Labor

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,

HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC,
PASIG, and SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this
special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary
Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs.
SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of
discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for
short), for its part, defends the Writ on the ground of absence of any employer-employee relationship
between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon)
and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent
said workers for purposes of collective bargaining. The Solicitor General agrees with the position of
SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and
D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors
duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts
to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion
and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers
employed by the contractors were to be paid by the latter and that none of them were to be deemed
employees or agents of SanMig. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter
executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or
contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope
of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), 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, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for SanMig
for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor
seasonal as they are performing work or activities necessary or desirable in the usual business or trade of
SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then
demanded that the employment status of these workers be regularized.
On 12 January 1989 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 (Annex D,
Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F,
Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the
two (2) notices of strike were consolidated and several conciliation conferences were held to settle the
dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite
workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to
enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or
D'RITE for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and

D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area
and/or picket lines and/or barricades which the defendants may set up at the plants and
offices of plaintiff within the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees
and/or contract workers of plaintiff, as well as those persons lawfully transacting
business with plaintiff at the work places within the bargaining unit referred to in the
CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to,
and egress from, the work places within the bargaining unit referred to in the CBA .., to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the
work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H,
Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for
hearing.
In the meantime, on 13 March 1989, 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.
That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order
(Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of
Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever
damages petitioners may sustain by reason thereof.
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 plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no
employer-employee relationship between plaintiff and the contractual workers employed
by Lipercon and D'Rite. This, however, does not mean that a final determination
regarding the question of the existence of employer-employee relationship has already
been made. To finally resolve this dispute, the court must extensively consider and delve
into the manner of selection and engagement of the putative employee; the mode of
payment of wages; the presence or absence of a power of dismissal; and the Presence or
absence of a power to control the putative employee's conduct. This necessitates a full-
blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly,
suffer irreparable damages. Upon the other hand, a writ of injunction does not
necessarily expose defendants to irreparable damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we
can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required
the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of
the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation.
The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were
recalled, and discussion on their other demands, such as wage distortion and appointment of
coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and
the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055
(the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or
equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig
Comment). In turn, the Union would immediately lift the pickets and return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January
1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over
the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that
question, is the matter of 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.
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, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and consequently
of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court
is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by
petitioner union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to compel

the employer to hire and thereby create an employment relationship with contractual
workers, especially were the contractual workers were recognized by the union, under
the governing collective bargaining agreement, as excluded from, and therefore strangers
to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in

the event of a deadlock in a labor dispute over 'wages, hours of work and all other and of
the employment' of the employees in the unit. The union leaders cannot instigate a strike
to compel the employer, especially on the eve of certification elections, to hire strangers
or workers outside the unit, in the hope the latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does
not arise out of a labor dispute, is an abuse of right, and violates the employer's
constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
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, on the one
hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless
exist "regardless of whether the disputants stand in the proximate relationship of employer and
employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the
terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as
defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee.
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 in effect, that they be
absorbed into the working unit of SanMig. 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.
Further, the Union also seeks to represent those workers, who have signed up for Union membership, for
the purpose of collective bargaining. 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. Neither can it be denied that the controversy below is directly connected with the labor
dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-
01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may,
in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and
D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of
strike was valid and the strike itself legal when it was allegedly instigated to compel the employer to hire
strangers outside the working unit; — those are issues the resolution of which call for the application of
labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by
SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions, of
employment or the representation of employees that called for the application of labor laws. In that case,
what the petitioning union demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as stevedores in the place of the members
of a rival union, which petitioners wanted discharged notwithstanding the existing contract of the
arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to
that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21
March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and
exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair
labor practice cases; 2. those that workers may file involving wages, hours of work and other terms and
conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including
questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of
the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code
would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for
damages is interwoven with a labor dispute existing between the parties and would have to be ventilated
before the administrative machinery established for the expeditious settlement of those disputes. To
allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the
orderly administration of justice (Philippine Communications, Electronics and Electricity Workers
Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its
best business judgment to determine whether it should contract out the performance of some of its work
to independent contractors. However, 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
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending
interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989
and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is
enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it.
The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending
the proceedings in the National Conciliation Mediation Board-Department of Labor and Employment,
docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
G.R. No. 130866 September 16, 1998
ST. MARTIN FUNERAL HOME, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.
REGALADO, J.:
The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private
respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No.
III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations
Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of
employment executed between him and petitioner nor was his name included in the semi-monthly
payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating
P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of
Internal Revenue (BIR). 1
Petitioner on the other hand claims that private respondent was not its employee but only the uncle of
Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private
respondent, who was formerly working as an overseas contract worker, asked for financial assistance
from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily
helped the mother of Amelita in overseeing the business.
In January 1996, the mother of Amelita passed away, so the latter then took over the management of the
business. She then discovered that there were arrears in the payment of taxes and other government fees,
although the records purported to show that the same were already paid. Amelita then made some
changes in the business operation and private respondent and his wife were no longer allowed to
participate in the management thereof. As a consequence, the latter filed a complaint charging that
petitioner had illegally terminated his employment.2
Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on
October 25, 1996 declaring that no employer-employee relationship existed between the parties and,
therefore, his office had no jurisdiction over the case. 3
Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor
arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as
a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23,
1996, or a period of about one year; and (3) in ruling that there was no employer-employee relationship
between him and petitioner.4
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding
the case to the labor arbiter for immediate appropriate proceedings.5 Petitioner then filed a motion for
reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of
merit,6 hence the present petition alleging that the NLRC committed grave abuse of discretion. 7
Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and
opportune to reexamine the functional validity and systemic practicability of the mode of judicial review
it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of
labor disputes that find their way to this Court and the legislative changes introduced over the years into
the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas
Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and
warrant a reassessment of that procedural aspect.
We prefatorily delve into the legal history of the NLRC. It was first established in the Department of
Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to
the Secretary of Labor and, ultimately, to the President of the Philippines.
On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six
months after its promulgation. 8 Created and regulated therein is the present NLRC which was attached
to the Department of Labor and Employment for program and policy coordination only. 9 Initially, Article
302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of
the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and
abolished such appeals. No appellate review has since then been provided for.
Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of
the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely
provides that the Commission shall decide all cases within twenty days from receipt of the answer of the
appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof
by the parties.
When the issue was raised in an early case on the argument that this Court has no jurisdiction to review
the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for
appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying
power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even
though no right of review is given by statute; that the purpose of judicial review is to keep the
administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is
that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and
unjust adjudications. 11
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the
aggrieved party is to timely file a motion for reconsideration as a precondition for any further or
subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule
65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the decision.
Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed
as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take
cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the
reglementary period under Rule 65. 14
Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as
follows:
Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate
jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards, or commissions, except those falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under the
Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15
Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18,
1995, to wit:
Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate
jurisdiction;
(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards
or commissions, including the Securities and Exchange Commission, the Social Security
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph
(1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in cases
falling within its original and appellate jurisdiction, including the power to grant and
conduct new trials or further proceedings. Trials or hearings in the Court of Appeals
must be continuous and must be completed within, three (3) months, unless extended by
the Chief Justice.
It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the
following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No.
7902, viz.:
1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central
Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of
Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.
2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section,
such that the original exclusionary clause therein now provides "except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948."
(Emphasis supplied).
3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which
the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation Commission and the Civil
Service Commission.
This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As
earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been
understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a
special original action limited to the resolution of jurisdictional issues, that is, lack or excess of
jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to
lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial
Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others,
"those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code
of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict
what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under
such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of
Appeals, but to this Court by necessary implication.
The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no
appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section 17 of
the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate
jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by
transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme
Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have
intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions,
orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court
for that matter.
A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have
been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology
used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC
in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode
of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the
considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the
Reference Committee Report on S. No. 1495/H. No. 10452. 18
In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which
we reproduce the following excerpts:
The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized
the Court of Appeals and at the same time expanded its jurisdiction and powers. Among
others, its appellate jurisdiction was expanded to cover not only final judgment of
Regional Trial Courts, but also all final judgment(s), decisions, resolutions, orders or
awards of quasi-judicial agencies, instrumentalities, boards and commissions, except
those falling within the appellate jurisdiction of the Supreme Court in accordance with
the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third
paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948.
Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the
transfer of some of its burden of review of factual issues to the Court of Appeals. However,
whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court
of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which
excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of
the Philippines and by the Central Board of Assessment Appeals.
Among the highest number of cases that are brought up to the Supreme Court are labor
cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section
9 and, additionally, extends the coverage of appellate review of the Court of Appeals in
the decision(s) of the Securities and Exchange Commission, the Social Security
Commission, and the Employees Compensation Commission to reduce the number of
cases elevated to the Supreme Court. (Emphases and corrections ours)
xxx xxx xxx
Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the
ideal situation of drastically reducing the workload of the Supreme Court without
depriving the litigants of the privilege of review by an appellate tribunal.
In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986
in the Annual Report of the Supreme Court:
. . . Amendatory legislation is suggested so as to relieve the Supreme

Court of the burden of reviewing these cases which present no important
issues involved beyond the particular fact and the parties involved, so
that the Supreme Court may wholly devote its time to cases of public
interest in the discharge of its mandated task as the guardian of the
Constitution and the guarantor of the people's basic rights and
additional task expressly vested on it now "to determine whether or not
there has been a grave abuse of discretion amounting to lack of
jurisdiction on the part of any branch or instrumentality of the
Government.
We used to have 500,000 cases pending all over the land, Mr. President. It has been cut
down to 300,000 cases some five years ago. I understand we are now back to 400,000
cases. Unless we distribute the work of the appellate courts, we shall continue to mount
and add to the number of cases pending.
In view of the foregoing, Mr. President, and by virtue of all the reasons we have
submitted, the Committee on Justice and Human Rights requests the support and
collegial approval of our Chamber.
xxx xxx xxx
Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by
the said sponsor and the following proceedings transpired: 20
Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the
Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D.
442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the
Labor Code will still be appealable to the Supreme Court.
The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.
Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also
discussed with our Colleagues in the House of Representatives and as we understand it,
as approved in the House, this was also deleted, Mr. President.
approved.
Senator Roco. There are no further Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.
approved. (Emphasis supplied).
xxx xxx xxx
Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second
reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference
Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved
by the House of Representatives, the same was likewise approved by the Senate on February 20,
1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme
Court were eliminated, the legislative intendment was that the special civil action of certiorari was and
still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in
relation thereto and in the instances we have noted could have been a lapsus plumae because appeals
by certiorari and the original action for certiorari are both modes of judicial review addressed to the
appellate courts. The important distinction between them, however, and with which the Court is
particularly concerned here is that the special civil action of certiorari is within the concurrent original
jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the assumption that appeals
by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of
Congress as expressed in the sponsorship speech on Senate Bill No. 1495.
Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse
from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be
circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically
emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:
On the other hand, Mr. President, to allow these cases to be appealed to the Court of
Appeals would give litigants the advantage to have all the evidence on record be
reexamined and reweighed after which the findings of facts and conclusions of said
bodies are correspondingly affirmed, modified or reversed.
Under such guarantee, the Supreme Court can then apply strictly the axiom that factual
findings of the Court of Appeals are final and may not be reversed on appeal to the
Supreme Court. A perusal of the records will reveal appeals which are factual in nature
and may, therefore, be dismissed outright by minute resolutions. 24
While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on
this score we add the further observations that there is a growing number of labor cases being elevated to
this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC
for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally
equipped for that purpose, aside from the increased number of its component divisions; and that there is
undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional
protection to labor.
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to
the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under
Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in
strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.
Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account:
One final observation. We discern in the proceedings in this case a propensity on the part
of petitioner, and, for that matter, the same may be said of a number of litigants who
initiate recourses before us, to disregard the hierarchy of courts in our judicial system by
seeking relief directly from this Court despite the fact that the same is available in the
lower courts in the exercise of their original or concurrent jurisdiction, or is even
mandated by law to be sought therein. This practice must be stopped, not only because of
the imposition upon the precious time of this Court but also because of the inevitable and
resultant delay, intended or otherwise, in the adjudication of the case which often has to
be remanded or referred to the lower court as the proper forum under the rules of
procedure, or as better equipped to resolve the issues since this Court is not a trier of
facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct
resort to it unless the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy within
and calling for the exercise of our primary jurisdiction.
WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED,
and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate
action and disposition consistent with the views and ruling herein set forth, without pronouncement as to
costs.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 99395 June 29, 1993
ST. LUKE'S MEDICAL CENTER, INC., petitioner,

vs.
HON. RUBEN O. TORRES and ST. LUKE'S MEDICAL CENTER ASSOCIATION-ALLIANCE OF
FILIPINO WORKERS ("SLMCEA-AFW"), respondents.
Sofronio A. Ona for petitioner.
Edgar R. Martir for respondent union.
MELO, J.:
In response to the mandate under Article 263(g) of the Labor Code and amidst the labor controversy
between petitioner St. Luke's Medical Center and private respondent St. Luke's Medical Center
Employees Association-Alliance of Filipino Workers (SLMCEA-AFW), then Secretary of Labor Ruben D.
Torres, issued the Order of January 28, 1991 requiring the parties to execute and finalize their 1990-1993
collective bargaining agreement (CBA) to retroact to the expiration of the anterior CBA. The parties were
also instructed to incorporate in the new CBA the disposition on economic and non-economic issues
spelled out in said Order (p. 48, Rollo). Separate motions for re-evaluation from the parties were to no
avail; hence, the petition at bar premised on the following ascriptions of error, to wit:
PUBLIC RESPONDENT HON. SECRETARY OF LABOR ACTED IN EXCESS OF

JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE
VIOLATED PETITIONER'S RIGHT TO DUE PROCESS, PUBLIC RESPONDENT
COMPLETELY IGNORED THE LATTER'S EVIDENCE AND ISSUED THE
QUESTIONED AWARDS ON THE BASIS OF ARBITRARY GUESSWORKS,
CONJECTURES AND INFERENCES.
II
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

CURTAILED THE PARTIES' RIGHT TO FREE COLLECTIVE BARGAINING, AND
WHEN HE GRANTED MONETARY AWARDS AND ADDITIONAL BENEFITS TO THE
EMPLOYEES GROSSLY DISPROPORTIONATE TO THE OPERATING INCOME OF
PETITIONER.
III
PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

ADOPTED/CONSIDERED THE ALLEGATIONS OF THE UNION THAT THE
HOSPITAL OFFERED SALARY AND MEAL ALLOWANCE INCREASES IN THE
AMOUNT OF P1,140,00 FOR THE FIRST YEAR AND P700.00 ACROSS THE BOARD
MONTHLY SALARY INCREASES FOR THE SECOND AND THIRD YEARS OF THE
NEW CBA.
IV
FINALLY, PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

WHEN HE GAVE HIS AWARD RETROACTIVE EFFECT.
When the collective bargaining agreement for the period August 1, 1987 to July 30, 1990 was forged
between petitioner and private respondent, the incumbent national president of AFW, the federation to
which the local union SLMCEA is affiliated, was Gregorio del Prado.
Before the expiration of the 1987-90 CBA, the AFW was plagued by internal squabble splitting its
leadership between Del Prado and Purita Ramirez, resulting in the filing by AFW and Del Prado of a
petition later docketed before the Department of Labor as NCR-00-M-90-05-077, where a declaration was
sought on the legitimacy of Del Prado's faction as bona fide officers of the federation. Pending resolution of
said case, herein private respondent SLMCEA-AFW brought to the attention of petitioner via a letter
dated July 4, 1990 that the 1987-1990 was about to expire, and manifested in the process that private
respondent wanted to renew the CBA. This development triggered round-table talks on which occasions
petitioner proposed, among other items, a maximum across-the-board monthly salary increase of P375.00
per employee, to which proposal private respondent demanded a P1,500.00 hike or 50% increase based
on the latest salary rate of each employee, whichever is higher.
In the meantime, relative to the interpleader case (NCR-00-M-90-05-070) initiated by petitioner to settle
the question as to who between Del Prado and Diwa was authorized to collect federation dues assessed
from hospital employees, the Med-Arbiter recognized Del Prado's right (p. 423, Rollo). This resolution of
July 31, 1990 was elevated to the Labor Secretary.
That talks that then ensued between petitioner and private respondent were disturbed anew when the
other wing in the AFW headed by Purita Ramirez, expressed its objections to the on-going negotiations,
and when a petition for certification election was filed by the Association of Democratic Labor
Organization of petitioner. However, private respondent emerged victorious after the elections and was
thus certified as the exclusive bargaining entity of petitioner's rank and file employees.
Following the decision dated September 14, 1990 in NCR-00-M-90-05-077 (pp. 444-445, Rollo) which
upheld the legitimacy of Del Prado's
status including the other officers, Bayani Diwa of the Ramirez Wing
appealed; the two cases — NCR-00-M-90-05-070 for interpleader and NCR-00-90-05-077 — were
consolidated.
On September 17, 1990, private respondent wrote petitioner for the resumption of their negotiations
concerning the union's proposed CBA. Petitioner reacted by writing a letter on September 20, 1990
expressing willingness to negotiate a new CBA for the rank and file employees who are not occupying
confidential positions. Negotiations thus resumed. However, a deadlock on issues, especially that bearing
on across-the-board monthly and meal allowances followed and to pre-empt the impending strike as
voted upon by a majority of private respondent's membership, petitioner lodged the petition below. The
Secretary of Labor immediately assumed jurisdiction and the parties submitted their respective
pleadings.
On January 22, 1991, a resolution was issued in the consolidated cases which eventually declared
Gregorio del Prado and his group as the legitimate officials of the AFW and the acknowledged group to
represent AFW (pp. 320-321, Rollo).
On January 28, 1991, public respondent Secretary of Labor issued the Order now under challenge. Said
Order contained a disposition on both the economic and non-economic issues raised in the petition. On
the economic issues, he thus ruled:
First year — P1,140.00 broken down as follows: P510.00 in compliance with the
government mandated daily salary increase of P17.00; and P630.00 CBA across the board
monthly salary increase.
Second year — P700.00 across the board monthly salary increase.
Third year — P700.00 across the board monthly salary increase.
It is understood that the second and third year salary increases shall not be chargeable to
future government mandated wage increases. (p. 47, Rollo.)
As earlier stated, both parties moved for reconsideration of the above order, but both motions were
denied. Consequently, petitioner St. Luke's filed the instant petition, a special civil action on certiorari.
In assailing the Order of January 28, 1991, petitioner St. Luke's focuses on public respondent's disposition
of the economic issues.
First, petitioner finds highly questionable the very basis of public respondent's decision to award
P1,140.00 as salary and meal allowance increases for the first year and P700.00 across-the-board monthly
salary increases for the succeeding second and third years of the new CBA. According to petitioner,
private respondent SLMCEA-AFW misled public respondent into believing that said amounts were the
last offer of petitioner St. Luke's immediately prior to the deadlock. Petitioner vehemently denies having
made such offer, claiming that its only offer consists of the following:
Non-Economic Issues:
St. Luke's submits that it is adopting the non-economic issues proposed and agreed upon
in its Collective Bargaining Agreement with SLMCEA-AFW for the period covering 1987,
1990. Copy of the CBA is attached as Annex "F" hereof.
Economic Issue
St. Luke's respectfully offers to give an increase to all its rank and file employees
computed as follows:
First Year — P900 (P700.00 basic + P200.00 food allowance) for an over
all total food allowance of P320.00.
Second Year — P400
Third Year — P400
plus the union will be allowed to operate and manage one (1) canteen for free to augment
their funds. Although the profit shall be divided equally between union and SLMC, the
operation of the canteen will generate for them a monthly income of no less than
P15,000.00, and likewise provide cheap and subsidized food to Union members.
The wage increase as proposed shall be credited to whatever increases in the minimum
wage or to any across the board increases that may be mandated by the government or
the DOLE. (pp. 20-21, Rollo.)
Petitioner charges that public respondent, in making such award, erroneously relied on the extrapolated
figures provided by respondent SLMCEA-AFW, which grossly inflated petitioner St. Luke's net income.
Petitioner contends that if the disputed award are sustained, the wage increases and benefits shall total
approximately P194,403,000.00 which it claims is excessive and unreasonable, considering that said
aggregate amount is more than its projected income for the next three years. To illustrate its point,
petitioner submits the following computation:
YR I
A. P1,40 added to basic pay
a) P1,140 x 1,500 (no. of employees) x 12 (months) — P 20,520,000
b) 13th month pay: P1,140 x 1,500 — 1,710,000
c) Overtime pay, 20% of payroll — 4,104,000
d) Holiday pay, PM/Night pay — 1,026,000
e) Sick leave — 855,000
f) Funeral, Paternity, Maternity leaves, retirement

pay — 820,000
B. P230 added to meal allowance
a) P230 x 1,500 x 12 — 4,140,000
C. One day added to sick leave
a) (Ave. pay P3,000 = P1,140) divided by 30 x 1,500 — 222,000
D. Sick leave cash conversion base reduced from 60 to 45 days
a) (P3,300 = P1,140)/30 x 1,200 — 2,664,000
E. Retirement benefits adjustment — 500,000
—————
FIRST YEAR ADDITIONAL COST P 36,561,000
YR II
A. Yr I increase except sick leave cash conversion
from 60 to 45 — P33,897,000
B. P700 added to monthly basic pay
a) P700 x 1,500 x 12 — 2,600,000

b) 13th month pay: P700 x 1,500 — 1,050,000
c) Overtime, pay, 20% of P12.6 M — 2,520,000
d) Holiday pay, PM/Night pay — 630,000
e) Sick leave: 15 days x 700/30 x 1,500 — 525,000
f) Funeral, paternity, maternity leaves, retirement pay — 504,000
————
SECOND YEAR ADDITIONAL COST P51,726,000
YR III
A. Yr I and Yr II increases — 88,287,000
B. P700 added to basic pay
a) P700 x 1,500 x 12 — 12,600,000

b) 13th month pay: P700 x 1,500 — 1,050,000
c) Overtime pay, 20% of P12.6 M — 2,520,000
d) Holiday pay, PM/Night pay — 630,000
e) Sick leave — 525,000
f) Funeral, paternity, maternity, leaves,
retirement pay — 504,000
————
THIRD YEAR ADDITIONAL COST — 106,116,000
TOTAL THREE-YEAR ADDITIONAL
BENEFIT/WAGES — 194,403,000
(pp. 14-16, Rollo).
On the basis of the foregoing, petitioner St. Luke's concludes that it would be in a very poor position to
even produce the resources necessary to pay the wage increases of its rank and file employees.
Petitioner also impugns public respondent's awards on grounds of prematurity, emphasizing that the
awards in question even preceded collective bargaining negotiations which have to take place first
between both litigants. It denies entering into a round of negotiations with private respondent SLMCEA-
AFW on the theory that the meetings referred to by the latter were merely informal ones, without any
binding effect on the parties because AFW is torn between two factions vying for the right to represent it.
Thus, petitioner maintains that nothing conclusive on the terms and conditions of the proposed CBA
could be arrived at when the other party, private respondent SLMCEA-AFW is confronted with an
unresolved representation issue.
Petitioner argues further that since no formal negotiations were conducted, it could not have possibly
made an offer of P1,140.00 as salary and meal allowance increases for the first year and an increase of
P700.00 across-the-board monthly salary for the second and third years of the new CBA. It raises doubts
on the veracity of the minutes presented by private respondent SLMCEA-AFW to prove that negotiations
were held, particularly on October 26, 1990, when petitioner allegedly made said offer as its last ditch
effort for a compromise prior to the deadlock. According to petitioner, these minutes, unsigned by
petitioner, were merely concocted by private respondent SLMCEA-AFW.
Finally, petitioner attacks the Order of January 28, 1991 for being violative of Article 253-A of the Labor
Code, particularly its provisions on retroactivity. Said Article pertinently provides:
xxx xxx xxx

Any agreement on such other provisions of the collective bargaining agreement entered
into within six (6) months from the date of expiry of the term of such other provisions as
fixed in the collective bargaining agreement, shall retroact to the day immediately
following such date. If any such agreement is entered into beyond six months, the parties
shall agree on the duration of retroactivity thereof. In case of a deadlock in the
renegotiation of the collective bargaining agreement, the parties may exercise their rights
under this Code.
Petitioner argues that in granting retroactive effect to the enforceability of the CBA, public respondent
committed an act contrary to the above provision of law, pointing out that the old CBA expired on July
30, 1990 and the questioned order was issued on January 28, 1991. Petitioner theorizes that following
Article 13 of the Civil Code which provides that there are 30 days in one month, the questioned Order of
January 28, 1991 was issued beyond the six-month period, graphically shown thus:
July 30, 1990 Expiration
July 31 = 1 day
August 1-31, 1990 = 31 days
September 1-30, 1990 = 30 days
October 1-31, 1990 = 31 days
November 1-30, 1990 = 30 days
December 1-31, 1990 = 31 days
January 1-28, 1991 = 28 days
—————————
TOTAL = 182 days
(6 months and 2 days)
(p. 34, Rollo.)
Traversing petitioner's arguments, private respondent SLMCEA-AFW contends that the formulation of
the terms and conditions of the CBA awards is well supported by the factual findings of public
respondent which established that petitioner failed to refute private respondent's allegation that during
their last meeting on October 26, 1990, petitioner stood pat on its offer of P1,140.00 as salary and meal
allowance increases for the first year of the new CBA and P700.00 across-the-board salary increases for
the second and third years thereof. Said awards, it said, are well within the means of petitioner because
its reported net income of P15 million, P11 million, and 13 million for 1987, 1988, and 1989, respectively,
have been actually understated. Moreover, private respondent claims that petitioner, in actual terms,
does not have to pay the alleged amount of P194,403,000.00 for wages and benefits in favor of its
employees. Such amount, according to private respondent, is bloated and excessive. Private respondent
in substantiating such claim made the following analysis:
First P1,140.00 total salary increase for the first year (1990-1991) of the new CBA is
divided into: P510.00 in compliance with the government mandated daily salary increase
of P17.00 and P630.00 CBA across the board monthly salary increase, thus, the whole
P1,140.00 salary increase is payable only beginning August 1, 1990 (reckoned from the
CBA July 30, 1990 expiry date) up to October 31, 1990 only following the November 1,
1990 effectivity of WAGE ORDER NO. NCR-01 which granted the said P17.00 daily wage
increase or P510.00 monthly of
which herein petitioner promptly complied with and paid to its employees and therefore
deductible from P1,140.00 total monthly salary increase (Annex "A" — Petitioner and
Annex "13" hereof);
Second, the remaining P630.00 CBA across the board monthly salary increase takes effect
on November 1, 1990 up to January 7, 1991 only following the January 8, 1991 effectivity
of WAGE ORDER NO. NCR-02 which mandated P12.00 daily wage increase or P630.00
monthly, hence, reducing the P630.00 CBA monthly salary increase to P270.00 CBA
monthly salary increase effective January 8, 1991 and onwards till July 31, 1991 (Annexes
"22" and "23" hereof);
Third, that out of an estimated workforce of 1,264 regular employees inclusive of about 209
supervisors, unit, junior area, division department managers and top level executives, all
occupying permanent positions, and approximately 55 regular but highly confidential
employees, only 1,000 rank-and-file regular/permanent employees (casuals, contractuals,
probies and security guards excluded) are entitled to the CBA benefits for three (3) years
(1990-1993) (as private respondent SLMCEA-AFW gathered and analyzed from the
petitioner's Personnel Strength Report hereto attached as Annex "28" hereof) vis-a-vis the
generalized and inflated 1,500 employees as total workforce purportedly entitled to CBA
benefits per its self-serving and incredible computation;
Fourth, the petitioner's computed 20% overtime pay of the basic salary is unrealistic and
overstated in view of its extreme cost-cutting/ savings measures on all expenditures,
most specially, on overtime work adopted since last year and a continuing management
priority project up to the present; and
Fifth, due to the above consideration, the total real award of wages and fringe benefits is
far less than the true annual hefty operating net income of the petitioner.
The net result is that the first year award of P1,140.00 monthly salary increase of which
P510.00 monthly salary increase is made in compliance with the P510.00 monthly wage
increase at P17.00 daily wage increase effective November 1, 1990 under Wage Order No.
NCR-01 (Annex "13" hereof) or with the intended P630.00 CBA monthly salary increase is
further reduced by P360.00 monthly wage increase at P12.00 daily wage increase effective
January 8, 1991 under Wage Order No.
NCR-02 (Annex "22" hereof), thereby leaving a downgraded or watered down CBA
monthly increase of P270.00 only.
Comparatively speaking, the 13% monthly salary increase of each employee average
basic monthly salary of P2,500.00 in 1987 or P325.00 monthly salary increase granted by
the petitioner under the first old CBA (1987-1990) is better than the much diluted P270.00
CBA monthly salary increase (in lieu of the awarded P630.00 CBA monthly salary
increase for the first year of the new CBA under Order, dated January 28, 1991, of public
respondent). (Annexes "A" and "G" — Petition). (pp. 390-391, Rollo.)
Private respondent concludes that petitioner's version that it will have to pay P194,403,000.00 is not true
because this will be drastically reduced by 40% to 60% in real terms due to a smaller number of
employees covered. It is further explained that the government-decreed wage increases abovementioned
already form part of the P1,140.00 wage and meal allowance increases, not to mention the strict cost-
cutting measures and practices on overtime and expense items adopted by petitioner since 1990.
With respect to public respondent's ruling that the CBA awards should be given retroactive effect, private
respondent agrees with the Labor Secretary's view that Article 253-A of the Labor Code does not apply to
arbitral awards such as those involved in the instant case. According to private respondent, Article 253-A
of the Labor Code is clear and plain on its face as referring only to collective bargaining agreements
entered into by management and the certified exclusive bargaining agent of all rank-and-file employees
therein within six (6) months from the expiry of the old CBA.
These foregoing contentions and arguments of private respondent have been similarly put forward by the
Office of the Solicitor General in its Consolidated Comment filed on November 23, 1991. The Solicitor
General share a the views of private respondent SLMCEA-AFW.
We are now tasked to rule on the petition. Do petitioner's evidence and arguments provide adequate
basis for the charge of alleged grave abuse of discretion committed by public respondent in his Order of
January 28, 1991 as to warrant its annulment by this Court? This is the sole issue in the case at bar.
Consequently, this Court would apply the following yardstick in resolving the aforestated issue: that
public respondent, in the exercise of his power to assume over subject labor dispute, acted whimsically,
capriciously, or in an arbitrary, despotic manner by reason of passion or personal hostility which was so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty
enjoined or to act at all in contemplation of law (San Sebastian College vs. Court of Appeals, 197 SCRA
138 [1991]).
Subjected to and measure by this test, the challenged Order, we believe, can withstand even the most
rigorous scrutiny.
Petitioner assails the Order of January 28, 1991 on three grounds:

(a) unreasonable and baselessness; (b) prematurity; and (c) violation of Article 253-A of the Labor Code.
We rule that the Order, particularly in its disposition on the economic issues, was not arbitrarily imposed
by public respondent. A perusal of the Order shows that public respondent took into consideration the
parties' respective contentions, a clear indication that he was keenly aware of their contrary positions.
Both sides having been heard, they were allowed to present their respective evidence. The due process
requirement was thus clearly observed. Considering public respondent's expertise on the subject and his
observance of the cardinal principles of due process, the assailed Order deserves to be accorded great
respect by this Court.
Equally worth mentioning is the fact that in resolving the economic issues, public respondent merely
adopted in toto petitioner's proposals. Consequently, petitioner cannot now claim that the awards are
unreasonable and baseless. Neither can it deny having made such proposals, as it attempted to do in its
Motion for Reconsideration of the challenged Order before public respondent and which it continues to
pursue in the instant petition. It is too late in the day for such pretense, especially so because petitioner
failed to controvert private respondent's allegation contained in its Comment to the petition before the
Labor Secretary that petitioner had offered as its last proposal said salary and meal allowance increases.
As correctly pointed out by public respondent, petitioner failed, when it had the chance, to rebut the
same in its Reply to said Comment, considering that the resolution of the labor dispute at that was still
pending. Any objection on this point is thus deemed waived.
We do not see merit in petitioner's theory that the awards were granted prematurely. In its effort to
persuade this Court along this point, petitioner denies having negotiated with private respondent
SLMCEA-AFW. Petitioner collectively refers to all the talks conducted with private respondent as mere
informal negotiations due to the representation issue involving AFW. Petitioner thus argues that in the
absence of any formal negotiations, no collective bargaining could have taken place. Public respondent,
petitioner avers, should have required the parties instead to negotiate rather than prematurely issuing his
order.
We cannot agree with this line of reasoning. It is immaterial whether the representation issue within AFW
has been resolved with finality or not. Said squabble could not possibly serve as a bar to any collective
bargaining since AFW is not the real party-in-interest to the talks; rather, the negotiations were confined
to petitioner and the local union SLMCEA which is affiliated to AFW. Only the collective bargaining
agent, the local union SLMCEA in this case, possesses legal standing to negotiate with petitioner. A duly
registered local union affiliated with a national union or federation does not lose its legal personality or
independence (Adamson and Adamson, Inc. vs. The Court of Industrial Relations and Adamson and
Adamson Supervising Union (FFW), 127 SCRA 268 [1984]). In Elisco-Elirol Labor Union (NAFLU)
vs. Noriel (180 SCRA 681 [1977]), then Justice Teehankee re-echoed the words of Justice Esguerra in Liberty
Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. (66 SCRA 512 [1975]), thus:
(T)he locals are separate and distinct units primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-members in the
economic struggle for the fruits of the joint productive effort of labor and capital; and the
association of the locals into the national union (as PAFLU) was in furtherance of the same end.
These associations are consensual entities capable of entering into such legal relations
with their members. 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. (at p. 688; emphasis in the original.)
Appending "AFW" to the local union's name does not mean that the federation absorbed the latter. No
such merger can be construed. Rather, what is conveyed is the idea of affiliation, with the local union and
the larger national federation retaining their separate personalities.
Petitioner cannot pretend to be unaware of these legal principles since they enjoy the benefit of legal
advice from their distinguished counsel. Thus, we are constrained to agree with the position of the
Solicitor General that petitioner conveniently used the representation issue within AFW to skirt entering
into bargaining negotiations with the private respondent.
Too, petitioner is in error in contending that the order was prematurely issued. It must be recalled that
immediately after the deadlock in the talks, it was petitioner which filed a petition with the Secretary of
Labor for the latter to assume jurisdiction over the labor dispute. In effect, petitioner submitted itself to
the public respondent's authority and recognized the latter's power to settle the labor dispute pursuant to
article 263(g) of the Labor Code granting him the power and authority to decide the dispute. It cannot,
therefore, be said that public respondent's decision to grant the awards is premature and pre-emptive of
the parties' right to collectively bargain, simply because the Order of January 28, 1991 was unfavorable to
one or the other party, for as we held in Saulog Transit, Inc. vs. Lazaro, (128 SCRA 591 [1984]):
It is a settled rule that a party cannot invoke the jurisdiction of a court to secure
affirmative relief against his opponent and after failing to obtain such relief, repudiate or
question that same jurisdiction. A party cannot invoke jurisdiction at one time and reject
it at another time in the same controversy to suit its interests and convenience. The Court
frowns upon and does not tolerate the undesirable practice of same litigants who submit
voluntarily a cause and then accepting the judgment when favorable to them and
attacking it for lack of jurisdiction when adverse. (Tajonera v. Lamaroxa, 110 SCRA
447, citingTijam v. Sibonghanoy, 23 SCRA 35). (at p. 601.)
Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the
previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A
cannot be property applied to herein case. As correctly stated by public respondent in his assailed Order
of April 12, 1991 dismissing petitioner's Motion for Reconsideration —
Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress
that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speak
of agreements by and between the parties, and not arbitral awards . . . (p. 818, Rollo.)
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such as
herein involved, public respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit.

SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 80485 November 11, 1988
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,

vs.
DIRECTOR PURA FERRER-CALLEJA, RASIDALI C. ABDULLAH, ENFORCEMENT UNIT NCR
ARBITRATION BRANCH, REYNALDO SANTOS, ET AL., respondents.
The Government Corporate Counsel for petitioner.
The Solicitor General for public respondent.
P.B. Iyog & Associates Law Office for private respondents.
GANCAYCO, J.:
The center of controversy in this petition is whether or not the Bureau of Labor Relations has jurisdiction
over the case involving the validity and refund of check-off assessments made by a labor union against
the salaries of union members through the petitioner-employer. The other issue is whether or not
petitioner has been afforded due process.
The 388 private respondents are employees of petitioner who are members of the PNCC Tollways
Employees and Workers Union. The union, through its Executive Board, adopted on October 22, 1983
Executive Committee Resolution No. 001-83 providing for the affiliation of the union with the Central
Luzon Labor Congress. The union also engaged the services of Atty. Emmanuel Clave as labor advocate,
negotiator and adviser, with a compensation of 10% on any arbitration award, settlement, collective
bargaining agreement (CBA) negotiation gains, plus expenses in the performance of his responsibilities.
The said resolution provided that the advocate's fees due Atty. Clave, in any form, shall be subject to
"check-off" arrangement with the petitioner.
Subsequently, the union adopted Executive Board Resolution No. 012-S-84 making the affiliation regular
and the retainer of Atty. Clave as official.
The union passed Resolution No. 15-S-84 providing that each union member and all other rank and file
employees of petitioner's Tollways Division shall be assessed the sum of 10% of all monetary benefits that
may be due them as a result of collective bargaining, arbitration, and other forms of representation, and
that the sums assessed shall be collected by the union by means of the check-off arrangement with
petitioner and shall be paid to Atty. Clave, in accordance with the retainer agreement between Atty.
Clave and the union. Resolution No. 15-S-84 was subsequently modified which only affected the amount
of negotiation fees payable to Atty. Clave, from 10% down to 5%
After the promulgation of Resolution No. 15-S-84, the Acting President of the union issued a
Memorandum dated June 2, 1984, directing all union members to comply with said resolution and to
execute check-off authorization. The private respondents alleged that they did not comply with the
directive respondents of the Acting President, but the union officers stated that 167 employees
accomplished the authorization forms and sent them to the personnel department of petitioner.
Petitioner, relying on Resolution No. 001-83, Resolution No. 15-S-84, Resolution No. 1-S-84, the letter
dated January 4, 1984 by David Clave, and the letter dated October 1, 1983 by Cipriano Mangubat, CLCC
President, through the then Head of the Tollways Division, advanced the total amount of P120,000.00 to
Atty. Clave, as follows:
(1) P100,000.00 in August of 1984; and
(2) P20,000.00 in February of 1985.
Petitioner, pursuant to Resolution No. 001-83, Resolution No. 15-S-84, General Membership Resolution
No. 1-S-84, as well as the submitted individual check-off authorizations, deducted P20.00 monthly from
the salaries of its employees subject of said resolutions, effective March, 1985. The deduction was
increased to P30.00 monthly per employee, effective April, 1985. Petitioner was not able to check-off said
amounts against all of its rank and file employees for the Tollways Division.
On April 17, 1985, petitioner turned over the total sum of Sixty Thousand Pesos (P60,000.00) to Atty.
Clave coming from the check-off special assessments. On September 30, 1985, petitioner turned over to
said lawyer the sum of Ten Thousand Pesos (P10,000.00) also out of the check-off special assessments.
Petitioner stopped the said deductions effective April, 1986, at which time it had allegedly collected a
total amount of One Hundred Fifty-Five Thousand Eight Hundred Pesos (P1,55800.00) as assessment
fees.
On July 11, 1985, the 388 private respondents, members of the then CDCP Union, now PNCC Employees
and Workers Union, filed a petition with the National Capital Region Director of the Department of
Labor and Employment (DOLE) against their own union officers and the petitioner. The petition asked
for the following reliefs:
(1) The issuance of a temporary restraining order enjoining petitioner, as their employer, from further
collecting special assessments from the salaries of the union members;
(2) The issuance of an order requiring the petitioner-employer to deposit with the Regional Office of
DOLE all sums of money in its possession collected from employees pursuant to said assessment;
(3) A declaration that the Resolution No. 15-S-84 of the Executive Board of the Union is null and void;
(4) The issuance of an order permanently enjoining the petitioner-employer from making deductions
from the employees' salaries by authority of Resolution No. 15-S-84; and
(5) The issuance of an order directing the petitioner-employer and/or the union officers to return the
amounts already deducted from their salaries pursuant to Resolution No. 15-S84.
The petition was certified to the Med-Arbiter for hearing and resolution. The summons supposedly sent
to the petitioner by the BLR was not served on responsible officials of petitioner. The records show that
the first summons was served by a private messengerial company; the second summons was served on
Armando Ancheta, a personnel assistant, on August 5, 1985; then upon Francisco Gabis, Jr., liaison
officer, on August 14, 1985; and finally on Mary Fernandez, a clerk, on September 9, 1985. Petitioner was
not able to file any pleading in the hearings of the case, and was unable to present its side.
On September 18, 1985, Atty. Clave moved to intervene and filed his position paper with the Med-
Arbiter. On October 14, 1985, public respondent Med-Arbiter issued an Order, which declared Resolution
No. 15-S-84 null and void and of no effect, ordered petitioner to stop collecting special assessments
against the salaries of union members and other rank and file employees of petitioner, and ordered
petitioner and the union, jointly and severally, to return to the employees concerned the amounts
deducted from their salaries pursuant to Resolution No. 15-S84. Atty. Clave filed an appeal with the BLR
on November 15, 1985. On June 30, 1986, the then Director of the Bureau of Labor Relations (BLR),
Cresencio B. Trajano, dismissed the appeal and affirmed the order of the
Med-Arbiter.
Public respondent BLR Director Pura Ferrer-Calleja issued a writ of execution on November 5, 1986,
directing the Enforcement Unit of the NCR Branch to collect from petitioner-employer and/or the CDCP
Union the sum of P257,400.00, the total amount of deductions made against the salaries of the employees,
or to satisfy said amount from the movable or immovable properties of the petitioner and/or union
which are not exempt from execution.
On December 29, 1986, petitioner filed an Urgent Motion for Reconsideration and to Quash Writ of
Execution on the ground that it was denied due process because it was never notified of the proceedings
and it had no opportunity to be heard. In an Order dated September 19, 1987, the Director of the BLR
denied the motion for reconsideration.
The Director of BLR issued an alias writ of execution dated October 13, 1987. Notice of this writ was
received by the petitioner on October 26, 1987 and subsequently the Enforcement Unit of the NCR
Arbitration Branch garnished the bank deposits of petitioner with the Philippine National Bank (PNB),
Buendia Avenue Branch and the Far East Bank and Trust Company, Shaw Boulevard Branch.
The responsible officials of petitioner who could have known of the case have left or were retired from
the petitioner after the EDSA Revolution of February, 1986. The new management of the petitioner was
never informed of this pending case, until petitioner received the first writ of execution. This case was
referred to the Office of the Government Corporate Counsel only on November 6, 1987.
Petitioner now questions the said orders of public respondents, as issued without jurisdiction, or in
excess of their jurisdiction and/or committed with grave abuse of discretion, because—
(1) There was a denial of petitioner's right to due process of law;
(2) The jurisdiction of the Med-Arbiter and the BLR covers only disputes between and among the union,
its officers and members, and that the BLR has no jurisdiction over matters where an interested party, like
the petitioner-employer herein, is involved;
(3) The petitioner-employer has no obligation to guarantee that the agent of private respondents, namely
the union acting through its officers, will faithfully comply with its obligation to its members;
(4) The 167 workers who submitted individual written authorizations for check-off are now estopped
from seeking a reimbursement from the petitioner;
(5) Petitioner has a just claim amounting to P190,000.00 against the union for advocate's fees paid to Atty.
Clave; and
(6) The amount of P257,400.00 stated in the Writ of Execution and the alias writ is not based on evidence
presented, and consequently, the public respondents acted with grave abuse of discretion in granting that
amount. The petitioner's records show that the amounts checked-off add up to only P155,800.00.
On November 23, 1987, this Court issued a temporary restraining order, enjoining the public respondents
from enforcing all the assailed orders, writs of executions and notices of garnishment in BLR Case No. A-
11-282-85 (NCR-LRD-M-7-275- 85). 1
On the issue of jurisdiction, the Court finds that respondent Director has jurisdiction over the
controversy. Under Article 241 of the Labor Code, the Bureau of Labor Relations has jurisdiction over
cases of reported violations thereof and to mete the appropriate penalty in disputes between and among
the union, its officers and members. The petition was for violation of said article which provides that
"(n)o special assessment or other extra-ordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. ..." 2
The principal relief sought in the case was for the nullification of Union Resolution No. 15-S-84. The
inclusion of petitioner as a co-respondent and the monetary claim against it is only incidental or ancillary
to the principal relief and is a consequence of petitioner having acted as a collection agent of the
respondent union officers. The action, therefore, is not essentially a money claim for underpayment of
wages that would fall under the jurisdiction of the labor arbiter. 3
The next issue is whether or not petitioner was afforded due process. The original claim of private
respondents was filed with the DOLE on July 11, 1985. Records of the BLR disclose that summons were
served upon minor employees of the petitioner, the last being on September 9, 1985. There followed those
abnormal times, the snap elections and the chaotic situation of the national elections culminating in the
EDSA Revolution of 1986. We can take judicial notice that the political upheaval of 1986 affected the
petitioner as a government-controlled corporation. There was a change of management. The defective
service of summons prevented the pending case from being brought to the attention of petitioner's Legal
Department. The eloquent non-appearance of petitioner in all the hearings establishing a money claim
against it is an indication of lack of sufficient notice regarding the case. It came to know of the case only
when the judgment against it was being executed.
Notice to enable the other party to be heard and to present evidence is not a mere technicality or a trivial
matter in any administrative or judicial proceedings. The service of summons is a very vital and
indispensable ingredient of due process.
In this case, the service of summons upon the minor subordinates of petitioner's Tollways Division is not
valid and binding. Under Section 15, Rule 14 of the Rules of Court, service of summons upon public
corporations must be made on its executive head or on such officer or officers as the law or the court may
direct. Under Section 13 of the same Rule, service upon a private corporation may be made on the
president, manager, secretary, cashier, agent or any of its directors.
The contention of public respondent is that petitioner had due notice and that technical rules are not
binding in proceedings under the Labor Code. 4 However, under Sections 4 and 5 of Rule IV of the
Revised Rules of the NLRC, service of such summons must be made as follows:
Section 4. Service of notices and resolutions. Notice of summons and copies of orders,
resolutions or decisions shall be served personally by the bailiff or duly authorized
public officer or by registered mail on the parties to the case; Provided, that where a party
is represented by counsel or authorized representative, service shall be made on the latter ...
(Emphasis supplied.)
and
Section 5. Proof and completeness of service. The return is prima facie proof of the facts
indicated therein Service by registered mails is complete upon receipt by the addressee or
his agents. (Emphasis supplied.)
To determine the scope or meaning of such authorized representative or agents of parties on whom
summon served, the provisions of the Rules of Court should apply in a suppletory character. 5
Public respondents argue that as petitioner filed a motion for reconsideration of the order of respondent
calling for the issuance of the writ of execution there was no denial of the opportunity to be heard.
However, said motion was denied without even considering the merit of the same but on the technical
ground that it was filed out of time. Accordingly thereby petitioner was denied due process.
Petitioner should be afforded its day in court. It must be given the opportunity to prove its contention
that what was actually collected as check-off assessments from union members is only P155,800.00 and
not P257,400.00 as assessed by public respondents. Its advance payments to the labor advocate must also
be considered.
In sum, the Court holds that petitioner was not duly notified of the pending case because of defective
service of summons. It was derived of its right to be heard and to present evidence which are essential
ingredients of due process of law.
WHEREFORE AND BY REASON OF THE FOREGOING, the restraining order issued by this Court in
favor of petitioner is made permanent, and all the assailed orders of October 14, 1985, June 30, 1986,
November 5, 1986, September 12, 1987 and October 13, 1987, writs of execution and notices of
garnishment in BLR Case No. A-11-282-85 (NCR-LRD-M-7-275-85) against petitioner only are SET ASIDE
for being null and void. This decision is immediately executory.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 106518 March 11, 1999
ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner,

vs.
ABS-CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUNOZ,
CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO ALCAZAR, JAKE MADERAZO, GON
CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ and RUBEN
BARRAMEDA, respondents.
PURISIMA, J.:
At bar is a special civil action for Certiorari 1 seeking the reversal of the Order2 dated July 31, 1992 of
public respondent Department of Labor and Employment Undersecretary Bienvenido E. Laguesma 3 in
Case No. NCR -
OD-M -90 -07-037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors Employees Union ("the Union"), represented by
respondent Union Officers, and ABS-CBN Broadcasting Corporation ("the Company") signed and
concluded a Collective Bargaining Agreement with the following check-off provision, to wit:
Art. XII — The [C]ompany agrees to advance to the Union a sum equivalent to 10% of the
sum total of all the salary increases and signing bonuses granted to the Supervisors
under this collective Bargaining Agreement and upon signing hereof to cover the Union's
incidental expenses, including attorney's fees and representation expenses for its
organization and (sic) preparation and conduct hereof, and such advance shall be
deducted from the benefits granted herein as they accrue.
On September 19, 1990, Petitioners4 filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a
Complaint against the Union Officers5 and ABS-CBN Broadcasting corporation, praying that (1) 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); and in utter
violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2) respondent
Company be ordered to suspend further deductions from petitioners' salaries for their shares thereof.
In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint for
lack of merit. They 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.
On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order: 6
WHEREFORE, premises considered judgment is hereby rendered:
a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal;
b) ordering respondents union officers to refund to the complainants and other union
members the amount of Five Hundred Thousand Pesos (P500,000.00) advanced by the
respondent Company as part of the 10% sum total of CBA benefits without unnecessary
delay;
c) ordering the respondent company to stop and desist from further making advances
and deductions from the union members' salaries their share in the advances already
made to the union;
d) ordering the respondent Company to remit directly to the complainants and other
union members the amount already deducted from the union members' salaries as part
of their share advances already made to the union and which it had kept in trust during
the pendency of this case; and
e) directing the respondents union officers and respondent Company to submit report on
the compliance thereof.
SO ORDERED.
On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision 7 on July
1, 1991, disposing as follows:
WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is
affirmed en toto.
On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and respondent
Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter alia that the
questioned ten percent (10%) special assessment is valid pursuant to the ruling in Bank of the Philippine
Islands Employee Union - ALU vs. NLRC.8
On July 31, 1992, Undersecretary B. E. Laguesma issued an Order 9; resolving, thus:
WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE, In lieu thereof, a
new one is hereby entered DISMISSING the Complaint/Petition for lack of merit.
Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent
Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to
lack of jurisdiction.
Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing
his own Decision of July 1,1991? Such is the sole issue posited, which we resolve in the negative. The
petition is unmeritorious.
Petitioners claim10 that the Decision of the Secretary of Labor and Employment dated July 1, 1991,
affirming in totothe Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a subject
of a motion for reconsideration because it is final and unappealable pursuant to Section 8, Rule VIII, Book
V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only remedy of the
respondent Union Officers' is to file a petition for certiorari with this Court.
Sec. 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:
The Secretary shall have fifteen (15) calendar days within which to decide the appeal
from receipt of the records of the case. The decision of the Secretary shall be final and
inappealable. [Underscoring supplied]. (Comment, p. 101)
The aforecited provision cannot be construed to mean that the Decision of the public respondent cannot
be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules of Court. As a
rule, the law requires a motion for reconsideration to enable the public respondent to correct his mistakes,
if any. In Pearl S. Buck Foundation, Inc., vs. NLRC,11 this Court held:
Hence, the only way by which a labor case may reach the Supreme Court is through a
petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable
time from receipt of the resolution denying the motion for reconsideration of the NLRC
decision. [Emphasis supplied].
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the
filing of a motion for reconsideration is a condition sine qua non to afford an opportunity for the
correction of the error or mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to judicial review only through a
special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having
exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must be
allowed to move for a reconsideration of the same so that he can bring a special civil action
for certiorari before the Supreme Court.12
Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early
Resolution13 dated June 24, 1992, averring that private respondents' Motion for Reconsideration did not
contain substantial factual or legal grounds for the reversal of subject decision. Consequently, petitioners
are now estopped from raising the issue sought for resolution. In Alfredo Marquez vs. Secretary of
Labor 14 the Court said:
. . . The active participation of the party against whom the action was brought, coupled
with his failure to object to the jurisdiction of the court or quasi-judicial body where the
action is pending, is tantamount to an invocation of that jurisdiction and a willingness to
abide by the resolution of the case and will bar said party from later on impugning the
court or body's jurisdiction.
What is more, it was only when the public respondent issued the Order adverse to them that the
petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought
which must be abhorred.
Petitioners also argued that the check-off provision in question 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."15 Its desirability in a labor
organization is quite evident. It is assured thereby of continuous funding. As this Court has
acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for
the individual employees.
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 xxx xxx
(g) No officer, agent, or member of a labor organization shall collect any fees, dues, or
other contributions in its behalf to make any disbursement of its money or funds unless
he is duly authorized pursuant to its constitution and by-laws.
xxx xxx xxx
(n) No special assessement or other extraordinary fees may be leavied 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. [Emphasis; supplied]
Art. 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.
[Emphasis; supplied]
And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands
Employees Union - Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission:17
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. . . .
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.
After a thorough review of the records on hand, we find that 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.
It can be gleaned that 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. 18
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,
thus:
Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN
BROADCASTING CORPORATION to deduct from my salary the sum of P30.00 per
month as my regular union dues and said Management and/or Cashier are further
authorize (sic) to deduct a sum equivalent to10% of all and whatever benefits that will
become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA) that
may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to
the advance that Management will make to our Union for incidental expenses such as
attorney's fees, representations and other miscellaneous expenses pursuant to Article XII
of the proposed CBA.20
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. There is, then, the presumption that such
check-off authorizations were executed voluntarily by the signatories thereto. Petitioner's contention that
the amount to be deducted is uncertain21 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.
Considering that the three requisites afforesaid for the validity of a special assessment were observed or
met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of the
CBA.
We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees Union -
ALU vs. NLRC 22 is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order of the
NLRC, holding that the validity of the five percent (5%) special assessment for attorney's fees is contrary
to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus:
The Court reads the aforecited provision 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. The purpose of the provision is to prevent
imposition on the workers of the duty to individually contribute their respective shares
in the fee to be paid the attorney for his services on behalf of the union in its negotiations
with the management. . . . [Emphasis supplied]
However, the public respondent overlooked the fact that in the said case, the deduction of the stipulated
five percent (5%) of the total economic benefits under the new collective bargaining agreement was
applied only to workers who gave their individual signed authorizations. The Court explained:
. . . And significantly, the authorized deductions affected only the workers who adopted
and signed the resolution and who were the only ones from whose benefits the
deductions were made by BPI. No similar deductions were taken from the other workers who
did not sign the resolution and so were not bound by it. [Underscoring; supplied]
While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-Calleja 23 is
inapropos in the case under scrutiny, it does not subscribe to public respondent's reasoning —
that Palacol should not be retroactively applied to the present case in the interest of justice, equity and
fairplay.24 The inapplicability of Palacol lies in the fact that it has a different factual milieu from the
present case. In Palacol, the check-off authorization was declared invalid because majority of the Union
members had withdrawn their individual authorizations, to wit:
Paragraph (o) on the other hand requires an individual written authorization duly signed
by every employee in order that 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
authorization is equivalent to no authorization at all. . . . [Emphasis; supplied]
In this case, majority of the Union members gave their individual written check-off
authorizations for the ten percent (10%) special assessment. And they have never withdrawn
their individual written authorizations for check-off.
There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case that
twenty (20)25 of the forty-two (42) petitioners executed a Compromise Agreement26 ratifying the
controversial check-off provision in the CBA.
Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling in BPIEU-
ALU vs. NLRC that (1) the prohibition against attorney's fees in Article 222, paragraph (b) of the Labor
Code applies only when the payment of attorney's fees is effected through forced contributions from the
workers; and (2) that no deductions must be taken from the workers who did not sign the check-off
authorization, applies to the case under consideration.
WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is
AFFIRMED except that no deductions shall be taken from the workers who did not give their individual
written check-off authorization. No pronouncement as to costs.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,

vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila
in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
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).2 Upon the facts agreed upon by the parties during the pre-trial conference,
the Court a quo rendered its decision on August 26, 1965, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered 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.3
From this decision, the Union appealed directly to this Court on purely questions of law, assigning the
following errors:
I. That the lower court erred when it did not rule that Republic Act No. 3350 is
unconstitutional.
II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum
of P500 as attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that
the Act infringes on the fundamental right to form lawful associations; that "the very phraseology of said
Republic Act 3350, that membership in a labor organization is banned to all those belonging to such
religious sect prohibiting affiliation with any labor organization" 4 , "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. 6
Secondly, the Union contended that Republic Act No. 3350 is 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. 7
Thirdly, the Union contended that 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; and while said Act unduly protects certain religious sects, it leaves no rights or protection to
labor organizations.8
Fourthly, 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.9
Fifthly, the Union contended that 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. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding
the promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining
agreement cannot be considered violative of religious freedom, as to call for the amendment introduced
by Republic Act No. 3350; 12and that unless Republic Act No. 3350 is declared unconstitutional, trade
unionism in this country would be wiped out as employers would prefer to hire or employ members of
the Iglesia ni Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the
right to form lawful associations, for the right to join associations includes the right not to join or to resign
from a labor organization, if one's conscience does not allow his membership therein, and the Act has
given substance to such right by prohibiting the compulsion of workers to join labor organizations; 14 that
said Act does not impair the obligation of contracts for said law formed part of, and was incorporated
into, the terms of the closed shop agreement; 15 that the Act does not violate the establishment of religion
clause or separation of Church and State, for Congress, in enacting said law, merely accommodated the
religious needs of those workers whose religion prohibits its members from joining labor unions, and
balanced the collective rights of organized labor with the constitutional right of an individual to freely
exercise his chosen religion; that the constitutional right to the free exercise of one's religion has primacy
and preference over union security measures which are merely contractual 16; that said Act does not
violate the constitutional provision of equal protection, for the classification of workers under the Act
depending on their religious tenets is based on substantial distinction, is germane to the purpose of the
law, and applies to all the members of a given class; 17 that said Act, finally, does not violate the social
justice policy of the Constitution, for said Act was enacted precisely to equalize employment
opportunities for all citizens in the midst of the diversities of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there are
some thoroughly established principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond
a reasonable doubt, that a law may work hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger must
negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or expediency
of a statute; and that a liberal interpretation of the constitution in favor of the constitutionality of
legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such
religious sects that forbid affiliation of their members with labor unions from joining labor unions
appears nowhere in the wording of Republic Act No. 3350; neither can the same be deduced by necessary
implication therefrom. It is not surprising, therefore, that appellant, having thus misread the Act,
committed the error of contending that said Act is obnoxious to the constitutional provision on freedom
of association.
Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article
III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that
the right to form associations or societies for purposes not contrary to law shall not be abridged. Section 3
of Republic Act No. 875 provides that employees shall have the right to self-organization and to form,
join of assist labor organizations of their own choosing for the purpose of collective bargaining and to
engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection.
What the Constitution and the Industrial Peace Act recognize and guarantee is the "right" to form or join
associations. Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right", it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e.,
the absence of legal restraint, whereby an employee may act for himself without being prevented by law;
and second, power, whereby an employee may, as he pleases, join or refrain from Joining an association.
It is, therefore, the employee who should decide for himself whether he should join or not an association;
and should he choose to join, he himself makes up his mind as to which association he would join; and
even after he has joined, he still retains the liberty and the power to leave and cancel his membership
with said organization at any time. 20 It is clear, therefore, that the right to join a union includes the right
to abstain from joining any union. 21 Inasmuch as what both the Constitution and the Industrial Peace Act
have recognized, and guaranteed to the employee, is the "right" to join associations of his choice, it would
be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join
associations. The law does not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act
is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by
operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which
the employer may employ only member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in order to keep their jobs. Thus
Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that
although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure
of employment or any term or condition of employment to encourage or discourage membership in any
labor organization" the employer is, however, 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". By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be
employed or to keep his employment, he must become a member of the collective bargaining union.
Hence, the right of said employee not to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious sects which prohibit affiliation of their members in
any such labor organization". Republic Act No. 3350 merely excludes ipso jure from the application and
coverage of the closed shop agreement the employees belonging to any religious sects which prohibit
affiliation of their members with any labor organization. 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. It is clear, therefore, that the
assailed Act, far from infringing the constitutional provision on freedom of association, upholds and
reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It
still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. 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.
2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its
contract, specifically, the "union security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was required as a condition for employment
for all permanent employees workers". This agreement was already in existence at the time Republic Act
No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated
into the agreement. But by reason of this amendment, Appellee, as well as others similarly situated, could
no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from the
Union, and the Company could continue employing him notwithstanding his disaffiliation from the
Union. The Act, therefore, introduced a change into the express terms of the union security clause; the
Company was partly absolved by law from the contractual obligation it had with the Union of employing
only Union members in permanent positions, It cannot be denied, therefore, that there was indeed an
impairment of said union security clause.
According to Black, any statute which introduces a change into the express terms of the contract, or its
legal construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the contract.
The extent of the change is not material. It is not a question of degree or manner or cause, but of
encroaching in any respect on its obligation or dispensing with any part of its force. There is an
impairment of the contract if either party is absolved by law from its performance. 22 Impairment has also
been predicated on laws which, without destroying contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not
absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction
to fill in the details. The prohibition is not to be read with literal exactness like a mathematical formula,
for it prohibits unreasonable impairment only. 24 In spite of the constitutional prohibition, the State
continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to
safeguarding said interests may modify or abrogate contracts already in effect. 25 For not only are existing
laws read into contracts in order to fix the obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All
contracts made with reference to any matter that is subject to regulation under the police power must be
understood as made in reference to the possible exercise of that power. 26 Otherwise, important and
valuable reforms may be precluded by the simple device of entering into contracts for the purpose of
doing that which otherwise may be prohibited. The policy of protecting contracts against impairment
presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a
government which retains adequate authority to secure the peace and good order of society. 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. 27
In several occasions this Court declared that the prohibition against impairing the obligations of contracts
has no application to statutes relating to public subjects within the domain of the general legislative
powers of the state involving public welfare. 28 Thus, this Court also held that the Blue Sunday Law was
not an infringement of the obligation of a contract that required the employer to furnish work on Sundays
to his employees, the law having been enacted to secure the well-being and happiness of the laboring
class, and being, furthermore, a legitimate exercise of the police power. 29
In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging

yardstick, applicable at all times and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must be determined upon its own
circumstances. 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. 30
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.
The questioned Act also provides protection to members of said religious sects against two aggregates of
group strength from which the individual needs protection. The individual employee, at various times in
his working life, is confronted by two aggregates of power — collective labor, directed by a union, and
collective capital, directed by management. The union, an institution developed to organize labor into a
collective force and thus protect the individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover,
when the Union interacts with management, it produces yet a third aggregate of group strength from
which the individual also needs protection — the collective bargaining relationship. 31
The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill
No. 5859, which later became Republic Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a person who, on account of his

religious beliefs and convictions, cannot accept membership in a labor organization
although he possesses all the qualifications for the job. This is tantamount to punishing
such person for believing in a doctrine he has a right under the law to believe in. The law
would not allow discrimination to flourish to the detriment of those whose religion
discards membership in any labor organization. Likewise, the law would not commend
the deprivation of their right to work and pursue a modest means of livelihood, without
in any manner violating their religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose —
exempting the members of said religious sects from coverage of union security agreements — is
reasonable.
It may not be amiss to point out here that the free exercise of religious profession or belief is superior to
contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the
United States has also declared on several occasions that the rights in the First Amendment, which
include freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and liberty, 34 and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. 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.
3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union
averred that said Act discriminates in favor of members of said religious sects in violation of Section 1 (7)
of Article Ill of the 1935 Constitution, and which is now 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.
The constitutional provision into only prohibits legislation for the support of any religious tenets or the
modes of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the
practice of any form of worship, 35 but also assures the free exercise of one's chosen form of religion
within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all
designed to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good. 36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between the religions, is invalid, even
though the burden may be characterized as being only indirect. 37 But if the stage regulates conduct by
enacting, within its power, a general law which has for its purpose and effect to advance the state's
secular goals, the statute is valid despite its indirect burden on religious observance, unless the state can
accomplish its purpose without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that 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. 40 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 purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy
and eternal. It was intended to serve the secular purpose of advancing the constitutional right to the free
exercise of religion, by averting that certain persons be refused work, or be dismissed from work, or be
dispossessed of their right to work and of being impeded to pursue a modest means of livelihood, by
reason of union security agreements. To help its citizens to find gainful employment whereby they can
make a living to support themselves and their families is a valid objective of the state. In fact, the state is
enjoined, in the 1935 Constitution, to afford protection to labor, and regulate the relations between labor
and capital and industry. 41 More so now in the 1973 Constitution where it is mandated that "the State
shall afford protection to labor, promote full employment and equality in employment, ensure equal
work opportunities regardless of sex, race or creed and regulate the relation between workers and
employers. 42
The primary effects of the exemption from closed shop agreements in favor of members of religious sects
that prohibit their members from affiliating with a labor organization, is the protection of said employees
against the aggregate force of the collective bargaining agreement, and relieving certain citizens of a
burden on their religious beliefs; and by eliminating to a certain extent economic insecurity due to
unemployment, which is a serious menace to the health, morals, and welfare of the people of the State,
the Act also promotes the well-being of society. It is our view that 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. 43 The free exercise clause of the
Constitution has been interpreted to require that religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden
that is imposed by union security agreements. It was Congress itself that imposed that burden when it
enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems advisable,
could take away the same burden. It is certain that not every conscience can be accommodated by all the
laws of the land; but when general laws conflict with scrupples of conscience, exemptions ought to be
granted unless some "compelling state interest" intervenes. 45 In the instant case, We see no such
compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves
no right to, and is silent as to the protection of, labor organizations. The purpose of Republic Act No. 3350
was not to grant rights to labor unions. The rights of labor unions are amply provided for in Republic Act
No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the rights and
protection of labor unions, suffice it to say, first, that the validity of a statute is determined by its
provisions, not by its silence 46 ; and, second, the fact that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel persons to join and remain members
of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor
unions, Congress has seen it fit to exempt religious objectors lest their resistance spread to other workers,
for religious objections have contagious potentialities more than political and philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor —
union assuming that such unity and loyalty can be attained through coercion — is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A desirable end cannot be promoted by
prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against
requiring a religious test for the exercise of a civil right or a political right, is not well taken. 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. A
conscientious religious objector need not perform a positive act or exercise the right of resigning from the
labor union — he is exempted from the coverage of any closed shop agreement that a labor union may
have entered into. How then can there be a religious test required for the exercise of a right when no right
need be exercised?
We have said that it was within the police power of the State to enact Republic Act No. 3350, and that its
purpose was legal and in consonance with the Constitution. It is never an illegal evasion of a
constitutional provision or prohibition to accomplish a desired result, which is lawful in itself, by
discovering or following a legal way to do it. 49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch
as it grants to the members of certain religious sects undue advantages over other workers, thus violating
Section 1 of Article III of the 1935 Constitution which forbids the denial to any person of the equal
protection of the laws. 50
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. The Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination as to things that
are different. 51 It does not prohibit legislation which is limited either in the object to which it is directed
or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification in law, as
in the other departments of knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not invalid because of simple
inequality. 52 The very idea of classification is that of inequality, so that it goes without saying that the
mere fact of inequality in no manner determines the matter of constitutionality. 53 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. 54 This Court has held that the standard is satisfied if the classification or distinction is based
on a reasonable foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that the
classification be based on scientific or marked differences of things or in their relation. 57 Neither is it
necessary that the classification be made with mathematical nicety. 58 Hence legislative classification may
in many cases properly rest on narrow distinctions, 59 for the equal protection guaranty does not preclude
the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may
appear.
We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies
employees and workers, as to the effect and coverage of union shop security agreements, into those who
by reason of their religious beliefs and convictions cannot sign up with a labor union, and those whose
religion does not prohibit membership in labor unions. Tile classification rests on real or substantial, not
merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs, feelings and
sentiments of employees. Employees do not believe in the same religious faith and different religions
differ in their dogmas and cannons. Religious beliefs, manifestations and practices, though they are found
in all places, and in all times, take so many varied forms as to be almost beyond imagination. There are
many views that comprise the broad spectrum of religious beliefs among the people. There are diverse
manners in which beliefs, equally paramount in the lives of their possessors, may be articulated. Today
the country is far more heterogenous in religion than before, differences in religion do exist, and these
differences are important and should not be ignored.
Even from the phychological point of view, the classification is based on real and important differences.
Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them
practical consequences and are the motives of certain rules. of human conduct and the justification of
certain acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or unhappiness its enjoyment or
irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain persons,
no single factor of their experience is more important to them than their religion, or their not having any
religion. Because of differences in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the necessities of life may be more cheerful than
the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became
resigned to the inevitable and accepted cheerfully even the most painful and excruciating pains. Because
of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution, hatred,
bloodshed and war, generated to a large extent by members of sects who were intolerant of other
religious beliefs. The classification, introduced by Republic Act No. 3350, therefore, rests on substantial
distinctions.
The classification introduced by said Act is also germane to its purpose. The purpose of the law is
precisely to avoid those who cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their work because of union shop security
agreements.
Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of
its enactment. The law does not provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the law is applicable exist. As long as
there are closed shop agreements between an employer and a labor union, and there are employees who
are prohibited by their religion from affiliating with labor unions, their exemption from the coverage of
said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this is evident from its provision.
The fact that the law grants a privilege to members of said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act only restores to them their freedom of association
which closed shop agreements have taken away, and puts them in the same plane as the other workers
who are not prohibited by their religion from joining labor unions. The circumstance, that the other
employees, because they are differently situated, are not granted the same privilege, does not render the
law unconstitutional, for every classification allowed by the Constitution by its nature involves
inequality.
The mere fact that the legislative classification may result in actual inequality is not violative of the right
to equal protection, for every classification of persons or things for regulation by law produces inequality
in some degree, but the law is not thereby rendered invalid. A classification otherwise reasonable does
not offend the constitution simply because in practice it results in some inequality. 61 Anent this matter, it
has been said that whenever it is apparent from the scope of the law that its object is for the benefit of the
public and the means by which the benefit is to be obtained are of public character, the law will be upheld
even though incidental advantage may occur to individuals beyond those enjoyed by the general
public. 62
6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social
justice is also baseless. Social justice is intended to promote the welfare of all the people. 63 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 inter-relations of the members of the community. 64 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
does not imply social equality, because social inequality will always exist as long as social relations
depend on personal or subjective proclivities. Social justice does not require legal equality because legal
equality, being a relative term, is necessarily premised on differentiations based on personal or natural
conditions. 65 Social justice guarantees equality of opportunity 66 , and this is precisely what Republic Act
No. 3350 proposes to accomplish — it gives laborers, irrespective of their religious scrupples, equal
opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not
called for — in other words, the Act is not proper, necessary or desirable. Anent this matter, it has been
held that a statute which is not necessary is not, for that reason, unconstitutional; that in determining the
constitutional validity of legislation, the courts are unconcerned with issues as to the necessity for the
enactment of the legislation in question. 67 Courts do inquire into the wisdom of laws. 68 Moreover,
legislatures, being chosen by the people, are presumed to understand and correctly appreciate the needs
of the people, and it may change the laws accordingly. 69 The fear is entertained by appellant that unless
the Act is declared unconstitutional, employers will prefer employing members of religious sects that
prohibit their members from joining labor unions, and thus be a fatal blow to unionism. We do not agree.
The threat to unionism will depend on the number of employees who are members of the religious sects
that control the demands of the labor market. But there is really no occasion now to go further and
anticipate problems We cannot judge with the material now before Us. At any rate, the validity of a
statute is to be determined from its general purpose and its efficacy to accomplish the end desired, not
from its effects on a particular case. 70 The essential basis for the exercise of power, and not a mere
incidental result arising from its exertion, is the criterion by which the validity of a statute is to be
measured. 71
II. We now pass on the second assignment of error, in support of which the Union argued that the
decision of the trial court ordering the Union to pay P500 for attorney's fees directly contravenes Section
24 of Republic Act No. 875, for the instant action involves an industrial dispute wherein the Union was a
party, and said Union merely acted in the exercise of its rights under the union shop provision of its
existing collective bargaining contract with the Company; that said order also contravenes Article 2208 of
the Civil Code; that, furthermore, Appellee was never actually dismissed by the defendant Company and
did not therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no
industrial dispute involved in the attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted intentional harm on Appellee; that since
Appellee was compelled to institute an action to protect his right to work, appellant could legally be
ordered to pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides
that:
No suit, action or other proceedings shall be maintainable in any court against a labor
organization or any officer or member thereof for any act done by or on behalf of such
organization in furtherance of an industrial dispute to which it is a party, on the ground only
that such act induces some other person to break a contract of employment or that it is in
restraint of trade or interferes with the trade, business or employment of some other
person or with the right of some other person to dispose of his capital or labor.
(Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed for appellant sought the discharge of
respondent by virtue of the closed shop agreement and under Section 2 (j) of Republic Act No. 875 a
question involving tenure of employment is included in the term "labor dispute". 74 The discharge or the
act of seeking it is the labor dispute itself. It being the labor dispute itself, that very same act of the Union
in asking the employer to dismiss Appellee cannot be "an act done ... in furtherance of an industrial
dispute". The mere fact that appellant is a labor union does not necessarily mean that all its acts are in
furtherance of an industrial dispute. 75 Appellant Union, therefore, cannot invoke in its favor Section 24 of
Republic Act No. 875. This case is not intertwined with any unfair labor practice case existing at the time
when Appellee filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides
that attorney's fees and expenses of litigation may be awarded "when the defendant's act or omission has
compelled the plaintiff ... to incur expenses to protect his interest"; and "in any other case where the court
deems it just and equitable that attorney's fees and expenses of litigation should be recovered". In the
instant case, it cannot be gainsaid that appellant Union's act in demanding Appellee's dismissal caused
Appellee to incur expenses to prevent his being dismissed from his job. Costs according to Section 1, Rule
142, of the Rules of Court, shall be allowed as a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of
First Instance of Manila, in its Civil Case No. 58894, appealed from is affirmed, with costs against
appellant Union. It is so ordered.
SUPREME COURT
Manila
THIRD DIVISION
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.
Vicente T. Ocampo & Associates for petitioners.
CORTES, J:
Primarily, the issue raised in this petition is 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.
The antecedents are as follows:
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 [Rollo, pp. 21-241].
The court a quo, on June 11, 1987, issued a temporary restraining order pending resolution of the
application for a writ of preliminary injunction [Rollo, p. 71.] In the meantime, petitioners filed a motion
to dismiss alleging the trial court's lack of jurisdiction over the subject matter [Rollo, pp. 72-82.] To this
motion, the SSS filed an opposition, reiterating its prayer for the issuance of a writ of injunction [Rollo,
pp. 209-222]. On July 22,1987, in a four-page order, the court a quo denied the motion to dismiss and
converted the restraining order into an injunction upon posting of a bond, after finding that the strike
was illegal [Rollo, pp. 83- 86]. As petitioners' motion for the reconsideration of the aforesaid order was
also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a petition for certiorari and prohibition with
preliminary injunction before this Court. Their petition was docketed as G.R. No. 79577. In a resolution
dated October 21, 1987, the Court, through the Third Division, resolved to refer the case to the Court of
Appeals. Petitioners filed a motion for reconsideration thereof, but during its pendency the Court of
Appeals on March 9,1988 promulgated its decision on the referred case [Rollo, pp. 130-137]. Petitioners
moved to recall the Court of Appeals' decision. In the meantime, the Court on June 29,1988 denied the
motion for reconsideration in G.R. No. 97577 for being moot and academic. Petitioners' motion to recall
the decision of the Court of Appeals was also denied in view of this Court's denial of the motion for
reconsideration [Rollo, pp. 141- 143]. Hence, the instant petition to review the decision of the Court of
Appeals [Rollo, pp. 12-37].
Upon motion of the SSS on February 6,1989, the Court issued a temporary restraining order enjoining the
petitioners from staging another strike or from pursuing the notice of strike they filed with the
Department of Labor and Employment on January 25, 1989 and to maintain the status quo [Rollo, pp. 151-
152].
The Court, taking the comment as answer, and noting the reply and supplemental reply filed by
petitioners, considered the issues joined and the case submitted for decision.
The position of the petitioners is that the Regional Trial Court had no jurisdiction to hear the case
initiated by the SSS and to issue the restraining order and the writ of preliminary injunction, as
jurisdiction lay with the Department of Labor and Employment or the National Labor Relations
Commission, since the case involves a labor dispute.
On the other hand, the SSS advances the contrary view, on the ground that the employees of the SSS are
covered by civil service laws and rules and regulations, not the Labor Code, therefore they do not have
the right to strike. Since neither the DOLE nor the NLRC has jurisdiction over the dispute, the Regional
Trial Court may enjoin the employees from striking.
In dismissing the petition for certiorari and prohibition with preliminary injunction filed by petitioners,
the Court of Appeals held that since the employees of the SSS, are government employees, they are not
allowed to strike, and may be enjoined by the Regional Trial Court, which had jurisdiction over the SSS'
complaint for damages, from continuing with their strike.
Thus, the sequential questions to be resolved by the Court in deciding whether or not the Court of
Appeals erred in finding that the Regional Trial Court did not act without or in excess of jurisdiction
when it took cognizance of the case and enjoined the strike are as follows:
1. Do the employees of the SSS have the right to strike?
2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS and to enjoin the
strikers from continuing with the strike and to order them to return to work?
These shall be discussed and resolved seriatim
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.
Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that "[tlhe right to self-
organization shall not be denied to government employees" [Art. IX(B), Sec. 2(5)], in answer to the
apprehensions expressed by Commissioner Ambrosio B. Padilla, Vice-President of the Commission,
explained:
MR. LERUM. I think what I will try to say will not take that long. When we proposed this
amendment providing for self-organization of government employees, it does not mean
that because they have the right to organize, they also have the right to strike. That is a
different matter. We are only talking about organizing, uniting as a union. With regard to
the right to strike, everyone will remember that in the Bill of Rights, there is a provision
that the right to form associations or societies whose purpose is not contrary to law shall
not be abridged. Now then, if the purpose of the state is to prohibit the strikes coming
from employees exercising government functions, that could be done because the
moment that is prohibited, then the union which will go on strike will be an illegal union.
And that provision is carried in Republic Act 875. In Republic Act 875, workers,
including those from the government-owned and controlled, are allowed to organize but
they are prohibited from striking. So, the fear of our honorable Vice- President is
unfounded. It does not mean that because we approve this resolution, it carries with it
the right to strike. That is a different matter. As a matter of fact, that subject is now being
discussed in the Committee on Social Justice because we are trying to find a solution to
this problem. We know that this problem exist; that the moment we allow anybody in the
government to strike, then what will happen if the members of the Armed Forces will go
on strike? What will happen to those people trying to protect us? So that is a matter of
discussion in the Committee on Social Justice. But, I repeat, the right to form an
organization does not carry with it the right to strike. [Record of the Constitutional
Commission, vol. 1, p. 569].
It will be recalled that the Industrial Peace Act (R.A. No. 875), which was repealed by the Labor Code
(P.D. 442) in 1974, expressly banned strikes by employees in the Government, including instrumentalities
exercising governmental functions, but excluding entities entrusted with proprietary functions:
.Sec. 11. Prohibition Against Strikes in the Government. — The terms and conditions of
employment in the Government, including any political subdivision or instrumentality
thereof, are governed by law and it is declared to be the policy of this Act that employees
therein shall not strike for the purpose of securing changes or modification in their terms
and conditions of employment. Such employees may belong to any labor organization
which does not impose the obligation to strike or to join in strike: Provided, however, That
this section shall apply only to employees employed in governmental functions and not
those employed in proprietary functions of the Government including but not limited to
governmental corporations.
No similar provision is found in the Labor Code, although at one time it recognized the right of
employees of government corporations established under the Corporation Code to organize and bargain
collectively and those in the civil service to "form organizations for purposes not contrary to law" [Art.
244, before its amendment by B.P. Blg. 70 in 1980], in the same breath it provided that "[t]he terms and
conditions of employment of all government employees, including employees of government owned and
controlled corporations, shall be governed by the Civil Service Law, rules and regulations" [now Art.
276]. Understandably, the Labor Code is silent as to whether or not government employees may strike,
for such are excluded from its coverage [Ibid]. But then the Civil Service Decree [P.D. No. 807], is equally
silent on the matter.
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].
But are employees of the SSS covered by the prohibition against strikes?
The Court is of the considered view that they are. 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 [NASECO v. NLRC,
G.R. Nos. 69870 & 70295, November 24,1988] 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.
The statement of the Court in Alliance of Government Workers v. Minister of Labor and Employment [G.R. No.
60403, August 3, 1:983, 124 SCRA 11 is relevant as it furnishes the rationale for distinguishing between
workers in the private sector and government employees with regard to the right to strike:
The general rule in the past and up to the present is that 'the terms and conditions of
employment in the Government, including any political subdivision or instrumentality
thereof are governed by law" (Section 11, the Industrial Peace Act, R.A. No. 875, as
amended and Article 277, the Labor Code, P.D. No. 442, as amended). Since the terms and
conditions of government employment are fixed by law, government workers cannot use the same
weapons employed by workers in the private sector to secure concessions from their
employers. The principle behind labor unionism in private industry is that industrial
peace cannot be secured through compulsion by law. Relations between private
employers and their employees rest on an essentially voluntary basis. Subject to the
minimum requirements of wage laws and other labor and welfare legislation, the terms
and conditions of employment in the unionized private sector are settled through the
process of collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the administrative heads of
government which fix the terms and conditions of employment. And this is effected
through statutes or administrative circulars, rules, and regulations, not through collective
bargaining agreements. [At p. 13; Emphasis supplied].
Apropos is the observation of the Acting Commissioner of Civil Service, in his position paper submitted
to the 1971 Constitutional Convention, and quoted with approval by the Court in Alliance, to wit:
It is the stand, therefore, of this Commission that by reason of the nature of the public
employer and the peculiar character of the public service, it must necessarily regard the
right to strike given to unions in private industry as not applying to public employees
and civil service employees. It has been stated that the Government, in contrast to the
private employer, protects the interest of all people in the public service, and that
accordingly, such conflicting interests as are present in private labor relations could not
exist in the relations between government and those whom they employ. [At pp. 16-17;
also quoted in National Housing Corporation v. Juco, G.R. No. 64313, January
17,1985,134 SCRA 172,178-179].
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."
II
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.
Neither could the court a quo be accused of imprudence or overzealousness, for in fact it had proceeded
with caution. Thus, after issuing a writ of injunction enjoining the continuance of the strike to prevent any
further disruption of public service, the respondent judge, in the same order, admonished the parties to
refer the unresolved controversies emanating from their employer- employee relationship to the Public
Sector Labor - Management Council for appropriate action [Rollo, p. 86].
III
In their "Petition/Application for Preliminary and Mandatory Injunction," and reiterated in their reply
and supplemental reply, petitioners allege that the SSS unlawfully withheld bonuses and benefits due the
individual petitioners and they pray that the Court issue a writ of preliminary prohibitive and mandatory
injunction to restrain the SSS and its agents from withholding payment thereof and to compel the SSS to
pay them. In their supplemental reply, petitioners annexed an order of the Civil Service Commission,
dated May 5, 1989, which ruled that the officers of the SSSEA who are not preventively suspended and
who are reporting for work pending the resolution of the administrative cases against them are entitled to
their salaries, year-end bonuses and other fringe benefits and affirmed the previous order of the Merit
Systems Promotion Board.
The matter being extraneous to the issues elevated to this Court, it is Our view that petitioners' remedy is
not to petition this Court to issue an injunction, but to cause the execution of the aforesaid order, if it has
already become final.
WHEREFORE, no reversible error having been committed by the Court of Appeals, the instant petition
for review is hereby DENIED and the decision of the appellate court dated March 9, 1988 in CA-G.R. SP
No. 13192 is AFFIRMED. Petitioners' "Petition/Application for Preliminary and Mandatory Injunction"
dated December 13,1988 is DENIED.
SO ORDERED.
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 79025. December 29, 1989.
BENGUET ELECTRIC COOPERATIVE, INC., petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO
EMPLOYEES LABOR UNION, respondents.
E.L. Gayo & Associates for petitioner.
CORTES, J.:
On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations
(hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and exclusive
bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc.
(hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO
has in its employ two hundred and fourteen (214) rank and file employees; that one hundred and ninety-
eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification
election has been conducted for the last 12 months; that there is no existing collective bargaining
representative of the rank and file employees sought to represented by BWLU- ADLO; and, that there is
no collective bargaining agreement in the cooperative.
An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as
BELU) contending that it was certified as the sole and exclusive bargaining representative of the subject
workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending resolution by
the National Labor Relations Commission are two cases it filed against BENECO involving bargaining
deadlock and unfair labor practice; and, that the pendency of these cases bars any representation
question.
BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric
cooperative engaged in providing electric services to its members and patron-consumers in the City of
Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not
eligible to form, join or assist labor organizations of their own choosing because they are members and
joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification
election. However, the med-arbiter limited the election among the rank and file employees of petitioner
who are non-members thereof and without any involvement in the actual ownership of the cooperative.
Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37)
employees who are not members and without any involvement in the actual ownership of the
cooperative. The dispositive portion of the med-arbiter's order is as follows:
WHEREFORE, premises considered, a certification election should be as it is hereby

ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at
Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all the
rank and file employees (non-members/consumers and without any involvement in the
actual ownership of the cooperative) with the following choices:
1. BENECO WORKERS LABOR UNION-ADLO
2. BENECO EMPLOYEES LABOR UNION
3. NO UNION
The payroll for the month of June 1985 shall be the basis in determining the qualified
voters who may participate in the certification election to be conducted.
SO ORDERED. [Rollo, pp. 22-23.]
BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March
25,1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for preliminary
injunction and /or restraining order, docketed as G.R. No. 74209, which the Supreme Court dismissed for
lack of merit in a minute resolution dated April 28, 1986.
The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO's
counsel verbally manifested that "the cooperative is protesting that employees who are members-
consumers are being allowed to vote when . . . they are not eligible to be members of any labor union for
purposes of collective bargaining; much less, to vote in this certification election." [Rollo, p. 28]. Petitioner
submitted a certification showing that only four (4) employees are not members of BENECO and insisted
that only these employees are eligible to vote in the certification election. Canvass of the votes showed
that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.
Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that
the issue as to whether or not member-consumers who are employees of BENECO could form, assist or
join a labor union has been answered in the affirmative by the Supreme Court in G.R. No. 74209, the med-
arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of Labor Relations (BLR)
director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified BELU as the sole and exclusive
bargaining agent of all the rank and file employees of BENECO.
Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of
jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General agreed
with BENECO's stance and prayed that the petition be given due course. In view of this respondent
director herself was required by the Court to file a Comment. On April 19, 1989 the Court gave due
course to the petition and required the parties to submit their respective memoranda.
The main issue in this case is whether or not respondent director committed grave abuse of discretion in
certifying respondent BELU as the sole and exclusive bargaining representtative of the rank and file
employees of BENECO.
Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least a
majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority
of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit."
Petitioner BENECO asserts that the certification election held on October 1, 1986 was null and void since
members-employees of petitioner cooperative who are not eligible to form and join a labor union for
purposes of collective bargaining were allowed to vote therein.
Respondent director and private respondent BELU on the other hand submit that members of a
cooperative who are also rank and file employees are eligible to form, assist or join a labor union
[Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99-100].
The Court finds the present petition meritorious.

The issue of whether or not employees of a cooperative are qualified to form or join a labor organization
for purposes of collective bargaining has already been resolved and clarified in the case of Cooperative
Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No. 7795, September 26,1988] and reiterated in
the cases of Batangas-Electric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386, 70880 and 74560
November 9, 1988] and San Jose City Electric Service Cooperative, Inc. v. Ministry of Labor and Employment, et
al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to collective bargaining is
not available to an employee of a cooperative who at the same time is a member and co-owner thereof.
With respect, however, to employees who are neither members nor co-owners of the cooperative they are
entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by
the 1987 Constitution and applicable statutes.
Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or
join a labor union of their own choice for purposes of collective bargaining would amount to a patent
violation of their right to self-organization. She points out that:
Albeit a person assumes a dual capacity as rank and file employee and as member of a
certain cooperative does not militate, as in the instant case, against his/her exercise of the
right to self-organization and to collective bargaining guaranteed by the Constitution and
Labor Code because, while so doing, he/she is acting in his/her capacity as rank and file
employee thereof. It may be added that while the employees concerned became members
of petitioner cooperative, their status employment as rank and filers who are hired for
fixed compensation had not changed. They still do not actually participate in the
management of the cooperative as said function is entrusted to the Board of Directors
and to the elected or appointed officers thereof. They are not vested with the powers and
prerogatives to lay down and execute managerial policies; to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees; and/or to effectively recommend
such managerial functions [Comment of Respondent Director, p. 4; Rollo, p. 125.]
Private respondent BELU concurs with the above contention of respondent director and, additionally,
claims that since membership in petitioner cooperative is only nominal, the rank and file employees who
are members thereof should not be deprived of their right to self-organization.
The above contentions are untenable. Contrary to respondents' claim, the fact that the members-
employees of petitioner do not participate in the actual management of the cooperative does not make
them eligible to form, assist or join a labor organization for the purpose of collective bargaining with
petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor
union for purposes of collective bargaining was based on the fact that as members of the cooperative they
are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an
owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v.
Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the
management thereof, which disqualifies a member from joining any labor organization within the
cooperative. Thus, irrespective of the degree of their participation in the actual management of the
cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of
collective bargaining.
Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the
constitutional protections afforded to labor, then there would be no hindrance for employers to grant, on
a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim that since
their employees are not stockholders [of the corporation], albeit in a minimal and involuntary manner,
they are now also co-owners and thus disqualified to form unions." To allow this, BELU argues, would be
"to allow the floodgates of destruction to be opened upon the rights of labor which the Constitution
endeavors to protect and which welfare it promises to promote." [Comment of BELU, p. 10; Rollo, p. 100].
The above contention of respondent union is based on the erroneous presumption that membership in a
cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise
some of the rights and privileges given to ordinary corporations provided under existing laws, such
cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No.
175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives
have rights and obligations different from those of stockholders of ordinary corporations. It was precisely
because of the special nature of cooperatives, that the Court held in the Davao City case that members-
employees thereof cannot form or join a labor union for purposes of collective bargaining. The Court held
that:
A cooperative ... is by its nature different from an ordinary business concern being run
either by persons, partnerships, or corporations. Its owners and/or members are the ones
who run and operate the business while the others are its employees. As above stated,
irrespective of the number of shares owned by each member they are entitled to cast one
vote each in deciding upon the affairs of the cooperative. Their share capital earn limited
interest. They enjoy special privileges as-exemption from income tax and sales taxes,
preferential right to supply their products to State agencies and even exemption from the
minimum wage laws.
An employee therefore of such a cooperative who is a member and co-owner thereof

cannot invoke the right to collective bargaining for certainly an owner cannot bargain
with himself or his co-owners.
It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made a
specific finding that there are only thirty-seven (37) employees of petitioner who are not members of the
cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form or join a
labor union for purposes of collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p. 22]. However,
the minutes of the certification election [Annex "C" of the Petition: Rollo, p. 28] show that a total of eighty-
three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent union. Thus,
even if We agree with respondent union's contention that the thirty seven (37) employees who were
originally non-members of the cooperative can still vote in the certification election since they were only
"forced and compelled to join the cooperative on pain of disciplinary action," the certification election
held on October 1, 1986 is still null and void since even those who were already members of the
cooperative at the time of the issuance of the med-arbiter's order, and therefore cannot claim that they
were forced to join the union were allowed to vote in the election.
Article 256 of the Labor Code provides, among others, that:
To have a valid, election, at least a majority of all eligible voters in the unit must have
cast their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all workers in the unit . . . [Italics supplied.]
In this case it cannot be determined whether or not respondent union was duly elected by the eligible
voters of the bargaining unit since even employees who are ineligible to join a labor union within the
cooperative because of their membership therein were allowed to vote in the certification election.
Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion
in certifying respondent union as the sole and exclusive bargaining representative of the rank and file
employees of petitioner cooperative.
WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director is
ANNULLED. The certification election conducted on October 1, 1986, is SET ASIDE. The Regional Office
No. 1 of San Fernando, La Union is hereby directed to immediately conduct new certification election
proceedings among the rank and file employees of the petitioner who are not members of the
cooperative.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 108855 February 28, 1996
METROLAB INDUSTRIES, INC., petitioner,

vs.
HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of the Department of
Labor and Employment and METRO DRUG CORPORATION EMPLOYEES ASSOCIATION -
FEDERATION OF FREE WORKERS, respondents.
DECISION
KAPUNAN, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the
Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and
25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-91; NCMB-NCR-NS-09-678-91)
on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers

(hereinafter referred to as the Union) is a labor organization representing the rank and file employees of
petitioner Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union
expired. The negotiations for a new CBA, however, ended in a deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc.
The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and
Mediation Board.
To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued
an assumption order dated 20 September 1991, the dispositive portion of which reads, thus:
WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as
amended, this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. -
Metro Drug Distribution Division and Metrolab Industries, Inc.
Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug
Corp.Employees Association - FFW are likewise directed to cease and desist from committing any and all
acts that might exacerbate the situation.
Finally, the parties are directed to submit their position papers and evidence on the aforequoted
deadlocked issues to this office within twenty (20) days from receipt hereof.
SO ORDERED.1 (Emphasis ours.)
On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the
CBA and ordered the parties involved to execute a new CBA.
Thereafter, the union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab
laid off 94 of its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from
implementing the mass layoff, alleging that such act violated the prohibition against committing acts that
would exacerbate the dispute as specifically directed in the assumption order. 2
On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its
management prerogative. It maintained that the company would suffer a yearly gross revenue loss of
approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract
Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of its
product "Eskinol," the number of workers required for its production is significantly reduced. 3
Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to
availability of work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of
Metrolab's 94 rank and file workers illegal and ordered their reinstatement with full backwages. The
dispositive portion reads as follows:
WHEREFORE, the Union's motion for reconsideration is granted in part, and our order of 28
December 1991 is affirmed subject to the modifications in allowances and in the close shop
provision. The layoff of the 94 employees at MII is hereby declared illegal for the failure of the
latter to comply with our injunction against committing any act which may exacerbate the
dispute and with the 30-day notice requirement. Accordingly, MII is hereby ordered to reinstate
the 94 employees, except those who have already been recalled, to their former positions or
substantially equivalent, positions with full backwages from the date they were illegally laid off
on 27 January 1992 until actually reinstated without loss of seniority rights and other benefits.
Issues relative to the CBA agreed upon by the parties and not embodied in our earlier order are
hereby ordered adopted for incorporation in the CBA. Further, the dispositions and directives
contained in all previous orders and resolutions relative to the instant dispute, insofar as not
inconsistent herein, are reiterated. Finally, the parties are enjoined to cease and desist from
committing any act which may tend to circumvent this resolution.
SO RESOLVED. 4
On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not
aggravate the dispute since no untoward incident occurred as a result thereof. It, likewise, filed a motion
for clarification regarding the constitution of the bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution,
however, was without prejudice to the outcome of the issues raised in the reconsideration and
clarification motions submitted for decision to the Secretary of Labor. 5
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its
employees on grounds of redundancy due to lack of work which the union again promptly opposed on 5
October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for
a reconsiderations.6
On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the
following orders:
xxx xxx xxx
1. MII's motion for partial reconsideration of our 14 April 1992 resolution specifically that portion
thereof assailing our ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is
hereby ordered to pay such employees their full backwages computed from the time of actual
layoff to the time of actual recall;
2. For the parties to incorporate in their respective collective bargaining agreements the
clarifications herein contained; and
3. MII's motion for reconsideration with respect to the consequences of the second wave of layoff
affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate
the dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our
resolution and no evidence had been adduced upon which a categorical finding thereon can be
based, the same is hereby referred to the NLRC for its appropriate action.
Finally, all prohititory injunctions issued as a result of our assumption of jurisdiction over this
dispute are hereby lifted.
SO RESOLVED.7
Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop
provision of the CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present
petition for certiorari with application for issuance of a Temporary Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from
enforcing and implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25
January 1993, respectively.
In its petition, Metrolab assigns the following errors:
A.
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT

COMMITTED GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN
DECLARING THE TEMPORARY LAYOFF ILLEGAL, AND ORDERING THE
REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES.*
B.
THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY

ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE
BARGAINING UNIT OF RANK AND FILE EMPLOYEES. 8
Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary
committed grave abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs
instituted by Metrolab illegal on grounds that these unilateral actions aggravated the conflict between
Metrolab and the Union who were, then, locked in a stalemate in CBA negotiations.
Metrolab argues that the Labor Secretary's order enjoining the parties from committing any act that might
exacerbate the dispute is overly broad, sweeping and vague and should not be used to curtail the
employer's right to manage his business and ensure its viability.
We cannot give credence to Metrolab's contention.
This Court recognizes the exercise of management prerogatives and often declines to interfere with the
legitimate business decisions of the employer. However, this privilege is not absolute but subject to
limitations imposed by law. 9
In PAL v. NLRC, 10 we issued this reminder:
xxx xxx xxx
. . . the exercise of management prerogatives was never considered boundless. Thus, in Cruz
vs. Medina(177 SCRA 565 [1989]), it was held that management's prerogatives must be without
abuse of discretion. . . .
xxx xxx xxx
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of
fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]) . . . . (Emphasis
ours.)
xxx xxx xxx
The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power
under the Labor Code to assume jurisdiction and resolve labor disputes involving industries
indispensable to national interest. The disputed injunction is subsumed under this special grant of
authority. Art. 263 (g) of the Labor Code specifically provides that:
xxx xxx xxx
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration. Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to enforce the same. . . . (Emphasis ours.)
xxx xxx xxx
That Metrolab's business is of national interest is not disputed. Metrolab is one of the leading
manufacturers and suppliers of medical and pharmaceutical products to the country.
Metrolab's management prerogatives, therefore, are not being unjustly curtailed but duly balanced with
and tempered by the limitations set by law, taking into account its special character and the particular
circumstances in the case at bench.
As aptly declared by public respondent Secretary of Labor in its assailed resolution:
xxx xxx xxx

MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of
management prerogatives such as layoffs. But it may nevertheless be appropriate to mention here
that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the
exacerbation of a labor dispute to the further detriment of the national interest. When a labor
dispute has in fact occurred and a general injunction has been issued restraining the commission
of disruptive acts, management prerogatives must always be exercise consistently with the
statutory objective. 11
xxx xxx xxx
Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no
untoward incident occurred after the layoffs were implemented. There were no work disruptions or
stoppages and no mass actions were threatened or undertaken. Instead, petitioner asserts, the affected
employees calmly accepted their fate "as this was a matter which they had been previously advised
would be inevitable. 12
After a judicious review of the record, we find no compelling reason to overturn the findings of the
Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of
administrative agencies supported by substantial evidence are accorded great respect and binds this
Court. 13
The Secretary of Labor ruled, thus:
xxx xxx xxx
Any act committed during the pendency of the dispute that tends to give rise to further
contentious issues or increase the tensions between the parties should be considered an act of
exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is
not needed to prove that a dispute has been exacerbated. For instance, the Union could not be
expected to file another notice of strike. For this would depart from its theory of the case that the
layoff is subsumed under the instant dispute, for which a notice of strike had already been filed.
On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic
action from the Union is to expect it to commit acts disruptive of public order or acts that may be
illegal. Under a regime of laws, legal remedies take the place of violent ones. 14
xxx xxx xxx
Protest against the subject layoffs need not be in the form of violent action or any other drastic measure.
In the instant case the Union registered their dissent by swiftly filing a motion for a cease and desist
order. Contrary to petitioner's allegations the Union strongly condemned the layoffs and threatened mass
action if the Secretary of Labor fails to timely intervene:
xxx xxx xxx
3. This unilateral action of management is a blatant violation of the injunction of this Office
against committing acts which would exacerbate the dispute. Unless such act is enjoined the
Union will be compelled to resort to its legal right to mass actions and concerted activities to
protest and stop the said management action. This mass layoff is clearly one which would result
in a very serious labor dispute unless this Office swiftly intervenes. 15
xxx xxx xxx

Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner
implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties',
attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA,
thereby aggravating the whole conflict.
We, likewise, find untenable Metrolab's contention that the layoff of the 94 rank-and-file employees was
temporary, despite the recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the
notices it sent to the affected employees and the Department of Labor and Employment. Consider the
tenor of the pertinent portions of the layoff notice to the affected employees:
xxx xxx xxx
Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng "lay-off" ng mga
empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin
ang kasama sa "lay-off" dahil wala nang trabaho para sa kanila. Mahirap tanggapin ang mga bagay na
ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad ng suweldo
kung ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad ng suweldo, mas
hihina ang ating kumpanya at mas marami ang maaaring maapektuhan.
Sa pagpapatupad ng "lay-off" susundin natin ang LAST IN-FIRST OUT policy. Ang mga
empleyadong may pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay
na rin sa nakasaad sa ating CBA na ang mga huling pumasok sa kumpanya ang unang masasama
sa "lay-off" kapag nagkaroon ng ganitong mga kalagayan.
Ang mga empleyado na kasama sa "lay-off" ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay
sa Lunes, Enero 27. Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila
sa Enero 30, 1992.
Hindi po natin matitiyak kung gaano katagal ang "lay-off", ngunit ang aming tingin ay matatagalan bago
maakaroon na dagdag na trabaho. Dahil dito, sinimulan na namin ang isang "Redundancy Program" sa
mga supervisors. Mabawasan ang mga puwesto para sa kanila, kaya sila ay mawawalan ng trabaho at
bibigyan na ng redundancy pay. 16 (Emphasis ours.)
xxx xxx xxx
We agree with the ruling of the Secretary of Labor, thus:
xxx xxx xxx
. . . MII insists that the layoff in question is temporary not permanent. It then cites International
Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice
required under Article 283 of the Labor Code need not be complied with if the employer has no
intention to permanently severe (sic) the employment relationship.
We are not convinced by this argument. International Hardware involves a case where there had
been a reduction of workload. Precisely to avoid laying off the employees, the employer therein
opted to give them work on a rotating basis. Though on a limited scale, work was available. This
was the Supreme Court's basis for holding that there was no intention to permanently severe (sic)
the employment relationship.
Here, there is no circumstance at all from which we can infer an intention from MII not to sever
the employment relationship permanently. If there was such an intention, MII could have made it
very clear in the notices of layoff. But as it were, the notices are couched in a language so
uncertain that the only conclusion possible is the permanent termination, not the continuation, of
the employment relationship.
MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While
insisting that there is really no best time to announce a bad news, (sic) it also claims that it broke
the bad news only on 27 January 1992 because had it complied with the 30-day notice, it could
have broken the bad news on 02 January 1992, the first working day of the year. If there is really
no best time to announce a bad news (sic), it wouldn't have mattered if the same was announced
at the first working day of the year. That way, MII could have at least complied with the
requirement of the law. 17
The second issue raised by petitioner merits our consideration.
In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on closed-
shop and the scope of the bargaining unit in this wise:
xxx xxx xxx
Appropriateness of the bargaining unit.
xxx xxx xxx
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows:
These aside, we reconsider our denial of the modifications which the Union proposes to
introduce on the close shop provision. While we note that the provision as presently
worded has served the relationship of the parties well under previous CBA'S, the shift in
constitutional policy toward expanding the right of all workers to self-organization should now be
formally by the parties, subject to the following exclusions only:
1. Managerial employees; and
2. The executive secretaries of the President, Executive Vice-President, Vice-President,

Vice-President for Sales, Personnel manager, and Director for Corporate Planning who
may have access to vital labor relations information or who may otherwise act in a
confidential capacity to persons who determine or formulate management policies.
The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be
modified consistently with the foregoing.
Article I (b) of the 1988-1990 CBA provides:
b) Close Shop. - All Qualified Employees must join the Association immediately upon
regularization as a condition for continued employment. This provision shall not apply
to: (i) managerial employees who are excluded from the scope of the bargaining unit; (ii)
the auditors and executive secretaries of senior executive officers, such as, the President,
Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-President for
Sales, who are excluded from membership in the Association; and (iii) those employees who
are referred to in Attachment I hereof, subject, however, to the application of the
provision of Article II, par. (b) hereof. Consequently, the above-specified employees are
not required to join the Association as a condition for their continued employment.
On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision.
The following positions in the Bargaining Unit are not covered by the Close Shop
provision of the CBA (Article I, par. b):
1. Executive Secretaries of Vice-Presidents, or equivalent positions.
2. Executive Secretary of the Personnel Manager, or equivalent Positions.
3. Executive Secretary, of the Director for Corporate Planning, or equivalent positions.
4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at
Head office, Accounting Department at Head Office, and Budget Staff, who because of
the nature of their duties and responsibilities need not join the Association as a condition
for their employment.
5. Newly-hired secretaries of Branch Managers and Regional Managers.
Both MDD and MII read the exclusion of managerial employees and executive secretaries in our
14 April 1992 resolution as exclusion from the bargaining unit. They point out that managerial
employees are lumped under one classification with executive secretaries, so that since the
former are excluded from the bargaining unit, so must the latter be likewise excluded.
This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing
the expanded scope of the right to self-organization, our intent was to delimit the types of
employees excluded from the close shop provision, not from the bargaining unit, to executive
secretaries only. Otherwise, the conversion of the exclusionary provision to one that refers to the
bargaining unit from one that merely refers to the close shop provision would effectively curtail
all the organizational rights of executive secretaries.
The exclusion of managerial employees, in accordance with law, must therefore still carry the
qualifying phrase "from the bargaining unit", in Article I (b) (i) of the 1988-1990 CBA. In the same
manner, the exclusion of executive secretaries should be read together with the qualifying phrase
"are excluded from membership in the Association" of the same Article and with the heading of
Attachment I. The latter refers to "Exclusions from Scope of Close Shop Provision" and provides
that "[t]he following positions in Bargaining Unit are not covered by the close shop provision of
the CBA."
The issue of exclusion has different dimension in the case of MII. In an earlier motion for
clarification, MII points out that it has done away with the positions of Executive Vice-President,
Vice-President for Sales, and Director for Corporate Planning. Thus, the foregoing group of
exclusions is no longer appropriate in its present organizational structure. Nevertheless, there
remain MII officer positions for which there may be executive secretaries. These include the
General Manager and members of the Management Committee, specifically i) the Quality
Assurance Manager; ii) the Product Development Manager; iii) the Finance Director; iv) the
Management System Manager; v) the Human Resources Manager; vi) the Marketing Director; vii)
the Engineering Manager., viii) the Materials Manager; and ix) the Production Manager.
xxx xxx xxx
The basis for the questioned exclusions, it should be noted, is no other than the previous CBA
between MII and the Union. If MII had undergone an organizational restructuring since then, this
is a fact to which we have never been made privy. In any event, had this been otherwise the
result would have been the same. To repeat, we limited the exclusions to recognize the expanded
scope of the right to self-organization as embodied in the Constitution. 18
Metrolab, however, maintains that executive secretaries of the General Manager and the executive
secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director,
Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager,
Materials Manager and Production Manager, who are all members of the company's Management
Committee should not only be exempted from the closed-shop provision but should be excluded from
membership in the bargaining unit of rank and file employees as well on grounds that their executive
secretaries are confidential employees, having access to "vital labor information." 19
We concur with Metrolab.
Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence has extended this prohibition to confidential
employees or those who by reason of their positions or nature of work are required to assist or act in a
fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly
confidential records.
The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file
employees and their disqualification to join any labor organization was succinctly discussed in Philips
Industrial Development v. NLRC: 21
xxx xxx xxx
On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave
abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that
PIDI's "Service Engineers, Sales Force, division secretaries, all Staff of General Management,
Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems
are included within the rank and file bargaining unit."
In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously disputed
by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them
as confidential employees. By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the rationale behind the ineligibility
of managerial employees to form, assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this court elaborated on this rationale,
thus:
. . . The rationale for this inhibition has been stated to be, because if these managerial
employees would belong to or be affiliated with a Union, the latter might not be assured
of their loyalty to the Union in view of evident conflict of interests. The union can also
become company-dominated with the presence of managerial employees in Union
membership.
In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to
confidential employees:
This rationale holds true also for confidential employees such as accounting personnel,
radio and telegraph operators, who having access to confidential information, may
become the source of undue advantage. Said employees may act as a spy or spies of
either party to a collective bargaining agreement. This is specially true in the present case
where the petitioning Union is already the bargaining agent of the rank-and-file
employees in the establishment. To allow the confidential employees to join the existing
Union of the rank-and-file would be in violation of the terms of the Collective Bargaining
Agreement wherein this kind of employees by the nature of their functions/positions are
expressly excluded.
xxx xxx xxx
Similarly, in National Association of Trade Union-Republic Planters Bank Supervisors Chapter

v. Torres 22 we declared:
xxx xxx xxx
. . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers
and Controllers are confidential employees, having control, custody and/or access to
confidential matters, e.g., the branch's cash position, statements of financial condition,
vault combination, cash codes for telegraphic transfers, demand drafts and other
negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding
joint custody, this claim is not even disputed by petitioner. A confidential employee is
one entrusted with confidence on delicate matters, or with the custody, handling, or care
and protection of the employer's property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form any labor organization, under
the doctrine of necessary implication, confidential employees are similarly disqualified. .
..
xxx xxx xxx
. . . (I)n 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 interest are
well protected. The employer is not assured of such protection if these employees
themselves are union members. Collective bargaining in such a situation can become
one-sided. It is the same reason that impelled this Court to consider the position of
confidential employees as included in the disqualification found in 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. It is not farfetched that in the course of
collective bargaining, they might jeopardize that interest which they are duty-bound to
protect. . . .
xxx xxx xxx
And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor, 23 we ruled that:
xxx xxx xxx
Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is
basically routinary and clerical. However, they should be, differentiated from rank-and-file
employees because they are tasked with, among others, the typing of legal documents,
memoranda and correspondence, the keeping of records and files, the giving of and receiving
notices, and such other duties as required by the legal personnel of the corporation. Legal
secretaries therefore fall under the category of confidential employees. . . .
xxx xxx xxx
We thus hold that public respondent acted with grave abuse of discretion in not excluding the
four foremen and legal secretary from the bargaining unit composed of rank-and-file employees.
xxx xxx xxx
In the case at bench, the Union does not disagree with petitioner that the executive secretaries are
confidential employees. It however, makes the following contentions:
xxx xxx xxx
There would be no danger of company domination of the Union since the confidential employees
would not be members of and would not participate in the decision making processes of the
Union.
Neither would there be a danger of espionage since the confidential employees would not have
any conflict of interest, not being members of the Union. In any case, there is always the danger
that any employee would leak management secrets to the Union out of sympathy for his fellow
rank and filer even if he were not a member of the union nor the bargaining unit.
Confidential employees are rank and file employees and they, like all the other rank and file
employees, should be granted the benefits of the Collective Bargaining Agreement. There is no
valid basis for discriminating against them. The mandate of the Constitution and the Labor Code,
primarily of protection to Labor, compels such conclusion. 24
xxx xxx xxx
The Union's assurances fail to convince. The dangers sought to be prevented, particularly the threat of
conflict of, interest and espionage, are not eliminated by non-membership of Metrolab's executive
secretaries or confidential employees in the Union. Forming part of the bargaining unit, the executive
secretaries stand to benefit from any agreement executed between the Union and Metrolab. Such a
scenario, thus, gives rise to a potential conflict between personal interests and their duty as confidential
employees to act for and in behalf of Metrolab. They do not have to be union members to affect or
influence either side.
Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature
of employment of confidential employees is quite distinct from the rank and file, thus, warranting a
separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is
not tantamount to discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public
respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the
extent that executive secretaries of petitioner Metrolab's General Manager and the executive secretaries of
the members of its Management Committee are excluded from the bargaining unit of petitioner's rank
and file employees.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 110399 August 15, 1997
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE,
President, petitioners,
vs.
HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF
LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-
ARBITER AND SAN MIGUEL CORPORATION, respondents.
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse
and set aside the Order of public respondent, Undersecretary of the Department of Labor and
Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-911 entitled "In
Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel
Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation
Supervisors and Exempt Union, Petitioner." The Order excluded the employees under supervisory levels
3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their
participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a
Petition for Direct Certification or Certification Election among the supervisors and exempt employees of
the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of
certification election among the supervisors and exempt employees of the SMC Magnolia Poultry
Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on
Appeal, pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate
plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3
and above whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company's
Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be included in the appropriate bargaining unit.
Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the
reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification
elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees
in each of the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration
with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the
doctrine enunciated in Philips Industrial Development, Inc. v. NLRC 2 case. Said Order reads in part:
. . . Confidential employees, like managerial employees, are not allowed to form, join or
assist a labor union for purposes of collective bargaining.
In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or assist a labor
union for purposes of collective bargaining following the above court's ruling.
Consequently, they are not allowed to participate in the certification election.
WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03
September 1991 is hereby modified to the extent that employees under supervisory levels
3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the
proposed bargaining unit and are therefore excluded from those who could participate in
the certification election. 3
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and the exempt employees of

the company are considered confidential employees, hence ineligible
from joining a union.
2. If they are not confidential employees, do the employees of the three

plants constitute an appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term "confidential
employees" who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt employees, are not vested with
the powers and prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified
as managerial employees who, under Article 245 4 of the Labor Code, are not eligible to join, assist or
form any labor organization. In the very same provision, they are not allowed membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor organizations of
their own. The only question that need be addressed is whether these employees are properly classified
as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who
formulate, determine, and effectuate management policies in the field of labor relations. 5 The two criteria
are cumulative, and both must be met if an employee is to be considered a confidential employee — that
is, the confidential relationship must exist between the employee and his supervisor, and the supervisor
must handle the prescribed responsibilities relating to labor relations. 6
The exclusion from bargaining units of employees who, in the normal course of their duties, become
aware of management policies relating to labor relations is a principal objective sought to be
accomplished by the ''confidential employee rule." The broad rationale behind this rule is that employees
should not be placed in a position involving a potential conflict of interests. 7 "Management should not be
required to handle labor relations matters through employees who are represented by the union with
which the company is required to deal and who in the normal performance of their duties may obtain
advance information of the company's position with regard to contract negotiations, the disposition of
grievances, or other labor relations matters." 8
There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto
Sanchez, 9 the Court held that "if these managerial employees would belong to or be affiliated with a
Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest.
The Union can also become company-dominated with the presence of managerial employees in Union
membership." The same rationale was applied to confidential employees in "Golden Farms, Inc. v. Ferrer-
Calleja" 10 and in the more recent case of "Philips Industrial Development, Inc. v. NLRC" 11 which held that
confidential employees, by the very nature of their functions, assist and act in a confidential capacity to,
or have access to confidential matters of, persons who exercise managerial functions in the field of labor
relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a
labor union was held equally applicable to them. 12
An important element of the "confidential employee rule" is the employee's need to use labor relations
information. Thus, in determining the confidentiality of certain employees, a key question frequently
considered is the employee's necessary access to confidential labor relations information. 13
It is the contention of respondent corporation that Supervisor employees 3 and 4 and the exempt
employees come within the meaning of the term "confidential employees" primarily because they
answered in the affirmative when asked "Do you handle confidential data or documents?" in the Position
Questionnaires submitted by the Union. 14 In the same questionnaire, however, it was also stated that the
confidential information handled by questioned employees relate to product formulation, product
standards and product specification which by no means relate to "labor relations." 15
Granting arguendo that an employee has access to confidential labor relations information but such is
merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties,
said access does not render the employee a confidential employee. 16 "If access to confidential labor
relations information is to be a factor in the determination of an employee's confidential status, such
information must relate to the employer's labor relations policies. Thus, an employee of a labor union, or
of a management association, must have access to confidential labor relations information with respect to
his employer, the union, or the association, to be regarded a confidential employee, and knowledge of
labor relations information pertaining to the companies with which the union deals, or which the
association represents, will not cause an employee to be excluded from the bargaining unit representing
employees of the union or association." 17 "Access to information which is regarded by the employer to be
confidential from the business standpoint, such as financial information 18 or technical trade secrets, will
not render an employee a confidential employee." 19
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift

operations when situations require.
2. To effectively oversee the quality control function at the processing

lines in the storage of chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct

manufacturing materials.
5. To recommend and initiate actions in the maintenance of sanitation

and hygiene throughout the plant. 20
It is evident that whatever confidential data the questioned employees may handle will have to relate to
their functions. From the foregoing functions, it can be gleaned that the confidential information said
employees have access to concern the employer's internal business operations. As held in Westinghouse
Electric Corporation v. National Labor Relations Board, 21 "an employee may not be excluded from
appropriate bargaining unit merely because he has access to confidential information concerning
employer's internal business operations and which is not related to the field of labor relations."
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to
guarantee to "all" workers the right to self-organization. Hence, confidential employees who may be
excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees
of their right to bargain collectively through representatives of their choosing. 22
In the case at bar, supervisors 3 and above may not be considered confidential employees merely because
they handle "confidential data" as such must first be strictly classified as pertaining to labor relations for
them to fall under said restrictions. The information they handle are properly classifiable as technical and
internal business operations data which, to our mind, has no relevance to negotiations and settlement of
grievances wherein the interests of a union and the management are invariably adversarial. Since the
employees are not classifiable under the confidential type, this Court rules that they may appropriately
form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are
confidential employees, jurisprudence has established that there is no legal prohibition against
confidential employees who are not performing managerial functions to form and join a union. 23
In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be
threshed out.
It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each
for Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-
company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three
plants have a similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised
of all or less than all of the entire body of employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the
law." 24
A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects of collective bargaining. 25
It is readily seen that the employees in the instant case have "community or mutuality of interests," which
is the standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed
that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that,
although they belong to three different plants, they perform work of the same nature, receive the same
wages and compensation, and most importantly, share a common stake in concerted activities.
In light of these considerations, the Solicitor General has opined that separate bargaining units in the
three different plants of the division will fragmentize the employees of the said division, thus greatly
diminishing their bargaining leverage. Any concerted activity held against the private respondent for a
labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of
the private respondent. The two other plants still in operation can well step up their production and
make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will
clearly frustrate the provisions of the Labor Code and the mandate of the Constitution. 27
The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis,
Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be
completely disregarded if the communal or mutual interests of the employees are not sacrificed as
demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employee of the University of
the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were
allowed to participate in a certification election. We rule that the distance among the three plants is not
productive of insurmountable difficulties in the administration of union affairs. Neither are there regional
differences that are likely to impede the operations of a single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-
Arbiter on December 19, 1990 is REINSTATED under which a certification election among the
supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 121084 February 19, 1997
TOYOTA MOTOR PHILIPPINES CORPORATION , petitioner,

vs.
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF
LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J.:
On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a
petition for certification election with the Department of Labor, National Capital Region, for all rank-and-
file employees of the Toyota Motor Corporation.1
In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the issuance of an
Order directing the holding of a certification election on two grounds: first, that the respondent union,
being "in the process of registration" had no legal personality to file the same as it was not a legitimate
labor organization as of the date of the filing of the petition; and second, that the union was composed of
both rank-and-file and supervisory employees in violation of law.2 Attached to the position paper was a
list of union members and their respective job classifications, indicating that many of the signatories to
the petition for certification election occupied supervisory positions and were not in fact rank-and-file
employees.3
The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for
lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor organization's
membership was composed of supervisory and rank-and-file employees in violation of Article 245 of the
Labor Code,4 and that at the time of the filing of its petition, respondent union had not even acquired
legal personality yet.5
On appeal, the Office of the Secretary of Labor, in a Resolution 6 dated November 9, 1993 signed by
Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993, and
directed the holding of a certification election among the regular rank.-and-file employees of Toyota
Motor Corporation. In setting aside the questioned Order, the Office of the Secretary contended that:
Contrary to the allegation of herein respondent-appellee, petitioner-appellant was

already a legitimate labor organization at the time of the filing of the petition on 26
November 1992. Records show that on 24 November 1992 or two (2) days before the
filing of the said petition, it was issued a certificate of registration.
We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed
the petition for certification election based on the ground that the proposed bargaining
unit is a mixture of supervisory and rank-and-file employees, hence, violative of Article
245 of the Labor Code as amended.
A perusal of the petition and the other documents submitted by petitioner-appellant will
readily show that what the former really seeks to represent are the regular rank-and-file
employees in the company numbering about 1,800 more or less, a unit which is obviously
appropriate for bargaining purposes. This being the case, the mere allegation of
respondent-appellee that there are about 42 supervisoy employees in the proposed
bargaining unit should have not caused the dismissal of the instant petition. Said issue
could very well be taken cared of during the pre-election conference where
inclusion/exclusion proceedings will be conducted to determine the list of eligible
voters.7
Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for
Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of
petition for certification election, respondent TMPCLU had not yet acquired the status of a legitimate
labor organization as required by the Labor Code, and that the proposed bargaining unit was
inappropriate.
Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside its
earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised by
petitioner both on appeal and in its motion for reconsideration were factual issues requiring further
hearing and production of evidence.8 The Order stated
We carefully re-examined the records vis-a-vis the arguments raised by the movant, and
we note that movant correctly pointed out that petitioner submitted a copy of its
certificate of registration for the first time on appeal and that in its petition, petitioner
alleges that it is an independent organization which is in the process of registration."
Movant strongly argues that the foregoing only confirms what it has been pointing out
all along, that at the time the petition was filed petitioner is (sic) not yet the holder of a
registration certificate; that what was actually issued on 24 November 1992 or two (2)
days before the filing of the petition was an official receipt of payment for the application
fee; and, that the date appearing in the Registration certificate which is November 24,
1992 is not the date when petitioner was actually registered, but the date when the
registration certificate was prepared by the processor. Movant also ratiocinates that if
indeed petitioner has been in possession of the registration certificate at the time this
petition was filed on November 26, 1992, it would have attached the same to the petition.
The foregoing issues are factual ones, the resolution of which is crucial to the petition.
For if indeed it is true that at the time of filing of the petition, the said registration
certificate has not been approved yet, then, petitioner lacks the legal personality to file
the petition and the dismissal order is proper. Sadly, we can not resolve the said
questions by merely perusing the records. Further hearing and introduction of evidence
are required. Thus, there is a need to remand the case to the Med-Arbiter solely for the
purpose.
WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let
the case be remanded to the Med-Arbiter for the purpose aforestated.
SO ORDERED.9
Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on
September 28, 1994, stating the following: 10
[T]he controvertible fact is that petitioner could not have been issued its Certificate of
Registration on November 24, 1992 when it applied for registration only on November
23, 1992 as shown by the official receipt of payment of filing fee. As Enrique Nalus, Chief
LEG, this office, would attest in his letter dated September 8, 1994 addressed to Mr.
Porfirio T. Reyes, Industrial Relations Officer of respondent company, in response to a
query posed by the latter, "It is unlikely that an application for registration is approved
on the date that it is filed or the day thereafter as the processing course has to pass
thought routing, screening, and assignment, evaluation, review and initialing, and
approval/disapproval procedure, among others, so that a 30-day period is provided for
under the Labor Code for this purpose, let alone opposition thereto by interested parties
which must be also given due course.
Another evidence which petitioner presented. . . is the "Union Registration 1992 Logbook
of IRD". . . and the entry date November 25, 1992 as allegedly the date of the release of
the registration certificate. . . On the other hand, respondent company presented . . . a
certified true copy of an entry on page 265 of the Union Registration Logbook showing
the pertinent facts about petitioner but which do not show the petitioner's registration
was issued on or before November 26, 1992. 11
Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that respondent
TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its) petition." 12
On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a certification
election among the regular rank-and-file employees of the Toyota Motor Philippines
Corporation. 13 Petitioner's motion for reconsideration was denied by public respondent in his Order
dated July 14, 1995.14
Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where petitioner
contends that "the Secretary of Labor and Employment committed grave abuse of discretion amounting
to lack or excess of jurisdiction in reversing, contrary to law and facts the findings of the Med-Arbiters to
the effect that: 1) the inclusion of the prohibited mix of rank-and file and supervisory employees in the
roster of members and officers of the union cannot be cured by a simple inclusion-exclusion proceeding;
and that 2) the respondent union had no legal standing at the time of the filing of its petition for
certification election. 15
We grant the petition.
The purpose of every certification election is to determine the exclusive representative of employees in an
appropriate bargaining unit for the purpose of collective bargaining. A certification election for the
collective bargaining process is one of the fairest and most effective ways of determining which labor
organization can truly represent the working force. 16 In determining the labor organization which
represents the interests of the workforce, those interests must be, as far as reasonably possible,
homogeneous, so as to genuinely reach the concerns of the individual members of a labor organization.
According to Rothenberg, 17 an appropriate bargaining unit is a group of employees of a given employer,

composed of all or less than 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 law. In Belyca Corporation v. Ferrer
Calleja, 18 we defined the bargaining unit as "the legal collectivity for collective bargaining purposes
whose members have substantially mutual bargaining interests in terms and conditions of employment
as will assure to all employees their collective bargaining rights." This in mind, the Labor Code has made
it a clear statutory policy to prevent supervisory employees from joining labor organizations consisting of
rank-and-file employees as the concerns which involve members of either group are normally disparate
and contradictory. Article 245 provides:
Art. 245 Ineligibility of managerial employees to join any labor organization; right of
supervisory employees. — Managerial Employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.
Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory
employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor organization, including the right to file a
petition for certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor organization is challenged on the
basis of Article 245 of the Labor Code.
It is the petitioner's contention that forty-two (42) of the respondent union's members, including three of
its officers, occupy supervisory positions 19 In its position paper dated February 22, 1993, petitioner
identified fourteen (14) union members occupying the position of Junior Group Chief 11 20 and twenty-
seven (27) members in level five positions. Their respective job-descriptions are quoted below:
LEVEL 4 (JUNIOR GROUP CHIEF II) — He is responsible for all operators and assigned
stations, prepares production reports related to daily production output. He oversees
smooth flow of production, quality of production, availability of manpower, parts and
equipments. He also coordinates with other sections in the Production Department.
LEVEL 5 — He is responsible for overseeing initial production of new models, prepares

and monitors construction schedules for new models, identifies manpower requirements
for production, facilities and equipment, and lay-out processes. He also oversees other
sections in the production process (e.g. assembly, welding, painting)." (Annex "V" of
Respondent TMP's Position Paper; which is the Job Description for an Engineer holding
Level 5 position in the Production Engineering Section of the Production Planning and
Control Department).
While there may be a genuine divergence of opinion as to whether or not union members occupying
Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the Labor Code's
definition of the term that those occupying Level 5 positions are unquestionably supervisory employees.
Supervisory employees, as defined above, are those who, in the interest of the employer, effectively
recommend managerial actions if the exercise of such authority is not merely routinary or clerical in
nature but require the use of independent judgment. 21Under the job description for level five employees,
such personnel — all engineers — having a number of personnel under them, not only oversee
production of new models but also determine manpower requirements, thereby influencing important
hiring decisions at the highest levels. This determination is neither routine nor clerical but involves the
independent assessment of factors affecting production, which in turn affect decisions to hire or transfer
workers. The use of independent judgment in making the decision to hire, fire or transfer in the
identification of manpower requirements would be greatly impaired if the employee's loyalties are torn
between the interests of the union and the interests of management. A supervisory employee occupying a
level five position would therefore find it difficult to objectively identify the exact manpower
requirements dictated by production demands.
This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees on
one hand, and supervisory employees on the other, seeks to avoid. The rationale behind the Code's
exclusion of supervisors from unions of rank-and-file employees is that such employees, while in the
performance of supervisory functions, become the alter ego of management in the making and the
implementing of key decisions at the sub-managerial level. Certainly, it would be difficult to find unity or
mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory
employees. And this is so because the fundamental test of a bargaining unit's acceptability is whether or
not such a unit will best advance to all employees within the unit the proper exercise of their collective
bargaining rights. 22 The Code itself has recognized this, in preventing supervisory employees from
joining unions of rank-and-file employees.
In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions. the union could not, prior to purging itself of its
supervisory employee members, attain the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for certification election.
The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to whether or
not respondent union was in possession of the status of a legitimate labor organization at the time of filing,
when, as petitioner vigorously claims, the former was still at the stage of processing of its application for
recognition as a legitimate labor organization. The union's composition being in violation of the Labor
Code's Prohibition of unions composed of supervisory and rank-and-file employees, it could not possess
the requisite personality to file for recognition as a legitimate labor organization. In any case, the factual
issue, albeit ignored by the public respondent's assailed Resolution, was adequately threshed out in the
Med-Arbiter's September 28, 1994 Order
The holding of a certification election is based on clear statutory policy which cannot be
circumvented. 23 Its rules, strictly construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development Corporation v. Secretary, Department of Labor
and Employment, 24 the Court's conclusion should not be interpreted as impairing any union's right to be
certified as the employees' bargaining agent in the petitioner's establishment. Workers of an appropriate
bargaining unit must be allowed to freely express their choice in an election where everything is open to
sound judgment and the possibility for fraud and misrepresentation is absent. 25
WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order dated
July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated September 28,
1994 of the Med-Arbiter is REINSTATED.
SO ORDERED.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 125195 July 17, 1997
SAMAHAN NG MGA MANGGAGAWA SA BANDOLINO-LMLC (represented by Lauro de Leon,

President) and ROMEO REYES, LAURO DE LEON, JAIME SIBUG, ROLANDO RAMOS, FREDDIE
ACAMPADO, REYNALDO DE LA PAZ, ELIAS CABRIA, JOHNNY FLORENCIO, EMELITA
BATOON, CORAZON REYES, DANIEL MARISCOTES, REGOLITO BANAGA, JOSELITO TAPAR,
JOSE TUGAY, MARCIAL B. FRANCO, SALVADOR LLABRES, LIGAYA FRANCO, AUREA B.
BONON, ADORACION C. BROZO, CAMILA TUGA, ROMULO G. ALMONITE, JACINTO
RODRIGUEZ, JR., ROSALINDA FLORENCIO, and EMMA BROZO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, BANDOLINO SHOE CORPORATION and/or
GERMAN ALCANTARA, AIDA ALCANTARA, and MIMI ALCANTARA, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision of the National Labor Relations Commission
(NLRC), dated May 31, 1995, which reversed the decision of the labor arbiter, dated July 22, 1992, finding
petitioners to have been illegally dismissed and consequently ordering their reinstatement and the
payment to them of their monetary claims.
The facts are as follows:
Petitioners are former employees of private respondent Bandolino Shoe Corporation and members of
petitioner union, Samahan ng Manggagawa sa Bandolino-LMLC. Private respondents German Alcantara,
Aida Alcantara, and Mimi Alcantara are the owners and officers of Bandolino Shoe Corporation.
On June 4, 1990, petitioners Marcial Franco, Johnny Florencio, and Romeo Reyes were directed to take a
two-week leave because of a strike at the Shoemart, Bandolino's biggest customer. Apparently, the strike
adversely affected private respondents' business. Petitioners were told by management that, should the
circumstances improve, they would be recalled to work after two weeks.
Later that day, petitioner Marcial Franco and his wife were called to the personnel manager's office and
told that Ligaya Franco had been dismissed. Marcial Franco pleaded with German Alcantara not to
terminate his wife from employment, but his entreaties were rejected, allegedly because of his refusal to
divulge the names of the organizers and members of the petitioner union. Three other relatives, namely
Emma Brozo, Adoracion Brozo, and Aurea Bonon, were subsequently dismissed.
On June 9, 1990, the other petitioners were likewise informed by the personnel manager of the
termination of their employment and asked to turn in their identification cards.
The petitioners tried to return to work after two weeks on June 11, 1990, but they were refused entry into
the company premises. Subsequent efforts to return to work were likewise thwarted. The management
refused to allow them to return to work allegedly to prevent any untoward incident between the
petitioner union and the Bandolino Shoes Independent Labor Union.
On June 11, 1990, petitioners filed a notice of strike. A conciliation conference was held but it was
unsuccessful. Although petitioners did not strike, they stage a picket for one hour each on two successive
Saturdays to protest their dismissal.
On August 22, 1990, they filed a complaint for illegal dismissal, unfair labor practice, underpayment,
overtime pay, and holiday pay. At the initial conference, the labor arbiter issued a return to work order to
the private respondents based on the private respondents' claim that they had not dismissed petitioners.
But petitioners were not allowed to work by private respondents. The labor arbiter's efforts to get the
parties to settle their dispute amicably proved unavailing, as the private respondents imposed conditions
unacceptable to petitioners. As private respondents themselves stated in their position paper date
November 27, 1990, "management was willing to allow complainants to report for work immediately . . .
if complainants were willing to forego their strike and Petition for Certification and to recognize the
majority representation status of the existing Union (then uncertified)," but they were not.
On July 22, 1992, the Labor Arbiter, Potenciano S. Cañizares, Jr., decided the case in favor of petitioners.
He found that petitioners had been illegally dismissed because of their union activities and that private
respondents had committed unfair labor practice. Although private respondents claimed to have merely
placed petitioners on "rotation" because of the Shoermart strike, the labor arbiter found that even after the
end of the strike, petitioners were still not allowed to return to work. Referring to private respondents'
position paper, the labor arbiter found that private respondents had imposed illegal conditions on
petitioners reinstatement by requiring them to forego their intended strike, withdraw their petition for
certification election, and instead recognize the existing union. On the basis and noting that during the
hearings private respondents' counsel subjected the petitioners to a barrage of questioning regarding
their union activities, the labor arbiter concluded that private respondents were guilty of unfair labor
practice for having restrained the petitioners' exercise of the right to self-organization. Accordingly, the
labor arbiter ordered:
WHEREFORE, judgment is hereby rendered:
1. Declaring the respondents guilty of unfair labor practice and ordering the respondents to cease
and desist from further committing the ULP acts as charged;
2. Ordering the respondents to reinstate the complainants in their previous jobs and to pay them
backwages for one (1) year without qualifications or deductions for earning elsewhere during
their illegal dismissal.
The aspect of reinstatement, either in the job or payroll at the option of the respondents, pursuant
to Article 223 of the Labor Code, being immediately executory, the respondents are hereby
directed to reinstate the complainants either way upon their presentation of themselves for work.
3. Ordering the respondents to pay the complainants salary differential and legal holiday pay.
The following are the monetary awards as computed by Ma. Cristina T. Paraoan of the
Commission's Research and Information Unit:
1. ROMULO ALMONTE P 43,087.76
2. REGOLITO BAÑAGA 53,953.93
3. EMELITA BATOON 43,533.46
4. ELIAS ECABRIA 42,229.72
5. LAURO DE LEON 45,499.32

6. NILDA DELGADO 32,625.72
7. JOHNNY FLORENCIO 45,499.72
8. MARCIAL FRANCO 43,147.72
9. SALVADOR LLABRES 44,915.32
10. ROSALINA FLORENCIO 37,564.85
11. DANIEL MARISCOTES 44,639.72
12. ROLANDO MATRE 44,713.52
13. VIRGINIA PEDRACIO 54,498.96
14. ROLANDO RAMOS 44,772.60
15. CORAZON REYES 58,868.46
16. ROMEO REYES 56,779.27
17. JACINTO RODRIGUEZ, JR. 37,674.12
18. CAROLINA SANTIAGO 35,257.14
19. JAIME SIBUG 32,453.72
20. MARITA SORIANO 37,900.72
21. CAMILA TUGAY 39,046.68
The claim for overtime pay is hereby dismissed for lack of sufficient evidence.
Pursuant to the decision of the labor arbiter, private respondents sent telegrams, dated August 29, 1992,
to the petitioners ordering them to —
REPORT TO WORK IMMEDIATELY AT 131 LOPEZ JAENA ST. JESUS DELA PEÑA,
MARIKINA. FAILURE TO DO SO WITHIN TEN (10) DAYS SHALL BE INTERPRETED THAT
YOU ARE NO LONGER TO INTERESTED TO WORK HERE.1
In a letter dated September 3, 1992, petitioners responded, thus:
While all the complainants are ready and willing to return to work at the soonest time possible
and while we do not in any way reject the scheduled reinstatement, it may not be possible within
the time frame stated by you in the telegram.
Inasmuch as there are more than four members of the union, in fact more than twenty (20), who
are entitled to reinstatement; and inasmuch as there are other aspects of the decision of the labor
arbiter covering the above-stated case which have to be discussed, we hereby propose that a
conference be held between the arbiter, the union leaders and managements' representatives in
order that all concerned will be able to thresh out these matters and prepare for a smooth and
amicable implementation of the decision in the above-mentioned case.
In this connection, a motion for immediate execution of the decision of the arbiter has been filed
in behalf of the complainant and a conference on the basis of this motion will be set by Arbiter
Cañizares to be held before him at the NLRC. A copy of the motion has been sent you and your
office will be notified of the date of the conference. 2
In response, private respondents wrote:
We are of the considered opinion that, since you have already admitted in behalf of the
complainants that they are ready and willing to report for work and do not reject the scheduled
reinstatement, there is no justifiable reason why they should not immediately return to work and
cause unnecessary delay.
xxx xxx xxx
Considering that both parties have already appealed the decision and that respondent has
already posted a surety bond, nothing is left then to be done but to follow the legitimate order of
Bandolino's management for the return of the complainants. The request for a conference, to be
mediated by the Honorable Arbiter Cañizares is not necessary since once an order has been
appealed, the Honorable Arbiter loses his jurisdiction.
And, considering further, that two (2) months have already lapsed from the time the decision was
promulgated and more than a month from the time the telegram was sent individually, the
interest and desire to return to work by your clients is surely doubtful and highly questionable. 3
Private respondents appealed to the NLRC, contending that the "rotation" of petitioners was not a
termination of employment; that petitioners did not report for work although they had been reinstated;
and that the labor arbiter's finding that the company imposed illegal conditions was based upon an "off
the record" offer which was privileged in nature and therefore could not be used in evidence against
private respondents. According to private respondents, petitioners' lay off because of the "rotation"
scheme could not be considered union busting because it was adopted in 1989, before the registration of
petitioner union as an affiliate of Lakas ng Manggagawa Labor Center (LMLC) on November 7, 1990.
They contended that the monetary awards had no basis.
In its decision dated May 31, 1995, the NLRC revised the labor arbiter. It ruled that except for Jaime
Sibug, petitioners were all piece-rate-workers entitled only to 13th month pay for three years. It held
further that there was no evidence showing specific instances of coercion or restraint committed by the
private respondents to justify finding of ULP. The NLRC gave credence instead to private respondents'
claim that, at the time the "rotation scheme" was implemented, they did not know that petitioner union
was registered or that the petitioners were the organizers; and that petitioners misrepresented that their
union was a member of the LMLC, when in fact it was only on November 7, 1990 that they affiliated with
the LMLC. The NLRC found that petitioners organized a union only after the implementation of the 1990
"rotation scheme." The NLRC agreed with the private respondents' claim that the "off the record" offer
made by them constitutes privileged communication and that under Art. 233 of the Labor Code it cannot
be taken in evidence against them. The NLRC therefore ruled that "There being no other evidence to
support the claim of ULP, such finding must be overturned." Hence, this petition.
Petitioners contend that the NLRC acted with grave abuse of discretion in reversing the labor arbiter's
findings. They contend that the labor arbiter's decision finding that they had been illegally dismissed is
supported by other evidence and not only the conditions attached to the offer, namely (1) that petitioners'
non-reinstatement even after the end of the Shoemart strike contradicts the claim of private respondents
that petitioners were merely put on "rotation" because business was poor on account of the Shoemart
strike and (2) that the order to petitioners to turn in their ID cards implied termination of their
employment. Petitioners also maintain that the offer of reinstatement made by private respondents at the
hearing was properly used as evidence of ULP because private respondents themselves adverted to the
offer in their position paper and therefore took the conditions attached to their offer out of the ambit of
privileged communication. They contend finally that it was error for the NLRC to rule that private
respondents did not commit unfair labor practice because, at that time, there was yet no union of
petitioners. Petitioners contend that under the ruling in Judric Canning Corp. vs. Inciong,4 restraint or
coercion may be employed even prior to the registration of a union.
While generally speaking factual findings of administrative agencies are not subject to review by this
Court, it is equally established that the Court will not uphold erroneous conclusions which are contrary
to the evidence because then the agency would be guilty of a grave abuse of discretion. Nor is this Court
bound by conclusions which are not supported by substantial evidence. 5
The substantial evidence rule does not authorize any finding to be made just as long as there is any
evidence to support it. It does not excuse administrative agencies from considering contrary evidence
which fairly detracts from the evidence supporting a finding. In this case, the labor arbiter's finding of
illegal dismissal was based not only upon the private respondents' "off the record" offer containing illegal
conditions but also on facts of record found by the arbiter which the NLRC disregarded. These are: (1)
that following the order for "rotation," some of the petitioners were made to surrender their ID's and (2)
that although the "rotation scheme" was ostensibly implemented because of the Shoemart strike, even
after the strike had ended, petitioners' attempts to return to work were thwarted. In truth, private
respondents' claim that petitioners, who were regular employees, were put on rotation while the casual
workers were not because petitioners were skilled and it was much easier for them to find new jobs only
succeeds in revealing their real intention. Would it be necessary for petitioners to look for new jobs if the
"rotation" was merely temporary? The NLRC plainly ignored these facts which amply supported the
labor arbiter's decision.
It is untenable for the Solicitor General to contend,6 that petitioners were dismissed for their refusal to
return to work. Petitioners did not refuse to work. They responded promptly to private respondents'
telegrams and expressed their intention to resume work immediately. This is clear from their letter to the
management on September 3, 19927 as quoted above. Moreover, it has been ruled that mere failure to
report for work after notice to return does not constitute abandonment or bar reinstatement. 8 Thus,
petitioners may even be considered dismissed without cause as a result of private respondents' refusal to
accept them, in addition to having been earlier dismissed by being put on "rotation."
To repeat, even disregarding evidence of the illegal conditions imposed by private respondents for
petitioners' return to work, there was substantial evidence remaining in the record to sustain the labor
arbiter's decision that private respondents were guilty of ULP. There was evidence to the effect that
Marcial Franco had been asked to disclose the names of the members of the union and that the
management had shown interest in the unionizing activities of the petitioners. This evidence has
remained unchallenged.9 What is more, it appears that only alleged members of the petitioner union were
put on "rotation".10 The labor arbiter's observation during the hearing that the private respondents had
shown hostility towards petitioners for their union activities is a determination of fact which is based on
the totality of private respondents' conduct, indicating anti-union bias.11 Nor is it disputed that private
respondents opposed petitioners' petition for certification election when this matter should be the sole
concern of the workers. 12Private respondents' interest belies their claim that they were not aware of
petitioners' organizational and union activities prior to the union's registration. An employer may be
guilty of ULP in interfering with the right to self-organization even before the union has been
registered.13
We therefore proceed to petitioners' prayer for monetary awards. Petitioners do not dispute the NLRC's
finding that, except for Jaime Sibug, the rest of petitioners are piece-rate workers. Consequently, all
petitioners are entitled to minimum wage and 13th-month pay, but only Jaime Sibug is entitled to an
additional award of holiday pay. All of the petitioners are entitled to salary differentials, as found by the
labor arbiter, and to 13th-month pay, as ruled by the NLRC. Pursuant to Art. 279 of the Labor Code, as
amended by Republic Act No. 6715, and our ruling in Bustamante v. National Labor Relations
Commission, 14 the petitioners are entitled to full backwages from the time their compensation was
withheld up to the time of their actual reinstatement or, where reinstatement is no longer possible, to full
backwages up to the time of finality of this decision.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated May 31, 1995 is set aside and the
decision of the labor arbiter dated July 22, 1992 is reinstated, with the modification that only Jaime Sibug
should be given holiday pay, while all petitioners should be given 13th-month pay and full backwages.
SO ORDERED.
FIRST DIVISION
G.R. No. 141471 September 18, 2000
COLEGIO DE SAN JUAN DE LETRAN, petitioner,

vs.
ASSOCIATION OF EMPLOYEES AND FACULTY OF LETRAN and ELEONOR
AMBAS, respondents.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal of the Decision of the Court of Appeals,
promulgated on 9 August 1999, dismissing the petition filed by Colegio de San Juan de Letran
(hereinafter, "petitioner") and affirming the Order of the Secretary of Labor, dated December 2, 1996,
finding the petitioner guilty of unfair labor practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of respondent union, Association of Employees and
Faculty of Letran, initiated the renegotiation of its Collective Bargaining Agreement with petitioner
Colegio de San Juan de Letran for the last two (2) years of the CBA's five (5) year lifetime from 1989-1994.
On the same year, the union elected a new set of officers wherein private respondent Eleanor Ambas
emerged as the newly elected President (Secretary of Labor and Employment's Order dated December 2,
1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao, claimed
that the CBA was already prepared for signing by the parties. The parties submitted the disputed CBA to
a referendum by the union members, who eventually rejected the said CBA (Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith before the National Labor Relations
Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided in favor of petitioner. However, the
Labor Arbiter's decision was reversed on appeal before the NLRC (Ibid, p. 2).
On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of its
intention to strike on the grounds (sic) of petitioner's: non-compliance with the NLRC (1) order to delete
the name of Atty. Federico Leynes as the union's legal counsel; and (2) refusal to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation on a new
five-year CBA starting 1994-1999. On February 7, 1996, the union submitted its proposals to petitioner,
which notified the union six days later or on February 13, 1996 that the same had been submitted to its
Board of Trustees. In the meantime, Ambas was informed through a letter dated February 15, 1996 from
her superior that her work schedule was being changed from Monday to Friday to Tuesday to Saturday.
Ambas protested and requested management to submit the issue to a grievance machinery under the old
CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met on March
27, 1996 before the NCMB to discuss the ground rules for the negotiation. On March 29, 1996, the union
received petitioner's letter dismissing Ambas for alleged insubordination. Hence, the union amended its
notice of strike to include Ambas' dismissal. (Ibid, p. 2-3).
On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation. However,
petitioner stopped the negotiations after it purportedly received information that a new group of
employees had filed a petition for certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of Labor and
Employment assumed jurisdiction and ordered all striking employees including the union president to
return to work and for petitioner to accept them back under the same terms and conditions before the
actual strike. Petitioner readmitted the striking members except Ambas. The parties then submitted their
pleadings including their position papers which were filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair labor
practice on two counts and directing the reinstatement of private respondent Ambas with backwages.
Petitioner filed a motion for reconsideration which was denied in an Order dated May 29, 1997 (Petition,
pp. 8-9)."1
Having been denied its motion for reconsideration, petitioner sought a review of the order of the
Secretary of Labor and Employment before the Court of Appeals. The appellate court dismissed the
petition and affirmed the findings of the Secretary of Labor and Employment. The dispositive portion of
the decision of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without merit in fact
and in law.
With cost to petitioner.
SO ORDERED.2
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of Appeals:
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO
BARGAIN (UNFAIR LABOR PRACTICE) FOR SUSPENDING THE COLLECTIVE
BARGAINING NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE FACT THAT THE
SUSPENSION OF THE NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A
PETITION FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR
PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE FACT THAT HER
DISMISSAL WAS CAUSED BY HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER
REFUSAL TO FOLLOW THE PRESCRIBED WORK SCHEDULE. 3
The twin questions of law before this Court are the following: (1) whether petitioner is guilty of unfair
labor practice by refusing to bargain with the union when it unilaterally suspended the ongoing
negotiations for a new Collective Bargaining Agreement (CBA) upon mere information that a petition for
certification has been filed by another legitimate labor organization? (2) whether the termination of the
union president amounts to an interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has not shown any
compelling reason sufficient to overturn the ruling of the Court of Appeals affirming the findings of the
Secretary of Labor and Employment. It is axiomatic that the findings of fact of the Court of Appeals are
conclusive and binding on the Supreme Court and will not be reviewed or disturbed on appeal. In this
case, the petitioner failed to show any extraordinary circumstance justifying a departure from this
established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase "duty to
bargain collectively," as follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any grievances or questions arising under
such agreement and executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession.
Noteworthy in the above definition is the requirement on both parties of the performance of the mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement. Undoubtedly, respondent Association of Employees and Faculty of Letran (AEFL)
(hereinafter, "union") lived up to this requisite when it presented its proposals for the CBA to petitioner
on February 7, 1996. On the other hand, petitioner devised ways and means in order to prevent the
negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely
reply to the proposals presented by the latter. More than a month after the proposals were submitted by
the union, petitioner still had not made any counter-proposals. This inaction on the part of petitioner
prompted the union to file its second notice of strike on March 13, 1996. Petitioner could only offer a
feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse for
failing to file its reply. This is a clear violation of Article 250 of the Labor Code governing the procedure
in collective bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in collective
bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party
with a statement of its proposals. The other party shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice.4
xxx
As we have held in the case of Kiok Loy vs. NLRC,5 the company's refusal to make counter-proposal to the
union's proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit
an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain
collectively.6 In the case at bar, petitioner's actuation show a lack of sincere desire to negotiate rendering it
guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first notice of strike in January 1996
show petitioner's resort to delaying tactics to ensure that negotiation would not push through. Thus, on
February 15, 1996, or barely a few days after the union proposals for the new CBA were submitted, the
union president was informed by her superior that her work schedule was being changed from Mondays
to Fridays to Tuesdays to Saturdays. A request from the union president that the issue be submitted to a
grievance machinery was subsequently denied. Thereafter, the petitioner and the union met on March 27,
1996 to discuss the ground rules for negotiation. However, just two days later, or on March 29, 1996,
petitioner dismissed the union president for alleged insubordination. In its final attempt to thwart the
bargaining process, petitioner suspended the negotiation on the ground that it allegedly received
information that a new group of employees called the Association of Concerned Employees of Colegio
(ACEC) had filed a petition for certification election. Clearly, petitioner tried to evade its duty to bargain
collectively.
Petitioner, however, argues that since it has already submitted the union's proposals to the Board of
Trustees and that a series of conferences had already been undertaken to discuss the ground rules for
negotiation such should already be considered as acts indicative of its intention to bargain. As pointed
out earlier, the evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing of the
petition for certification election the issue on majority representation of the employees has arose.
According to petitioner, the authority of the union to negotiate on behalf of the employees was
challenged when a rival union filed a petition for certification election. Citing the case of Lakas Ng
Manggagawang Makabayan v. Marcelo Enterprises,7 petitioner asserts that in view of the pendency of the
petition for certification election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining process there must be a
valid petition for certification election raising a legitimate representation issue. Hence, the mere filing of a
petition for certification election does not ipso facto justify the suspension of negotiation by the employer.
The petition must first comply with the provisions of the Labor Code and its Implementing Rules.
Foremost is that a petition for certification election must be filed during the sixty-day freedom period.
The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor
Code, provides that: " .… 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 rule is based on Article
232,8 in relation to Articles 253, 253-A and 256 of the Labor Code. No petition for certification election for
any representation issue may be filed after the lapse of the sixty-day freedom period. The old CBA is
extended until a new one is signed. The rule is that 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.9 Hence, the contract bar rule still applies.10 The purpose is to ensure stability in the relationship
of the workers and the company by preventing frequent modifications of any CBA earlier entered into by
them in good faith and for the stipulated original period. 11
In the case at bar, the lifetime of the previous CBA was from 1989-1994.1âwphi1 The petition for
certification election by ACEC, allegedly a legitimate labor organization, was filed with the Department
of Labor and Employment (DOLE) only on May 26, 1996. Clearly, the petition was filed outside the sixty-
day freedom period. Hence, the filing thereof was barred by the existence of a valid and existing
collective bargaining agreement. Consequently, there is no legitimate representation issue and, as such,
the filing of the petition for certification election did not constitute a bar to the ongoing negotiation.
Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises12 is misplaced since that case involved a legitimate representation issue which is not present in
the case at bar.
Significantly, the same petition for certification election was dismissed by the Secretary of Labor on
October 25, 1996.1âwphi1 The dismissal was upheld by this Court in a Resolution, dated April 21, 1997.13
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its stern refusal
to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we hold that the dismissal
was effected in violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union president was terminated for cause, allegedly for
insubordination for her failure to comply with the new working schedule assigned to her, and pursuant
to its managerial prerogative to discipline and/or dismiss its employees. While we recognize the right of
the employer to terminate the services of an employee for a just or authorized cause, nevertheless, the
dismissal of employees must be made within the parameters of law and pursuant to the tenets of equity
and fair play.14 The employer's right to terminate the services of an employee for just or authorized cause
must be exercised in good faith.15 More importantly, it must not amount to interfering with, restraining or
coercing employees in the exercise of their right to self-organization because it would amount to, as in
this case, unlawful labor practice under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that she was
dismissed in order to strip the union of a leader who would fight for the right of her co-workers at the
bargaining table. Ms. Ambas, at the time of her dismissal, had been working for the petitioner for ten (10)
years already. In fact, she was a recipient of a loyalty award. Moreover, for the past ten (10) years her
working schedule was from Monday to Friday. However, things began to change when she was elected
as union president and when she started negotiating for a new CBA. Thus, it was when she was the union
president and during the period of tense and difficult negotiations when her work schedule was altered
from Mondays to Fridays to Tuesdays to Saturdays. When she did not budge, although her schedule was
changed, she was outrightly dismissed for alleged insubordination. 16 We quote with approval the
following findings of the Secretary of Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid ground to
teminate her employment. The disputed management action was directly connected with Ms. Ambas'
determination to change the complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching position
in faithfully and truthfully carrying out her duties and responsibilities to her Union and its members in
getting a fair share of the fruits of their collective endeavors was the proximate cause for her dismissal,
the charge of insubordination being merely a ploy to give a color of legality to the contemplated
management action to dismiss her. Thus, the dismissal of Ms. Ambas was heavily tainted with and
evidently done in bad faith. Manifestly, it was designed to interfere with the members' right to self-
organization.
Admittedly, management has the prerogative to discipline its employees for insubordination. But when
the exercise of such management right tends to interfere with the employees' right to self-organization, it amounts
to union-busting and is therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to
frustrate the Union in its desire to forge a new CBA with the College that is reflective of the true wishes
and aspirations of the Union members. Her dismissal was merely a subterfuge to get rid of her, which
smacks of a pre-conceived plan to oust her from the premises of the College. It has the effect of busting
the Union, stripping it of its strong-willed leadership. When management refused to treat the charge of
insubordination as a grievance within the scope of the Grievance Machinery, the action of the College in
finally dismissing her from the service became arbitrary, capricious and whimsical, and therefore violated
Ms. Ambas' right to due process."17
In this regard, we find no cogent reason to disturb the findings of the Court of Appeals affirming the
findings of the Secretary of Labor and Employment. The right to self-organization of employees must not
be interfered with by the employer on the pretext of exercising management prerogative of disciplining
its employees. In this case, the totality of conduct of the employer shows an evident attempt to restrain
the employees from fully exercising their rights under the law. This cannot be done under the Labor
Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.

Labor

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Republic of the Philippines

G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

The antecedents of the controversy reveal that:

c. inciting, instigating and/or inducing the employees or workers of LIPERCON and

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor dispute.

A. The exclusive bargaining representative of an employer unit cannot strike to compel

B. A strike is a coercive economic weapon granted the bargaining representative only in

We find the Petition of a meritorious character.

G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner,

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

xxx xxx xxx

. . . Amendatory legislation is suggested so as to relieve the Supreme

xxx xxx xxx

Senator Roco. There are no further Committee amendments, Mr. President.

xxx xxx xxx

G.R. No. 99395 June 29, 1993

ST. LUKE'S MEDICAL CENTER, INC., petitioner,

Sofronio A. Ona for petitioner.

Edgar R. Martir for respondent union.

PUBLIC RESPONDENT HON. SECRETARY OF LABOR ACTED IN EXCESS OF

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

FINALLY, PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

Second year — P700.00 across the board monthly salary increase.

Third year — P700.00 across the board monthly salary increase.

Second Year — P400

Third Year — P400

A. P1,40 added to basic pay

a) P1,140 x 1,500 (no. of employees) x 12 (months) — P 20,520,000

b) 13th month pay: P1,140 x 1,500 — 1,710,000

c) Overtime pay, 20% of payroll — 4,104,000

d) Holiday pay, PM/Night pay — 1,026,000

e) Sick leave — 855,000

f) Funeral, Paternity, Maternity leaves, retirement

B. P230 added to meal allowance

a) P230 x 1,500 x 12 — 4,140,000

C. One day added to sick leave

a) (Ave. pay P3,000 = P1,140) divided by 30 x 1,500 — 222,000

D. Sick leave cash conversion base reduced from 60 to 45 days

a) (P3,300 = P1,140)/30 x 1,200 — 2,664,000

E. Retirement benefits adjustment — 500,000

FIRST YEAR ADDITIONAL COST P 36,561,000

A. Yr I increase except sick leave cash conversion

B. P700 added to monthly basic pay

a) P700 x 1,500 x 12 — 2,600,000

SECOND YEAR ADDITIONAL COST P51,726,000

A. Yr I and Yr II increases — 88,287,000

B. P700 added to basic pay

a) P700 x 1,500 x 12 — 12,600,000

THIRD YEAR ADDITIONAL COST — 106,116,000

TOTAL THREE-YEAR ADDITIONAL

(pp. 14-16, Rollo).

xxx xxx xxx

July 30, 1990 Expiration

(6 months and 2 days)

(p. 34, Rollo.)

Petitioner assails the Order of January 28, 1991 on three grounds:

WHEREFORE, the instant petition is hereby DISMISSED for lack of merit.