G.R. No. L-22008, November 3, 1924 THE PEOPLE OF THE PHILIPPINE ISLANDS vs.

JULIO POMAR
The prosecuting attorney of the City of Manila presented a complaint in the CFI accusing the defendant of a violation of
section 13 in connection with section 15 of Act No. 3071 of the Philippine Legislature. That accused, being the manager
and person in charge of La Flor de la Isabela, a tobacco factory pertaining to La Campania General de Tabacos de
Filipinas, and having in his employ and service as cigar-maker in said factory, a woman by the name of Macaria
Fajardo, whom he granted vacation leave which began on the 16th day of July, 1923, by reason of her pregnancy,
failed and refused to pay to said woman the sum to which she was entitled as her regular wages corresponding to thirty
days before and thirty days after her delivery and confinement.
Defendant contended that the provisions of said Act No. 3071 were illegal, unconstitutional and void.
The CFI convicted POMAR as charged. POMAR appealed and questions the constitutionality of Act. No. 3071.
ISSUE: whether said Act has been adopted in the reasonable and lawful exercise of the police power of the state.
RULING:
The late Mr. Justice Harlan, in the case of Adair vs. United States (208 U. S., 161, 174), said that the right of a person
to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor
to prescribe the conditions upon which he will accept such labor from the person offering to sell. In all such particulars
the employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary
interference with the liberty of contract, which no government can legally justify in a free land, under a constitution which
provides that no person shall be deprived of his liberty without due process of law.
Liberty includes not only the right to labor, but to refuse to labor, and, consequently, the right to contract to labor or for
labor, and to terminate such contracts, and to refuse to make such contracts. The legislature cannot prevent persons,
who are sui juris, from laboring, or from making such contracts as they may see fit to make relative to their own lawful
labor; nor has it any power by penal laws to prevent any person, with or without cause, from refusing to employ another
or to terminate a contract with him, subject only to the liability to respond in a civil action for an unwarranted refusal to
do that which has been agreed upon.
The statute in question is exactly analogous to the "Minimum Wage Act" referred to above. In section 13 it will be seen
that no person, firm, or corporation owning or managing a factory shop, or place of labor of any description, can make a
contract with a woman without incurring the obligation, whatever the contract of employment might be, unless he also
promise to pay to such woman employed as a laborer, who may become pregnant, her wages for thirty days before and
thirty days after confinement. In other words, said section creates a term or condition in every contract made by every
person, firm, or corporation with any woman who may, during the course of her employment, become pregnant, and a
failure to include in said contract the terms fixed shall be subject to a fine and imprisonment. Clearly, therefore, the law
has deprived, every person, firm, or corporation owning or managing a factory, shop or place of labor of any description
within the Philippine Islands, of his right to enter into contracts of employment upon such terms as he and the employee
may agree upon. The law creates a term in every such contract, without the consent of the parties. Such persons are,
therefore, deprived of their liberty to contract. The constitution of the Philippine Islands guarantees to every citizen his
liberty and one of his liberties is the liberty to contract.
It will also be noted from an examination of said section 13, that it takes no account of contracts for the employment of
women by the day nor by the piece. The law is equally applicable to each case. It will hardly be contended that the
person, firm or corporation owning or managing a factory, shop or place of labor, who employs women by the day or by
the piece, could be compelled under the law to pay for sixty days during which no services were rendered.

300 U.S. 379, West Coast Hotel Co. v. Parrish; Argued: December 16, 17, 1936; Decided: March 29, 1937
(State legislation fixing minimum wages was deemed offensive to the due process clause in a 1923 decision in
Adkins v. Children's Hospital.11 Only in 1937, in the leading case of West Coast Hotel v. Parrish,12 was the
Adkins case overruled and a minimum wage law New York statute upheld.)

1. Deprivation of liberty to contract is forbidden by the Constitution if without due process of law, but restraint or
regulation of this liberty, if reasonable in relation to its subject and if adopted for the protection of the community against
evils menacing the health, safety, morals and welfare of the people, is due process. P. 391.
2. In dealing with the relation of employer and employed, the legislature has necessarily a wide field of discretion in
order that there may be suitable protection of health and safety, and that peace and good order may be promoted
through regulations designed to insure wholesome conditions of work and freedom from oppression. P. 393.
This case presents the question of the constitutional validity of the minimum wage law of the State of Washington.
The Act, entitled "Minimum Wages for Women," authorizes the fixing of minimum wages for women and minors. It
provides:
SEC. 2. It shall be unlawful to employ women or minors in any industry or occupation within the State of Washington
under conditions of labor detrimental to their health or morals, and it shall be unlawful to employ [p387] women workers
in any industry within the State of Washington at wages which are not adequate for their maintenance.
Further provisions required the Commission created under the law to ascertain the wages and conditions of labor of
women and minors within the State. Public hearings were to be held. If, after investigation, the Commission found that
the wages paid to women were "inadequate to supply them necessary cost of living and to maintain the workers in
health," the Commission was empowered to call a conference. The conference was to recommend to the Commission,
on its request, an estimate of a minimum wage adequate for the purpose above stated, and, on the approval of such a
recommendation, it became the duty of the Commission to issue an obligatory order fixing minimum wages.
The appellant conducts a hotel. The appellee, Elsie Parrish, was employed as a chambermaid and (with her husband)
brought this suit to recover the difference between the wages paid her and the minimum wage fixed pursuant to the
state law.
The constitutional provision invoked is the due process clause of the Fourteenth Amendment, governing the States, as
the due process clause invoked in the Adkins case governed Congress. In each case, the violation alleged by those
attacking the minimum wage regulation for women is deprivation of freedom of contract. What is this freedom? The
Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without
due process of law. In prohibiting that deprivation, the Constitution does not recognize an absolute and uncontrollable
liberty. Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social
organization which requires the protection of law against the evils which menace the health, safety, morals and welfare
of the people. Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation
which is reasonable in relation to its subject and is adopted in the interests of the community is due process.
Freedom of contract is a qualified, and not an absolute, right. There is no absolute freedom to do as one wills or to
contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of
activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards.
Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in
the interests of the community.
In dealing with the relation of employer and employed, the legislature has necessarily a wide field of discretion in order
that there may be suitable protection of health and safety, and that peace and good order may be promoted through
regulations designed to insure wholesome conditions of work and freedom from oppression.
The argument that the legislation in question constitutes an arbitrary discrimination, because it does not extend to men,
is unavailing. This Court has frequently held that the legislative authority, acting within its proper field, is not bound to
extend its regulation to all cases which it might possibly reach. The legislature "is free to recognize degrees of harm and
it may confine its restrictions to those classes of cases where the need is deemed to be clearest." If the law presumably
hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have
been applied. There is no "doctrinaire requirement" that the legislation should be couched in all embracing terms.

G.R. No. L-21484, November 29, 1969. ACCFA vs. ACCFA SUPERVISORS' ASSOCIATION, et. Al.
Separate Opinions: FERNANDO, J., concurring:
2. The influence exerted by American constitutional doctrines unavoidable when the Philippines was still under
American rule notwithstanding, an influence that has not altogether vanished even after independence, the laissez-faire

principle never found full acceptance in this jurisdiction, even during the period of its full flowering in the United States.
Moreover, to erase any doubts, the Constitutional Convention saw to it that our fundamental law embodies a policy of
the responsibility thrust on government to cope with social and economic problems and an earnest and sincere
commitment to the promotion of the general welfare through state action. It would thus follow that the force of any legal
objection to regulatory measures adversely affecting property rights or to statutes organizing public corporations that
may engage in competition with private enterprise has been blunted. Unless there be a clear showing of any invasion of
rights guaranteed by the Constitution, their validity is a foregone conclusion.
As early as 1919, in the leading case of Rubi V. Provincial Board of Mindoro, 20 Justice Malcolm already had occasion to
affirm: "The doctrines of laissez-faire and of unrestricted freedom of the individual, as axioms of economic and political
theory, are of the past. The modern period has shown a widespread belief in the amplest possible demonstration of
governmental activity.
Our constitution which took effect in 1935, upon the inauguration of the Commonwealth of the Philippines, erased
whatever doubts there might be on that score. Its philosophy is antithetical to the laissez-faire concept. Delegate, later
President, Manuel Roxas, one of the leading members of the Constitutional Convention, in answer precisely to an
objection of Delegate Jose Reyes of Sorsogon, who noted the "vast extensions in the sphere of governmental
functions" and the "almost unlimited power to interfere in the affairs of industry and agriculture as well as to compete
with existing business" as "reflections of the fascination exerted by [the then] current tendencies" in other jurisdictions,24
spoke thus: "My answer is that this constitution has a definite and well defined philosophy, not only political but social
and economic. A constitution that in 1776 or in 1789 was sufficient in the United States, considering the problems they
had at that time, may not now be sufficient with the growing and ever-widening complexities of social and economic
problems and relations. If the United States of America were to call a constitutional convention today to draft a
constitution for the United States, does any one doubt that in the provisions of that constitution there will be found
definite declarations of policy as to economic tendencies; that there will be matters which are necessary in accordance
with the experience of the American people during these years when vast organizations of capital and trade have
succeeded to a certain degree to control the life and destiny of the American people? If in this constitution the
gentleman will find declarations of economic policy, they are there because they are necessary to safeguard the
interests and welfare of the Filipino people because we believe that the days have come when in self-defense, a nation
may provide in its constitution those safeguards, the patrimony, the freedom to grow, the freedom to develop national
aspirations and national interests, not to be hampered by the artificial boundaries which a constitutional provision
automatically imposes."25
Delegate Roxas continued further: "The government is the creature of the people and the government exercises its
powers and functions in accordance with the will and purposes of the people. That is the first principle, the most
important one underlying this document. Second, the government established in this document is, in its form, in our
opinion, the most adapted to prevailing conditions, circumstances and the political outlook of the Filipino people. Rizal
said, 'Every people has the kind of government that they deserve.' That is just another form of expressing the principle
in politics enunciated by the French philosophers when they said: 'Every people has the right to establish the form of
government which they believe is most conducive to their welfare and their liberty.' Why have we preferred the
government that is established in this draft? Because it is the government with which we are familiar. It is the form of
government fundamentally such as it exists today; because it is the only kind of government that our people
understand; it is the kind of government we have found to be in consonance with our experience, with the necessary
modification, capable of permitting a fair play of social forces and allowing the people to conduct the affairs of that
government."26
One of the most prominent delegates, a leading intellectual, former President Rafael Palma of the University of the
Philippines, stressed as a fundamental principle in the draft of the Constitution the limitation on the right to property. He
pointed out that the then prevailing view allowed the accumulation of wealth in one family down to the last remote
descendant, resulting in a grave disequilibrium and bringing in its wake extreme misery side by side with conspicuous
luxury. He did invite attention to the few millionaires at one extreme with the vast masses of Filipinos deprived of the
necessities of life at the other. He asked the Convention whether the Filipino people could long remain indifferent to
such a deplorable situation. For him to speak of a democracy under such circumstances would be nothing but an
illusion. He would thus emphasize the urgent need to remedy the grave social injustice that had produced such
widespread impoverishment, thus recognizing the vital role of government in this sphere.27
Another delegate, Tomas Confesor of Iloilo, was quite emphatic in his assertion for the need of a social justice provision
which is a departure from the laissez-faire principle. Thus: "Take the case of the tenancy system in the Philippines. You
have a tenant. There are hundreds of thousands of tenants working day in and day out, cultivating the fields of their

landlords. He puts all his time, all his energy, the labor and the assistance of his wife and children, in cultivating a piece
of ground for his landlord but when the time comes for the partition of the products of his toil what happens? If he
produces 25 cavanes of rice, he gets only perhaps five and the twenty goes to the landlord. Now can he go to court?
Has he a chance to go to court in order to secure his just share of the products of his toil? No. Under our present
regime of law, under our present regime of justice, you do not give that to the poor tenant. Gentlemen, you go to the
Cagayan Valley and see the condition under which those poor farmers are being exploited day in and day out. Can they
go to court under our present regime of justice, of liberty, or democracy? The other day, workmen were shot by the
police just because they wanted to increase or they desired that their wages be increased from thirty centavos a day to
forty or fifty centavos. Is it necessary to spill human blood just to secure an increase of ten centavos in the daily wages
of an ordinary laborer? And yet under our present regime of social justice, liberty and democracy, these things are
happening; these things, I say, are happening. Are those people getting any justice? No. They cannot get justice now
from our courts. For this reason, I say it is necessary that we insert 'social justice' here and that social justice must be
established by law. Proper legal provisions, proper legal facilities must be provided in order that there be a regime not
of justice alone, because we have that now and we are seeing the oppression arising from such a regime.
Consequently, we must emphasize the term 'social justice'."28
Delegate Ventenilla of Pangasinan reflected the attitude of the Convention as to why laissez-faire was no longer
acceptable. After speaking of times having changed, he proceeded: "Since then new problems have arisen. The
spiritual mission of government has descended to the level of the material. Then its function was primarily to soothe the
aching spirit. Now, it appears, it must also appease hunger. Now that we may read history backwards, we know for
instance, that the old theory of 'laissez-faire' has degenerated into 'big business affairs' which are gradually devouring
the rights of the people the same rights intended to be guarded and protected by the system of constitutional
guaranties. Oh, if the Fathers were now alive to see the changes that the centuries have wrought in our life! They might
contemplate the sad spectacle of organized exploitation greedily devouring the previous rights of the individual. They
might also behold the gradual disintegration of society, the fast disappearance of the bourgeois the middle class, the
backbone of the nation and the consequent drifting of the classes toward the opposite extremes the very rich and
the very poor."29
Embodying the spirit of the present epoch, general provisions were inserted in the Constitution which are intended to
bring about the needed social and economic equilibrium between component elements of society through the
application of what may be termed as the justitia communis advocated by Grotius and Leibnits many years ago to be
secured through the counterbalancing of economic and social forces and opportunities which should be regulated, if not
controlled, by the State or placed, as it were, in custodia societatis. 'The promotion of social justice to insure the wellbeing and economic security of all the people' was thus inserted as vital principle in our Constitution. ... ."
4. With the decision reached by us today, the government is freed from the compulsion exerted by the Bacani doctrine
of the "constituent-ministrant" test as a criterion for the type of activity in which it may engage. Its constricting effect is
consigned to oblivion. No doubts or misgivings need assail us that governmental efforts to promote the public weal,
whether through regulatory legislation of vast scope and amplitude or through the undertaking of business activities,
would have to face a searching and rigorous scrutiny. It is clear that their legitimacy cannot be challenged on the
ground alone of their being offensive to the implications of the laissez-faire concept. Unless there be a repugnancy then
to the limitations expressly set forth in the Constitution to protect individual rights, the government enjoys a much wider
latitude of action as to the means it chooses to cope with grave social and economic problems that urgently press for
solution. For me, at least, that is to manifest deference to the philosophy of our fundamental law. Hence my full
concurrence, as announced at the outset.

G.R. No. 103524 April 15, 1992. CESAR BENGZON, et. Al. vs. DRILON, et. Al.
The petitioners are retired Justices of the Supreme Court and Court of Appeals who are currently receiving monthly
pensions under Republic Act No. 910 as amended by Republic Act No. 1797. They filed the instant petition on their own
behalf and in representation of all other retired Justices of the Supreme Court and the Court of Appeals similarly
situated.
On June 20, 1953, Republic Act No, 910 was enacted to provide the retirement pensions of Justices of the Supreme
Court and of the Court of Appeals. Republic Act No. 910 was amended by Republic Act No. 1797.

Identical retirement benefits were also given to the members of the Constitutional Commissions under Republic Act No.
1568, as amended by Republic Act No. 3595. On the occasion of the Armed Forces Loyalty Day, President Marcos
signed Presidential Decree 578 which extended similar retirement benefits to the members of the Armed Forces giving
them also the automatic readjustment features of Republic Act No. 1797 and Republic Act No. 3595.
Two months later, however, President Marcos issued Presidential Decree 644 repealing Section 3-A of Republic Act
No. 1797 and Republic Act No. 3595 which authorized the adjustment of the pension of the retired Justices of the
Supreme Court, Court of Appeals, Chairman and members of the Constitutional Commissions and the officers and
enlisted members of the Armed Forces to the prevailing rates of salaries.
Significantly, under Presidential Decree 1638 the automatic readjustment of the retirement pension of officers and
enlisted men was subsequently restored by President Marcos. A later decree Presidential Decree 1909 was also issued
providing for the automatic readjustment of the pensions of members of the Armed Forces who have retired prior to
September 10, 1979.
The adjustment of the retirement pensions for retired Justices of the Supreme Court and Court of Appeals was not
restored.
The Congress then approved a bill for the re-enactment of the repealed provisions of Republic Act No. 1797 and
Republic Act No. 3595. In the explanatory note of House Bill No. 16297 and Senate Bill No. 740, the legislature saw the
need to re-enact Republic Act Nos. 1797 and 3595 to restore said retirement pensions and privileges of the retired
Justices and members of the Constitutional Commissions, in order to assure those serving in the Supreme Court, Court
of Appeals and Constitutional Commissions adequate old age pensions.
President Aquino, however vetoed House Bill No. 16297 on the ground that "it would erode the very foundation of the
Government's collective effort to adhere faithfully to and enforce strictly the policy on standardization of compensation
as articulated in Republic Act No. 6758 known as Compensation and Position Classification Act of 1989." She further
said that "the Government should not grant distinct privileges to select group of officials whose retirement benefits
under existing laws already enjoy preferential treatment over those of the vast majority of our civil service servants."
III
It cannot be denied that the retired Justices have a vested right to the accrued pensions due them pursuant to RA 1797.
The right to a public pension is of statutory origin and statutes dealing with pensions have been enacted by practically
all the states in the United States and presumably in most countries of the world. Statutory provisions for the support of
Judges or Justices on retirement are founded on services rendered to the state. Where a judge has complied with the
statutory prerequisite for retirement with pay, his right to retire and draw salary becomes vested and may not,
thereafter, be revoked or impaired.
As early as 1953, Rep. Act No. 910 was enacted to grant pensions to retired Justices of the Supreme Court and Court
of Appeals.
This was amended by RA 1797 which provided for an automatic adjustment of the pension rates. Through the years,
laws were enacted and jurisprudence expounded to afford retirees better benefits.
The rationale behind the veto which implies that Justices and Constitutional officers are unduly favored is, again, a
misimpression.
Immediately, we can state that retired Armed Forces officers and enlisted men number in the tens of thousands while
retired Justices are so few they can be immediately identified. Justices retire at age 70 while military men retire at a
much younger age some retired Generals left the military at age 50 or earlier. Yet the benefits in Rep. Act No. 1797
are made to apply equally to both groups. Any ideas arising from an alleged violation of the equal protection clause
should first be directed to retirees in the military or civil service where the reason for the retirement provision is not
based on indubitable and constitutionally sanctioned grounds, not to a handful of retired Justices whose retirement
pensions are founded on constitutional reasons.

The provisions regarding retirement pensions of justices arise from the package of protections given by the Constitution
to guarantee and preserve the independence of the Judiciary.
The Constitution expressly vests the power of judicial review in this Court. Any institution given the power to declare, in
proper cases, that act of both the President and Congress are unconstitutional needs a high degree of independence in
the exercise of its functions. Our jurisdiction may not be reduced by Congress. Neither may it be increased without our
advice and concurrence. Justices may not be removed until they reach age 70 except through impeachment. All courts
and court personnel are under the administrative supervision of the Supreme Court. The President may not appoint any
Judge or Justice unless he or she has been nominated by the Judicial and Bar Council which, in turn, is under the
Supreme Court's supervision. Our salaries may not be decreased during our continuance in office. We cannot be
designated to any agency performing administrative or quasi-judicial functions. We are specifically given fiscal
autonomy. The Judiciary is not only independent of, but also co-equal and coordinate with the Executive and Legislative
Departments. (Article VIII and section 30, Article VI, Constitution)
Any argument which seeks to remove special privileges given by law to former Justices of this Court and the ground
that there should be no "grant of distinct privileges" or "preferential treatment" to retired Justices ignores these
provisions of the Constitution and, in effect, asks that these Constitutional provisions on special protections for the
Judiciary be repealed. The integrity of our entire constitutional system is premised to a large extent on the
independence of the Judiciary. All these provisions are intended to preserve that independence. So are the laws on
retirement benefits of Justices.
One last point.
The Office of the Solicitor General argues that:
. . . Moreover, by granting these benefits to retired Justices implies that public funds, raised from taxes
on other citizens, will be paid off to select individuals who are already leading private lives and have
ceased performing public service. Said the United States Supreme Court, speaking through Mr. Justice
Miller: "To lay with one hand the power of the government on the property of the citizen, and with the
other to bestow upon favored individuals . . . is nonetheless a robbery because it is done under the forms
of law . . ." (Law Association V. Topeka, 20 Wall. 655) (Comment, p. 16)
The above arguments are not only specious, impolite and offensive; they certainly are unbecoming of an office whose
top officials are supposed to be, under their charter, learned in the law.
Chief Justice Cesar Bengzon and Chief Justice Querube Makalintal, Justices J.B.L. Reyes, Cecilia Muoz Palma, Efren
Plana, Vicente Abad Santos, and, in fact, all retired Justices of the Supreme Court and the Court of Appeals may no
longer be in the active service. Still, the Solicitor General and all lawyers under him who represent the government
before the two courts and whose predecessors themselves appeared before these retirees, should show some
continuing esteem and good manners toward these Justices who are now in the evening of their years.
All that the retirees ask is to be given the benefits granted by law. To characterize them as engaging in "robbery" is
intemperate, abrasive, and disrespectful more so because the argument is unfounded.
If the Comment is characteristic of OSG pleadings today, then we are sorry to state that the then quality of research in
that institution has severely deteriorated.
In the first place, the citation of the case is, wrong. The title is not LAW Association v. Topeka but Citizen's Savings and
Loan Association of Cleveland, Ohio v. Topeka City (20 Wall. 655; 87 U.S. 729; 22 Law. Ed. 455 [1874]. Second, the
case involved the validity of a statute authorizing cities and counties to issue bonds for the purpose of building bridges,
waterpower, and other public works to aid private railroads improve their services. The law was declared void on the
ground that the right of a municipality to impose a tax cannot be used for private interests.
The case was decided in 1874. The world has turned over more than 40,000 times since that ancient period. Public use
is now equated with public interest. Public money may now be used for slum clearance, low-cost housing, squatter
resettlement, urban and agrarian reform where only private persons are the immediate beneficiaries. What was
"robbery" in 1874 is now called "social justice." There is nothing about retirement benefits in the cited case. Obviously,
the OSG lawyers cited from an old textbook or encyclopedia which could not even spell "loan" correctly. Good lawyers
are expected to go to primary sources and to use only relevant citations.

The Court has been deluged with letters and petitions by former colleagues in the Judiciary requesting adjustments in
their pensions just so they would be able to cope with the everyday living expenses not to mention the high cost of
medical bills that old age entails. As Justice Cruz aptly stated in Teodoro J. Santiago v. COA, (G.R. No. 92284, July 12,
1991);
Retirement laws should be interpreted liberally in favor of the retiree because their intention is to provide
for his sustenance, and hopefully even comfort, when he no longer has the stamina to continue earning
his livelihood. After devoting the best years of his life to the public service, he deserves the appreciation
of a grateful government as best concretely expressed in a generous retirement gratuity commensurate
with the value and length of his services. That generosity is the least he should expect now that his work
is done and his youth is gone. Even as he feels the weariness in his bones and glimpses the approach of
the lengthening shadows, he should be able to luxuriate in the thought that he did his task well, and was
rewarded for it.
For as long as these retired Justices are entitled under laws which continue to be effective, the government cannot
deprive them of their vested right to the payment of their pensions.

[G.R. No. 47800. December 2, 1940.] MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.
It is alleged in the petition that the National Traffic Commission resolved to recommend to the Director of Public Works
and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along
certain streets for a certain time. The measure proposed was adopted in pursuance of the provisions of Commonwealth
Act No. 548 which authorizes said Director of Public Works to promulgate rules and regulations to regulate and control
the use of and traffic on national roads. The Mayor of Manila and the Acting Chief of Police of Manila have enforced and
caused to be enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animaldrawn vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment not only
of
their
owners
but
of
the
riding
public
as
well.
The petitioner avers that the rules and regulations complained of infringe upon the constitutional precept regarding the
promotion of social justice to insure the well-being and economic security of all the people. The promotion of social
justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through
the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined
force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting
the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."

G.R. No. 119243 April 17, 1997. BREW MASTER vs. NAFLU, ANTONIO D. ESTRADA and NLRC
ESTRADA was first employed by BREW as route helper with the latest daily wage of P119.00. For a period of one (1)
month, complainant went on absent without permission (AWOP). BREW sent a Memo to complainant asking for an
explanation for the said absence. Complainant explained:
"Sa dahilan po na ako ay hindi nakapagpaalam sainyo (sic) dahil inuwi ko ang mga anak ko sa Samar dahil ang asawa
ko ay lumayas at walang mag-aalaga sa mga anak ko. Kaya naman hindi ako naka long distance or telegrama dahil
wala akong pera at ibinili ko ng gamot ay puro utang pa.
Finding said explanation unsatisfactory, ESTRADA was terminated.

Complainants (respondents herein/NAFLU ESTRADA) contend that individual complainant's dismissal was done
without just cause.
Respondent (plaintiff herein/BREW) contends that individual complainant was dismissed for cause allowed by the
company Rules and Regulations and the Labor Code; that the act of complainant in absenting from work for one (1)
month without official leave is deleterious to the business of respondent; that it will result to stoppage of production
which will not only destructive to respondent's interests but also to the interest of its employees in general.
The Labor. Arbiter dismissed the complaint for lack of merit, citing the principle of managerial control.
On appeal, the NLRC modified the Labor Arbiter's decision and held that complainant's dismissal was invalid ruling that
dismissal was a severe a penalty considering that ESTRADA is only a first time offender. NLRC denied BREWs MR,
thus the present certiorari.
RULING: A scrutiny of the facts discloses that complainant's absence was precipitated by grave family problem as his
wife unexpectedly deserted him and abandoned the family. Considering that he had a full-time job, there was no one to
whom to he could entrust the children and he was thus compelled to bring them to the province. It would have been
extremely difficult for him to have been husband and wife/father and mother at the same time to the children in the
metropolis. He was then under emotional, psychological, spiritual and physical stress and strain. The reason for his
absence is, under these circumstances, justified. While his failure to inform and seek petitioner's approval was an
omission which must be corrected and chastised, he did not merit the severest penalty of dismissal from the service.
Complainant sought petitioner's understanding. In declaring him guilty of abandonment, petitioner merely relied on its
Rules and Regulations which limited its application to a six-day continuous absence, contrary to the purpose of the law.
While the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees,
these rules and their implementation must be fair, just and reasonable. It must be underscored that no less than our
Constitution looks with compassion on the workingman and protects his rights not only under a general statement of a
state policy, 21 but under the Article on Social Justice and Human Rights, 22 thus placing labor contracts on a higher
plane and with greater safeguards. Verily, relations between capital and labor are not merely contractual. They are
impressed with public interest and labor contracts must, perforce, yield to the common good.

G.R. No. 110017 Jan. 2, 1997. RODOLFO FUENTES, et. Al. vs. NLRC, AGUSAN PLANT. INC., AND/OR CHANG
CHEE KONG
The State is bound under the Constitution to afford full protection to labor and when conflicting interests of
labor and capital are to be weighed on the scales of social justice the heavier influence of the latter should be
counterbalanced with the sympathy and compassion the law accords the less privileged workingman. Labor is
not a mere employee of capital but its active and equal partner.
Petitioners (75 in all) were regular employees of private respondent AGUSAN which was engaged in the operation of a
palm tree plantation. Claiming that it was suffering business losses which resulted in the decision of the head office in
Singapore to undertake retrenchment measures, private respondent sent notices of termination to petitioners and the
DOLE.
Petitioners filed with the DOLE a complaint for illegal dismissal with prayer for reinstatement, etc. Respondents denied
the allegations of petitioners and contended that upon receipt of instructions from the head office in Singapore to
implement retrenchment, private respondents conducted grievance conferences or meetings. Private respondents also
contended that the 30-day notices of termination were duly sent to petitioners.
The LA ruled in favour of petitioners. On appeal, the NLRC reversed the arbiters ruling.
RULING: Petitioners allege that respondent NLRC gravely abused its discretion amounting to lack or excess of
jurisdiction in ruling that petitioners were legally terminated from their employment. They argued that their dismissal or
retrenchment did not comply with the requirements of Art. 283 of the Labor Code.
We sustain petitioners.

Under Art. 283 therefore retrenchment may be valid only when the following requisites are met: (a) it is to prevent
losses; (b) written notices were served on the workers and the Department of Labor and Employment (DOLE) at least
one (1) month before the effective date of retrenchment; and, (c) separation pay is paid to the affected workers.
The closure of a business establishment is a ground for the termination of the services of an employee unless the
closing is for the purpose of circumventing pertinent provisions of the Labor Code. But while business reverses can be a
just cause for terminating employees, they must be sufficiently proved by the employer.
Private respondents did not present any other documentary proof of their alleged losses which could have been easily
proven in the financial statements which unfortunately were not shown. Indeed, private respondents failed to prove their
claim of business losses. What they submitted to the Labor Arbiter were mere self-serving documents and allegations.
Private respondents never adduced evidence which would show clearly the extent of losses they suffered as a result of
lack of capital funding, which failure is fatal to their cause.
The 1-month period requirement of notices of termination to employees was not also complied with. (Termination was
effected Sept. 25; the notices were given on Sept. 12)
We agree with the conclusion of the Labor Arbiter that the termination of the services of petitioners was illegal as there
was no valid retrenchment. The Court firmly holds that measures should be strictly implemented to ensure that such
constitutional mandate on protection to labor is not rendered meaningless by an erroneous interpretation of applicable
laws.

G.R. No. 112630 September 5, 1997. CORAZON JAMER, et. Al. vs. NLRC, ISETANN DEPARTMENT STORE
and/or JOHN GO
Petitioners are both employees of respondent ISETANN. This complaint arose from the dismissal of the complainants
by the respondents. They were both dismissed on August 31, 1990 on the alleged ground of dishonesty in their work as
Store Cashiers.
Complainants discovered a shortage in the cash sales but they did not immediately report the shortage to management,
hoping to find the cause of the shortage but to no avail. They failed to reconcile the same. Hence, they had no other
alternative but to report the same to the management.
They were asked to explain and they submitted their respective written explanations.
Respondents placed both complainants under preventive suspension for the alleged shortages. Thereafter,
respondents conducted an administrative investigation. Finding the explanation of the complainants to be
unsatisfactory, respondent dismissed the complainants from the service. Aggrieved and not satisfied with the decision
of management terminating their services, complainants instituted the present action for illegal dismissal praying for
reinstatement with payment of backwages and other benefits. 7
Complainants further alleged that there were at a minimum of at least six (6) persons who could have access to the
company funds. To ascribe liability to the store cashiers alone, in the absence of a clear proof of any wrongdoing is not
only unfair and discriminatory but is likewise illegal.
The Labor Arbiter ruled in favor of herein petitioners. On appeal to the NLRC, the NLRC vacated the decision of the
Labor Arbiter and entering a new one dismissing the petitioners' complaint.
RULING:
On the merits, the court finds and so holds that substantial evidence exists to warrant the finding that petitioners were
validly dismissed for just cause and after observance of due process.
In the instant case, the court finds no difficulty in agreeing with the findings of the public respondent that the herein
petitioners were guilty of acts of dishonesty by incurring several occurrences of shortages which they failed to turnover
and account for/and in behalf of respondent Isetann. They were accorded the chance to explain their side as to the

shortages and that they have utterly failed to do so providing basis for their valid dismissal. The money is under their
responsibility, not one of them gave any explanation about the shortage or loss.
The failure of petitioners to report the aforequoted shortages and overages to management as soon as they arose
resulted in the breach of the fiduciary trust reposed in them by respondent company, thereby causing the latter to lose
confidence in them. The failure of petitioners to report to management the aforementioned irregularities constitute "fraud
or willful breach of the trust reposed in them by their employer or duly authorized representative" one of the just
causes in terminating employment as provided for by paragraph (c), Article 282 of the Labor Code, as amended.
Private respondents Isetann Department Store and Mr. John Go cannot be compelled to retain employees who are
clearly guilty of malfeasance as their continued employment will be prejudicial to the formers' best interest. 27 The law,
in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer.
The cause of social justice is not served by upholding the interest of petitioners in disregard of the right of private
respondents. Social justice ceases to be an effective instrument for the "equalization of the social and economic forces"
by the State when it is used to shield wrongdoing. 29 While it is true that compassion and human consideration should
guide the disposition of cases involving termination of employment since it affects one's source or means of livelihood, it
should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the
services of an employee who has been shown to be a gross liability to the employer.

G.R. No. 103525 March 29, 1996. MARCOPPER MINING CORP. vs. NLRC, NATIONAL MINES AND ALLIED
WORKERS' UNION (NAMAWU-MIF), respondents.
Social justice and full protection to labor guaranteed by the fundamental law of this land is not some romantic notion,
high in rhetoric but low in substance. The case at bench provides yet another example of harmonizing and balancing
the "right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth." 1
MARCOPPER and private respondent NAMAWU-MIF entered into a Collective Bargaining Agreement (CBA) effective
from 1 May 1984 until 30 April 1987 containing, among others, an agreement for a grant of general wage increase to all
employees within the bargaining unit.
Prior to the expiration of the aforestated Agreement, petitioner and private respondent executed a MOA wherein the
terms of the CBA, specifically on matters of wage increase and facilities allowance, were modified.
In compliance with the amended CBA, petitioner implemented the initial wage increase.
Later, E.O. No. 178 was promulgated mandating the integration of the cost of living allowance under Wage Orders Nos.
1, 2, 3, 5 and 6 into the basic wage of workers, its effectivity retroactive to 1 May 1987.
Petitioner implemented the second wage increase due on 1 May 1987 and thereafter added the integrated COLA.

Private respondent, however, assailed the manner in which the second wage increase was effected. It argued that the
COLA should first be integrated into the basic wage before the wage increase is computed. 8
The union filed a complaint for underpayment of wages before the Regional Arbitration.
The Labor Arbiter promulgated a decision in favor of the union.
The Labor Arbiter ruled in this wise:
First and foremost, the written instrument and the intention of the parties must be brought to the fore.
And talking of intention, we conjure to sharp focus the provision embossed in Section 1, Article V of the
collective agreement, viz:.
xxx xxx xxx

It is expressly understood that this wage increase shall be exclusive of increase in the
minimum wage and/or mandatory living allowance that may be promulgated during the life
of this Agreement. (Emphasis ours.)
The foregoing phrase albeit innocuously framed offers the cue. This ushers us to the inner sanctum of
what really was the intention of the parties to the contract. Treading along its lines, it becomes readily
discernible that this portion of the contract is the "stop-lock" gate or known in its technical term as the
"non-chargeability" clause. There can be no quibbling that on the strength of this provision, the
wage/allowance granted under this accord cannot be credited to similar form of benefit that may be
thereafter ordained by the government through legislation. That the parties therefore were consciously
aware at the time of the conclusion of the agreement of the never-ending rise in the cost of living is a
logical corollary. And while this upward trend may not be a welcome phenomenon, there was the
intention to yield and comply in the event of an imposition.
Petitioner appealed the Labor Arbiter's decision and the NLRC rendered its decision sustaining the Labor Arbiter's
ruling.
The NLRC declared:
. . . Increments to the laborers' financial gratification, be they in the form of salary increases or changes
in the salary scale are aimed at one thing improvement of the economic predicament of the laborers.
As such, they should be viewed in the light of the State's avowed policy to protect labor. Thus, having
entered into an agreement with its employees, an employer may not be allowed to renege on its
obligation under a collective bargaining agreement should, at the same time, the law grants the
employees the same or better terms and conditions of employment. Employee benefits derived from law
are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the
agreement itself or by law. (Meycauayan College v. Hen. Franklin N. Drilon, 185 SCRA 50). 12
Petitioner's motion for reconsideration was denied by the NLRC. Thus, the present petition.
RULING:
Petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the pendulum of
judgment swings to and fro and the forces are equal on both sides, the same must be stilled in favor of labor." While
petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be resolved in favor of labor, 20 it
insists that what is involved here is the amended CBA which is essentially a contract between private persons. What
petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to accord utmost protection
and justice to labor, a policy, we are, likewise, sworn to uphold..
Philippine Telegraph & Telephone Corporation v. NLRC, 21 we categorically stated that:
When conflicting interests of labor and capital are to be weighed on the scales of social justice, the
heavier influence of the latter should be counter-balanced by sympathy and compassion the law must
accord the underprivileged worker.
Likewise, in Terminal Facilities and Services Corporation v. NLRC, 22 we declared:
Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice
policy.
The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We are bound to ensure
its fruition.

G.R. No. 111933 July 23, 1997. PLDT vs. NATIONAL LABOR RELATIONS COMMISSION and LETTIE P. CORPUZ

CORPUZ was employed as traffic operator at the Manila International Traffic Division (MITD) by the PLDT for ten years
and nine months until her dismissal. Her primary task was to facilitate requests for incoming and outgoing international
calls through the use of a digital switchboard.
MITD Manager Erlinda Kabigting directed respondent to explain her alleged infraction, that is, facilitating 34 calls using
a disconnected number.
Instead of tendering the required explanation, respondent requested a formal investigation to allow her to confront the
witnesses and rebut the proofs that may be brought against her. On grounds of serious misconduct and breach of trust,
the Legal Department recommended her dismissal. Later, respondent received her letter of termination effective the day
after her receipt of the letter.
In a complaint for illegal dismissal filed by respondent against petitioner, Labor Arbiter Jose G. De Vera rendered a
decision in favour of CORPUZ .
On appeal, said decision was affirmed by the NLRC. Its motion for reconsideration having been denied, petitioner filed
the instant petition for certiorari.
RULING:
The records show, however, that the subject phone calls were neither unusual nor coincidental as other operators
shared similar experiences.
Thus, Labor Arbiter de Vera correctly ruled:
It need not be emphasized here that there were lapses in certain operational aspects of the respondent
company which made the irregularity possible, for indeed there exists a mystery about the serviceability of the
subject telephone line. That there were personnel of the respondent company involved who could have restored
what was earlier disconnected permanently appears certain. Nonetheless, exacting the ultimate blame upon the
respondent (complainant) in the absence of concrete inculpatory proofs of her complexity (sic) to an anomaly if
there be one, cannot be justified. 6
Petitioner failed to convincingly establish valid bases on the alleged serious misconduct and loss of trust and
confidence.
In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare
should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to tile
liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code, as amended, which states that
''all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules
and regulations shall be resolved in favor of labor, 11 as well as the Constitutional mandate that the State shall afford full
protection to labor and promote full employment opportunities for all. Likewise, it shall guarantee the rights of all
workers to security of tenure. Such constitutional right should not be denied on mere speculation of any unclear and
nebulous basis. 12

G.R. No. L-12582. January 28, 1961. LVN PICTURES vs. PHILIPPINE MUSICIANS Guild
Philippine Musicians Guild averred that it is a duly registered legitimate labor organization and that petitioner employ
musicians for the purpose of making music recordings for motion pictures. The Guild prayed that it be certified as the
sole and exclusive bargaining agency for all musicians working in the companies. The latter denied that they have any
musicians as employees and alleged that the musical recordings are furnished by independent contractors. The lower
court, however, rejected this pretense and sustained the theory of the Guild.
RULING:
By declaring a worker an employee of the person for whom he works and by recognizing and protecting his rights as
such, we eliminate the cause of industrial unrest and consequently we promote industrial peace, because we enable

him to negotiate an agreement which will settle disputes regarding conditions of employment, through the process of
collective bargaining.
To determine whether a person who performs work for another is the latter's employee or an independent contractor,
the National Labor Relations relies on 'the right to control' test. Under this test an employer-employee relationship exist
where the person for whom the services are performed reserves the right to control not only the end to be achieved, but
also the manner and means to be used in reaching the end.
The right of control of the film company over the musicians is shown (1) by calling the musicians through 'call slips' in
'the name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing
transportation and meals to musicians; and (4) by supervising and directing in detail, through the motion picture director
(employee of the film companies), the performance of the musicians before the camera, in order to suit the music they
are playing to the picture which is being flashed on the screen.
The work of the musicians is an integral part of the entire motion picture." Indeed, one can hardly find modern films
without music therein.

G.R. No. L-53590 July 31, 1984. ROSARIO BROTHERS vs. BLAS F. OPLE, et. Al.
Private respondents are tailors, pressers, stitchers and similar workers hired by the petitioner in its tailoring department
(Modes Suburbia). They are hired through a master cutter and the department head and upon the approval of the
personnel department and the management. For their services, they were paid weekly wages on piece-work basis,
minus the withholding tax per BIR rules. Further, they were registered with the Social Security System (SSS) as
employees of petitioner and premiums were deducted from their wages. They were required to report for work from
Monday through Saturday and to stay in the tailoring shop for no less than eight (8) hours a day, unless no job order
was given them after waiting for two to three hours, in which case, they may leave and may come back in the afternoon.
Their attendance was recorded through a bundy clock just like the other employees of petitioner. A master cutter
distributes job orders equally, supervises the work and sees to it that they were finished as soon as possible. The tailors
are given deadlines on their assigned jobs. They are required to work on job orders as soon as these are given to them.
Tailors are also required to follow the company code of discipline and the rules and regulations of the tailoring
department. Outright dismissal is meted on anyone who brings out company patterns.
Private respondents filed with the Ministry of Labor a complaint for violation of their 13th month pay and Emergency
Living Allowance against herein petitioner.
The labor arbiter dismissed private respondents claims ruling that private respondents are not employees of petitioner.
As a consequence, the private respondents were dismissed and this prompted them to file a complaint for illegal
dismissal with the Ministry of Labor. Meanwhile, the NLRC affirmed the decision of the Labor Arbiter and dismissed
private respondents' appeal. However, upon appeal to the Minister of Labor, it reversed the NLRC holding that under
the facts, the existence of the employment relations cannot be disputed. It also ordered the payment of private
respondents claims.
Thereafter, private respondents filed a motion for issuance of a writ of execution of the aforesaid decision of the Minister
of Labor which was granted and, partially implemented.
Hence, petitioner filed the petition for certiorari, praying, among others, to annul and set aside the decision of public
respondent Minister of Labor and to dismiss the claims of private respondents.
RULING:
The existence of employer-employee relationship is determined by the following elements, namely: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
employees' conduct although the latter is the most important element.
1. The selection and hiring of private respondents were done by the petitioner, through the master cutter who was a
regular employee. The procedure was modified when the employment of personnel was made by the management

itself after the applicants' qualifications had been passed upon by a committee of four. Later, further approval by the
Personnel Department was required.
2. Private respondents received their weekly wages from petitioner on piece-work basis which is within the scope and
meaning of the term "wage" as defined under Article 97(f) of the New Labor Code (PD 442).
3. Petitioner had the power to dismiss private respondents, as shown by the various memoranda issued for strict
compliance by private respondents, violations of which, in extreme cases, are grounds for outright dismissal. In fact,
they were dismissed on January 2, 1978, although, the dismissal was declared illegal by the Labor Arbiter.
4. Private respondents' conduct in the performance of their work was controlled by petitioner, such as: (1) they were
required to work from Monday through Saturday; (2) they worked on job orders without waiting for the deadline; (3) they
were to observe cleanliness in their place of work and were not allowed to bring out tailoring shop patterns; and (4) they
were subject to quality control by petitioner.
5. Private respondents were allowed to register with the Social Security System (SSS) as employees of petitioner and
premiums were deducted from their wages just like its other employees. And, withholding taxes were also deducted
from their wages for transmittal to the Bureau of Internal Revenue (BIR).

G.R. No. 64948 September 27, 1994. MANILA GOLF & COUNTRY CLUB, INC. vs. IAC and FERMIN LLAMAR
Private respondent and his fellow caddies petitioned before the Social Security Commission for coverage and availment
of benefits under the Social Security Act. They alleged in essence that although they were employees of the Manila Golf
and Country Club, the latter had not registered them as such with the SSS.
MANILA GOLF alleged that the caddies were allowed into the Club premises to render services as such to the
individual members and guests playing the Club's golf course and who themselves paid for such services; that as such
caddies, they were not subject to the direction and control of the Club as regards the manner in which they performed
their work; and hence, they were not the Club's employees.
Later, the other caddies continued no more their claims after realizing that there is no Er-Ee relationship.
The Commission dismissed the petition ruling that the caddy's fees were paid by the golf players themselves and not by
respondent club, and thus, there is no employer-employee relationship.
On appeal to IAC, it declared LLAMAR an employee of the Manila Gold and Country Club. The questioned employeremployee relationship between the Club and Fermin Llamar passed the so-called "control test." The Club's control over
the caddies encompassing:
(a) the promulgation of no less than twenty-four (24) rules and regulations just about every aspect
of the conduct that the caddy must observe, or avoid, when serving as such, any violation of any
which could subject him to disciplinary action, which may include suspending or cutting off his
access to the club premises;
(b) the devising and enforcement of a group rotation system whereby a caddy is assigned a
number which designates his turn to serve a player;
(c) the club's "suggesting" the rate of fees payable to the caddies.
RULING: No employer-employee relationship.
The list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the
petitioner's regulations, does not so circumscribe the actions or judgment of the caddies concerned as to leave them
little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things,
caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation
within the premises and grounds of whatever club they do their work in. They work for the club to which they attach

themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave
anytime they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of said
rules, any discipline may be meted them beyond barring them from the premises which the Club may do in any case
even absent any breach of the rules, and without violating any right to work on their part.
The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still
another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is
to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and
compensation that an employer would possess.
The Court agrees with petitioner that the group rotation system is merely a measure of assurance that the work is fairly
distributed.
(Petitioner) has no means of compelling the presence of a caddy. A caddy is not required to exercise his occupation in
the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with
any entity or individual without restriction by petitioner.
In the final analysis, petitioner has no way of compelling the presence of the caddies as they are not required to render
a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute because a player
is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation.
It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to work
elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other place of work
that he wishes (sic). Or a caddy who is on call for a particular day may deliberately absent himself if he has more
profitable caddying, or another, engagement in some other place. These are things beyond petitioner's control and for
which it imposes no direct sanctions on the caddies.

G.R. No. L-55674 July 25, 1983. LA SUERTE CIGAR AND CIGARETTE FACTORY vs. DIRECTOR OF THE
BUREAU OF LABOR RELATIONS
Private respondents Local Union of LA SUERTE and NATU (NATIONAL ASSOCIATION OF TRADE UNIONS) filed a
petition for direct certification or certification election which alleged among others, that forty-eight of the sixty sales
personnel of the Company were members of the local union; that the petition is supported by no less than 75% of the
sales force.
LA SUERTE then filed a motion to dismiss the petition on the ground that it is not supported by at least 30% of the
members of the proposed bargaining unit because (a) of the alleged forty-eight (48) members of the local union, thirtyone (31) had withdrawn prior to the filing of the petition; and (b) fourteen (14) of the alleged members of the union were
not employees of the Company but were independent contractors.
Private respondents opposed the Company's motion to dismiss alleging that the fourteen dealers are actually
employees of the Company because they are subject to its control and supervision.
The Med-Arbiter dismissed the petition as the fourteen dealers who joined the union should not be counted in
determining the 30% consent requirement because they are not employees but independent contractors.
The local union file a MR/Appeal. Acting on the MR/appeal, the Director of the Bureau of Labor Relations held that the
14 dealers are in fact employees of the company.
The Company then filed a motion to set aside the resolution of the Director of the Bureau of Labor Relations.
The Director of the Bureau of Labor Relations denied the Company's motion for reconsideration and directing that the
certification election be conducted immediately. Hence, this petition.
RULING:

I. Whether or not the 14 dealers are employees or independent contractors.

Er-Ee relationship is important in the determination of who shall be included in a proposed bargaining unit because it is
the sine qua non, the fundamental and essential condition that a bargaining unit be composed of employees. Failure to
establish this juridical relationship between the union members and the employer affects the legality of the union itself. It
means the ineligibility of the union members to present a petition for certification election as well as to vote therein.
Corollarily, when a petition for certification election is supported by 48 signatories in a bargaining unit composed of 60
salesmen, but 14 of the 48 lacks employee status, the petition is vitiated thereby. Herein lies the importance of resolving
the status of the dealers in this case.
Pursuant to the terms and stipulations of the Dealership Contracts between the dealers on one hand and the company
on the other, the status thereby created is one of independent contractorship.
It is likewise immediately noticeable that no such words as "to hire and employ" are present. The Dealership Agreement
uses the words "the factory has accepted the application of (name of applicant) and therefore has appointed him as one
of its dealers"; whereas the Dealership Supplementary Agreement is prefaced with the statement: "For and in
consideration of the mutual covenants and agreements made herein, by one to the other, the COMPANY and the
DEALER by these presents, enter into this Supplementary Agreement whereby the COMPANY will avail of the services
of the DEALER to handle the sale and distribution of the cigarette products". Nothing in the terms and conditions
likewise reveals that the dealers were engaged as employees.
Again, on the basis of the clear terms of the dealership agreements, no mention is made of the wages of the dealers. In
fact, it specifies that the dealer shall not receive any commission from the factory but the latter shall give the dealer a
discount for all sales either on consignment or in cash (par. 4).
The respondents were free to reject the terms of the dealership but having signed it, they were bound by its stipulations
and the consequences thereof under existing labor laws. The fact that the 14 local union members voluntarily executed
with La Suerte formal dealership agreements which indicate the distribution and sale of La Suerte cigarettes signifies
that they were acting as independent businessmen.
The terms and stipulations of the dealership agreement leave no room for doubt that the parties entered into a
transaction for the distribution and sale of La Suerte products whereby the distributor/seller or dealer assumes the
status of an independent contractor. The dealer on his own account sells the cigarettes in any manner he deems best
without constraint as to time. The dealers do not devote their full time in selling company products. They are likewise
engaged in other livelihood and businesses while selling cigarettes manufactured by the company.
The terms and conditions for the termination of the contract are the usual and common stipulations in independent
contractorship agreements. The contention that the totality of the powers expressly reserved to the company
establishes company control over the manner and details of performance is merely speculative and conjectural.

G.R. No. L-80680 January 26, 1989. DANILO B. TABAS, et. Al. vs. CALIFORNIA MANUFACTURING CO., et. Al.
Petitioners petitioned the NLRC for reinstatement and payment of various benefits against respondent California
Manufacturing Company. 1
California denied the existence of an employer-employee relation between the petitioners and the company and,
consequently, any liability for payment of money claims. On motion of the petitioners, Livi Manpower Services, Inc. was
impleaded as a party-respondent.
It appears that the petitioners were, prior to their stint with California, employees of LIVI, which subsequently assigned
them to work as "promotional merchandisers" 3 for CALIFORNIA pursuant to a manpower supply agreement. Among
other things, the agreement provided that Livi "is an independent contractor and nothing therein contained shall be
construed as creating between [California] and [Livi] . . . the relationship of principal-agent or employer-employee'.
The petitioners now allege that they had become regular California employees.

California denies any liability for the reason that it is not the petitioners' employer.
Whether the petitioners are California's or Livi's employees.
The labor arbiter's decision, 11 a decision affirmed on appeal, 12 ruled against the existence of any employer-employee
relation between the petitioners and California ostensibly in the light of the manpower supply contract.
RULING:
The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of
agreement. Hence, the fact that the manpower supply agreement between Livi and California had specifically
designated LIVI as the petitioners' employer and had absolved CALIFORNIA from any liability as an employer, will not
erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers
and either firm.
The determination of whether or not there is an employer-employee relation depends upon four standards: (1) the
manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or
absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's
conduct. 14 Of the four, the right-of-control test has been held to be the decisive factor. 15
On the other hand, based on Article 106 of the Labor Code, hereinbelow reproduced:
ART. 106. Contractor or sub-contractor. Whenever an employee enters into a contract with
another person for the performance of the former's work, the employees of the contractor and of
the latter's sub-contractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or sub-contractor fails to pay wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor or
sub-contractor to such employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by him.
xxxxx
There is 'labor-only' contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
that notwithstanding the absence of a direct employer-employee relationship between the employer in whose favor work
had been contracted out by a "labor-only" contractor, and the employees, the former has the responsibility, together
with the "labor-only" contractor, for any valid labor claims, 16 by operation of law. The reason, so we held, is that the
"labor-only" contractor is considered "merely an agent of the employer," 17 and liability must be shouldered by either one
or shared by both. 18
LIVI performs "manpower services", it contracts out labor in favor of clients. LIVI is "an independent contractor." The
bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California
with workers to pursue the latter's own business. In this connection, we do not agree that the petitioners had been made
to perform activities 'which are not directly related to the general business of manufacturing," 22 California's purported
"principal operation activity. " 23 The petitioner's had been charged with "merchandise promotion or sale of the products
of [California] including task and occasional price tagging," an activity that is doubtless, an integral part of the
manufacturing business. Livi, as a placement agency, had simply supplied CALIFORNIA with the manpower necessary
to carry out its (California's) merchandising activities, using its (California's) premises and equipment. 25

The fact that the petitioners have allegedly admitted being Livi's "direct employees" 26 in their complaints is nothing
conclusive. For one thing, the fact that the petitioners were (are), will not absolve California since liability has been
imposed by legal operation.
The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. As we
held in Philippine Bank of Communications v. NLRC, 27 a temporary or casual employee, under Article 218 of the Labor
Code, becomes regular after service of one year, unless he has been contracted for a specific project. And we cannot
say that merchandising is a specific project for the obvious reason that it is an activity related to the day-to-day
operations of California.
In the case at bar, Livi is admittedly an "independent contractor providing temporary services of manpower to its client. "
29
When it thus provided California with manpower, it supplied California with personnel, as if such personnel had been
directly hired by California. Hence, Article 106 of the Code applies.
The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-a-vis
the four barometers referred to earlier, since by fiction of law, either or both shoulder responsibility.

G.R. No. 84484 November 15, 1989. INSULAR LIFE vs. NLRC and MELECIO BASIAO
INSULAR CO. and Melecio T. Basiao entered into a contract 1 by which Basiao was "authorized to solicit within the
Philippines applications for insurance policies and annuities; he would receive "compensation, in the form of
commissions.
The contract also contained, among others, the ff. provisions governing the relations of the parties, the duties of the
Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means
of soliciting insurance. Nothing herein contained shall therefore be construed to create the relationship of employee and
employer between the Agent and the Company. However, the Agent shall observe and conform to all rules and
regulations which the Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly, rebates in any form,
or from making any misrepresentation or over-selling, and, in general, from doing or committing acts prohibited in the
Agent's Manual and in circulars of the Office of the Insurance Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to the Agent, for or on
account of ... (explicitly specified causes). ...
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations shall be valid
without the prior consent in writing of the Company. ...
Some four years later, the parties entered into another contract an Agency Manager's Contract and to implement
his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first contract with the Company. 2
Later, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the
Company in a civil action and this prompted the latter to terminate also his engagement under the first contract and to
stop payment of his commissions.
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. Without
contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid
thereunder. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor.
The Labor Arbiter ruled in favour of Basiao.

On appeal, the NLRC affirmed the arbiters ruling.

RULING:
INSULAR contends that from the terms of the contract they had entered into, Basiao was the master of his own time
and selling methods. Thus, no Er-Ee relationship exists.
Respondents contend that INSULAR exercises control over Basiao, basing from the contract provision obliging him to
"... observe and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as
to the fact that the Company prescribed the qualifications of applicants for insurance, processed their applications and
determined the amounts of insurance cover to be issued.
Not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the
services rendered may be accorded the effect of establishing an employer-employee relationship.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or
fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote
the result, create no employer-employee relationship unlike the second, which address both the result and the means
used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest,
as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the
relations between insurer and insured but also to the internal affairs of the insurance company. 12
In an insurance business, rules and regulations governing the conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and
what it requires or prohibits. None of these really invades the agent's contractual prerogative to adopt his own selling
methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a
commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an
ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without
jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision.

G.R. No. L-48645 January 7, 1987. "BROTHERHOOD" LABOR MOVEMENT, et. Al. vs. ZAMORA, et. Al.
Petitioners are workers who have been employed at the San Miguel Parola Glass Factory. They worked as
"cargadores" or "pahinante" at the SMC Plant loading, unloading, piling or palleting empty bottles and woosen shells to
and from company trucks and warehouses. At times, they accompanied the company trucks on their delivery routes.
Petitioners were paid every ten (10) days on a piece rate basis, that is, according to the number of cartons and wooden
shells they were able to load, unload, or pile.
Allegedly, petitioners organized and affiliated themselves with the petitioner union and engaged in union activities.
San Miguel refused to bargain with the petitioner union alleging that the workers are not their employees.
Later, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent company's glass
factory despite their regularly reporting for work.
BROTHERHOOD filed a complaint with the now defunct CIR charging San Miguel Corporation, et. Al. of unfair labor
practice and of illegal dismissal.
Respondents moved for the dismissal of the complaint on the grounds that the complainants are not and have never
been employees of respondent company but employees of the independent contractor.

The Labor Arbiter found for complainants which was concurred in by the NLRC.
On appeal, the Secretary stressed the absence of an employer-mployee relationship as borne out by the records of the
case.
The petitioners strongly argue that there exists an employer-employee relationship between them and the respondent
company.
RULING:
Applying the control test, the evidence strongly indicates the existence of an employer-employee relationship.
Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and
exclusively for the respondent company's shipping and warehousing department. Considering the length of time that the
petitioners have worked with the respondent company, there is justification to conclude that they were engaged to
perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are,
therefore regular employees.
In fact, despite past shutdowns of the glass plant for repairs, the petitioners, thereafter, promptly returned to their jobs,
never having been replaced, or assigned elsewhere until the present controversy arose. The term of the petitioners'
employment appears indefinite. The continuity and habituality of petitioners' work bolsters their claim of employee status
vis-a-vis respondent company.
Even under the assumption that a contract of employment had indeed been executed between respondent SMC and
the alleged labor contractor, respondent's case will, nevertheless, fail.
Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:
Job contracting. There is job contracting permissible under the Code if the following conditions
are met:
(1) The contractor carries on an independent business and undertakes the contract work on his
own account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of
the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
The Guaranteed and Reliable Labor contractors have neither substantial capital nor investment to qualify as an
independent contractor under the law. The premises, tools, equipment and paraphernalia used by the petitioners in their
jobs are admittedly all supplied by respondent company. It is only the manpower or labor force which the alleged
contractors supply, suggesting the existence of a "labor only" contracting scheme prohibited by law.
Anent the argument that the petitioners are not employees as they worked on piece basis, we merely have to cite our
rulings in Dy Keh Beng v. International Labor and Marine Union of the Philippines (90 SCRA 161), as follows:
Units of time . . . and units of work are just yardsticks whereby to determine rate of compensation,
to be applied whenever agreed upon.
Firmly establishing respondent SMC's role as employer is the control exercised by it over the petitioners that is, control
in the means and methods/manner by which petitioners are to go about their work, as well as in disciplinary measures
imposed by it.
Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the means and manner of
performing the same is practically nil. For, how many ways are there to load and unload bottles and wooden shells?
The mere concern of both respondent SMC and the alleged contractor is that the job of having the bottles and wooden

shells brought to and from the warehouse be done. More evident and pronounced is respondent company's right to
control in the discipline of petitioners. Documentary evidence presented by the petitioners establish respondent SMC's
right to impose disciplinary measures for violations or infractions of its rules and regulations as well as its right to
recommend transfers and dismissals of the piece workers. The inter-office memoranda submitted in evidence prove the
company's control over the petitioners. That respondent SMC has the power to recommend penalties or dismissal of the
piece workers is the strongest indication of respondent company's right of control over the petitioners as direct
employer. There is no evidence to show that the alleged labor contractor had such right of control or much less had
been there to supervise or deal with the petitioners.

G.R. No. 80774 May 31, 1988. SAN MIGUEL CORP. vs. NLRC and RUSTICO VEGA
In line with an Innovation Program sponsored by SMC, and under which, management undertook to grant cash awards
to "all SMC employees ... except [ED-HO staff, Division Managers and higher-ranked personnel" who submit to the
Corporation ideas and suggestions found to be beneficial to the Corporation, private respondent Rustico Vega
submitted an innovation proposal entitled "Modified Grande Pasteurization Process," and was supposed to eliminate
certain alleged defects in the quality and taste of the product "San Miguel Beer Grande:"
SMC did not find the aforequoted proposal acceptable and consequently refused Mr. Vega's subsequent demands for a
cash award under the Innovation Program. A Complaint was filed against SMC with the Regional Arbitration of the then
Ministry of Labor and Employment. Vega alleged there that his proposal "[had] been accepted by the methods analyst
and implemented by the Corporation, and that the same "ultimately and finally solved the problem of the Corporation in
the production of Beer Grande.Vega thus claimed entitlement to a cash prize of P60,000.00 and attorney's fees.
SMC alleged among others that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed the
grievance machinery procedure prescribed under a then existing collective bargaining agreement between
management and employees, and available administrative remedies provided under the rules of the Innovation
Program.
The Labor Arbiter, noting that the money claim of complainant Vega in this case is "not a necessary incident of his
employment" and that said claim is not among those mentioned in Article 217 of the Labor Code, dismissed the
complaint for lack of jurisdiction.
The Labor Arbiter's order was subsequently appealed by both parties. The NLRC ordered the SMC to pay Vega
60,000.00.
SMC, invoking Article 217 of the Labor Code, seeks to annul the Decision of NLRC upon the ground that the Labor
Arbiter and the Commission have no jurisdiction over the subject matter of the case.
RULING:
The jurisdiction of Labor Arbiters and the NLRC is outlined in Article 217 of the Labor Code, as last amended by Batas
Pambansa Blg. 227 which took effect on 1 June 1982:
ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor Arbiters shall have
the original and exclusive jurisdiction to hear and decide within thirty (30) working days after
submission of the case by the parties for decision, the following cases involving are workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and
conditions of employment;
3. All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other

benefits provided by law or appropriate agreement, except claims for employees'

compensation, social security, medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this; Code, including questions
involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters. (Emphasis supplied)
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe
of money claims that might be asserted by workers against their employers has been absorbed into the original and
exclusive jurisdiction of Labor Arbiters. It is evident that there is a unifying element which runs through paragraphs 1 to
5 and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee
relationship. For it cannot be presumed that money claims of workers which do not arise out of or in connection with
their employer-employee relationship, and which would therefore fall within the general jurisdiction of the regular courts
of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with
Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the money claims of workers"
referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employeremployee relationship, or some aspect or incident of such relationship.
Applying the foregoing reading to the present case, petitioner's Innovation Program is an employee incentive scheme
offered and open only to employees of petitioner Corporation, more specifically to employees below the rank of
manager. The money claim of private respondent Vega in this case arose out of or in connection with his employment
relationship with petitioner.
The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega
arose out of or in connection with his employment relation" with petitioner Corporation, is enough to bring such money
claim within the original and exclusive jurisdiction of Labor Arbiters.
Where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC.
Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was essentially an
invitation from SMC to its employees to submit innovation proposals. Such undertaking, though unilateral in origin,
could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation
under certain circumstances. Thus, whether or not an enforceable contract had arisen between petitioner Corporation
and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with
wages or other terms and conditions of employment, but rather having recourse to our law on contracts.

G.R. No. 89621 September 24, 1991. PEPSI COLA, et. Al. vs. LOLITA O. GAL-LANG, et. Al.
Private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of
empty Pepsi Cola bottles. Petitioners filed a criminal complaint against respondents but the same was dismissed.
Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner
company. As a result, they lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC,
and decisions ordered reinstatement with damages. In addition, they instituted in the RTC a separate civil complaint
against the petitioners for damages arising from what they claimed to be their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case
because it involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was

granted. However, the respondent judge, acting on the MR, reinstated the complaint, saying it was "distinct from the
labor case for damages now pending before the labor courts." The petitioners then came to SC for relief.
The petitioners invoke Article 217 of the Labor Code to support their position that the private respondents civil complaint
for damages falls under the jurisdiction of the labor arbiter.
RULING:
It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor
arbiters. This will be so only if there is a "reasonable causal connection" between the claim asserted and employeeemployer relations to put the case under the provisions of Article 217. Absent such a link, the complaint will be
cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction.
The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the
RTC by the employees of the defendant company. It does not appear that there is a "reasonable causal connection"
between the complaint and the relations of the parties as employer and employees. No such relationship or any unfair
labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed
the criminal complaint which the MTC said was intended "to harass the poor employees" and the dismissal of which
was affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the
respondents herein have committed the crime imputed against them." This is a matter which the labor arbiter has no
competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code.
"Talents differ, all is well and wisely put," so observed the philosopher-poet. 8 So it must be in the case we here decide.

G.R. No. L-59825 September 11, 1982. MEDINA, et. Al. vs. CASTRO-BARTOLOME, et. Al.
Petitioners alleged that defendant Cosme de Aboitiz, President and CEO of PEPSI, went to the Pepsi-Cola Plant, and
without any provocation, shouted and maliciously humiliated the plaintiffs with the use of slanderous language and other
words of similar import uttered in the presence of the plaintiffs' subordinate employees. ThusGOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT
TO ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE FIRED! '(referring to
Jose Ong )
Plaintiffs filed a joint criminal complaint for oral defamation against the defendant Cosme de Aboitiz, but the same was
dismissed allegedly because the expression "Fuck you and "You are both shit to me" were uttered not to slander but to
express anger and displeasure.
Plaintiffs filed a Petition for Review with the office of the Secretary of Justice (now Ministry of Justice) and the Deputy
Minister of Justice issued a resolution sustaining the plaintiff's complaint and directing the Provincial Fiscal to file
against defendant Aboitiz an information for Grave Slander.
That because of the anti-social manner by which the plaintiffs were dismissed from their employment and the
embarrassment and degradation they experience in the hands of the defendants, the plaintiffs asked the court to award
them civil damages.
A motion to dismiss the complaint on the ground of lack of jurisdiction was filed by the defendants. The trial court denied
the motion ruling that the complaint for civil damages is clearly not based on an employer-employee relationship but on
the manner of plaintiffs' dismissal and the effects flowing therefrom.
While the trial was underway, the defendants filed a second motion to dismiss the complaint because of amendments to
the Labor Code immediately prior thereto. The trial court, granting the dismissal, ruled that the complaint alleges unfair
labor practices which under Art. 217 of the Labor Code, as amended by P.D. 1691, has vested original and exclusive
jurisdiction to Labor Arbiters, and Art. 248, thereof ... "which may include claims for damages and other affirmative
reliefs."

The pivotal question is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs.

RULING:
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for
damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil
Code and not the Labor Code.

G.R. No. 157010. June 21, 2005. PHILIPPINE NATIONAL BANK vs. FLORENCE O. CABANSAG
The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective
mantle of Philippine labor and social legislations. Our labor statutes may not be rendered ineffective by laws or
judgments promulgated, or stipulations agreed upon, in a foreign country.
CABANSAG arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the PNB. She
applied for employment as Branch Credit Officer. Due to her credentials, the president of PNB approved PNB V. Pres.
Tobias recommendation. She then filed an Application, with the Ministry of Manpower of the Government of
Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch. Her application
was approved.
In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag
and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an Overseas
Employment Certificate, certifying that she was a bona fide contract worker for Singapore.
After sometime, Cabansag was asked to resign from her job. Tobias explained that her resignation was imperative as a
cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore
Branch will be sold or transformed into a remittance office. Later, Tobias again demanded Cabansag to submit her letter
of resignation, with the pretext that he needed a Chinese-speaking Credit Officer to penetrate the local market.
Cabansag refused to submit her letter of resignation. Later, she received a letter from Ruben C. Tobias terminating her
employment with the Bank.
The Labor Arbiter ruled in favor of Cabansag finding petitioners guilty of Illegal dismissal.
On appeal, the NLRC affirmed that Decision.
On appeal to CA, it ruled that even though respondent secured an employment pass from the Singapore Ministry of
Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over
her Complaint for illegal dismissal.
Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant
controversy?
RULING: The Petition has no merit.
Petitioners contention is that respondent was "locally hired"; and totally "governed by and subject to the laws, common
practices and customs" of Singapore, not of the Philippines.
Labor arbiters clearly have original and exclusive jurisdiction over claims arising from employer-employee relations,
including termination disputes involving all workers, among whom are overseas Filipino workers (OFW).15

We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB
branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the
Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to the immigration
regulations of that country.16
Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in
order to be legally employed here. That permit, however, does not automatically mean that the non-citizen is thereby
bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones national laws on labor.
Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status
as a worker in the issuing country.
Respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner
cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter.
Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social
legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public
policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of
sex, race or creed, and regulate the relations between workers and employers. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy
and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or
conventions agreed upon in a foreign country.

G.R. No. 122791. February 19, 2003. PLACIDO O. URBANES, JR. vs. SEC. OF LABOR AND EMPLOYMENT, SSS
Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security Agency, entered into
an agreement1 to provide security services to respondent Social Security System (SSS).
During the effectivity of the agreement, petitioner requested the SSS for the upward adjustment of their contract rate in
view of Wage Order No. NCR-03.
As his letter to the SSS remained unheeded, petitioner sent another letter reiterating the request, which was followed by
still another letter.
Later, petitioner pulled out his agencys services from the premises of the SSS and another security agency, Jaguar,
took over.
Petitioner filed a complaint with the DOLE-NCR against the SSS seeking the implementation of Wage Order No. NCR03.
SSS prayed for the dismissal of the complaint arguing that if it had any obligation, it was to the security guards.
The Regional Director of the DOLE-NCR ruled in favour of petitioner.
The SSS appealed13 to the Secretary of Labor questioning the jurisdiction of the Regional Director.
The Secretary of Labor set aside the order of the Regional Director and held petitioners security agency "JOINTLY
AND SEVERALLY liable to the security guards concerned." Petitioners MR was denied. Thus, the present petition.
RULING:
Petitioner asserts that the Secretary of Labor does not have jurisdiction to review appeals from decisions of the
Regional Directors in complaints filed under Article 129 of the Labor Code18 which provides:
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND OTHER BENEFITS. x x x x x x

Any decision or resolution of the regional director or officer pursuant to this provision may be appealed on the same
grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or
resolution, to the National Labor Relations Commission x x x x x .
x x x (Emphasis supplied).
Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should have been dismissed.19
The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case. Article 128 provides:
ART. 128. VISITORIAL AND ENFORCEMENT POWERS
xxx
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may
be appealed to the latter.
x x x (Emphasis supplied).
Neither the petitioners contention nor the SSSs is impressed with merit.
It is well settled in law and jurisprudence that where no employer-employee relationship exists between the
parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or
any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint,
petitioner is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages
on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is
within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution
of the issue involves the application of labor laws, reference to the labor code was only for the determination of
the solidary liability of the petitioner to the respondent where no employer-employee relation exists.
Even if petitioner filed the complaint on his and also on behalf of the security guards,22 the relief sought has to do with
the enforcement of the contract between him and the SSS which was deemed amended by virtue of Wage Order No.
NCR-03. The controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which is
the civil courts.

G.R. No. 154060 August 16, 2005. YUSEN AIR AND SEA SERVICE PHIL. vs. ISAGANI A. VILLAMOR
Petitioner is engaged in the business of freight forwarding.
Petitioner hired respondent as branch manager in its Cebu Office. Later, petitioner reclassified respondents position to
that of Division Manager, which position respondent held until his resignation.
Immediately after his resignation, respondent started working for Aspac International, a corporation engaged in the
same line of business as that of petitioner.
In the RTC, petitioner filed against respondent a complaint3 for injunction and damages alleging that [respondent]
violated his duly signed undertaking to abide by the policy of the [Petitioner] to refrain from engaging in any business or
undertaking that is directly or indirectly in competition with that of the company and its affiliates or activity prejudicial to
the interests of the company or to the performance of his/her job or work assignments for a period of two (2) years
from the date of an employees resignation, termination or separation from the company.
Petitioner thus prayed for a judgment enjoining respondent from "further pursuing his work at Aspac International".
Respondent filed a Motion to Dismiss arguing that the RTC has no jurisdiction over the subject matter of said case
because an employer-employee relationship is involved.

The trial court dismissed petitioners complaint for lack of jurisdiction over the subject matter thereof on the ground that
the action was for damages arising from employer-employee relations. Citing Article 217 of the Labor Code, the trial
court ruled that it is the labor arbiter which had jurisdiction over petitioners complaint. Petitioners MR was also denied.
Hence, petitioners present recourse, maintaining that its cause of action did not arise from employer-employee
relations.
Whether petitioner's claim for damages arose from employer-employee relations between the parties?
RULING: NO.
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon
in the contract as redress for private respondents breach of his contractual obligation to its "damage and prejudice".
Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.
More so when we consider that the stipulation refers to the post-employment relations of the parties.

G.R. No. 79004-08 October 4, 1991. FRANKLIN BAGUIO, et. Al. vs. NLRC, GENERAL MILLING CORP.
Private respondent Feliciano LUPO, a building contractor, entered into a contract with GMC, a domestic corporation
engaged in flour and feeds manufacturing, for the construction of an annex building inside the latter's plant. In
connection with the aforesaid contract, LUPO hired herein petitioners either as carpenters, masons or laborers.
Subsequently, LUPO terminated petitioners' services. As a result, petitioners filed Complaints against LUPO and GMC
before the NLRC Regional Arbitration for unpaid wages, etc.
The Labor Arbiter found LUPO and GMC jointly and severally liable to petitioners, premised on Article 109 of the Labor
Code. Elevated on appeal, the NLRC denied the same.
Upon Motion for Reconsideration, the NLRC absolved GMC from any liability. It opined that petitioners were only hired
by LUPO as workers in his construction contract with GMC and were never meant to be employed by the latter.
Petitioners contend that GMC is jointly and severally liable with LUPO for the latter's obligations to them. They seek
recovery from GMC based on Article 106 of the Labor Code which holds the employer jointly and severally liable with
his contractor for unpaid wages of employees of the latter.
GMC and the NLRC maintain that Article 106 finds no application in the instant case because it is limited to situations
where the work being performed by the contractor's employees are directly related to the principal business of the
employer. The NLRC further opines that Article 109 on "Solidary Liability" finds no application either because GMC was
neither petitioners' employer nor indirect employer.
RULING:
SC upheld the solidary liability of GMC and LUPO for the latter's liabilities in favor of employees whom he had earlier
employed and dismissed.
Recovery, however, should not be based on Article 106 of the Labor Code. This provision treats specifically of "laboronly" contracting, which is not the set-up between GMC and LUPO. A person is deemed to be engaged in "labor only"
contracting where (1) the person supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others; and (2) the workers recruited and placed by
such person are performing activities which are directly related to the principal business of such employer.
Since the construction of an annex building inside the company plant has no relation whatsoever with the employer's
business of flour and feeds manufacturing, "labor-only" contracting does not exist. Article 106 is thus inapplicable.
Instead, it is "job contracting," covered by Article 107, which is involved, reading:

Art. 107. Indirect Employer. The provisions of the immediately preceding Article shall likewise
apply to any person, partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any work, task, job or project.
(Emphasis supplied).
Specifically, there is "job contracting" where (1) the contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to his own manner and method, free from the
control and direction of his employer or principal in all matters connected with the performance of the work except as to
the results thereof; and (2) the contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his business.
Based on the foregoing, GMC qualifies as an "indirect employer." It entered into a contract with an independent
contractor, LUPO, for the construction of an annex building, a work, task, job or project not directly related to GMC's
business of flour and feeds manufacturing. Being an "indirect employer," GMC is solidarily liable with LUPO for any
violation of the Labor Code pursuant to Article 109 thereof, reading:
Art. 109. Solidary Liability. Theprovisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with a contractor or subcontractor
for any violation of any provision of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct employers.
The provision of existing law referred to is Article 1728 of the Civil Code, which states, among others, that "the
contractor is liable for all the claims of laborers and others employed by him ..."
The distinction between Articles 106 and 107 was in the fact that Article 106 deals with "labor-only" contracting. Here,
by operation of law, the contractor is merely considered as an agent of the employer, who is deemed "responsible to the
workers to the same extent as if the latter were directly employed by him." On the other hand, Article 107 deals with "job
contracting." In the latter situation, while the contractor himself is the direct employer of the employees, the employer is
deemed, by operation of law, as an indirect employer.
As an indirect employer, and for purposes of determining the extent of its civil liability, GMC is deemed a "direct
employee" of his contractor's employees pursuant to the last sentence of Article 109 of the Labor Code. As a
consequence, GMC can not escape its joint and solidary liability to petitioners.

G.R. Nos. 100376-77 June 17, 1994. DBP vs. NLRC, et. Al.
Private respondents were hired as security guards by Confidential Investigation and Security Corporation ("CISCOR").
In the course of their employment, private respondents were assigned to secure the premises of CISCORs clients,
among them, the herein petitioner DBP which, in turn, assigned private respondents to secure one of its properties or
assets, the Riverside Mills Corporation.
Later, private respondents resigned from CISCOR. Thereafter, they claimed from CISCOR the return of their cash bond
and payment of their 13th month pay and service incentive leave pay. For failure of CISCOR to grant their claims,
private respondents filed against CISCOR cases for the recovery of their claims.
CISCOR admitted that private respondents were former security guards of CISCOR. They added, however, that
petitioner allegedly formed its own security agency and pirated private respondents who tendered their voluntary
resignations from CISCOR.
CISCOR filed a motion with leave to implead petitioner bank and averred therein that in view of its contract with the
petitioner whereby, for a certain service fee, CISCOR undertook to guard petitioners premises, both CISCOR and
petitioner, under the Labor Code, are jointly and severally liable to pay the salaries and other statutory benefits due the
private respondents.
Petitioner stated that it cannot be held liable to the claim of private respondents because there was no failure on the
part of CISCOR and Medina to pay said claims.

The Labor Arbiter ruled in favour of private respondents.

From the above decision, CISCOR and Medina appealed to the NLRC. Petitioner likewise filed its Motion for
Reconsideration/Appeal and prayed for the Labor Arbiter to modify his decision and make CISCOR and Medina solely
liable for the claims of private respondents.
The NLRC held the petitioner DBP, CISCOR and Medina, as jointly and severally liable.
Hence, this petition for review on certiorari.
RULING:
Whether petitioner was correctly held jointly and severally liable, alongside CISCOR and Medina?
Petitioner posits that it is not the employer of private respondents and should thus not be held liable for the latters
claims. Petitioner even goes further by countering that, assuming arguendo, it was the indirect employer of private
respondents, Article 106 of the Labor Code 4 cannot be applied to the present case as there was no failure on the part
of CISCOR and Medina, as direct employer, to pay the claims of private respondents, but only a failure on the part of
the latter to present the proper clearance to pave the way for the payment of the claims. It emphasizes that the term
"fails" in Article 106 of the Labor Code implies insolvency or unwillingness of the direct employer to pay, which cannot
be said of CISCOR and Medina as they have manifested their willingness to pay private respondents claims after they
have presented proper clearance from accountability.
Petitioners interpretation of Article 106 of the Labor Code is quite misplaced. Nothing in said Article 106 indicates that
insolvency or unwillingness to pay by the contractor or direct employer is a prerequisite for the joint and several liability
of the principal or indirect employer. In fact, the rule is that in job contracting, the principal is jointly and severally liable
with the contractor. The statutory basis for this joint and several liability is set forth in Articles 107 5 and 109 6 in relation
to Article 106 of the Labor Code. 7 There is no doubt that private respondents are entitled to the cash benefits due them.
The petitioner is also, no doubt, liable to pay such benefits because the law mandates the joint and several liability of
the principal and the contractor for the protection of labor. The contractor is made liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of
paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates,
if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample
protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3]. 8

G.R. No. 144672. July 10, 2003. SAN MIGUEL CORP. vs. MAERC INTEGRATED SERVICES, INC., et. Al.
TWO HUNDRED NINETY-ONE (291) workers filed their complaints against SMC and Maerc for underpayment of
wages, etc. The complainants alleged that they were hired by SMC through its agent or intermediary Maerc. They
washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the
consuming public.
Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been
working for SMC under the guise of being employees of another contractor, Jopard Services.
SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an
independent contractor.
In a letter, SMC informed MAERC of the termination of their service contract. SMC cited its plans to phase out its
segregation activities due to the installation of labor and cost-saving devices.
When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs;
that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were
directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a
shield by SMC to avoid its liability under the Labor Code.

The Labor arbiter ruled that MAERC was an independent contractor. He ordered MAERC to pay complainants'
separation benefits. MAERC and SMC were also ordered to jointly and severally pay complainants their wage
differentials and to pay attorney's fees.
The complainants appealed the Labor Arbiter's finding that MAERC was an independent contractor and solely liable to
pay the amount representing the separation benefits to the exclusion of SMC.
The NLRC ruled that MAERC was a labor-only contractor and that complainants were employees of SMC.3 The NLRC
also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with
MAERC for the latter's unpaid obligations, citing Art. 1094 of the Labor Code. Thus, the NLRC modified the judgment of
the Labor Arbiter and held SMC jointly and severally liable with MAERC for complainants' separation benefits. In
addition, both respondents were ordered to pay jointly and severally an indemnity fee of P2,000.00 to each
complainant.
The Court of Appeals denied the petition and affirmed the decision of the NLRC.6 The appellate court also denied
SMC's MR. Hence, petitioner seeks a review of the Court of Appeals' judgment before SC.
Whether the complainants are employees of petitioner SMC or of respondent MAERC?
RULING:
Petitioner ascribes as error the failure of the Court of Appeals to apply the ruling in Neri v. NLRC.28 In that case, it was
held that the law did not require one to possess both substantial capital and investment in the form of tools, equipment,
machinery, work premises, among others, to be considered a job contractor.
Accordingly, petitioner alleged that the appellate court and the NLRC erred when they declared MAERC a labor-only
contractor despite the finding that MAERC had investments amounting to P4,608,080.00 consisting of buildings,
machinery and equipment.
However, in Vinoya v. NLRC,30 it was clarified that it was not enough to show substantial capitalization or investment in
the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor.
MAERC displayed the characteristics of a labor-only contractor. Moreover, while MAERC's investments in the form of
buildings, tools and equipment amounted to more than P4 Million, we cannot disregard the fact that it was the SMC
which required MAERC to undertake such investments. Nor do we believe MAERC to have an independent business.
Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its
segregation division, none of its workers was also ever assigned to any other establishment, thus convincing us that it
was created solely to service the needs of SMC. Naturally, with the severance of relationship between MAERC and
SMC followed MAERC's cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting
actions instituted by the workers.
Petitioner also alleged that the Court of Appeals erred in ruling that "whether MAERC is an independent contractor or a
labor-only contractor, SMC is liable with MAERC for the latter's unpaid obligations to MAERC's workers."
On this point, we agree with petitioner as distinctions must be made. In legitimate job contracting, the law creates an
employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages.34 The
principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees'
wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any
claim made by the employees.
On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had
been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the
labor-only contractor for all the rightful claims of the employees.

This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the
separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case,
petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.

G.R. No. 87700 June 13, 1990. SMC EMPLOYEES UNION, et. Al. vs. JUDGE BERSAMIRA
SMC entered into contracts for merchandising services with Lipercon and D'Rite. These companies are independent
contractors.
The UNION is the duly authorized representative of the monthly paid rank-and-file employees of SanMig.
The Union advised SanMig that some Lipercon and D'Rite workers had signed up for union membership and sought the
regularization of their employment with SMC. The Union alleged that this group of employees have been continuously
working for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work or activities are
necessary or desirable in the usual business or trade of SanMig. It was then demanded that the employment status of
these workers be regularized.
On the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for
unfair labor practice, CBA violations, and union busting.
Several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board
(NCMB) of DOLE.
Series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices.
SMC then filed a verified Complaint for Injunction and Damages before respondent Court.
The Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of the
action, which motion was opposed by SanMig. The Motion to dismiss was denied by respondent Judge.
After several hearings, respondent Court granted SMCs application and enjoined the Union from Committing the acts
complained of. In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor dispute. Verily,
this court has jurisdiction to take cognizance of SMC's grievance.
Anchored on grave abuse of discretion, petitioners are now before the SC seeking nullification of the challenged Writ.
Whether or not the case at bar involves, or is in connection with, or relates to a labor dispute? An affirmative answer
would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular
Courts.
RULING:
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a
labor dispute and is directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond
the ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the mass concerted action of
picketing and the reliefs prayed for by the private respondent) are within the competence of labor tribunals.
On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor
dispute between itself and the Union.
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms
and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining,

changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself and the contractual
workers of Lipercon and D'Rite, a labor dispute can nevertheless exist "regardless of whether the disputants stand in
the proximate relationship of employer and employee" provided the controversy concerns, among others, the terms and
conditions of employment or a "change" or "arrangement" thereof (ibid).
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to
regularize the status of the employees contracted by Lipercon and D'Rite. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the
arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. SanMig, for its
part, resists that Union demand on the ground that there is no employer-employee relationship between it and those
workers and because the demand violates the terms of their CBA. Obvious then is that representation and association,
for the purpose of negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig
was precisely also to prevent such representation. Again, the matter of representation falls within the scope of a labor
dispute.
G.R. No. 95449 August 18, 1997. PHILIPPINE-SINGAPORE TRANSIT vs. NLRC
Petitioner, a manning agency, hired private respondent Estrada as master of the vessel Sea Carrier I for its foreign
principal Intra-Oil.
Barely two months following his employment, private respondent Estrada was informed that he would be relieved from
his employment and repatriated back to the Philippines. He was not given any explanation or reason for his relief. On
that same day, someone took over as captain of Sea Carrier I, which prompted Estrada to relinquish his post. On
account of this unfortunate incident, he decided to return to Manila the following day. Then he went to petitioner to ask
about his dismissal. Petitioner informed him that his service was terminated due to his incompetence.
Private respondent Estrada then filed with the POEA a complaint against petitioner and Intra-Oil for illegal dismissal.
In its answer, petitioner alleged that the dismissal of private respondent Estrada was due to a valid cause, which is
incompetency. It asserted that his incompetency is evidenced by the telexes of the charterer to petitioner complaining
about the private respondent's incompetency in handling the vessel. According to petitioner, it had no choice but to give
its consent to the dismissal of private respondent by the charterer because the latter was in a best position to determine
the qualification of the private respondent.
Private respondent alleged that he was justified in refusing to obey the order of the charterer to tow another of its vessel
by reason of worn out ropes and, in his professional opinion, damage would result from using inadequate ropes.
POEA ruled in favor of the private respondent by holding that his dismissal from service was illegal.
On appeal to the NLRC, it ruled that the charge of private respondent's incompetence was unmeritorious. Petitioners
MR was also denied. Hence, this petition.
RULING:
An employer is free to manage and regulate, according to his own discretion and judgment, all phases of employment.
While the law recognizes 6 and safeguards 7 this right of an employer to exercise what are clearly management
prerogatives, such right should not be abused and used as a tool of oppression against labor. The company's
prerogatives must be exercised in good faith and with due regard to the rights of labor. The right of the company to
dismiss an employee is a measure of self-protection. 11 Such right, however, is subject to regulation by the State,
basically in the exercise of its paramount police power.
The dismissal of private respondent from service is done without just cause and without due process.
Petitioner's imputation of incompetence on the part of the private respondent due to his lack of foresight to anticipate
the number of mooring ropes to be used is unworthy of being given credence. As explained by private respondent, the

Sea Carrier I was sufficiently furnished with mooring ropes prior to the voyage. It so happened that the ropes would
later on "suffer(ed) extreme wear and tear" during its voyage from Singapore to Bombay. Faced by such problem, he
immediately reported the situation to, and at the same time, requested for new mooring ropes from, Mr. Bala of Essar
Shipping, a person whom the private respondent alleged to be connected with the petitioner and its principal. No new
ropes came, however. So, when the charterer ordered private respondent to tow its barge, he explained that the ropes
were worn out and, in his professional opinion, inadequate for maneuvering a barge in close water situation, hence,
damage would result if towing of tile barge would proceed. Evidently, as called for by the circumstances of the situation,
the private respondent complied with his responsibility as master of the vessel. It would even show that he was very
professional in his job as Master, regardless of the intrusions of the charterer into his area of responsibility. It would
have been a different story had complainant refused the towing order simply because he didn't know how to, in which
case he could be said to be incompetent in that area of expertise.

G.R. No. L-53515 February 8, 1989. SAN MIGUEL BREWERY SALES FORCE UNION vs. BLAS F. OPLE, SMC
A collective bargaining agreement was entered into by petitioner UNION and the private respondent SMC.
In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System"
(CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices.
The UNION filed a complaint for unfair labor practice in the Ministry of Labor on the ground that the CDS was contrary
to the existing marketing scheme. It was alleged that the new marketing scheme violates Section 1, Article IV of the
collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the salesmen
and their truck helpers for the company would be unfairly competing with them.
The Minister of Labor ruled that the unilateral action of the employer in inaugurating the new sales scheme was not
designed to discourage union organization or diminish its influence, but rather the establishment of such scheme was
part of its overall plan to improve efficiency and economy and at the same time gain profit to the highest.
RULING:
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives.
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed
towards that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under
valid agreements, the Court will uphold them. San Miguel Corporation's offer to compensate the members of its sales
force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment
commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith
and lack of intention to bust their union.

G.R. No. L-39575 August 31, 1978. GSIS vs. GSIS SUPERVISORS' UNION, CIR AND/OR NLRC
A strike was called and staged by the UNION in protest against the discriminatory acts constituting unfair labor
practices in matters of promotion, among others, committed by the management of the GSIS against the UNION and its
members.
The UNION alleged that promotions are based on union affiliation.

The GSIS alleged that promotions are made on the basis of competence, merit and qualification to hold the position and
on the basis of appropriate civil service eligibility.
The UNION alleged that respondent (GSIS) discouraged membership in the UNION by discriminating against its
members by GSIS failure and refusal to upgrade and/or convert the position of ... (e) Dr. Orlando Misa as Acting
Assistant Manager, Medical Department, to be replaced by Demetrio Lopez or Andrea Moral."
GSIS averred that in point of qualification, Dr. Orlando Misa had the highest points over the other aspirants and that in
the judgment of the GSIS, Dr. Misa was best qualified to occupy the position of Acting Assistant Manager, Medical
Department, GSIS.
The CIR recommended that "it would seem to be equitable that Dra. Andrea Moral should have been appointed Acting
Assistant Medical Director rather than Dr. Orlando Misa." The same was adopted by the court.
The GSIS and the private respondent, Dr. Orlando Misa, moved for reconsideration. The CIR en banc denied the
motions for reconsideration. The GSIS now comes to SC assailing the order.
RULING:
The contention of the petitioner that the Court of Industrial Relations, in ordering the GSIS to appoint Dr. Andrea Moral
as Acting Assistant Medical Director, replacing the present incumbent, Dr. Orlando Misa, substituted the judgment or
discretion of management and thereby committed a grave abuse of discretion amounting to lack and/or excess of
jurisdiction is meritorious. The right to select and appoint employees is the prerogative of the employer. Management
discretion or judgment lodged in management may not therefore, be controlled, interfered with or substituted by the CIR
upon petition or representation of the striking labor union.
Petitioner exercising the privilege, prerogative or right of management had appointed Dr. Orlando Misa as Acting
Assistant Medical Director after considering and evaluating the rank or salary, efficiency rating, education and training,
seniority in the GSIS, seniority in the same department and civil service eligibility and in service training of the qualified
personnel at its Medical Department. The GSIS found that based on the Evaluation Sheet on Promotion, Dr. Misa was
the best qualified for the position after an evaluation of their respective qualifications. So long as management
prerogatives are not exercised arbitrarily, they cannot be interfered with.

G.R. No. 76645 July 23, 1991. PT & T vs. ALICIA LAPLANA, et. Al.
Alicia Laplana was the cashier of the Baguio of PT & T. PT & T's treasurer, Mrs. Alicia A. Arogo, directed Laplana to
transfer to the company's branch office at Laoag City. Laplana refused the reassignment and proposed instead that
qualified clerks in the Baguio Branch be trained for the purpose.
Mrs. Arogo later reiterated her directive for Laplana's transfer, this time in the form of a written Memorandum, informing
Laplana that she will be reassigned to Laoag branch assuming the same position of branch cashier.
Apparently Laplana was not allowed to resume her work as Cashier of the Baguio Branch. She thereupon wrote again
to Mrs. Arogo advising that the directed transfer was unacceptable.
Later, Laplana received a telegram from Mrs. Arogo ordering Laplana to report to Manila for a new job assignment.
Laplana in turn sent a telex message to Mrs. Arogo refusing the new assignment and requested to be retrenched
instead.
Termination of Laplana's employment on account of retrenchment thereupon followed.
Laplana then filed with the Labor Arbiter a complaint against PT & T. She alleged that the company's "act of transferring
is not only without any valid ground but also arbitrary and without any purpose but to harass and force . . . (her) to
eventually resign."

PT&T alleged that the company "was exercising management prerogatives in transferring complainant . . . and there is
no showing that this exercise was arbitrarily and whimsically done.
The Labor Arbiter ruled in Laplana's favor. Arbiter ruled that the transfer of the complainant from Baguio City to Laoag
City or to Manila is patently a demotion and a form of punishment without just cause and would cause untold suffering
on the part of the complainant.
The NLRC affirmed the Arbiter's judgment and dismissed PT&Ts appeal.
RULING:
There can be no quarrel with the Arbiter's formulation of the general principle governing an employer's prerogative to
transfer his employees from place to place or from one position to another. The Arbiter acknowledges "the inherent right
of an employer to transfer or assign an employee in the pursuit of its legitimate business interests" subject only to the
condition that it be not "motivated by discrimination or (made) in bad faith, or . . . effected as a form of punishment or
demotion without sufficient cause."
The employer has the prerogative of making transfers and reassignment of employees to meet the requirements of the
business. An employee's right to security of tenure does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. When his
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or
diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.
In this case, the employee (Laplana) had to all intents and purposes resigned from her position. She had unequivocally
asked that she be considered dismissed, herself suggesting the reason therefor retrenchment. When so dismissed,
she accepted separation pay. On the other hand, the employer has not been shown to be acting otherwise than in good
faith, and in the legitimate pursuit of what it considered its best interests, in deciding to transfer her to another office.
The situation here presented is of an employer transferring an employee to another office in the exercise of what it took
to be sound business judgment and in accordance with pre-determined and established office policy and practice, and
of the latter having what was believed to be legitimate reasons for declining that transfer, rooted in considerations of
personal convenience and difficulties for the family. Under these circumstances, the solution proposed by the employee
herself, of her voluntary termination of her employment and the delivery to her of corresponding separation pay, would
appear to be the most equitable.

G.R. No. 155421. July 7, 2004. ELMER M. MENDOZA vs. RURAL BANK OF LUCBAN
The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with
business judgments of employers, provided they do not violate the law, collective bargaining agreements, and general
principles of fair play and justice. The transfer of personnel from one area of operation to another is inherently a
managerial prerogative that shall be upheld if exercised in good faith -- for the purpose of advancing business interests,
not of defeating or circumventing the rights of employees.
The Board of Directors of respondent issued Board Resolutions providing for the re-shuffling of assignments of all
officers and employees, without changes in their compensation and other benefits, in line with the policy of the bank to
familiarize bank employees with the various phases of bank operations and further strengthen the existing internal
control system.
Petitioner Elmer Mendoza expressed his opinion on the reshuffle that his reshuffling from the present position as
Appraiser to Clerk-Meralco Collection is deemed to be a demotion without any legal basis.
The Bank replied that the recent management's decision to reshuffle the duties of bank employees was never the
intention (of management) to downgrade positions in the bank and that the same is also a prerogative of bank
management."

Later, petitioner filed a Complaint before Arbitration Branch of the NLRC. The Complaint -- for illegal dismissal,
underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban.
The labor arbiter upheld petitioner's claims.
On appeal, the NLRC reversed the labor arbiter. It held that the reshuffling is valid as it was not motivated by bad faith.
On appeal to the CA, it upheld NLRCs decision. Hence, this Petition.19
Whether or not the reshuffling of private respondent'[s] employees was done in good faith and cannot be made as the
basis of a finding of constructive dismissal?
RULING: The Petition has no merit.
Management Prerogative to Transfer Employees
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from
one office or area of operation to another -- provided there is no demotion in rank or diminution of salary, benefits, and
other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.26 This privilege is inherent in the right of employers to control and
manage their enterprise effectively.27 The right of employees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to change their assignments or to transfer
them.28
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and
general principles of fair play and justice.
The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind
the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In
particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee's transfer shall be tantamount to constructive
dismissal.
Petitioner's Transfer Lawful
In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA that there was no constructive
dismissal.
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with the various phases
of bank operations and further strengthen the existing internal control system"33 of all officers and employees. Petitioner
was not singled out; other employees were also reassigned without their express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits.

[G.R. No. 152057. September 29, 2003]. PT&T vs. CA, et. Al.
Sometime in 1997, after conducting a series of studies regarding the profitability of its retail operations, its existing
branches and the number of employees, the petitioner came up with a Relocation and Restructuring Program designed
to promote efficiency and productivity, among others.
Later, private respondents received separate letters from the petitioner, giving them the option to choose the branch to
which they could be transferred. Thereafter, private respondents and other employees were directed to relocate to their
new PT&T Branches. The affected employees were then directed to report to their respective relocation assignments.
The petitioner offered benefits/allowances as well as promotion to those employees who would agree to be transferred
under its new program.

The private respondents rejected the petitioners offer. Later, petitioner sent letters to the private respondents requiring
them to explain in writing why no disciplinary action should be taken against them for their refusal.
Private respondents explained that the transfers imposed by the management would cause enormous difficulties on the
individual complainants (new assignment involves distant places and they would be separated from their respective
families).
Dissatisfied, petitioner considered the private respondents refusal as insubordination and willful disobedience to a
lawful order; hence, they were dismissed from work.
A complaint for illegal dismissal and unfair labor practice for and in behalf of the private respondents was subsequently
filed before the arbitration branch of the NLRC.[10]
PT&T alleged that the private respondents transfers were made in the lawful exercise of its management prerogative
and were done in good faith. Private respondents opined that since their respective transfers resulted in their promotion,
they had the right to refuse or decline the positions being offered to them. Resultantly, the refusal to accept the transfer
could not have amounted to insubordination or willful disobedience to the lawful orders of the employer.
RULING:
The increase in the respondents responsibility can be ascertained from the scalar ascent of their job grades. With or
without a corresponding increase in salary, the respective transfer of the private respondents was in fact promotions.
Promotion is the advancement from one position to another with an increase in duties and responsibilities as authorized
by law, and usually accompanied by an increase in salary. An employee cannot be promoted, even if merely as a result
of a transfer, without his consent. A transfer that results in promotion or demotion, advancement or reduction or a
transfer that aims to lure the employee away from his permanent position cannot be done without the employees
consent.[24]
There is no law that compels an employee to accept a promotion for the reason that a promotion is in the nature of
a gift or reward, which a person has a right to refuse.[25] Hence, the exercise by the private respondents of their right
cannot be considered in law as insubordination, or willful disobedience of a lawful order of the employer. As such, there
was no valid cause for the private respondents dismissal.

G.R. No. L-75656 May 28, 1990. YUCO CHEMICAL vs. MINISTRY OF LABOR, GEORGE HALILI, AMADO MAGNO
Private respondents were employed by YUCO which is engaged in the manufacture/assembly of ice boxes. They were
assigned to make aluminum handles for the ice boxes.
After obtaining a favorable legal opinion from the Office of Ministry of Labor and Employment (MOLE) concerning the
legality of moving the production of aluminum handles from Tarlac to Manila, petitioner addressed a memorandum to
private respondents directing them to report for work at their new place of work in Manila. The memorandum further
stated that private respondents would be paid with a salary of P27.00 and an additional allowance of P2.00 "to meet the
higher cost of living in Manila.
A day after, instead of complying with the memorandum, private respondents filed a complaint with the provincial labor
office for illegal dismissal, etc. The OIC of the Tarlac labor office issued an order directing petitioner to give private
respondents their separation pay.
Private respondents appealed to the Office of the Minister of MOLE, who ruled that to transfer the place of work at such
a distant place as Manila without the consent of the employees concerned can no longer be construed as a reasonable
exercise of management prerogative.
A motion for reconsideration subsequently filed by the petitioner was denied. Hence this present petition.
RULING:
The reassignment of Halili and Magno to Manila is legally indefensible on several grounds. Firstly, it was grossly
inconvenient to private respondents. They are working students. When they received the transfer memorandum
directing their relocation to Manila within seven days from notice, classes had already started. The move from Tarlac to
Manila at such time would mean a disruption of their studies. Secondly, there appears to be no genuine business

urgency that necessitated their transfer. As well pointed out by private respondents' counsel, the fabrication of
aluminum handles for ice boxes does not require special dexterity. Many workers could be contracted right in Manila to
perform that particular line of work.
The controversial transfer was not prompted by legitimate reasons. Petitioner company had indeed discriminated
against Magno and Halili. The transfer was timed at the height of union concerted activities in the firm, deliberately
calculated to demoralize the other union members.
G.R. NO. 41314 November 13, 1992. UNION CARBIDE LABOR UNION vs. UNION CARBIDE PHIL., SEC. OF
LABOR
Complainants were dismissed from their employment after an application for clearance to terminate them was approved
by the Secretary of Labor. Respondent's application for clearance was premised on "willful violation of Company
regulations, gross insubordination and refusal to submit to a Company investigation.
There has been a change in the work shifts of the Company.
In manifestation of their dissention to the new work schedule, the three respondents Duro, Torio, and Javillonar did not
report for work on November 26, 1972 which was a Sunday since it was not a working day according to the provisions
of the Collecrtive Bargaining Agreement. Their absence caused their suspension for fourteen (14) days.
The Arbitrator rendered a decision ordering the reinstatement with backwages of the complainants. The NLRC
dismissed respondent company's appeal. A motion for reconsideration was then filed by respondent company before
the Secretary of Labor, resulting in the modification of the Arbitrator's decision by awarding complainants separation
pay. A motion for reconsideration subsequently filed by the petitioner was denied for lack of merit. Hence, this petition.
Whether or not the complainants could be validly dismissed from their employment on the ground of insubordination for
refusing to comply with the new work schedule?
RULING:
Petitioner alleges that the change in the company's working schedule violated the existing Collective Bargaining
Agreement of the parties. Hence, complainants cannot be dismissed since their refusal to comply with the re-scheduled
working hours was based on a provision of the Collective Bargaining Agreement.
The petition has no merit.
Notwithstanding the CBA, the company is not prohibited from changing its working schedule, for Section 2, Article II of
the same CBA expressly provides that:
Sec. 2. In the exercise of its functions of management, the COMPANY shall have the sole and
exclusive right and power, x x x x x x x ; x x x x x ; to schedule the hours of work, shifts
and work schedules; x x x x x x x x x ; and to make such changes in the duties of its
employees as the COMPANY may see fit or convenient for the proper conduct of its business.
Verily and wisely, management retained the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees. And as long as such prerogative is exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws
or under valid agreements, this Court will uphold such exercise.

G.R. No. 106107 June 2, 1994. AGUSTIN CHU vs. NLRC and VICTORIAS MILLING COMPANY, INC.
Petitioner retired from the service of private respondent upon reaching the age of sixty under its regular retirement
program. He was granted an extention of service by the BOD under a "Special Contract of Employment." The contract
provided, inter alia, that its term was for a period of one year.

Private respondent issued 2 Memoranda both providing for a rotation of the personnel and other organizational
changes. Pursuant to the memoranda, petitioner was transferred to the Sugar Sales Department.
Petitioner protested his transfer and requested a reconsideration thereof, which was denied. Consequently, petitioner
filed a complaint for illegal dismissal, contending that he was constructively dismissed from his employment.
The Labor Arbiter said that there was no constructive dismissal since the personnel rotation was pursuant to
organizational changes done in the valid exercise of management prerogatives and that there was no bad faith in the
transfer of petitioner, as other employees similarly situated as he were likewise affected.
On appeal to the NLRC, it affirmed the Arbiters decision.
Petitioner contends that there was no valid exercise of management prerogative because: (1) his transfer violated the
"Special Contract of Employment" which was the law between the parties; and (2) said transfer was unreasonable and
caused inconvenience to him.
Thus, petitioner urges that private respondent, by employing him specifically as Head of the Warehousing, Sugar,
Shipping, and Marine Department, waived its prerogative to reassign him within the term of the contract to another
department.
RULING: We disagree.
One of the prerogatives of management, and a very important one at that, is the right to transfer employees in their
work station. It is the employers prerogative, based on its assessment and perception of its employees qualifications,
aptitudes, and competence to move them around in the various areas of its business operations in order to ascertain
where they will function with maximum benefit to the company.
There is nothing in the "Special Contract of Employment" invoked by petitioner wherein private respondent had waived
its right to transfer or re-assign petitioner to any other position in the company. Before such right can be deemed to
have been waived or contracted away, the stipulation to that effect must be clearly stated so as to leave no room to
doubt the intentions of the parties.
Petitioners bare assertion that the transfer was unreasonable and caused him inconvenience cannot override the fact,
as found by the Labor Arbiter and respondent Commission, that the rotation was made in good faith and was not
discriminatory, and that there was no demotion in rank or a diminution of his salary, benefits and privileges.

G.R. No. 102993 July 14, 1995. CALTEX REFINERY EMPLOYEES ASSOC. and ARNELIO M. CLARETE vs.
NLRC, CALTEX PHILIPPINES, INC. and/or EDGARDO C. CATAQUIS
Petitioner Arnelio M. Clarete was hired by respondent Caltex Philippines, Inc. (Caltex) as Mechanic C. He was later
promoted to the position of Mechanic B and assigned to the Mechanical/Metal Grades Section of respondent Caltex's
refinery.
Clarete was charged with the crime of theft before the MTC for allegedly taking with him a bottle of lighter fluid, a Caltex
property, without authorization. Clarete was later aquitted of the charge.
Later, Clarete was informed that his services were being terminated for "serious misconduct and loss of trust and
confidence resulting from his having violated a lawful order of the Company, i.e., GM Circular No. 484 of 8-28-74 which
gave notice that the Company considers removing or attempting to remove Company property from the Refinery
without authorization to be sufficiently serious that the erring employee be dismissed.
Clarete then filed a complaint for illegal dismissal against private respondents with the Regional Arbitration of the
NLRC. The Labor Arbiter found Clarete neither culpable of theft nor of violating GM Circular No. 484 as "his purpose in
going to security guard was precisely to ask the latter's permission to bring out the lighter fluid from the Refinery
Compound.

On appeal, NLRC reversed the arbiters ruling.

Petitioners contend that since Clarete's position as mechanic is not one of trust and does not involve the production,
safekeeping or even the handling of lighter fluid, his act of picking up the bottle of lighter fluid with the intention of asking
permission to bring it home, cannot serve as basis for loss of confidence.
Respondent Caltex, on the other hand, asserts that G.M. Circular No. 484 was issued pursuant to its management
prerogative to prescribe rules and regulations necessary for the conduct of its business and specifically to put a stop to
rampant pilferages of company property by its employees. Clarete committed not only a serious misconduct but also a
willful breach of trust and confidence reposed upon him in the performance of his duties.
RULING:
Undoubtedly, the lighter fluid is a property of private respondent and to take the same out of its premises without the
corresponding gate pass is a violation of company rules on theft and pilferage of company property.
But while Clarete may be guilty of violation of company rules, we find the penalty of dismissal imposed upon him by
respondent Caltex too harsh and unreasonable. Such a penalty (of dismissal) must be commensurate with the act,
conduct or omission imputed to the employee and imposed in connection with the employer's disciplinary authority.
Indeed, considering that Clarete has no previous record in his eight years of service; that the value of the lighter fluid,
placed at P8.00, is very minimal compared to his salary of P325.00 a day; that after his dismissal, he has undergone
mental torture; that respondent Caltex did not lose anything as the bottle of lighter fluid was retrieved on time; and that
there was no showing that Clarete's retention in the service would work undue prejudice to the viability of employer's
operations or is patently inimical to its interest, we hold that the penalty of dismissal imposed on Clarete is unduly harsh
and grossly disproportionate to the reason for terminating his employment. Hence, we find that the preventive
suspension imposed upon private respondent is a sufficient penalty for the misdemeanor committed by petitioner.

G.R. No. 70479 February 27, 1987. FIRESTONE TIRE AND RUBBER CO. vs. CARLOS LARIOSA, NLRC
Carlos Lariosa started working with Firestone. At the time of his dismissal, he was a tire builder.
At around 2:00 o'clock in the afternoon of July 27, 1983, as he was about to leave the company premises Lariosa
submitted himself to a routine check by the security guards at the west gate. He was frisked by the Security Guards. In
the course of the inspection, sixteen [16] wool flannel swabs, all belonging to the company, were found inside his bag,
tucked underneath his soiled clothes.
As a result of the incident, Firestone terminated Lariosa's services, citing as grounds therefor: "stealing company
property and loss of trust." 1 Firestone also filed a criminal complaint against him with the Rizal provincial fiscal for
attempted theft.
Lariosa, on the other hand, sued Firestone before the Ministry of Labor and Employment for illegal dismissal, etc. The
Labor Arbiter found Lariosa's dismissal justified. 3 On appeal, the NLRC reversed the decision of the Labor Arbiter and
held that the dismissal of Lariosa was too severe a penalty.
Petitioner Firestone questions the NLRCs ruling.
RULING:
A review of the record shows that Lariosa was indubitably involved in the attempted theft of the flannel swabs.
From the records, it is likewise clear that Firestone did not act arbitrarily in terminating Lariosa's services.
There is no gainsaying that theft committed by an employee constitutes a valid reason for his dismissal by the
employer. Although as a rule this Court leans over backwards to help workers and employees continue with their

employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property are a
different matter. 8
Thus, under Article 283 of the Labor Code, an employer may terminate an employment for "serious misconduct" or for
"fraud or willful breach by the employee of the trust reposed in him by his employer or representative."
If there is sufficient evidence that an employee has been guilty of a breach of trust or that his employer has ample
reasons to distrust him, the labor tribunal cannot justly deny to the employer the authority to dismiss such an employee.
9

If Lariosa, by his own wrong-doing, could no longer be trusted, it would be an act of oppression to compel the company
to retain him, fully aware that such an employee could, in the long run, endanger its very viability.
The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to
expect from the workers adequate work, diligence and good conduct. 11

G.R. No. 162994. September 17, 2004. DUNCAN ASSOC. vs. GLAXO WELLCOME PHILIPPINES, INC.
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo as medical representative.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide
by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity
with co-employees or employees of competing drug companies and should management find that such relationship
poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any
existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug
companies. If management perceives a conflict of interest or a potential conflict between such relationship and the
employees employment with the company, the management and the employee will explore the possibility of a "transfer
to another department in a non-counterchecking position" or preparation for employment outside the company after six
months.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals3 (Astra),
a competitor of Glaxo. Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson
married Bettsy.
Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecsons superiors
reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him
that they wanted to retain him as much as possible because he was performing his job well.
Later, Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not have a milk division, the
potential conflict of interest would be eliminated. His application was denied.
Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to
reconsider its decision, but his request was denied. Tecson defied the transfer order.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products
which were competing with similar products manufactured by Astra. He was also not included in product conferences
regarding such products.
Later, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on
relationships between its employees and persons employed with competitor companies, and affirming Glaxos right to
transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals.

CA held that Glaxos policy prohibiting its employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives. Petitioners MR was also denied.
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming the NCMBs finding
that the Glaxos policy prohibiting its employees from marrying an employee of a competitor company is valid.
Petitioners contend that Glaxos policy against employees marrying employees of competitor companies violates the
equal protection clause of the Constitution because it creates invalid distinctions among employees on account only of
marriage.
Glaxo argues that the company policy prohibiting its employees from having a relationship with and/or marrying an
employee of a competitor company is a valid exercise of its management prerogatives and does not violate the equal
protection clause. Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it
has a genuine interest in ensuring that its employees avoid any activity, relationship or interest that may conflict with
their responsibilities to the company.
RULING:
Whether the Court of Appeals erred in ruling that Glaxos policy against its employees marrying employees from
competitor companies is valid.
The Court finds no merit in the petition.
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy prohibiting an employee
from having a relationship with an employee of a competitor company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos
employees is reasonable under the circumstances because relationships of that nature might compromise the interests
of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the
interest of fair play.21
The Court also finds no merit in petitioners contention that Tescon was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales
area, and when he was excluded from attending the companys seminar on new products which were directly
competing with similar products manufactured by Astra. The record does not show that Tescon was demoted or unduly
discriminated upon by reason of such transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales area, in keeping with the policy of the
company in avoidance of conflict of interest.

G.R. No. 148303. October 17, 2002. UNION OF NESTLE WORKERS vs. NESTLE PHIL., et. Al.
Nestle adopted Policy No. HRM 1.8, otherwise known as the "Drug Abuse Policy." Pursuant to this policy, the
management shall conduct simultaneous drug tests on all employees from different factories and plants. Thus, drug
testing commenced at the Lipa City factory, then followed by the other factories and plants.

However, there was resistance to the policy in the Nestle Cagayan de Oro factory. Out of 496 employees, only 141 or
28.43% submitted themselves to drug testing. Petitioners wrote Nestle challenging the implementation of the policy and
branding it as a mere subterfuge to defeat the employees constitutional rights. Nestle claimed that the policy is in
keeping with the governments thrust to eradicate the proliferation of drug abuse, explaining that the company has the
right to ensure that its employees are of sound physical and mental health and (b) to terminate the services of an
employee who refuses to undergo the drug test.
Petitioners are assailing the manner by which respondents are implementing the policy. According to them, it is
"arbitrary in character" because: (1) the employees were not consulted prior to its implementation; (2) the policy is
punitive inasmuch as an employee who refuses to abide with the policy may be dismissed from the service; and (3)
such implementation is subject to limitations provided by law which were disregarded by the management.
RULING:
Respondent Nestles Drug Abuse Policy states that "(i)llegal drugs and use of regulated drugs beyond the medically
prescribed limits are prohibited in the workplace. Illegal drug use puts at risk the integrity of Nestle operations and the
safety of our products. It is detrimental to the health, safety and work-performance of employees and is harmful to the
welfare of families and the surrounding community."6 This pronouncement is a guiding principle adopted by Nestle to
safeguard its employees welfare and ensure their efficiency and well-being. To our minds, this is a company personnel
policy. In San Miguel Corp. vs. NLRC,7 this Court held:
"Company personnel policies are guiding principles stated in broad, long-range terms that express the philosophy or
beliefs of an organizations top authority regarding personnel matters. They deal with matter affecting efficiency and
well-being of employees and include, among others, the procedure in the administration of wages, benefits, promotions,
transfer and other personnel movements which are usually not spelled out in the collective agreement."

G.R. No. 76219. May 27, 1991. GTE DIRECTORIES CORP. vs. AUGUSTO S. SANCHEZ, et. Al.
The case involves the dismissal of 14 premise sales representatives for violation of company rules and for their alleged
failure to comply with the reportorial requirement under the Sales and Administrative Practices, which was still being
negotiated at the time of the dismissal.
The issue central to the labor dispute revolves around compliance with existing company policies, rules and regulations
specifically the sales evaluation and production policy.
It seems to the Court that upon the undisputed facts on record, GTE had cause to dismiss the fourteen (14) premise
sales representatives who had repeatedly and deliberately, not to say defiantly, refused to comply with its directive for
submission of individual reports on specified matters. The record shows that GTE addressed no less than (six) written
official communications to said premise sales representatives embodying this requirement.
The basic question then is whether or not the effectivity of an employer's regulations and policies is dependent upon the
acceptance and consent of the employees thereby sought to be bound; or otherwise stated, whether or not the union's
objections to, or request for reconsideration of those regulations or policies automatically suspend enforcement thereof
and excuse the employees' refusal to comply with the same.
RULING:
In the case at bar, it must thus be conceded that GTEs adoption of a new "Sales Evaluation and Production Policy" was
within its management prerogative to regulate, according to its own discretion and judgment, all aspects of employment,
including the manner, procedure and processes by which particular work activities should be done. There were, to be
sure, objections presented by the union, i.e., that the schedule had not been "drawn (up) as a result of an agreement of
all concerned," that the new policy was incomprehensible, discriminatory and whimsical, and "would result to further
reduction" of the sales representatives' compensation. There was, too, the union's accusation that GTE had committed
unfair labor practices.

This Court fails to see, however, how these objections and accusations justify the deliberate and obdurate refusal of the
sales representatives to obey the management's simple requirement for submission by all Premise Sales
Representatives (PSRs) of individual reports or memoranda reflecting target revenueswhich is all that GTE basically
required and which it addressed to the employees concerned no less than six (6) times. The Court fails to see how
the existence of objections made by the union justify the studied disregard, or wilful disobedience by the sales
representatives of direct orders of their superior officers to submit reports.
To sanction disregard or disobedience by employees of a rule or order laid down by management, on the pleaded
theory that the rule or order is unreasonable, illegal, or otherwise irregular for one reason or another, would be
disastrous to the discipline and order that it is in the interest of both the employer and his employees to preserve and
maintain in the working establishment and without which no meaningful operation and progress is possible. Deliberate
disregard or disobedience of rules, defiance of management authority cannot be countenanced. This is not to say that
the employees have no remedy against rules or orders they regard as unjust or illegal. They may object thereto, ask to
negotiate thereon, bring proceedings for redress against the employer before the Ministry of Labor. But until and Unless
the rules or orders are declared to be illegal or improper by competent authority, the employees ignore or disobey them
at their peril.
Promulgations of company policies and regulations are basic management prerogatives" and that it is a "recognized
principle of law that company policies and regulations are, unless shown to be grossly oppressive or contrary to law,
generally binding (and) valid on the parties and must be complied with until finally revised or amended unilaterally or
preferably through negotiations or by competent authorities."
It does not follow that just because the employees or their union are unable to realize or appreciate the desirability of
their employers' policies or rules, the policies/rules were laid down to oppress the former and subvert legitimate union
activities. Indeed, the overt, direct, deliberate and continued defiance and disregard by the employees of the authority of
their employer left the latter with no alternative except to impose sanctions. The sanction of suspension having proved
futile, termination of employment was the only option left to the employer.
To repeat, it would be dangerous doctrine indeed to allow employees to refuse to comply with rules and regulations,
policies and procedures laid down by their employer by the simple expedient of formally challenging their
reasonableness or the motives which inspired them, or filing a strike notice with the Department of Labor and
Employment, or, what amounts to the same thing, to give the employees the power to suspend compliance with
company rules or policies by requesting that they be first subject of collective bargaining, It would be well nigh
impossible under these circumstances for any employer to maintain discipline in its establishment.

G.R. No. L-44360 March 31, 1977. REGINA S. BIBOSO vs. VICTORIAS MILLING COMPANY, INC..
FACTS: Individual complainants herein were employed by respondent as academic teachers in respondent's school,
the St. Mary Mazzarello School, which is operated by respondent. On or about April 14, 1973, complainants were
notified by the school Directress that they (complainants) were not going to be rehired for the school year 1973-74. The
necessary report for such action was filed by respondent with the Department of Labor on May 28, 1973, informing that
complainants' services were thus terminated after the business hours on June 30, 1973. Complainants were hired as
teachers of the school on a year-to-year basis and that they reapplied before the expiration of the contracts and/or
signed new ones, as the case may be, if the school decided to renew the same.Thus, under 'Status of Employment' of
said contracts, the complainants were hired as 'temporary as and when required until June 30, 1973,' or whatever year
the contract is supposed to terminate.
ISSUE: Whether or not the guarantee on security of tenure covers the case of the nine petitioners, whose employment
admittedly were on a basis.

RULING: The Supreme Court held that petitioners were well aware all the time that their tenure was for a limited
duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse. It was
the decision of private respondent that it should cease. The Office of the President could find nothing objectionable
when it determined that the will of the parties as to the limited duration thereof should be respected. That was all that
was decided.

G.R. No. 72222 January 30, 1989. INTL CATHOLIC MIGRATION COMMISSION vs. NLRC, BERNADETTE
GALANG
ICMC engaged the services of GALANG as a probationary cultural orientation teacher.
3 months thereafter, GALANG was informed that her services were being terminated for her failure to meet the
prescribed standards of petitioner as reflected in the performance evaluation of her supervisors.
GALANG then filed a complaint for illegal dismissal, etc. against ICMC with the then Ministry of Labor.
The labor arbiter upheld the validity of the dismissal, nevertheless awarded Galang the sum of P6,000.00 as payment
for the last three (3) months of the agreed employment period (probation period).
Petitioner maintains that private respondent is not entitled to the award of salary for the unexpired three-month portion
of the probationary period since her services were terminated during such period when she failed to qualify as a regular
employee in accordance with the reasonable standards prescribed by petitioner.
The Solicitor General contends that a probationary employment for six (6) months is an employment for a definite
period of time and, as such, the employer is duty-bound to allow the probationary employee to work until the termination
of the probationary employment.
RULING: The award of salary for the unexpired period of the probationary employment was improper.
Probationary employment is not an employment with definite period which requires the employer to exhaust the entire
period of employment.
There is no dispute that GALANG was terminated during her probationary period of employment for failure to qualify as
a regular member of ICMCs teaching staff in accordance with its reasonable standards. Records show that GALANG
was found by petitioner to be deficient in classroom management, teacher-student relationship and teaching
techniques. Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a
just cause for terminating a probationary employee specifically recognized under Art. 281 of the Labor Code.
A probationary employee is one who is on trial by an employer during which the employer determines whether or not he
is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to
observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient
employee. 9 The word "probationary", as used to describe the period of employment, implies the purpose of the term or
period, but not its length. 10
As the law now stands, Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary
employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his engagement. There is nothing under Article 281 of the
Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee
once the employer finds that the employee is qualified for regular employment even before the expiration of the
probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said
period, Article 281 of the Labor Code does not likewise preclude the employer from terminating the probationary
employment on justifiable causes as in the instant case.

G.R. No. L-63316 July 31, 1984. ILUMINADA VER BUISER vs. HON. VICENTE LEOGARDO, JR
FACTS: Petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into an "Employment Contract (on
Probationary Status for 18 months)" on May 26, 1980 with private respondent, a corporation engaged in the business of
publication and circulation of the directory of the Philippine Long Distance Telephone Company. Petitioner Ma. Cecilia
Rillo-Acuna entered into the same employment contract on June 11, 1980 with the private respondent. Corollary to this,
the private respondent prescribed sales quotas to be accomplished or met by the petitioners. Failing to meet their
respective sales quotas, the petitioners were dismissed from the service by the private respondent. The records show
that the private respondent terminated the services of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May
14, 1981 and petitioner Ma. Mercedes P. Intengan on May 18, 1981 for their failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and Employment, a
complaint for illegal dismissal with claims for backwages, earned commissions and other benefits.
ISSUES: Whether or not petitioners are validly dismissed.
RULING: Yes, Generally, the probationary period of employment is limited to six (6) months. The exception to
this general rule is When the parties to an employment contract may agree otherwise, such as when the same
is established by company policy or when the same is required by the nature of work to be performed by the
employee. The petitioners' failure to meet the sales quota assigned to each of them constitute a just cause of their
dismissal, regardless of the permanent or probationary status of their employment. Failure to observe prescribed
standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the
same within the alloted reasonable period, or by producing unsatisfactory results. This management prerogative of
requiring standards availed of so long as they are exercised in good faith for the advancement of the employer's
interest. where the employee must learn a particular kind of work such as selling, or when the job requires certain
qualifications, skills, experience or training.

G.R. No. 74246 January 26, 1989. MARIWASA MANUFACTURING, INC. vs. VICENTE LEOGARDO, JR., et. Al.
Private respondent Joaquin A. Dequila was hired on probation by MARIWASA as a general utility worker on January
10, 1979. Upon the expiration of the probationary period of six months, Dequila was informed that his work had proved
unsatisfactory and had failed to meet the required standards. To give him a chance to improve his performance and
qualify for regular employment, with his written consent, Mariwasa extended his probation period for another three
months. His performance, however, did not improve and on that account Mariwasa terminated his employment at the
end of the extended period. 1
Dequila thereupon filed with the Ministry of Labor against Mariwasa a complaint for illegal dismissal, etc. His complaint
was dismissed after a ruling that the termination of his employment was in the circumstances justified. On appeal to the
Office of the Minister, however, said disposition was reversed. Respondent Leogardo, Jr. held that Dequila was already
a regular employee at the time of his dismissal.
Whether employer and employee may by agreement extend the probationary period of employment beyond the six
months prescribed in Art. 282 of the Labor Code

RULING:
Such an extension may lawfully be covenanted, notwithstanding the seemingly restrictive language of the cited
provision.
Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is when
the parties to an employment contract may agree otherwise, such as when the same is established by company policy
or when the same is required by the nature of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment
The extension of Dequila's probation was ex gratia, an act of liberality on the part of his employer affording him a
second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now
unjustly be turned against said employer's account to compel it to keep on its payroll one who could not perform
according to its work standards. The law, surely, was never meant to produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the
completion of said period if he still failed to make the grade during the period of extension.

G.R. No. 109114 September 14, 1993. HOLIDAY INN MANILA vs. NATIONAL LABOR RELATIONS COMMISSION
FACTS: Elena Honasan applied for employment with the Holiday Inn and was on April 15, 1991, accepted for "on-thejob training" as a telephone operator for a period of three weeks. For her services, she received food and transportation
allowance. 2 On May 13, 1992, after completing her training, she was employed on a "probationary basis" for a period of
six months ending November 12, 1991. Her employment contract stipulated that the Hotel could terminate her
probationary employment at any time prior to the expiration of the six-month period in the event of her failure (a) to learn
or progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions and orders of her
superiors; or (c) to perform her duties according to hotel standards. On November 8, 1991, four days before the
expiration of the stipulated deadline, Holiday Inn notified her of her dismissal, on the ground that her performance had
not come up to the standards of the Hotel. Through counsel, Honasan filed a complaint for illegal dismissal, claiming
that she was already a regular employee at the time of her separation and so was entitled to full security of tenure.
ISSUE: Whether or not Elena Honasan is considered a regular employee. If in affirmative, whether not her she validly
dismissed.
RULING: Yes, the Supreme Court held that Honasan was placed by the petitioner on probation twice, first during her
on-the-job training for three weeks, and next during another period of six months, ostensibly in accordance with Article
281. Her probation clearly exceeded the period of six months prescribed by this article. Probation is the period during
which the employer may determine if the employee is qualified for possible inclusion in the regular force. In the
case at bar, the period was for three weeks, during Honasan's on-the-job training. When her services were continued
after this training, the petitioners in effect recognized that she had passed probation and was qualified to be a regular
employee. The consequence is that she could no longer be summarily separated on the ground invoked by the
petitioners. As a regular employee, she had acquired the protection of Article 279 of the Labor Code. The grounds for
the removal of a regular employee are enumerated in Articles 282, 283 and 284 of the Labor Code. The procedure for
such removal is prescribed in Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code. These rules were
not observed in the case at bar as Honasan was simply told that her services were being terminated because they were

found to be unsatisfactory. No administrative investigation of any kind was undertaken to justify this ground. She was
not even accorded prior notice, let alone a chance to be heard.

G.R. No. 132564 October 20, 1999. SAMEER OVERSEAS PLACEMENT vs. NLRC, PRISCILA ENDOZO
ENDOZO applied to petitioner SAMEER for overseas employment in Taiwan as a domestic helper. Respondent Endozo
then left for Taiwan. However, she stayed in Taiwan only for eleven (11) days as her employer terminated her services,
and sent her home for alleged incompetence.
Immediately upon her return, she confronted petitioner agency and was told that she was just unlucky and that she
would be refunded. ENDOZO then filed a complaint for illegal dismissal, etc.
It was ruled that ENDOZO was illegally dismissed and petitioner was ordered to pay her salary.
The Solicitor General said that private respondent had been illegally dismissed by her foreign employer entitling her to
payment of her salaries corresponding to the unexpired portion of her contract.
RULING: The court upheld the illegal dismissal.
Petitioner recruited private respondent for employment in Taiwan, and she executed a contract of employment with her
Taiwanese employer under which she was to serve as domestic helper for a period of one year, with six months
probationary period. After only eleven days of work, the Taiwanese employer terminated private respondent's
employment for alleged incompetence.
It is an elementary rule in the law on labor relations that even a probationary employee is entitled to security of
tenure. 9 A probationary employee cannot be terminated, except for cause. In this case, the employment contract was
for a definite period of one (1) year, with six (6) months probationary period. After only eleven days of work, the
employer dismissed private respondent without just cause.

[G.R. No. 145417. December 11, 2003] FLORENCIO M. DE LA CRUZ, JR. vs. NLRC
FACTS: On May 27, 1996, petitioner Florencio M. de la Cruz, Jr. was hired by private respondent Shemberg Marketing
Corporation (Shemberg) as senior sales manager with a monthly salary of P40,500. Shemberg was engaged in the
business of manufacturing, trading, distributing and importing various consumer products. However, on September 14,
1996, Shembergs human resource department manager, Ms. Lilybeth Y. Llanto, summoned petitioner and informed him
of the managements decision to terminate his services. Petitioner asked Llanto for the reason but the latter merely
informed him that it had something to do with the drop in the companys sales. Petitioner then requested a meeting with
Shembergs vice president, Ernesto U. Dacay, Jr., but was told that the decision of the management was final. His
request to be furnished a 30-day written notice was also denied by the management. Hence, petitioner filed a complaint
for illegal dismissal, non-payment of salary, backwages, 13th month pay and damages against Shemberg, Ernesto
Dacay, Jr. and Lilybeth Llanto. Respondents answered that petitioners dismissal was premised on the following: (1) his
poor performance as evidenced by the steady and substantial drop in company sales since his assumption as senior
sales manager; (2) the dissatisfaction of his subordinates over his management style and dealings with the companys
distributors which resulted in the low morale of Shembergs sales force, as evidenced by the joint affidavit of two of his
subordinates, Ruel O. Salgado and Joel D. Sol; (3) his unauthorized use of company cellular phone for overseas

personal calls and (4) the unauthorized reimbursement of the plane tickets of his wife and child. In short, petitioner was
terminated for his failure to meet the required company standards and for loss of trust and confidence.
ISSUE: Whether or not Florencio M. de la Cruz is a regular employee.
RULING: No, The Supreme Court held that petitioner was well informed of the standards to be met before he could
qualify as a regular employee as stated in the contract (under probation for a period of 6 months or more). A
probationary employee is one who, for a given period of time, is under observation and evaluation to determine
whether or not he is qualified for permanent employment. During the probationary period, the employer is
given the opportunity to observe the skill, competence and attitude of the employee while the latter seeks to
prove to the employer that he has the qualifications to meet the reasonable standards for permanent
employment. The length of time is immaterial in determining the correlative rights of both the employer and the
employee in dealing with each other during said period.
There is no dispute that petitioner, as a probationary employee, enjoyed only temporary employment status. In general
terms, this meant that he was terminable anytime, permanent employment not having been attained in the
meantime. The employer could well decide he no longer needed the probationary employees services or his
performance fell short of expectations, etc. As long as the termination was made before the expiration of the six-month
probationary period, the employer was well within his rights to sever the employer-employee relationship. A contrary
interpretation would defect the clear meaning of the term probationary. In this case, respondent Shemberg had good
reason to terminate petitioners employment and that was his dishonesty.

G.R. No. 106246 September 1, 1994. CENTRAL NEGROS ELECTRIC COOP. vs. NLRC, et. Al.
Private respondents are employees of petitioner CENECO. They have worked for petitioner from a high of four and one
half (4 1/2) years to a low of ten (10) months. Their work forms an integral part of the business of petitioner. They were
extended permanent appointments only on July 13, 1988, retroactive to June 16, 1988.
Petitioner has a collective bargaining agreement (for a duration of three (3) years from April 1, 1987 up to March 31,
1990) with its employees' providing for wage increase. Among the employees exempted from coverage are the
temporary and probationary employees.
Though they were made permanent in 1988 only, private respondents demanded payment of the three hundred fifty
pesos (P350.00) wage increase for the year 1987. Petitioner denied their demand. Petitioner contends that its collective
bargaining agreement clearly excludes "temporary or probationary employees . . ." It stresses that private respondents
were extended appointments as permanent workers only on July 13, 1988 retroactive to June 16, 1988.
RULING: The contention overlooks Articles 280 and 281 of the Labor Code.
Art. 280. Regular and Casual Employment The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement 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 undertaking 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 actually exists. (Emphasis supplied)
Art. 281. Probationary employment Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular employee.
It cannot be denied that private respondents attained the status of regular employees even before 1988. Firstly, they
perform activities which are necessary or desirable in the usual business of the petitioner as an electric cooperative.
They are meter inspectors, PABX operators, utility men, disconnectors, linemen, messengers, secretaries, clerks,
typists, plumbers, mechanics, draftsmen, HRD personnel, collectors and electricians. Secondly, they had worked for
petitioner for more than six (6) months before they were given regular appointments. They had been hired on various
dates starting from 1984.
Petitioner's insistence that private respondents became regular employees only when they were extended
appointments on July 13, 1988 is deplorable. Articles 280 and 281 of our Labor Code, supra, put an end to the
pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum. Thus, Article 281, supra, placed a ceiling on probationary employment, i.e., not
to exceed six (6) months from the date the employee started working. On the other hand, Article 280, supra, defined
when an employment shall be regular notwithstanding any written agreement to the contrary. In other words, the
graduation of an employee from casual or probationary to regular does not depend on the arbitrary will of his employer.

G.R. No. 70705 August 21, 1989. MOISES DE LEON vs. NATIONAL LABOR RELATIONS COMMISSION
FACTS: Petitioner was employed by private respondent La Tonde;a Inc. on December 11, 1981, at the Maintenance
Section of its Engineering Department in Tondo, Manila. His work consisted mainly of painting company building and
equipment, and other odd jobs relating to maintenance. He was paid on a daily basis through petty cash vouchers. In
the early part of January, 1983, after a service of more than one (1) year, petitioner requested from respondent
company that lie be included in the payroll of regular workers, instead of being paid through petty cash vouchers.
Private respondent's response to this request was to dismiss petitioner from his employment on January 16, 1983.
Having been refused reinstatement despite repeated demands, petitioner filed a complaint for illegal dismissal.
Petitioner alleged that he was dismissed following his request to be treated as a regular employee; that his work
consisted of painting company buildings and maintenance chores like cleaning and operating company equipment,
assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by the
respondent company indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of respondent
company, and was made to perform the tasks which he used to do. Emiliano Tanque Jr. corroborated these averments
of petitioner in his affidavit. On the other hand, private respondent claimed that petitioner was not a regular employee
but only a casual worker hired allegedly only to paint a certain building in the company premises, and that his work as a
painter terminated upon the completion of the painting job.
ISSUE: Whether or not petitioner is a regular employee.

RULING: Yes. The Supreme Court held that the primary standard of determining a regular employment is the
reasonable connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee
has been performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the employment is also considered
regular, but only with respect to such activity and while such activity exists.
In the case of petitioner, the painting and maintenance work given him manifest a treatment consistent with a
maintenance man and not just a painter, for if his job was truly only to paint a building there would have been no basis
for giving him other work assignments In between painting activities. It is not tenable to argue that the painting and
maintenance work of petitioner are not necessary in respondent's business of manufacturing liquors and wines, just as
it cannot be said that only those who are directly involved in the process of producing wines and liquors may be
considered as necessary employees. Otherwise, there would have been no need for the regular Maintenance Section
of respondent company's Engineering Department, manned by regular employees like Emiliano Tanque Jr., whom
petitioner often worked with.

G.R. No. L-77629 May 9, 1990. KIMBERLY INDEPENDENT LABOR UNION, et. Al. vs. DRILON, et. Al.
On April 21, 1986, petitioner UNION filed a petition for certification election before the Ministry of Labor and
Employment (MOLE). Private respondent Kimberly-Clark Philippines, Inc. (KIMBERLY) and United Kimberly-Clark
Employees Union-Philippine Transport and General Workers' Organization (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.
Later, it was ruled by the labor minister that the service contract for janitorial and yard maintenance service between
KIMBERLY and RANK was legal; and that the 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 only on the date of the ministers decision which is on Nov. 13, 1986.
As a result, they cannot vote in the certification election.
The pivotal issue, therefore, is when said workers, not performing janitorial or yard maintenance service, became
regular employees of KIMBERLY.
RULING: 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
notwithstanding 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 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.
(KIMBERLY is engaged in the manufacture of consumer paper products and cigarette paper)

G.R. No. 105538 September 5, 1994. FERROCHROME PHILIPPINES, INC. vs. NLRC
FACTS: Private respondent Horst Bartsch was initially employed as a consultant-engineer of the Austrian company
Voest-Alpine. While thus employed, Bartsch was assigned to the Philippines as a consultant-engineer of petitioner
Ferrochrome, a subsidiary of Voest-Alpine. His contract of employment 1 provided that he would be employed at
Ferrochrome for a period of three (3) months, i.e., from February 15, 1988 to May 15, 1988, extendible for a term
mutually agreeable to the parties. After Bartsch's employment expired on May 15, 1988, his services were still engaged
by petitioner Ferrochrome. However, his continued employment was no longer covered by any written contract. From
July 12-15, 1988, Bartsch was confined at the Capitol College General Hospital in Misamis Oriental for treatment of a
psychological disorder. On July 15, 1988, Bartsch was transferred to the Makati Medical Center where he was confined
until July 29, 1988. Thereafter, petitioner granted Bartsch a vacation leave. Bartsch returned to the Philippines on
September 28, 1988. On October 1, 1988, he assumed his former position at Ferrochrome. Ferrochrome terminated his
services in a letter, dated January 30, 1989. Bartsch filed a complaint against petitioners for unpaid salary, nonpayment of vacation leave, separation pay and 13th month pay, plus damages and attorney's fees before the NLRC,
Regional Arbitration Branch No. X, Cagayan de Oro City.
ISSUE: Whether or not Batsch is considered as a regular employee.
RULING: Yes. As defined under the law, an employment shall be deemed regular if the employee performs
activities usually necessary or desirable in the usual business and trade of the employer OR if the employee
has rendered at least one (1) year of service, whether the service be continuous or broken. Applying these two

(2) tests, we find that contrary to the suppositions of petitioner, Bartsch was a regular employee of the latter. (T)he
complainant under the definition of his power and duties has been an ordinary technical staff employee. The term
"consultant" is merely more of a matter of nomenclature as he is required under the contract to observe regular office
hours. It therefore precludes the hiring of a mere "consultant" who is supposed to render part-time service to the
principal employer. Being a regular employee, private respondent is entitled to security of tenure and his
services may be terminated only for causes provided by law. Thus, under the circumstances, petitioner should
have complied with the due process requirements of notice and hearing before terminating the services of private
respondent. An employee should be notified of his employer's intent to dismiss him and the true reasons
therefor. Unfortunately, these basic requisites were not met. It was not shown that private respondent was informed of
the alleged "real" reason for his dismissal. Neither was he given an opportunity to air his side and defend himself.

G.R. No. 91307. January 24, 1991. SINGER SEWING MACHINE CO. vs. DRILON, et. Al.
Respondent UNION filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of
the Singer Sewing Machine Co.
SINGER opposed the petition mainly on the ground that the union members are actually not employees but are
independent contractors as evidenced by the collection agency agreement which they signed.
Respondent Med-Arbiter found an existing employer-employee relationship between the union members and the
Company, thus granted the petition for certification election. On appeal, Drilon affirmed it. The motion for
reconsideration of the Secretary's resolution was denied. Hence, this petition.
The private respondents asserted that the UNION members are employees under Article 280 of the Labor Code.
RULING: Private respondents are not employees of SINGER.
The Agreement between the parties confirms the status of the collecting agent in this case as an independent
contractor not only because he is explicitly described as such but also because the provisions permit him to perform
collection services for the company without being subject to the control of the latter except only as to the result of his
work.
The Court finds the contention of the respondents that the union members are employees under Article 280 of the
Labor Code to have no basis. The definition that regular employees are those who perform activities which are
desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide
that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the
latter's business) even without being hired as an employee. This is precisely true in the case of an independent
contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is
not the yardstick for determining the existence of an employment relationship because it merely distinguishes between
two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the
existence of an employment relationship is in dispute.

[G. R. No. 148492. May 9, 2003]. MAGSALIN vs. NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M)
FACTS: Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as sales route
helpers for a limited period of five months. After five months, respondent workers were employed by petitioner company
on a day-to-day basis. According to petitioner company, respondent workers were hired to substitute for regular sales

route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower
in any of its work places or an unusually high volume of work. The practice was for the workers to wait every morning
outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at
the end of the day.
Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company
refused. On 07 November 1997, twenty-three (23) of the temporary workers (herein respondents) filed with the National
Labor Relations Commission (NLRC) a complaint for the regularization of their employment with petitioner
company. The complaint was amended a number of times to include other complainants that ultimately totaled fiftyeight (58) workers. Claiming that petitioner company meanwhile terminated their services, respondent workers filed a
notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC.
ISSUE: Whether or not the respondent workers considered as regular employees of the petitioner.
RULING: Yes. In determining whether an employment should be considered regular or non-regular, the
applicable test is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the
work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme under
which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is
divorced from the normal activities required in carrying on the particular business or trade. But, although the work to
be performed is only for a specific project or seasonal, where a person thus engaged has been performing the
job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the
repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of
that activity to the business or trade of the employer. The employment of such person is also then deemed to
be regular with respect to such activity and while such activity exists.
The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or
desirability of their services in the regular conduct of the business or trade of petitioner company.

G.R. No. L-48494 February 5, 1990. BRENT SCHOOL, REV. GABRIEL DIMACHE vs. RONALDO ZAMORA,
DOROTEO R. ALEGRE
Alegre was engaged as athletic director by Brent School. The contract fixed a specific term for its existence, five (5)
years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary
agreements reiterated the same terms and conditions.
Some three months before the expiration of the stipulated period, Alegre was given a copy of the report filed by Brent
School with the Department of Labor advising of the termination of his services. The stated ground for the termination
was "completion of contract, expiration of the definite period of employment."
Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that
the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of

his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could
not be removed except for valid cause.
Whether or not the employment with a fixed term is valid
RULING: YES.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor
Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into effect until
November 1, 1974, some three years after the perfection of the employment contract.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term
employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as
amended by R.A. 1787. 12 Basically, this statute provided that
In cases of employment, without a definite period, in a commercial, industrial, or agricultural
establishment or enterprise, the employer or the employee may terminate at any time the employment
with just cause; or without just cause in the case of an employee by serving written notice on the
employer at least one month in advance, or in the case of an employer, by serving such notice to the
employee at least one month in advance or one-half month for every year of service of the employee,
whichever is longer, a fraction of at least six months being considered as one whole year.
Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also implicitly
acknowledged the propriety of employment with a fixed period.
Now, the Civil Code of the Philippines itself deals with obligations with a period. No prohibition against term-or fixedperiod employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly
legitimate for them to include in it a stipulation fixing the duration thereof. Stipulations for a term were explicitly
recognized as valid by the Supreme Court, for instance, in Biboso v. Victorias Milling Co., Inc., and J. Walter Thompson
Co. (Phil.) v. NLRC.
Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it terminates on
the expiration of such period." 16 "A contract of employment for a definite period terminates by its own terms at the end
of such period." 17
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code which
went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or
employment with a fixed or definite period. Nevertheless, later amendments deleted the employment with fixed period
from the Code.
But still, fixed-term employment is valid provided that it was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.
Where it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy, morals, etc.
Even if the work performed is necessary/desirable to the business of the employer, it does not necessarily follow that
the employer and employee should be forbidden to stipulate any period of time for the performance of those activities.
There is nothing essentially contradictory between a definite period of an employment contract and the nature of the
employees duties. The decisive determinant in term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their
employment relationship. Period means length of existence, duration, an end, a limit, a bound, a time of definite
length, the period from one fixed date to another fixed date. It should be apparent that this settled and familiar notion of
a period, in the context of a contract of employment, takes no account at all of the nature of the duties of the employee;

it has absolutely no relevance to the character of his duties as being "usually necessary or desirable to the usual
business of the employer," or not.

G.R. No. 61594 September 28, 1990. PAKISTAN INTERNATIONAL AIRLINES CORPORATION vs BLAS F. OPLE
FACTS: On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation
licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one with
private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. The contracts,
which became effective on 9 January 1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by the mutual consent of the parties.
6. TERMINATION
Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time
by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by
paying the EMPLOYEE wages equivalent to one month's salary.
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi,
Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement.

On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of employment, PIA
through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate letters both dated 1 August
1980 to private respondents Farrales and Mamasig advising both that their services as flight stewardesses would be
terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment agreement [they had) executed
with [PIA]." On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint.
ISSUE: Whether or not private respondents are validly dismissed.
RULING: No. The critical consideration is the presence or absence of a substantial indication that the period
specified in an employment agreement was designed to circumvent the security of tenure of regular employees
which is provided for in Articles 280 and 281 of the Labor Code. This indication must ordinarily rest upon some
aspect of the agreement other than the mere specification of a fixed term of the employment agreement, or upon
evidence aliunde of the intent to evade. Examining the provisions of paragraphs 5 and 6 of the employment agreement
between petitioner PIA and private respondents, we consider that those provisions must be read together and when so
read, the fixed period of three (3) years specified in paragraph 5 will be seen to have been effectively neutralized by the
provisions of paragraph 6 of that agreement. For petitioner PIA claims to be authorized to shorten that term, at any time
and for any cause satisfactory to itself, to a one-month period, or even less by simply paying the employee a month's
salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is to render the
employment of private respondents Farrales and Mamasig basically employment at the pleasure of petitioner
PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any security of tenure from accruing
in favor of private respondents even during the limited period of three (3) years, and thus to escape completely
the thrust of Articles 280 and 281 of the Labor Code.

G.R. No. 78693. January 28, 1991. ZOSIMO CIELO vs. NLRC, HENRY LEI and/or HENRY LEI TRUCKING
Petitioner is a truck driver who claims he was illegally dismissed by the private respondent. The Labor Arbiter found for
him. 1 On appeal, NLRC held that petitioners employment had expired under a valid contract.
The Solicitor General agreed that the contract between the petitioner and the private respondent was a binding
agreement. The petitioner's services could be legally terminated upon the expiration of the period agreed upon, which
was only six months.
The agreement was supposed to have commenced on June 30, 1984, and to end on December 31, 1984. On
December 22, 1984, however, the petitioner was formally notified by the private respondent of the termination of his
services on the ground of expiration of their contract. Soon thereafter, the petitioner filed his complaint with the Ministry
of Labor and Employment.
CIEO claimed he started working for HENRY on June 16, 1984, and having done so for more than six months, had
acquired the status of a regular employee. As such, he could no longer be dismissed except for lawful cause.
The agreement contains, among others, that the same is for a 6-month period, unless terminated earlier by either party;
that there is no employer-employee relationship, the agreement being contractual in nature.
RULING: (All drivers were under a fixed-term contract badge of circumvention of the right of security of tenure)
It appears from the records that all the drivers of the private respondent have been hired on a fixed contract basis. The
private respondent's intention is obvious. There is no question that the purpose behind these individual contracts was to
evade the application of the labor laws by making it appear that the drivers of the trucking company were not its regular
employees.
Under these arrangements, the private respondent hoped to be able to terminate the services of the drivers without the
inhibitions of the Labor Code. All it had to do was refuse to renew the agreements, which, significantly, were uniformly
limited to a six-month period. No cause had to be established because such renewal was subject to the discretion of the
parties. In fact, the private respondent did not even have to wait for the expiration of the contract as it was there
provided that it could be "earlier terminated at the option of either party." By this clever scheme, the private respondent
could also prevent the drivers from becoming regular employees and thus be entitled to security of tenure and other
benefits.

G.R. No. 105033 February 28, 1994. PHILIPPINE VILLAGE HOTEL vs. NLRC
FACTS: Private respondents were employees of petitioner Philippine Village Hotel. However, on May 19, 1986,
petitioner had to close and totally discontinue its operations due to serious financial and business reverses resulting in
the termination of the services of its employees. Thereafter, the Philippine Village Hotel Employees and Workers Union
filed against petitioner a complaint for separation pay, unfair labor practice and illegal lock-out but was dismissed. On
February 1, 1989, petitioner decided to have a one (1) month dry-run operation to ascertain the feasibility of resuming
its business operations. In order to carry out its dry-run operation, petitioner hired casual workers, including private
respondents, for a one (1) month period, or from February 1, 1989 to March 1, 1989, as evidenced by the latter's
Contract of Employment. After evaluating the individual performance of all the employees and upon the lapse of the
contractual one-month period or on March 2, 1989, petitioner terminated the services of private respondents. On April 6,
1989, private respondents and Tupas Local Chapter No. 1362 filed a complaint against petitioner for illegal dismissal
and unfair labor practice.
ISSUE: Whether or not private respondents are casual employees.

RULING: Yes. The two guidelines by which fixed contracts of employments can be said NOT to circumvent
security of tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any
force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms
with no moral dominance whatever being exercised by the former on the latter."
In the instant case, private respondents were validly terminated by the petitioner when the latter had to close its
business due to financial losses. Following the directives of the NLRC to give priority in hiring private respondents
should it resume its business, petitioner hired private respondents during their one (1) month dry-run operation.
However, this does not mean that private respondents were deemed to have continued their regular employment
status, which they had enjoyed before their aforementioned termination due to petitioner's financial losses. It should be
borne in mind that when complainants were first terminated as a result of the company's cessation from operation in
May, 1986 the employer-employee relationship between the parties herein was totally and completely severed. Such
being the case, respondent acted well within its discretion when in rehiring the private respondents it made them casual
and for a specific period. The complainants are no better than the new employees of petitioner for the matter of what
status or designation to be given them exclusively rests in the discretion of management.

G.R. No. 119523 October 10, 1997. ISABELO VIOLETA vs. NLRC
Petitioners Isabelo Violeta and Jovito Baltazar were former employees of private respondent Dasmarias Industrial and
Steelworks Corporation (DISC).
Violeta worked in Construction and Devt Corp. of the Phil. (CDCP), a sister corporation of DISC, at its project in CDCP
Mines until termination of the project. Later, he was transferred from one project to another as a regular project
employee, and was terminated upon the completion of the last project where he was transferred. Baltazar was also
transferred from one project to another as a regular project employee and was terminated like Violeta.
Contending that they are already regular employees who cannot be dismissed on the ground of completion of the
particular project where they are engaged, petitioners filed two separate complaints for illegal dismissal against private
respondent.
Private respondent admitted that it is engaged in the development and construction of infrastructure projects and
maintained that petitioners are project employees.
Whether petitioners are regular (non-project) employees or project employees?
RULING:
As Handyman and Erector II, respectively, petitioners' services are both necessary and vital to the operation of the
business of private respondent. This is confirmed by the fact that they were continually and successively assigned to
the different projects of private respondent and its sister company, CDCP.
The principal test for determining whether particular employees are properly characterized as "project employees," as
distinguished from "regular employees," is whether or not the "project employees" were assigned (1) to carry out a

"specific project or undertaking," (2) the duration (and scope) of which were specified at the time the employees were
engaged for that project.
Based on the above criteria, petitioners are regular employees of private respondent. There is no debate that petitioners
were hired for a specific project or undertaking (for NSC ETL #3 Civil Works). The fact of the completion of said item of
work is also undisputed. However, the records are barren of any definite period or duration for the expiration of the
assigned items of work of petitioners at the time of their engagement. Their appointment/employment, as stated in their
respective Appointments For Project Employment, was not predetermined because the duration of the work is
"contingent upon the progress accomplishment" and the contract gives private respondent the liberty to "determine the
personnel and the number as the work progresses." Clearly, the employment is subject to no term but rather, a
condition, that is, "progress accomplishment." It cannot therefore be said to be definite that will therefore exempt the
respondent company from the effects of Article 280.
Their employer could, at any stage of such work, determine whether their services were needed or not. Their services
could then be terminated even before the completion of the phase of work assigned to them.

GR No. 125837. Oct. 6, 2004. CHUA vs. CA

Facts:
On August 20, 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando
Trinidad, Romeo Tapang and Carlos Maliwat filed a petition with the SSC for SSS coverage and contributions against
petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that they were all regular
employees of the petitioner in his construction business.
Private respondents alleged that petitioner dismissed all of them without justifiable grounds, and without notice to them
and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them to the SSS
for compulsory coverage in flagrant violation of the Social Security Act.
Petitioner claimed that private respondents were not regular employees, but project employees whose work had been
fixed for a specific project or undertaking the completion of which was determined at the time of their engagement. This
being the case, he concluded that said employees were not entitled to coverage under the Social Security Act.
Petitioner also claimed that the case has prescribed. The Court of Appeals ruled in favor of the private respondents.
Issue:
Whether or not the private respondents are entitled to compulsory SSS coverage.
Held:
Yes. Well-settled is the rule that the mandatory coverage of Republic Act No. 1161, as amended, is premised on the
existence of an employer-employee relationship, the essential elements of which are: (a) selection and engagement of
the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means
and methods by which the work is to be accomplished, with the power of control being the most determinative factor.
The existence of an employer-employee relationship between the parties can easily be determined by the application of
the control test.
It is clear that private respondents are employees of petitioner, the latter having control over the results of the work
done, as well as the means and methods by which the same were accomplished. Suffice it to say that regardless of the
nature of their employment, whether it is regular or project, private respondents are subject of the compulsory coverage
under the SSS Law, their employment not falling under the exceptions provided under Section 8(j) of the Social Security
Act. Moreover, while it may be true that private respondents were initially hired for specific projects or undertakings, the
repeated re-hiring and continuing need for their services over a long span of timethe shortest being two years and the
longest being eighthave undeniably made them regular employees. In addition, private respondents right to file their
claim had not yet prescribed at the time of the filing of their petition. Republic Act No. 1161, as amended, prescribes a

period of twenty (20) years, from the time the delinquency is known or assessment is made by the SSS, within which to
file a claim for non-remittance against employers.

G.R. No. 82973 September 15, 1989. MARIO CARTAGENAS, et. al. vs. ROMAGO ELECTRIC CO., NLRC
Romago is a general contractor engaged in contracting and sub-contracting of specific building construction projects
such as electrical, mechanical and civil engineering aspects in the repair of buildings and from other kindred services.
Individual complainants are employed by the respondent in connection with particular construction projects.
Individual complainants were temporarily laid-off by virtue of a memorandum issued by the respondent. In said
memorandum, they were also informed that a meeting regarding the resumption of operation will be held and that they
will be notified as to when they will resume work.
Complainants then filed the instant case for illegal dismissal but before the respondent could receive a copy of the
complaint and the notification and summons issued by the NLRC, individual complainants re-applied with the
respondent and were assigned to work with its project at Robinson-EDSA.
Respondent introduced documentary exhibits that the complainant have invariably been issued appointment from
project to projects and were issued notice of temporary lay-off when the PNB Finance Center project was suspended
due to lack of funds and that when work was available particularly respondent's project at Robinson-EDSA they were
rehired and assigned to this project.
The NLRC held that the complainants were project employees because their appointments were "co-terminus with the
phase or item of work assigned to them in said project."
RULING:
Petitioners are only project workers of the private respondent. As an electrical contractor, the private respondent
depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since
its work depends on the availability of such contracts or "projects," necessarily the duration of the employment of its
work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they
are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if
it would have to carry them as permanent employees and pay them wages even if there are no projects for them to
work on.
The nature of the business the corporation is engaged into is one which will not allow it to employ workers for an
indefinite period. The completion of their work or project automatically terminates their employment, in which case, the
employer is, under the law, only obliged to render a report on the termination of the employment.

RICARDO FERNANDEZ vs NATIONAL LABOR RELATIONS COMMISSION and D. M. CONSUNJI, INC.,

FACTS: Petitioner was hired as a laborer at the D.M. Consunji, Inc., a construction firm, on November 5, 1974. He
became a skilled welder and worked for private respondent until March 23, 1986 when his employment was terminated
on the ground that the project petitioner had been assigned to was already completed and there was no more work for
him to do.
Skeptic of private respondent's reason, petitioner brought his plight before the Labor Arbiter who consolidated the same
with three (3) other separate complaints for illegal dismissal and various money claims against private respondent. On
May 12, 1988, Labor Arbiter Fernando V. Cinco rendered a decision, finding that complainants worked continuously in
various projects ranging from five (5) to twenty (20) years and belonged to a work pool. Hence, petitioner is considered
a regular employee. Private respondent questioned on appeal the aforesaid decision of the Labor Arbiter on the ground
that the complainants were all project employees who were hired on a project-to-project basis, depending on the

availability of projects that the former was able to close with its clients. Respondent pointed to the gaps in complainants'
respective employment histories to show that they were indeed hired on an "off-and-on" basis.
RULING: Generally, there are two types of employees in the construction industry, namely 1) Project Employees and 2)
Non-project Employees.
Project employees are those employed in connection with a particular construction project. Non-project employees are
those employed by a construction company without reference to a particular project.
Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project
or any phase thereof in which they are employed, regardless of the number of projects in which they have been
employed by a particular construction company.
Petitioner cites Article 280 of the Labor Code as legal basis for the decision of the Labor Arbiter in his favor. The text of
Article 280 states as follows:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement 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 undertaking 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 actually exists.
Petitioner claims that the above-quoted proviso in Article 280 of the Labor Code supports his claim that he should be
regarded as a regular employee.
We disagree. The proviso in the second paragraph of Article 280 of the Labor Code has recently been explained
in Mercado v. NLRC, 4 where it was held that said proviso deems as regular employees only those "casual" employees
who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. It
is not applicable to "project" employees, who are specifically excepted therefrom. Thus, the Court therein said:
The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain
or limit the generality of the clause that it immediately follows. (Statutory Construction by Ruben Agpalo, 1986 ed., p.
173). Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the
provision to which it is attached, and not to the statute itself or to other sections thereof. (Chinese Flour Importers
Association v. Price Stabilization Board, 89 Phil. 469 (1951); Arenas v. City of San Carlos, G.R. No. 24024, April 5,
1978, 82 SCRA 318 (1978). The only exception to the rule is where the clear legislative intent is to restrain or qualify not
only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself
as a whole. (Commissioner of Internal Revenue v. Filipinas Compania de Seguros, 107 Phil. 1055 (1960)
Indeed, a careful reading of the proviso readily discloses that the same relates to employment where the employee is
engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer but
hastens to qualify that project employment is specifically exempted therefrom.

G.R. No. 109902 August 2, 1994. ALU-TUCP, et. al. vs. NLRC, NATIONAL STEEL CORPORATION
Petitioners plead that they had been employed by NSC in connection with its Five Year Expansion Program 1 & 2 for
varying lengths of time when they were separated from NSC's service.

Petitioners filed separate complaints for regularization, etc. The Labor Arbiter declared petitioners as "regular project
employees.
On appeal to NLRC, it affirmed that petitioners were project employees since they were hired to perform work in a
specific undertaking the completion of which had been determined at the time of their engagement and which operation
was not directly related to the business of steel manufacturing.
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and workrelated to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more
years to private respondent NSC. 4
Private respondent, on the other hand, claimed that petitioners are project employees as they were employed to
undertake a specific project NSC's Five Year Expansion Program (FAYEP I & II).
RULING:
"Project" could refer to: (1) a particular job or undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. The
job or undertaking begins and ends at determined or determinable times. Example: A particular construction job or
project of a construction company. (2) A particular job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular
business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.
The case at bar presents a typical example of this kind of "project."
NSC undertook the Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and
increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number
of component projects. The carrying out of the Program constitutes a distinct undertaking identifiable from the ordinary
business and activity of NSC, which is the production and marketing of steel products. Each component project, of
course, begins and ends at specified times, which had already been determined by the time petitioners were engaged.
We also note that NSC did the work here involved the construction of buildings and civil and electrical works,
installation of machinery and equipment and the commissioning of such machinery only for itself. Private respondent
NSC was not in the business of constructing buildings and installing plant machinery for the general business
community.
During the time petitioners rendered services to NSC, their work was limited to one or another of the specific
component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were
hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and
commissioned, steel-making machinery and equipment, or for selling the finished steel products.

Mercado v. NLRC
Facts:
1. Petitioners were agricultural workers of the private respondent's sugar land who were dismissed. They had worked in
all agriculture phases for several years in the said sugar land. The respondent denied that petitioners were regular
employees alleging that their services were engaged through 'mandarols' or supply workers to do a particular phase of
the agricultural work.
2. As a result, the petitioners filed a complaint for illegal dismissal. The Labor Arbiter held that the petitioners were not
regular employees and the NLRC affirmed this ruling.
Issue: W/N the petitioners are regular and permanent farm workers
RULING: No, they are project/seasonal employees. A project employee is one whose employment has been fixed for a
specific project or undertaking, the completion has been determined at the time of engagement, or where work or
service is seasonal in nature and employment is for the duration of the season.

As such, the termination of employment cannot be considered as illegal dismissal. The petitioners are free to contract
their services to work for other farm owners.

G.R. No. 149440. January 28, 2003. HACIENDA FATIMA, et. al. vs. NATL FEDERATION OF SUGARCANE
WORKERS-FOOD AND GENERAL TRADE
The employers have shown that respondents performed work that was seasonal in nature. They failed to prove that the
latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have
served them for several years already. Hence, they are regular not seasonal employees.
The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on
leave during the off-season and were therefore still employed by petitioners.
The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who
refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants'
persistence and dogged determination in going back to work."
RULING:
Respondents are regular employees.
For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or
services that are seasonal in nature. They must have also been employed only for the duration of one season. The
evidence proves the existence of the first, but not of the second, condition. The fact that respondents repeatedly worked
as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed
respondents for more than one season. Therefore, the general rule of regular employment is applicable.
The fact that [respondents] do not work continuously for one whole year but only for the duration of the season does not
detract from considering them in regular employment since in a litany of cases this Court has already settled that
seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not
separated from service in said period, but merely considered on leave until re-employed." 14
Having performed the same tasks for petitioners every season for several years, respondents are considered the
former's regular employees for their respective tasks.

Vassar Industries Employees Union (VIEU), vs. Estrella

Facts: There was in existence a collective bargaining agreement between private respondents
Associated Labor Unions and VassarIndustries, Inc. which expired on May 15, 1977. Prior to such date, 111 of a total
number of 150 employees of such firm disaffiliated from the former labor organization and formed their own union.
Thereafter, they filed an application for registration of their union with the Bureau of Labor Relations, complying with an
the requirements of both the Labor Code and its implementing regulations. While such application was pending,
petitioner Union filed a petition for certification as bargaining agent for the rank-and-file employees of the company. The
Med-Arbiter, on May 24, 1977, denied their plea on the ground that the union was not duly registered with the
Department of Labor. Then came a motion for reconsideration praying that the dismissal be set aside until action be
taken on its pending application for registration.
On July 5, 1977, respondent Estrella, then Acting Director of the Bureau of Labor Relations, denied, as previously
noted, the application for registration "on the ground that there is a registered collective bargaining agent in the
company." Hence this petition.
Issue: Whether or not the refusal of respondent Francisco L. Estrella, then the Acting Director of the Bureau
of Labor Relations, to register petitioner Vassar Industries Employees Union was proper

Held: NO. Petitioner Union should be registered, there being no legal obstacle to such a step and the duty of the
Bureau of LaborRelations being clear in this regard. "Once the fact of disaffiliation has been demonstrated beyond
doubt, as in this case, a certification election is the most expeditious way of determining which labororganization is to be
the exclusive bargaining representative."
In U.E. Automotive Employees and Workers Union v. Noriel,reference was made to the fact that a notable feature of our
Constitution is that "freedom of association is explicitly ordained; it is not merely derivative, peripheral or penumbral, as
is the case in the United States. It can trace its origin to the Malolos Constitution." In Pan American World Airways, Inc.
v. Pan American Employees Association: "There is both a constitutional and statutory recognition that laborers have the
right to form unions to take care of their interests vis-a-viz their employees. Their freedom to form organizations would
be rendered nugatory if they could not choose their own leaders to speak on their behalf and to bargain for them." It
cannot be otherwise, for the freedom to choose which labororganization to join is an aspect of the constitutional
mandate of protection to labor. Prior to the Industrial Peace Act, there was a statute setting for the guidelines for the
registration of labor unions.
Furthermore, the Court in Philippine Labor Alliance Council v. Bureau of Labor Relations held that: "It is indisputable
that the present controversy would not have arisen if there were no mass disaffiliation from petitioning union. Such a
phenomenon is nothing new in the Philippine labor movement. Nor is it open to any legal objection. It is implicit in the
freedom of association explicitly ordained by the Constitution. There is then the incontrovertible right of any individual to
join an organization of his choice. That option belongs to him. A workingman is not to be denied that liberty. He may be,
as a matter of fact, more in need of it the institution of collective bargaining as an aspect of industrial democracy is to
succeed. No obstacle that may possibly thwart the desirableobjective of militancy in labor's struggle for better terms and
conditions is then to be placed on his way. Once the fact of disaffiliation has been demonstrated beyond doubt, as in
this case, a certification election is the most expeditious way of determining which labor organization is to be the
exclusive bargaining representative. It is as simple as that."

G.R. No. L-43495-99 January 20, 1990. TROPICAL HUT EMPLOYEES' UNION-CGW, et. al. vs. TROPICAL HUT
The rank and file workers of the Tropical Hut organized the UNION (THEU) and immediately sought affiliation with the
National Association of Trade Unions (NATU). NATU accepted the application for affiliation.
After several negotiations were conducted between THEU-NATU and respondent, a CBA was concluded. It provides,
among others, that any employee who is expelled from THEU-NATU for joining another federation or forming another
union, or who fails or refuses to maintain his membership therein as required, shall, upon written request of THEUNATU, be discharged by the COMPANY.
Later, petitioners disaffiliated THEU with NATU, and affiliated with the Confederation of General Workers (CGW). The
letter was passed around among the members of the THEU-NATU, to which around one hundred and thirty-seven (137)
signatures gave their consent to and acknowledged the decision to disaffiliate.
Later, those who affiliated with CWG (petitioners/THEU-CWG) were dismissed by respondent upon the written request
of the remaining THEU-NATU members raising as a ground the violation of the CBA. The dismissal was made pending
approval by the Secretary of Labor of the application for their dismissal.
As a consequence thereof, cases for unfair labor practice were filed by petitioners against respondent.
Whether or not the disaffiliation from the mother federation (NATU) was illegal?
RULING: NO.

The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and
voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when
circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association.
The locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power
between the employer and their employee-members; and the association of the locals (THEU) into the national union
(NATU) was in furtherance of the same end. The essential purpose was the affiliation of the local unions into a common
enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor.
Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to
the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for
mutual welfare upon the terms laid down in the agreement which brought it into existence.
The inclusion of the word NATU after the name of the local union THEU in the registration with the Department of Labor
is merely to stress that the THEU is NATU's affiliate at the time of the registration. It does not mean that the said local
union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own interests
independently of the federation. The local union (THEU) was merely exercising its primary right to labor organization for
the effective enhancement and protection of common interests. In the absence of enforceable provisions in the
federation's constitution preventing disaffiliation of a local union, a local may sever its relationship with its parent. There
is nothing in the constitution of the NATU or in the constitution of the THEU-NATU that the THEU was expressly
forbidden to disaffiliate from the federation.

AMADA RANCE vs. THE NATIONAL LABOR RELATIONS COMMISSION

FACTS: CBA provision
ARTICLE V
UNION SECURITY
Any employee within the bargaining agreement who is a member of the union at the time of the effectivity of
this agreement or becomes a member of the UNION thereafter, shall during the term thereof or any extention,
continue to be a member in good standing of the UNION as a condition of continued employment in the
COMPANY. xxxxxxxxxxxxxxxxxxxxxxxx
Provided, however, that in case expulsion proceedings are instituted against any member of the UNION,
pending such proceedings, the COMPANY, on the basis of a board resolution of the UNION, shall suspend the
member concerned; and provided further, that the UNION, jointly and severally with the officers and members
of the board voting for the dismissal or suspension, shall hold and render the COMPANY, its executive,
owners, and officers free from any and all claims and liabilities. (Rollo, p. 64).
Petitioners herein were among the members of the respondent union who were expelled by the latter fordisloyalty in
that they allegedly joined the NAFLU a large federation. Because of the expulsion, petitioners were dismissed by
respondent Corporation. Petitioners sued for reinstatement and backwages stating their dismissal was without due
process. Losing both in the decisions of the Labor Arbiter and the National Labor Relations Commission (NLRC), they
elevated their cause to the Supreme Court.
Respondent Polybag Workers Union as already stated expelled 125 members on the ground of disloyalty and acts
inimical to the interests of the Union based on the findings and recommendations of the panel of investigators. Both the
Labor Arbiter and the NLRC found the Collective Bargaining Agreement and the "Union Security Clause" valid and
considered the termination of the petitioners justified thereunder, for having committed an act of disloyalty to the
Polybag Workers Union by having affiliated with and having joined the NAFLU, another labor union claiming jurisdiction
similar to the former, while still members of respondent union.

Among the disputed portions of the NLRC decision is its finding that it has been substantially proven that the petitioners
committed acts of disloyalty to their union as a consequence of the filing by NAFLU for and in their behalf of the
complaint in question
Petitioners insist that their expulsion from the Union and consequent dismissal from employment have no basis whether
factual or legal, because they did not in fact affiliate themselves with another Union, the NAFLU. On the contrary, they
claim that there is a connivance between respondents Company and Union in their illegal dismissal in order to avoid the
payment of separation pay by respondent company. Petitioners contend that they did not authorize NAFLU to file
NLRC-AB Case No. 6-4275-82.
RULING: While the power to dismiss is a normal prerogative of the employer, the same is not without limitations. The
employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining Agreement, as in the instant case. Dismissals must
not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only
his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their
employees, which include the right to labor (Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 90 SCRA
393 [1979], Resolution).
In the case at bar, the scandalous haste with which respondent corporation dismissed 125 employees lends credence
to the claim that there was connivance between respondent corporation and respondent Union. It is evident that private
respondents were in bad faith in dismissing petitioners. They, the private respondents, are guilty of unfair labor practice.

G.R. No. L-50992 June 19, 1985. NATIVIDAD SAMPANG vs. AMADO G. INCIONG
Natividad Sampang was the president of the labor union of the employees of private respondent Insular Yebana
Tobacco Corporation, working for the respondent for 31 years.
She seeks the reversal of an order of the then Deputy Minister of Labor, Amado G. Inciong to grant clearance for her
dismissal, presumably for initiating "a concerted action among the rank and file workers not to perform overtime work
[amounting] to gross insubordination" 2 That charge she denied, her version being that she made "several
representations with management, upon request of the members of the union, to cut-off overtime work but to no avail;
that there is no exigency for the rendering of overtime work, hence, the concerted refusal to work overtime cannot be
recalled a strike." 3
The basis for the dismissal of petitioner Sampang was the "unexpected" character of the strike lasting until the next day,
a strike the blame for which was attributed to petitioner, who allegedly instigated it. It was further stated that the pleas
made by the company supervisor for the employees to do overtime work was disregarded. As a result, the company lost
an estimated amount of P2,716.00 worth of unpacked cigarettes which were spoiled."
RULING:
There is here a case of an employee, with more than thirty years service, having been dismissed for instigating a strike
that lasted for two days and caused the loss in the amount of P2,716.00. It is quite obvious then that the constitutional
mandate on security of tenure was violated. For even if her denial that she did not instigate such two-day strike be
disregarded, still the penalty imposed was grossly disproportionate to the offense imputed to her.
Where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with
a consequence so severe. It is not only because of the law's concern for the workingman. There is, in addition, his
family to consider. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner.

G.R. No. 127374 January 31, 2002. PHILIPPINE SKYLANDERS, INC, vs. NLRC

FACTS: November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with
the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election
conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of
Labor.
Pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs supposed
deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the resolution
adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother
federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine
Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to maintain continuity within the
organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the
newly-forged PSEA-NCW. On March 17, 1994 PSEA-NCW entered into a collective bargaining agreement with PSI
which was immediately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.
PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and
personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs refusal to bargain collectively with its
workers, the company through its president and personnel manager, was also liable for interfering with its employees
union activities
Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict
which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for
that matter had no personality to file the instant complaint. Labor Arbiter declared PSEAs disaffiliation from PAFLU
invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice.. PSI, PSEA and their
respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision
As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement with PSI was struck
down for being invalid ofthe Labor Arbiter.
RULING: right of local unions to separate from their mother federation on the ground that as separate and voluntary
associations, local unions do not owe their creation and existence to the national federation to which they areaffiliated
but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common
bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there
aretimes when without succor and support local unions may find it hard, unaided by other support groups, to secure
justice for themselves. Yet the local unions remain the basic units of association, free to serve their own interests
subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce
the affiliation upon the terms laid down in the agreement which brought such affiliation into existence.
Nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from
the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency of an election
protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. Neither
was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of
the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any
complaint in their behalf.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had
validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently
affiliating with NCW and entering into a collective bargaining agreement in behalf of its members. The mere act of
disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the
local union.

G.R. No. 131235 November 16, 1999. UST FACULTY UNION (USTFU), et. al. vs. BITONIO, et. al.
Private Respondents are duly elected officers of the USTFU.
A notice was posted addressed to all USTFU members announcing a general assembly. Among others, the general
assembly was called to elect USTFU's next set of officers.
The secretary general of UST issued notices allowing all faculty members to hold a convocation. 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".
The general faculty assembly was held as scheduled and was attended by members of the USTFU and, as admitted by
petitioners, also by "non-USTFU members [who] are members in good standing of the UST Academic Community
Collective Bargaining Unit". On this occasion, petitioners were elected as USTFU's new set of officers.
Private respondents filed the instant petition seeking the nullification of the election results, alleging, among others, that
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 the Unions Constitution and Bylaws.
Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latter's
incumbency impelled the election of the new set of USTFU officers. They assert that such exercise was pursuant to
their right to self-organization.
RULING:
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 union's
CBL (Constitution and Bylaws) 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.
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. The election in the case at bar 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. The participation of non-union members in the
election aggravated its irregularity.

G.R. No. L-25246 September 12, 1974. BENJAMIN VICTORIANO vs. ELIZALDE ROPE WORKERS' UNION

FACTS:
Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia ni
Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958.
As such employee, he was a member of the Elizalde Rope Workers' Union (hereinafter referred to as Union) which had
with the Company a collective bargaining agreement containing a closed shop provision which reads as follows:
Membership in the Union shall be required as a condition of employment for all permanent employees workers covered
by this Agreement.
The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the
employer was not precluded "from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of the employees." On June 18, 1961,
however, Republic Act No. 3350 was enacted, introducing an amendment to paragraph (4) subsection (a) of section
4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization".
Being a member of a religious sect that prohibits the affiliation of its members with any labor organization, Appellee
presented his resignation to appellant Union in 1962, and when no action was taken thereon, he reiterated his
resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to the Company asking the latter to
separate Appellee from the service in view of the fact that he was resigning from the Union as a member.
The management of the Company in turn notified Appellee and his counsel that unless the Appellee could achieve a
satisfactory arrangement with the Union, the Company would be constrained to dismiss him from the service.
This prompted Appellee to file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance
of Manila to enjoin the Company and the Union from dismissing Appellee. 1 In its answer, the Union invoked the "union
security clause" of the collective bargaining agreement; assailed the constitutionality of Republic Act No. 3350; and
contended that the Court had no jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d) and
(e).

DECISION OF LOWER COURTS:

* CFI - Manila: enjoining the defendant Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present
employment and sentencing the defendant Elizalde Rope Workers' Union to pay the plaintiff P500 for attorney's fees
and the costs of this action
Appeal to this Court on purely questions of law.
ISSUE:
WON RA 3350 introducing an amendment to paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as
follows: ... "but such agreement shall not cover members of any religious sects which prohibit affiliation of their
members in any such labor organization" is constitutional
SUB-ISSUES & RULING:
a. WON RA 3350 infringes on the fundamental right to form lawful associations when it "prohibits all the members of a
given religious sect from joining any labor union if such sect prohibits affiliations of their members thereto" 5 ; and,
consequently, deprives said members of their constitutional right to form or join lawful associations or organizations
guaranteed by the Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6) of the 1935 Constitution
NO.
What the exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop
agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole
ground that they are not members of the collective bargaining union.
If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they
can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so; the law does not
coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor union
compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of
association.
b. WON RA 3350 unconstitutional for impairing the obligation of contracts in that, while the Union is obliged to comply
with its collective bargaining agreement containing a "closed shop provision," the Act relieves the employer from its
reciprocal obligation of cooperating in the maintenance of union membership as a condition of employment; and that
said Act, furthermore, impairs the Union's rights as it deprives the union of dues from members who, under the Act, are
relieved from the obligation to continue as such members

NO.
The contract clause of the Constitution must, therefore, be not only in harmony with, but also in subordination to, in
appropriate instances, the reserved power of the state to safeguard the vital interests of the people. It follows that not all
legislations, which
have the effect of impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a statute
passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must be
upheld by the courts. This has special application to contracts regulating relations between capital and labor which are
not merely contractual, and said labor contracts, for being impressed with public interest, must yield to the common
good.
Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general
good of the people, and when the means adopted to secure that end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with
the constitutional limitation of that power.
What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of
belief and religion, and to promote the general welfare by preventing discrimination against those members of religious
sects which prohibit their members from joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own life
and the life of their dependents. It cannot be gainsaid that said purpose is legitimate.
free exercise of religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore,
yield to the former.
It is only where unavoidably necessary to prevent an immediate and grave danger to the security and welfare of the
community that infringement of religious freedom may be justified, and only to the smallest extent necessary to avoid
the danger.
c. WON Republic Act No. 3350 discriminatorily favors those religious sects which ban their members from joining labor
unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution or Section 8 of Article IV of the 1987 Constitution;
and while said Act unduly protects certain religious sects, it leaves no rights or protection to labor organizations
Section 8 of Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free
exercise and enjoyment of religious profession and worship, without discrimination and preference, shall forever be
allowed. No religious test shall be required for the exercise of civil or political rights.
NO, the government should not be precluded from pursuing valid objectives secular in character even if the incidental
result would be favorable to a religion or sect. It has likewise been held that the statute, in order to withstand the
strictures of constitutional prohibition, must have a secular legislative purpose and a primary effect that neither
advances nor inhibits religion. Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the
constitutional inhibition of the "no-establishment" (of religion) clause of the Constitution.
the exemption from the effects of closed shop agreement does not directly advance, or
diminish, the interests of any particular religion. Although the exemption may benefit those who are members of
religious sects that prohibit their members from joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The "establishment clause" (of religion) does not ban regulation on conduct whose reason or
effect merely happens to coincide or harmonize with the tenets of some or all religions.
d. WON Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test shall be
required for the exercise of a civil right," in that the laborer's exercise of his civil right to join associations for purposes
not contrary to law has to be determined under the Act by his affiliation with a religious sect; that conversely, if a worker
has to sever his religious connection with a sect that prohibits membership in a labor organization in order to be able to
join a labor organization, said Act would violate religious freedom
NO. The Act does not require as a qualification, or condition, for joining any lawful association membership in any

particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits its
members from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts members with such
religious affiliation from the coverage of closed shop agreements. So, under this Act, a religious objector is not required
to do a positive act to exercise the right to join or to resign from the union. He is exempted ipso jure without need of
any positive act on his part.
e. WON Republic Act No. 3350, violates the "equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the operation of closed shop agreement the members of the
"Iglesia ni Cristo", it has granted said members undue advantages over their fellow workers, for while the Act exempts
them from union obligation and liability, it nevertheless entitles them at the same time to the enjoyment of all
concessions, benefits and other emoluments that the union might secure from the employer
NO. The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality,
that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them.
It guarantees equality, not identity of rights.
All that is required of a valid classification is that it be reasonable, which means that the classification should be based
on substantial distinctions which make for real differences; that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply equally to each member of the class.
f. WON Republic Act No. 3350 violates the constitutional provision regarding the promotion of social justice
NO.
Social justice is intended to promote the welfare of all the people. Republic Act No. 3350 promotes that welfare insofar
as it looks after the welfare of those who, because of their religious belief, cannot join labor unions; the Act prevents
their being deprived of work and of the means of livelihood. In determining whether any particular measure is for public
advantage, it is not necessary that the entire state be directly benefited it is sufficient that a portion of the state be
benefited thereby.
Social justice also means the adoption by the Government of measures calculated to insure economic stability of all
component elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community. Republic Act No. 3350 insures economic stability to the members of a
religious sect, like the Iglesia ni Cristo, who are also component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having a closed shop agreement with the employer. The
Act also advances the proper economic and social equilibrium between labor unions and employees who cannot join
labor unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits membership in
labor unions with those whose religion does not prohibit said membership.
Social justice guarantees equality of opportunity, and this is precisely what Republic Act No. 3350 proposes to
accomplish it gives laborers, irrespective of their religious scrupples, equal opportunity for work.

G.R. No. 82914 June 20, 1988. KAPATIRAN SA MEAT & CANNING DIVISION vs. PURA FERRER-CALLEJA, et. al.
Petitioner was the sole and exclusive collective bargaining representative of the workers in the Meat and Canning
Division of the Universal Robina Corporation.
Later, private respondent New Employees and Workers United Labor Org. (NEW ULO), mostly members of the INC,
registered as a labor union and later filed for a petition for a certification election. Petitioner moved to dismiss the
petition alleging that the members of the NEW ULO three (3) years previously refused to affiliate with any labor union.
The petition was however granted.
RULING:

The SC, in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upheld the right of members of the INC sect not
to join a labor union for being contrary to their religious beliefs. And this does not bar the members of that sect from
forming their own union. The "recognition of the tenets of the sect should not infringe on the basic right of selforganization granted by the constitution to workers, regardless of religious affiliation."

PEPSI-COLA SUPERVISORY UNION(UPSU) vs BIENVENIDO E. LAGUESMA, PEPSI-COLA PRODUCTS

FACTS : Petitioner is a union of supervisory employees. Itappears that on March 20, 1995 the union filed a petition
for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition
wasdenied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route
managersare managerial employees and, therefore, ineligible for unionmembership under the first sentence of Art. 245
of the Labor Code, which provides:
Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor
organizationsof their own.
Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in the order dated
September 22, 1995, of the Secretary of Labor and Employment. Its petition was dismissed by the Third Divisionfor lack
of showing that respondent committed grave abuse of discretion. But petitioner filed a motion for
reconsideration,pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it
declares managerialemployees to be ineligible to form, assist or join unions, contravenes Art. III, 8 of the Constitution
which provides:The right of the people, including those employed inthe public and private sectors, to form
unions,associations, or societies for purposes not contrary tolaw shall not be abridged.
ISSUES: (1) whether the route managers at Pepsi-ColaProducts Philippines, Inc. are managerial employees and
(2)whether Art. 245, insofar as it prohibits managerial employeesfrom forming, joining or assisting labor unions, violates
Art. III, 8 of the Constitution.
HELD: 1. Yes, route managers are considered managerialemployees. We have in this case an expert's view that
theemployees concerned are managerial employees within thepurview of Art. 212 which provides:(m) "managerial
employee" is one who is vested with powers or prerogatives to lay down and executemanagement policies and/or to
hire, transfer,suspend, lay off, recall, discharge, assign or disciplineemployees. Supervisory employees are those who,
inthe interest of the employer, effectively recommendsuch managerial actions if the exercise of suchauthority is not
merely routinary or clerical in nature but requires the use of independent judgment. Allemployees not falling within any
of the abovedefinitions are considered rank-and-file employees for purposes of this Book.The term "manager" generally
refers to "anyone who is responsible for subordinates and other organizationalresources."

FIRST-LINE MANAGERS The lowest level in anorganization at which individuals are responsible for the work of
others is called first-line or first-level management. First-line managers direct operating employees only; they do not
supervise other managers. Examples of first-line managers are the"foreman" or production supervisor in a
manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a
largeoffice. First-level managers are often called supervisors.
MIDDLE MANAGERS The term middlemanagement can refer to more than one level in anorganization. Middle
managers direct the activities of other managers and sometimes also those of operating employees. Middle managers'
principal responsibilities are to direct the activities that implement their organizations' policies and to balancethe
demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an
example of a middle manager.

TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the
overall management of the organization. It establishes operating policies and guides the organization's interactions with
its environment. Typical titles of top managers are "chief executive officer," "president," and "senior vice-president."
Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest
management classification.
2. As can be seen from this description, a distinction exists between those who have the authority to devise, implement
and control strategic and operational policies (top and middle managers) and those whose task is simply to ensure that
such policies are carried out by the rank-and-file employees of an organization (first-level managers/supervisors). What
distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such
rank-and-file employees."Managerial employees" may therefore be said to fall into two distinct categories: the
"managers" per se, who compose the former group described above, and the "supervisors" who form the latter group.
Whether they belong to the first or the second category, managers, vis-a-vis employers, are, likewise,employees.

Unlike supervisors who basically merely direct operatingemployees in line with set tasks assigned to them,
routemanagers are responsible for the success of the company'smain line of business through management of their
respectivesales teams. Such management necessarily involves theplanning, direction, operation and evaluation of their
individualteams and areas which the work of supervisors does not entail.The route managers cannot thus possibly be
classified as mere supervisors because their work does not only involve, butgoes far beyond, the simple direction or
supervision of operating employees to accomplish objectives set by thoseabove them. They are not mere functionaries
with simpleoversight functions but business administrators in their ownright.2. No, Art. 245, insofar as it prohibits
managerial employeesfrom forming, joining or assisting labor unions, does not violate Art. III, 8 of the Constitution
Art. 245. Ineligibility of managerial employees to joinany labor organization; right of supervisory employees.
Managerial employees are not eligibleto 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 separatelabor
organizations of their own.
This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as
theHerrera-Veloso Law. Unlike the Industrial Peace Act or theprovisions of the Labor Code which it superseded, R.A.
No.6715 provides separate definitions of the terms "managerial"and "supervisory employees," as follows: Art. 212.
Definitions. . . .(m) "managerial employee" is one who is vested
withpowers or prerogatives to lay down and executemanagement policies and/or to hire transfer, suspend,lay off, recall,
discharge, assign or disciplineemployees. Supervisory employees are those who, inthe interest of the employer,
effectively recommendsuch managerial actions if the exercise of suchauthority is not merely routinary or clerical in
naturebut requires the use of independent judgment. Allemployees not falling within any of the abovedefinitions are
considered rank-and-file employees for purposes of this Book. Although the definition of "supervisory employees"
seems tohave been unduly restricted to the last phrase of the definitionin the Industrial Peace Act, the legal significance
given to thephrase "effectively recommends" remains the same. In fact,the distinction between top and middle
managers, who setmanagement policy, and front-line supervisors, who are merelyresponsible for ensuring that such
policies are carried out bythe rank and file, is articulated in the present definition.
When read in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the
Constitutional Commission in framing Art. III, 8 of the fundamental law.Nor is the guarantee of organizational right in
Art. III, 8infringed by a ban against managerial employees forming aunion. The right guaranteed in Art. III, 8 is subject
to thecondition that its exercise should be for purposes "not contrary to law." In the case of Art. 245, there is a rational
basis for prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr., himself a
constitutionalcommissioner, said in his ponencia in Philips Industrial Development, Inc. v. NLRC: In the first place, all
these employees, with theexception of the service engineers and the sales forcepersonnel, are confidential employees.
Their classification as such is not seriously disputed byPEO-FFW; the five (5) previous CBAs between PIDIand PEOFFW explicitly considered them asconfidential employees. By the very nature of their functions, they assist and act in a
confidentialcapacity to, or have access to confidential matters of,persons who exercise managerial functions in thefield

of labor relations. As such, the rationale behindthe ineligibility of managerial employees to form,assist or joint a labor
union equally applies to them.In Bulletin PublishingCo., Inc. v. Hon. Augusto Sanchez, this Courtelaborated on this
rationale, thus:. . . The rationale for this inhibitionhas been stated to be, because if these managerial employees
wouldbelong to or be affiliated with aUnion, the latter might not beassured of their loyalty to the Unionin view of evident
conflict of interests. The Union can alsobecome company-dominated withthe presence of managerialemployees in
Union membership.
To be sure, the Court in Philips Industrial was dealing with theright of confidential employees to organize. But the
samereason for denying them the right to organize justifies evenmore the ban on managerial employees from forming
unions. After all, those who qualify as top or middle managers areexecutives who receive from their employers
information thatnot only is confidential but also is not generally available to thepublic, or to their competitors, or to other
employees. It ishardly necessary to point out that to say that the first sentenceof Art. 245 is unconstitutional would be to
contradict thedecision in that case.WHEREFORE, the petition is DISMISSED.

G.R. No. 93468 December 29, 1994. NATIONAL ASSOCIATION OF TRADE UNIONS (NATU)-REPUBLIC
PLANTERS BANK SUPERVISORS CHAPTER vs. RUBEN D. TORRES and REPUBLIC PLANTERS BANK
NATU filed a petition for certification election to determine the exclusive bargaining representative of respondent Bank's
supervisory employees. The Bank moved to dismiss the petition on the ground that the supposed supervisory
employees were actually managerial and/or confidential employees thus ineligible to join, assist or form a union, and
that the petition lacked the 20% signatory requirement under the Labor Code.
The Department Managers, Assistant Managers, Branch Managers, Cashiers and Controllers were declared
managerial employees by respondent Torres. Perforce, they cannot join the union of supervisors.
Whether the Department Managers, etc. are managerial and/or confidential employees hence ineligible to join or assist
the union of petitioner?
RULING:
The grave abuse of discretion committed by public respondent is at once apparent. Art. 212, par. (m), of the Labor
Code is explicit. A managerial employee is (a) one who is vested with powers or prerogatives to lay down and execute
management policies, or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees; or (b) one
who is vested with both powers or prerogatives. A supervisory employee is different from a managerial employee in the
sense that the supervisory employee, in the interest of the employer, effectively recommends such managerial actions,
if the exercise of such managerial authority is not routinary in nature but requires the use of independent judgment.
The Branch Managers, Cashiers and Controllers of respondent Bank are not managerial employees but supervisory
employees. Neither do the Branch Managers, Cashiers and Controllers have the power to hire, transfer, suspend, lay
off, recall, discharge, assign or discipline employees. They possess only recommendatory powers subject to evaluation,
review and final action by higher officials. (In the latter part of the case, they were however declared as confidential
employees by the SC. Thus, they were prohibited from joining, assisting or forming a union.)
The Department Managers are not managerial employees also. Like Branch Managers, Cashiers and Controllers,
Department Managers do not possess the power to lay down policies nor to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees. They occupy supervisory positions, charged with the duty among others to
"recommend proposals to improve and streamline operations." 22 With respect to Assistant Managers, there is
absolutely no evidence submitted to substantiate public respondent's finding that they are managerial employees.
(Rationale behind the disqualification of managerial employees expressed in Bulletin Publishing Corporation v.
Sanchez, 28 thus: ". . . if these managerial employees would belong to or be affiliated with a Union, the latter might not
be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become companydominated with the presence of managerial employees in Union membership." Stated differently, in the collective
bargaining process, managerial employees are supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interests are well protected. The employer is not assured of such protection if

these employees themselves are union members. It is the same reason that impelled this Court to consider the position
of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential
employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for
themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover,
unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to
persons or individuals who are supposed to act "in the interest of" the employers. Confidential employees, having
access to confidential information, may become the source of undue advantage. Said employee(s) may act as spy or
spies of either party to a collective bargaining agreement.)

G.R. No. 110399 August 15, 1997. SMC Vs. BIENVENIDO E. LAGUESMA
FACTS: Petitioner union filed before DOLE a Petition for Direct Certification or Certification Election among the
supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the
abovementioned employees of the different plants as one bargaining unit.
San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the MedArbiters error in grouping together all three (3) separate plants, into one bargaining unit, and in including supervisory
levels 3 and above whose positions are confidential in nature.
The public respondent, Undersecretary Laguesma, granted respondent companys Appeal and ordered the remand of
the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be
included in the appropriate bargaining unit.
Upon petitioner-unions motion, Undersecretary Laguesma granted the reconsideration prayed for and directed the
conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the
exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.
ISSUE:
1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential
employees, hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single
bargaining unit.
RULING:
(1) On the first issue, this Court rules that said employees do not fall within the term confidential employees who may
be prohibited from joining a union.
They are not qualified to be classified as managerial employees who, under Article 245 of the Labor Code, are not
eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a
labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate,
determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both
must be met if an employee is to be considered a confidential employee that is, the confidential relationship must
exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating
to labor relations.
The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of
management policies relating to labor relations is a principal objective sought to be accomplished by the confidential
employee rule. The broad rationale behind this rule is that employees should not be placed in a position involving a
potential conflict of interests. Management should not be required to handle labor relations matters through employees

who are represented by the union with which the company is required to deal and who in the normal performance of
their duties may obtain advance information of the companys position with regard to contract negotiations, the
disposition of grievances, or other labor relations matters.
The Court held that if these managerial employees would belong to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become companydominated with the presence of managerial employees in Union membership. An important element of the confidential
employee rule is the employees need to use labor relations information. Thus, in determining the confidentiality of
certain employees, a key question frequently considered is the employees necessary access to confidential labor
relations information.
(2) The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan,
Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if
the communal or mutual interests of the employees are not sacrificed. An appropriate bargaining unit may be defined as
a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the
collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law. A unit to be appropriate
must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and
other subjects of collective bargaining.

G.R. No. 116194. February 2, 2000. SUGBUANON RURAL BANK (SRBI) vs. BIENVENIDO E. LAGUESMA, et. al.
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).
The union filed a petition for certification election of the supervisory employees of SRBI. SRBI filed a motion to dismiss
the union's petition alleging that the members of APSOTEU-TUCP were in fact managerial or confidential employees.
Whether or not the members of the respondent union are managerial employees/confidential employees?
RULING:
The members were held to be not managerial 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.
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 failed state who among the employees has access to information specifically relating to its labor to relations
policies. While petitioner's explanation confirms the regular duties of the concerned employees, it shows nothing about
any duties specifically connected to labor relations.

Cooperative Rural Bank of Davao vs Ferrer-Calleja (1988)

An employee of such a cooperative who is a member AND COOWNER cannot invoke the right to collective bargaining
for certainly an owner cannot bargain with himself or his co-owners. However, insofar as it involves cooperatives with
employees who are NOT members or co-owners thereof, certainly such employees are entitled to exercise the rights of
all workers to organization, collective bargaining negotiations, and others as are enshrined in the Constitution and
existing laws of the country.

G.R. Nos. 43633-34 September 14, 1990. PABLO ARIZALA, et. al. vs. CA
Petitioners occupied supervisory positions in the GSIS. Demands were made on all four of them to resign from the
GSIS Employees Association, in view of their supervisory positions. They refused to do so. Consequently, two (2)
criminal cases for violation of the Industrial Peace Act were lodged against them.
Both criminal actions resulted in the conviction of the accused in separate decisions. Petitioners moved for
reconsideration arguing that when the "1973 Constitution" took effect, their cases were still pending; that since the
provisions of that constitution and of the Labor Code subsequently promulgated, repealing the Industrial Peace Actplaced employees of all categories in GOCs without distinction within the Civil Service, and provided that the terms and
conditions of their employment were to be "governed by the Civil Service Law, rules and regulations" and hence, no
longer subject of collective bargaining, the appellants ceased to fall within the coverage of the Industrial Peace Act and
should thus no longer continue to be prosecuted and exposed to punishment for a violation thereof.
Whether or not the petitioners' criminal liability for a violation of the Industrial Peace Act may be deemed to have been
obliterated in virtue of subsequent legislation and the provisions of the 1973 and 1987 Constitutions?
RULING:
The GSIS performs proprietary functions. It exercises all the powers of a corporation under the Corporation Law in so
far as they are not otherwise inconsistent with other applicable law.
The petitioners contend that the right of self-organization and collective bargaining had been withdrawn by the Labor
Code from government employees including those in government-owned and controlled corporations- chiefly for the
reason that the terms and conditions of government employment, all embraced in civil service, may not be modified by
collective bargaining because set by law.
This was true, for a time. As already discussed, both under the Labor Code and PD 807, government employees,
including those in government-owned or controlled corporations, were indeed precluded from bargaining as regards
terms and conditions of employment because these were set by law and hence could not possibly be altered by
negotiation.
But EO 111 restored the right to organize and to negotiate and bargain of employees of "government corporations
established under the Corporation Code." And EO 180, and apparently RA 6715, too, granted to all government
employees the right of collective bargaining or negotiation except as regards those terms of their employment which
were fixed by law; and as to said terms fixed by law, they were prohibited to strike to obtain changes thereof.
2. The petitioners appear to be correct in their view of the disappearance from the law of the prohibition on supervisors
being members of labor organizations composed of employees under their supervision. The Labor Code (PD 442)
allowed supervisors (if not managerial) to join rank-and-file unions. And under the Implementing Rules of RA 6715,
supervisors who were members of existing labor organizations on the effectivity of said RA 6715 were explicitly
authorized to "remain therein."

SSS Employee Asso. v CA 175 SCRA 686 (July 28, 1989)

Facts: The petitioners went on strike after the SSS failed to act upon the unions demands concerning the
implementation of their CBA. SSS filed before the court action for damages with prayer for writ of preliminary injunction

against petitioners for staging an illegal strike. The court issued a temporary restraining order pending the resolution of
the application for preliminary injunction while petitioners filed a motion to dismiss alleging the courts lack of jurisdiction
over the subject matter. Petitioners contend that the court made reversible error in taking cognizance on the subject
matter since the jurisdiction lies on the DOLE or the National Labor Relations Commission as the case involves a labor
dispute. The SSS contends on one hand that the petitioners are covered by the Civil Service laws, rules and regulation
thus have no right to strike. They are not covered by the NLRC or DOLE therefore the court may enjoin the petitioners
from striking.
Issue: Whether or not SSS employers have the right to strike.
Whether or not the CA erred in taking jurisdiction over the subject matter.

Held: The Constitutional provisions enshrined on Human Rights and Social Justice provides guarantee among workers
with the right to organize and conduct peaceful concerted activities such as strikes. On one hand, Section 14 of E.O No.
180 provides that the Civil Service law and rules governing concerted activities and strikes in the government service
shall be observed, subject to any legislation that may be enacted by Congress referring to Memorandum Circular No.
6, s. 1987 of the Civil Service Commission which states that prior to the enactment by Congress of applicable laws
concerning strike by government employeesenjoins under pain of administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which will
result in temporary stoppage or disruption of public service. Therefore in the absence of any legislation allowing govt.
employees to strike they are prohibited from doing so.
In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as government employees and that the
SSS is one such government-controlled corporation with an original charter, having been created under R.A. No. 1161,
its employees are part of the civil service and are covered by the Civil Service Commissions memorandum prohibiting
strikes. Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the Public
Sector Labor-Management Council which is not granted by law authority to issue writ of injunction in labor disputes
within its jurisdiction thus the resort of SSS before the general court for the issuance of a writ of injunction to enjoin the
strike is appropriate.
G.R. No. 85279 July 28, 1989
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON, RAMON MODESTO,
JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA, PLACIDO AGUSTIN,
VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO, RTC, BRANCH 98,
QUEZON CITY, respondents
FACTS: On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for damages with a
prayer for a writ of preliminary injunction against petitioners, alleging that on June 9, 1987, the officers and members of
SSSEA staged an illegal strike and baricaded the entrances to the SSS Building, preventing non-striking employees
from reporting for work and SSS members from transacting business with the SSS; that the strike was reported to the
Public Sector Labor - Management Council, which ordered the strikers to return to work; that the strikers refused to
return to work; and that the SSS suffered damages as a result of the strike. The complaint prayed that a writ of
preliminary injunction be issued to enjoin the strike and that the strikers be ordered to return to work; that the
defendants (petitioners herein) be ordered to pay damages; and that the strike be declared illegal.
It appears that the SSSEA went on strike after the SSS failed to act on the union's demands, which included:
implementation of the provisions of the old SSS-SSSEA collective bargaining agreement (CBA) on check-off of union
dues; payment of accrued overtime pay, night differential pay and holiday pay; conversion of temporary or contractual
employees with six (6) months or more of service into regular and permanent employees and their entitlement to the
same salaries, allowances and benefits given to other regular employees of the SSS; and payment of the children's
allowance of P30.00, and after the SSS deducted certain amounts from the salaries of the employees and allegedly
committed acts of discrimination and unfair labor practices .

ISSUE: Whether or not the Regional Trial Court can enjoin the Social Security System Employees Association (SSSEA)
from striking and order the striking employees to return to work. Collaterally, it is whether or not employees of the Social
Security System (SSS) have the right to strike.
RULING: The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State "shall
guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law" [Art. XIII, Sec. 31].
By itself, this provision would seem to recognize the right of all workers and employees, including those in the public
sector, to strike. But the Constitution itself fails to expressly confirm this impression, for in the Sub-Article on the Civil
Service Commission, it provides, after defining the scope of the civil service as "all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original
charters," that "[t]he right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(l) and
(50)]. Parenthetically, the Bill of Rights also provides that "[tlhe right of the people, including those employed in the
public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not abridged"
[Art. III, Sec. 8]. Thus, while there is no question that the Constitution recognizes the right of government employees to
organize, it is silent as to whether such recognition also includes the right to strike.
Resort to the intent of the framers of the organic law becomes helpful in understanding the meaning of these provisions.
A reading of the proceedings of the Constitutional Commission that drafted the 1987 Constitution would show that in
recognizing the right of government employees to organize, the commissioners intended to limit the right to the
formation of unions or associations only, without including the right to strike.
On June 1, 1987, to implement the constitutional guarantee of the right of government employees to organize, the
President issued E.O. No. 180 which provides guidelines for the exercise of the right to organize of government
employees. In Section 14 thereof, it is provided that "[t]he Civil Service law and rules governing concerted activities and
strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress." The
President was apparently referring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission under date
April 21, 1987 which, "prior to the enactment by Congress of applicable laws concerning strike by government
employees ... enjoins under pain of administrative sanctions, all government officers and employees from staging
strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary stoppage
or disruption of public service." The air was thus cleared of the confusion. At present, in the absence of any legislation
allowing government employees to strike, recognizing their right to do so, or regulating the exercise of the right, they are
prohibited from striking, by express provision of Memorandum Circular No. 6 and as implied in E.O. No. 180. [At this
juncture, it must be stated that the validity of Memorandum Circular No. 6 is not at issue
The employees of the SSS are covered by the prohibition against strike. Considering that under the 1987 Constitution
"[t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No.
180 where the employees in the civil service are denominated as "government employees"] and that the SSS is one
such government-controlled corporation with an original charter, having been created under R.A. No. 1161, its
employees are part of the civil service. and are covered by the Civil Service Commission's memorandum prohibiting
strikes. This being the case, the strike staged by the employees of the SSS was illegal.
E.O. No. 180, which provides guidelines for the exercise of the right to organize of government employees, while
clinging to the same philosophy, has, however, relaxed the rule to allow negotiation where the terms and conditions of
employment involved are not among those fixed by law. Thus:
.SECTION 13. Terms and conditions of employment or improvements thereof, except those that are fixed
by law, may be the subject of negotiations between duly recognized employees' organizations and
appropriate government authorities.
The same executive order has also provided for the general mechanism for the settlement of labor disputes in the
public sector to wit:

.SECTION 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed
in the resolution of complaints, grievances and cases involving government employees. In case any
dispute remains unresolved after exhausting all the available remedies under existing laws and
procedures, the parties may jointly refer the dispute to the [Public Sector Labor- Management] Council
for appropriate action.
Government employees may, therefore, through their unions or associations, either petition the Congress for the
betterment of the terms and conditions of employment which are within the ambit of legislation or negotiate with the
appropriate government agencies for the improvement of those which are not fixed by law. If there be any unresolved
grievances, the dispute may be referred to the Public Sector Labor - Management Council for appropriate action. But
employees in the civil service may not resort to strikes, walk-outs and other temporary work stoppages, like workers in
the private sector, to pressure the Govemment to accede to their demands. As now provided under Sec. 4, Rule III of
the Rules and Regulations to Govern the Exercise of the Right of Government- Employees to Self- Organization, which
took effect after the instant dispute arose, "[t]he terms and conditions of employment in the government, including any
political subdivision or instrumentality thereof and government- owned and controlled corporations with original charters
are governed by law and employees therein shall not strike for the purpose of securing changes thereof."
The strike staged by the employees of the SSS belonging to petitioner union being prohibited by law, an injunction may
be issued to restrain it.
It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive jurisdiction of the NLRC
and, hence, the Regional Trial Court had no jurisdiction to issue a writ of injunction enjoining the continuance of the
strike. The Labor Code itself provides that terms and conditions of employment of government employees shall be
governed by the Civil Service Law, rules and regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public
Sector Labor - Management Council with jurisdiction over unresolved labor disputes involving government employees
[Sec. 16]. Clearly, the NLRC has no jurisdiction over the dispute.
This being the case, the Regional Trial Court was not precluded, in the exercise of its general jurisdiction under B.P.
Blg. 129, as amended, from assuming jurisdiction over the SSS's complaint for damages and issuing the injunctive writ
prayed for therein. Unlike the NLRC, the Public Sector Labor - Management Council has not been granted by law
authority to issue writs of injunction in labor disputes within its jurisdiction. Thus, since it is the Council, and not the
NLRC, that has jurisdiction over the instant labor dispute, resort to the general courts of law for the issuance of a writ of
injunction to enjoin the strike is appropriate.

G.R. No. 96566 January 6, 1992. ATLAS LITHOGRAPHIC SERVICES vs. BIENVENIDO E. LAGUESMA, et. al.
The supervisory, administrative personnel, production, accounting and confidential employees of the petitioner Atlas
affiliated with private respondent Kaisahan ng Manggagawang Pilipino, a national labor organization. The local union
adopted the name ALSI-SAPPACEA-KAMPIL ("supervisors" union).
Shortly thereafter, private respondent Kampil-Katipunan filed on behalf of the "supervisors" union a petition for
certification election so that it could be the sole and exclusive bargaining agent of the supervisory employees.
The petitioners opposed the private respondent's petition claiming that under Article 245 of the Labor code the private
respondent cannot represent the supervisory employees for collective bargaining purposes because the private
respondent also represents the rank-and-file employees' union.
Whether or not, under Article 245 of the Labor Code, a local union of supervisory employees may be allowed to affiliate
with a national federation of labor organizations of rank-and-file employees and which national federation actively
represents its affiliates in collective bargaining negotiations with the same employer of the supervisors and in the
implementation of resulting collective bargaining agreements.
RULING: NO.
The interests of supervisors on the one hand, and the rank-and-file employees on the other, are separate and distinct.
The functions of supervisors, being recommendatory in nature, are more identified with the interests of the employer.
The performance of those functions may, thus, run counter to the interests of the rank-and-file.

The peculiar role of supervisors is such that while they are not managers, when they recommend action implementing
management policy or ask for the discipline or dismissal of subordinates, they identify with the interests of the employer
and may act contrary to the interests of the rank-and-file.
In the area of bargaining, their interests cannot be considered identical. The needs of one are different from those of the
other. Moreover, in the event of a strike, the national federation might influence the supervisors' union to conduct a
sympathy strike on the sole basis of affiliation.
The prohibition against a supervisors' union joining a local union of rank-and-file is replete with jurisprudence. The Court
emphasizes that the limitation is not confined to a case of supervisors wanting to join a rank-and-file local union. The
prohibition extends to a supervisors' local union applying for membership in a national federation the members of which
include local unions of rank-and-file employees. The intent of the law is clear especially where, as in the case at bar, the
supervisors will be co-mingling with those employees whom they directly supervise in their own bargaining unit.

G.R. No. L-98050 March 17, 1994

PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, petitioner,
vs.
HON. RUBEN D. TORRES, Secretary of Labor and Employment, HON. RODOLFO S. MILADO, Department of
Labor and Employment Mediator-Arbiter for Region VIII, Tacloban, City, and PHILPHOS MOVEMENT FOR
PROGRESS, INC. (PMPI), respondents.

FACTS: On 7 July 1989, Philphos Movement for Progress, Inc. (PMPI for brevity), filed with the Department of Labor
and Employment a petition for certification election among the supervisory employees of petitioner, alleging that as a
supervisory union duly registered with the Department of Labor and Employment it was seeking to represent the
supervisory employees of Philippine Phosphate Fertilizer Corporation.
The petition for certification election filed by PMPI was not opposed by PHILPHOS. In fact, on 11 August 1989,
PHILPHOS submitted a position paper with the Mediator-Arbiter stating that its management welcomed the creation of
a supervisory employees' union provided the necessary requisites of law were properly observed, but exempting from
the union its superintendents who were managerial and not supervisory employees as they managed a division,
subdivision or section, and were vested with powers or prerogatives to lay down and execute management policies.
PHILPHOS also asserted that its professional or technical employees were not within the definition of supervisory
employees under the Labor Code as they were immediately under the direction and supervision of its superintendents
and supervisors. Moreover, the professional and technical employees did not have a staff of workers under them.
Consequently, petitioner prayed for the exclusion of its superintendents andprofessional/technical employees from the
PMPI supervisory union.
On 13 October 1989, Mediator-Arbiter Rodolfo S. Milado issued an order directing the holding of a certification election
among the supervisory employees of petitioner, excluding therefrom the superintendents and
theprofessional and technical employees..
On 15 November 1989, PMPI filed an amended petition with the Mediator-Arbiter wherein it sought to represent not only
the supervisory employees of petitioner but also its professional/technical and confidential employees. The amended
petition was filed in view of the amendment of the PMPI Construction which included in its membership
the professional/technical and confidential employees.
On 28 March 1990, Mediator-Arbiter Milado issued an order granting the petition and directing the holding of a
certification election among the "supervisory, professional (engineers, analysts, mechanics, accountants, nurses,
midwives, etc.), technical, and confidential employees" 1 to comprise the proposed bargaining unit.
On 16 April 1990, PHILPHOS appealed the order of 28 March 1990 to the Secretary of Labor and Employment who on
7 August 1990 rendered a decision through Undersecretary Bienvenido Laguesma dismissing the appeal. PHILPHOS
moved for reconsideration but the same was denied; hence, the instant petition alleging grave abuse of discretion on
the part of public respondents in rendering the assailed rulings.

ISSUE: Whether or not its professional/technical and confidential employees may validly join respondent PMPI union
which is composed of supervisors.
RULING: The Court is with the petitioner that being a supervisory union, respondent PMPI cannot represent
the professional/technical and confidential employees of petitioner whose positions we find to be more of the rank and
file than supervisory.
With the enactment in March 1989 of R.A. 6715, employees were thereunder reclassified into three (3) groups, namely:
(a) managerial employees, (b) supervisory employees, and (c) rank and file employees. The category of supervisory
employees is once again recognized in the present law.
Article 212, par. (m), of the Labor Code, as amended, provides, that "(s)upervisory 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." The definition of managerial employees is
limited to those having authority to hire and fire, while those who only recommend effectively the hiring or firing or
transfer of personnel; are considered closer to rank and file employees. The exclusion therefore of mid-level executives
from the category of managers has brought about a third classification, the supervisory employees. The peculiar role of
supervisors is such that while they are not managers, when they recommend action implementing management policy
or ask for the discipline or dismissal of subordinates, they identify with the interests of the employer and may act
contrary to the interests of the rank and file. 5
The certification of Personnel Officer Duhaylungsod that its professional/technical employees occupy positions that are
non-supervisory is evidence that said employees belong to the rank and file. 8 Quite obviously,
theseprofessional/technical employees cannot effectively recommend managerial actions with the use of independent
judgment because they are under the supervision of superintendents and supervisors. Because it is unrefuted that
theseprofessional/technical employees are performing non-supervisory functions, hence considered admitted, they
should be classified, at least for purposes of this case, as rank and file employees. Consequently,
these professional/technical employees cannot be allowed to join a union composed of supervisors.
Conversely, supervisory employees cannot join a labor organization of employees under their supervision but may
validly form a separate organization of their own. 9 This is provided in Art. 245 of the Labor Code, as amended by R.A.
No. 6715, to wit:
. . . 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.
Respondent PMPI is supposed to be a union of 125 supervisors. If the professional/technical employees are included
as members, and records show that they are 271 in all or much more than the supervisors, then PMPI will turn out to be
a rank and file union with the supervisors as members.
This is precisely the situation which the law prohibits. It would create an obvious conflict of views among the members,
or at least between two (2) groups of members espousing opposing interests. The intent of the law is to avoid a
situation where supervisors would merge with the rank and file, or where the supervisors' labor organization would
represent conflicting interests, especially where, as in the case at bar, the supervisors will be commingling with those
employees whom they directly supervise in their own bargaining unit. Members of the supervisory union might refuse to
carry out disciplinary measures against their co-member rank and file employees. 10
Supervisors have the right to form their own union or labor organization. What the law prohibits is a union whose
membership comprises of supervisors merging with the rank and file employees because this is where conflict of
interests may arise in the areas of discipline, collective bargaining and strikes. 11 The professional/technical
employees of petitioner therefore may join the existing rank and file union, or form a union separate and distinct from
the existing union organized by the rank and file employees of the same company.
As to the confidential employees of the petitioner, the latter has not shown any proof or compelling reason to exclude
them from joining respondent PMPI and from participating in the certification election, unless these confidential
employees are the same professional/technical employees whom we find to be occupying rank and file positions.

G.R. No. 88957 June 25, 1992. PHILIPS INDUSTRIAL DEVT Inc. vs. NLRC, PHILIPS EMPLOYEES ORG. (FFW)
PIDI is a domestic corporation engaged in the manufacturing and marketing of electronic products. Since 1971, it had a
total of six (6) CBAs with private respondent PEO-FFW.
Later in the case, the NLRC ruled that based on the implementing rules of the labor code, all workers, except
managerial employees and security personnel, are qualified to join or be a part of the bargaining unit.
RULING:
A palpable error was committed by NLRC in ruling that under the law, all workers, except managerial employees and
security personnel, are qualified to join a union, or form part of a bargaining unit. At the time the Case was filed in 1987,
security personnel were no longer disqualified from joining or forming a union.
Section 6 of E.O. No. 111, enacted on 24 December 1986, repealed the original provisions of Article 245 of the Labor
Code, reading as follows:
Art. 245. Ineligibility of security personnel to join any labor organization. Security guards and other
personnel employed for the protection and security of the person, properties and premises of the
employer shall not be eligible for membership, in any labor organization.
and substituted it with the following provision:
Art. 245. Right of employees in the public service. 10
xxx xxx xxx
By virtue of such repeal and substitution, security guards became eligible for membership in any labor
organization. 11

G.R. No. L-50283-84 April 20, 1983

DOLORES VILLAR, ROMEO PEQUITO, DIONISIO RAMOS, BENIGNO MAMARALDO, ORLANDO ACOSTA,
RECITACION BERNUS, ANSELMA ANDAN, ROLANDO DE GUZMAN and RITA LLAGAS, petitioners,
vs.
THE HON. AMADO G. INCIONG, as Deputy Minister of the Ministry of Labor, AMIGO MANUFACTURING
INCORPORATED and PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), respondents.
FACTS: Petitioners were members of the Amigo Employees Union-PAFLU, a duly registeredlabor organization which,
was the existing bargaining agent of the employees inprivate respondent Amigo Manufacturing, Inc. (Company). The
Company and theAmigo Employees Union-PAFLU had a CBA governing their labor relations, whichagreement was
then about to expire on February 28, 1977. Within the last 60 daysof the CBA, upon written authority of at least 30% of
the employees in the company,including the petitioners, the Federation of Unions of Rizal (FUR) filed a petition
forcertification election with MOLE. The petition was opposed by the PhilippineAssociation of Free Labor Unions
(PAFLU) with whom the Amigo Employees Unionwas at that time affiliated. The same employees who had signed the
petition filedby FUR signed a joint resolution disaffiliating from PAFLU. Petitioner Dolores Villar,representing herself to
be the authorized representative of the Amigo
EmployeesUnion, filed a petition for certification election in the Company. The AmigoEmployees UnionPAFLU intervened and moved for the dismissal of the petition
forcertification election filed by Dolores Villar, on the ground, among others thatDolores Villar had no legal personality to
sign the petition since she was not anofficer of the union nor is there factual or legal basis for her claim that she was
theauthorized representative of the local union. Med-Arbiter dismissed the petition
filedby Villar, which dismissal is still pending appeal before BLR. Amigo EmployeesUnion-PAFLU called a special
meeting of its general membership. A Resolution
wasthereby unanimously approved which called for the investigation by the PAFLUnational president, of all of the petitio
ners and one Felipe Manlapao, forcontinuously maligning the union spreading false propaganda that the union

officerswere merely appointees of the management; and for causing divisiveness in theunion. PAFLU formed a Trial
Committee to investigate the local union's chargesagainst the petitioners for acts of disloyalty. PAFLU and the
Company concluded anew CBA which also reincorporated the same provisions of the existing CBA,including the union
security clause. PAFLU President rendered a decision finding thepetitioners guilty of the charges. PAFLU demanded
the Company to terminate theemployment of the petitioners pursuant to the security clause of the CBA. Acting
onPAFLU's demand, the Company informed PAFLU that it will first secure thenecessary clearances to terminate
petitioners. PAFLU requested the Company
toput petitioners under preventive suspension pending the application for saidclearances to terminate the petitioners. Th
e Company filed the request forclearance to terminate the petitioners before DOLE which was granted. DOLESecretary
Inciong denied the appeal, hence, this petition for review.
RULING: The main thrust of the petition is the alleged illegality of the dismiss of the petitioners by private respondent
Company upon demand of PAFLU which invoked the security clause of the collective bargaining agreement between
the Company and the local union, Amigo Employees Union-PAFLU. Petitioners contend that the respondent Deputy
Minister acted in grave abuse of discretion when he affirmed the decision granting the clearance to terminate the
petitioners and dismissed petitioners' complaint, and in support thereof, allege that their constitutional right to selforganization had been impaired. Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not open to legal objection. It is implicit in the freedom of association
ordained by the Constitution. 13 But this Court has laid down the ruling that a closed shop is a valid form of union
security, and such provision in a collective bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution. 14
In the case at bar, it appears as an undisputed fact that on February 15, 1977, the Company and the Amigo Employees
Union-PAFLU entered into a Collective Bargaining Agreement with a union security clause provided for in Article XII
thereof which is a reiteration of the same clause in the old CBA. The quoted stipulation for closed-shop is clear and
unequivocal and it leaves no room for doubt that the employer is bound, under the collective bargaining agreement, to
dismiss the employees, herein petitioners, for non- union membership. Petitioners became non-union members upon
their expulsion from the general membership of the Amigo Employees Union-PAFLU on March 15, 1977 pursuant to the
Decision of the PAFLU national president.
The contention of petitioners that the charges against them being intra-union problems, should have been investigated
in accordance with the constitution and by-laws of the Amigo Employees Union-PAFLU and not of the PAFLU, is not
impressed with merit. It is true that under the Implementing Rules and Regulations of the Labor Code, in case of intraunion disputes, redress must first be sought within the organization itself in accordance with its constitution and by-laws.
However, it has been held that this requirement is not absolute but yields to exception under varying circumstances.
Thus, in Kapisanan ng mga Manggagawa sa MRR vs. Hernandez, 20 SCRA 109, We held:
In the case at bar, noteworthy is the fact that the complaint was filed against the union and its incumbent
officers, some of whom were members of the board of directors. The constitution and by-laws of the
union provide that charges for any violations thereof shall be filed before the said board. But as
explained by the lower court, if the complainants had done so the board of directors would in effect be
acting as respondent investigator and judge at the same time. To follow the procedure indicated would
be a farce under the circumstances, where exhaustion of remedies within the union itself would
practically amount to a denial of justice or would be illusory or vain, it will not be insisted upon,
particularly where property rights of the members are involved, as a condition to the right to invoke the
aid of a court.
The facts of the instant petition stand on all fours with the aforecited case that the principle therein enunciated applies
here as well. In the case at bar, the petitioners were charged by the officers of the Amigo Employees Union- PAFLU
themselves who were also members of the Board of Directors of the Amigo Employees Union-PAFLU. Thus, were the
petitioners to be charged and investigated according to the local union's constitution, they would have been tried by a
trial committee of three (3) elected from among the members of the Board who are themselves the accusers. (Section
2, Article 11, Constitution of the Local Union). Petitioners would be in a far worse position had this procedure been
followed. Nonetheless, petitioners admit in their petition that two (2) of the six (6) charges, i.e. disaffiliation and filing a
petition for certification election, are not intra-union matters and, therefore, are cognizable by PAFLU.

Petitioners insist that their disaffiliation from PAFLU and filing a petition for certification election are not acts of disloyalty
but an exercise of their right to self-organization. They contend that these acts were done within the 60-day freedom
period when questions of representation may freely be raised. Under the peculiar facts of the case, We find petitioners'
insistence untenable.
In the first place, had petitioners merely disaffiliated from the. Amigo Employees Union-PAFLU, there could be no legal
objections thereto for it was their right to do so. But what petitioners did by the very clear terms of their "Sama-Samang
Kapasiyahan" was to disaffiliate the Amigo Employees Union-PAFLU from PAFLU, an act which they could not have
done with any effective consequence because they constituted the minority in the Amigo Employees Union-PAFLU.
Extant from the records is the fact that petitioners numbering ten (10), were among the ninety-six (96) who signed the
"Sama-Samang Kapasiyahan" whereas there are two hundred thirty four (234) union members in the Amigo Employees
Union-PAFLU. Hence, petitioners constituted a small minority for which reason they could not have successfully
disaffiliated the local union from PAFLU. Since only 96 wanted disaffiliation, it can be inferred that the majority wanted
the union to remain an affiliate of PAFLU and this is not denied or disputed by petitioners. The action of the majority
must, therefore, prevail over that of the minority members.
Neither is there merit to petitioners' contention that they had the right to present representation issues within the 60-day
freedom period. It is true, as contended by petitioners, that under Article 257 of the Labor Code and Section 3, Rule 2,
Book 2 of its Implementing Rules, questions of exclusive bargaining representation are entertainable within the sixty
(60) days prior to the expiry date of an existing CBA, and that they did file a petition for certification election within that
period. But the petition was filed in the name of the Amigo Employees Union which had not disaffiliated from PAFLU,
the mother union. Petitioners being a mere minority of the local union may not bind the majority members of the local
union.
Moreover, the Amigo Employees Union, as an independent union, is not duly registered as such with the Bureau of
Labor Relations.

In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40, We had occasion to interpret Section 23 of
R.A. No. 875 (Industrial Peace Act) requiring of labor unions registration by the Department of Labor in order to qualify
as "legitimate labor organization," and We said:
The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly
and association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in
paragraph (b) of said section 17 is not a limitation to the right of assembly or association, which may be
exercised with or without said registration. The latter is merely a condition sine qua non for the
acquisition of legal personality by labor organizations, associations or unions and the possession of the
'rights and privileges granted by law to legitimate labor organizations.' The Constitution does not
guarantee these rights and privileges, much less said personality, which are mere statutory creations, for
the possession and exercise of which registration is required to protect both labor and the public against
abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union
they purport to represent. Such requirement is a valid exercise of the police power, because the activities
in which labor organizations, associations and union or workers are engaged affect public interest, which
should be protected.
Simply put, the Amigo Employees Union (Independent) Which petitioners claim to represent, not being a legitimate
labor organization, may not validly present representation issues. Therefore, the act of petitioners cannot be considered
a legitimate exercise of their right to self-organization. Hence, We affirm and reiterate the rationale explained in Phil
Association of Free Labor Unions vs. Sec. of Labor case, supra, in order to protect legitimate labor and at the same
time maintain discipline and responsibility within its ranks.
Finally, We reject petitioners' contention that respondent Minister committed error in law amounting to grave abuse of
discretion when he affirmed the conclusion made by the RO4 OIC, upholding the legal applicability of the security
clause of a CBA over alleged offenses committed earlier than its conclusion and within the 60-day freedom period of an
old CBA. In the first place, as We stated earlier, the security clause of the new CBA is a reproduction or reiteration of
the same clause in the old CBA. While petitioners were charged for alleged commission of acts of disloyalty inimical to
the interests of the Amigo Employees Union-PAFLU in the Resolution of February 14, 1977 of the Amigo Employees

Union- PAFLU and on February 15, 1977 PAFLU and the Company entered into and concluded a new collective
bargaining agreement, petitioners may not escape the effects of the security clause under either the old CBA or the new
CBA by claiming that the old CBA had expired and that the new CBA cannot be given retroactive enforcement. To do so
would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a
new agreement shall have been entered into with the union. As this Court said in Seno vs. Mendoza, 21 SCRA 1124,
"without any agreement to govern the relations between labor and management in the interim, the situation would well
be productive of confusion and result in breaches of the law by either party. "
The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously needs further citation of the facts and the opinion
of the Court, speaking through Justice Makalintal who later became Chief Justice, and We quote:
It appears that petitioners other than Januario T. Seno who is their counsel, were members of the United
Seamen's Union of the Philippines. Pursuant to a letter-request of the Union stating that they 'had
ceased to be members in good standing' and citing a closed shop clause in its bargaining agreement
with respondent Carlos A. Go Thong & Co., the latter dismissed said petitioners. Through counsel,
petitioners requested that they be reinstated to their former positions and paid their backwages,
otherwise they would picket respondents' offices and vessels. The request was denied on the ground
that the dismissal was unavoidable under the terms of the collective bargaining agreement. ...
We, therefore, hold and rule that petitioners, although entitled to disaffiliate from their union and form a new
organization of their own, must, however, suffer the consequences of their separation from the union under the security
clause of the CBA.

G.R. No. 96425 February 4, 1992. PROGRESSIVE DEVT CORP. vs. SECRETARY, et. al.
Respondent Pambansang Kilusan ng Paggawa (KILUSAN) -TUCP filed with the DOLE a petition for certification
election among the rank-and-file employees of the petitioner alleging that it is a legitimate labor federation and its local
chapter, Progressive Development Employees Union, was issued charter certificate.
Petitioner PDC filed its motion to dismiss contending that the local union failed to comply with Rule II Section 3, Book V
of the Rules Implementing the Labor Code, as amended, which requires the submission of: (a) the constitution and bylaws; (b) names, addresses and list of officers and/or members; and (c) books of accounts. KILUSAN denied PDCs
allegations.
In its "Supplemental Position Paper", the petitioner insisted that upon verification with the Bureau of Labor Relations
(BLR), it found that the alleged minutes of the organizational meeting was unauthenticated, the list of members did not
bear the corresponding signatures of the purported members, and the constitution and by-laws did not bear the
signature of the members and was not duly subscribed. It argued that the private respondent therefore failed to
substantially comply with the registration requirements provided by the rules.
RULING: Respondent Union failed to qualify as a legitimate labor organization.
Article 212(h) defines a legitimate labor organization as "any labor organization duly registered with the DOLE
and includes any branch or local thereof." Rule I, Section 1 (j), Book V of the Implementing Rules likewise defines a
legitimate labor organization as "any labor organization duly registered with the DOLE and includes any branch, local or
affiliate thereof.
The question that now arises is: when does a branch, local or affiliate of a federation become a legitimate labor
organization?
Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR.
Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that the application should be signed by at
least twenty percent (20%) of the employees in the appropriate bargaining unit and be accompanied by a sworn
statement of the applicant union that there is no certified bargaining agent or, where there is an existing collective
bargaining agreement duly submitted to the DOLE, that the application is filed during the last sixty (60) days of the
agreement.

But when an unregistered union becomes a branch, local or chapter of a federation, some of the aforementioned
requirements for registration are no longer required. By force of law (in this case, Article 212[h]); such local or chapter
becomes a legitimate labor organization upon compliance with the provisions of Rule II, Section 3, Book V of the
Implementing Rules.
Undoubtedly, the intent of the law in imposing lesser requirements in the case of the branch or local of a registered
federation or national union is to encourage the affiliation of a local union with the federation or national union in order
to increase the local union's bargaining powers respecting terms and conditions of labor.
The petitioner maintains that the documentary requirements prescribed in Section 3(c), namely: the constitution and bylaws, set of officers and books of accounts, must follow the requirements of law. Petitioner PDC calls for the similar
application of the requirement for registration in Article 235 that all requisite documents and papers be certified under
oath by the secretary or the treasurer of the organization and attested to by the president.
In the case at bar, the constitution and by-laws and list of officers submitted in the BLR, while attested to by the
chapter's president, were not certified under oath by the secretary. Does such defect warrant the withholding of the
status of legitimacy to the local or chapter? YES.
In the case of union registration, the rationale for requiring that the submitted documents and papers be certified under
oath by the secretary or treasurer, as the case may be, and attested to by president is apparent. The submission of the
required documents becomes the Bureau's basis for approval of the application for registration. Upon approval, the
labor union acquires legal personality and is entitled to all the rights and privileges granted by law to a legitimate labor
organization. The employer naturally needs assurance that the union it is dealing with is a bona fide organization, one
which has not submitted false statements or misrepresentations to the Bureau. The certification and attestation
requirements are preventive measures against the commission of fraud.
In the case of the union affiliation with a federation, the submission of constitution and by-laws, set of officers and books
of accounts must likewise be complied with. The same rationale for requiring the submission of duly subscribed
documents upon union registration exists in the case of union affiliation. Moreover, there is greater reason to exact
compliance with the certification and attestation requirements because, as previously mentioned, several requirements
applicable to independent union registration are no longer required in the case of formation of a local or chapter/union
affiliation. The policy of the law in conferring greater bargaining power upon labor unions must be balanced with the
policy of providing preventive measures against the commission of fraud.
A local or chapter therefore becomes a legitimate labor organization only upon submission of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of which are certified
under oath by the secretary or treasurer, as the case may be, of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not become a legitimate labor
organization. In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the required documents under
oath is fatal to its acquisition of a legitimate status.

[G.R. No. 133215. July 15, 1999]

PAGPALAIN HAULERS, INC., petitioner, vs. The HONORABLE CRESENCIANO B. TRAJANO, in his official
capacity as Secretary of Labor and Employment, the HONORABLE RENATO D. PARUNGO, in his official
capacity as the Med-Arbiter in DOLE Case No. NCR-OD-M-9705-006, and the INTEGRATED LABOR
ORGANIZATION (ILO-PHILS) PAGPALAIN WORKERS UNION-ILO-PHILS. respondents.

FACTS: On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Workers Union (hereafter
referred to as ILO-PHILS), in a bid to represent the rank-and-file drivers and helpers of petitioner Pagpalain Haulers,
Inc. (hereafter referred to as Pagpalain), filed a petition for certification election with the Department of Labor and

Employment. ILO-PHILS attached to the petition copies of its charter certificate, its constitution and by-laws, its books of
account, and a list of its officers and their addresses.
On July 10, 1997, Pagpalain filed a motion to dismiss the petition, alleging that ILO-PHILS was not a legitimate
labor organization due to its failure to comply with the requirements for registration under the Labor Code. Specifically, it
claimed that the books of account submitted by ILO-PHILS were not verified under oath by its treasurer and attested to
by its president, a required by Rule II, Book V of the Omnibus Rules Implementing the Labor Code.
In a reply dated August 4, 1997, ILO-PHILS dismissed Pagpalains claims, saying that Department Order No. 9,
Series of 1997 had dispensed with the requirement that a local or chapter of a national union submit books of account
in order to be registered with the Department of Labor and Employment.
Finding in favor of ILO-PHILS, the Med-Arbiter, on August 27, 1997, ordered the holding of certification elections
among the rank-and-file of Pagpalain Haulers. Pagpalain promptly appealed the decision to the Secretary of Labor and
Employment. It claimed that the Med-Arbiter had gravely abused his discretion in allowing Department Order No. 9 to
take precedence over a ruling of the Supreme Court. Pagpalain cited Protection Technology v. Secretary, Department
of Labor and Employment[1] and Progressive Development Corporation v. Secretary of Labor[2] in support of its
contention.
Declaring Protection and Progressive to be inapplicable to the case before him, the Secretary, on February 27,
1998, issued a resolution dismissing Pagpalains appeal. In his own words, [I]n these aforementioned cases, the
Supreme Court premised its ruling on the previous rules implementing the Labor Code, particularly Book V, that
provides the requirements for the registration of a local or chapter of a federation or national union. With the issuance of
Department Order No. 09 amending the rules implementing Book V of the Code, the requirement on books of account
no longer exists.[3]
Aggrieved by said resolution, Pagpalain now comes to this Court for relief claiming that the Secretary of Labor
acted without jurisdiction in issuing the questioned resolution.
SYNOPSIS
On May 14,1997, respondent ILO-PHILS, in a bid to represent the rank-and-file workers of petitioner Pagpalain
Haulers, Inc., filed a petition for certification election with the DOLE. However, petitioner moved to dismiss the same,
alleging that ILO-PHILS was not a legitimate labor organization due to its failure to comply with the requirements for
registration under the Labor Code. Specifically, the books of account submitted by ILO-PHILS were not verified under
oath by its treasurer and attested to by its president.
The Labor Code does not require the submission of books of account in order for a labor organization to be
registered as a legitimate labor organization. That requirement was in the Implementing Rules of the Labor Code.
However, with the issuance of Dept. Order No. 9, series of 1997, the same has been dispensed with. This Order was
issued by the Secretary of Labor under his authority to promulgate rules and regulations to implement the Labor Code.
Said Order not being contrary to the laws or the Constitution, there was no cogent reason to declare the same null and
void.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR ORGANIZATION; REGISTRATION; REQUIREMENTS;
SUBMISSION OF BOOKS OF ACCOUNT DISPENSED WITH UNDER DEPARTMENT ORDER NO. 9. The Labor
Code does not require the submission of books of account in order for a labor organization to be registered as a
legitimate labor organization: The requirement that books of account be submitted as a requisite for registration can
be found only in Book V of the Omnibus Rules Implementing the Labor Code, prior to its amendment by
Department Order No. 9, Series of 1997. Specifically, the old Section 3(e), Rule II, of Book V provided that [t]he
local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of
officers and books of accounts. For reporting purposes, the procedure governing the reporting of independently
registered unions, federations or national unions shall be observed. By virtue of Department Order No. 9, Series of
1997, however, the documents needed to be submitted by a local or chapter have been reduced to the following:
(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter; (b) The names of the local/chapters officers, their addresses, and the principal office of the
local/chapter; (c) the local/chapters constitution and by-laws; provided that where the local/chapters constitution
and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the
foregoing supporting requirements shall be certified under oath by the Secretary or Treasurer of the local/chapter
and attested by its President.
2.

POLITICAL LAW; ADMINISTRATIVE LAW; SECRETARY OF LABOR; RULE-MAKING POWER;

ADMINISTRATIVE ORDER; VALIDITY OF DEPARTMENT ORDER NO. 9 UPHELD IN CASE AT BAR. Neither

can Pagpalain contend that Department Order No. 9 is an invalid exercise of rule-making power by the Secretary of
Labor. For an administrative order to be valid, it must (i) be issued on the authority of law and (ii) it must not be
contrary to the law and Constitution. Department Order No. 9 has been issued on authority of law. Under the law,
the Secretary is authorized to promulgate rules and regulations to implement the Labor Code. Specifically, Article 5
of the Labor Code provides that [t]he Department of Labor and other government agencies charged with the
administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules
and regulations. Consonant with this article, the Secretary of Labor and Employment promulgated the Omnibus
Rules Implementing the Labor Code. By virtue of this self-same authority, the Secretary amended the abovementioned omnibus rules by issuing Department Order No. 9, Series of 1997. Moreover, Pagpalain has failed to
show that Department Order No. 9 is contrary to the law or the Constitution. At the risk of being repetitious, the
Labor Code does not require a local or chapter to submit books of account in order for it to be registered as a
legitimate labor organization. There is, thus, no inconsistency between the Labor Code and Department Order No.
9. Neither has Pagpalain shown that said order contravenes any provision of the Constitution.
3. ID.; ID.; ID.; ID.; ID.; ID.; UPHELD, NOT BEING CONTRARY TO PUBLIC POLICY. Pagpalain cannot also allege
that Department Order No. 9 is violative of public policy. The sole function of our courts is to apply or interpret the
laws. It does not formulate public policy, which is the province of the legislative and executive branches of
government. It cannot, thus, be said that the principles laid down by the court in the case
of Progressive and Protection Technologyon the requirement of books of accounts constitute public policy on the
matter. They do, however, constitute the Courts interpretation of public policy, as formulated by the executive
department through its promulgation of rules implementing the Labor Code. However, this public policy has itself
been changed by the executive department, through the amendments introduced in Book V of the Omnibus Rules
by Department Order No. 9. It is not for us to question this change in policy, it being a well-established principle
beyond question that it is not within the province of the courts to pass judgment upon the policy of legislative or
executive action. Notwithstanding the expanded judicial power under Sec. 1, Article VIII of the Constitution, an
inquiry on the above-stated policy would delve into matters of wisdom not within the powers of this Court.
Furthermore, the controlling intention in requiring the submission of books of account is the protection of labor
through the minimization of the risk of fraud and diversion in the handling of union funds. This intention can still be
realized through other provisions of the Labor Code. Department Order No. 9 only dispenses with books of
account as a requirement for registration of a local or chapter of a national union or federation. As provided by
Article 241 (h) and (j), a labor organization must still maintain books of account, but it need not submit the same as
a requirement for registration.

G.R. Nos. L-18778 and L-18779. August 31, 1967. UNITED SEAMEN'S UNION OF THE PHILIPPINES (USUP) vs.
DAVAO SHIPOWNERS ASSOCIATION, et. al.
Petitioner USUP presented a set of demands to respondent Davao Shipowners Association representing respondent
shipping companies, for union recognition, etc. The Shipowners invited USUP's attention to the existence of a CBA with
the Davao Marine Association (ASSOCIATION), to which all the crewmen of their launches belonged. Since the
Shipowners were bound by said CBA until the end of that year (1959), it suggested that USUP first take the necessary
steps to be certified as the collective bargaining agent of the employees before they could negotiate in connection with
its proposals.
Later, USUP had filed a notice of strike against all the individual shipowners. An agreement was later formulated by the
3 parties. As stipulated, USUP filed with the Court of Industrial Relations a petition for certification election to determine
the sole collective bargaining representative of all the workers and employees of respondent shipping companies.
Meanwhile, subsequent to the covenant, the respondent shipping companies separately served notices of termination
of service upon sixty-four(64) employees (members of USUP and also of the ASSOCIATION).
USUP filed an unfair labor practice case against herein respondents. The CIR later ruled that the strike staged by
USUP members was unjustified and illegal.
Did the Court of Industrial Relations gravely abuse its discretion, as claimed, in declaring the strike staged by the
members of the USUP unjustified and illegal?
RULING: NO.

The existence of a collective bargaining agreement should have been sufficient to deter USUP from acts tending to
force the issue of union recognition. The parties (SHIPOWNERS and the ASSOCIATION) adopted a graduated
procedure in the settlement of their labor disputes because of their desire to maintain harmonious relations and prevent
as much as possible the declaration of a strike, which in the last analysis works adversely to both capital and labor.
The employees concerned who after all were bound by the collective bargaining agreement, as members of the
Association, totally disregarded, the procedure laid down therein by immediately going on strike without coursing their
complaints through the grievance committee for possible settlement. Having failed to take advantage of a legal right
granted them under the agreement, they are in no position to demand relief from the consequences of their own
impulsive acts.
Where, "in carrying out the strike, coercion, force, intimidation, violation with physical injuries, sabotage and the use of
unnecessary and obscene language or epithets were committed by the top officials and members of the union in an
attempt to prevent the other willing laborers to go to work," it was held that "a strike held under those circumstances
cannot be justified in a regime of law for that would encourage abuses and terrorism and could subvert the very
purpose of the law which provides for arbitration and peaceful settlement of labor disputes."
A labor organization is wholesome if it serves its legitimate purpose of promoting the interests of labor without
unnecessary labor disputes. That is why it is given personality and recognition in concluding collective bargaining
agreements. But if it is made use of as a subterfuge, or as a means to subvert valid commitments, it defeats its own
purpose, for it tends to undermine the harmonious relations between management and labor. The situation does not
deserve any approving sanction from the Court.

G.R. Nos. 64821-23 January 29, 1993

UNIVERSITY OF PANGASINAN FACULTY UNION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and UNIVERSITY OF PANGASINAN, respondents.
FACTS: The uncontroverted facts show that on various dates, petitioner filed the following complaints against the
University of Pangasinan (University for brevity) before the Arbitration Branch of the NLRC in Dagupan City:
1. October 14, 1980: for nonpayment of benefits under P.D. No. 1713 and emergency cost of living
allowance (ecola) to part-time teachers, and for prompt and accurate computation of benefits under P.D.
No. 451 and the payment of ecolas;
2. November 7, 1980: for nonpayment of all ecolas to instructors from October 18-31, 1980;
3. November 20, 1980: for nonpayment of ecolas under P.D. Nos. 525, 1123, 1614, 1634, 1678 and
1713 for November 1-15, 1980, and extra loads during typhoons "Nitang" and "Osang" on July 21 and
25, 1980, respectively;
4. April 13, 1981: for violation of P.D. No. 1751 and nonpayment of extra loads on February 12-13, 1980
(Anniversary celebration);
5. April 27, 1981: for nonpayment of all ecolas for April 1-15, 1981 to faculty members who were also
members of the union;
6. May 21, 1981: for violation of Wage Order No. 1 and delayed payment of salaries; and
7. June 17, 1981: for nonpayment of salary differentials for summer under P.D. No. 451. 1
The Regional Director in San Fernando, La Union certified six (6) of these complaints to Labor Arbiter Pedro Fernandez
of the Dagupan City District Office of the then Ministry of Labor and Employment for compulsory arbitration. 2 According
to the petitioner, it was made to understand by Fernandez that the seventh complaint should also be discussed in its
position paper. Accordingly, petitioner filed a position paper discussing the merits of all the seven complaints. On the
other hand, the University limited its discussion to only four: the complaints filed on April 13, 1981, April 27, 1981, May

21, 1981 and June 17, 1981. Petitioner was of the view that Executive Labor Arbiter Sotero L. Tumang adopted the
stand of the University on the four complaints and accordingly dismissed them in his decision of January 25, 1982. 3
Observing that in its position paper, the petitioner included matters which were "beyond the scope of the issues alleged
in the complaints," said Labor Arbiter discussed the four complaints individually. On the April 13, 1981 complaint, he
ruled that because at the time P.D. No. 1123 took effect on May 1, 1977, the University had not increased its tuition
fees, there was of "nothing to integrate." 4 However, from June 16, 1979 when the University increased its tuition fees, it
was obligated to cause the integration of the across-the-board increase of P60.00 in emergency allowance into the
basic pay as mandated by P.D. Nos. 1123 and 1751.
On the alleged nonpayment of extra loads handled by the employees on February 12 and 13, 1981 when classes were
suspended, Tumang stated that Consuelo Abad, the petitioner's president, had no cause to complain because her
salary was fully paid and that, since there were "no complainants for the alleged nonpayment of extra loads for two
days," the issue had become academic.
With respect to the April 27, 1981 complaint, Tumang said that since the salary paid to Consuelo Abad and other faculty
members for the April 1-15, 1981 period had been earned "as part of their salary for the ten-month period," she was no
longer entitled to an emergency cost of living allowance. He added that "payment of emergency cost of living allowance
is based on actual work performed except when they (employees) are on leave with pay." Hence, because classes
ended in March 1981, the teachers who did not report for work could not be considered on leave with pay and,
therefore, they were not entitled to an emergency cost of living allowance.
As regards the May 21, 1981 complaint alleging violation of Wage Order No. 1, Tumang found that the University had
actually implemented the additional living allowance of P2.00 a day required therein. On the alleged delay in the
payment of salaries of the employees, he rationalized that delays could not be avoided but he reminded the University
to pay its employees on time.
The June 17, 1981 complaint was also resolved in favor of the University. Stating that P.D. No. 451 which mandates
salary increases is dependent on enrollment and allowable deductions, Tumang ruled that, again, Consuelo Abad had
no cause to complain as she had been paid out of the allowable 12.74% for distribution which was a "substantial
compliance with P.D. No. 451." 5
RULING : Petitioner's contention that the cases filed by Consuelo Abad as its president should affect, not only herself,
but all the other union members similarly situated as she was, is well taken. The uncontroverted allegation of the
petitioner is that it is the holder of Registration Certificate No. 9865-C, having been registered with the then Ministry of
Labor and Employment on February 16, 1978. As such, petitioner possessed the legal personality to sue and be sued
under its registered name. 16 Corollarily, its president, Consuelo Abad, correctly filed the complaints even if some of
them involved rights and interest purely or exclusively appertaining to individual employees, it appearing that she signed
the complaints "for and in behalf of the University of Pangasinan Faculty Union." 17
The University's contention that petitioner had no legal personality to institute and prosecute money claims must,
therefore, fail. To quote then Associate Justice Teehankee in Heirs of Teodelo M. Cruz v. CIR, 18 "[w]hat should be
borne in mind is that the interest of the individual worker can be better protected on the whole by a strong union aware
of its moral and legal obligations to represent the rank and file faithfully and secure for them the best wages and
working terms and conditions. . . . Although this was stated within the context of collective bargaining, it applies equally
well to cases, such as the present wherein the union, through its president, presented its individual members'
grievances through proper proceedings. While the complaints might not
have disclosed the identities of the individual employees claiming monetary benefits, 19 such technical defect should not
be taken against the claimants, especially because the University appears to have failed to demand a bill of particulars
during the proceedings before the Labor Arbiter.

G.R. No. 96189 July 14, 1992. UP vs. PURA FERRER-CALLEJA

The case was initiated in the BLR by a registered labor union, the "Organization of Non-Academic Personnel of UP"
(ONAPUP). 4 Claiming to have a membership comprising more than 33% of the persons constituting the non-academic
personnel of UP-Diliman, Los Baos, Manila, and Visayas, it sought the holding of a certification election.

Another registered labor union, the "All UP Workers' Union" (private respondent), filed a comment alleging that its
membership covers both academic and non-academic personnel, it declared its assent to the holding of the election.
For its part, the University, through its General Counsel, 6 made of record its view that there should be two (2) unions:
one for academic, the other for non-academic or administrative, personnel.
Calleja declared that "the appropriate organizational unit should embrace all the regular rank-and-file employees,
teaching and non-teaching," and that there was no sufficient evidence "to justify the grouping of the non-academic
personnel into an organization unit apart and distinct from that of the academic or teaching personnel."
Whether all rank-and-file employees of the university should be organized into a single collective bargaining unit?
RULING:
A "bargaining unit" has been defined as a group of employees of a given employer, comprised of all or less than all of
the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.
Our labor laws do not however provide the criteria for determining the proper collective bargaining unit. Case law
fortunately furnishes some guidelines.
In a case, the Court ruled that the basic test in determining the appropriate bargaining unit is that a unit, to be
appropriate, must affect a grouping of employees who have substantial, mutual interests in wages, hours, working
conditions and other subjects of collective bargaining.
The Court further explained that "(t)he test of the grouping is community or mutuality of interests. And this is so because
'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'.
In the case at bar, the University employees may, as already suggested, quite easily be categorized into two general
classes: one, the group composed of employees whose functions are non-academic, i.e., janitors, messengers, typists,
clerks, receptionists, carpenters, electricians, grounds-keepers, chauffeurs, mechanics, plumbers; 32 and two, the group
made up of those performing academic functions, i.e., full professors, associate professors, assistant professors,
instructors, and research, extension and professorial staff. It would seem obvious that teachers would find very little in
common with the University clerks and other non-academic employees as regards responsibilities and functions,
working conditions, compensation rates, social life and interests, skills and intellectual pursuits, cultural activities, etc.
On the contrary, the dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the
compensation and working conditions of the academic and non-academic personnel dictate the separation of these two
categories of employees for purposes of collective bargaining. The formation of two separate bargaining units, the first
consisting of the rank-and-file non-academic personnel, and the second, of the rank-and-file academic employees, is
the set-up that will best assure to all the employees the exercise of their collective bargaining rights.

G.R. No. L-28223

August 30, 1968

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL RAILWAYS, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA MANGGAGAWA SA CALOOCAN SHOPS,
FACTS: Petition by the "Mechanical Department Labor Union sa PNR" for a review of an order of the Court of Industrial
Relations, in its Case No. 1475-MC, directing the holding of a plebiscite election to determine whether the employees at
the Caloocan Shops desire the respondent union, "Samahan ng mga Manggagawa sa Caloocan Shops", to be
separated from the Mechanical Department Labor Union, with a view to the former being recognized as a separate
bargaining unit.

The case began on 13 February 1965 by a petition of the respondent "Samahan ng mga Manggagawa, etc." calling
attention to the fact that there were three unions in the Caloocan shops of the Philippine National Railways: the
"Samahan", the "Kapisanan ng Manggagawa sa Manila Railroad Company", and the Mechanical Department Labor
Union; that no certification election had been held in the last 12 months in the Caloocan shops; that both the "Samahan"
and the Mechanical Department Labor Union had submitted different labor demands upon the management for which
reason a certification election was needed to determine the proper collective bargaining agency for the Caloocan shop
workers.
The petition was opposed by the management as well as by the Mechanical Department Labor Union, the latter
averring that it had been previously certified in two cases as sole and exclusive bargaining agent of the employees and
laborers of the PNR'S mechanical department, and had negotiated two bargaining agreements with management in
1961 and 1963; that before the expiration of the latter, a renewal thereof had been negotiated and the contract
remained to be signed; that the "Samahan" had been organized only in 21 January 1965; that the Caloocan shops unit
was not established nor separated from the Mechanical Department unit; that the "Samahan" is composed mainly of
supervisors who had filed a pending case to be declared non-supervisors; and that the purpose of the petition was to
disturb the present smooth working labor management relations.
ISSUE: Whether or not a new unit should be established, the Caloocan shops, separate and distinct from the rest of the
workers under the Mechanical Department now represented by the Mechanical Department Labor Union.
RULING: The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part and parcel
of the whole Mechanical Department of the Philippine National Railways. The department is composed of four
main divisions or units, namely: Operations, Manila Area and Lines; Locomotive Crew; Motor Car Crew; and the
Shops Rolling Stocks Maintenance. (Exhibits "D" and "D-1").
The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a separate unit, and is
represented by the Union de Maquinistas, Fogoneros Y Motormen. The workers under the other two main units
of the departments are represented by the Mechanical Department Labor Union. The workers of the Shops
Rolling Stocks Maintenance Division or the Caloocan Shops now seek to be separated from the rest of the
workers of the department and to be represented by the "Samahan Ng Mga Manggagawa sa Caloocan Shops."
.
There is certainly a community of interest among the workers of the Caloocan Shops. They are grouped in one
place. They work under one or same working condition, same working time or schedule and are exposed to
same occupational risk.
Though evidence on record shows that workers at the Caloocan Shops perform the same nature of work as their
counterparts in the Manila Shed, the difference lies in the fact that workers at the Caloocan Shops perform
major repairs of locomotives, rolling stocks, engines, etc., while those in the Manila Shed, works on minor
repairs. Heavy equipment and machineries are found in the Caloocan Shops.
The trial judge then reviewed the collective bargaining history of the Philippine National Railways, as
follows: 1wph1.t
On several similar instances, this Court allowed the establishment of new and separate bargaining unit in one
company, even in one department of the same company, despite the existence of the same facts and
circumstances as obtaining in the case at bar.
The history of the collective bargaining in the Manila Railroad Company, now the Philippine National Railways
shows that originally, there was only one bargaining unit in the company, represented by the Kapisanan Ng
Manggagawa sa MRR. Under Case No. 237-MC, this Court ordered the establishment of two additional units,
the engine crew and the train crew to be represented by the Union de Maquinistas, Fogoneros, Ayudante Y
Motormen and Union de Empleados de Trenes, respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC
and 507-MC three new separate units were established, namely, the yard crew unit, station employees unit and
engineering department employees unit, respectively, after the employees concerned voted in a plebiscite
conducted by the court for the separation from existing bargaining units in the company. Then again, under
Case No. 763-MC, a new unit, composed of the Mechanical Department employees, was established to be
represented by the Mechanical Department Labor Union. Incidentally, the first attempt of the employees of the
Mechanical Department to be separated as a unit was dismissed by this Court of Case No. 488-MC.

In the case of the yard crew, station employees and the Engineering Department employees, the Supreme
Court sustained the order of this Court in giving the employees concerned the right to vote and decide whether
or not they desire to be separate units (See G.R. Nos. L-16292-94, L-16309 and L-16317-18, November, 1965).
In view of its findings and the history of "union representation" in the railway company, indicating that bargaining units
had been formed through separation of new units from existing ones whenever plebiscites had shown the workers'
desire to have their own representatives, and relying on the "Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB
294) applied in Democratic Labor Union vs. Cebu Stevedoring Co., L-10321, 28 February 1958, Judge Martinez held
that the employees in the Caloocan Shops should be given a chance to vote on whether their group should be
separated from that represented by the Mechanical Department Labor Union, and ordered a plebiscite held for the
purpose. The ruling was sustained by the Court en banc; wherefore, the Mechanical Department Labor Union appealed
to this Court questioning the applicability under the circumstances of the "Globe doctrine" of considering the will of the
employees in determining what union should represent them.
Technically, this appeal is premature, since the result of the ordered plebiscite among the workers of the Caloocan
shops may be adverse to the formation of a separate unit, in which event, as stated in the appealed order, all questions
raised in this case would be rendered moot and academic. Apparently, however, the appellant Mechanical Department
Labor Union takes it for granted that the plebiscite would favor separation.
We find no grave abuse of discretion in the issuance of the ruling under appeal as would justify our interfering with it.
Republic Act No. 875 has primarily entrusted the prosecution of its policies to the Court of Industrial Relations, and, in
view of its intimate knowledge concerning the facts and circumstances surrounding the cases brought before it, this
Court has repeatedly upheld the exercise of discretion of the Court of Industrial Relations in matters concerning the
representation of employee groups (Manila Paper Mills Employees & Workers' Association vs. C.I.R. 104 Phil. 10;
Benguet Consolidated vs. Bobok Lumber Jack Association, 103 Phil. 1150).
Appellant contends that the application of the "Globe doctrine" is not warranted because the workers of the Caloocan
shops do not require different skills from the rest of the workers in the Mechanical Department of the Railway Company.
This question is primarily one of facts. The Industrial Court has found that there is a basic difference, in that those in the
Caloocan shops not only have a community of interest and working conditions but perform major repairs of railway
rolling stock, using heavy equipment and machineries found in said shops, while the others only perform minor repairs.
It is easy to understand, therefore, that the workers in the Caloocan shops require special skill in the use of heavy
equipment and machinery sufficient to set them apart from the rest of the workers. In addition, the record shows that the
collective bargaining agreements negotiated by the appellant union have been in existence for more than two (2) years;
hence, such agreements can not constitute a bar to the determination, by proper elections, of a new bargaining
representative

G.R. No. 102130 July 26, 1994. GOLDEN FARMS, INC. vs. SEC. OF LABOR, PROGRESSIVE FED. OF LABOR
(GOLDEN FARMS engaged in banana industry)
Private respondent Progressive Federation of Labor (PFL) filed a petition praying for the holding of a certification
election among the monthly paid office and technical rank-and-file employees of petitioner Golden Farms.
Petitioner moved to dismiss the petition arguing that there was already an existing collective bargaining agreement
between the rank-and-file employees represented by the National Federation of Labor (NFL) and petitioner.
Respondent PFL countered that the monthly paid office and technical employees should be allowed to form a separate
bargaining unit because they were expressly excluded from coverage in the Collecting Bargaining Agreement (CBA)
between petitioner and NFL. The Med arbiter and public respondent granted the petition for certification election.
Whether or not petitioner's monthly paid rank-and file employees can constitute a bargaining unit separate from the
existing bargaining unit of its daily paid rank-and-file employees?
RULING:

The monthly paid office and technical rank-and-file employees of petitioner Golden Farms enjoy the constitutional right
to self-organization and collective bargaining. 4 A "bargaining unit" has been defined as a group of employees of a given
employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the
employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law. 5 The community or mutuality of interest is
therefore the essential criterion in the grouping. "And this is so because '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.' 6
In the case at bench, the evidence established that the monthly paid rank-and-file employees of petitioner primarily
perform administrative or clerical work. In contradistinction, the petitioner's daily paid rank-and-file employees mainly
work in the cultivation of bananas in the fields. It is crystal clear the monthly paid rank-and-file employees of petitioner
have very little in common with its daily paid rank-and-file employees in terms of duties and obligations, working
conditions, salary rates, and skills. To be sure, the said monthly paid rank-and-file employees have even been excluded
from the bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests warrants the formation
of a separate and distinct bargaining unit for the monthly paid rank-and-file employees of the petitioner. To rule
otherwise would deny this distinct class of employees the right to self-organization for purposes of collective bargaining.

G.R. No. 85343 June 28, 1989

PHILTRANCO SERVICE ENTERPRISES, petitioner,
vs.
BUREAU OF LABOR RELATIONS and KAPISANAN NG MGA KAWANI, ASSISTANT, MANGGAGAWA AT
KONPIDENSIYAL SA PHILTRANCO, respondents.
FACTS: On February 15, 1988, the Kapisanan ng mga Kawani, Assistant, Manggagawa at Konpidensyal sa Philtranco
(KASAMA KO), a registered labor organization filed a petition for certification election with the Department of Labor and
Employment.
On February 24, 1988, the National Mines and Allied Workers Union (NAMAWU-MIF) filed a motion for intervention
alleging that it is the bargaining agent of the workers at Philtranco and as such it has a substantial interest in the
outcome of the petition.
On February 26, 1988, Arbiter Paterno Adap called the parties to a hearing. Philtranco and NAMAWU were ordered to
submit their respective position papers and KASAMA KO was given the opportunity to submit a reply.
On April 4, 1988, a resolution was rendered with the following dispositive portion:
WHEREFORE, in the light of the foregoing premises, this petition is, as it is hereby ordered DISMISSED.
If there are still individual members of the herein petitioner eligible to join a labor organization, it is hereby
directed that all should be included/incorporated in the existing bargaining unit.
Parties are further directed/enjoined to device a mechanism for the implementation of the matter herein
treated. (Rollo, pp. 29-30)
KASAMA KO appealed to the Bureau of Labor Relations (BLR) On September 5, 1988 the BLR reversed the resolution
of the Med-Arbiter. A motion for reconsideration was denied in an order dated October 10, 1988.
As prayed for by the petitioner, a temporary restraining order was issued by this Court on November 7, 1988 restraining
the BLR from enforcing and/or carrying out the decision dated September 5, 1988 and the order dated October 10,
1988.
RULING: The Labor Code recognizes two (2) principal groups of employees, namely, the managerial and the rank and
file groups. Thus, Art. 212 (k) of the Code provides:
xxx xxx xxx

(k) Managerial employee' is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial actions. All employees not falling within this
definition are considered rank and file employees for purposes of this Book.
In implementation of the aforequoted provision of the law, Section 11 of Rule II, Book V of the Omnibus Rules
implementing the Labor Code did away with existing supervisors' unions classifying the members either as managerial
or rank and file employees depending on the work they perform. If they discharge managerial functions, supervisors are
prohibited from forming or joining any labor organization. If they do not perform managerial work, they may join the rank
and file union and if none exists, they may form one such rank and file organization.
It, therefore, follows that the members of the KASAMA KO who are professional, technical, administrative and
confidential personnel of PHILTRANCO performing managerial functions are not qualified to join, much less form a
union. This rationalizes the exclusion of managers and confidential employees exercising managerial functions from the
ambit of the collective bargaining unit. As correctly observed by Med-Arbiter Adap:
... managerial and confidential employees were expressly excluded within the operational ambit of the
bargaining unit for the simple reason that under the law, managers are disqualified to be members of a
labor organization.
On the other hand, confidential workers were not included because either they were performing
managerial functions and/or their duties and responsibilities were considered or may be categorized as
part and parcel of management as the primary reason for their exclusion in the bargaining unit. The other
categorized employees were likewise not included because parties have agreed on the fact that the
aforementioned group of workers are not qualified to join a labor organization at the time the agreement
was executed and that they were classified as outside the parameter of the bargaining unit. (Rollo, pp.
28-29)
The respondents, on the other hand, aver that the members of the respondent union are rank and file employees
qualified to form a union. In fact their status as rank and file employees was allegedly recognized by this Court in the
case of Pantranco South Express, Inc. v. NAMAWU
The reliance on the Pantranco South Express, Inc. case is misplaced. The petition filed by Pantranco South Express
Inc. simply asked for a ruling that certain employees were performing managerial functions. We denied the petition for
lack of merit in a minute resolution. There was absolutely no discussion on the recognition of another separate rank and
file union in addition to the existing bargaining unit.
There is no conflict. The employees of Philtranco have been appraised and their functions evaluated. Managers by any
name may not join the rank and file union. On the other hand, those who are rank and file workers may join the existing
bargaining unit instead of organizing another bargaining unit and compelling the employer to deal with it.
We are constrained to disallow the formation of another union. There is no dispute that there exists a labor
union in the company, herein intervenor, the NAMAWU-MIF which is the collective bargaining agent of the rank
and file employees in PHILTRANCO.
Article 2 of the Collective Bargaining Agreement between PHILTRANCO and NAMAWU-MIF under the sub-title
Appropriate Bargaining Unit provides:
Section 1 -The appropriate bargaining unit covered by this agreement consists of all regular rankand file employees of the company. Managerial, confidential, casuals, temporary, probationary
and contractual employees as well as trainees, apprentices, security personnel and foreman are
excluded from the bargaining unit and therefore, not covered by this AGREEMENT. The job
description outside the bargaining unit are enumerated in the list hereto attached as Annex '1'
and made an integral part hereof (Emphasis supplied; Rollo, p. 27)
We see no need for the formation of another union in PHILTRANCO. The qualified members of the KASAMA KO
may join the NAMAWU-MIF if they want to be union members, and to be consistent with the one-union, onecompany policy of the Department of Labor and Employment, and the laws it enforces. As held in the case of
General Rubber and Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283 [1987]):

... It has been the policy of the Bureau to encourage the formation of an employer unit 'unless
circumstances otherwise require. The proliferation of unions in an employer unit is discouraged
as a matter of policy unless there are compelling reasons which would deny a certain class of
employees the right to self-organization for purposes of collective bargaining. This case does not
fall squarely within the exception. (Emphasis supplied).
There are no compelling reasons in this case such as a denial to the KASAMA KO group of the right to join the
certified bargaining unit or substantial distinctions warranting the recognition of a separate group of rank and
file workers. Precisely, NAMAWU-MIF intervened to make it clear it has no objections to qualified rank and file
workers joining its union.
It is natural in almost all fairly sized companies to have groups of workers discharging different functions. No
company could possibly have all employees performing exactly the same work. Variety of tasks is to be
expected. It would not be in the interest of sound labor-management relations if each group of employees
assigned to a specialized function or section would decide to break away from their fellow-workers and form
their own separate bargaining unit. We cannot allow one unit for typists and clerks, one unit for accountants,
another unit for messengers and drivers, and so on in needless profusion. Where shall the line be drawn? The
questioned decision of the public respondent can only lead to confusion, discord and labor strife.
The respondents state that this case is an exception to the general rule considering that substantial differences
exist between the office employees or professional, technical, administrative and confidential employees vis-avis the field workers or drivers, conductors and mechanics of the petitioner. Against this contention, we find
that the "substantial differences" in the terms and conditions of employment between the private respondent's
members and the rest of the company's rank and file employees are more imagined than real. We agree with
the petitioner that the differences alleged are not substantial or significant enough to merit the formation of
another union.
PHILTRANCO is a large bus company engaged in the business of carrying passengers and freight, servicing
Luzon, Visayas and Mindanao. Certainly there is a commonality of interest among filing clerks, dispatchers,
drivers, typists, and field men. They are all interested in the progress of their company and in each worker
sharing in the fruits of their endeavors equitably and generously. Their functions mesh with one another. One
group needs the other in the same way that the company needs them all. The drivers, mechanics and
conductors are necessary for the company but technical, administrative and office personnel are also needed
and equally important for the smooth operation of the business. There may be differences as to the nature of
their individual assignments but the distinctions are not enough to warrant the formation of separate unions.
The private respondent has not even shown that a separate bargaining unit would be beneficial to the
employees concerned. Office employees also belong to the rank and file. There is an existing employer wide
unit in the company represented by NAMAWU-MIF. And as earlier stated, the fact that NAMAWU-MIF moved to
intervene in the petition for certification election filed by KASAMA KO negates the allegations that "substantial
differences" exist between the employees concerned. We find a commonality of interest among them. There
are no compelling reasons for the formation of another union.

G.R. No. 110399 August 15, 1997. SMC SUPERVISORS vs. BIENVENIDO E. LAGUESMA, et. al.
Petitioner union filed before DOLE a Petition for Certification Election among the supervisors and exempt employees of
the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. The same was granted by the MedArbiter but the same was for 1 bargaining unit for the 3 separate plants.
Respondent SMC alleged that the Med-Arbiter erred in grouping together all three (3) separate plants, Otis, Cabuyao
and San Fernando, into one bargaining unit. Later, reconsideration was made and separate certification elections on
the 3 plants were granted.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units is contrary to the onecompany, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a
similarity or a community of interests.
RULING: The Court finds the contention of the petitioner meritorious.

An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law." 24
A unit to be appropriate must affect a grouping of employees who have substantial, mutual interests in wages, hours,
working conditions and other subjects of collective bargaining. 25
It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the
standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong to
the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different
plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share
a common stake in concerted activities. In light of these considerations, separate bargaining units in the three different
plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining
leverage.
The fact that the three plants are located in three different places is immaterial. Geographical location can be
completely disregarded if the communal or mutual interests of the employees are not sacrificed. The Court ruled that
the distance among the three plants is not productive of insurmountable difficulties in the administration of union affairs.
Neither are there regional differences that are likely to impede the operations of a single bargaining representative.

BELYCA CORPORATION, petitioner,

vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF LABOR AND EMPLOYMENT; MEDARBITER, RODOLFO S. MILADO, MINISTRY OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10 AND
ASSOCIATED LABOR UNION (ALU-TUCP), MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO
CITY, respondents.
FACST: On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor organization duly
registered with the Ministry of Labor and Employment under Registration Certificate No. 783-IP, filed with the Regional
Office No. 10, Ministry of Labor and Employment at Cagayan de Oro City, a petition for direct certification as the sole
and exclusive bargaining agent of all the rank and file employees/workers of Belyca Corporation (Livestock and AgroDivision employing approximately 205 rank and file employees/workers, the collective bargaining unit sought in the
petition, or in case of doubt of the union's majority representation, for the issuance of an order authorizing the
immediate holding of a certification election
Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged, among others, (1) that there
is no existing collective bargaining agreement between the respondent employer, petitioner herein, and any other
existing legitimate labor unions; (2) that there had neither been a certification election conducted in the proposed
bargaining unit within the last twelve (12) months prior to the filing of the petition nor a contending union requesting for
certification as the. sole and exclusive bargaining representative in the proposed bargaining unit; (3) that more than a
majority of respondent employer's rank-and-file employees/workers in the proposed bargaining unit or one hundred
thirty-eight (138) as of the date of the filing of the petition, have signed membership with the ALU-TUCP and have
expressed their written consent and authorization to the filing of the petition; (4) that in response to petitioner union's
two letters to the proprietor/ General Manager of respondent employer, dated April 21, 1986 and May 8, 1 986,
requesting for direct recognition as the sole and exclusive bargaining agent of the rank-and-file workers, respondent
employer has locked out 119 of its rank-and-file employees in the said bargaining unit and had dismissed earlier the
local union president, vice-president and three other active members of the local unions for which an unfair labor
practice case was filed by petitioner union against respondent employer last July 2, 1986 before the NLRC in Cagayan
de Oro City (Rollo, pp. 18; 263).<re||an1w>
Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due to the nature of its
business, very few of its employees are permanent, the overwhelming majority of which are seasonal and casual and
regular employees; (2) that of the total 138 rank-and-file employees who authorized, signed and supported the filing of
the petition (a) 14 were no longer working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their
membership from petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious
insubordination and destruction of property and (f) 100 simply abandoned their work or stopped working; (3) that the

128 incumbent employees or workers of the livestock section were merely transferred from the agricultural section as
replacement for those who have either been dismissed, retrenched or resigned; and (4) that the statutory requirement
for holding a certification election has not been complied with by the union (Rollo, p. 26).
The Labor Arbiter granted the certification election sought for by petitioner union in his order dated August 18, 1986.
On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor Arbiter to the Bureau
of Labor Relations in Manila which denied the appeal and the motion for reconsideration . Thus, the instant petition
received in this Court by mail on February 20, 1987. In the resolution of March 4, 1987, the Second Division of this
Court required respondent Union to comment on the petition and issued a temporary restraining order . Respondent
union filed its comment on March 30, 1987 ; public respondents filed its comment on April 8, 1987.
On May 4, 1987, the Court resolved to give due course to the petition and to require the parties to submit their
respective memoranda within twenty (20) days from notice
RULING: In the instant case, respondent ALU seeks direct certification as the sole and exclusive bargaining agent of all
the rank-and-file workers of the livestock and agro division of petitioner BELYCA Corporation (Rollo, p. 232), engaged
in piggery, poultry raising and the planting of agricultural crops such as corn, coffee and various vegetables (Rollo, p.
26). But petitioner contends that the bargaining unit must include all the workers in its integrated business concerns
ranging from piggery, poultry, to supermarts and cinemas so as not to split an otherwise single bargaining unit into
fragmented bargaining units (Rollo, p. 435).<re||an1w>
The Labor Code does not specifically define what constitutes an appropriate collective bargaining unit. Article 256 of the
Code provides:
Art. 256. Exclusive bargaining representative.The labor organization designated or
selected by the majority of the employees in an appropriate collective bargaining unit shall
be exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employee shall have the right at
any time to present grievances to their employer.
According to Rothenberg, a proper bargaining unit maybe said to be a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective interests of all the employees,
consistent with equity to the employer, indicate to be best suited to serve reciprocal rights and duties of the parties
under the collective bargaining provisions of the law (Rothenberg in Labor Relations, p. 482).
This Court has already taken cognizance of the crucial issue of determining the proper constituency of a collective
bargaining unit.
Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc. (103 Phil 1103 [1958])
are: "(1) will of employees (Glove Doctrine); (2) affinity and unity of employee's interest, such as substantial similarity of
work and duties or similarity of compensation and working conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and probationary employees".
Under the circumstances of that case, the Court stressed the importance of the fourth factor and sustained the trial
court's conclusion that two separate bargaining units should be formed in dealing with respondent company, one
consisting of regular and permanent employees and another consisting of casual laborers or stevedores. Otherwise
stated, temporary employees should be treated separately from permanent employees. But more importantly, this Court
laid down the test of proper grouping, which is community and mutuality of interest.
Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra Employees' Association 107
Phil. 28 [1960]) where the employment status was not at issue but the nature of work of the employees concerned; the
Court stressed the importance of the second factor otherwise known as the substantial-mutual-interest test and found
no reason to disturb the finding of the lower Court that the employees in the administrative, sales and dispensary
departments perform work which has nothing to do with production and maintenance, unlike those in the raw leaf, cigar,
cigarette and packing and engineering and garage departments and therefore community of interest which justifies the
format or existence as a separate appropriate collective bargaining unit.
Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the employees concerned was
again challenged, the Court reiterating the rulings, both in Democratic Labor Association v. Cebu Stevedoring Co. Inc.

supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees' Association (supra) held that among the
factors to be considered are: employment status of the employees to be affected, that is the positions and categories of
work to which they belong, and the unity of employees' interest such as substantial similarity of work and duties.
In any event, whether importance is focused on the employment status or the mutuality of interest of the employees
concerned "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 (Democratic Labor
Association v. Cebu Stevedoring Co. Inc. supra)
Hence, still later following the substantial-mutual interest test, the Court ruled that there is a substantial difference
between the work performed by musicians and that of other persons who participate in the production of a film which
suffice to show that they constitute a proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA
132 [1961]).
Coming back to the case at bar, it is beyond question that the employees of the livestock and agro division of petitioner
corporation perform work entirely different from those performed by employees in the supermarts and cinema. Among
others, the noted difference are: their working conditions, hours of work, rates of pay, including the categories of their
positions and employment status. As stated by petitioner corporation in its position paper, due to the nature of the
business in which its livestock-agro division is engaged very few of its employees in the division are permanent, the
overwhelming majority of which are seasonal and casual and not regular employees (Rollo, p. 26). Definitely, they have
very little in common with the employees of the supermarts and cinemas. To lump all the employees of petitioner in its
integrated business concerns cannot result in an efficacious bargaining unit comprised of constituents enjoying a
community or mutuality of interest. Undeniably, the rank and file employees of the livestock-agro division fully constitute
a bargaining unit that satisfies both requirements of classification according to employment status and of the substantial
similarity of work and duties which will ultimately assure its members the exercise of their collective bargaining rights.

G.R. No. 92357 July 21, 1993. PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY
(PSVSIA), GVM SECURITY AND INVESTIGATION AGENCY (GVM) and ABAQUIN SECURITY AND DETECTIVE
AGENCY, INC. (ASDA) vs. RUBEN D. TORRES, PGA BROTHERHOOD ASSOC.-UNION OF FILIPINO WORKERS
Private respondent labor union, PGA Brotherhood Association - Union of Filipino Workers (UFW) filed a petition for
Direct Certification/Certification Election among the rank and file employees of PSVSIA, GVM, and ASDA. These three
agencies were collectively referred to by private respondent Union as the "PGA Security Agency," which is actually the
first letters of the corporate names of the agencies.
Petitioners alleged that they have separate and distinct corporate personalities.
The Union alleged on the other hand that the three security agencies' administration, management and operations are
so intertwined that they can be deemed to be a single entity.
The Med-Arbiter and the Labor Secretary ruled that PSVSIA, GVM and ASDA should be deemed as a single entity and
bargaining unit for the purpose of union organizing and the holding of a certification election.
Whether or not a single petition for certification election or for recognition as the sole and exclusive bargaining agent
can validly or legally be filed by a labor union in three (3) corporations, each of which has a separate and distinct legal
personality instead of filing three (3) separate petitions?
Whether or not at least twenty percent (20%) of the employees in the bargaining unit must support the petition for
certification election in an unorganized establishment?
Whether or not the employer should have a participation in the certification election?
RULING:
1. The three agencies in the case at bar failed to rebut the fact that they are managed through the Utilities
Management Corporation with all of their employees drawing their salaries and wages from said entity; that the

agencies have common and interlocking incorporators and officers; and that the PSVSIA, GVM and ASDA
employees have a single Mutual Benefit System and followed a single system of compulsory retirement.
No explanation was also given by petitioners why the security guards of one agency could easily transfer from one
agency to another and then back again by simply filling-up a common pro forma slip called "Request for Transfer".
Records also show that the PSVSIA, GVM and ASDA always hold joint yearly ceremonies such as the "PGA Annual
Awards Ceremony". In emergencies, all PSVSIA Detachment Commanders were instructed in a memorandum to get in
touch with the officers not only of PSVSIA but also of GVM and ASDA. All of these goes to show that the security
agencies concerned do not exist and operate separately and distinctly from each other with different corporate
directions and goals. On the contrary, all the cross-linking of the three agencies' command, control and communication
systems indicate their unitary corporate personality. Accordingly, the veil of corporate fiction of the three agencies
should be lifted for the purpose of allowing the employees of the three agencies to form a single labor union. As a single
bargaining unit, the employees therein need not file three separate petitions for certification election. All of these could
be covered in a single petition.
2. There is no need for the labor union to prove that at least 20% of the security guards in the three agencies
supported the petition. When a duly organized union files a petition for certification election, the Med-Arbiter has the
duty to automatically conduct an election. He has no discretion on the matter. This is clearly the mandate of Article
257 of the Labor Code, as amended by Section 24 of R.A. 6715, which now reads:
Art. 257. Petitions in unorganized establishments. In any establishment where there is no certified
bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the
filing of a petition by a legitimate labor organization.
3. Finally, except where the employer has to file a petition for certification election pursuant to Article 258 of the Labor
Code because of a request to bargain collectively, it has nothing to do with a certification election which is the sole
concern of the workers. Its role in a certification election has aptly been described as that of a mere by-stander. It
has no legal standing in a certification election as it cannot oppose the petition or appeal the Med-Arbiter's orders
related thereto.
Indeed, the three security agencies should not even be adverse parties in the certification election itself. The Court
notes with disapproval the title given to the petition for certification election of the Union by the Med-Arbiter and the
Secretary of Labor naming the three security agencies as respondents. Such is clearly an error. While employers may
rightfully be notified or informed of petitions of such nature, they should not, however, be considered parties thereto with
concomitant right to oppose it. Sound policy dictates that they should maintain a strictly hands-off policy.

G.R. No. L-22228 February 27, 1969

PHILIPPINE ASSOCIATION OF LABOR UNIONS (PAFLU) SOCIAL SECURITY SYSTEM EMPLOYEES

ASSOCIATION-PAFLU, AL FAJARDO AND ALL THE OTHER MEMBERS AND OFFICERS OF THE SOCIAL
SECURITY AND EMPLOYEES ASSOCIATION-PAFLU v. THE SECRETARY OF LABOR, THE DIRECTOR OF
LABOR RELATIONS and THE REGISTRAR OF LABOR ORGANIZATIONS
FACTS: The Registration of Labor Organization (Registrar) rendered a decision cancelling the SSSEAs Registration
Certificate No. 1-IP169 for failure to submit the following:
1. Failure to furnish the Bureau of Labor Relations with copies of the reports on the finances of that union duly verified
by affidavits which its treasurer or treasurers rendered to said union and its members covering the periods from
September 24, 1960 to September 23, 1961 and September 24, 1961 to September 23, 1962, inclusive, within sixty
days of the 2 respective latter dates, which are the end of its fiscal year; and
2. Failure to submit to this office the names, postal addresses and non-subversive affidavits of the officers of that union
within sixty days of their election in October (1st Sunday), 1961 and 1963, in conformity with Article IV (1) of its
constitution and by-laws.

On the following day, Manuel Villagracia, Assistant Secretary of the SSSEA filed with the Office of the Registrar, a letter
enclosing documents that supposed to comply with the abovementioned requirements, but the Registrar found out that
the following are still not complied with:
1. Non-subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo Zalameda, Raymundo Sabino and
Napoleon Pefianco who were elected along with others on January 30, 1962.
2. Names, postal addresses and non-subversive affidavits of all the officers who were supposedly elected on October
(1st Sunday), of its constitution and by-laws.
Alfredo Fajardo, president of the SSSEA moved for a reconsideration of said decision and prayed for time, up to
November 15, within which to submit the requisite papers and data. An opposition thereto having been filed by one
Paulino Escueta, a member of the SSSEA, upon the ground that the latter had never submitted any financial statement
to its members, said motion was heard on November 27, 1963. Subsequently, or on December 4, 1963, the Registrar
issued an order declaring that the SSSEA had failed to submit the abovementioned requirements and granting the
SSSEA 15 days from notice to comply with said requirements, as well as meanwhile holding in abeyance the resolution
of its motion for reconsideration.
ISSUE: Whether or not the effect of Section 23 of Republic Act No. 875 (Any labor organization, association or union of
workers duly organized for the material, intellectual and moral well being of its members shall acquire legal personality
and be entitled to all the rights and privileges granted by law to legitimate labor organizations within thirty days of filing
with the office of the Secretary of Labor notice of its due organization and existence and the following documents,
together with the amount of five pesos as registration fee, except as provided in paragraph d of this section:) unduly
curtails the freedom of assembly and association guaranteed in the Bill of Rights.
RULING: The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and
association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in paragraph (b) of
said section 1 is not a limitation to the right of assembly or association, which may be exercised with or withoutsaid
registration. 2 The latter is merely a condition sine qua non for the acquisition of legal personality by labor organizations,
associations or unions and the possession of the "rights and privileges granted by law to legitimate labor organizations".
The Constitution does not guarantee these rights and privileges, much less said personality, which are
mere statutory creations, for the possession and exercise of which registration is required to protect both labor and the
public against abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union
they purport to represent. Such requirement is a valid exercise of the police power, because the activities in which labor
organizations, associations and union of workers are engaged affect public interest, which should be
protected. 3 Furthermore, the obligation to submit financial statements, as a condition for the non-cancellation of a
certificate of registration, is a reasonable regulation for the benefit of the members of the organization, considering that
the same generally solicits funds or membership, as well as oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the organization. 4
For the same reasons, said Section 23 does not impinge upon the right of organization guaranteed in the Declaration of
Human Rights, or run counter to Articles 2, 4, 7 and Section 2 of Article 8 of the ILO-Convention No. 87, which provide
that "workers and employers, ... shall have the right to establish and ... join organizations of their own choosing, without
previous authorization"; that "workers and employers organizations shall not be liable to be dissolved or suspended by
administrative authority"; that "the acquisition of legal personality by workers' and employers' organizations, ... shall not
be made subject to conditions of such a character as to restrict the application of the provisions" above mentioned; and
that "the guarantees provided for in" said Convention shall not be impaired by the law of the land.
In B.S.P. v. Araos, 5 we held that there is no incompatibility between Republic Act No. 875 and the Universal Declaration
of Human Rights. Upon the other hand, the cancellation of the SSSEA's registration certificate would not entail a
dissolution of said association or its suspension. The existence of the SSSEA would not be affected by said
cancellation, although its juridical personality and its statutory rights and privileges as distinguished from those
conferred by the Constitution would be suspended thereby.
To be registered, pursuant to Section 23(b) of Republic Act No. 875, a labor organization, association or union of
workers must file with the Department of Labor the following documents:
(1) A copy of the constitution and by-laws of the organization together with a list of all officers of the association,
their addresses and the address of the principal office of the organization;

(2) A sworn statement of all the officers of the said organization, association or union to the effect that they are
not members of the Communist Party and that they are not members of any organization which teaches the
overthrow of the Government by force or by any illegal or unconstitutional method; and
(3) If the applicant organization has been in existence for one or more years, a copy of its last annual financial
report.
Moreover, paragraph (d) of said-Section ordains that:
The registration and permit of a legitimate labor organization shall be cancelled by the Department of Labor, if
the Department has reason to believe that the labor organization no longer meets one or more of the
requirements of paragraph (b) above; or fails to file with the Department Labor either its financial reportwithin the
sixty days of the end of its fiscal year or the names of its new officers along with their non-subversive
affidavits as outlined in paragraph (b) above within sixty days of their election; however, the Department of
Labor shall not order the cancellation of the registration and permit without due notice and hearing, as provided
under paragraph (c) above and the affected labor organization shall have the same right of appeal to the courts
as previously provided.6
The determination of the question whether the requirements of paragraph (b) have been met, or whether or not the
requisite financial report or non-subversive affidavits have been filed within the period above stated, is not judicial
power. Indeed, all officers of the government, including those in the executive department, are supposed, to act on the
basis of facts, as they see the same. This is specially true as regards administrative agencies given by law the power to
investigate and render decisions concerning details related to the execution of laws the enforcement of which is
entrusted thereto. Hence, speaking for this Court, Mr. Justice Reyes (J.B.L.) had occassion to say:
The objections of the appellees to the constitutionality of Republic Act No. 2056, not only as an undue
delegation of judicial power to the Secretary of Public Works but also for being unreasonable and arbitrary, are
not tenable. It will be noted that the Act (R.A. 2056) merely empowers the Secretary to remove unauthorized
obstructions or encroachments upon public streams, constructions that no private person was anyway entitled to
make because the bed of navigable streams is public property, and ownership thereof is not acquirable by
adverse possession
(Palanca vs. Commonwealth, 69 Phil., 449).
It is true that the exercise of the Secretary's power under the Act necessarily involves the determination of some
question of fact, such as the existence of the stream and its previous navigable character; but these functions,
whether judicial or quasi-judicial, are merely incidental to the exercise of the power granted by law to clear
navigable streams of unauthorized obstructions or encroachments, and authorities are clear that they are validly
conferable upon executive officials provided the party affected is given opportunity to be heard, as is expressly
required by Republic Act No. 2056, section 2.7
It should be noted also, that, admittedly, the SSSEA had not filed the non-subversive affidavits of some of its officers
"Messrs. Sison, Tolentino, Atienza, Zalameda, Sabino and Pefianca" although said organization avers that these
persons "were either resigned or out on leave as directors or officers of the union", without specifying who had resigned
and who were on leave. This averment is, moreover, controverted by respondents herein.
Again, the 30-day period invoked by the petitioners is inapplicable to the decision complained of. Said period is
prescribed in paragraph (c) 8 of Section 23, which refers to the proceedings for the "registration" of labor organizations,
associations or unions not to the "cancellation" of said registration, which is governed by the abovequoted paragraph
(d) of the same section.
Independently of the foregoing, we have repeatedly held that legal provisions prescribing the period within which a
decision should be rendered are directory, not mandatory in nature in the sense that, a judgment promulgated after
the expiration of said period is not null and void, although the officer who failed to comply with law may be dealt with
administratively, in consequence of his delay 9 unless the intention to the contrary is manifest. Such, however, is not
the import of said paragraph (c). In the language of Black:
When a statute specifies the time at or within which an act is to be done by a public officer or body, it is
generally held to be directory only as to the time, and not mandatory, unless time is of the essence of the thing

to be done, or the language of the statute contains negative words, or shows that the designation of the time
was intended as a limitation of power, authority or right. 10
Then, again, there is no law requiring the approval, by the Secretary of Labor, of the decision of the Registrar decreeing
the cancellation of a registration certificate. In fact, the language of paragraph (d) of Section 23, suggests that, once the
conditions therein specified are present, the office concerned "shall" have no choice but to issue the order of
cancellation. Moreover, in the case at bar, there is nothing, as yet, for the Secretary of Labor to approve or disapprove,
since petitioners, motion for reconsideration of the Registrar's decision of October 23, 1963, is still pending resolution.
In fact, this circumstance shows, not only that the present action is premature, 11but, also, that petitioners have failed to
exhaust the administrative remedies available to them. 12 Indeed, they could ask the Secretary of Labor to disapprove
the Registrar's decision or object to its execution or enforcement, in the absence of approval of the former, if the same
were necessary, on which we need not and do not express any opinion.

G.R. No. 135806. August 8, 2002. TOYOTA MOTORS PHIL. CORP. LABOR UNION (TMPCLU) vs. TOYOTA
MOTOR PHIL. CORP. EMPLOYEES AND WORKERS UNION (TMPCEWU), TOYOTA MOTOR PHIL. CORP., SEC.
OF LABOR
Respondent TMPCEWU filed a Petition for Certification Election seeking to represent the rank-and-file employees of the
manufacturing division from Levels 1 to 4 of Toyota (TMPC unorganized establishment).
TMPCLU, claiming to be the legitimate labor organization, filed its opposition claiming that the petition was premature
due to an earlier resolution by the Secretary of Labor ordering the conduct of a certification election among the rankand-file employees of TMPC represented by petitioner which was the subject of certiorari proceedings before the
Supreme Court and still awaiting final resolution at the time.
The Med-Arbiter ordered the provisional dismissal of TMPCEWU's Petition for Certification Election pending a final
ruling by the Supreme Court on the Petition for Certification Election. Later, the decision of the Supreme Court became
final and executory.
In view of respondent TMPCEWU's revival of its Petition for Certification Election, petitioner also filed its Petition-inIntervention.
The Med-Arbiter rendered a decision dismissing for lack of merit TMPCEWU's Petition for Certification Election and
likewise dismissing TMPCLU's Petition-in-Intervention for lack of legal personality. The Med-Arbiter explained that at the
time intervenor TMPCLU filed its application for registration and subsequently thereafter was issued a certificate of
registration, its union membership was composed of supervisory and rank-and-file employees. Thus, the registration
certificate issued by the DOLE is void ab initio. The Sec. of Labor affirmed the arbiters decision. The Secretary ruled
that the bargaining unit of the rank-in-file which TMPCLU is seeking to represent is a mixture of supervisory employees
which is prohibited under Article 245 of the Labor Code, as amended, the union prior to purging itself of supervisory
employees-members, had not attained the status of a legitimate labor organization. TMPCLU has not shown that it
registered anew because admittedly some of its officers are supervisory employees. The need to register anew is
necessary and the purging by itself of its officers who are holding supervisory position is imperative. One of the
requirements for registration is the submission of the list of officers. Under the circumstances obtaining, appellant has
not as yet attained the status of a legitimate labor organization. It has therefore no legal authority to oppose the instant
petition.
Petitioner contended that when it filed its Intervention, it did have a Certificate of Registration which was based on its
compliance with the requisites for union registration. Hence, it had the legal personality when it filed its Intervention.
There was therefore no necessity for petitioner to register anew when it was already a registered labor organization.
Whether petitioner had legal personality on 30 October 1997 when it filed its Petition-in-Intervention. Corollary thereto,
should petitioner register anew despite its alleged purging of the supervisory employee-members as directed by the
Court in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union9 and the issuance
in its favor of a certificate of registration after it was found to have violated Art. 245 of the Labor Code?
RULING:

Petitioner had no valid certificate of registration and therefore no legal personality to file the Petition for Certification
Election and in the absence of any attempt on its part to rectify the legal infirmity, likewise the disputed Petition-inIntervention.
We cannot also accede to petitioner's submission that the issuance of a certificate of registration in its favor is an
adequate and unassailable proof that it possesses the requisite legal personality to file a Petition for Certification
Election. As we emphasized in Progressive Development Corp. - Pizza Hut v. Laguesma,13 if a labor organizations
application for registration is vitiated by falsification and serious irregularities, a labor organization should be denied
recognition as a legitimate labor organization. And if a certificate of registration has been issued, the propriety of its
registration could be assailed directly through cancellation of registration proceedings in accordance with Arts. 238 and
239 of the Labor Code, or indirectly, by challenging its petition for the issuance of an order for certification election. We
believe the procedural requirements to impugn the registration by petitioner were more than adequately complied with
as shown in the 1997 case of Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor
Union.14

G.R. No. 142000

January 22, 2003

TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED, petitioner,

vs.
TAGAYTAY HIGHLANDS EMPLOYEES UNION-PGTWO, respondent.
FACTS: On October 16, 1997, the Tagaytay Highlands Employees Union (THEU)Philippine Transport and General
Workers Organization (PTGWO), Local Chapter No. 776, a legitimate labor organization said to represent majority of
the rank-and-file employees of THIGCI, filed a petition for certification election before the DOLE Mediation-Arbitration
Unit, Regional Branch No. IV.
THIGCI, in its Comment1 filed on November 27, 1997, opposed THEUs petition for certification election on the ground
that the list of union members submitted by it was defective and fatally flawed as it included the names and signatures
of supervisors, resigned, terminated and absent without leave (AWOL) employees, as well as employees of The
Country Club, Inc., a corporation distinct and separate from THIGCI; and that out of the 192 signatories to the petition,
only 71 were actual rank-and-file employees of THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rank-and-file employees which it annexed2 to its Comment to
the petition for certification election. And it therein incorporated a tabulation3 showing the number of signatories to said
petition whose membership in the union was being questioned as disqualified and the reasons for disqualification.
THIGCI also alleged that some of the signatures in the list of union members were secured through fraudulent and
deceitful means, and submitted copies of the handwritten denial and withdrawal of some of its employees from
participating in the petition.4Replying to THIGCIs Comment, THEU asserted that it had complied with all the
requirements for valid affiliation and inclusion in the roster of legitimate labor organizations pursuant to DOLE
Department Order No. 9, series of 1997,5 on account of which it was duly granted a Certification of Affiliation by DOLE
on October 10, 1997;6 and that Section 5, Rule V of said Department Order provides that the legitimacy of its
registration cannot be subject to collateral attack, and for as long as there is no final order of cancellation, it continues to
enjoy the rights accorded to a legitimate organization.
THEU thus concluded in its Reply7 that under the circumstances, the Med-Arbiter should, pursuant to Article 257 of the
Labor Code and Section 11, Rule XI of DOLE Department Order No. 09, automatically order the conduct of a
certification election.
By Order of January 28, 1998, 8 DOLE Med-Arbiter Anastacio Bactin ordered the holding of a certification election
among the rank-and-file employees of THIGCI in this wise, quoted verbatim:
We evaluated carefully this instant petition and we are of the opinion that it is complete in form and substance.
In addition thereto, the accompanying documents show that indeed petitioner union is a legitimate labor
federation and its local/chapter was duly reported to this Office as one of its affiliate local/chapter. Its
due reporting through the submission of all the requirements for registration of a local/chapter is a clear showing
that it was already included in the roster of legitimate labor organizations in this Office pursuant to Department

Order No. 9 Series of 1997 with all the legal right and personality to institute this instant petition. Pursuant
therefore to the provisions of Article 257 of the Labor Code, as amended, and its Implementing Rules as
amended by Department Order No. 9, since the respondents establishment is unorganized, the holding of a
certification election is mandatory for it was clearly established that petitioner is a legitimate labor organization.
Giving due course to this petition is therefore proper and appropriate.9 (Emphasis supplied)
Passing on THIGCIs allegation that some of the union members are supervisory, resigned and AWOL employees or
employees of a separate and distinct corporation, the Med-Arbiter held that the same should be properly raised in the
exclusion-inclusion proceedings at the pre-election conference. As for the allegation that some of the signatures were
secured through fraudulent and deceitful means, he held that it should be coursed through an independent petition for
cancellation of union registration which is within the jurisdiction of the DOLE Regional Director. In any event, the MedArbiter held that THIGCI failed to submit the job descriptions of the questioned employees and other supporting
documents to bolster its claim that they are disqualified from joining THEU.
THIGCI appealed to the Office of the DOLE Secretary and accordingly dismissed the petition for certification election
on the ground that there is a "clear absence of community or mutuality of interests," it finding that THEU sought to
represent two separate bargaining units (supervisory employees and rank-and-file employees) as well as employees of
two separate and distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda Dimalipis-Baldoz, by authority of the
DOLE Secretary, issued DOLE Resolution of November 12, 199810 setting aside the June 4, 1998 Resolution
dismissing the petition for certification election. In the November 12, 1998 Resolution, Undersecretary Dimapilis-Baldoz
held that since THEU is a local chapter, the twenty percent (20%) membership requirement is not necessary for it to
acquire legitimate status, hence, "the alleged retraction and withdrawal of support by 45 of the 70 remaining rank-andfile members . . . cannot negate the legitimacy it has already acquired before the petition;" that rather than disregard the
legitimate status already conferred on THEU by the Bureau of Labor Relations, the names of alleged disqualified
supervisory employees and employees of the Country Club, Inc., a separate and distinct corporation, should simply be
removed from the THEUs roster of membership; and that regarding the participation of alleged resigned and AWOL
employees and those whose signatures are illegible, the issue can be resolved during the inclusion-exclusion
proceedings at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-Arbiter for the conduct of certification
election.
THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution having been denied by the DOLE
Undersecretary by Resolution of December 29, 1998,11 it filed a petition for certiorari before this Court which, by
Resolution of April 14, 1999,12 referred it to the Court of Appeals in line with its pronouncement in National Federation of
Labor (NFL) v. Hon. Bienvenido E. Laguesma, et al.,13 and in strict observance of the hierarchy of courts, as
emphasized in the case of St. Martin Funeral Home v. National Labor Relations Commission.14
By Decision of February 15, 2000,15 the Court of Appeals denied THIGCIs Petition for Certiorari and affirmed the DOLE
Resolution dated November 12, 1998. It held that while a petition for certification election is an exception to the innocent
bystander rule, hence, the employer may pray for the dismissal of such petition on the basis of lack of mutuality of
interests of the members of the union as well as lack of employer-employee relationship following this Courts ruling
in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union et al.16 and Dunlop
Slazenger [Phils.] v. Hon. Secretary of Labor and Employment et al,17 petitioner failed to adduce substantial
evidence to support its allegations.
ISSUE: Whether or not THEU local chapters legal personality may be assailed collaterally even though it has been
issued a certificate of election.
RULING: The statutory authority for the exclusion of supervisory employees in a rank-and-file union, and vice-versa, is
Article 245 of the Labor Code, to wit:
Article 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.
Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or
form separate labor organizations of their own.

While above-quoted Article 245 expressly prohibits supervisory employees from joining a rank-and-file union, it does not
provide what would be the effect if a rank-and-file union counts supervisory employees among its members, or viceversa.
Citing Toyota19 which held that "a labor organization composed of both rank-and-file and supervisory employees is no
labor organization at all," and the subsequent case of Progressive Development Corp. Pizza Hut v. Ledesma20 which
held that:
"The Labor Code requires that in organized and unorganized establishments, a petition for certification election
must be filed by a legitimate labor organization. The acquisition of rights by any union or labor organization,
particularly the right to file a petition for certification election, first and foremost, depends onwhether or not the
labor organization has attained the status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer that the former look into the
legitimacy of the respondent Union by a sweeping declaration that the union was in the possession of a charter
certificate so that for all intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate
organization,"21 (Underscoring and emphasis supplied),
petitioner contends that, quoting Toyota, "[i]t becomes necessary . . ., anterior to the granting of an order allowing a
certification election, to inquire into the composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code."22
Continuing, petitioner argues that without resolving the status of THEU, the DOLE Undersecretary "conveniently
deferred the resolution on the serious infirmity in the membership of [THEU] and ordered the holding of the certification
election" which is frowned upon as the following ruling of this Court shows:
We also do not agree with the ruling of the respondent Secretary of Labor that the infirmity in the membership
of the respondent union can be remedied in "the pre-election conference thru the exclusion-inclusion
proceedings wherein those employees who are occupying rank-and-file positions will be excluded from the list of
eligible voters." Public respondent gravely misappreciated the basic antipathy between the interest of
supervisors and the interest of rank-and-file employees. Due to the irreconcilability of their interest we held
in Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor Union,viz:
x x x
"Clearly, based on this provision [Article 245], a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate
labor organization. Not being one, an organization which carries a mixture of rank-and-file and
supervisory employees cannot posses any of the rights of a legitimate labor organization, including the
right to file a petition for certification election for the purpose of collective bargaining. It becomes
necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into
the composition of any labor organization whenever the status of the labor organization is challenged on
the basis of Article 245 of the Labor Code." (Emphasis by petitioner) (Dunlop Slazenger (Phils.), v.
Secretary of Labor, 300 SCRA 120 [1998]; Underscoring and emphasis supplied by petitioner.)
The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject
to collateral attack. It may be questioned only in an independent petition for cancellation in accordance with
Section 5 of Rule V, Book IV of the "Rules to Implement the Labor Code" (Implementing Rules) which section
reads:
Sec. 5. Effect of registration. The labor organization or workers association shall be deemed registered and
vested with legal personality on the date of issuance of its certificate of registration. Such legal personality
cannot thereafter be subject to collateral attack, but may be questioned only in an independent petition for
cancellation in accordance with these Rules. (Emphasis supplied)
The grounds for cancellation of union registration are provided for under Article 239 of the Labor Code, as follows:
Art. 239. Grounds for cancellation of union registration. The following shall constitute grounds for cancellation of
union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution
and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the
ratification;
(b) Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days from adoption
or ratification of the constitution and by-laws or amendments thereto;
(c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the
election of officers, the list of voters, or failure to subject these documents together with the list of the newly
elected/appointed officers and their postal addresses within thirty (30) days from election;
(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the losing of every
fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any activity
prohibited by law;
(f) Entering into collective bargaining agreements which provide terms and conditions of employment below
minimum standards established by law;
(g) Asking for or accepting attorneys fees or negotiation fees from employers;
(h) Other than for mandatory activities under this Code, checking off special assessments or any other fees
without duly signed individual written authorizations of the members;
(i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau;
and
(j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis supplied),
while the procedure for cancellation of registration is provided for in Rule VIII, Book V of the Implementing
Rules.
The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is
due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of
Article 239 of above-quoted Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to have already acquired
juridical personality which may not be assailed collaterally.
As for petitioners allegation that some of the signatures in the petition for certification election were obtained through
fraud, false statement and misrepresentation, the proper procedure is, as reflected above, for it to file a petition for
cancellation of the certificate of registration, and not to intervene in a petition for certification election.
Regarding the alleged withdrawal of union members from participating in the certification election, this Courts following
ruling is instructive:
"[T]he best forum for determining whether there were indeed retractions from some of the laborers is in
thecertification election itself wherein the workers can freely express their choice in a secret ballot. Suffice it to
say that the will of the rank-and-file employees should in every possible instance be determined by secret ballot
rather than by administrative or quasi-judicial inquiry. Such representation and certification election cases are
not to be taken as contentious litigations for suits but as mere investigations of a non-adversary, fact-finding
character as to which of the competing unions represents the genuine choice of the workers to be their sole and
exclusive collective bargaining representative with their employer."23
As for the lack of mutuality of interest argument of petitioner, it, at all events, does not lie given, as found by the court a
quo, its failure to present substantial evidence that the assailed employees are actually occupying supervisory
positions.

While petitioner submitted a list of its employees with their corresponding job titles and ranks,24 there is nothing
mentioned about the supervisors respective duties, powers and prerogatives that would show that they can effectively
recommend managerial actions which require the use of independent judgment.25
As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor:26
Designation should be reconciled with the actual job description of subject employees x x x The mere fact that
an employee is designated manager does not necessarily make him one. Otherwise, there would be an absurd
situation where one can be given the title just to be deprived of the right to be a member of a union. In the case
of National Steel Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that:
What is essential is the nature of the employees function and not the nomenclature or titlegiven to
the job which determines whether the employee has rank-and-file or managerial status or whether he is a
supervisory employee. (Emphasis supplied).27

G.R. No. 76189 August 8, 1991. ROBERTO M. OCA, JR., ET AL. vs. CRESENCIANO B. TRAJANO, et. al.
During the 11th PTGWO (Philippine Transport and General Workers Organization) national convention, herein private
respondent Andres L. Dinglasan, Jr. was elected National President while herein petitioner Roberto M. Oca, Jr. was
elected National Executive Vice President.
On February 26, 1982, Dinglasan convened an executive board meeting to thresh out the mechanics of the national
convention of PTGWO for that year. Of the thirty three (33) voting members of the board, thirty one (31) were present.
However, before the body could agree on the date of the convention, a number of participants questioned the
qualifications of some members to sit on the board. The meeting was then adjourned. Thereafter, Oca and some
members of the board left the conference hall.
Nonetheless, the nineteen (19) members who remained asked Dinglasan to reconvene the meeting, which he did. This
body passed, among others, a resolution to hold the national convention on April 18, 1982. On the other hand, Oca and
his group, in a special board meeting on March 19, 1982, decided to hold their convention on April 4, 1982; thereby
prompting Dinglasan and his group in their board meeting of April 1, 1982 to advance their convention date also to April
4, 1982.
Hence, on April 4, 1982, the groups of Dinglasan and Oca held their respective conventions at different venues and
elected their own set of officers.
Later, PTGWO-III, a group of fifteen (15) local unions headed by Carlos T. Rullamas and identified with the Dinglasan
faction, "seceded" from the camp of Dinglasan.
Trajano later declared both conventions of doubtful validity.
Petitioners and private respondents both assail the conclusion reached by Trajano. Each side insists on the validity of
its convention.
RULING:
Elementary is the rule that the Constitution and By-laws of an organization serve as a contract that binds its members.
In this instance, the pertinent provisions of the Constitution and By-Laws are as follows: 6
ARTICLE VII-NATIONAL CONVENTION
Section 24. DATE AND PLACE OF CONVENTION The National Convention shall hold (sic) every three years at a
time during the first half of April, the inclusive dates, time, place to be fixed by (sic) National Executive Board which
shall be at least sixty (60) days before its holding. x x x x x x

ARTICLE VIII-THE NATIONAL EXECUTIVE BOARD

xxxxxx
Section 40. MEETINGS AND QUORUM The National Executive Board shall normally meet immediately after the
close of the regular convention and at least once every quarter thereafter, or upon call of the National President, at his
initiative or upon petition of at least one-fourth () of its members, for a special meeting. A majority of the members of
the National Executive Board shall constitute a quorum to transact business.
Section 46. APPOINTIVE OFFICERS. The officers to be appointed by the National President subject to confirmation
by the National Executive Board shall be:
a) Two National Assistant Secretaries, one each for Transport and General Workers;
The presence of a quorum during petitioner Oca's and respondent Dinglasan's respective Board meetings is
questionable. As found by the public respondent Director: 7
... In both meetings the quorum requirement (majority of the members of the national executive board (Section 40,
Article VIII, PTGWO Constitution)-33, elective and approximately 36, appointive (Section 39, Article VIII in relation to
section 46, Article IX, PTGWO Constitution) has not been met.
Moreover, petitioner Oca's Board Meeting and subsequent Convention were tainted with invalidity. The call for "a
special Board meeting to fix the special convention" made by the National Secretary, Johnny Oca, was anomalous
since only the National President of the Union was empowered to call a special Board Meeting, "at his own initiative or
upon petition of at least one fourth () of the Board members."
Still further, both Conventions were in violation of the sixty-day requirement imposed by section 24 of the By-Laws. Said
section clearly provides that the National Convention's dates, time and place shall be fixed by the National Executive
Board which shall be at least sixty (60) days before the holding. 9 As succinctly found by the public respondent Labor
Director: 10
The group headed by petitioner Dinglasan fixed the final date of the convention barely three (3) days before the holding,
while respondents Oca did so only sixteen (16) days prior to their convention.
It was imperative for both petitioners and private respondents to strictly follow the command therein with respect to the
period for calling a National Convention.

Ferrer vs. NLRC

Facts: Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC). The
Samahang Manggagawa ng Occidental Foundry Corporation-Federation of Free Workers (SAMAHAN) and the OFC
entered into a collectivebargaining agreement (CBA). The agreement provides that a union member who fails to retain
a membership of good standing may be dismissed by the employer upon written request by the union.
Pursuant to this provision, herein petitioners were dismissed from employment on the ground of failure to
retain membership in good standing. It was later on found out that the dismissal was due to an intra-union squabble
arising out of the attempt by the petitioners to oust the elected union officials.
Upon knowledge of their dismissal, petitioners volunteered to be admitted as members of the Federation of Democratic
Labor Unions (FEDLU) who represented them before the DOLE in the complaint for illegal dismissal against the
company, SAMAHAN and FFW.
Issue: Whether or not petitioners failed to maintain membership in good standing by committing acts of disloyalty
against SAMAHAN
Held:

No. Petitioners sought the help of the FEDLU only after they had learned of the termination of their employment. Their
allegedapplication with federations other than the FFW can hardly be considered as disloyalty to the SAMAHAN, nor
may the filing of such applications denote that petitioners failed to maintain in good standing their membership in the
SAMAHAN. The SAMAHAN is a different entity from FFW, the federation to which it belonged. Neither may it be
inferred that petitioners sought disaffiliation from the FFW for petitioners had not formed a union distinct from that of the
SAMAHAN. Parenthetically, the right of a local union to disaffiliate from a federation in the absence of any provision in
the federation's constitution preventing disaffiliation of a local union is legal. Such right is consistent with the
constitutional guarantee of freedom of association.
As to the propriety of the dismissal, the court said that while it is true that the CBA between OFC and the SAMAHAN
provided for the dismissal of employees who have not maintained their membershipin the union, the manner in which
the dismissal was enforced left much to be desired in terms of respect for the right of petitioners to procedural due
process. SAMAHAN did not conduct any investigation and hearing where petitioners could have defended themselves.
Moreover, the company summarily dismissed petitioners upon request of the union officers without conducting their own
investigation.
G.R. No. 78131 January 20, 1988. EDUARDO TANCINCO, et. al. vs. PURA FERRER-CALLEJA, et. al.
Private respondents are the prime organizers of ITM-MEA (Imperial Textile Mills Inc. Monthly Employees Association).
While said respondents were preparing to file a petition for direct certification of the Union as the sole and exclusive
bargaining agent of ITM's bargaining unit, the union's Vice-President, Carlos Dalmacio was promoted to the position of
Department Head, thereby disqualifying him for union membership. Said incident, among others, led to a strike
spearheaded by Lacanilao group, respondents herein. Another group however, led by herein petitioners staged a strike
inside the company premises. After four (4) days the strike was settled. Later, an agreement was entered into by the
representatives of the management, Lacanilao group and the Tancinco group the relevant terms of which are as
follows:
"1. That all monthly-paid employees shall be United under one union, the ITM Monthly Employees Association (ITMMEA), to be affiliated with ANGLO;
2. That the management of ITM recognizes ANGLO as the sole and exclusive bargaining agent of all the monthly-paid
employees;
3. That an election of union officers shall be held on 26 May l986, from 8:00 a.m. to 5:00 p.m.;
4. That the last day of filing of candidacy shall be on l9 May l986 at 4:00 p.m.;
5. That a final pre-election conference to finalize the list of qualified voters shall be held on 19 May 1986, at 5:00 p.m.;" 1
On May 19, 1986, a pre-election conference was held, but the parties failed to agree on the list of voters. During the
May 21, 1986 pre-election conference attended by MOLE officers, ANGLO through its National Secretary, a certain Mr.
Cornelio A. Sy, made a unilateral ruling excluding some 56 employees. Prior to the holding of the election of union
officers, petitioners, 2 through a letter addressed to the Election Supervisor, MOLE San Fernando Pampanga, protested
said ruling but no action was taken. On May 26, 1986, the election of officers was conducted under the supervision of
MOLE wherein the 56 employees in question participated but whose votes were segregated without being counted.
Lacanilao's group won. Lacanilao garnered 119 votes with a margin of three (3) votes over Tancinco prompting
petitioners to make a protest. Thereafter, petitioners filed a formal protest with the Ministry of Labor Regional
Office claiming that the determination of the qualification of the 56 votes is beyond the competence of ANGLO. Private
respondents maintain the contrary on the premise that definition of union's membership is solely within their jurisdiction.
Petitioners allege that public respondent director of Labor Relations committed grave abuse of discretion in ordering the
Med-Arbiter to disregard the 56 segregated votes and proclaim private respondents as the duly elected officers of ITMMEA whereas said respondent ruled that the grounds relied upon by ANGLO for the exclusion of voters are arbitrary,
whimsical and without legal basis.
RULING:

The petition is impressed with merit. The record of the case shows that public respondent categorically declared as
arbitrary, whimsical and without legal basis the grounds 11 relied upon by ANGLO in disenfranchising the 56 voters in
question. However, despite said finding, public respondent ruled to set aside the Resolution of July 25, 1986 of the
Med-Arbiter based on its own findings 12 that 51 of the 56 disenfranchised voters were not yet union members at the
time of the election of union officers on May 26, 1986 on the ground that their names do not appear in the records of the
Union submitted to the Labor Organization Division of the Bureau of Labor on April 24, 1986.
In the case before Us, considering that none of the parties insisted on the use of the payroll period-list as voting list and
considering further that the 51 remaining employees were correctly ruled to be qualified for membership, their act of
joining the election by casting their votes on May 26, 1986 after the May 10, 1986 agreement is a clear manifestation of
their intention to join the union. They must therefore be considered ipso facto members thereof Said employees having
exercised their right to unionism by joining ITM-MEA their decision is paramount. Their names could not have been
included in the list of employee submitted on April 24, 1986 to the Bureau of Labor for the agreement to join the union
was entered into only on May 10, 1986. Indeed the election was supervised by the Department of Labor where said 56
members were allowed to vote. Private respondents never challenged their right to vote then.

Halili v CIR (136 SCRA 112)

Facts:The cases involve disputes regarding claims for overtime of more than five hundred bus drivers andconductors of
Halili Transit. The disputes were eventually settled when the contending parties reached an Agreement where the
Administratrix would transfer to the employees the title to a tract of land in Caloocan,Rizal. The parcel of land was
eventually registered in the name of the Union.The Union, through Atty. Pineda, filed an urgent motion with the Ministry
of Labor and Employment (MOLE)requesting for authority to sell and dispose of the property. Atty. Espinas, (the original
counsel) established the award of 897 workers' claim. When Atty. Pineda appearedfor the Union in these cases, still an
associate of the law firm, his appearance carried the firm name B.C.Pineda and Associates," giving the impression that
he was the principal lawyer in these cases. Atty. Pineda, without authority from the Supreme Court but relying on the
earlier authority given him by theMinistry of Labor, filed another urgent motion, praying that the Union be authorized to
sell the lot. The sale wasfinally consummated, resulting in the execution of an escrow agreement.
Issue:Whether or not Atty. Pineda and Arbiter Valenzuela should be held in contempt.
Held: YES.
Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends tobring the
authority and
administration of the law into disrespect or to interfere with or prejudice parties litigant
or their witnesses during litigation.The power to punish for contempt is inherent in all courts and is essential to the
preservation of order in judicialproceedings and to the enforcement of judgments, orders, and mandates of the court,
and consequently, to thedue administration of justice.The Court may suspend or disbar a lawyer for any conduct on his
part showing his unfitness for the confidenceand trust which characterize the attorney and client relations, and the
practice of law before the courts, orshowing such a lack of personal honesty or of good moral character as to render
him unworthy of publicconfidence.In the case, the expeditious manner by which Arbiter Valenzuela granted Atty.
Pineda's motion for suchauthority to sell the property makes the entire transaction dubious and irregular.Significantly
Atty. Pineda's act of filing a motion praying for authority to sell was by itself an admission on hispart that he did not
possess the authority to sell the property. He could not and did not even wait for validauthority but instead previously
obtained the same from the labor arbiter whom he knew was not empoweredto so authorize.
Atty. Pineda is found guilty of indirect contempt of court for which he is sentenced to imprisonment anddirected to show
cause why he should not be disbarred.

G.R. No. 85333 February 26, 1990. CARMELITO L. PALACOL, ET AL. vs. PURA FERRER-CALLEJA, MANILA
CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC.

Respondent Manila CCBPI Sales Force Union, as the collective bargaining agent of all regular salesmen, regular
helpers, and relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers,
concluded a new collective bargaining agreement with the latter.
The president of the Union submitted to the Company the ratification by the union members of the new CBA and
authorization for the Company to deduct union dues equivalent to P20.00 every month and, in addition, 10% by way of
special assessment, from the CBA lump-sum pay granted to the union members. The last one among the
aforementioned is the subject of the instant petition.
The purpose of the special assessment sought to be levied is "to put up a cooperative and credit union; purchase
vehicles and other items needed for the benefit of the officers and the general membership; and for the payment for
services rendered by union officers, consultants and others." 2 There was also an additional proviso stating that the
"matter of allocation ... shall be at the discretion of our incumbent Union President."
Subsequently however, 528 union members favoured the disauthorization of the special assessment.
Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article 222(b) of the Labor
Code. Article 222(b) provides as follows:
ART. 222. Appearances and Fees. xxx xxx xxx
(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations
or conclusion of the collective agreement shall be imposed on any individual member of the contracting union;
Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the
parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of membership in a labor organization.
xxx xxx xxx
(o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any
other extraordinary fees may be checked off from any amount due to an employee without an individual written
authorization duly signed by the employee. The authorization should specifically state the amount, purpose and
beneficiary of the deduction;
Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o), the Union has
nevertheless failed to comply with the procedure to legitimize the questioned special assessment by: (1) presenting
mere minutes of local membership meetings instead of a written resolution; (2) failing to call a general membership
meeting; (3) having the minutes of three (3) local membership meetings recorded by a union director, and not by the
union secretary as required; (4) failing to have the list of members present included in the minutes of the meetings; and
(5) failing to present a record of the votes cast.
Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members, granted under a
collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization of the same by a majority of the
union members?
RULING:
The deduction of the 10% special assessment by the Union was not made in accordance with the requirements
provided by law. Substantial compliance is not enough in view of the fact that the special assessment will diminish the
compensation of the union members. Their express consent is required, and this consent must be obtained in
accordance with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed.
The Union obviously failed to comply with the requirements of paragraph (n) of Article 241 of the Labor Code. It held
local membership meetings on separate occasions, on different dates and at various venues, contrary to the express
requirement that there must be a general membership meeting. It submitted only minutes of the local membership
meetings when what is required is a written resolution adopted at the general meeting. Worse still, the minutes of three

of those local meetings held were recorded by a union director and not by the union secretary. The minutes submitted
to the Company contained no list of the members present and no record of the votes cast.
Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that
a special assessment may be validly checked-off. Even assuming that the special assessment was validly levied
pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless
there can be no valid check-off considering that the majority of the union members had already withdrawn their
individual authorizations. A withdrawal of individual authorizations is equivalent to no authorization at all.
Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only the collection
of a special fund for labor and education research is mandated. The two other purposes, namely, the purchase of
vehicles and other items for the benefit of the union officers and the general membership, and the payment of services
rendered by union officers, consultants and others, should be supported by the regular union dues, there being no
showing that the latter are not sufficient to cover the same.
The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the Labor Code. The
contention is impressed with merit. Article 222 (b) prohibits attorney's fees, negotiations fees and similar charges arising
out of the conclusion of a collective bargaining agreement from being imposed on any individual union member. The
collection of the special assessment partly for the payment for services rendered by union officers, consultants and
others may not be in the category of "attorney's fees or negotiations fees." But there is no question that it is an exaction
which falls within the category of a "similar charge," and, therefore, within the coverage of the prohibition in the
aforementioned article. There is an additional proviso giving the Union President unlimited discretion to allocate the
proceeds of the special assessment. Such a proviso may open the door to abuse by the officers of the Union
considering that the total amount of the special assessment is quite considerable P1,027,694.33 collected from those
union members who originally authorized the deduction, and P1,267,863.39 from those who did not authorize the same,
or subsequently retracted their authorizations.

Volkschel Labor Union v. BLR

Disaffiliation of Labor Union from a Federation
Facts:
Volkschel Labor Union was once affiliated with Associated Labor Union for Metal Workers(ALUMETAL).Both Volkschel
and Alumetal entered into a CBA. They agreed that ALUMETAL will apply payroll deductions twice a month on the
members of the UNION as membership dues and other fees/fines, as may be duly authorized by the UNION AND ITS
MEMBERS. They called thischeck-off authorization. Subsequently, majority of Volkschels members decided to
disaffiliate from ALUMETAL in order to operate on its own as an independent labor group, pursuant to
Art. 241 of the Labor Code.*
Moreover, the same want to revoke their check-off authorization in favour of ALUMETAL
On the other hand, ALUMETAL assailed that the disaffiliation is contrary to law and the members are still obliged to pay
their dues.
Issues:
Can a local union like Volkschel disaffiliate from its mother union like ALUMETAL.
Should the local union still pay union membership dues even upon disaffiliation from its mother union?
Held:
YES. A local union, being a separate and voluntary association, is free to serve the interest of all its members including
the freedom to disaffiliate. This right is consistent with constitutional guarantee of FREEDOM OF ASSOCIATION. (Art.
IV, Sec. 7, Phil.Constitution)

NO. The obligation of an employee to pay uniondues is coterminous with hisaffiliation/membership.

*ART. 241 of the Labor Code
Incumbent affiliates of existing federations or national unions may disaffiliate only for the purpose of joining a
federation or national union in the industry or region in which is properly belongs or for the purpose of operating as an
independent labor group.
[G.R. No. 106518. March 11, 1999]. ABS CBN SUPERVISORS UNION vs. ABS CBN BROADCASTING CORP., et.
al.
Petitioner Union and ABS-CBN signed and concluded a CBA with a check-off provision.
Later, Petitioners filed with the Bureau of Labor Relations a Complaint against the Union Officers and ABS-CBN,
praying that the special assessment of ten percent (10%) of the sum total of all salary increases and signing bonuses
granted by respondent Company to the members of the Union be declared illegal for failure to comply with the labor
Code, as amended, particularly Article 241, paragraphs (g), (n), and (o).
Respondent Union Officers and ABS argued that the check-off provision is in accordance with law as majority of the
Union members individually executed a written authorization giving the Union officers and the Company a blanket
authority to deduct subject amount.
The check-off provision was later declared illegal by the Arbiter and the DOLE Undersecretary. Later, the DOLE
Undersecretary reconsidered its decision and dismissed petitioners complaint.
Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing his own Decision
of July 1, 1991?
RULING: NO. The petition is unmeritorious.
Petitioners argued that the check-off provision is illegal because it was never submitted for consideration and approval
to "all the members at a general membership meeting called for the purpose"; and further alleged that the formalities
mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as amended, were not complied with.
"A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper
bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the union." The system of check-off is primarily for the benefit of the Union
and only indirectly, for the individual employees.
The legal basis of check-off is found in statutes or in contracts.[16] The statutory limitations on check-offs are found in
Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads:
"Rights and conditions of membership in a labor organization. - The following are the rights and conditions of
membership in a labor organization:
xxx
(g) No officer, agent, member of a labor organization shall collect any fees, dues, or other contributions in its behalf or
make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws.
xxx
(n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless
authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the
purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members
present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or
fees. The record shall be attested to by the president.

(o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any
other extraordinary fees may be checked off from any amount due to an employee without an individual written
authorization duly signed by the employee. The authorization should specifically state the amount, purpose and
beneficiary of the deductions. [Underscoring; supplied]
Article 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the same law,
which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising from collective bargaining negotiations or
conclusion of the collective agreement shall be imposed on any individual member of the contracting union: Provided,
however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary shall be null and void." [Underscoring; supplied]
The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as prohibiting the payment of attorney's
fees only when it is effected through forced contributions from the workers from their own funds as distinguished from
the union funds. xxx"
Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the special assessment for
Union's incidental expenses, attorney's fees and representation expenses, as stipulated in Article XII of the CBA, be
valid and upheld namely: 1) authorization by a written resolution of the majority of all the members at the general
membership meeting duly called for the purpose; (2)secretary's record of the minutes of the meeting; and (3) individual
written authorization for check-off duly signed by the employee concerned.
The three (3) requisites for the validity of the ten percent (10%) special assessment for Union's incidental expenses,
attorney's fees and representation expenses were met.
On July 14, 1989, the ABS-CBN Supervisors Employee Union held its general meeting, whereat it was agreed that a
ten percent (10%) special assessment from the total economic package due to every member would be checked-off to
cover expenses for negotiation, other miscellaneous expenses and attorney's fees. The minutes of the said meeting
were recorded by the Union's Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera.
On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members agreed that "in as
much as the Union had already paid Atty. P. Pascual the amount of P500,000.00, the same must be shared by all the
members until this is fully liquidated."[19]
Eighty-five (85) members of the same Union executed individual written authorizations for check-off. Records do not
indicate that the aforesaid check-off authorizations were executed by the eighty-five (85) Union members under the
influence of force or compulsion. Petitioners contention that the amount to be deducted is uncertain[21] is not persuasive
because the check-off authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all
and whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments,
contemplates a general meeting after the conclusion of the collective bargaining agreement.
Subject Article does not state that the general membership meeting should be called after the conclusion of a
collective bargaining agreement. Even granting ex gratia argumenti that the general meeting should be held after the
conclusion of the CBA, such requirement was complied with since the May 24, 1991 General Membership Meeting was
held after the conclusion of the Collective Bargaining Agreement, which was signed and concluded on December 7,
1989.

LITTON MILLS VS FERRER-CALLEJA

FACTS: On 14 August 1986, without the knowledge and approval of the general membership of LMEA-K, Umali
"Affiliated" petitioner-union with the federation of GATCORD. Umali then caused mimeographed leaflets to be
distributed to the union-members, urging them to continue affiliating with GATCORD. As a consequence, a majority of
the union-members, numbering 725 3 out of a total membership of 1,100, more or less, opposed the affiliation of LMEAK with GATCORD, and expressly manifested their intention to remain as an independent-union, in a statement, "SamaSamang Kapasiyahan", dated 18 August 1986 4 which, among others, also authorized petitioner Abong to take

appropriate steps against respondent Umali, including impeachment, should the latter continue the affiliation of the
petitioner-union with GATCORD.
Despite the opposition of a majority of the union membership to the petitioner- union's affiliation with GATCORD, Umali
continued with it. Thereafter, Abong and the majority of the elected union officers signed a letter, dated 24 August 1986,
addressed to Umali, accusing him of disloyalty by reasons of his affiliation with GATCORD, and advising him to appear
before them on August 1986 at 2:00 p.m. in the company canteen, to refute the charge of disloyalty against
him. Consequently, the majority of the union officers, led by Abong, voted to impeach Umali, who was informed of this
fact by letter, dated 30 August 1986, addressed to him. LMI required the petitioners to first thresh out the matter with
the proper office of the Department of Labor and Employment, before it could act on petitioners' request to terminate
Umali from his employment with LMI.
RULING: The case at bar stems from respondent Umali's act of affiliating the petitioner-union with GATCORD, which
caused the union officers to impeach Umali for disloyalty to the union. The impeachment is anchored on a provision in
the petitioner union's Constitution and By-Laws, which reads as follows:
Art. IV, Section 5. Membership may be lost under the following grounds:
xxx xxx xxx
b) Organizing or joining another labor union or any federation.
It cannot be denied that Umali did not only propose the affiliation, but in fact affiliated the petitioner union with
GATCORD, in contravention of the above-cited prohibition in Section 5, Article IV of the petitioner union's Constitution
and By-Laws. The Court takes notice of the fact that in all of the pleadings submitted by respondent Umali, lie never
bothered to refute the charge of the petitioners as to the questioned 161 signatures; neither has he denied that the
union members who opposed the affiliation were more than those who supported it. Hence, this Court finds that the
affiliation of the petitioner union with GATCORD was done by Umali without the support of the majority of the union
membership.
The act of affiliating with a federation is a major modification in the status of the petition union. And such act is a
violation of the rule that no modification of the CBA can be made during its existence, unless either party serves written
notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. 8 Hence, there was a
violation of the existing CBA, on the part of Umali.
It clearly appears that the procedure in the petitioners Constitution and By-Laws was not followed by the petitioners
when they impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying with the required
procedure for impeachment, considering that the petition to impeach had to be addressed to the Chairman of the
Executive Board of the Union, and that the majority membership which would decide on the impeachment had to be
convened only upon call of the Chairman of the Executive Board who, in the case at bar, happened to be respondent
Umali himself.
Nevertheless, despite the practical difficulties in complying with the said procedure, petitioners should have shown
substantial compliance with said impeachment procedure, by giving Umali ample opportunity to defend himself, as
contrasted to an outright impeachment, right after he failed to appear before the first and only investigation scheduled
on 27 August 1986 in the Litton Canteen.
G.R. No. L-69188 September 23, 1986. MIGUEL J. VILLAOR, et. al. vs. CRESENCIANO B. TRAJANO, et. al.
On February 17-23, 1984, in Metro Manila and on February 20, 1984 in Cebu/Mactan area, PALEA held its election for
National Officers. Herein petitioner Miguel J. Villaor won the election over respondent Mario S. Santos for the
presidency. Likewise, herein petitioner Cecilio V. Bautista won against Carlos V. Bandalan for the position of vicepresident.
Defeated candidates-respondent filed their election protests with the PALEA COMELEC on the grounds of uncounted
votes, etc.

Herein petitioners filed a complaint/petition with the MOLE against the PALEA COMELEC members, seeking their
disqualification from their positions as such on the ground of alleged partiality for the protestants.
PALEA COMELEC en banc resolved the election protests in favour of respondents.
Petitioners then filed a motion with the Med-Arbiter to annul their Resolution "for being issued without jurisdiction."
In conformity with the Resolution of PALE COMELEC, PALEA COMELEC members counted the segregated ballots and
likewise held on said date a special election in Cebu/Mactan area. As a result of the election respondents were
proclaimed as the duly elected President, Vice-President and Secretary by PALEA COMELEC.
On May 8, 1984, Petitioner Miguel J. Villaor filed a motion to annul the election and the proclamation of the winners
contending that these were "premature" as no action had yet been taken on the motion to declare the PALEA
COMELEC Resolution void.
The Med-Arbiter, after hearing, issued an Order declaring respondents PALEA COMELEC members as disqualified
from their office; declaring as null and void their Resolution; declaring the special election conducted by the
respondents (PALEA Comelec) as invalid.
Respondents appealed to the Bureau of Labor Relations (BLR). BLR Director Trajano set aside the Med-Arbiter's
Orders. Hence, the instant petition.
Trajano stressed that "It shall be unlawful for any person," Article 247 of the Labor Code states, "to unduly interfere with
employees and workers in their exercise of the right to self-organization." He opined that the right of self-organization is
impaired when the government dissolves a union COMELEC and proceeds to resolve an election protest pending
before it.
Whether or not the decision of public respondent Director was promulgated with grave abuse of discretion amounting to
lack of jurisdiction?
RULING: YES.
ART. 226. Bureau of Labor Standards.-The Bureau of labor Relations and the Labor Code relations divisions of the
regional offices of the Department of Labor (now the Ministry of Labor and Employment) shall have original and
exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intraunion conflicts and all disputes arising from or affecting labor-management relations in all workplaces whether
agricultural or non-agricultural, except those arising from the implementation of collective bargaining agreements which
shall be the subject of grievance procedure and/or voluntary arbitration.
as supplemented by Policy Instruction No. 6-relating to the distribution of jurisdiction over labor casesxxx xxx xxx
3. The following cases are under the exclusive original jurisdiction of the Med-Arbiter Section of the Regional Office:
xxx xxx xxx
b) Intra-union cases.
From the aforequoted provisions, it is safe to conclude that the freedom of the unions from interference from the
government presupposes that there is no inter-union or intra-union conflict. In the instant case, there is no question that
there is an intra-union conflict.
Public respondent further opined that the COMELEC should have been allowed to discharge its functions without
prejudice to the right of petitioners to apply for relief from the Board of Directors. In short, the petitioners should first
exhaust administrative remedies before bringing their case to the Med-Arbiter.
Anent this opinion of public respondent, petitioners averred that pursuant to Section 4 of Article VII of the PALEA
Constitution and By-Laws, they have fully exhausted the administrative remedies available to them provided in the
PALE charter, which fact was never denied by private respondents.

Accordingly, there is no question that the Med-Arbiter rightly exercised jurisdiction over the case.

PEPSI-COLA SALES AND ADVERTISING UNION vs. HON. SECRETARY OF LABOR

FACTS: In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC), promulgated on February 8, 1989, 1 this
Court 2laid down the doctrine governing an illegal dismissal case where the employee satisfactorily establishes that his
employment was terminated without due process i.e., without written notice to him of the charges against him and
without according him opportunity to defend himself personally or through a representative but the employer
nevertheless proves the existence of just cause for the employee's dismissal. The controlling principle in such a
case is that since the employee's dismissal was for just cause, he is entitled neither to reinstatement or back
wages nor separation pay or salaries for the unexpired portion of his contract, being entitled only to the
salaries earned up to the last day of employment; at the same time, however, as a general proposition, the
employer is obliged, on account of its failure to comply with the requirements of due process in terminating the
services of the employee, to pay damages to the latter fixed at P1,000.00, a sum deemed adequate for the
purpose.
From 1964 until sometime about 1985, Alisasis was an employee of the Pepsi-Cola Bottling Co., Inc. and later, of the
Pepsi-Cola Products (Philippines) Inc., after the latter had bought out the former. 4 He was also a member of the labor
organization of all regular route and truck salesmen and truck helpers of the company the Pepsi Cola Sales &
Advertising Union (PSAU) from June 1, 1965 up to the termination of his employment in 1985. 5 As a member of the
PSAU, he was also a participant in the "Mutual Aid Plan" set up by said union sometime in 1980. During the entire
period of his employment, there were regularly deducted from his wages the amounts corresponding to union dues as
well as contributions to the fund of the Mutual Aid Plan. 6
On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch, Capital Region, Manila, a complaint for illegal
dismissal against Pepsi-Cola, Inc.
ISSUE: whether or not the private respondent, Roberto Alisasis, may be considered to have been dismissed for just
cause within the meaning of the charter papers organizing and governing a mutual aid program of which he was a
participant.
RULING: The Court holds that Alisasis had indeed been "dismissed for cause." His employer had established this
factual proposition by competent evidence to the satisfaction of both the Labor Arbiter and the National Labor Relations
Commission. In the Latter's view, and in its own words, "Certainly, with the actuations of complainant, . . (Alisasis'
employer) had ample reason or enough basis to lose trust and confidence in him . . . considering that (said employer)
had already lost trust and confidence in complainant which is founded on a reasonable ground, as discussed earlier,
(and therefore) there is no point in requiring respondent to reinstate complainant to his former position . . (as to) do so
would be tantamount to compelling the management to employ someone whom it can no longer trust, which is
oppressive." The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a "member dismissed
for cause," and hence disqualified under its amended by-laws to claim any "Benefit or return of contributions . . under
any circumstances, . . ." The ruling to the contrary of the Med-Arbiter and the Secretary of Labor and Employment must
thus be set aside as tainted with grave abuse of discretion.

G.R. Nos. 76579-82 August 31, 1988. BENEDICTO RODRIGUEZ, etc. vs. CARLOS GALVADORES, LIVI MARQUEZ
G.R. No. 80504 August 31, 1988. REY C. SUMANGIL, et al. vs. MANOLITO PARAN, et. al., FREE TELEPHONE
WORKERS UNION, PLDT CO., and HON. PURA FERRER-CALLEJA
G.R. No. 80504: Controversy Respecting Labor-Union Dues
The Legislative Council of the union passed a resolution which increased the amount of the union dues. It was then
presented to the general membership for ratification at a referendum called for the purpose. Rey Sumangil, et. al.
objected to the holding of the referendum. When their objection went unheeded, they and their supporters, all together

numbering 829 or so, boycotted the referendum. Subsequently the union officers announced that the referendum has
resulted in a ratification of the increased union dues.
Rey Sumangil, etc. filed a petition with the BLR challenging the resolution for the increase in union dues. However, the
Med-Arbiter denied their petition on the ground of lack of support of at least 30% of all members of the union, citing
Article 242 of the Labor Code (now Art. 247) which reads as follows:
Art. 242. Rights and conditions of membership in a labor organization. ... Any violation of the above rights and
conditions of membership shall be a ground for cancellation of union registration and expulsion of officer from office,
whichever is appropriate. At least thirty percent (30%) of all the members of a union or any member or members
specially concerned may report such violation to the Bureau. The Bureau shall have the power to hear and decide any
reported violation to mete the appropriate penalty.
Sumangil, et. al. appealed to Director of Labor Relations Ferrer-Calleja. The Director reversed the Med-Arbiter.
According to her, the petition was supported by 6,022 signatures, a number comprising more than 30% of the total
membership of the union (10,413). Even assuming the contrary according to her, the lack of 30%-support will not
preclude the BLR from taking cognizance of the petition where there is a clear violation of the rights and conditions of
union membership because Article 226 of the Labor Code, expressly confers on it the authority to act on all intra-union
and inter-union conflicts and grievances affecting labor and management relations, at the instance of either or both
parties. The provision cited reads as follows:
Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations division in the
Regional Offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or
upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor management
relations ...
However, later, the Director reversed her earlier decision opining that there was no 30%-membership support.
Petitioners Sumangil et. al. insist that the support of 30% of the union membership is not a jurisdictional requirement for
the ventilation of their grievance before the BLR.
Whether or not 30%-membership support is indispensable for acquisition of jurisdiction by the Bureau of Labor
Relations of a complaint for alleged violation of rights and conditions of union members?
RULING: NO.
Article 242 of the Labor Code (now Art. 247) states that a report of a violation of rights and conditions of membership in
a labor organization maybe made by "(a)t least thirty percent (30%) of all the members of a union or any member or
members specially concerned." The use of the permissive "may" in the provision at once negates the notion that the
assent of 30% of all the members is mandatory. More decisive is the fact that the provision expressly declares that the
report may be made, alternatively by "any member or members specially concerned." And further confirmation that the
assent of 30% of the union members is not a factor in the acquisition of jurisdiction by the Bureau of Labor Relations is
furnished by Article 226 of the same Labor Code, which grants original and exclusive jurisdiction to the Bureau, and the
Labor Relations Division in the Regional Offices of the Department of Labor, over "all inter-union and intra-union
conflicts, and all disputes, grievances or problems arising from or affecting labor management relations," making no
reference whatsoever to any such 30% support requirement. Indeed, the officials mentioned are given the power to act
"on all inter-union and intra-union conflicts (1) "upon request of either or both parties" as well as (2) "at their own
initiative." There can thus be no question about the capacity of Rey Sumangil and his group of more than eight hundred,
to report and seek redress in an intra-union conflict involving a matter they are specially concerned, i.e., the rates of
union dues being imposed on them.
These considerations apply equally well to controversies over elections. In the cases at bar, the petition to nullify the
1986 union elections could not be deemed defective because it did not have the assent of 30% of the union
membership. The petition clearly involved an intra-union conflict one directly affecting the right of suffrage of more
than 800 union members and the integrity of the union elections over which, as the law explicitly provides, jurisdiction
could be assumed by the Labor Relations Director or the Med-Arbiters "at their own initiative" or "upon request of either
or both parties."
PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION vs. HON. BIENVENIDO E. LAGUESMA

FACTS: On 22 October 1990, private respondent PT&T Supervisory Employees Union-APSOTEU (UNION, for brevity)
filed a petition before the Industrial Relations Decision of the Department of Labor and Employment praying for the
holding of a certification election among the supervisory employees of petitioner Philippine Telegraph & Telephone
Corporation (PT&T, for brevity). On 29 October 1990, UNION amended its petition to include the allegation that PT&T
was an unorganized establishment employing roughly 100 supervisory employees from whose ranks will constitute the
bargaining unit sought to be established.
On 22 November 1990, PT&T moved to dismiss the petition for certification election on the ground that UNION
members were performing managerial functions and thus were not merely supervisory employees. Moreover, PT&T
alleged that a certified bargaining unit already existed among its rank-and-file employees which barred the filing of the
petition.
On 27 November 1990, respondent UNION opposed the motion to dismiss, contending that under the Labor Code
supervisory employees are not eligible to join the Labor organization of the rank-and-file employees although they may
form their own.
On 4 December 1990, PT&T filed its reply to the opposition and manifested that it is the function of an employee which
is determinative of whether said employee is a managerial or supervisory employee.
ISSUE: Can a petition for certification election filed by supervisory employees of an unorganized establishment one
without a certified bargaining agent be dismissed on the ground that these employees are actually performing
managerial functions?
RULING: The applicable provision of law in the case at bar is Art. 257 of the Labor Code. It reads
Art. 257. Petitions in unorganized establishments. In any establishment where there is no certified
bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the filing of
a petition by a legitimate labor organization (emphasis supplied).
The supervisory employees of PT&T did not yet have a certified bargaining agent to represent them at the time
the UNION, which is legitimate labor organization duly registered with the Department of Labor and
Employment,6 filed the petition for certification election. Since no certified bargaining agent represented the
supervisory employees, PT&T may be deemed an unorganized establishment within the purview of Art. 257 of
the Labor Code.
The fact that petitioner's rank-and-file employees were already represented by a certified bargaining agent doe not
make PT&T an organized establishment vis-a-vis the supervisory employees. After all, supervisory employees are "not .
. . eligible for membership in a labor organization of the rank-and-file employees."
Consequently, the Med-Arbiter, as sustained by public respondent, committed no grave abuse of discretion in granting
the petition for certification election among the supervisory employee of petitioner PT&T because Art. 257 of the Labor
Code provides that said election should be automatically conducted upon filing of the petition.
Furthermore, PT&T did not possess the legal personality to file a motion to dismiss the petition for certification election
even if based on the ground that its supervisory employees are in reality managerial employees. It is well-settled that
an employer has no standing to question a certification election 8 since this is the sole concern of the
workers. 9 The only exception to this rule is where the employer has to file the petition for certification election
itself pursuant to Art. 258 10 of the Labor Code because it was requested to bargain collectively. But, other that
this instance, the choice of a collective bargaining agent is purely the internal affair of labor. 11

G.R. No. 116172. Oct. 10, 1996. SAN MIGUEL FOODS vs. BIENVENIDO E. LAGUESMA, ILAW AT BUKLOD NG
MANGGAGAWA (IBM)
A petition for certification election among the monthly-paid employees of the SMFI was filed by private respondent labor

federation IBM before the Med-Arbiter.

SMFI filed a Motion to Dismiss on the ground that a similar petition remains pending between the same parties for the
same cause of action before the same Med-Arbiter Achilles V. Manit.
IBM contended that the case referred to by SMFI had already been resolved by Med-Arbiter Manit in his Resolution by
denying the first petition for certification election.
Med-Arbiter Manit, this time, granted the second petition for certification election.
SMFI appealed to the Sec. of Labor alleging that the local or chapter of IBM at SMFI is still not a legitimate labor
organization with a right to be certified as the exclusive bargaining agent in petitioners establishment.
Laguesma denied petitioners appeal as well as its MR.
RULING:
Supreme Court notes that it is petitioner, the employer, which has offered the most tenacious resistance to the holding
of a certification election among its monthly-paid rank-and-file employees. This must not be so, for the choice of a
collective bargaining agent is the sole concern of the employees.[19] The only exception to this rule is where the
employer has to file the petition for certification election pursuant to Article 258[20] of the Labor Code because it was
requested to bargain collectively,[21] which exception finds no application in the case before us. Its role in a certification
election has aptly been described in Trade Unions of the Philippines and Allied Services (TUPAS) v. Trajano,[22] as that
of a mere by-stander. It has no legal standing in a certification election as it cannot oppose the petition or appeal the
Med-Arbiters orders related thereto. An employer that involves itself in a certification election lends suspicion to the fact
that it wants to create a company union.[23] This Court should be the last agency to lend support to such an attempt at
interference with a purely internal affair of labor.[24]
While employers may rightfully be notified or informed of petitions of such nature, they should not, however, be
considered parties thereto with the concomitant right to oppose it. Sound policy dictates that they should maintain a
strictly hands-off policy.[25]
It bears stressing that no obstacle must be placed to the holding of certification elections,[26] for it is a statutory policy
that should not be circumvented.[27] The certification election is the most democratic and expeditious method by which
the laborers can freely determine the union that shall act as their representative in their dealings with the establishment
where they are working.[28] It is the appropriate means whereby controversies and disputes on representation may be
laid to rest, by the unequivocal vote of the employees themselves.[29] Indeed, it is the keystone of industrial
democracy.[30]

FOITAF-ASSOCIATED ANGLO AMERICAN CHAPTER vs. CARMELO NORIEL

FACTS: On March 20, 1975, the Federation of Free Workers (Associated Anglo-American Employees Chapter,
hereinafter referred to as FFW), filed a verified petition for certification election among the employees and workers of
the Anglo-American Tobacco Corporation (company for brevity), alleging that more than 30% of its rank and file workers
support the same. 2. On April 14, 1975, the company opposed the petition alleging that the petitioning union did not
have the support of at least 30% of the more than 1,000 workers of the company. 3. At the hearing of the case on April
21, 1975, the company alleged that there are 941 rank and file workers under its employ. Since respondent FFW had
then already submitted 283 signatures, the Med-Arbiter ruled that FFW had complied with the 30% written consent
requirement On the same date, Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinos
(FOITAF for short) Associated Anglo-American Chapter, moved to intervene alleging legal interest in the case and
the latter was granted time to substantiate its claim by way of employee's support. FOITAF filed a motion and
manifestation calling attention to an alleged retraction or revocation of signatures to the petition coming from thirteen
(13) employees, the letters of said retracting employees, all claims that they were forced to sign .... It is worthy of note
that the letters of retraction by the thirteen (13) employees were not under oath and none of them was presented during
the hearings to confirm their alleged retractions. 5. Thus, on April 30, 1975, the Med-Arbiter assigned to the case,
finding that FFW had submitted 283 signatures of the company's labor force of 941, thereby complying with the 30%

consent requirement, ordered the certification election with the following contending unions: 1. FFW Associated AngloAmerican Employees Chapter), 6. On May 9, 1975, petitioner FOITAF filed a letter appeal from the aforesaid order of
the Med-Arbiter on the sole ground that FFW failed to comply with the 30% requirement. This was opposed by FFW
contending that the alleged retraction of the 13 employees can only be determined in a secret balloting in a certification
election 7. Meanwhile on May 29, 1975, acting on a motion to stop the holding of a certification election filed by
FOITAF, the Bureau of Labor Relations in an order of even date suspended the holding of a certification election.
RULING: Clearly, what is at stake is the constitutional right to freedom of association on the part of employees.
Petitioner labor union was in the past apparently able to enlist the allegiance of the working force in the Anglo-American
Tobacco Corporation. Thereafter, a number of such individuals joined private respondent labor union. That is a matter
clearly left to their sole uncontrolled judgment. There is both a constitutional and statutory recognition that
laborers have the right to form unions to take care of their interests vis-a-vis their employees. Their freedom to
form organizations would be rendered nugatory if they could not choose their own leaders to speak on their
behalf and to bargain for them." 7 It cannot be otherwise, for the freedom to choose which labor organization to
join is an aspect of the Constitutional mandate of protection to labor. It is thus of the very essence of the
regime of industrial democracy sought to be attained through the collective bargaining process that there be
no obstacle to the freedom Identified with the exercise of the right to self-organization. Labor is to be
represented by a union that can express its collective will. In the event, and this is usually the case, that there is more
than one such group fighting for that privilege, a certification election must be conducted.
There can then be no legitimate objection to the holding of a certification election not only in the light of the basic theory
of labor statutes from Commonwealth Act 213 to the present Labor Code, but also in view of the factual finding that the
verified petition by private respondent labor union had the support of more than thirty percent of the rank and file
employees. Such being the case, it becomes, in the language of the new Labor Code, "mandatory for the Bureau to
conduct a certification election for the purpose of determining the representative of the employees in the appropriate
bargaining unit and certify the winner as the exclusive collective bargaining representative of all the employees in the
unit."

G.R. No. L-33705 April 15, 1977. AIR LINE PILOTS ASSOC. OF THE PHIL. (GASTON GROUP) vs. CIR, AIR LINES
PILOTS ASSOC. OF THE PHIL. (GOMEZ GROUP)
The Air Line Pilots Assoc. of the Phil. (ALPAP), represented by Ben Hur Gomez who claimed to be its President, filed a
petition with the CIR praying for certification as the sole and exclusive collective bargaining representative of "all the
pilots now under employment by PAL, and are on active flight and/or operational assignments." The petition was
opposed in the name of the same association by Felix C. Gaston (who also claimed to be its President) on the ground
that CIR has no jurisdiction over the subject-matter of the petition "because a certification proceeding in the CIR is not
the proper forum for the adjudication of the question as to who is the lawful president of a legitimate labor organization."
The CIR certified ALPAP, with Capt. Ben Hur Gomez as its president, as the sole and exclusive Bargaining
representative of all the pilots employed by PAL.
RULING:
The Court has always stressed that a certification proceeding is not a litigation, in the sense in which this term is
ordinarily understood, but an investigation of a non-adversary, fact finding character in which the Court of Industrial
Relations plays the part of a disinterested investigator seeking merely to ascertain the desires of employees as to the
matter of their representation. Such being the nature of a certification proceeding, we find no cogent reason that should
prevent the industrial court, in such a proceeding, from inquiring into and satisfying itself about matters which may be
relevant and crucial, though seemingly beyond the purview of such a proceeding, to the complete realization of the wellknown purposes of a certification case.
Such a situation may arise, as it did in the case at bar, where a group of pilots of a particular airline, allegedly
anticipated their forced retirement or resignation on account of strained relations with the airline arising from unfulfilled
economic demands, decided to adopt an amendment to their organization's constitution and by-laws in order to enable
them to retain their membership standing therein even after the termination of their employment with the employer

concerned. The industrial court definitely should be allowed ample discretion to secure a disclosure of circumstances
which will enable it to act fairly in a certification case.

REYES vs.TRAJANO
FACTS: Public Respondent Trajano as OIC of the Bureau of Labor Relations sustained the denial by the Med Arbiter of
the right to vote of one hundred forty-one members of the Iglesia ni Kristo (INK), all employed in the same company,
at a certification election at which two labor organizations were contesting the right to be the exclusive representative of
the employees in the bargaining unit.
The certification election was authorized to be conducted by the Bureau of Labor Relations among the employees of
Tri-Union Industries Corporation. The competing unions were Tri-Union Employees Union-Organized Labor Association
in Line Industries and Agriculture (TUEU-OLALIA), and Trade Union of the Philippines and Allied Services (TUPAS).
The final tally of the votes showed the following results:
TUPAS 1, TUEU-OLALIA 95, NO UNION 1, SPOILED 1, CHALLENGED 141
The challenged votes were those cast by the 141 INK members. They were segregated and excluded from the final
count in virtue of an agreement between the competing unions, reached at the pre-election conference, that the INK
members should not be allowed to vote because they are not members of any union and refused to participate in the
previous certification elections.
The INK employees promptly filed a petition to cancel the election alleging that it was not fair and the result thereof did
not reflect the true sentiments of the majority of the employees. TUEU-OLALIA opposed the petition contending that
the petitioners do not have legal personality to protest the results of the election, because they are not members of
either contending unit, but . . . of the INK which prohibits its followers, on religious grounds, from joining or forming any
labor organization . . . .
ISSUE: W/N employees who are not part of any union may validly exercise their right to vote in a certification election
HELD: YES. Guaranteed to all employees or workers is the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining. This is made plain by no less than three
provisions of the Labor Code of the Philippines.
The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or
more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes of collective
bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e., the protection,
promotion, or enhancement of their rights and interests.
The right to form or join a labor organization necessarily includes the right to refuse or refrain from exercising
said right. It is self-evident that just as no one should be denied the exercise of a right granted by law, so also,
no one should be compelled to exercise such a conferred right. The fact that a person has opted to acquire
membership in a labor union does not preclude his subsequently opting to renounce such membership.
The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in
the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by
which particular labor organization. If the results of the election should disclose that the majority of the workers do not
wish to be represented by any union, then their wishes must be respected, and no union may properly be certified as
the exclusive representative of the workers in the bargaining unit in dealing with the employer regarding wages, hours
and other terms and conditions of employment. The minority employees who wish to have a union represent them in
collective bargaining can do nothing but wait for another suitable occasion to petition for a certification election and
hope that the results will be different. They may not and should not be permitted, however, to impose their will on the
majority who do not desire to have a union certified as the exclusive workers benefit in the bargaining unit upon
the plea that they, the minority workers, are being denied the right of self-organization and collective bargaining.

The respondents argument that the petitioners are disqualified to vote because they are not constituted into a duly
organized labor union but members of the INK which prohibits its followers, on religious grounds, from joining or
forming any labor organization and hence, not one of the unions which vied for certification as sole and exclusive
bargaining representative, is specious. Neither law, administrative rule nor jurisprudence requires that only
employees affiliated with any labor organization may take part in a certification election. On the contrary, the
plainly discernible intendment of the law is to grant the right to vote to all bona fide employees in the
bargaining unit, whether they are members of a labor organization or not.
Neither does the contention that petitioners should be denied the right to vote because they did not participate in
previous certification elections in the company for the reason that their religious beliefs do not allow them to form, join or
assist labor organizations, persuade acceptance. No law, administrative rule or precedent prescribes forfeiture of the
right to vote by reason of neglect to exercise the right in past certification elections.
G.R. No. 92391 July 3, 1992. PHIL. FRUITS AND VEGETABLE INDUSTRIES, INC. vs. RUBEN D. TORRES, TRADE
UNION OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS)
Med-Arbiter Basa issued an Order granting the petition for Certification election filed by TUPAS. Said order directed the
holding of a certification election among the regular and seasonal workers of Philippine Fruits.
After a series of pre-election conferences, all issues relative to the conduct of the certification election were threshed
out except that which pertains to the voting qualifications of 194 workers enumerated in the lists of qualified voters
submitted by TUPAS.
Med-Arbiter Basa issued an Order allowing 184 of the 194 questioned workers to vote, subject to challenge, in the
certification election. 168 of the questioned workers actually voted on election day.
Initial tally of the election results, excluding the challenged votes, showed that the yes votes failed to obtain the majority
of the votes cast in said certification election, hence, the necessity of opening the 168 challenged votes to determine
the true will of the employees.
Petitioner argued against the opening of said votes mainly because said voters are not regular employees nor seasonal
workers. However, Med-Arbiter Basa ordered the opening of the same. All 168 challenged votes voted yes.
Whether or not petitioners formal protest was filed beyond the reglementary period?
Whether or not non-regular seasonal workers who have long been separated from employment prior to the filing of the
petition for certification election would be allowed to vote and participate in a certification election?
RULING:
-The formal protest of petitioner was filed beyond the reglementary period. As a matter of procedure, the following
requirements are required in order that a protest filed would prosper, to wit:
(1) The protest must be filed with the representation officer and made of record in the minutes of the proceedings before
the close of election proceedings, and
(2) The protest must be formalized before the Med-Arbiter within five (5) days after the close of the election
proceedings.
The records disclose the fact that petitioner, after filing a manifestation of protest on December 16, 1988, election day,
only formalized the same on February 20, 1989, or more than two months after the close of election proceedings (i.e.,
December 16, 1988). We are not persuaded by petitioner's arguments that election proceedings include not only
casting of votes but necessarily includes canvassing and appreciation of votes cast and considering that the canvassing
and appreciation of all the votes cast were terminated only on February 16, 1989, it was only then that the election
proceedings are deemed closed, and thus, when the formal protest was filed on February 20, 1989, the five-day period
within which to file the formal protest still subsisted and its protest was therefore formalized within the reglementary
period. 5

As explained correctly by the Solicitor General, the phrase "close of election proceedings" as used in Sections 3 and 4,
Rule VI, Book V of the Implementing Rules of the Labor Code, refers to that period from the closing of the polls to the
counting and tabulation of the votes as it could not have been the intention of the Implementing Rules to include in the
term "close of the election proceedings" the period for the final determination of the challenged votes and the canvass
thereof, as in the case at bar which may take a very long period.
-It is now well-settled that employees who have been improperly laid off but who have a present, unabandoned right to
or expectation of re-employment, are eligible to vote in certification elections. 10 Thus, and to repeat, if the dismissal is
under question, as in the case now at bar whereby a case of illegal dismissal and/or unfair labor practice was filed, the
employees concerned could still qualify to vote in the elections. 11
And finally, the Court would wish to stress once more the rule which it has consistently pronounced in many earlier
cases that a certification election is the sole concern of the workers and the employer is regarded as nothing more than
a bystander with no right to interfere at all in the election. The only exception here is where the employer has to file a
petition for certification election pursuant to Article 258 of the Labor Code because it is requested to bargain collectively.
Thus, upon the score alone of the "Bystander Rule", the instant petition would have been dismissed outright.

Militante vs NLRC
FACTS: The golden taxi employees and workers union (GTEWU-ANGLO), represented by Ernesto Serrano, as union
president, filed a case against respondent golden taxi cab Co. for illegal lock out , unfair labor practice, and payment of
damages. The med arbiter found out that the closure of company was illegal and ordered private respondent to pay the
members of union.
Another complaint was filed by Danilo Militante against the owners of the company for the same cause of action. Other
similar action was filed by other people. Med arbiter dismiss this case on the ground of bar by prior judgement.
RULING: The Labor Organization designated or selected by the majority of the employees in an appropriate collective
bargaining unit shall be the exclusive representatives of the employees in such unit for the purpose of collective
bargaining.
The legal conclusion of the Labor Arbiter and NLRC on the binding effect of the judgment in the NLRC NCR CA No.
003194-92 on petitioners finds support in Article 255 of the Labor Code of the Philippines, as amended. Said
article provides: Exclusive bargaining representative and workers participation in policy and decision
making. The labor organization designated or selected by the majority of the employees in an appropriate
collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of
collective bargaining.
Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the consent election conducted on
March 17, 1989, petitioners cannot now claim that they were not parties in the first case filed by GTEWU-ANGLO,
which represented not only PACIWU-TUCP but also GTEWU-ANGLO. Hence, all the requisites of res judicata being
present, said principle should be made to apply, thus barring any subsequent action such as the consolidated cases
subject of this petition.
G.R. No. 143428. June 25, 2001. SANDOVAL SHIPYARDS, INC. vs. PRISCO PEPITO, et. al.
National Federation of Labor (NFL) filed with DOLE a petition for certification election, alleging that its members, which
included private respondents were regular employees of petitioner. Finding that the NFL members were rank-and-file
employees of SSI, the Med-Arbiter issued an order directing that a certification election be held.
However, Undersecretary Bienvenido Laguesma reversed the Med-Arbiters Order and ruled that there was a valid
subcontracting agreement between SSI and its subcontractors, and that no employer-employee relationship existed
between SSI and private respondents.
In 1993, several cases for illegal dismissal were filed by private respondents against SSI. Later, the Labor Arbiter found
that private respondents were illegally dismissed but there was no employer-employee relationship between SSI and

private respondents, reasoning that said issue has been laid to rest in the resolution of Undersecretary Laguesma in the
certification election case. The NLRC affirmed the same.
On appeal to CA by respondents, CA reversed the decision of the NLRC and held that SSI is the direct employer of
private respondents.
Petitioners contend that CA erred in applying SCs pronouncement in Manila Golf & Country Club vs. IAC that a
decision in a certification election case regarding the existence of an employer-employee relationship does not
foreclose all further disputes between the parties as to the existence or non-existence of such relationship. They
contend that such pronouncement is obiter dictum (not binding) since the issue involved therein was whether or not the
persons rendering caddying services are employees of Manila Golf and Country Club and therefore within the
compulsory coverage of the Social Security System, not the correctness of the Med-Arbiters finding in the certification
election case that no employer-employee relationship existed between the golf club and the caddies.8
RULING: The Court does not agree with petitioner.
Our pronouncement in the Manila Golf case that the decision in a certification election case, by the very nature of such
proceeding, does not foreclose further dispute regarding the existence or non-existence of an employer-employee
relationship, was not obiter dictum as petitioners suggest, but rather was part of the resolution of the main issue in said
case.
Manila Golf involved three separate proceedings initiated by a group of caddies against Manila Golf and Country Club,
Inc.: (1) a petition for certification election, (2) a petition for compulsory arbitration, and (3) a petition for compulsory
social security coverage. In the certification election proceeding, the Med-Arbiter found that an employer-employee
relationship existed between the golf club and the caddies. On the other hand, the petition for compulsory arbitration
was dismissed by the Labor Arbiter upon finding that no employer-employee relationship existed between Manila Golf
and the caddies, which dismissal was later affirmed by the NLRC. The Social Security Commission also dismissed the
caddies petition for compulsory social security coverage, stating that the caddies were not employees of the golf club,
but this ruling was later reversed by the Intermediate Appellate Court.9
One of the questions in said case which this Court had to address in order to resolve the main issue was which of the
three proceedings should be recognized as being decisive of the issue regarding the existence of an employeremployee relationship.
Clearly, such pronouncement was not obiter dictum since the determination as to whether the finding of the Med-Arbiter
in the certification election case operates as res judicata, or bar by prior judgment, was necessary in resolving the main
issue therein.
The Court of Appeals correctly applied the ruling in Manila Golf & Country Club vs. IAC that "however final it may
become, the decision in a certification election case, by the very nature of such proceeding, is not such as to foreclose
all further dispute as to the existence, or non-existence of an employer-employee relationship"10between SSI and
private respondents herein.
It is established doctrine that for res adjudicata to apply, the following requisites must concur: (1) the former judgment or
order must be final; (2) the court which rendered said judgment or order must have jurisdiction over the subject matter
and the parties; (3) said judgment or order must be on the merits; and (4) there must be between the first and second
actions identity of parties, subject matter and cause of action.11
Clearly, implicit in these requisites is that the action or proceedings in which is issued the "prior Judgment" that would
operate in bar of a subsequent action between the same parties for the same cause, be adversarial, or contentious,
"one having opposing parties; is contested, as distinguished from an ex parte hearing or proceeding. *** of which the
party seeking relief has given legal notice to the other party and afforded the latter an opportunity to contest it," and a
certification case is not such a proceeding, as this Court has already ruled:
"A certification proceeding is not a litigation in the sense in which this term is commonly understood, but a mere
investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their
representation. The court enjoys a wide discretion in determining the procedure necessary to insure the fair and free
choice of bargaining representatives by the employees." (Citations omitted.)12

Considering the foregoing, both the Labor Arbiter and the NLRC therefore erred in relying on the pronouncement of
then Undersecretary Laguesma in the certification proceeding that there was no employer-employee relationship
between SSI and private respondents.
Central Negros Electric Cooperative vs DOLE
Facts: On August 15, 1987, CENECO entered into a collective bargaining agreement with CURE, a labor union
representing its rank-and-file employees, providing for a term of three years retroactive to April 1, 1987 and extending
up to March 31, 1990. On December 28, 1989, CURE wrote CENECO proposing that negotiations be conducted for a
new collective bargaining agreement (CBA).
On January 18, 1990, CENECO denied CUREs request on the ground that, under applicable decisions of the Supreme
Court, employees who at the same time are members of an electric cooperative are not entitled to form or join a union.
Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general assembly held on
December 9, 1989, approved Resolution No. 35 whereby it was agreed that tall union members shall withdraw, retract,
or recall the union members membership from Central Negros Electric Cooperative, Inc. in order to avail (of) the full
benefits under the existing Collective Bargaining Agreement entered into by and between CENECO and CURE, and the
supposed benefits that our union may avail of under the renewed CBA.
However, the withdrawal from membership was denied by CENECO on February 27, 1990 under Resolution No. 90.
Issue: WON the employees of CENECO who withdrew their membership from the cooperative are entitled to form or
join CURE for purposes of the negotiations for a collective bargaining agreement proposed by the latter.
Held: The right of the employees to self-organization is a compelling reason why their withdrawal from the cooperative
must be allowed. As pointed out by CURE, the resignation of the member- employees is an expression of their
preference for union membership over that of membership in the cooperative. The avowed policy of the State to afford
fall protection to labor and to promote the primacy of free collective bargaining mandates that the employees right to
form and join unions for purposes of collective bargaining be accorded the highest consideration.
Thus, member employees of a cooperative may withdraw as members of the cooperative in order to join labor union.
Membership in a cooperative is voluntary; inherent in it is the right not to join.
The Court ruled however, that the direct certification ordered by respondent Secretary is not proper. By virtue of
Executive Order No. 111, which became effective on March 4, 1987, the direct certification originally allowed under
Article 257 of the Labor Code has apparently been discontinued as a method of selecting the exclusive bargaining
agent of the workers. This amendment affirms the superiority of the certification election over the direct certification
which is no longer available now under the change in said provision. 8
We have said that where a union has filed a petition for certification election, the mere fact that no opposition is made
does not warrant a direct certification. 9 In said case which has similar features to that at bar, wherein the respondent
Minister directly certified the union, we held that:
... As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering the assailed orders
was to make a mockery of the procedure provided under the law for representation cases because: ... (c) By directly
certifying a Union without sufficient proof of majority representation, he has in effect arrogated unto himself the right,
vested naturally in the employee's to choose their collective bargaining representative. (d) He has in effect imposed
upon the petitioner the obligation to negotiate with a union whose majority representation is under serious question.
This is highly irregular because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of the
employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a union whose right to
bargaining status has not been legally established.
While there may be some factual variances, the rationale therein is applicable to the present case in the sense that it is
not alone sufficient that a union has the support of the majority. What is equally important is that everyone be given a
democratic space in the bargaining unit concerned. The most effective way of determining which labor organization can
truly represent the working force is by certification election.

G.R. No. 84685. Feb. 23, 1990. ILAW AT BUKLOD NG MANGGAGAWA (IBM) v. PURA FERRER-CALLEJA, SMC
Petitioner Union, formerly registered with the Labor Organization Division of the BLR, as the SMC Sales Force Union
Calasiao Beer Region-IBM Local No. 56, a local union of IBM, which is a national union, requested SMC for voluntary
recognition as the sole and exclusive bargaining representative of all the covered employees which consist of the
monthly-and daily-paid employees. As the territorial coverage of the Calasiao Beer Region embraces the regional sales
office and six (6) sales offices, SMC denied the unions request and instead, suggested that it avail of a certification
election. So SMC, through its North-Central Luzon Sales Operations Manager, filed a petition for certification election.
The Union filed a motion to dismiss alleging that the petition for certification election was premature as it did not ask
SMC to bargain collectively with it. It cited Article 258 of the Labor Code which provides:
ART. 258. When an employer may file petition. When requested to bargain collectively, an employer may petition
the Bureau for an election. x x x x x x
The Med-Arbiter ordered the certification election to be conducted.
Petitioner appealed the order to the BLR which denied the same. Hence, the present petition for certiorari alleging that
the Director of the BLR gravely abused her discretion in ordering the holding of a certification election.
RULING: The petition has no merit. Ordinarily, in an unorganized establishment like the SMC Calasiao Beer Region, it
is the union that files a petition for a certification election if there is no certified bargaining agent for the workers in the
establishment. If a union asks the employer to voluntarily recognize it as the bargaining agent of the employees, as the
petitioner did, it in effect asks the employer to certify it as the bargaining representative of the employees a
certification which the employer has no authority to give, for it is the employees prerogative (not the employers) to
determine whether they want a union to represent them, and, if so, which one it should be.
The petitioners request for voluntary recognition as the bargaining representative of the employees was in effect a
request to bargain collectively, hence, the employers request for a certification election was in accordance with Article
258 of the Labor Code, and the public respondents did not abuse their discretion in granting the request.

ALIGRE VS DE MESA
FACTS: The case arose out of the election of the rightful officers to represent the union in the Collective Bargaining
Agreement (CBA) with the management of Universal Robina Textile at its plant in Km. 50, Bo. San Cristobal, Calamba,
Laguna. Universal Robina Textile Monthly Salaried Employees Union, (URTMSEU), through private respondent
Regalado de Mesa, filed on September 4, 1990 a petition for the holding of an election of union officers with the
Arbitration Branch of the Department of Labor and Employment (DOLE). Acting thereon, DOLEs Med-Arbiter Rolando
S. de la Cruz issued an Order dated October 19, 1990 directing that such an election be held. In the pre-election
conference, it was agreed that the election by secret ballot be conducted on November 15, 1990 between petitioners
(Catalino Algire, et al.) and private respondents (Regalado de Mesa, et al.) under the supervision of DOLE through its
duly appointed representation officer.
The official ballot contained the following pertinent instructions: Nais kong pakatawan sa grupo ni: LINO ALGIRE
REGALADO and DE MESA his officers and his officers 1. Mark check (/) or cross (x) inside the box specified above
who among the two contending parties you desire to be represented for the purpose of collective bargaining. 2. This is a
secret ballot. Dont write any other markings.
The result was a tie (133 votes to both Aligre and Regalado). It was found out that there are spoiled ballots and one
ballot contained two (2) checks in the box opposite petitioner Algires name and his officers. On December 20, 1990,
med-arbiter de la Cruz issued an Order declaring the questioned ballot valid, thereby counting the same in Algires favor
and accordingly certified petitioners group as the unions elected officers. Regalado de Mesa, et al. appealed from the
decision of the med- arbiter to the Secretary of Labor.
RULING: To resolve the issue of union representation at the Universal Robina Textile plant, what was agreed to be held
at the companys premises and which became the root of this controversy, was a consent election, not a certification
election. It is unmistakable that the election held on November 15, 1990 was a consent election and not a certification

election. It was an agreed one, the purpose being merely to determine the issue of majority representation of all the
workers in the appropriate collective bargaining unit. It is a separate and distinct process and has nothing to do with the
import and effort of a certification election. If indeed petitioners group had any opposition to the representation officers
ruling that the questioned ballot was spoiled, it should have done so seasonably during the canvass of votes. Its failure
or inaction to assail such ballots validity shall be deemed a waiver of any defect or irregularity arising from said
election. Moreover, petitioners even question at this stage the clear instruction to mark a check or cross opposite the
name of the candidates group, arguing that such instruction was not clear, as two checks may be interpreted that a
voter may vote for Lino Algire but not with (sic) his officers or viceversa, notwithstanding the fact that a pre-election
conference had already been held where no such question was raised.
In any event, the choice by the majority of employees of the union officers that should best represent them in the
forthcoming collective bargaining negotiations should be achieved through the democratic process of an election, the
proper forum where the true will of the majority may not be circumvented but clearly defined. The workers must be
allowed to freely express their choice once and for all in a determination where everything is open to their sound
judgment and the possibility of fraud and misrepresentation is minimized, if not eliminated, without any unnecessary
delay and/or maneuvering.
G.R. No. L-56902 September 21, 1982. CONFEDERATION OF CITIZENS LABOR UNIONS (CCLU) and REDSON
EMPLOYEES AND LABORERS ASSOC. vs. CARMELO C. NORIEL, et. al.
CCLU was one of the four unions wanting to be certified as the collective bargaining representative of the employees in
the Redson Textile Manufacturing Corp.
The other unions aspiring to become the collective bargaining representative were the National Union of Garments
Textile and General Workers of the Philippines (GATCORD), the National Trade Union (NATU), and the Associated
Labor Unions (ALU).
A certification election was held. Out of the 831 votes cast, CCLU garnered 356 votes; ALU 338 votes; NATU, 82 votes
and GATCORD 42 votes. As no union obtained a majority vote, CCLU and ALU, which had the two largest numbers of
votes, agreed that a run-off election would be held.
On the run-off election date, three election supervisors from MOLE arrived but they were not allowed to enter the
company premises. So the said election supervisors decided to hold the certification election "outside the premises of
the company in a small store outside of the annex building". They used as ballot box "an improvised carton box."
A ALU representative executed a written protest alleging that the management of Redson Textile did not allow the runoff election to be held within its premises; that the company prevented fifty percent of the workers from voting by not
allowing them to get out of the company premises and inducing them to work overtime; that the company refused to
furnish election paraphernalia like the polling place and the ballot box.
After the votes were canvassed, of the 692 votes cast, ALU got 366 votes as against CCLU's 313 votes. There were
1,010 voters. Because ALU won, its representative withdrew his protest or manifestation.
On the following day, CCLU through its representative Fresnoza, filed with BLR a protest wherein he prayed that the
certification election be annulled, alleging that the certification election was irregular and disorderly because no booths
were provided for by the company, ALU members gave t-shirts and free tricycle rides, etc.
CCLU informed BLR that the election was conducted without regard to the provisions of section 6, Rule VI, Book V of
the Rules and Regulations Implementing the Labor Code.
Noriel dismissed CCLU's protest for lack of merit. He observed that CCLU failed to submit the pleadings and evidences
required and that CCLU failed to file a protest either "before or during the election proceeding" and, therefore, pursuant
to section 3, Rule VI, Book V of the aforementioned rules, CCLU is deemed to have waived its right to protest.
Noriel later certified ALU as the exclusive bargaining representative of the employees in Redson.
RULING:

The certification election is invalid because of certain irregularities such as that (1) the workers on the night shift and
some of those in the afternoon shift were not able to vote, so much so that out of 1,010 voters only 692 voted and about
318 failed to vote; (2) the secrecy of the ballot was not safeguarded; (3) the election supervisors were remiss in their
duties and were apparently "intimidated" by a union representative and (4) the participating unions were overzealous in
wooing the employees to vote in their favor by resorting to such tactics as giving free tricycle rides and T-shirts.
The purpose of a certification election is to give the employees "true representation in their collective bargaining with an
employer". That purpose was not achieved in the run-off election because many employees or union members were not
able to vote and the employer, through apathy or deliberate intent, did not render assistance in the holding of the
election.

National Congress of Union in Sugar Industry v. Trajano

FACTS: Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP)-TUCP is the
certified exclusive bargaining representative of the rank and file workers of Calinog Refinery Corporation. Private
respondent Federation of Unions of Rizal (FUR)-TUCP is a labor organization duly registered with the Department of
Labor and Employment while private respondent Calinog Refineries Employees Union (CREU)-NACUSIP is the
certified exclusive bargaining representative of the rank and file workers of the private respondent Calinog Refinery
Corporation by virtue of the certification election held on March 30, 1981.
On June 21, 1982, petitioner union filed a petition for deadlock in collective bargaining with the Ministry of Labor and
Employment (now Department of Labor and Employment). In order to obviate friction and tension, the parties agreed to
submit the petition for deadlock to compulsory arbitration on July 14, 1982 and was docketed as RAB Case No. VI0220-82.
On July 21, 1982, private respondent FUR-TUCP filed with the Regional Office No. VI, MOLE (now DOLE), Iloilo City a
petition for certification election among the rank and file employees of private respondent company, alleging that: (1)
about forty-five percent (45%) of private respondent company's employees had disaffiliated from petitioner union and
joined private respondent union; (2) no election had been held for the past twelve (12) months; and (3) while petitioner
union had been certified as the sole collective bargaining agent, for over a year it failed to conclude a collective
bargaining agreement with private respondent company. Petitioner union filed a motion to intervene in the petition for
certification election filed by private respondent union.
By order dated July 23, 1982, the Acting Med-Arbiter Pacifico V. Militante dismissed the petition for certification election
for lack of merit since the petition is barred by a pending bargaining deadlock.
On August 25, 1982, private respondent union filed an appeal to the Bureau of Labor Relations, Manila. On November
18, 1983, respondent Director Trajano rendered a decision affirming with qualification the order of Med-Arbiter Correa.
From the decision of respondent Director Trajano, petitioner filed a motion for reconsideration dated December 6, 1983.
The respondent Director in his order dated March 21, 1984 denied the motion for reconsideration for lack of merit and
affirmed the Bureau's decision of November 18, 1983.
ISSUE: Whether or not a petition for certification election may be filed during the pendency of a bargaining deadlock
submitted to arbitration or conciliation.
RULING: The Court holds that the respondent Director gravely abused his discretion when he affirmed the order of
Med-Arbiter Correa calling for a certification election among the rank and file workers of private respondent company.
The law on the matter is Section 3, Book V, Rule V of the Omnibus Rules Implementing the Labor Code, to wit:
Sec. 3. When to file. In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
However, no certification election may be held within one year from the date of issuance of a final
certification election result. Neither may a representation question be entertained if, before the filing of a
petition for certification election, a bargaining deadlock to which an incumbent or certified bargaining
agent is a party had been submitted to conciliation or arbitration or had become the subject of valid
notice or strike or lockout.

If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code,
a petition for certification election or a motion for intervention can only be entertained within sixty (60)
days prior to the expiry date of such agreement.
The clear mandate of the aforequoted section is that a petition for certification election may be filed at any time, in the
absence of a collective bargaining agreement. Otherwise put, the rule prohibits the filing of a petition for certification
election in the following cases:
(1) during the existence of a collective bargaining agreement except within the freedom period;
(2) within one (1) year from the date of issuance of declaration of a final certification election result; or
(3) during the existence of a bargaining deadlock to which an incumbent or certified bargaining agent is a party and
which had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
The Deadlock Bar Rule simply provides that a petition for certification election can only be entertained if there is no
pending bargaining deadlock submitted to conciliation or arbitration or had become the subject of a valid notice of strike
or lockout. The principal purpose is to ensure stability in the relationship of the workers and the management.
In the case at bar, a bargaining deadlock was already submitted to arbitration when private respondent FUR-TUCP filed
a petition for certification election. The same petition was dismissed for lack of merit by the Acting Med-Arbiter in an
order dated July 23, 1982 on the sole ground that the petition is barred by a pending bargaining deadlock. However,
respondent Director set aside the same order and subsequently affirmed an order giving due course to the petition for
certification election and ordering that an election be held.
The law demands that the petition for certification election should fail in the presence of a then pending bargaining
deadlock.
A director of the Bureau of Labor Relations, by the nature of his functions, acts in a quasi-judicial capacity. We find no
reason why his decision should be beyond this Court's review. Administrative officials, like the director of the Bureau of
Labor Relations are presumed to act in accordance with law but this Court will not hesitate to pass upon their work
where there is a showing of abuse of authority or discretion in their official acts or when their decisions or orders are
tainted with unfairness or arbitrariness.
Noteworthy is the fact that a certification was issued by Executive Labor Arbiter Celerino Grecia II on October 21, 1982
certifying that the petition for deadlock in RAB Case No. VI-0220-82 was forwarded to the Executive Labor Arbiter for
compulsory arbitration (see Rollo, p. 19). The respondent Director erred in finding that the order issued by the MedArbiter dismissing the petition for certification election was irregular and was merely based on information.
G.R. No. 118915 Feb. 4, 1997. CAPITOL MED. CENTER OF CONCERNED EMPLOYEES-UNIFIED FILIPINO
SERVICE WORKERS (CMC-ACE-UFSW) vs. BIENVENIDO E. LAGUESMA, CAPITOL MED. CENTER EMPLOYEES
ASSOC.-ALLIANCE OF FILIPINO WORKERS AND CAPITOL MED. CENTER INC. AND DRA. THELMA CLEMENTE
Respondent union filed a petition for certification election and was later granted. Elections were held. Thereafter, an
Order was issued certifying respondent union as the sole and exclusive bargaining representative of the rank and file
employees at CMC.
Respondent union thereafter presented economic proposals for the negotiation of a CBA. However, CMC refused to
bargain collectively despite insistence on the part of respondent union. Due to this, respondent union filed a notice of
strike and staged a strike later.
It is at this juncture that petitioner union filed a petition for certification election among the regular rank-and-file
employees of CMC alleging that a certification election can now be conducted as more that 12 months have lapsed
since the last certification election was held. Moreover, no CBA has as yet been concluded between respondent union
and CMC despite the lapse of twelve months from the time said union was voted as the collective bargaining
representative.
Respondent union opposed the petition. Later, petitioner unions petition was granted.

Respondent union appealed from the said Order, alleging that the Med-Arbiter erred in granting the petition for
certification election and in holding that this case falls under Section 3, Rule V Book V of the Rules Implementing the
Labor Code. 15 It also prayed that the said provision must not be applied strictly in view of the facts in this case.
Public respondent rendered a Resolution granting the appeal. He ratiocinated that while the petition was indeed filed
after the lapse of one year from the time of declaration of a final certification result, and that no bargaining deadlock had
been submitted for conciliation or arbitration, respondent union was not remiss on its right to enter into a CBA for it was
the CMC which refused to bargain collectively.
Petitioner insists that the circumstances prescribed in Section 3, Rule V, Book V Of the Rules Implementing the Labor
Code where a certification election should be conducted, viz: (1) that one year had lapsed since the issuance of a final
certification result; and (2) that there is no bargaining deadlock to which the incumbent or certified bargaining agent is a
party has been submitted to conciliation or arbitration, or had become the subject of a valid notice of strike or lockout,
are present in this case. It further claims that since there is no evidence on record that there exists a CBA deadlock, the
law allowing the conduct of a certification election after twelve months must be given effect in the interest of the right of
the workers to freely choose their sole and exclusive bargaining agent.
Whether or not petitioner unions petition for certification election should be granted?
RULING: NO
While it is true that one year had lapsed since the time of declaration of a final certification result, and that there is no
collective bargaining deadlock, public respondent did not commit grave abuse of discretion when it ruled in respondent
union's favor since the delay in the forging of the CBA could not be attributed to the fault of the latter.
CMC refused to negotiate with respondent union and instead challenged the latter's legal personality through a petition
for cancellation of the certificate of registration which eventually reached SC. The decision affirming the legal status of
respondent union should have left CMC with no other recourse but to bargain collectively; but still it did not. Respondent
union was left with no other recourse but to file a notice of strike against CMC for unfair labor practice with the National
Conciliation and Mediation Board.
Was there a bargaining deadlock between CMC and respondent union, before the filing of petitioner of a petition for
certification election, which had been submitted to conciliation or had become the subject of a valid notice of strike or
lockout?
In the case of Divine Word University of Tacloban v. Secretary of Labor and Employment, deadlock is defined as;
A "deadlock" is . . . the counteraction of things producing entire stoppage; . . . . There is a deadlock when there is a
complete blocking or stoppage resulting from the action of equal and opposed forces . . . . The word is synonymous
with the word impasse, which . . "presupposes reasonable effort at good faith bargaining which, despite noble
intentions, does not conclude in agreement between the parties."
Although there is no "deadlock" in its strict sense as there is no "counteraction" of forces present in this case nor
"reasonable effort at good faith bargaining," such can be attributed to CMC's fault as the bargaining proposals of
respondent union were never answered by CMC. In fact, what happened in this case is worse than a bargaining
deadlock for CMC employed all legal means to block the certification of respondent union as the bargaining agent of the
rank-and-file; and use it as its leverage for its failure to bargain with respondent union. Thus, we can only conclude that
CMC was unwilling to negotiate and reach an agreement with respondent union. CMC has not at any instance shown
willingness to discuss the economic proposals given by respondent union. 22
If the law proscribes the conduct of a certification election when there is a bargaining deadlock submitted to conciliation
or arbitration, with more reason should it not be conducted if, despite attempts to bring an employer to the negotiation
table by the "reasonable effort in good faith" on the part of the employer certified bargaining agent, there was no
bargain collectively.
In the case at bench, there was proof that the certified bargaining agent, respondent union, had taken an action to
legally coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the employer with
unfair labor practice and conducting a strike in protest against the employer's refusal to bargain. 25 It is only just and
equitable that the circumstances in this case should be considered as similar in nature to a "bargaining deadlock" when

no certification election could be held. This is also to make sure that no floodgates will be opened for the circumvention
of the law by unscrupulous employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section
3, Rule V, Book V of the Implement Rules should be interpreted liberally so as to include a circumstance, e.g. where a
CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively.

National Congress of Union in Sugar Industry v. Ferrer-Calleja

National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP) Filed for certification election
(after freedom period) but denied by Hon. Pura Ferrer-Calleja as the Dir. of Bureau of Labor Relations on MR by Priv.
National Federation of Sugar Workers (NFSW-FGT-KMU) the union sought to be replaced by Pet. because it was in a
negotiating deadlock with their employer.
Facts: Dacongcong Sugar and Rice Milling Co. in Negros Occ. Employs about 500 workers during milling season, and
300 workers during off milling season. Dacongcong has 2 competing labor unions for these workers. Nov. 14, 1984
Dacongcong entered into a CBA with Priv. Res. Natl Federation, effective three years./ until Nov 14, 1987. The CBA
was renewed, extended for another 3years, BUT with reservation for amendments regarding wage increases, hours of
work, and other terms of conditions of employment. The negotiation for the reservations in the CBA, went into a
deadlock. The parties agreed to a suspension and cooling off period. Meanwhile (Dec 5, 1988) National Congress,
FILED a direct certification/certification election (They filed beyond the freedom period of 60days before CBA expiry) . It
was opposed by National Federation moved to dismiss the petition because, (1) it was filed out of time, (2) there was
still the deadlocked CBA. The Med-Arbiter directed the conduct of the Certification Election.
Issue: Whether or not a petition for certification election may be filed after the 60-day freedom period?
Ruling: NO. It should be dismissed outright based on RuleV 6 BookV of the labor codes IRR. That the CBA was in
deadlock is immaterial because CBAs are deemed to continue to be in force until a new CBA is executed. LC 253. A
careful perusal of the provision (RuleV 6 BookV) shows that there is a clear mandate that the petition should be
dismissed outright for having been filed outside the 60-day freedom period.
A careful perusal of Rule V, Section 6, Book V of the Rules Implementing the Labor Code, as amended by the rules
implementing Executive Order No. 111 provides that:
Sec. 6. Procedure . . .
In a petition involving an organized establishment or enterprise where the majority status of the incumbent collective
bargaining union is questioned by a legitimate labor organization, the Med-Arbiter shall immediately order the conduct
of a certification election if the petition is filed during the last sixty (60) days of the collective bargaining agreement. Any
petition filed before or after the sixty-day freedom period shall be dismissed outright.
The sixty-day freedom period based on the original collective bargaining agreement shall not be affected by any
amendment, extension or renewal of the collective bargaining agreement for purposes of certification election.
xxx xxx xxx
The clear mandate of the aforequoted section is that the petition for certification election filed by the petitioner
NACUSIP-TUCP should be dismissed outright, having been filed outside the 60-day freedom period or a period of more
than one (1) year after the CBA expired.
It is a rule in this jurisdiction that only a certified collective bargaining agreement i.e., an agreement duly certified by
the BLR may serve as a bar to certification elections. (Philippine Association of Free Labor Unions (PAFLU) v. Estrella,
G.R. No. 45323, February 20, 1989, 170 SCRA 378, 382) It is noteworthy that the Bureau of Labor Relations duly
certified the November 14, 1984 collective bargaining agreement. Hence, the contract-bar rule as embodied in Section
3, Rule V, Book V of the rules implementing the Labor Code is applicable.
This rule simply provides that a petition for certification election or a motion for intervention can only be entertained
within sixty days prior to the expiry date of an existing collective bargaining agreement. Otherwise put, the rule prohibits

the filing of a petition for certification election during the existence of a collective bargaining agreement except within the
freedom period, as it is called, when the said agreement is about to expire. The purpose, obviously, is to ensure stability
in the relationships of the workers and the management by preventing frequent modifications of any collective
bargaining agreement earlier entered into by them in good faith and for the stipulated original period. (Associated Labor
Unions (ALU-TUCP) v. Trajano, G.R. No. 77539, April 12, 1989, 172 SCRA 49, 57 citing Associated Trade Unions
(ATU v. Trajano, G.R. No. L-75321, 20 June 1988, 162 SCRA 318, 322-323)
Anent the petitioner's contention that since the expiration of the CBA in 1987 private respondent NFSW-FGT-KMU and
Dacongcogon had not concluded a new CBA, We need only to stress what was held in the case of Lopez Sugar
Corporation v. Federation of Free Workers, Philippine Labor Union Association (G.R. No. 75700-01, 30 August 1990,
189 SCRA 179, 191) quoting Article 253 of the Labor Code that "(i)t shall be the duty of both parties to keep
the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60day period and/or until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of the
CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed.
Hence, the contract bar rule still applies.
Besides, it should be emphasized that Dacongcogon, in its answer stated that the CBA was extended for another three
(3) years and that the deadlock was submitted to the Labor Management Council.