Phosphate Corporation v. Torres, 231 SCRA 335, 342 (1994).

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 116751 August 28, 1998 ORIENTAL TIN CAN LABOR UNION, petitioner, vs. SECRETARY OF LABOR AND EMPLOYMENT, ORIENTAL TIN CAN WORKERS UNION FEDERATION OF FREE WORKERS [OTCWU-FFW] and ORIENTAL TIN CAN AND METAL SHEET MANUFACTURING,respondents. G.R. No. 116779 August 28, 1998 ORIENTAL TIN CAN AND METAL SHEET MANUFACTURING CO., INC., petitioner, vs. HON. BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF LABOR AND EMPLOYMENT, ORIENTAL TIN CAN WORKERS UNION FFW and ORIENTAL TIN CAN LABOR UNION, respondents. ROMERO, J.: Respondent (in G.R. No. 116751) and petitioner (in sister case G.R. No. 116779), Oriental Tin Can and Metal Sheet Manufacturing Company, Inc. (the company) is engaged in the manufacture of tin can containers and metal sheets. On March 3, 1994, it entered into a collective bargaining agreement (CBA) with petitioner Oriental Tin Can Labor Union (OTCLU) as the existing CBA was due to expire on April 15, 1994. Four days later, 248 of the company's rank-and-file employees authorized the Federation of Free Workers (FFW) to file a petition for certification election. 1 On March 10, 1994, however, this petition was repudiated via a written waiver 2 by 115 of the signatories who, along with other employees totalling 897, ratified the CBA on the same date. On March 18, 1994, armed with Charter Certificate No. IV-MEE-089, respondent Oriental Tin Can Workers Union Federation of Free Workers (OTCWU-FFW) filed a petition for certification election with the National Capital Region office of the Department of Labor and Employment (DOLE), pursuant to Article 256 of the Labor Code. Purporting to represent the regular rank-and-file employees of the company, the petition was accompanied by the "authentic signatures" of 25% of the employees/workers in the bargaining unit. The OTCLU filed a manifestation and motion on April 15, 1994, praying for the dismissal of the petition for certification election on the ground that it was not endorsed by at least 25% of the employees of the bargaining unit. Some of the employees who initially signed the petition had allegedly withdrawn in writing such support prior to the filing of the same. The OTCWU-FFW filed a reply to said manifestation and motion, claiming that the retraction of support for the petition was "not verified under oath" and, therefore, had no legal and binding effect. It further asserted that the petition had the required support of more than 25% of all the employees in the bargaining unit. For its part, the company filed a comment alleging inter alia that the new CBA was ratified by 897 out of the 1,020 rankand-file employees within the bargaining unit. The OTCLU then filed a motion to dismiss and/or position paper reiterating its position that the petition did not comply with the 25% signature requirement and maintaining that the new CBA was a bar to a certification election. To said comment and motion to dismiss, the OTCWU-FFW filed a consolidated reply, alleging that "an employer has no legal personality to oppose a petition for certification election; that there are only 882 rank and file workers in the bargaining unit and not 1,020 which included supervisors and workers hired after the filing of the petition; that those who gave their support to the filing of the petition did not withdraw or retract the same before or after the petition was filed; the Collective Bargaining Agreement (CBA) between respondent company and Forced Intervenor (OTCLU) is a sweetheart contract and concluded within the freedom period; and that additional employees gave their support to the petition after the same was filed." 3 The company filed a rejoinder to said consolidated reply, asserting its objection to the petition for certification election because the case at bar "involves a collective bargaining agreement which was ratified by 897 employees including the 245

workers who had earlier given their consent to the filing of the petition; that the benefits provided for therein are being enjoyed by the workers themselves; that a certification election would impair the said contract; that the officers of (OTCWU-FFW) were among those who ratified the CBA; and (OTCWU-FFW) failed to name the supervisors and workers hired after the filing of the petition that were allegedly included in the list of rank and file employees." 4 In the meantime, on April 18, 1994, the DOLE issued a certificate of registration of the CBA pursuant to Article 231 of the Labor Code, as amended by Republic Act No. 6715. It showed that the CBA between the company and the OTCLU would have the force and effect of law between the parties that had complied with the requirements and standards for registration thereof. On June 1, 1994, the officers of the OTCWU-FFW walked out of their jobs, prompting the company to require them to explain in writing why no disciplinary action should be taken against them for walking out en masse. The following day, said union filed a notice of strike with the National Conciliation and Mediation Board (NCMB) grounded on the alleged dismissal of union members/officers. Two days later, the company directed said officers to report back to work within 48 hours, but none of them did. In an order dated June 7, 1994, Med-Arbiter Renato D. Parugo dismissed the petition for certification election for lack of merit. Noting that the petition was filed after the valid retractions were made, he concluded that by the withdrawal of support to the petition by 115 workers, the remaining 133 of the 1,020 employees were clearly less than the 25% subscription requirement. Thus, he opined: There is merit to the Company's contention that by subsequently ratifying the CBA, the employees in effect withdrew their previous support to the petition. Thus, when the petition was filed on March 18, 1994, it did not have the required consent of the employees within the bargaining unit. Another factor which militates against the petition is the fact that actually there are 1,020 rank and file workers in the bargaining unit. Twenty-five percent (25%) of this is 255, but admittedly only 248 union members had originally authorized the filing of the petition. The law expressly requires that a petition for certification election should be supported by the written consent of at least 25% of all the employees in the bargaining unit at the time of the filing thereof. In view of the circumstances obtaining in the case at bar, we are constrained to order the dismissal of the instant petition. Furthermore, it would be in the interest of industrial peace to deny the holding of a certification election among the rank and file workers of respondent Company during the effectivity of the new CBA it appearing that out of 1,020 rank and file employees, 897 have ratified the same and the benefits of which are currently being enjoyed by all covered employees of respondent Company. 5 The OTCWU-FFW appealed this ruling to the Labor Secretary. On June 18, 1994, however, during the pendency of the appeal, said union staged a strike that prevented the free ingress and egress of non-striking employees, delivery trucks and other vehicles to and from the company's premises. Upon complaint of the company, the National Labor Relations Commission (NLRC) issued a writ of preliminary injunction on July 19, 1994, on the ground that the strike caused the company to incur daily losses amounting to P3.6 million. Meanwhile, on July 15, 1994, Undersecretary Bienvenido E. Laguesma, acting on the appeal of the OTCWU-FFW, issued a resolution 6 holding that: An examination of the records of this case shows that the subject CBA was concluded during the 60-day freedom period of the old CBA which expired on 15 April 1994, and registered with the Regional Office of this Department on 18 April 1994 while the petition for certification election was filed on 18 March 1994. It is therefore, crystal clear that, the present petition was filed during the freedom period and no registered CBA in the respondent establishment could be invoked (to) pose as a bar to the holding of a certification election. In other words, when the said CBA was registered there was a pending representation case. Consequently, said CBA cannot bar the election being prayed for. This is the rule contained in Section 4, Rule V of the Rules and Regulations Implementing the Labor Code, as amended, which provides that: Sec. 4. Effects of early agreements. The representation case shall not, however, be adversely affected by a collective bargaining agreement registered before or during the last sixty (60) days of a subsisting agreement or during the pendency of the representation case. (Emphasis supplied)

On the issue of whether the 25% support requirement for filing the petition for certification election had been met, Undersecretary Laguesma opined thus: The rule being followed in case of alleged retractions and withdrawals, as appellant correctly pointed out, is that the best forum for determining whether there was (sic) indeed retractions is the certification election itself wherein the workers can freely express their choice in a secret ballot. (Atlas Free Workers Union vs. Noriel, et al., 104 SCRA 565) The argument of (OTCLU) that since the withdrawal was made prior to the filing of the petition it should be presumed voluntary and therefore, has adversely affected the petition, lacks merit. The Supreme Court ruling cited in support of the argument ( i.e. La Suede Cigar and Cigarette Factory, et al. vs. Director of the Bureau of Labor Relations, et al., 123 SCRA 679) is not squarely applicable in the present case. For while in the said case it was undisputably ( sic) shown that 31 members have withdrawn their support to the petition, in the present case, the employees who supposedly withdrew from the union executed joint statements (Sama-samang Pahayag) declaring that the "WAIVER" document they signed has no force and effect considering that it was the product of duress, force and intimidation employed by the company after it learned of the petition for certification election, and reiterating their wish to be given the opportunity to choose the union of their choice. Said statements raised doubts on the voluntariness of the retractions, destroyed the presumption that retractions made before the filing of the petition are deemed voluntary and consequently brought the present case outside the mantle of the Atlas ruling He added that even if there were 1,020 rank-and-file employees in the bargaining unit, the signatures gathered sufficed to meet the 25% support requirement because the Sama-samang Pahayag invalidating the previous "Waiver," contained 359 signatures which, when added to the 165 signatures submitted by the OTCWU-FFW on May 27, 1994, brought the total to 524, much more than the required 25% of the alleged 1,020 rank-and-file employees. Moreover, in case of doubt, the DOLE tends to favor the conduct of certification election, for the rule on simultaneous submission of the consent signatures and the petition should be liberally interpreted. As such, "contracts where the identity of the authorized representative of the workers is in doubt must be rejected in favor of a more certain indication of the will of the workers. Any stability that does not establish the type of industrial peace contemplated by the law must be subordinated to the employees' freedom to choose their real representative." Accordingly, Undersecretary Laguesma disposed of the appeal as follows: WHEREFORE, the appeal of the petitioner is hereby granted and the Order of the Med-Arbiter is hereby set aside. In lieu thereof, a new order is hereby issued directing the conduct of a certification election among the regular rank and file employees of the Oriental Tin Can and Metal Sheet Manufacturing, with the following as choices: 1. Oriental Tin Can Workers Union Federation of Free Workers (OTCWU-FFW); 2. Oriental Tin Can Labor Union (OTCLU); 3. No Union. Let therefore, the entire records of this case be forwarded to the Regional Office of origin for the immediate conduct of certification election, subject to the usual pre-election conference. The payrolls three (3) months before the filing of the petition shall be the basis of the list of eligible voters. SO RESOLVED. Herein petitioners filed a motion for reconsideration of said resolution, but this was denied for lack of merit in the resolution dated August 22, 1994. From this resolution, the company and the OTCLU filed separate petitions forcertiorari before this Court. G. R. No. 116779 In assailing the resolution of July 15, 1994, the company raises in issue the following grounds to show that the Labor Secretary, through Undersecretary Laguesma, gravely abused his discretion in: (a) ordering the conduct of a certification election even though the employees who signed the petition therefor had withdrawn their support by ratifying the CBA and even though no certification election could be conducted without the written consent of at least 25% of all the employees in the bargaining unit, and (b) ruling, in effect, "that the provision of Article 256 of the Labor Code takes precedence over that of Article 253 of the same Code."

The company concedes that, as an employer, it should "remain a bystander in the entire process of selection by the employees of their bargaining representative, since the exercise is indisputably an all-employee affair." Nonetheless, it justifies its "right to question the filing of the petition for certification election" by the situation "where, the small number of employees, the very ones who had earlier supported the petition for certification election, subsequently changed their mind, and ratified the CBA and thereafter reaped from its bounty." 7 Thus, in its desire to maintain industrial peace, the company deemed it necessary to challenge the propriety of holding a certification election. This argument is misleading. It is a well-established rule that certification elections are exclusively the concern of employees; hence, the employer lacks the legal personality to challenge the same. 8 In Golden Farms, Inc. v. Secretary of Labor, 9 the Court declared: . . . Law and policy demand that employers take a strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. A labor bargaining representative, to be effective, must owe its loyalty to the employees alone and to no other. The only instance when an employer may concern itself with employee representation activities is when it has to file the petition for certification election because there is no existing CBA in the unit and it was requested to bargain collectively, pursuant to Article 258 of the Labor code. 10 After filing the petition, the role of the employer ceases and it becomes a mere bystander. 11 The company's interference in the certification election below by actively opposing the same is manifestly uncalled-for and unduly creates a suspicion that it intends to establish a company union. 12On this score, it is clear that the perceived grave abuse of discretion on the part of the Labor Secretary is non-existent and G.R. No. 116779 should, consequently, be dismissed. This case will now proceed and decided on the merits of the issues raised in G.R. No. 116751. G.R. No. 116751 The OTCLU contends that the Labor Secretary acted without jurisdiction or with grave abuse of discretion: (a) in "imposing upon the employees the manner of choosing their collective bargaining representative by ordering a certification election notwithstanding the fact that the overwhelming majority of the employees have already decided to retain the petitioner (OCTLU) as their collective bargaining representative," and (b) in giving due course to the petition for certification election even though it lacked the required support of 25% of the employees. (a) The OTCLU maintains that the Labor Secretary improperly prescribed the mode of picking a collective bargaining agent upon the employees who effectively repudiated the "notion" of a certification election by ratifying the CBA entered into during the freedom period This contention is without merit as it runs counter to the policy of the State on the matter. Undersecretary Laguesma, by authority of the Secretary of the DOLE, was exercising the function of the Department to "(e)nforce social and labor legislation to protect the working class and regulate the relations between the worker and his employee" 13 when he issued the resolution being assailed in the instant petition. As will be shown shortly, he was merely applying the law applicable to the appeal raised before his office. The Labor Code imposes upon the employer and the representative of the employees the duty to bargain collectively. 14 Since the question of right of representation as between competing labor organizations in a bargaining unit is imbued with public interest, 15 the law governs the choice of a collective bargaining representative which shall be the duly certified agent of the employees concerned. An official certification becomes necessary where the bargaining agent fails to present adequate and reasonable proof of its majority authorization and where the employer demands it, or when the employer honestly doubts the majority representation of several contending bargaining groups. 16 In fact, Article 255 of the Labor Code allows the majority of the employees in an appropriate collective bargaining unit to designate or select the labor organization which shall be their exclusive representative for the purpose of collective bargaining. The designation or selection of the bargaining representative without, however, going through the process set out by law for the conduct of a certification election applies only when representation is not in issue. There is no problem if a union is unanimously chosen by a majority of the employees as their bargaining representative, but a question of representation arising from the presence of more than one union in a bargaining unit aspiring to be the employees' representative, can only be resolved by holding a certification election under the supervision of the proper government authority. Thus:

It bears stressing that no obstacle must be placed to the holding of certification elections, for it is a statutory policy that should not be circumvented. We have held that whenever there is doubt as to whether a particular union represents the majority of the rank-and-file employees, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees' choice of their bargaining representative. It is the appropriate means whereby controversies and disputes on representation may be laid to rest, by the unequivocal vote of the employees themselves. Indeed, it is the keystone of industrial democracy. 17 Given these premises, the filing of a petition for certification election by one of the two unions in the bargaining unit is enough basis for the DOLE, through its authorized official, to implement the law by directing the conduct of a certification election. Art. 253-A of the Labor Code explicitly provides that the aspect of a union's representation of the rank-and-file employees contained in the CBA shall be for a term of five (5) years and that "(n)o petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement." Accordingly, Section 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code provides that "(i)f a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the expiry date of such agreement." It is uncontroverted that the petition for certification election in this case was filed on March 18, 1994, twenty-eight days before the expiration of the existing CBA on April 15, 1994, and well within the 60-day period provided for by the Code. The OTCLU, however, is concerned with the effect of the employees' ratification of the new CBA on the timely filing of the petition for certification election. Would such ratification nullify the petition? The law dictates a negative reply. The filing of a petition for certification election during the 60-day freedom period gives rise to a representation case that must be resolved even though a new CBA has been entered into within that period. This is clearly provided for in the aforequoted Section 4, Rule V, Book V of the Omnibus Rules Implementing the Labor Code. The reason behind this rule is obvious. A petition for certification election is not necessary where the employees are one in their choice of a representative in the bargaining process. Moreover, said provision of the Omnibus Rules manifests the intent of the legislative authority to allow, if not encourage, the contending unions in a bargaining unit to hold a certification election during the freedom period. Hence, the Court held in the case of Warren Manufacturing Workers Union (WMWU) v. Bureau of Labor Relations, 18 that the agreement prematurely signed by the union and the company during the freedom period does not affect the petition for certification election filed by another union. (b) As regards the 25% support requirement, we concur with public respondent's finding that said requisite has been met in this case. With regard to the finding that the "waiver" document executed by the employees "was the product of duress, force and intimidation employed by the company after it learned of the petition for certification election," 19 the following pronouncement of the Court is relevant: . . . Even doubts as to the required 30% being met warrant (the) holding of the certification election. In fact, once the required percentage requirement has been reached, the employees' withdrawal from union membership taking place after the filing of the petition for certification election will not affect the petition. On the contrary, the presumption arises that the withdrawal was not free but was procured through duress, coercion or for a valuable consideration. Hence, the subsequent disaffiliation of the six (6) employees from the union will not be counted against or deducted from the previous number who had signed up for certification . . . 20 (Citations omitted) The support requirement is a mere technicality which should be employed in determining the true will of the workers 21 instead of frustrating the same. Thus, in Port Workers Union of the Philippines (PWUP) v. Laguesma , 22 this Court declared that: In line with this policy (that the holding of a certification election is a certain and definitive mode of arriving at the choice of the employees' bargaining representative), we feel that the administrative rule requiring the simultaneous submission of the 25% consent signatures upon the filing of the petition for certification election should not be strictly applied to frustrate the determination of the legitimate representative of the workers. Significantly, the requirement in the rule is not found in Article 256, the law it seeks to implement. This is all the more reason why the regulation should at best be given only a directory effect. Accordingly, we hold that the mere filing of a petition for certification election within the

freedom period is sufficient basis for the issuance of an order for the holding of a certification election, subject to the submission of the consent signatures within a reasonable period from such filing. All doubts as to the number of employees actually supporting the holding of a certification election should, therefore, be resolved by going through such procedure. It is judicially settled that a certification election is the most effective and expeditious means of determining which labor organizations can truly represent the working force in the appropriate bargaining unit of the company. 23 If the OTCLU wanted to be retained as the rank-and-file employees' bargaining representative, it should have sought their vote, not engaged in legal sophistry. The selection by the majority of the employees of the union which would best represent them in the CBA negotiations should be achieved through the democratic process of an election. 24 The fear expressed by the OTCLU that granting the petition for certification election would be prejudicial to all the employees since the new CBA would run the risk of being nullified and the employees would be required to restitute whatever benefits they might have received under the new CBA, is to be dismissed as being baseless and highly speculative. The benefits that may be derived from the implementation of the CBA prematurely entered into between the OTCLU and the company shall, therefore, be in full force and effect until the appropriate bargaining representative is chosen and negotiations for a new collective bargaining agreement is thereafter concluded. 25 A struggle between contending labor unions must not jeopardize the implementation of a CBA that is advantageous to employees. WHEREFORE, both petitions for certiorari are hereby DISMISSED. This decision is immediately executory. Costs against petitioners. SO ORDERED. Narvasa, C.J., Kapunan and Purisima, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 128067 June 5, 1998 SAMAHAN NG MGA MANGGAGAWA SA FILSYSTEMS (SAMAFIL-NAFLU-KMU), petitioner, vs. HON. SECRETARY OF LABOR AND EMPLOYMENT and FILSYSTEMS, INC., respondents. PUNO, J.: Assailed under Rule 65 of the Rules of Court are the Resolution and Order 1 of the public respondent, dated June 28, 1996 and November 18, 1996, respectively, dismissing petitioner's petition for certification election. It appears that petitioner Samahan ng mga Manggagawa sa Filsystems (SAMAFIL-NAFLU-KMU) is a registered labor union with Certificate of Registration No. NCR-UR-10-1575-95 issued by the Department of Labor and Employment (DOLE) on October 25, 1995. On November 6, 1995, petitioner union filed a Petition for Certification Election among the rank-and-file employees of private respondent FILSYSTEMS , Inc. before the DOLE National Capital Region (NCR). 2 Attached as annexes to the petition are the Certificate of Registration issued by the DOLE, copies of union membership signed by thirty three (33) rank-and-file employees of respondent company, the Charter Certificate showing its affiliation with the National Federation of Labor Unions (NAFLUKMU), the list of union officers, the certification of the union secretary of the minutes of the general membership meeting, the Books of Accounts and its Constitution and By-Laws. 3 Private respondent opposed the petition. It questioned the status of petitioner as a legitimate labor organization on the ground of lack of proof that its contract of affiliation with the NAFLU-KMU has been submitted to the Bureau of Labor Relations (BLR) within thirty (30) days from its execution. 4 In reply, petitioner averred that as a duly registered labor union, it has "all the rights and privileges . . . to act as representative of its members for the purpose of collective bargaining with employers." 5 On January 12, 1996, Med-Arbiter Paterno D. Adap dismissed the petition for certification election. He ruled that petitioner, as an affiliate of NAFLU-KMU, has no legal personality on account of its failure to comply with paragraphs (a), (b) and (e) of Section 3, Rule II of the Implementing Rules of Book V of the Labor Code, 6 viz: xxx xxx xxx In matters of affiliation of an independently registered union, the rules provide that the latter shall be considered an affiliate of a labor federation after submission of the contract or agreement of affiliation to the Bureau of Labor Relations (BLR) within thirty (30) days after its execution. Likewise, it mandates the federation or national union concerned to issue a charter certificate indicating the creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor Relations within thirty (30) days from issuance of such certificate. A close examination of the records of the case does not reveal that the federation and the independent union have executed a contract or agreement of affiliation, nor had it shown that it has submitted its charter certificate to the Bureau of Labor Relations, within thirty (30) days from issuance of such charter certificate as amended by the rules. Petitioner argued that it has complied with all the requirements for certification election pursuant to the mandate of Sec. 2, Rule V of Book V of the Implementing Rules of the Labor Code; that the rule cited by respondent is not included in the Rule citing the requirements for certification election.

We disagree with petitioner's contention. The rule cited by the petitioner, Sec. 2, Rule V, Book V, subparagraphs A, B, C, D, E, F and G, refers to an independently registered labor organization which has filed a petition for certification election. In the case at bar, an independently registered union has affiliated with a federation, hence, strict compliance with the requirements embodied in Sec. 3, paragraphs A, B and E of Rule II, Book V of the Rules and Regulations implementing the Labor Code should be complied with. Record discloses that petitioner has not shown to have executed a contract or agreement of affiliation nor has it established that is has submitted its charter certificate to the Bureau of Labor Relations (BLR) within thirty (30) days from its execution. Thus, petitioner in this case having failed to comply with the mandatory requirement, there was no valid affiliation. Consequently, petitioner has no legal personality because the union failed to attain the status of legitimacy for failure to comply with the requirements of law. Petitioner appealed to the Office of the Secretary of Labor and Employment. It reiterated its contention that as an independently registered union, it has the right to file a petition for certification election regardless of its failure to prove its affiliation with NAFLU-KMU. 7 On February 26, 1996, private respondent opposed the appeal. It argued that petitioner should have filed its petition for certification election as an independently registered union and not as a union affiliated with NAFLUKMU. 8 Meanwhile or on February 7, 1996, another union, the Filsystems Workers Union (FWU), filed a Petition for Certification Election in the same bargaining unit. On March 22, 1996, the Med-Arbitration NCR Branch granted the petition. The certification election held on April 19, 1996, was won by FWU which garnered twenty six (26) votes out of the forty six (46) eligible voters. The FWU was certified on April 29, 1996, as the exclusive bargaining agent of all rank-and-file employees of private respondent. Eventually, FWU and the private respondent negotiated a CBA. 9 On June 11, 1996, the private respondent filed a Motion to Dismiss Appeal of petitioner as it has become moot and academic. It also invoked Section 3, Rule V of the Implementing Rules of Book V of the Labor Code stating that "once a union has been certified, no certification election may be held within one (1) year from the date of issuance of a final certification election [result]." 10 In opposing the Motion to Dismiss Appeal, petitioner contended that its appeal is not moot as the certification election held on April 19, 1996, was void for violating Section 10, Rule V of the Implementing Rules of Book V of the Labor Code, 11 viz: Sec. 10. Decision of the Secretary final and inappealable. The Secretary shall have fifteen (15) calendar days within which to decide the appeal from receipt of the records of the case. The filing of the appeal from the decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall be final and inappealable. Petitioner further argued that the CBA executed between the FWU and the private respondent could not affect its pending representation case following Section 4, Rule V of the Implementing Rules of Book V of the Labor Code 12which states: Sec. 4. Effects of early agreements. The representation case shall not, however, be adversely affected by a collective bargaining agreement registered before or during the last 60 days of the subsisting agreement or during the pendency of the representation case. On June 28, 1996, respondent Secretary dismissed the appeal interposed by petitioner on the ground that it has been rendered moot by the certification of FWU as the sole and exclusive bargaining agent of the rank-and-file workers of respondent company. Petitioner's Motion for Reconsideration was denied in an Order dated November 18, 1996. 13 Before this Court, petitioner contends:

I Public respondent acted with grave abuse of discretion amounting to acting without or in excess of jurisdiction in holding that the pending appeal in the representation case was rendered moot and academic by a subsequently enacted collective bargaining agreement in the company. II Public respondent committed a serious legal error and gravely abused its discretion in failing to hold that the legal personality of petitioner as a union having been established by its Certificate of Registration, the same could not be subjected to collateral attack. The petition is meritorious. I We shall first resolve whether the public respondent committed grave abuse of discretion when he effectively affirmed the Resolution dated January 12, 1996 of the Med-Arbiter dismissing petitioner's petition for certification election for failure to prove its affiliation with NAFLU-KMU. The reasoning of the public respondent and the Med-Arbiter is flawed, proceeding as it does from a wrong premise. Firstly, it must be underscored that petitioner is an independently registered labor union as evidenced by a Certificate of Registration issued by the DOLE. As a legitimate labor organization, petitioner's right to file a petition for certification election on its own is beyond question. 14 Secondly, the failure of petitioner to prove its affiliation with NAFLU-KMU cannot affect its right to file said petition for certification election as an independent union. At the most, petitioner's failure will result in an ineffective affiliation with NAFLU-KMU. Still, however, it can pursue its petition for certification election as an independent union. In our rulings, we have stressed that despite affiliation, the local union remains the basic unit free to serve the common interest of all its members and pursue its own interests independently of the federation. 15 In fine, the Med-Arbiter erred in dismissing petitioner's petition for certification election on account of its nonsubmission of the charter certificate and the contract of affiliation with the NAFLU-KMU with the BLR. The public respondent gravely abused his discretion in sustaining the Med-Arbiter's Resolution. II We shall now resolve the issue of whether the appeal filed by the petitioner was rendered moot and academic by the subsequent certification election ordered by the Med-Arbiter, won by FWU and which culminated in a CBA with private respondent. Public respondent's ruling is anchored on his finding that there exists no pending representation case since the petition for certification election filed by the petitioner was dismissed by the Med-Arbiter. According to the public respondent, the legal effect of the dismissal of the petition was to leave the playing field open without any legal barrier or prohibition to any petitioner; thus, other legitimate labor organizations may file an entirely new petition for certification election. We reject public respondent's ruling. The order of the Med-Arbiter dismissing petitioner's petition for certification election was seasonably appealed. The appeal stopped the holding of any certification election. Section 10, Rule V of the Implementing Rules of Book V of the Labor Code is crystal clear and hardly needs any interpretation. Accordingly, there was an unresolved representation case at the time the CBA was entered between FWU and private respondent. Following Section 4, Rule V of the Implementing Rules of Book V of the Labor Code, such CBA cannot and will not prejudice petitioner's pending representation case or render the same moot. 16 This rule was applied in the case of Associated Labor Unions (ALU-TUCP) v. Trajano 17 where we held that "[t]here should be no obstacle to the right of the proper time, that is, within sixty (60) days prior to the expiration of the life of a certified collective bargaining agreement . . ., not even by a collective agreement submitted during the pendency of the representation case." Likewise, in Associated Labor Unions (ALU) v. Ferrer-Calleja, 18 we held that a prematurely renewed CBA is not a bar to the holding of a certification election.

Finally, we bewail private respondent's tenacious opposition to petitioner's certification election petition. Such a stance is not conducive to industrial peace. Time and again, we have emphasized that when a petition for certification election is filed by a legitimate labor organization, it is good policy for the employer not to have any participation or partisan interest in the choice of the bargaining representative. While employers may rightfully be notified or informed of petitions of such nature, they should not, however, be considered parties thereto with an inalienable right to oppose it. An employer that involves itself in a certification election lends suspicion to the fact that it wants to create a company union. Thus, in Consolidated Farms, Inc. II v. Noriel, 19 we declared that "[o]n a matter that should be the exclusive concern of labor, the choice of a collective bargaining representative, the employer is definitely an intruder. His participation, to say the least, deserves no encouragement. This Court should be the last agency to lend support to such an attempt at interference with a purely internal affair of labor. . . . [While] it is true that there may be circumstances where the interest of the employer calls for its being heard on the matter, . . . sound policy dictates that as much as possible, management is to maintain a strictly hands-off policy. For it is does not, it may lend itself to the legitimate suspicion that it is partial to one of the contending unions. That is repugnant to the concept of collective bargaining. That is against the letter and spirit of welfare legislation intended to protect labor and promote social justice. The judiciary then should be the last to look with tolerance at such efforts of an employer to take part in the process leading to the free and untrammeled choice of the exclusive bargaining representative of the workers." IN VIEW WHEREOF, the instant petition is GRANTED. The assailed Resolution and Order of the public respondent are set aside. The Bureau of Labor Relations is ORDERED to hold a certification election in respondent company with petitioner as a contending union. No costs. SO ORDERED. Regalado, Mendoza and Martinez, JJ., concur. Melo, J., is on leave.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 178989 March 18, 2010

EAGLE RIDGE GOLF & COUNTRY CLUB, Petitioner, vs. COURT OF APPEALS and EAGLE RIDGE EMPLOYEES UNION (EREU), Respondents. DECISION VELASCO, JR., J.: In this petition for certiorari under Rule 65, Eagle Ridge Golf & Country Club (Eagle Ridge) assails and seeks to nullify the Resolutions of the Court of Appeals (CA) dated April 27, 2007 1 and June 6, 2007,2 issued in CA-G.R. SP No. 98624, denying a similar recourse petitioner earlier interposed to set aside the December 21, 2006 Decision 3 of the Bureau of Labor Relations (BLR), as reiterated in a Resolution4 of March 7, 2007. Petitioner Eagle Ridge is a corporation engaged in the business of maintaining golf courses. It had, at the end of CY 2005, around 112 rank-and-file employees. The instant case is an off-shot of the desire of a number of these employees to organize themselves as a legitimate labor union and their employers opposition to their aspiration. The Facts On December 6, 2005, at least 20% of Eagle Ridges rank-and-file employeesthe percentage threshold required under Article 234(c) of the Labor Code for union registration had a meeting where they organized themselves into an independent labor union, named "Eagle Ridge Employees Union" (EREU or Union),5 elected a set of officers,6 and ratified7 their constitution and by-laws.8 On December 19, 2005, EREU formally applied for registration9 and filed BLR Reg. Form No. I-LO, s. 199810before the Department of Labor and Employment (DOLE) Regional Office IV (RO IV). In time, DOLE RO IV granted the application and issued EREU Registration Certificate (Reg. Cert.) No. RO400-200512-UR-003. The EREU then filed a petition for certification election in Eagle Ridge Golf & Country Club, docketed as Case No. RO4000601-RU-002. Eagle Ridge opposed this petition,11 followed by its filing of a petition for the cancellation 12of Reg. Cert. No. RO400-200512-UR-003. Docketed as RO400-0602-AU-003, Eagle Ridges petition ascribed misrepresentation, false statement, or fraud to EREU in connection with the adoption of its constitution and by-laws, the numerical composition of the Union, and the election of its officers. Going into specifics, Eagle Ridge alleged that the EREU declared in its application for registration having 30 members, when the minutes of its December 6, 2005 organizational meeting showed it only had 26 members. The misrepresentation was exacerbated by the discrepancy between the certification issued by the Union secretary and president that 25 members actually ratified the constitution and by-laws on December 6, 2005 and the fact that 26 members affixed their signatures on the documents, making one signature a forgery. Finally, Eagle Ridge contended that five employees who attended the organizational meeting had manifested the desire to withdraw from the union. The five executed individual affidavits or Sinumpaang Salaysay13 on February 15, 2006, attesting that they arrived late at said meeting which they claimed to be drinking spree; that they did not know that the documents they signed on that occasion pertained to the organization of a union; and that they now wanted to be excluded from the Union. The withdrawal of the five, Eagle Ridge maintained, effectively reduced the union membership to 20 or 21, either of which is below the mandatory minimum 20% membership requirement under Art. 234(c) of the Labor Code. Reckoned from 112 rank-and-file employees of Eagle Ridge, the required number would be 22 or 23 employees. As a counterpoint, EREU, in its Comment,14 argued in gist:

1) the petition for cancellation was procedurally deficient as it does not contain a certification against forum shopping and that the same was verified by one not duly authorized by Eagle Ridges board; 2) the alleged discrepancies are not real for before filing of its application on December 19, 2005, four additional employees joined the union on December 8, 2005, thus raising the union membership to 30 members as of December 19, 2005; 3) the understatement by one member who ratified the constitution and by-laws was a typographical error, which does not make it either grave or malicious warranting the cancellation of the unions registration; 4) the retraction of 5 union members should not be given any credence for the reasons that: (a) the sworn statements of the five retracting union members sans other affirmative evidence presented hardly qualify as clear and credible evidence considering the joint affidavits of the other members attesting to the orderly conduct of the organizational meeting; (b) the retracting members did not deny signing the union documents; (c) following, Belyca Corporation v. Ferrer-Calleja15 and Oriental Tin Can Labor Union v. Secretary of Labor and Employment,16 it can be presumed that "duress, coercion or valuable consideration" was brought to bear on the retracting members; and (d) citing La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations,17 Belyca Corporation and Oriental Tin Can Labor Union, where the Court ruled that "once the required percentage requirement has been reached, the employees withdrawal from union membership taking place after the filing of the petition for certification election will not affect the petition," it asserted the applicability of said ruling as the petition for certification election was filed on January 10, 2006 or long before February 15, 2006 when the affidavits of retraction were executed by the five union members, thus contending that the retractions do not affect nor be deemed compelling enough to cancel its certificate of registration. The Union presented the duly accomplished union membership forms 18 dated December 8, 2005 of four additional members. And to rebut the allegations in the affidavits of retraction of the five union members, it presented the SamaSamang Sinumpaang Salaysay19 dated March 20, 2006 of eight union members; anotherSama-Samang Sinumpaang Salaysay,20 also bearing date March 20, 2006, of four other union members; and the Sworn Statement 21 dated March 16, 2006 of the Unions legal counsel, Atty. Do mingo T. Aonuevo. These affidavits attested to the orderly and proper proceedings of the organizational meeting on December 6, 2005. In its Reply,22 Eagle Ridge reiterated the grounds it raised in its petition for cancellation and asserted further that the four additional members were fraudulently admitted into the Union. As Eagle Ridge claimed, the applications of the four neither complied with the requirements under Section 2, Art. IV of the unions constitution and by -laws nor were they shown to have been duly received, issued receipts for admission fees, processed with recommendation for approval, and approved by the union president. Moreover, Eagle Ridge presented another Sinumpaang Salaysay23 of retraction dated March 15, 2006 of another union member. The membership of EREU had thus been further reduced to only 19 or 20. This same member was listed in the first Sama-Samang Sinumpaang Salaysay24 presented by the Union but did not sign it. The Ruling of the DOLE Regional Director After due proceedings, the DOLE Regional Director, Region IV-A, focusing on the question of misrepresentation, issued on April 28, 2006 an Order25 finding for Eagle Ridge, its petition to cancel Reg. Cert. No. RO400-200512-UR-003 being granted and EREU being delisted from the roster of legitimate labor organizations. Aggrieved, the Union appealed to the BLR, the recourse docketed as BLR A-C-30-5-31-06 (Case No. RO400-0602-AU003). The Ruling of the BLR Initially, the BLR, then headed by an Officer-in-Charge (OIC), affirmed26 the appealed order of the DOLE Regional Director. Undeterred by successive set backs, EREU interposed a motion for reconsideration, contending that: 1) Contrary to the ruling of the BLR OIC Director, a certificate of non-forum shopping is mandatory requirement, under Department Order No. (DO) 40-03 and the Rules of Court, non-compliance with which is a ground to dismiss a petition for cancellation of a certificate of registration;

2) It was erroneous for both the Regional Director and the BLR OIC Director to give credence to the retraction statements of union members which were not presented for reaffirmation during any of the hearings of the case, contrary to the requirement for the admission of such evidence under Sec. 11, Rule XI of DO 40-03. In a Decision dated December 21, 2006, the BLR, now headed by Director Rebecca C. Chato, set aside the July 28, 2006 order of the BLR OIC Director, disposing as follows: WHEREFORE, the motion for reconsideration is hereby GRANTED and our Resolution dated 28 July 2006 is hereby VACATED. Accordingly, the Eagle Ridge Employees Union (EREU) shall remain in the roster of legitimate organizations. In finding for the Union, the BLR Director eschewed procedural technicalities. Nonetheless, she found as without basis allegations of misrepresentation or fraud as ground for canc ellation of EREUs registration. In turn aggrieved, Eagle Ridge sought but was denied reconsideration per the BLRs Resolution dated March 7, 2007. Eagle Ridge thereupon went to the CA on a petition for certiorari. The Ruling of the CA On April 27, 2007, the appellate court, in a terse two-page Resolution,27 dismissed Eagle Ridges petition for being deficient, as: 1. the questioned [BLR] Decision dated December 21, 2006 and the Resolution dated March 7, 2007 Resolution [appended to the petition] are mere machine copies; and 2. the verification and certification of non-forum shopping was subscribed to by Luna C. Piezas on her representation as the legal counsel of the petitioner, but sans [the requisite] Secretarys Certificate or Board Resolution authorizing her to execute and sign the same. The CA later denied, in its second assailed resolution, Eagle Ridges motion for r econsideration, albeit the latter had submitted a certificate to show that its legal counsel has been authorized, per a board resolution, to represent the corporation. The Issues Eagle Ridge is now before us via this petition for certiorari on the submissions that: I. [THE CA] COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING THE COMPANYS PETITION FOR CERTIORARI AND DENYING ITS MOTION FOR RECONSIDERATION CONSIDERING THAT THE COMPANYS PREVIOUS C OUNSEL WAS AUTHORIZED TO REPRESENT THE COMPANY IN THE PETITION FOR CERTIORARI FILED BEFORE THE [CA]; II. IN ORDER NOT TO FURTHER PREJUDICE THE COMPANY, IT IS RESPECTFULLY SUBMITTED THAT THIS HONORABLE COURT COULD TAKE COGNIZANCE OF THE MERITS OF THIS CASE AND RESOLVE THAT BASED ON THE EVIDENCE ON RECORD, THERE WAS FRAUD, MISREPRESENTATION AND/OR FALSE STATEMENT WHICH WARRANT THE CANCELLATION OF CERTIFICATE OF REGISTRATION OF EREU. 28 The Courts Ruling We dismiss the petition. Procedural Issue: Lack of Authority

Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of right.29 Accordingly, the party who seeks to avail of it must strictly observe the rules laid down by law.30 Petitions for certiorari under Rule 65 of the Rules of Court require a "sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46." 31 Sec. 3, paragraphs 4 and 6 of Rule 46 pertinently provides: SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. x x x x xxxx xxxx The petitioner shall also submit together with the petition a sworn certification that he has not theretofore commenced any action involving the same issues in the Supreme Court, the Court of Appeals x x x, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same x x x. xxxx The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition . (Emphasis supplied.) Evidently, the Rules requires the petitioner, not his counsel, to sign under oath the requisite certification against nonforum shopping. Such certification is a peculiar personal representation on the part of the principal party, an assurance to the court that there are no other pending cases involving basically the same parties, issues, and cause of action. 32 In the instant case, the sworn verification and certification of non-forum shopping in the petition for certiorari of Eagle Ridge filed before the CA carried the signature of its counsel without the requisite authority. Eagle Ridge tried to address its faux pas by submitting its board secretarys Certificate33 dated May 15, 2007, attesting to the issuance on May 10, 2007 of Board Resolution No. ERGCCI 07/III-01 that authorized its counsel of record, Atty. Luna C. Piezas, to represent it before the appellate court. The CA, however, rejected Eagle Ridges virtual plea for the relaxation of the rules on the signing of the verification and certification against forum shopping, observing that the board resolution adverted to was approved after Atty. Piezas has signed and filed for Eagle Ridge the petition for certiorari. The appellate courts assailed action is in no way tainted with grave abuse of discretion, as Eagle Ridge would have this Court believed. Indeed, a certification of non-forum shopping signed by counsel without the proper authorization is defective and constitutes a valid cause for dismissal of the petition.34 The submission of the board secretarys certificate through a motion for reconsideration of the CAs decision dismissing the petition for certiorari may be considered a substantial compliance with the Rules of Court. 35 Yet, this rule presupposes that the authorizing board resolution, the approval of which is certified to by the secretarys certification, was passed within the reglementary period for filing the petition. This particular situation does not, however, obtain under the premises. The records yield the following material dates and incidents: Eagle Ridge received the May 7, 2007 resolution of the BLR Director on March 9, 2007, thus giving it 60 days or up to May 8, 2007 to file a petition for certiorari, as it in fact filed its petition on April 18, 2007 before the CA. The authorization for its counsel, however, was only issued in a meeting of its board on May 10, 2007 or a couple of days beyond the 60-day reglementary period referred to in filing a certiorari action. Thus, there was no substantial compliance with the Rules. As with most rules of procedure, however, exceptions are invariably recognized and the relaxation of procedural rules on review has been effected to obviate jeopardizing substantial justice.36 This liberality stresses the importance of review in our judicial grievance structure to accord every party litigant the amplest opportunity for the proper and just disposition of his cause, freed from the constraints of technicalities.37 But concomitant to a liberal interpretation of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.381avvphi1 To us, Eagle Ridge has not satisfactorily explained its failure to comply. It may be true, as Eagle Ridge urges, that its counsels authority to represent the corporation was never questioned before the DOLE regional office and agency. But

EREUs misstep could hardly lend Eagle Ridge comfort. And obviously, Eagle Ridge and its counsel erred in equating the latters representation as legal counsel with the authority to sign the verification and the certificate of non -forum shopping in the formers behalf. We note that the authority to represent a client before a court or quasi-judicial agency does not require an authorizing board resolution, as the counsel-client relationship is presumed by the counsels representation by the filing of a pleading on behalf of the client. In filing a pleading, the counsel affixes his signature on it, but it is the client who must sign the verification and the certification against forum shopping, save when a board resolution authorizes the former to sign so. It is entirely a different matter for the counsel to sign the verification and the certificate of non-forum shopping. The attestation or certification in either verification or certification of non-forum shopping requires the act of the principal party. As earlier indicated, Sec. 3 of Rule 46 exacts this requirement; so does the first paragraph of Sec. 5 of Rule 7 pertinently reading: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. (Emphasis added.) It is, thus, clear that the counsel is not the proper person to sign the certification against forum shopping. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized. 39 In addition, Eagle Ridge maintains that the submitted board resolution, albeit passed after the filing of the petition was filed, should be treated as a ratificatory medium of the counsels act of signing the sworn certificat ion of non-forum shopping. We are not inclined to grant the desired liberality owing to Eagle Ridges failure to sufficiently explain its failure to fol low the clear rules. If for the foregoing considerations alone, the Court could very well dismiss the instant petition. Nevertheless, the Court will explore the merits of the instant case to obviate the inequity that might result from the outright denial of the petition. Substantive Issue: No Fraud in the Application Eagle Ridge cites the grounds provided under Art. 239(a) and (c) of the Labor Code for its petition for cancellation of the EREUs registration. On the other hand, the Union asserts bona fide compliance with the registration requirements under Art. 234 of the Code, explaining the seeming discrepancies between the number of employees who participated in the organizational meeting and the total number of union members at the time it filed its registration, as well as the typographical error in its certification which understated by one the number of union members who ratified the unions constitution and by-laws. Before their amendment by Republic Act No. 948140 on June 15, 2007, the then governing Art. 234 (on the requirements of registration of a labor union) and Art. 239 (on the grounds for cancellation of union registration) of the Labor Code respectively provided as follows: ART. 234. REQUIREMENTS OF REGISTRATION. Any applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of workers who participated in such meetings ; (c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

xxxx (e) Four copies (4) 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.41 xxxx ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION . The following shall constitute grounds for cancellation of union registration: (a) Misrepresentation, false statements 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; xxxx (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.42 (Emphasis supplied.) A scrutiny of the records fails to show any misrepresentation, false statement, or fraud committed by EREU to merit cancellation of its registration. First. The Union submitted the required documents attesting to the facts of the organizational meeting on December 6, 2005, the election of its officers, and the adoption of the Unions constitution and by -laws. It submitted before the DOLE Regional Office with its Application for Registration and the duly filled out BLR Reg. Form No. I-LO, s. 1998, the following documents, to wit: (a) the minutes of its organizational meeting43 held on December 6, 2005 showing 26 founding members who elected its union officers by secret ballot; (b) the list of rank-and-file employees44 of Eagle Ridge who attended the organizational meeting and the election of officers with their individual signatures; (c) the list of rank-and-file employees45 who ratified the unions constitution and by-laws showing the very same list as those who attended the organizational meeting and the election of officers with their individual signatures except the addition of four employees without their signatures, i.e., Cherry Labajo, Grace Pollo, Annalyn Poniente and Rowel Dolendo; (d) the unions constitution and by-laws46 as approved on December 6, 2005; (e) the list of officers47 and their addresses; (f) the list of union members48 showing a total of 30 members; and (g) the Sworn Statement49 of the unions elected president and secretary. All the foregoing documents except the sworn statement of the president and the secretary were accompanied by Certifications 50 by the union secretary duly attested to by the union president. Second. The members of the EREU totaled 30 employees when it applied on December 19, 2005 for registration. The Union thereby complied with the mandatory minimum 20% membership requirement under Art. 234(c). Of note is the undisputed number of 112 rank-and-file employees in Eagle Ridge, as shown in the Sworn Statement of the Union president and secretary and confirmed by Eagle Ridge in its petition for cancellation. Third. The Union has sufficiently explained the discrepancy between the number of those who attended the organizational meeting showing 26 employees and the list of union members showing 30. The difference is due to the additional four members admitted two days after the organizational meeting as attested to by their duly

accomplished Union Membership forms. Consequently, the total number of union members, as of December 8, 2005, was 30, which was truthfully indicated in its application for registration on December 19, 2005. As aptly found by the BLR Director, the Union already had 30 members when it applied for registration, for the admission of new members is neither prohibited by law nor was it concealed in its application for registration. Eagle Ridges contention is flawed when it equated the requirements under Art. 234(b) and (c) of the Labor Code. Par. (b) clearly required the submission of the minutes of the organizational meetings and the list of workers who participated in the meetings, while par. (c) merely required the list of names of all the union members comprising at least 20% of the bargaining unit. The fact that EREU had 30 members when it applied for registration on December 19, 2005 while only 26 actually participated in the organizational meeting is borne by the records. Fourth. In its futile attempt to clutch at straws, Eagle Ridge assails the inclusion of the additional four members allegedly for not complying with what it termed as "the sine qua non requirements" for union member applications under the Unions constitution and by -laws, specifically Sec. 2 of Art. IV. We are not persuaded. Any seeming infirmity in the application and admission of union membership, most especially in cases of independent labor unions, must be viewed in favor of valid membership. The right of employees to self-organization and membership in a union must not be trammeled by undue difficulties. In this case, when the Union said that the four employee-applicants had been admitted as union members, it is enough to establish the fact of admission of the four that they had duly signified such desire by accomplishing the membership form. The fact, as pointed out by Eagle Ridge, that the Union, owing to its scant membership, had not yet fully organized its different committees evidently shows the direct and valid acceptance of the four employee applicants rather than deter their admission as erroneously asserted by Eagle Ridge. Fifth. The difference between the number of 26 members, who ratified the Unions constitution and by-laws, and the 25 members shown in the certification of the Union secretary as having ratified it, is, as shown by the factual antecedents, a typographical error. It was an insignificant mistake committed without malice or prevarication. The list of those who attended the organizational meeting shows 26 members, as evidenced by the signatures beside their handwritten names. Thus, the certifications understatement by one member, while not factual, was clearly an error, but neither a misleading one nor a misrepresentation of what had actually happened. Sixth. In the more meaty issue of the affidavits of retraction executed by six union members, we hold that the probative value of these affidavits cannot overcome those of the supporting affidavits of 12 union members and their counsel as to the proceedings and the conduct of the organizational meeting on December 6, 2005. The DOLE Regional Director and the BLR OIC Director obviously erred in giving credence to the affidavits of retraction, but not according the same treatment to the supporting affidavits. The six affiants of the affidavits of retraction were not presented in a hearing before the Hearing Officer (DOLE Regional Director), as required under the Rules Implementing Book V of the Labor Code covering Labor Relations. Said Rules is embodied in Department Order No. (DO) 40-03 which was issued on February 17, 2003 and took effect on March 15, 2003 to replace DO 9 of 1997. Sec. 11, Rule XI of DO 40-03 specifically requires: Section 11. Affirmation of testimonial evidence. Any affidavit submitted by a party to prove his/her claims or defenses shall be re-affirmed by the presentation of the affiant before the Med-Arbiter orHearing Officer, as the case may be. Any affidavit submitted without the re-affirmation of the affiant during a scheduled hearing shall not be admitted in evidence, except when the party against whom the affidavit is being offered admits all allegations therein and waives the examination of the affiant. It is settled that affidavits partake the nature of hearsay evidence, since they are not generally prepared by the affiant but by another who uses his own language in writing the affiants statement, which may thus be either omitted or misunderstood by the one writing them.51 The above rule affirms the general requirement in adversarial proceedings for the examination of the affiant by the party against whom the affidavit is offered. In the instant case, it is required for affiants to re-affirm the contents of their affidavits during the hearing of the instant case for them to be examined by the opposing party, i.e., the Union. For their non-presentation and consonant to the above-quoted rule, the six affidavits of retraction are inadmissible as evidence against the Union in the instant case. Moreover, the affidavit and joint-affidavits presented by the Union before the DOLE Regional Director were duly re-affirmed in the hearing of March 20, 2006 by the affiants. Thus, a reversible error was committed by the DOLE Regional Director and the BLR OIC Director in giving credence to the inadmissible affidavits of retraction presented by Eagle Ridge while not giving credence to the duly re-affirmed affidavits presented by the Union.

Evidently, the allegations in the six affidavits of retraction have no probative value and at the very least cannot outweigh the rebutting attestations of the duly re-affirmed affidavits presented by the Union. Seventh. The fact that six union members, indeed, expressed the desire to withdraw their membership through their affidavits of retraction will not cause the cancellation of registration on the ground of violation of Art. 234(c) of the Labor Code requiring the mandatory minimum 20% membership of rank-and-file employees in the employees union. The six retracting union members clearly severed and withdrew their union membership. The query is whether such separation from the Union can detrimentally affect the registration of the Union. We answer in the negative. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. Besides, it cannot be argued that the six affidavits of retraction retroact to the time of the application of registration or even way back to the organizational meeting. Prior to their withdrawal, the six employees in question were bona fide union members. More so, they never disputed affixing their signatures beside their handwritten names during the organizational meetings. While they alleged that they did not know what they were signing, it bears stressing that their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little, if any, evidentiary value. With the withdrawal of six union members, there is still compliance with the mandatory membership requirement under Art. 234(c), for the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. Eagle Ridge further argues that the list of union members includes a supervisory employee. This is a factual issue which had not been raised at the first instance before the DOLE Regional Director and cannot be appreciated in this proceeding. To be sure, Eagle Ridge knows well who among its personnel belongs or does not belong to the supervisory group. Obviously, its attempt to raise the issue referred to is no more than an afterthought and ought to be rejected. Eighth. Finally, it may not be amiss to note, given the factual antecedents of the instant case, that Eagle Ridge has apparently resorted to filing the instant case for cancellation of the Unions certificate of registration to bar the holding of a certification election. This can be gleaned from the fact that the grounds it raised in its opposition to the petition for certification election are basically the same grounds it resorted to in the instant case for cancellation of EREUs certificate of registration. This amounts to a clear circumvention of the law and cannot be countenanced. For clarity, we reiterate the following undisputed antecedent facts: (1) On December 6, 2005, the Union was organized, with 26 employees of Eagle Ridge attending; (2) On December 19, 2005, the Union filed its formal application for registration indicating a total of 30 union members with the inclusion of four additional members on December 8, 2005 (Reg. Cert. No. RO400-200512-UR-003 was eventually issued by the DOLE RO IV-A); (3) On January 10, 2006, the Union filed before the DOLE RO IV-A its petition for certification election in Eagle Ridge; (4) On February 13, 2006, Eagle Ridge filed its Position Paper opposing the petition for certification election on essentially the same grounds it raised in the instant case; and (5) On February 24, 2006, Eagle Ridge filed the instant case for cancellation of the Unions certificate of registration on essentially the same grounds it raised in its opposition to the Unions petition for certification election.

Evidently, as the Union persuasively argues, the withdrawal of six member-employees from the Union will affect neither the Unions registration nor its petition for certification election, as their affidavits of retraction were executed after t he Unions petition for certification election had been filed. The initial five affidavits of retraction were executed on February 15, 2006; the sixth, on March 15, 2006. Indisputably, all six were executed way after the filing of the petition for certification election on January 10, 2006. In Eastland Manufacturing Company, Inc. v. Noriel ,52 the Court emphasized, and reiterated its earlier rulings,53that "even if there were less than 30% [the required percentage of minimum membership then] of the employees asking for a certification election, that of itself would not be a bar to respondent Director ordering such an election provided, of course, there is no grave abuse of discretion."54 Citing Philippine Association of Free Labor Unions v. Bureau of Labor Relations,55 the Court emphasized that a certification election is the most appropriate procedure for the desired goal of ascertaining which of the competing organizations should represent the employees for the purpose of collective bargaining.56 Indeed, where the company seeks the cancellation of a unions registration during the pendency of a petition for certification election, the same grounds invoked to cancel should not be used to bar the certification election. A certification election is the most expeditious and fairest mode of ascertaining the will of a collective bargaining unit as to its choice of its exclusive representative.57 It is the fairest and most effective way of determining which labor organization can truly represent the working force. It is a fundamental postulate that the will of the majority, if given expression in an honest election with freedom on the part of the voters to make their choice, is controlling. 58 The Court ends this disposition by reproducing the following apt excepts from its holding in S.S. Ventures International, Inc. v. S.S. Ventures Labor Union (SSVLU) on the effect of the withdrawal from union membership right before or after the filing of a petition for certification election: We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written statements submitted by Ventures on March 20, 2001, or seven months after it filed its petition for cancellation of registration, partake of the nature of withdrawal of union membership executed after the Unions filing of a petition for certification election on March 21, 2000. We have in precedent cases said that the employees withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the same . Now then, if a withdrawal from union membership done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to assume thatsuch withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it concluded that the affidavits of retraction of the 82 members had no evidentiary weight.59 (Emphasis supplied.) WHEREFORE, premises considered, we DISMISS the instant petition for lack of merit. Costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 170928 September 11, 2007

VICENTE S. ALMARIO, Petitioner, vs. PHILIPPINE AIRLINES, INC., Respondent. DECISION CARPIO MORALES, J.: On October 21, 1988, petitioner, Vicente S. Almario (Almario), was hired by respondent, Philippine Airlines, Inc. (PAL), as a Boeing 747 Systems Engineer. On April 28, 1995, Almario, then about 39 years of age1 and a Boeing 737 (B-737) First Officer at PAL, successfully bid for the higher position of Airbus 300 (A-300) First Officer.2 Since said higher position required additional training, he underwent, at PALs expense, more than five months of training consisting of ground schooling in Manila and flight simulation in Melbourne, Australia.3 After completing the training course, Almario served as A-300 First Officer of PAL, but after eight months of service as such or on September 16, 1996, he tendered his resignation, for "personal reasons," effective October 15, 1996. 4 On September 27, 1996, PALs Vice President for Flight Operations sent Almario a letter, the pertinent portions of which read: xxxx 2. Our records show that you have been trained by the Company as A300 First Officer starting on 04 September 1995 and have completed said training on 08 February 1996. As you are aware the Company invested heavily on your professional training in the estimated amount of PHP786,713.00 on the basis that you continue to serve the Company for a definite period of time which is approximately three (3) years or thirty-six (36) months. 3. In view of the foregoing, we urge you to reconsider your proposed resignation otherwise you will be required to reimburse the Company an amount equivalent to the cost of your professional training and the damaged [sic] caused to the Company.5 (Emphasis and underscoring supplied) Despite receipt of the letter, Almario pushed through with his resignation. By letter of October 9, 1996, Almarios counsel sought PALs explanation behind its September 27, 1996 letter considering that Almario "did not sign anything regarding any reimbursement."6 PAL did not reply, prompting Almarios counsel to send two letters dated January 6, 1997 and February 10, 1997 following-up PALs reply, as well as the release of Almarios clearances which he needed to avail of his benefits.7 On February 11, 1997, PAL filed a Complaint8 against Almario before the Makati Regional Trial Court (RTC), for reimbursement of P851,107 worth of training costs, attorneys fees equivalent to 20% of the said amount, and costs of litigation. PAL invoked the existence of an innominate contract of do ut facias (I give that you may do) with Almario in that by spending for his training, he would render service to it until the costs of training were recovered in at least three (3) years.9Almario having resigned before the 3-year period, PAL prayed that he should be ordered to reimburse the costs for his training. In his Answer with Special and Affirmative Defenses and Compulsory Counterclaims,10 Almario denied the existence of any agreement with PAL that he would have to render service to it for three years after his training failing which he would reimburse the training costs. He pointed out that the 1991-1994 Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots Association of the Philippines (ALPAP), of which he was a member, 11 carried no such agreement.

Almario thus prayed for the award of actual damages on account of PALs withholding of the necessary clearances which he needed in order to obtain his lawful benefits, and moral and exemplary damages for malicious prosecution and unjust harassment.12 PAL, in its Reply to Defendants Answer and Answer to Counterclaim,13 argued as follows: The right of PAL to be reimbursed for training expenses is based on Article XXIII, Section 1 of the 1991-1994 Collective Bargaining Agreement (CBA, for brevity) and which was taken from the decision of the Secretary of Labor. [The Secretary of Labor] ruled that a pilot should remain in the position where he is upon reaching the age of fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. Thus, Article XXIII, Section 1 of the CBA provide[s]: "Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fifty-seven (57) years of age provided they have previously qualified in any companys turbo -jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet. The reason why pilots who are 57 years of age are no longer qualified to bid for a higher position is because they have only three (3) years left before the mandatory retirement age [of 60] and to send them to training at that age, PAL would no longer be able to recover whatever training expenses it will have to incur. Simply put, the foregoing provision clearly and unequivocally recognizes the prohibitive training cost principle such that it will take a period of at least three (3) years before PAL could recover from the training expenses it incurred.14 (Emphasis and underscoring supplied) By Decision15 of October 25, 2000, Branch 147 of the Makati RTC, finding no provision in the CBA between PAL and ALPAP stipulating that a pilot who underwent a training course for the position of A-300 First Officer must serve PAL for at least three years failing which he should reimburse the training expenses, rendered judgment in favor of Almario. The trial court denied Almarios claim for moral damages, however. 16 It denied too Almarios claim for the monetary equivalent of his family trip pass benefits (worth US$49,824), it holding that the same had been forfeited as he did not avail of them within one year from the date of his separation. Thus the trial court disposed: WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of defendant Vicente Almario and against the plaintiff: 1- Dismissing the plaintiffs complaint; 2- Ordering the plaintiff to pay the defendant: a- the amount of P312,425.00 as actual damages with legal interest from the filing of the counterclaim; b- the amount of P500,000.00 as exemplary damages; c- the amount of P150,000.00 as attorneys fees; d- the costs of the suit. SO ORDERED.17 On appeal by both parties,18 the Court of Appeals, by Decision19 dated March 31, 2005, reversed the trial courts decision. It found Almario liable under the CBA between PAL and ALPAP and, in any event, under Article 22 of the Civil Code. Thus it disposed:

WHEREFORE, the appealed Decision is REVERSED and SET ASIDE. In lieu thereof, a new judgment is herebyENTERED, as follows: (a) Appellee Vicente Almario is hereby ordered to pay appellant Philippine Airlines, Inc. the sum of Five Hundred Fifty Nine Thousand, Seven Hundred [T]hirty Nine & 9/100 Pesos (P559, 739.90) with six percent (6%) interest as above-computed; and (b) the award of exemplary damages and attorneys fees in favor of appellee is herebyDELETED.20 (Emphasis in the original; underscoring supplied) His Motion for Reconsideration21 having been denied,22 Almario filed the instant Petition for Certiorari [sic] (Under Rule 45),23 raising the following issues: A. Whether the Court of Appeals committed reversible error in interpreting the Collective Bargaining Agreementbetween Philippine Airlines, Inc. (PAL) and the Airline Pilots Association of the Philippines (ALPAP) as an ordinary civil law contract applying ordinary contract law principles which is contrary to the ruling of the Supreme Court inSamahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFM-UWP) v. NLRCand, therefore, erroneously reading into the CBA a clause that was not agreed to during the negotiation and not expressly stated in the CBA; B. Whether the Court of Appeals committed reversible error in holding that Article 22 of the Civil Code can be applied to recover training costs which were never agreed to nor included as reimbursable expenses under the CBA; C. Whether the availing by petitioner of a required training is a legal ground justifying the entitlement to a benefit and therefore, negating claims of unjust enrichment; D. Whether the failure of private respondent to honor and provide the Family Trip Pass Benefit in the equivalent amount of US$ 49,824.00 which petitioner and his family were not able to avail of within the one (1) year from date of separation due to the actions of PAL amounts to unjust enrichment; E. Whether or not respondent is liable for malicious prosecution[.] 24 (Underscoring supplied) Almario insists on the absence of any written contract or explicit provision in the CBA obliging him to reimburse the costs incurred by PAL for his training. And he argues: [T]here can be no unjust enrichment because petitioner was entitled to the benefit of training when his bid was accepted, and x x x PAL did not suffer any injury because the failure to include a reimbursement provision in the CBA was freely entered into by the negotiating parties; xxxx It is not disputed that the petitioner merely entered a bid for a higher position, and that when he was accepted based on seniority and qualification, the position was awarded to him. It is also not disputed that petitioner [had] not asked, requested, or demanded for the training. It came when his bid was accepted by PAL; Because the training was provided when the bid was accepted, the acceptance of the bid was the basis and legal ground for the training; Therefore, since there is a legal ground for the entitlement of the training, contrary to the ruling of the Court of Appeals, there can be no unjust enrichment;25 (Underscoring supplied) The petition fails. As reflected in the above-enumerated issues raised by Almario, he cites the case of Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines (SMTFM-UWP) v. NLRC26 (Manggagawa) in support of his claim that the appellate court erred in interpreting the CBA as an ordinary civil law contract and in reading into it "a clause that was not agreed to during the negotiation and not expressly stated in the CBA." On the contrary, the ruling in Manggagawa supports PALs position. Thus this Court held: The CBA is the law between the contracting parties the collective bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions

should be "construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve." This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation.27 (Emphasis and underscoring supplied) In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine Airlines, Inc.," the Secretary of the Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on the terms and conditions for the renewal of their CBA which expired on December 31, 1987 and construing Section 1 of Article XXIII of the 1985-1987 CBA, held: xxxx Section 1, Article XXIII of the 1985-1987 CBA provides: Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet aircraft shall not be permitted to bid into the Companys turbo -jet operations. Pilots fifty-five (55) years of age or over who have previously qualified in the companys turbo-jet operations may be by-passed at Company option, however, any such pilot shall be paid the by-pass pay effective upon the date a junior pilot starts to occupy the bidded position. x x x PAL x x x proposed to amend the provision in this wise: The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five (55) years and over without having previously qualified in any Company turbo-jet aircraft shall not be permitted to occupy any position in the Companys turbo-jet fleet. Pilots fifty-four (54) years of age and over are ineligible for promotion to any position in Group I. Pilots reaching the age of fifty-five (55) shall be frozen in the position they currently occupy at that time and shall be ineligible for any further movement to any other positions. PALs contention is basically premised on prohibitive training costs. The return on this investment in the form of the pilot promoted is allegedly five (5) years. Considering the pilots age, the chances of full recovery [are] asserted to be quite slim. ALPAP opposed the proposal and argued that the training cost is offset by the pilots maturity, expertise and experience. By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbo -jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. But if a pilot is only at age fifty-five (55), and promotional positions are available, he should still be considered and promoted if qualified, provided he has previously qualified in any company turbo-jet aircraft. In the latter case, the prohibitive training costs are more than offset by the maturity, expertise, and experience of the pilot. Thus, the provision on age limit should now read: Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.28 (Emphasis and underscoring supplied) The above-quoted provision of Section 1 of Article XXIII of the 1985-1987 CBA, as construed by the DOLE Secretary, was substantially incorporated in the 1991-1994 CBA between PAL and ALPAP29 as follows: Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are less than fifty-seven (57) years of age provided they have previously qualified in any companys turbo -jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.30 The same section of Article XXIII of the 1991-1994 CBA was reproduced in the 1994-2000 CBA.31 Arturo Gabanton, PALs Senior Vice President for Flight Operations, testifying on PALs "policy or practice" on underwriting the training costs of its pilots at the time Almario was trained, with the "expectation" of benefiting therefrom "in order to recover the cost of training," explained:

Atty. Parinas: Q: At the time the defendant was accepted for training as A300 First Officer, would you know what was the governing policy or practice of Philippine Airlines that was being employed regarding the training cost[s] for the pilots? Witness: A: The company has to spend for the training of the pilots and after that the company expecting that services will be rendered in order to recover the cost[s] of training. Atty. Parinas: Q: You stated that the pilot must serve the company after completing the training, for how long after completing the training? Witness: A: At least for three (3) years. Atty. Parinas: Q: What is your basis in saying that a pilot must serve the company after completing the training? Witness: A: That is embodied in the Collective Bargaining Agreement between Philippine Airlines and the Airline Pilot Association of the Philippines.32 xxxx Atty. Parinas: Q: Can you point to the provision in this agreement relating to the three (3) year period you stated a while ago? NOTE: Witness going over the document shown to him by counsel. Witness: A: It is on page 99 of the Collective Bargaining Agreement, Article 23, Miscellaneous. Atty. Parinas: I would like to manifest that this provision pointed out by the witness is already marked as Exhibit B-1 by the plaintiff. xxxx [Atty. Parinas] Q: Mr. witness, Exhibit B-1 states in part that "Pilots, 57 years of age shall be frozen in their position. Pilots who are less than 57 years of age provided they have been previously qualified in any companys Turbo -Jet Aircraft shall be permitted to occupy any position in the companys Turbo-jet Fleet", why do you say this is the basis for the three (3) year period within which a pilot must render service to the company after completing the training? [Witness] A: The reason why 57 years old is placed here in the Collective Bargaining Agreement [is that] it is expected that you serve the position for three (3) years because the retirement age is at 60, therefore, if you are past 57 years old, it will fall short of the three (3) years recovery period for the company. So it was established that [anyone] past 57 years old will not be allowed to train for another position.33 (Emphasis and underscoring supplied)

It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he was expected to serve PAL for at least three years to offset "the prohibitive costs" thereof. The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim, Article 22 of the Civil Code which reads: Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him, applies. This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of another. An authority on Civil Law34 writes on the subject, viz: Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value of property of the defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of a right in the defendant; and (7) the improvement of the conditions of life of the defendant. xxxx The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the plaintiff. 1wphi1 This prejudice may consist, not only of the loss of property or the deprivation of its enjoyment, but also of non-payment of compensation for a prestation or service rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire something which the latter would have obtained. The injury to the plaintiff, however, need not be the cause of the enrichment of the defendant. It is enough that there be some relation between them, that the enrichment of the defendant would not have been produced had it not been for the fact from which the injury to the plaintiff is derived. (Underscoring supplied)35 Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill, proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL expected to recover the training costs by availing of Almarios services for at least three years. The expectation of PAL was not fully realized, however, due to Almarios resignation after only eight months of service following the completion of his training course. He cannot, therefore, refuse to reimburse the costs of training without violating the principle of unjust enrichment.1wphi1 Following the computation by the appellate court which was arrived at by offsetting the respective claims of the parties, viz: Training Cost Less: Appellee's corresponding 8 months Service after training [P850,107.00 divided by 36 months (3 years) = P23,640.86 x 8 months] Equals Less: Accrued Benefits P851,107.00

189,126.88 P661,980.12 102,240.22

Net Reimbursable Amount or P559,739.9036 Appellee's Outstanding Account *****************

Almario must pay PAL the sum of P559,739.90, to bear the legal interest rate of 6% per annum from the filing of PALs complaint on February 11, 1997 until the finality of this decision. In light of the foregoing discussions on the main issue, the Court finds it unnecessary to dwell on the other issues raised by Almario. Suffice it to state that the appellate courts disposition thereof is, as its decision reflects, well -taken. WHEREFORE, the petition is DENIED and the decision appealed from is AFFIRMED. Costs against petitioner. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: (ON LEAVE) LEONARDO A. QUISUMBING* Associate Justice Chairperson ANTONIO T. CARPIO*** Associate Justice Acting Chairperson PRESBITERO J. VELASCO, JR. Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Acting Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chair persons Attestation, I certify that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

ANGELINA SANDOVAL-GUTIERREZ** Associate Justice DANTE O. TINGA Associate Justice