G.R. No.

76427 February 21, 1989

JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE JOHNSON

MORANTE, MYRNA OLOVEJA AND ITS OTHER INDIVIDUAL UNION
MEMBERS, petitioners
vs.
DIRECTOR OF LABOR RELATIONS, AND OSCAR PILI, respondents.

Rogelio R. Udarbe for petitioners.

The Solicitor General for public respondent.

Manuel V. Nepomuceno for private respondent.

GUTIERREZ, JR., J.:

The sole issue in this petition for review on certiorari is whether or not the public
respondent committed grave abuse of discretion in ruling that the private
respondent is entitled to the financial aid from the compulsory contributions of the
petitioner-union afforded to its members who have been suspended or
terminated from work without reasonable cause.

The provision for the grant of financial aid in favor of a union member is
embodied in the petitioner-union's Constitution and By-laws, Article XIII, Section
5, of which reads:

A member who have (sic) been suspended or terminated without

reasonable cause shall be extended a financial aid from the
compulsory contributions in the amount of SEVENTY FIVE
CENTAVOS (P0. 75) from each member weekly. (p. 18, Rollo)

On May 6, 1985, the private respondent, a member of the petitioner-union was

dismissed from his employment by employer Johnson & Johnson (Phil.) Inc., for
non-disclosure in his job application form of the fact that he had a relative in the
company in violation of company policies.

On July 1985, a complaint was filed by the private respondent against the officers
of the petitioner-union docketed as NRC- LRD-M-7-271-85 alleging, among
others, that the union officers had refused to provide the private respondent the
financial aid as provided in the union constitution despite demands for payment
thereof The petitioner-union and its officers counter-alleged, in their answer, that
the said financial aid was to be given only in cases of termination or suspension
without any reasonable cause; that the union's executive board had the
prerogative to determine whether the suspension or termination was for a
reasonable cause or not; and that the union, in a general membership meeting,
had resolved not to extend financial aid to the private respondent.

While the grievance procedure as contained in the union's collective bargaining

agreement was being undertaken, the private respondent, on August 26, 1985,
filed a case for unfair labor practice and illegal dismissal against his employer
docketed as NLRC-NCR Case No. 6-1912-85.

On September 27, 1985, Med-Arbiter Anastacio L. Bactin issued an order

dismissing for lack of merit the complaint of the private respondent against the
petitioners for alleged violation of the union constitution and by-laws.

On appeal, the then public respondent Director Cresenciano B. Trajano, on April

17, 1986, rendered the decision assailed in this petition. The dispositive portion
of the said decision reads:

WHEREFORE, premises considered, the appeal of complainant

Oscar Pili is hereby granted and the Order appealed from is hereby
set aside. Appellees, therefore, are hereby ordered to pay the
complainant the sum of P0.75/week per union member to be
computed from the time of the complainant's termination from
employment to the time he acquired another employment should his
complaint for illegal dismissal against the company be resolved in
his favor; provided, that if his complaint against the company be
dismissed, appellees are absolved from paying the complainant
anything. (p. 115, Records)

Both parties moved for reconsideration. The petitioners reiterated that since the
private respondent's termination was for a reasonable cause, it would be unjust
and unfair if financial aid were to be given in the event that the latter's case for
illegal dismissal is decided against him. The private respondent, on the other
hand, prayed for the amendment of the dispositive portion in order that the grant
of financial aid be made without any qualifications.

On June 16, 1986, a Manifestation and/or Opposition to the Motion for

Reconsideration filed by the petitioners was filed by the private respondent
stating that he was being discriminated against considering that one Jerwin
Taguba, another union member, was terminated for dishonesty and loss of
confidence but was granted financial aid by the petitioners while Taguba's
complaint against the company was still pending with the National Labor Relation
Commission.
The public respondent separately resolved the above motions. On June 26,
1986, an order was issued denying the petitioners' motion for reconsideration. On
August 19, 1986, the public respondent modified its decision dated April 17, 1986
and its aforestated order as follows:

Considering that complainant Pili is similarly situated as Jerwin

Taguba coupled with the need to obviate any discriminating
treatment to the former, it is only just and appropriate that our
Decision dated 17 April 1986 be modified in such a manner that
respondents immediately pay the complainant the sum of P0.75/
week per union member to be computed from the time of his
dismissal from the company, without prejudice to refund of the
amount that shall be paid to Pili in the event the pending case is
finally resolved against him.

WHEREFORE, and as above qualified, this Bureau's Decision dated

17 April 1986 and the Order dated 26 June 1986 are hereby
modified to the extent that the respondents are directed to
immediately pay complainant the sum of P0.75/week per union
member to be computed from the time of his termination from his
employment until his case against the employer company shall have
been finally resolved and/or disposed. (p. 53, Rollo)

Meanwhile, on July 25, 1986, a motion for issuance of a writ of execution was
filed by the private respondent in order to collect from the petitioners the amount
of financial aid to which the former was entitled.

On September 1, 1986, the petitioners moved for a reconsideration of the public

respondent's resolution dated August 19, 1986 on the grounds that Taguba's
affidavit cannot support the private respondent's claim that he is also entitled to
the financial aid provided in the union's constitution and that the union cannot be
compelled to grant the said aid in the absence of a special fund for the purpose.

On October 28, 1986, the public respondent through Director Pura Ferrer-Calleja
denied the petitioners' motion for reconsideration stating that Article XIII, Section
5 of the union's constitution and by-laws does not require a special fund so that
all union members similarly situated as the private respondent must be entitled to
the same right and privilege regarding the grant of financial aid as therein
provided.

On December 18, 1986, a writ of execution was issued by the public respondent
in the following tenor:
 NOW THEREFORE, you are hereby directed to proceed to the
premises of Johnson and Johnson (FFW) located at Edison Road,
Bo. Ibayo, Paranaque, Metro Manila to collect from the said union
through its Treasurer, Myrna Oloveja or to any responsible officer of
the union the amount of Twenty Thousand Five Hundred Twenty
Pesos (P20,520.00), more or less representing financial assistance
to complainant under the union's constitution and by-laws. In case
you fail to collect said amount in cash, you are to cause the
satisfaction of the same on the union's movable or immovable
properties not exempt from execution. You are to return this writ
within fifteen (15) days from your compliance hereby together with
your report thereon. You may collect your legal fees from the
respondent union. (p. 55, Rollo)

On December 24, 1986, the instant petition was filed with prayer for a preliminary
injunction. The temporary restraining order issued by the Chief Justice on
December 24, 1986 was confirmed in our resolution dated January 7, 1987.

The grounds relied upon by the petitioners are as follows:

A. THAT THE DECISION/ORDER IN QUESTION IS CONTRARY

TO LAW.

B. THAT RESPONDENT OFFICIAL ACTED WITH GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF JURISDICTION.

C. THAT WITH RESPECT TO PETITIONING MEMBERS, THEY

HAVE BEEN DEPRIVED OF THEIR CONSTITUTIONAL RIGHT TO
DUE PROCESS OF LAW. (P. 13, Rollo)

We find unmeritorious the contention of the petitioners that the questioned

decision and order are contrary to law for being tantamount to compelling the
union to disburse it funds without the authority of the general membership and to
collect from its members without the benefit of individual payroll authorization.

Section 5, Article XIII of the petitioner-union's constitution and by-laws earlier

aforequoted is self-executory. The financial aid extended to any suspended or
terminated union member is realized from the contributions declared to be
compulsory under the said provision in the amount of seventy-five centavos due
weekly from each union member. The nature of the said contributions being
compulsory and the fact that the purpose as stated is for financial aid clearly
indicate that individual payroll authorizations of the union members are not
necessary. The petitioner-union's constitution and by-laws govern the
relationship between and among its members. As in the interpretation of
contracts, if the terms are clear and leave no doubt as to the intention of the
parties, the literal meaning of the stipulations shall control. (See Government
Service Insurance System v. Court of Appeals, 145 SCRA 311 [1986]). Section
5, Article XIII of the said constitution and by-laws is in line with the petitioner-
union's aims and purposes which under Sec. 2, Article II include

To promote, establish and devise schemes of mutual assistance

among the members in labor disputes.

Thus, there is no doubt that the petitioner-union can be ordered to release its
funds intended for the promotion of mutual assistance in favor of the private
respondent.

We likewise find untenable the argument of the petitioners that the public
respondent, in granting financial aid to the private respondent, in effect,
substituted the decision of the petitioner-union to do otherwise and that in so
doing, the public respondent gravely abused its discretion amounting to lack of
jurisdiction. The union constitution is a covenant between the union and its
members and among the members. There is nothing in their constitution which
leaves the legal interpretation of its terms unilaterally to the union or its officers or
even the general membership. It is noteworthy to quote the ruling made by the
public respondent in this respect, to wit:

The union constitution and by-laws clearly show that any member
who is suspended or terminated from employment without
reasonable cause is entitled to financial assistance from the union
and its members. The problem, however, is that the constitution
does not indicate which body has the power to determine whether a
suspension or dismissal is for reasonable cause or not. To our mind,
the constitution's silence on this matter is a clear recognition of the
labor arbiter's exclusive jurisdiction over dismissal cases. After all,
the union's constitution and by-laws is valid only insofar as it is not
inconsistent with existing laws. ... . (BLR decision, p. 2; p. 115,
Records)

An aggrieved member has to resort to a government agency or tribunal.

Considering that quasi-judicial agencies like the public respondent's office have
acquired expertise since their jurisdiction is confined to specific matter, their
findings of fact in connection with their rulings are generally accorded not only
respect but at times even finality if supported by substantial evidence. (See
Manila Mandarin Employees Union v. National Labor Relations Commission, 154
SCRA 368 [1987]) Riker v. Ople, 155 SCRA 85 [1987]; and Palencia v. National
Labor Relations Commission, 153 SCRA 247 [1987]. We note from the records
that the petitioners have conflicting interpretations of the same disputed provision
one in favor of Jerwin Taguba and another against the private respondent.

On the ancillary issue presented by the petitioners whether or not the petitioning
union members have been deprived of their right to due process of law because
they were never made parties to the case under consideration, we rule that the
fact that the union officers impleaded since the inception of the case acted in a
representative capacity on behalf of the entire union's membership substantially
meets the requirements of due process with respect to the said union members.
Moreover, the complaint filed against the union involves the interpretation of its
constitution favoring an aggrieved member. The members are bound by the
terms of their own constitution. A suit to enforce a union constitution does not
have to be brought against each individual member, especially where several
thousand members form the membership. If there is any violation of the right to
due process in the case at bar it is as regards the private respondent since the
petitioners-union has dispensed with due process in deciding not to extend
financial aid to the private respondent in the absence yet of a ruling by the labor
arbiter on whether his dismissal was for a reasonable cause or not.

The remedy of the petitioners is to strike out or amend the objectionable features
of their constitution. They cannot expect the public respondent to assist them in
its non- enforcement or violation.

WHEREFORE, PREMISES CONSIDERED, the instant petition is hereby

DISMISSED in the absence of a showing of grave abuse of discretion on the part
of the public respondent. The decision of the public respondent dated April 17,
1986 as modified in a resolution dated August 17, 1986 is AFFIRMED. The
temporary restraining order issued by the Court on December 24,1986 is SET
ASIDE.

SO ORDERED.

G.R. No. 107590 February 21, 1995

PAMANTASAN NG LUNGSOD NG MAYNILA (PLM), petitioner,

vs.
CIVIL SERVICE COMMISSION (CSC), PAMANTASAN NG LUNGSOD NG
MAYNILA FACULTY ORGANIZATION (PLMFO), ROBERTO AMORES,
ROLANDO AUSTRIA, VICENTE BANAGALE, NEMENCIO CABATUANDO,
MANOLO HINA, ELEANOR JIMENEZ, ANITA LEYSON, JONATHAN
MANZANO, JOSE MEJIA, ESTELITA PINEDA, LORDEO POQUIZ, ALFREDO
RAZON, MA. ZELDA REYES, SALVACION RODRIGUEZ, BELINDA SANTOS,
and VIRGILIO ZAMORA respondents.

VITUG, J.:

This petition stemmed from a complaint for illegal dismissal and unfair labor
practice filed with public respondent Civil Service Commission ("CSC") by private
respondents, through Pamantasan Ng Lungsod Ng Maynila Faculty Organization
("PLMFO"), against petitioner Pamantasan Ng Lungsod Ng Maynila ("PLM") and
its officers.

The sixteen (16) individual private respondents were full-time instructors of PLM
under "temporary contracts" of employment renewable on a yearly basis. They,
among other instructors, joined the PLMFO.

Uniform notices of termination, all dated 24 April 1990, were individually sent to
private respondents informing them of "the expiration of their temporary
appointments at the close of office hours on 31 May 1990" and the non-renewal
of their appointments for the school year (SY) 1990-1991. A series of letter-
complaints addressed to the CSC by private respondents evoked a letter-
response from PLM, dated 16 May 1990, traversing the complainants' right to
compel a renewal of the appointments. They were advised that their retention
was not recommended by their respective Deans.

On 29 May 1990, private respondents, through PLMFO, filed with the CSC a
verified complaint for illegal dismissal and unfair labor practice against petitioner
and its officers.

In a letter-comment, dated 13 July 1990, petitioner denied having committed any

unfair labor practice or having illegally dismissed private respondents. In its
defense, PLM interposed (1) the temporary nature of private respondents'
contracts of employment and (2) reasons that could justify the non- renewal of
the contracts.

Public respondent CSC referred the case to the Public Sector Labor-
Management Council1 ("PSLMC"). The latter, through its deputized hearing
officer, Med-Arbiter Hope Ruiz-Valenzuela of the Bureau of Labor Relations of
the Department of Labor and Employment, after due notice, heard the case
(PSLMC Case No. 00-06-91). During the proceedings, petitioner relied in main
on the temporary nature of private respondents' employment contracts.
In a Resolution,2 dated 16 December 1991, the PSLMC found petitioner guilty of
"Unfair Labor Practice" and held that private respondents "should be reinstated."
The dispositive portion of its Resolution read:

WHEREFORE, premises considered, the Council finds that PLM

Management committed Unfair Labor Practice when it terminated
the services of herein complainants, and for which the latter should
be reinstated.

Accordingly, let this Resolution be forwarded to the Civil Service

Commission for appropriate action.

SO ORDERED.3

Petitioner's request for reconsideration was denied in PSLMC's Order of 30 April

1992. Forthwith, the PSLMC transmitted the case to the CSC for appropriate
action.

On 15 May 1992, petitioner filed with this Court a petition for certiorari, entitled
"Pamantasan Ng Lungsod Ng Maynila vs. Public Sector Labor-Management
Council, et al.," docketed G.R. No. 105157, that sought the annulment of the
aforementioned PSLMC resolutions. In a Minute Resolution, dated 27 May 1992,
the Court dismissed the petition for PLM's failure to submit the certification
required under Circular 28-91 on forum-shopping. The motion for the
reconsideration of this resolution was dismissed with finality, no compelling
reason having been shown to reconsider the dismissal of the petition. On 30 July
1992, the resolution became final and executory and, in due course, was
recorded in the Book of Entries of Judgment.

In the meantime, public respondent CSC, acting on the case forwarded to it by

the PSLMC, issued its Resolution No. 92-814, dated 25 June 1992, sustaining
the findings of the PSLMC. The CSC, accordingly, directed the reinstatement,
with back salaries, of private respondents; thus —

WHEREFORE, foregoing premises considered, the Commission

hereby resolves to rule that the termination of the services of Estelita
Pineda, Vicente Banagale, Salvacion Rodriguez, Anita Leyson,
Eleanor Jimenez, Ma. Zelda Reyes, Belinda Santos, Lordeo Poquiz,
Rolando Austria, Jonathan Manzano, Manolo Hina, Nemencio
Cabatuando, Alfredo Razon, Virgilio Zamora, Roberto Amores and
Jose Mejia, all of the Pamantasan ng Lungsod ng Maynila, is illegal.
 The PLM Management is hereby directed to reinstate these
employees to their former or equivalent positions and pay them back
salaries and other benefits from the time of their illegal termination
until their actual reinstatement.4

The request for the reconsideration of the order was denied by the CSC in its
Resolution No. 92-1573 of 20 October 1992. Respondent CSC, in denying
petitioner's motion, held, among other things, that the findings of fact by the
PSLMC deserved the respect of the Commission and that there was no further
need for it, to conduct a hearing of its own.

The PLM cites the following reasons for its instant petition for certiorari (under
Rule 65, not Rule 45 such as mistakenly referred to by petitioner):

1. The Civil Service Commission acted with grave abuse of

discretion tantamount to lack of jurisdiction and denial of due
process when it adopted entirely, without according the petitioner the
opportunity to be heard, the findings of facts and resolutions of the
Public Sector Labor and Management Council, a body separate and
distinct and with different jurisdiction from that of the Commission.

2. The Civil Service Commission acted with grave abuse discretion

in effectively denying the petitioner the opportunity to present
evidence to substantiate its allegations in its defense against the
charge of illegal dismissal, to the prejudice of civil service and public
interest.

3. The Civil Service Commission committed a grave abuse of

discretion in directing reinstatement and payment of backwages to
private respondents whose temporary contracts of employment had
already expired.

On 11 May 1993, this Court, acting on petitioner's motion for the issuance of a
writ of preliminary injunction, issued, on 18 May 1993, a temporary restraining
order directing respondent CSC "to cease and desist from executing (its)
assailed Resolutions No. 92-814 and No. 92-1573.5

In our resolution, dated 17 August 1993, following the receipt of respondents'

comment, we gave due course to the petition and ordered the parties to file their
respective memoranda.

The Solicitor General took an adverse position to that of public respondent and
prayed that the petition be given due course, contending that it was inappropriate
for respondent CSC to rule on the aspect of illegal dismissal, an act that involved
an exercise of its original jurisdiction, without affording anew petitioner an
opportunity to be heard.

Public respondent CSC manifested its intention to file its own comment to the
instant petition; however, it failed to file any such comment within the allotted
period. The Court finally dispensed with the filing of the comment and ordered
CSC to instead file its memorandum in accordance with this Court's resolution of
24 August 1993.6

On 20 January 1994, the Court dismissed the petition for failure to prosecute on
the part of petitioner, which likewise failed to file its memorandum, as well as
because of the "evident lack of interest of the parties"7 to pursue the case. On
petitioner's motion for reconsideration, however, the Court resolved, on 24
February 1994, to reinstate the petition.

Petitioner stresses that the CSC and the PSLMC both exercise quasi-judicial
functions but not on identical issues and subject matter; that the PSLMC
possesses jurisdiction only over the unfair labor practice aspect of private
respondents' complaint but that it is the CSC which alone can take cognizance
over the question of illegal dismissal; and that, therefore, when the CSC has
simply adopted the recommendations of the PSLMC in the unfair labor practice
case in resolving the issue of illegal dismissal and ordering the reinstatement of
private respondents without conducting further proceedings of its own, it has
effectively denied petitioner of its right to due process.

PSLMC's jurisdiction over the unfair labor practice case filed by private
respondents against petitioner is not disputed. The PSLMC, in case No. 00-06-
91, has conducted its proceedings in accordance with its legal mandate.8The
proceedings before Med-Arbiter Valenzuela, who had been deputized to so act
as the hearing officer, conform with the "Rules and Regulations to Govern the
Exercise of the Right of Government Employees to Self Organization" —

Sec. 3. The Council may call on any officer or agency for assistance.
It may deputize officers to hear and recommend action on
complaints or grievances filed with the council.

Sec. 4. The procedure in the Council shall be non-adversarial in

nature. The parties may be required to submit their respective
position papers, together with all evidences available in support of
their respective positions within 15 days from receipt of notices.

Sec. 5. The decision of the Council shall be final.

The conclusion of the PSLMC regarding petitioner's alleged commission of unfair
labor practice against private respondents can no longer be considered a proper
issue either before the CSC or in this instance since this particular matter has
already been adjudged with finality in accordance with this Court's resolution in
G.R. No. 105157 heretofore mentioned.

The PSLMC, in part, said:

. . . Individual sixteen (16) complainants were part of the original

founders of the PLMFO and claim to be active members thereof.
Complainants Vicente Benagale, Roberto Amores, and Anita Leyson
were the President, Treasurer and Secretary, respectively, of the
PLMFO. At the time of complainants separation, the union had just
secured its public sector union registration. All 16 complainants had
temporary employment contracts that were renewed on a yearly
basis. Half of the complainants had been with the PLM for a long
time, ranging from four (4) to six and one-half (6 1/2) years.

It appears that the Faculty had many long-standing issues with the
PLM Management, which complainants claim motivated the
organization of the PLMFO. As gathered from the evidence, the
following are some of the more salient issues:

1. Failure to appoint a true faculty representative to the Board of

Regents as provided in the PLM Charter;

2 No faculty participation in areas where normally the faculty input is

sought. i.e.

a. revision of the student curriculum

b. the development of criteria/policies regarding faculty

development and promotion

3. While PLM has identified the academic qualifications and teaching

experience required for each level of hierarchy in the faculty, the
actual mechanics of promotion are vague. The faculty remains in the
dark as to whether they have already qualified and therefore can
apply for the next faculty rank as a matter of right. The PLMFO
maintains that this vagueness in the procedure/policies for promotion
is a deliberate scheme to enable PLM management to establish the
faculty according to its whim;
4. On the matter of promotion scheme, the faculty is not given the
complete results of their performance evaluation;

5. The faculty is kept guessing about the official salary scale

according to rank, so that the implementation of such official salary
scale can be arbitrary and discriminatory . . .;

6. Management refuses to allow the concerned faculty to participate

in choosing the Chairperson in their respective departments;

7. PLM's existing practice in the promotion of faculty members either

for permanent status or to the next higher rank as undermined the
university's standard of excellence. Out of the 223, close to 30% of
the faculty had no previous teaching experience before joining PLM.
There are only 29 assistant professors and 6 with the rank of
professor. The teachers holding temporary appointments comprise,
almost half of the faculty.

After securing its union registration, PLMFO began asserting its

rights.

xxx xxx xxx

In its complaint, PLMFO alleged that their actions and determination

to see changes in the management of PLM angered PLM which
prompted its decision to terminate the services of the complainants.

xxx xxx xxx

Ordinarily, there is merit to respondent's argument that employees

who hold temporary contracts of employment may not expect
renewal of appointment as a matter of right, the decision being a
management prerogative. However, when the exercise of this
privilege is alleged to be the means by which management hinders
unionism or outrightly bust unions and such allegation is supported
by evidence, the act needs to be examined and studied. It then
becomes incumbent upon Management to show that its intentions
are otherwise. Records of the case, however, reveal that despite
numerous opportunities to do so, PLM makes little attempt to rebut
the specific charges and instead rests its defense largely on the
argument that since complainants possess only temporary contracts
of employment, PLM has the right not to renew their contracts
without any need for justification.
 There is sufficient evidence to show that the management of PLM is
not particularly enthusiastic about faculty participation in the
formulation of policies concerning the University and the Faculty
itself, as shown from the very nature of the majority of the complaints
of the faculty against the administration and the response/reaction of
the management to earlier attempts by the faculty to bring about
changes. . . .

. . . . The facts on record show that management did not respond to

any of the faculty issues. One accurate example is the matter of the
teachers' performance evaluation ratings which were the basis for
"renewal of appointment and recommendation for permanent
status." It was discussed in the dialogue that the over-all rating score
of the faculty would include the Peer's evaluation. However, as can
be seen from the ratings of the complainants who were accused of
having poor performance, the Peer's evaluation was not included as
one of the factors for their evaluation.

xxx xxx xxx

. . . . In its position paper and other subsequent pleadings, PLM has

however, abandoned all efforts to pursue its line of defense. It would
appear therefore that the charges are false and untenable. If this is
so, why was PLM so bold as to present them as grounds for the
separation of complainants in the first place? Perhaps, it was
confident that because complainants possessed temporary contracts
of employment, no serious attempt would be made to examine
PLMFO's complaint. Whatever other reasons PLM may have, the
circumstances obtaining in the instant case show that these charges
were created as an attempt to confuse/mislead PLM's real
motivations on the matter.9

In agreeing with the PSLMC, the CSC, in its own resolution of 25 June 1992,
stated:

In the arbitration proceedings, the PSLMC found that PLM

committed unfair labor practice when it terminated the services of
the complainants. It is undisputed that the PLM Management did not
renew the appointments of these members of the faculty with
temporary contracts but those who were hired as replacements
possess even lesser qualifications than the 16 complainants.
Further, the PLM Management refused and still refuses to produce
the results of their evaluation of the performance of the complainants
 which can be an indication that presentation of such evidence would
be detrimental to its case. Hence, this issue before us.

Had complainants not been among those active officers and/or

members of the PLMFO, and had their qualifications, training,
experience and performance rating not been impressive, the
Commission would have agreed that the termination or non-renewal
of the contracts of complainants does not constitute unfair labor
practice. But the records reveal otherwise. Hence, there is indeed no
reason for PLM Management to terminate the services of these
employees except to bust their organization. The Commission finds
no reason to disagree with the findings of facts by the PSLMC that
PLM Management committed an unfair labor practice.

xxx xxx xxx

Even temporary employees enjoy that basic right to form

organization or association for purposes not contrary to law. PLMFO
is that organization. Thus, its members cannot be separated from
the service for the simple reason of membership in the said
organization. And when the appointment status of these members
happens to be temporary in nature, such becomes merely incidental
and the doctrine that temporary employees have no security of
tenure must yield or is not applicable. When the clear intent
therefore of PLM Management in terminating the services of these
employees is to abridge their constitutional right to self-organization,
the Commission has the duty to give them protection and uphold
their basic right. This constitutional right of employees is superior to
the right of management not to renew the temporary appointment of
its employees. When the exercise of discretion by the management
is calculated to bust the union as what PLM Management had done,
the Commission has no choice but to declare it as a grave abuse of
discretion. 10

Petitioner insists that when CSC has ruled on the matter of illegal dismissal
without conducting any further hearing of its own, relying, instead, on PSLMC's
finding of unfair labor practice on the part of petitioner, the latter has thereby
been denied due process. Unfortunately for petitioner, however, the two
supposed independent issues, i.e., the unfair labor practice charge and the
complaint for illegal dismissal both filed by private respondents, are, in fact, here
unavoidably interlinked. The non-renewal of an employment contract with a term,
it is true, is ordinarily a valid mode of removal at the end of each
period. 11 This rule, however, must yield to the superior constitutional right of
employees, permanent or temporary, to self-organization. While, a temporary
employment may be ended with or without cause, it certainly may not, however,
be terminated for an illegal cause.

Petitioner claims that it was denied "due process." It itself admitted, however, that
"it manifested (before the PSLMC) its intention to submit evidence (that it had
other valid grounds for not renewing private respondents' temporary contracts of
employment) which, inadvertently or otherwise, it failed to present . . . 12 This
supposed evidence, if true and being material to substantiate its defense against
the unfair labor charge, should have been duly presented, but it did not.
Petitioner should not now be heard to complain that it was denied due process.
We ruled, time and again, that "due process" was designed to afford an
opportunity to be heard,13 not that an actual hearing should always and
indispensably be held.

In any case, in its reply to public respondents' comment, PLM enumerates the
alleged causes for the non-renewal of the contracts, to wit:

Name Cause

1. Zamora, Virgilio Failure to finish MA after 2 years

2. Benagale, Vicente Poor over-all performance

3. Mejia, Jose Worked with DAR while with PLM

4. Amores, Roberto Failure to complete MA

5. Reyes, Zelda Poor Performance

6. Santos, Belinda Tardiness in class, says negative

comments during faculty meeting

7. Poquiz, Lorredo Seldom returns test papers, taught in another university

8. Austria, Rolando Taught in another school for 2nd Semester of 1989-1990

9. Manzano, Jonathan Taught in another university

10. Hina, Manalo Poor class performance

11. Cabatuando, Nemensio Poor class performance, taught in another university

12. Rodriguez, Salvacion none given

13. Razon, Alfredo none given

14. Jimenez, Eleanor Tardiness during 2nd sem. in school

15. Leyson, Anita Enrolled in another law school

16. Pineda, Estelita Unbecoming conduct, tardiness 14

The PSLMC has noted, however, that the charges are either false or
untenable; hence, its following findings:

. . . In the case of complainants Zelda Reyes, Hina Manalo and

Nemencio Cabatuando, PLM alleged that they scored poorly in their
performance evaluation ratings. However, check with their actual
performance scores (see pp. 252-264, records) shows that their
grades are near perfect. PLMFO's President Vicente Benagale was
accused of having poor class performance scores. His evaluation
forms were, however, not available for scrutiny.

On two occasions, PLM was directed to produce the evaluation

results of the 16 complainants, the first, through an Order of Director
Salvador Fernandez dated May 28, 1990 (see p. 148 records) and
the second, in the conference of January 24, 1990 (see p. 278,
records). PLM failed to comply on both occasions. This Council can
only deduce that the presentation of such evidence would be
detrimental to its case.

Roberto Amores and Virgilio Zamora were separated on the ground

that they failed to complete their MA degrees. A glance at their
number of years of service makes PLM's charge spurious. In the
case of Roberto Amores, records show that he has been with PLM
for 6 1/2 years and was still on a temporary appointment basis.
Under Board Resolution 1025, he should be considered as a
permanent employee, his contract of employment having been
renewed after the interim period. If PLM were sincere in applying the
rule that all permanent faculty must have a Masters Degree, it
should have disqualified Mr. Amores after his interim period of
appointment. It therefore appears that PLM sought to enforce this
rule only after Mr. Amores was elected union treasurer. On the other
hand, PLM's objection as regards Virgilio Zamora is premature. Mr.
Zamora was only in his 4th year at the university. Based on the
 concept of interim appointment, he is given up to the fifth year to
complete his Masters.

The cause for termination of Leyson's services was her enrollment in

another school without allegedly asking permission from PLM
management. On record (p. 507, records) is a letter dated January
7, 1989 of Anita Leyson to the University, asking permission to
continue her studies at the Arellano Law School for the 2nd
semester of 1989. PLM challenges complainant to show proof that
her request had been granted. Even if complainant, however, cannot
produce any document showing that she was granted permission, in
like manner, neither can PLM present any document expressly
prohibiting her to enroll at the Arellano University. PLM's non-
response, if this is indeed the case, must be construed as consent.
Complainant's request was for continuance of her studies. If this act
was truly objectionable, PLM should have questioned about her
previous enrollment at the Arellano University.

Moreover, this Council cannot help but comment that as part of

every person's basic human right, there is nothing to prevent nor
prohibit Ms. Leyson to enroll in the law school of her choice. As
borne out by her excellent performance ratings, complainant has
rendered an exemplary service. Penalizing complainant for seeking
to further improve herself is bordering on oppression.

In the same conference of January 24, 1991, PLM was directed to

further substantiate the validity of its charges against complainants.
In its position paper and other subsequent pleadings, PLM has
however, abandoned all efforts to pursue its line of defense. It would
appear therefore that the charges are false and untenable. If this is
so, why was PLM so bold as to present them as grounds for the
separation of complainants in the first place? Perhaps, it was
confident that because complainants possessed, temporary
contracts of employment, no serious attempt would be made to
examine PLMFO's complaint. Whatever other reasons PLM may
have, the circumstances obtaining in the instant case show that
these charges were created as an attempt to confuse/mislead PLM's
real motivations on the matter.15

The finding of the PSLMC that the non-renewal by petitioner of the questioned
contracts of employment had been motivated by private respondents' union
activities is conclusive on the parties. Indeed, this Court's resolution in G.R. No.
105157 (PLM vs. PSLMC et al.) which has long become final and executory
should now render that matter a fait accompli.

When the case was thus referred to the CSC by the PSLMC to take "appropriate
action" it understandably meant that the CSC should take the necessary steps of
reinstating the illegally dismissed employees.

WHEREFORE, the petition for certiorari is DISMISSED and the appealed

resolutions of the Civil Service Commission are AFFIRMED. The temporary
restraining order issued by this Court on 18 May 1993, is LIFTED. No costs.

SO ORDERED.

G.R. No. L-35120 January 31, 1984

ADAMSON & ADAMSON, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and ADAMSON & ADAMSON
SUPERVISORY UNION (FFW), respondents.

Sycip, Salazar, Luna & Feliciano for petitioner.

Jaime D. Lauron for respondents.

GUTIERREZ, JR., J.:

Adamson and Adamson, Inc., filed this petition to set aside orders of the
respondent Court of Industrial Relations (CIR) holding that the Adamson and
Adamson, Inc. supervisory Union (FFW) can legally represent supervisors of the
petitioner corporation notwithstanding the affiliation of the lank and file union of
the same company with the same labor federation, the Federation of Free
Workers.

The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the
petitioner about its having organized on the same date that the Adamson and
Adamson, Inc. Salesmen Association (FFW) advised the petitioner that the rank
and file salesmen had formed their own union.

The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter
of Representation of the Supervisory Employees of Adamson and Adamson, Inc.,
Petitioner " thus prompting the filing of this petition for review on certiorari.
Subsequently and during the pendency of the present petition, the rank and file
employees formed their own union, naming it Adamson and Adamson
Independent Workers (FFW).

The petitioner made a lone assignment of error, to wit:

THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN

SUSTAINING THE ELIGIBILITY OF THE RESPONDENT UNION TO
REPRESENT THE PETITIONER'S SUPERVISORY EMPLOYEES NOT-
WITHSTANDING THE AFFILIATION OF THE SAID UNION WITH THE SAME
NATIONAL FEDERATION WITH WHICH THE UNIONS OF NON-
SUPERVISORS IN THE PETITIONER COMPANY ARE ALSO AFFILIATED.

The petitioner argues that the affiliation of the respondent union of supervisors,
the salesmen's association, and the Adamson and Adamson independent
Workers Union of rank and file personnel with the same national federation
(FFW) violates Section 3 of the Industrial Peace Act, as amended, because —
(1) it results in the indirect affiliation Of supervisors and rank-and-file employees
with one labor organization; (2) since respondent union and the unions of non-
supervisors in the same company are governed by the same constitution and by-
laws of the national federation, in practical effect, there is but one union; and (3)
it would result in the respondent union's losing its independence because it
becomes the alter ego of the federation.

The petitioner also submits that should affiliation be allowed, this would violate
the requirement of separateness of bar units under Section 12 of the Act
because only one union will in fact represent both supervisors and rank-and-file
employees of the petitioner.

The respondents on the other hand argue that the supervisory employees of an
employer may validly join an organization of the rank-and-file employees so long
as the said rank and file employees are not under their supervision. They submit
that Adamson and Adamson Supervisory Union (FFW) is not composed of sales
supervisors and, therefore, the salesmen of the company are not under the
supervision of the supervisory employees forming the union. Respondents also
argue that even if the salesmen of the petitioner company are under the
supervision of the members of the supervisory union, the prohibition would not
apply because the salesmen and the supervisory employees of the company
have their separate and distinct labor organizations, and, as a matter of fact, their
respective unions sent separate proposal for collective bargaining agreements.
They contend that their respective labor organizations, not the FFW, will
represent their members in the negotiations as well as in the signing of their
respective contracts. Respondents further argue that the Federation of Free
Workers has, as its affiliates, supervisory as well as rank-and-file employees, and
should both the supervisory and the rank-and-file employees of a certain
employer who have separate certificates of registration affiliate with the same
federation, the prohibition does not apply as the federation is not the organization
of the supervisory employees contemplated in the law.

The issue presented involves the correct interpretation of Section 3 of Republic

Act No. 875, the Industrial Peace Act, as amended, which states:

Employees shall have the right to self-organization and to form join or assist
labor organizations of their own choosing for the purpose 6f collective bargaining
through representatives of their own and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or protection. Individuals
employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form separate
organizations of their own.

The right of employees to self-organization and to form, join or assist labor

organizations of their own choosing for the purpose of collective bargaining and
to engage in concerted activities for mutual aid or protection is a fundamental
right of labor that derives its existence from the Constitution. It is recognized and
implemented through the abovecited Section 3 of the Industrial Peace Act as
amended.

In interpreting the protection to labor and social justice provisions of the

Constitution and the labor laws or rules and regulations implementing the
constitutional mandates, we have always adopted the liberal approach which
favors the exercise of labor rights.

In deciding this case, we start with the recognized rule that the right of
supervisory employees to organize under the Industrial Peace Act carries certain
restrictions but the right itself may not be denied or unduly abridged. The
supervisory employees of an employer cannot join any labor organization of
employees under their supervision but may validly form a separate organization
of their own. As stated in Caltex Filipino Managers and Supervisors Association
v. Court of Industrial Relations (47 SCRA 112), it would be to attach unorthodoxy
to, not to say an emasculation of, the concept of law if managers as such were
precluded from organization. Thus, if Republic Act 875, in its Section 3,
recognizes the right of supervisors to form a separate organization of their own,
albeit they cannot be members of a labor organization of employees under their
supervision, that authority of supervisors to form a separate labor union carries
with it the right to bargain collectively with the employer. (Government Service
Insurance System v. Government Service Insurance System Supervisors' Union,
68 SCRA 418).

The specific issue before us is whether or not a supervisor's union may affiliate
with a federation with which unions of rank and-file employees of the same
employer are also affiliated. We find without merit the contentions of petitioner
that if affilation will be allowed, only one union will in fact represent both
supervisors and rank-and-file employees of the petitioner; that there would be an
indirect affiliation of supervisors and rank-and-file employees with one labor
organization; that there would be emerging of two bargaining units ; and that the
respondent union will loose its independence because it becomes an alter ego of
the federation.

In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80 SCRA 681) and Liberty Cotton
Mills Workers Union v. Liberty Cotton Mills, Inc. (66 SCRA 512), we held :

xxx xxx xxx

... the court expressly cited and affirmed the basic principle that
'(T)he locals are separate and distinct units primarily designed to
secure and maintain the equality of bargaining power between the
employer and their employee-member 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
the furtherance of the same end. These association are concensual
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.

We agree with the Court of Industrial Relations when it ruled that:

xxx xxx xxx

The confusion seems to have stemmed from the prefix of FFW after
the name of the local unions in the registration of both. Nonetheless,
the inclusion of FWW in the registration is merely to stress that they
 are its affiliates at the time of registrations. It does not mean that
said local unions cannot stand on their own Neither can it be
construed that their personalities are so merged with the mother
federation that for one difference or another they cannot pursue their
own ways, independently of the federation. This is borne by the fact
that FFW, like other federation is a legitimate labor organization
separate and distinct from its locals and affiliates and to construe the
registration certificates of the aforecited unions, along the line of the
Company's argument. would tie up any affiliates to the shoe string of
the federation. ...

The Adamson and Adamson Supervisory Union and the Adamson and Adamson,
Inc., Salesmen Association (FFW), have their own respective constitutions and
by-laws. They are separately and independently registered of each other. Both
sent their separate proposals for collective bar agreements with their employer.
There could be no employer influence on rank-and-file organizational activities
nor their could be any rank and file influence on the supervisory function of the
supervisors because of the representation sought to be proscribed.

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

questioned order and the resolution en bancof the respondent Court of Industrial
Relations are AFFIRMED.

SO ORDERED.

G.R. No. 37687 March 15, 1982

PEOPLE'S INDUSTRIAL AND COMMERCIAL EMPLOYEES AND WORKERS

ORGANIZATION (FFW), ERNESTO PAGAYATAN, ANTONIO ERIÑO,
RODRIGO BOADO AND LINO FRANCISCO, petitioners,
vs.
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, FEDERATION
OF TENANTS AND LABORERS ORGANIZATION, and THE COURT OF
INDUSTRIAL RELATIONS, respondents.

GUERRERO, J.:

Petition for review of the decision and en banc resolution of the Court of
Industrial Relations dated April 2, 1973 and October 3, 1973, respectively,
promulgated in three (3) consolidated cases. 1
The decision penned by Associate Judge Alberto S. Veloso adopting in full the
report of CIR Hearing Examiner Atty. Francisco de los Reyes made the following
dispositive portion, thus —

After a careful review, scrutiny and evaluation of the records of these

cases, as well as of every piece of evidence adduced by the parties,
pro and con, this court finds the findings of facts and conclusions of
law contained in the aforequoted Report to be amply substantiated,
and, therefore, adopts the same as its own.

WHEREFORE, in view of all the foregoing, above- entitled cases

should therefore be, as they are hereby ordered DISMISSED.

SO ORDERED.

This petition limits itself to the controversy in Case No. 4498-ULP filed by
People's Industrial and Commercial Employees and Workers Organization
against People's Industrial and Commercial Corporation and the Federation of
Tenants and Laborers Organization.

On the basis of the Examiner's Report, the following facts appear: On April 30,
1964, the Federation of Tenants and Laborers Organization, Rizal Chapter,
FTLO for short, entered into a collective bargaining agreement with respondent
People's Industrial and Commercial Corporation, hereafter referred to as
PINCOCO, (Exhibits "2" and "G"). At the time the agreement was consummated,
herein individual petitioners, Ernesto Pagayatan, Antonio Eriño, Rodrigo Boado
and Lino Francisco, who were also the individual complainants in Case No.
4498-ULP, together with those mentioned in Annex "A" of the complaint (List of
some forty-five [45] other employees), were employees of PINCOCO and
members of FTLO. The relevant portions of the working agreement stipulate:

xxx xxx xxx

Art. II. — Union Security Maintenance Shop. Those who are

members in good standing of the Union before the signing of this
working agreement, shall continue to be union members in good
standing as a prerequisite for continued employment in the
company.

xxx xxx xxx

Any employee covered by this agreement who during its term,

should resign from the union or shall be expelled therefrom
 according to its normal procedures for any of the causes hereafter
enumerated, shall upon written notice by the union directorate, be
discharged from employment, provided that the causes for expulsion
from the Union be any of the following:

1. Working in the interest of any labor organization other than the

Union which claims or exercises jurisdiction similar to that claimed or
exercised by the Union;

2. Refusal to pay or non-payment of Union dues and Assessment;

3. Disloyalty to the Union;

4. Separation from the Union for cause.

xxx xxx xxx

Art. VIII. No Strike, No Lockout. For the duration of the Agreement,

the COMPANY shall not lockout its employees, nor shall the UNION
or any employee stage any strike, picket or other concerted activity
other than in protest of unfair labor practice, and the court decision
in the case that may be filed in this connection shall determine the
propriety of such concerned activity under the Agreement. Violation
of this paragraph shall be treated as subject to the same sanctions
as a violation of the duty to bargain collectively.

A stoppage of work or cessation of operation due to poor sales, lack of raw

material, or any other business reason, or to force majeure shall not be deemed
a lockout for the purpose of the preceding paragraph. In any case that the
COMPANY should stop operations due to any of the foregoing reasons,
adequate notice shall be given to the UNION whenever possible.

xxx xxx xxx

Art. XI. Duration of the Agreement. — This agreement shall take

effect this — day of April, 1964 and shall only be in effect for a
period of one (1) year thereafter. Unless written notice of a desire to
terminate or modify the same is given by either party to the other at
least thirty (30) days before its expiration, this agreement shall be
deemed to be renewed for another year.

xxx xxx xxx

On October 18, 1964, it appears that with the knowledge of PINCOCO, an
election of union officers of the Rizal Chapter of FTLO was conducted by virtue of
a resolution (Exhibit "2-FFW", t.s.n., pp. 24-31, October 10, 1969) and that
individual petitioners were elected as the new officers with Ernesto Pagayatan as
chapter president (Exhibits "4-FFW" and "5-FFW"). On January 10, 1965,
individual petitioners together with fifty-one (51) other employees executed a
Certification (Exhibit "3-FFW") stating that they are members of the Federation of
Tenants and Laborers Organization, but as of the above date, they have
changed the name of their union to People's Industrial and Commercial
Employees and Workers Organization (PICEWO) and have affiliated this new
union with the Federation of Free Workers, Ernesto Pagayatan was again made
the president of the new union (PICEWO) together with the set of officers elected
with him in the last election retaining their respective positions. Further, in the
same certification, the union counsel of FTLO, Atty. David Advincula, was
disauthorized to represent the signatories. The certification contains no specific
reason or cause for the change of union name. On February 10, 1965, the new
union was granted a certificate of registration by the Department of Labor (Exhibit
" 1-FFW "),

On March 23, 1965, Ernesto Pagayatan, assuming the capacity of chapter

president of FTLO and not as a president of PICEWO, notified in writing
respondent PINCOCO of their desire to terminate the working agreement. Later,
a set of collective bargaining proposals was sent in the name of PICEWO
(Exhibits "e", "10" and " 11 "). PINCOCO replied this wise:

xxx xxx xxx

That in view of the study effected by the management as to its stand

with regard to the said proposals and further submission of the same
to our legal counsel for consultation and advice and considering that
April 15, 1965 is a legal holiday we cannot serve you, our formal
reply within the period specified by existing statute.

However, we assure you of our formal reply to your proposal on April

14, 1965 and that management will endeavor to avail of the
remedies within the financial capacity of the company and other
factors to be considered to meet the terms of your proposal.

On April 13, 1965, FTLO passed a resolution expelling petitioners Ernesto

Pagayatan, Antonio Eriño Rodrigo Boado and Lino Francisco from the
Federation of Tenants and Laborers Organization (FTLO) on grounds of
disloyalty and working for the interest of another labor federation (Exhibit "F"). On
April 22, 1965, Ernesto Pagayatan, this time as president of PICEWO filed a
notice of strike, alleging as cause thereof respondent employer's refusal to
bargain. (Exhibit "9-H"). On April 29,1965, prompted by the demand of the
majority of the FTLO directorate to enforce the maintenance of membership shop
of the working agreement, respondent PINCOCO dismissed Ernesto Pagayatan
and his companions from employment (Exhibits "12- FFW "12-A-FFW" to "12-
CFFW"). On May 1, 1965, the FTLO and respondent PINCOCO executed a
collective bargaining agreement for a period of three (3) years (Exhibits "A-CO"
and "D").

Meantime, on April 30, 1965, PICEWO, led by individual petitioners struck.

Thereafter, at the behest of the FTLO, respondent PINCOCO posted a notice for
the strikers to return to work within a period of five (5) or ten (10) days or else
they shall be considered to have abandoned their work. None of the strikers
returned and picketing went on for a period of six (6) months. Later, PINCOCO
again posted a notice that it had decided to resume operation on March 9, 1966,
and between March 7 and 8 of the same year, all employees were advised to
signify their ability to work at which time they will be required to submit police
clearances and to medical and physical examination by the company physician,
otherwise their failure to return within the period shall be considered as
abandonment of work. On March 31, 1966 petitioner-union, through its president,
signified the intention to return to work beginning April 4, 1966. None of the
strikers, however, were allowed to work.

From the preceding developments, three separate cases were filed with the
Court of Industrial Relations. In Case No. 4428-ULP, FTLO indicted herein
individual petitioners for unfair labor practice in staging an illegal strike after they
were already dismissed from the company. In Case No. 167-INJ, FTLO sought
for the issuance of a permanent injunction to stop the alleged illegal strike. In
Case No. 4498-ULP, PICEWO sued PINCOCO and FTLO for unfair labor
practice, alleging that by illegally dismissing petitioners, the company
discriminated against them in regard to hire, tenure and/or other conditions of
employment by unlawfully acceding and effecting the request of FTLO without
proper investigation thereof, with no just reason but to encourage membership in
the FTLO; and that respondent federation, in recommending and insisting on the
dismissal of individual petitioners, had interfered in their right to self-organization.
(Annex "C", p. 39, Rollo)

After the reception of evidence, the Hearing Examiner designated by the Court of
Industrial Relations, reported that the petitioners were, beyond doubt, members
of the FTLO when the Working Agreement of April 30, 1964 took effect and that
the working agreement required in Article II thereof maintenance of membership
in the federation as condition for continued employment in the company. Since
the specific causes for expulsion from membership have been enumerated,
particularly that of working for the interest of another organization and disloyalty
to the union, the Hearing Examiner concluded that petitioners' conduct is within
the said causes expressed in the agreement. The Report also established that
FTLO is the sole and exclusive bargaining representative of the employees which
entered into a bona fide agreement, putting a limitation of petitioners' right to
leave the union and join another. The Examiner found no unfair labor practice
committed by either the FTLO or PINCOCO, and that the strike staged by
petitioners was not on account of any unfair labor practice, but, rather, done to
force recognition.

Based on the above findings, respondent court dismissed the three cases. On
April 10, 1973, petitioners filed their motion for reconsideration; same was denied
in the en banc resolution of October 3, 1973. Petitioners now raise the following
assignment of errors:

a) The respondent court erred in holding that the Motion for Reconsideration and
the Memorandum in support of the Motion for Reconsideration were filed out of
time;

b) The respondent court erred in holding that the strike declared by herein
petitioners was intended only to force recognition;

c) The respondent court erred in not declaring both respondent Corporation and
respondent Federation guilty of committing unfair labor practice;

d) The respondent court erred in not declaring as illegal the dismissal from
employment of individual petitioners; and

e) Respondent court erred in not ordering the return to work of the striking
members of petitioner Union with backwages and other fringe benefits from April
30, 1965 until their actual reporting for work.

The last day for filing the motion for reconsideration was April 9, 1973 which was
a holiday (BATAAN DAY), and the last day for filing the arguments in support of
the motion for reconsideration, ten days after, was April 19, 1973, also a holiday
(MAUNDY THURSDAY). Since petitioners have filed their pleadings on the next
respective business days, that is, April 10, 1973, for the motion for
reconsideration and April 23 for the arguments in support thereof (April 20 to 22
not being business days), the pleadings were, therefore, filed on time. On this
procedural aspect, the resolution of October 3, 1973 has erred. It is the policy of
the law to disregard technicalities in procedure so as not to deprive the litigant's
pursuit of his substantial rights under the Rules.
Under Article 13, last paragraph, of the Civil Code, in computing the period, the
first day shall be excluded, and the last day included. And under Rule 28 of the
Rules of Court, Section 1, time is computed thus —

Sec. 1. How to compute time.-In computing any period of time

prescribed or allowed by these rules, by order of court, or by any
applicable statute, the day of the act, event, or default after the
designated period of time begins to run is not to be included. The
last day of the period so computed is to be included, unless it is a
Sunday or a legal holiday, in which event the time shall run until the
end of the next day which is neither a Sunday nor a holiday.

Under the second assignment of error, the question to be resolved is whether or

not the petitioners' act of disaffiliating themselves from the mother federation
constitutes an act of disloyalty to the union which would warrant their expulsion
and consequently their dismissal from the company in pursuance to the union
security clause embodied in the CBA.

Petitioners contend that no disloyalty is involved since what they did on January
10, 1965 was merely to change, as they did change, the name of Rizal Chapter
of the Federation of Tenants and Laborers Organization FTLO to People's
Industrial and Commercial Employees and Workers Organization (PICEWO).

While We are not convinced with the petitioners' argument that the only act that
they have done was to change the name of their union for they have registered
the new union and affiliated it with the Federation of Free Workers, We rule that
individual petitioners do not merit the dismissals meted by the company.

In Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, 2 We held that the
validity of the dismissals pursuant to the security clause of the CBA hinges on the
validity of the disaffiliation of the local union from the federation. It was further
held in this case that PAFLU (the federation) had the status of an agent while the
local union remained the basic unit of association free to serve the common
interest of all its members including the freedom to disaffiliate when the
circumstances warrant such an act. The Supreme Court, speaking thru Justice
Esguerra, said:

All these questions boil down to the single issue of whether or not
the dismissal of the complaining employees, petitioners herein, was
justified or not. The resolution of this question hinges on a precise
and careful analysis of the Collective Bargaining Agreements. (Exhs.
"H" and "l"). In these contracts it appears that PAFLU has been
recognized as the sole bargaining agent for all the employees of the
 Company other than its supervisors and security guards. Moreover it
likewise appears that "PAFLU, represented in this Act by its National
Treasurer, and duly authorized representative, ... (was) acting for
and in behalf of its affiliate, the Liberty Cotton Mills Workers Union
and the employees of the Company, etc." In other words, the
PAFLU, acting for and in behalf of its affiliate, had the status of an
agent while the local union remained the basic unit of the
association free to serve the common interest of all its members
including the freedom to disaffiliate when the circumstances warrant.
This is clearly provided in its Constitution and By-Laws, specifically
Article X on Union Affiliation, supra. At this point, relevant is the
ruling in an American case. (Harker et al. vs. Mckissock et al., 81A
2d 480, 482).

The locals are separate and distinct units primarily designed to

secure and maintain an equality of bargaining power between the
employer and their employee-members 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.

The right of the local members to withdraw from the federation and to form a new
local depends upon the provisions of the union's constitution, by- laws and
charter. In the absence of enforceable provisions in the federation's constitution
preventing disaffiliation of a local union, a local may sever its relationship with its
parent.

There is nothing shown in the records nor is it claimed by respondent federation

that the local union was expressly forbidden to disaffiliate from the federation.
Except for the union security clause, the federation claims no other ground in
expelling four of the fifty-one who signed the certification.
Fifty-one out of sixty employees is equivalent to eighty five percent (85%) of the
total working force. This is not a case where one or two members of the old union
decided to organize another union in order to topple down the former, but it is a
case where majority of the union members decided to reorganize the union and
to disaffiliate from the mother federation.

There is no merit to the contention of the respondent federation that the act of
disaffiliation is disloyalty to the union. The federation and the union are two
different entities and it was the federation which actively initiated the dismissal of
the individual petitioners. A local union does not owe its existence to the
federation to which it is affiliated. It is a separate and distinct voluntary
association owing its creation and continued existence to the will of its members.
The very essence of self-organization is for the workers to form a group for the
effective enhancement and protection of their common interests.

The third, fourth and fifth assignment of errors maybe resolved on the same
issue which is the legality of the strike and the consequences thereof.

Petitioners allege that the strike which was started on April 30, 1965 was staged
because of the unfair labor practice of the respondent company in refusing to
bargain collectively with PICEWO and in dismissing individual petitioners. The
Hearing Officer in his Report which was adopted in full by the Court of Industrial
Relations settled the legality of the strike in the following manner:

xxx xxx xxx

While the reply of respondent PINCOCO to the proposal of the new

union evokes ambiguity, the same may not be treated as a refusal to
bargain. At the time the letter proposal was sent, the presumed
bargaining agent was the FTLO. No showing had been made that
the PICEWO, upon its organization was should should have been
accorded the status of a majority bargaining representative. The
letter reply of PINCOCO, although it seem to cast doubt as to its
motivation, should not be held and taken against it as a positive
design to discriminate in the absence of any additional or
corroborative showing that the new union actually represented the
majority of the employees in the unit and that this fact was known to
the management.

The strike therefore of the PICEWO was not on account of any unfair
labor practice acts committed by the respondent PINCOCO. It seem
to have been more of a strike to force recognition.
 xxx xxx xxx

We do not agree with the finding of the Hearing Officer that the strike was staged
to force recognition. The chain of events which preceded the strike belie this
conclusion. On April 5, 1965, Ernesto Pagayatan, the president of PICEWO sent
to the management a set of proposals for a collective bargaining agreement. The
management on April 13, 1965 replied that the formal reply to the proposals
cannot be made within the reglementary period because they will submit the said
proposals to their legal counsel for further study and instead their reply would be
made on April 19, 1965. No reply was made on that date. On April 29, 1965,
individual petitioners were dismissed. A strike was staged the next day. One day
after the petitioners struck, a new collective bargaining agreement was signed by
the respondent company and the FTLO.

The respondent company knew that a new union was formed composed of about
85% of the total number of its employees. It was furnished a copy of the
certification that the majority of the FTLO members are forming a new union
called PICEWO. The set of bargaining proposals were in the name of the new
union. While a company cannot be forced to sit down and bargain collectively
with the new union since it had no notice of the union's official capacity to act as
the bargaining agent, the respondent company cannot deny that it had factual
knowledge of the existence of a majority union. It could have asked for further
proof that the new union was indeed the certified bargaining agent. It did not.
Instead, it dismissed individual petitioners and signed a new CBA the day after
the expiration of the old CBA, on the pretext that FTLO was presumed to be the
certified bargaining agent. Such pretext does not seem justified nor reasonable in
the face of the established fact that a new union enjoyed a majority status within
the company.

On the belief that the respondent company refused to bargain collectively with
PICEWO, individual petitioners together with the other members staged a strike.
We have in several cases ruled that a strike may be considered legal when the
union believed that the respondent company committed unfair labor acts and the
circumstances warranted such belief in good faith although subsequently such
allegation of unfair labor practices are found out as not true.

Thus, in Norton and Harrison Co. and Jackbilt Blocks company Labor Union
(NLU) vs. Norton and Harrison, et al., 3We held that "the act of the company in
dismissing Arcaina done without the required fair hearing, and, therefore, not
tenable even under strict legal ground, induced the union and its members to
believe that said company was guilty of unfair labor practice although viewed
now in retrospect said act would fall short of unfair labor practice. Since the strike
of the union was in response to what it was warranted in believing in good faith to
be unfair labor practice on the part of the management, said strike following the
berrer ruling did not result in the termination of the striking members' status as
employees and therefore, they are still entitled to reinstatement without
backwages."

The Ferrer 4 ruling was also upheld in Shell Oil Workers Union vs. Shell
Company of the Phil. Ltd. 5 where We stated that "(i)t is not even required that
there be in fact an unfair labor practice committed by the employer. It suffices, if
such a belief in good faith is entertained by labor as the inducing factor for
staging a strike. So it was clearly stated by the present Chief Justice while still an
Associate Justice of this Court: 'As a consequence, we hold that the strike in
question had been called to offset what petitioners were warranted in believing in
good faith to be unfair labor practices on the part of Management, that petitioners
were not bound, therefore, to wait for the expiration of thirty (30) days from notice
of strike before staging the same, that said strike was not, accordingly, illegal and
that the strikers had not thereby lost their status as employees of respondents
herein.

The Ferrer ruling was promulgated in 1966, that in the Shell Oil case in 1971. In
1980, there was the case of Pepito vs. Secretary of Labor, L-49418, Feb. 29,
1980, where petitioner therein was separated for having been implicated in a
pilferage case by a co-employee but was later absolved from the charge. The
Supreme Court thru Chief Justice Fernando ruled that the cause for his dismissal
was proved non-existent or false and thus ordered his reinstatement with three
years backwages, without deduction and qualification.

We adopt the Pepito ruling and We hold that the petitioners in the case at bar are
entitled not only to reinstatement but also to three years backwages without
deduction and qualification. This is . justified and proper since the strike was
proved and We held the same to be not illegal but was induced in the honest
belief that management had committed unfair labor practices and, therefore, the
cause of their dismissal from employment was non-existent. It is clear that
management gave cause or reason to induce the staging of the strike by
improperly refusing to recognize the new union formed by petitioners. It has been
twelve (12) years since petitioners were dismissed from their employment and in
their destitute and deplorable condition, to them the benign provisions of the New
Constitution for the protection of labor, assuring the rights of workers to self-
organization, collective bargaining and security of tenure would be useless and
meaningless. Labor, being the weaker in economic power and resources than
capital, deserve protection that — is actually substantial and material.

WHEREFORE, IN VIEW OF THE FOREGOING, the decision under review is

hereby SET ASIDE. The respondent company is hereby ordered to reinstate
individual petitioners and other striking members within thirty (30) days from
notice of this decision, with backwages equivalent, to three (3) years at the rates
actually received by them before their dismissal without deduction and
qualification.

In view of the length of time that this dispute has been pending, this decision
shall be immediately executory upon promulgation and notice to the parties.
Without pronouncement as to costs.

SO ORDERED.

G.R. No. 75037 April 30, 1987

TANDUAY DISTILLERY LABOR UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LAMBERTO SANTOS,
PEDRO ESTERAL, ROMAN CHICO, JOSELITO ESTANISLAO, JOSE
DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and JOSEFINO
PAGUYO, respondents.

No. 75055 April 30, 1987

TANDUAY DISTILLERY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), LAMBERTO
SANTOS, PEDRO ESTERAL, ROMAN CHICO, JOSELITO ESTANISLAO,
JOSE DELGADO, JUANITO ARGUELLES, RICARDO CAJOLES, and
JOSEFINO PAGUYO, respondents.

Jaime G. de Leon for petitioner in G.R. No. 75037.

Pacifico de Ocampo and Benjamin C. Gascon for petitioner in G.R. No. 75055.

GUTIERREZ, JR.:

These consolidated petitions for certiorari seek the review and setting aside of
respondent National Labor Relations Commission's decision in NLRC Case No.
AB-6-11685-81 dated May 26, 1986, affirming the October 12, 1984 decision of
the Labor Arbiter, and of the NLRC resolution dated June 28, 1986, which denied
the motion for reconsideration of the petitioners.

The facts of the case are as follows:

Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and
members of the Tanduay Distillery Labor Union (TDLU), a duly organized and
registered labor organization and the exclusive bargaining agent of the rank and
file employees of the petitioner company.

On March 11, 1980, a Collective Bargaining Agreement (CBA), was executed

between TDI and TDLU. The CBA was duly ratified by a majority of the workers
in TDI including herein private respondents, and a copy was filed with the
Ministry of Labor and Employment (MOLE) on October 29, 1980 for certification.
The CBA had a term of three (3) years from July 1, 1979 to June 30, 1982. It also
contained a union security clause. which provides:

All workers who are or may during the effectivity of this Contract,
become members of the Union in accordance with its Constitution
and By-Laws shall, as a condition of their continued employment,
maintain membership in good standing in the Union for the duration
of the agreement.

On or about the early part of October 1980, while the CBA was in effect
and within the contract bar period the private respondents joined another
union, the Kaisahan Ng Manggagawang Pilipino KAMPIL) and organized its local
chapter in TDI, with private respondents Pedro Esteral and Lamberts Santos
being elected President and Vice-President, respectively.

On November 7, 1980, KAMPIL filed a petition for certification election to

determine union representation in TDI, which development compelled TDI to file
a grievance with TDLU on November 7, 1980 pursuant to Article XV of the CBA.

Acting on the grievance of TDI, TDLU wrote the private respondents on

December 23, 1980 requiring them to explain why TDLU should not take
disciplinary action against them for, among other things —

Disloyalty to the Tanduay Distillery Labor Union (T.D.L.U.) by

forming and joining another union with a complete takeover intent as
the sole and exclusive bargaining representative of all rank and file
employees at TDI. (p. 16, Rollo)

TDLU created a committee to investigate its erring members in accordance with

its by-laws which are not disputed by the private respondents. Except for
Josefino Paguyo who, despite due notice, was absent during the investigation
conducted on January 2, 1981, all the private respondents were present and
given a chance to explain their side. Thereafter, in a resolution dated January 9,
1981, TDLU, through the Investigating Committee and approved by TDLU's
Board of Directors, expelled the private respondents from TDLU for disloyalty to
the Union effective January 16, 1981. By letter dated January 10, 1981, TDLU
notified TDI that private respondents had been expelled from TDLU and
demanded that TDI terminate the employment of private, respondents because
they had lost their membership with TDLU.

Acting on the demand of TDLU, TDI, in a Memorandum dated January 13, 1981,
notified "that effective January 16, 1981, we shall file the usual application for
clearance (with preventive suspension to take effect on the same day) to
terminate your services on the basis of the union security clause of our CBA.

Accordingly, TDI filed with the MOLE on January 14, 1981 its application for
clearance to terminate the employment of private respondents. This application
docketed as Case No. NCR-AC-1-435-81 specifically stated that the action
applied for was preventive suspension which will result in termination of
employment, ... due to (T)hreat to (P)roduction traceable to rival (U)nion
activity. The private respondents then filed with the MOLE a complaint for illegal
dismissal against TDI and Benjamin Agaloos, in his capacity as President of
TDLU, which complaint was docketed as Case No. STF-1-333-91. The cases
were jointly heard and tried by Labor Arbiter Teodorico Dogelio.

However, on January 26, 1981, the Med-Arbiter granted the private respondents'
petition calling for a certification election among the rank and file employees of
TDI. The Med-Arbiter's Order stated, inter-alia that the existence of an uncertified
CBA cannot be availed of as a bar to the holding of a certification election
(Emphasis supplied). On appeal of TDI and TDLU to the Bureau of Labor
Relations (BLR), the order for the holding of a certification election was reversed
and set aside by the BLR on July 8,1982, thus:

A careful perusal of the records of the case will reveal that

the uncertified CBA was duly filed and submitted on 29 October
1980, to last until June 30, 1982. Indeed, said CBA is certifiable for
having complied with all the necessary requirements for
certification. Consistent with the intent and spirit of P.D. 1391 and its
implementing rules, the contract bar rule should have been applied
in this case. The representation issue cannot be entertained except
within the last sixty (60) days of the collective agreement. (Emphasis
supplied) (p. 243, Rollo)

The last 60 days in a collective bargaining agreement is referred to as the

"freedom period" when rival union representation can be entertained during the
existence of a valid CBA. In this case, the "freedom period" was May 1 to June
30, 1982. After the term of the CBA lapsed, KAMPIL moved for a reconsideration
of the July 8, 1982 decision of the BLR on July 23, 1982 on the same ground that
since the CBA then in question was uncertified, the contract bar rule could not be
made to apply. On December 3, 1982, the BLR reversed itself, but for a different
reason and held that:

Movant union (Kampil) now seeks for the reconsideration of that

Order on the ground, among others, that the CBA in question is not
certifiable and, hence, the contract bar rule cannot properly apply in
this case.

After a more careful examination of the records, this Bureau is of the

view that the instant motion should be given due course, not
necessarily for the arguments raised by herein movant.

It should be noted that the alleged CBA has now expired. Its expiry
date being 30 June 1982. Consequently; there appears to be no
more obstacle in allowing a certification election to be conducted
among the rank and file of respondent. The contract bar rule will no
longer apply in view of the supervening event, that is, the expiration
of the contract. (Emphasis supplied) (pp. 244-245, Rollo)

TDLU filed a petition for review of the BLR decision with the Supreme Court,
docketed as Case No. G.R. No. 63995 TDI argued that KAMPIL did not have a
cause of action when the petition for certification was filed on November 7, 1980
because the freedom period was not yet in effect. The fact that the BLR issued
its order when the 60-day freedom period had supervened, did not cure this
defect. Moreover, the BLR decision completely overlooked or ignored the fact
that on September 21, 1982, a new CBA had been executed between the TDLU
and TDI so that when the BLR allowed a certification election in its order dated
December 3, 1982, the contract bar rule was applicable again. This Court denied
TDLU's petition in a minute resolution on November 14,1983.

Using the foregoing as relevant and applicable to the consolidated cases for the
clearance application for termination filed by TDI and the illegal dismissal case
filed by the private respondents on October 12, 1984, Labor Arbiter Teodorico
Dogelio rendered a decision denying TDI's application to terminate the private
respondents and ordering TDI to reinstate the complainants with backwages. It
should be noted that the Labor Arbiter rendered the decision even before the
petitioner company could file its memorandum, formal offer of exhibits and its
manifestation and motion to correct tentative markings of exhibits. This decision
of the arbiter was upheld by the respondent NLRC in NLRC Case No. AB-6-
11685-81 in its decision dated May 20,1986.
TDI and TDLU moved for reconsideration of the questioned decision, In its
motion, TDI alleged, inter alia, that respondent NLRC did not rule on the validity
of the CBA as a contract, neither did it resolve squarely the validity of the
enforcement of the union security clause of the CBA. TDI stated further that
respondent NLRC failed to consider the fact that at the time the private
respondents were expelled by TDLU and consequently terminated by TDI, the
union security clause of the CBA was in full force and effect, binding TDI and
TDLU.

For its part, TDLU said that the decision of the Supreme Court in the certification
case could not be used by respondent NLRC to justify its decision in the
dismissal case because the issues on the cases are entirely different and miles
apart. It is for this reason that there are two (2) cases that are involved. TDLU
explained that the Supreme Court decided to dismiss the petition for certiorari of
TDI and TDLU in the certification case because the original CBA existing at the
time the private respondents formed and joined KAMPIL had already expired.
However, TDLU made it clear that when the private respondents organized
KAMPIL in TDI, the same CBA was still in force and the disaffiliation did not take
place within the freedom period. Hence, at that point in time, the private
respondents committed disloyalty against the union.

On June 26, 1986, respondent NLRC denied the motion for reconsideration filed
by TDI and TDLU for lack of merit. In its petition, TDI alleged that:

RESPONDENT COMMISSION ACTED IN EXCESS AND WITH

GRAVE ABUSE OF ITS DISCRETION AND IN A MANNER
CONTRARY TO LAW IN RENDERING ITS DECISION EN BANC
OF MAY 20, 1986 AND IN DENYING PETITIONER'S MOTION FOR
RECONSIDERATION THEREOF IN ITS RESOLUTION SOLUTION
DATED JUNE 26, 1986 BECAUSE —

1. THE RESPONDENT COMMISSION HAS IGNORED

THE FACT THAT THE PRIVATE RESPONDENTS
WERE EXPELLED BY TDLU FROM ITS
MEMBERSHIP ON JANUARY 16, 1981 AND,
CONSEQUENTLY, TDLU HAD DEMANDED OF THE
PETITIONER OF THE ENFORCEMENT OF THE
UNION SECURITY CLAUSE OF THE CBA, THE SAID
CBA WAS AN EXISTING AND A VALID CONTRACT
BETWEEN THE PETITIONER AND TDLU, AND
EFFECTIVE BETWEEN THE PARTIES;
 2. IT IS FUNDAMENTAL THAT A UNION SECURITY
CLAUSE PROVISION IN COLLECTIVE BARGAINING
AGREEMENT IS BINDING BETWEEN THE PARTIES
TO THE CBA UNDER THE LAWS;

3. THE EXPULSION OF THE PRIVATE

RESPONDENTS FROM TDLU WAS THE UNION'S
OWN DECISION. HENCE, WHEN TDLU DEMANDED
OF THE PETITIONER THE ENFORCEMENT OF THE
SECURITY CLAUSE PROVISION OF THE CBA BY
SEPARATING PRIVATE RESPONDENTS FROM
THEIR EMPLOYMENT, FOR HAVING LOST THEIR
MEMBERSHIP IN THE UNION, THE PETITIONER
WAS DUTY BOUND TO DO SO;

4. THE ALLUSION THAT THE CBA WAS NOT

CERTIFIED BY THE BUREAU OF LABOR RELATIONS
(BLR) HAS NOTHING TO DO WITH ITS
EFFECTIVENESS AS A VALID CONTRACT
BETWEEN ALL PARTIES THERETO.

II

RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF

DISCRETION AND IN EXCESS OF ITS JURISDICTION IN
HOLDING THAT PRIVATE RESPONDENTS DID NOT COMMIT
ACTS PREJUDICIAL TO THE PETITIONER'S PRODUCTION
EFFORTS TO BE SUFFICIENT BASIS FOR THEIR PREVENTIVE
SUSPENSION AND EVENTUAL REMOVAL.

On the other hand, petitioner TDLU in essence contends that:

THE CBA IS VALID AND BINDING NOT ONLY ON TDI AND TDLU BUT
LIKEWISE ON PRIVATE RESPONDENTS WHO HAVE RATIFIED THE SAME
IN THEIR INDIVIDUAL CAPACITIES AS MEMBERS OF TDLU; HENCE, THE
UNION SECURITY CLAUSE IS VALID AND BINDING ON THEM;

THE ACTION OF TDLU IN REQUESTING FOR THE ENFORCEMENT OF THE

UNION SECURITY CLAUSE OF THE CBA BETWEEN TDI AND TDLU IS PART
OF THE INHERENT RIGHT TO SELF- ORGANIZATION;

TDLU CANNOT BE MADE LIABLE FOR THE PAYMENT OF BACKWAGES

BECAUSE ALL THAT IT DID WAS ASK FOR THE ENFORCEMENT OF A CBA,
WHICH CBA HAS NEVER BEEN DECLARED NULL AND VOID AND THE
UNION SECURITY CLAUSE SOUGHT TO BE ENFORCED WAS NOT ALSO
DECLARED NULL AND VOID;

PRIVATE RESPONDENTS DISAFFILIATED THEMSELVES FROM TDLU BY

ORGANIZING THE LOCAL CHAPTER OF KAMPIL IN TDI IN OCTOBER 1980,
BUT THE ACT OF DISAFFILIATION WAS COMMITTED OUTSIDE THE
FREEDOM PERIOD PROVIDED UNDER PRESIDENTIAL DECREE 1391
WHICH LIMIT ALL PETITIONS FOR CERTIFICATION ELECTION,
DISAFFILIATION AND INTERVENTION TO THE 60 DAY FREEDOM PERIOD
PRECEDING THE EXPIRATION OF THE CBA. HENCE, PRIVATE
RESPONDENTS COULD BE EXPELLED FROM MEMBERSHIP FOR
DISLOYALTY AND OTHER INIMICAL ACTS AGAINST THE INTEREST OF
TDLU.

The private respondents admit that the root of the whole controversy in the
instant case is the organization of a Local Union Chapter of KAMPIL at TDI and
the subsequent filing of a petition for certification election with the MOLE by said
local chapter. This local chapter of KAMPIL was organized with the help of,
among others, the private respondents some of whom were elected union
officers of said chapter. They contend that their act of organizing a local chapter
of KAMPIL and eventual filing of a petition for certification election was pursuant
to their constitutional right to self-organization.

The issues to be resolved are the following: (a) whether or not TDI was justified
in terminating private respondents' employment in the company on the basis of
TDLU's demand for the enforcement of the Union Security Clause of the CBA
between TDI and TDLU; and (b) whether or not TDI is guilty of unfair labor
practice in complying with TDLU's demand for the dismissal of private
respondents.

We enforce basic principles essential to a strong and dynamic labor movement.

An established postulate in labor relations firmly rooted in this jurisdiction is that
the dismissal of an employee pursuant to a demand of the majority union in
accordance with a union security agreement following the loss of seniority rights
is valid and privileged and does not constitute an unfair labor practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed
shop arrangement as a form of union security. The closed shop, the union shop,
the maintenance of membership shop, the preferential shop, the maintenance of
treasury shop, and check-off provisions are valid forms of union security and
strength. They do not constitute unfair labor practice nor are they violations of the
freedom of association clause of the Constitution. (See Pascual, Labor Relations
Law, 1986 Edition, pp. 221-225 and cases cited therein.) There is no showing in
these petitions of any arbitrariness or a violation of the safeguards enunciated in
the decisions of this Court interpreting union security arrangements brought to us
for review.

In this light, the petitioner points out that embedded at the very core and
as raison d'etre for the doctrine which enforces the closed-shop, the union shop,
and other forms of union security clauses in the collective bargaining agreement
is the principle of sanctity and inviolability of contracts guaranteed by the
Constitution.

This Court speaking thru Mr. Justice Labrador, in Victorias Milling Co., Inc., v.
Victorias-Manapia Workers Organization (9 SCRA 154), ruled:

Another reason for enforcing the closed-shop agreement is the

principle of sanctity or inviolability of contracts guaranteed by the
Constitution. As a matter of principle the provision of the Industrial
Peace Act relating freedom to employees to organize themselves
and set their representative for entering into bargaining agreements,
should be subordinate to the constitutional provision protecting the
sanctity of contracts. We can not conceive how freedom to contract,
which should be allowed to be exercised without limitation may be
subordinated to the freedom of laborers to choose the organization
they desire to represent them. And even if the legislature had
intended to do so and made such freedom of the laborer paramount
to the sanctity of obligation of contracts, such attempt to override the
constitutional provision would necessarily and ipso facto be null and
void.

xxx xxx xxx

[T]he action of the respondent company in enforcing the terms of the

closed-shop agreement is a valid exercise of its rights and
obligations under the contract. The dismissal by virtue thereof
cannot constitute an unfair labor practice, as it was in pursuance of
an agreement that has been found to be regular and of a closed-
shop agreement which under our laws is valid and binding.

In the instant case, the CBA in question provides for a Union Security Clause
requiring:

(c) All workers who are or may during the effectivity of this contract
become members of the union in accordance with its constitution
 and by-laws shall as a condition of their continued employment,
maintain membership in good standing in the union for the duration
of the agreement. (Emphasis supplied)

Having ratified that CBA and being then members of the TDLU, the private
respondents owe fealty and are required under the Union Security Clause to
maintain their membership in good standing with it during the term thereof, a
requirement which ceases to be binding only during the 60-day freedom period
immediately preceding the expiration of the CBA. When the private respondents
organized and joined the KAMPIL Chapter in TDI and filed the corresponding
petition for certification election in November 1980, there was no freedom period
to speak of yet. For under Presidential Decree No. 1391, promulgated May 29,
1978, the law applicable in this instance provides:

No petition for certification election for intervention disaffiliation shall

be entertained or given due course except within the 60 day freedom
period immediately preceding the execution of the Collective
Bargaining Agreement.

and under Section 21, Rule 3 of the Rules Implementing PD 1391 "... pending
certification of a duly filed collective bargaining agreement no petition for
certification election in the same bargaining unit shall be entertained or
processed." (promulgated September 19, 1978). The Labor Code further
mandates that "no certification election shall be entertained if a Collective
Bargaining Agreement which has been submitted in accordance with Article 231
of the Code exists between the employer and a legitimate labor organization
except within sixty (60) days prior to the expiration of the life of such collective
agreement (Art. 257).

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or
act on TDLU's request for certification of the CBA in question is of no moment to
the resolution of the issues presented in this case. The BLR itself found in its
order of July 8, 1982 that "the certified CBA was duly filed and submitted on
October 29, 1980, to last until June 30, 1982 is certifiable for having complied
with all the requirements for certification.

The validity of the CBA is not here assailed by private respondents. They
admitted having organized the local chapter of KAMPIL at TDI, although it is
claimed that this was done when there was no certified CBA between TDI and
TDLU that would constitute a bar to the certification election. Of significance is
the ruling in Manalang v. Artex Development Co., Inc., (21 SCRA 561, 569)
decided on a factual setting where the petitioners had affiliated themselves with
another labor union, Artex Free Workers, without first terminating their
membership with Bagong Buhay Labor Union (BBLU) and without the knowledge
of the officers of the latter union, for which reason the petitioners were expelled
from the BBLU for acts of disloyalty; and the company, upon the behest of BBLU
dismissed them from employment pursuant to the closed-shop stipulation in a
Collective Bargaining Agreement. This Court ruled:

The validity of the Collective Bargaining Agreement of March 4, 1960

is not assailed by the petitioners. Nor do they deny that they were
members of the BBLU prior to March 4, 1960 and until they were
expelled from the union. ...

The petitioners further contention that the closed-shop provision in

the collective Bargaining Agreement is illegal because it is
unreasonable,restrictive of right of freedom of association
guaranteed by the Constitution is a futile exercise in argumentation
of this Court has in a number of cases sustained closed-shop as
valid union security.

Finally, even if we assume, in gratia argumenti,that the petition were

unaware of the stipulation set forth in the collective bargaining
agreement since their membership in the BBLU prior to t the
expulsion thereform is undenied there can be no question that as
long as the agreement with closed-shop provision was in force they
were bound by it. Neither their ignorance of,nor their dissatisfaction
with, its terms and condition would justify breach thereof or the
formation by them of a union of their own.As has been aptly said the
collective bargaining agreement entered into by officers of a union
as agent of the member,and an employer,gives rise to valid
inforcible contractual relation against the individual union members
in matters that affect the entire membership or large classes of its
member who employed under an agreement between the union and
his employer is bound by the provision thereof,since it is a joint and
several contract of the members of the union and entered into by the
union as their agent.

In an earlier case, this Court held:

Nor can it be said that the stipulation providing that the employer
may dismiss an employee whenever the union recommends his
expulsion either for disloyalty or for any violation of its by-laws and
constitution is illegal or constitute of unfair labor practice, for such is
one of the matters on which management and labor can agree in
order to bring about harmonious relations between them and the
 union, and cohesion and integrity of their organization And as an act
of loyalty a union may certainly require its members not to affiliate
with any other labor union and to consider its infringement as a
reasonable cause for separation. This is what was done by
respondent union. And the respondent employer did nothing but to
put in force their agreement when it separated the herein
complainants upon the recommendation of said union. Such a
stipulation is not only necessary to maintain loyalty and preserve the
integrity of the union but is allowed by the Magna Charta of Labor
when it provided that while it is recognized that an employee shall
have the right to self-organization, it is at the same time postulated
that such right shall not injure the right of the labor organization to
prescribe its own rules with respect to the acquisition or retention of
membership therein (Section 41(b) par. 1, Republic Act 875). This
provision is significant. It is an indirect restriction on the right of an
employee to self-organization. It is a solemn pronouncement of a
policy that while an employee is given the right to join a labor
organization, such right should only be asserted in a manner that will
not spell the destruction of the same organization The law requires
loyalty to the union on the part of its members in order to obtain to
the full extent its cohesion and integrity. We therefore, see nothing
improper in the disputed provisions of the collective bargaining
agreement entered into between the parties. (Ang Malayang
Manggagawa ng Ang Tibay Enterprises, et al. v. Ang Tibay, et al.
102 Phil. 669) (Emphasis supplied)

We agree with petitioner TDLU that the dismissal of the petition for certiorari in
G.R. No. 63995 entitled TDLU v. Kaisahan ng Manggagawang Pilipina could not
be construed as to extinguish the right of TDLU to expel private respondents for
acts of disloyalty when they organized a local chapter of KAMPIL in October
1980 in TDI. The subject matter brought to this Court in G.R. No. 63995 was the
decision of the Bureau of Labor Relations dated December 3, 1982 requiring the
holding of certification election in TDI within twenty (20) days from receipt of said
BLR's decision which reads:

Movant union (KAMPIL) now seeks for the reconsideration of that

order on the ground, among others, that the CBA in question is not
certifiable and, hence, the contract bar rule cannot properly apply to
this case.

After a careful examination of the records, this Bureau is of the view

that the instant motion should be given due course, not necessarily
for the arguments raised by herein movant.
 It should be noted that alleged CBA has now expired, its expiry date
being 30 June 1982. Consequently, there appears to be no more
obstacle in allowing a certification election to be conducted among
the rank and file of respondent. The contract bar rule will no longer
apply in view of the supervening even that is, the expiration of the
contract. (ANNEX C, TDI's Memorandum dated November 28,1986;
Emphasis supplied).

It is clearly apparent that the BLR aforesaid Order which this Court upheld in
G.R. No. 63995 when it dismissed TDLU's petition in a minute resolution, did not
pass upon the question of legality or illegality of the dismissal of private
respondents from TDI by reason of their expulsion from TDLU for disloyalty. That
question was neither raised nor passed upon in the certification case, and was
not a proper issue therein because a petition for certification election is not a
litigation but a mere investigation of a non-adversary character to determine the
bargaining unit to represent the employees (George Peter Lines, Inc. v.
Associated Labor Union, 134 SCRA 82). Hence, no inference could be derived
from the dismissal of said petition that either the BLR or this Court has decided in
favor of private respondents insofar as the question of union disloyalty and their
suspension and termination from employment of TDI is concerned.

Simply put, the BLR ordered the holding of a certification election because the
CBA in question had already expired, its expiry date being June 30, 1982.
Consequently, there appears to be no more obstacle in allowing a certification
election. "... [T]he contract bar rule will not apply in view of the supervening
event, that is, the expiration of the CBA."

But the fact that the CBA had expired on June 30, 1982 and the BLR, because of
such supervening event, ordered the holding of a certification election could not
and did not wipe out or cleanse private respondents from the acts of disloyalty
committed in October 1980 when they organized KAMPIL's local chapter in TDI
while still members of TDLU. The ineluctable fact is that private respondents
committed acts of disloyalty against TDLU while the CBA was in force and
existing for which they have to face the necessary sanctions lawfully imposed by
TDLU.

In Villar v. Inciong (121 SCRA 444), we held that "petitioners, although entitled to
disaffiliation from their union and to form a new organization of their own must
however, suffer the consequences of their separation from the union under the
security clause of the CBA: "

Inherent in every labor union, or any organization for that matter, is

the right of self-preservation. When members of a labor union,
 therefore, sow the seeds of dissension and strife within the union;
when they seek the disintegration and destruction of the very union
to which they belong; they thereby forfeit their rights to remain as
members of the union which they seek to destroy. Prudence and
equity, as well as the dictates of law and justice, therefore,
compelling mandate the adoption by the labor union of such
corrective and remedial measures, in keeping with its laws and
regulations, for its preservation and continued existence; lest by its
folly and inaction, the labor union crumble and fall. (Idem., p. 458)

The private respondents cannot, therefore, escape the effects of the security
clause of their own applicable collective bargaining agreement.

WHEREFORE, the decision dated May 26, 1986 and the resolution dated June
26, 1986 of respondent National Labor Relations Commission in NLRC Case No.
AB-11685-81 are hereby SET ASIDE. The expulsion of private respondents from
TANDUAY DISTILLERY LABOR UNION and their consequent suspension and
termination from employment with TANDUAY DISTILLERY, INC., without
reinstatement and backwages, are hereby SUSTAINED. No cost.

SO ORDERED.

[G.R. No. L-39686. June 25, 1980.]

VOLKSCHEL LABOR UNION, MARIANO SUAREZ, PEDRO TORRES, JAIME

RAMOS, and ANTONIO GALAN, Petitioners, v. NATIONAL LABOR
RELATIONS COMMISSION and PEOPLE’S CAR,
INCORPORATED, Respondents.

DECISION

DE CASTRO, J.:

Petition for review on certiorari of the decision of the National Labor Relations
Commission which modified the award dated February 1, 1974 of the Arbitrator.

The case arose from the complaint for unfair labor practice filed on March 15,
1973 by petitioner against respondent company on the following
grounds:chanrob1es virtual 1aw library
1. Unjust transfers and suspension of unionists.

2. Gross violation of the collective bargaining agreement, particularly re: agency

clause.

3. Refusal to negotiate union grievances in good faith.

Sometime in January, 1973, respondent company in an inter-office

memorandum, 1 ordered the transfer of several employees from the Malabon
District Office to the Cebu District and Magna Service, Inc., sister-company of
said Respondent. The union, thru its president, Casiano C. Garcia wrote a letter
2 to Mr. Rene Oboza, President and General Manager of the Company, seeking
a reconsideration of the projected transfer. On January 9, 1973, the company
issued an inter-office memorandum 3 informing the employees concerned that
management is standing firm on its decision to transfer or assign them to the
Cebu District and Magna Services and that they are suspended indefinitely for
their refusal to comply with the management’s order, which suspension will
eventually lead to termination from the service for cause after the company
secures the clearance from the Secretary of Labor. With this situation, Casiano
Garcia, the union president, again wrote a letter to the management, requesting
for the lifting of the employees’ suspension without loss of personal rights and
privileges and stating that by effecting the transfer of these employees, it would
seem that the company is bent on "busting" the union chapter in Malabon District
which tends to demoralize the members. In reply to said letter, the company, thru
Mr. Rene Oboza, averred that the suspension was the result of the employees’
violation of the Code of Discipline; that the act of suspension was merely an
exercise of management’s prerogative to discipline its employees, calling the
attention of Mr. Garcia to Art. II, Section 1 of the CBA which
provides:jgc:chanrobles.com.ph

"Management rights — The COMPANY retains the sole right to manage its
business including the number and location of factories or plants . . . as well as to
suspend, discharge, lay-off or take any disciplinary action against any employee
for just causes . . ."cralaw virtua1aw library

and that management was well within its rights in enforcing a provision of the
CBA.

The respondent company adduced the reason that the questioned transfer was
due to the fact that the Malabon District Office of the Company had been in a
business slump on account of the construction and subsequent opening of the
North Diversion Road at Balintawak, Rizal and other business factors which
forced the company to decide on a retrenchment program involving the reduction
of its personnel. It was also stressed by the company that a careful screening of
all the employees’ records was done to avoid injustice and that the selection of
those involved in the retrenchment was made regardless of whether they were
union members or not; that it could have well decided to dismiss its employees at
its Malabon Branch but instead of pursuing such course of action, it gave its
employees several options to choose from:chanrob1es virtual 1aw library

(1) temporary lay offs with priority of employment at the opening of respondent’s
Marikina Branch;

(2) transfer or relocation to any of respondents’ branches or sister corporations;

and

(3) permanent termination from employment with separation pay; that some
employees accepted and received respondent’s offer of separation pay; and
when herein petitioner-employees opted to remain with the company, they
submitted themselves to its discretion when and where they should be
transferred and/or relocated.

On the other hand, petitioners maintain that the company violated the provision
of Art. I, Section 1 of the Collective Bargaining Agreement, to
wit:jgc:chanrobles.com.ph

"UNION RECOGNITION AND CHECK-OFF — Section 1. The COMPANY

recognizes the union as the sole and exclusive bargaining representative for all
regular rank and file workers of the COMPANY in the Greater Manila Area . .
."cralaw virtua1aw library

Petitioners contend that such transfer involved movement that would take the
employees outside the bargaining unit defined in the agreement. Moreover, in
refusing to be transferred to the Magna Services, Inc. and Cebu District, herein
petitioners-employees claim that it would be very difficult to leave their families
behind even if they wanted to, considering the prevailing economic conditions.

Furthermore, petitioner union alleged that the company refused to honor its
commitment embodied in Art. III, Section 3 of the Agreement, "that respondent
company bound itself . . . to assist the Union to collect and hereby guarantees
collection of, an agency fee equivalent to the Union membership dues but not
exceeding P4.00 per month from each regular employee . . ., and who is not a
member of the Union;" and since all the employees in the Company, whether
they be union or non-union members are entitled to all the benefits that their
bargaining agent was able to secure for them, it is in this light that the Union
seeks the imposition of the Agency fee.
The respondent company considers the issue of agency fee as sub judice since it
was raised for resolution before the Court of First Instance of Rizal in a petition
for declaratory relief praying for the proper construction and interpretation of the
provision on agency fee. In answer to this claim, petitioner union argues that the
NLRC has exclusive jurisdiction to resolve the present dispute regarding agency
fees in accordance with PD No. 21.

Pending resolution of the complaint, the company reinstated Godofredo League

and Edilberto Vicmudo while petitioners Suarez, Ramos, Torres and Galan were
dismissed for insubordination. After a series of hearings and submission of the
parties’ respective memoranda, the arbitrator rendered an award 4 on February
1, 1974, the dispositive portion of which reads:jgc:chanrobles.com.ph

"WHEREFORE, and in recapitulation, the respondent company is hereby

directed to reinstate Mariano Suarez, Jaime Ramos, Pedro Torres and Antonio
Galan to their usual employment with full backwages from January 9, 1973 and
to pay backwages to Godofredo League and Edilberto Vicmudo corresponding to
the period of their unjust suspension and/or lay-off from January to February,
1973.

"Likewise, the respondent company is ordered to comply with its obligation under
Art. III, Section 3 of the CBA and in this respect, to transmit all agency fees due
the union in the amount of P4.00 per capita monthly from January 1, 1972 up to
the present time and to continue to comply with such obligation henceforth till the
expiration of the CBA.

"So Ordered."cralaw virtua1aw library

From this award, respondent company appealed to the National Labor

Commission. Petitioners objected to the appeal on the grounds that (1) the award
had already become final and executory since the appeal was filed beyond the
reglementary period; (2) the award is final and unappealable because of the
provision of the collective bargaining agreement and (3) the award is supported
by substantial evidence. On October 17, 1974, the Commission rendered a
decision 5 modifying the arbitrator’s award, thus:jgc:chanrobles.com.ph

"WHEREFORE, complainants Suarez, Jaime Ramos, Pedro Torres and Antonio

Galan are hereby ordered to comply with respondents directive to reassign or
transfer them within fifteen (15) days from receipt of this decision.

x x x
"The award appealed from is therefore, set aside insofar as it is inconsistent with
this decision.

"So Ordered."cralaw virtua1aw library

Petitioners appealed to the Secretary of Labor on November 14, 1974 and during
the pendency thereof, filed the instant petition for review alleging that they cannot
exclusively rely on their appeal to the Secretary of Labor when they received the
disputed decision on November 8, 1974 (after the New Labor Code had already
taken effect on November 1, 1974, repealing PD No. 21); that up to now there
are no implementing rules promulgated yet by the New NLRC created by PD 442
and in order to prevent a grave irreparable damage to the interest of the
petitioners, they must file this appeal by certiorari pursuant to the provision of the
New Labor Code "that the decision of the NLRC involving question of law could
he appealed by certiorari to the Supreme Court."cralaw virtua1aw library

The following issues are presented to this Court for resolution:chanrob1es virtual
1aw library

1. As to whether or not the NLRC has the power to alter or modify the award
rendered by a voluntary arbitrator whose decision is final and executory pursuant
to the CBA; and

2. As to whether or not the NLRC could still reverse or modify the voluntary
arbitrator’s award despite the appeal of the private respondent company was
filed beyond the reglementary period or in other words the right to appeal has
prescribed.

The petition was given due course on February 24, 1975 and pending receipt of
respondent’ s answer, the Secretary of Labor on March 24, 1975 issued an order
6 denying petitioners’ appeal from the decision of respondent commission and
accordingly enjoined the parties to comply with the disposition set forth in the
said appealed decision.

In support of the first issue raised, petitioners argued that the voluntary arbitrator
expressly stated in his award "that the parties agreed to refer the dispute to the
undersigned for voluntary arbitration in accordance with the CBA;" that said
finding was not questioned by respondent company; that the decision revising
the award of the voluntary arbitrator is violative of the CBA which
provides:jgc:chanrobles.com.ph
"There shall be no appeal from an arbitrator’s decision. It shall be final and
binding on the UNION, on all bargaining unit employees and on the COMPANY.
The decision shall be such as to be dispositive of the matter or matters submitted
to arbitration . . ." 7

and that the provision in the CBA regarding the grievance machinery as well as
the definition of the bargaining unit specifically delineating a definite place of
work would be useless if respondent company could transfer employees at will
even to places not covered by the CBA.

As to the second issue raised, it is the contention of petitioners that the appeal of
respondent company from the arbitrator’s award was filed on March 5, 1974,
which is beyond the reglementary period, alleging that said respondent received
the award on February 22, 1974; 8 and for the NLRC now to revise or disturb the
award of the voluntary arbitrator would in effect be going against the very
implementing rules it has promulgated requiring any aggrieved party to file an
appeal within 5 days upon receipt of the award, which rule was adopted on
October 18, 1972.

In refutation of petitioners’ contentions, respondent company alleged that the

award rendered by the arbitrator is not the decision contemplated in and provided
for in the CBA; that the fact that petitioners’ appeal to the Secretary of Labor was
still pending when they filed the instant petition clearly divests this Court from
taking cognizance of the present case; that the NLRC’s rule dated October 18,
1972 was expressly repealed by its subsequent supplementary rule issued on
January 26, 1973 which reads in part, thus:jgc:chanrobles.com.ph

"Section 2. Appeal may be brought to the Commission within ten (10) days upon
receipt of the Award by the aggrieved party." 9

It was stressed by said respondent that the provision in the collective bargaining
agreement is subordinate to the will of the state or the law; that is to say, if
appeal is provided for or available under the law, said remedy cannot be
foreclosed by mere stipulation of the parties.

Arbitrator Alexander Guray stated in his award that the parties had earlier sought
to settle their differences internally pursuant to the grievance machinery provided
in their agreement; and when their efforts to resolve the problem failed, the
parties agreed to refer the dispute to a voluntary arbitrator. A perusal of the
records however show that on May 11, 1973, the Mediation-fact finding report
submitted by Mediator Jose Collado, Jr. contained the following data: 10

"II. Issue remained non-conciliatory.

III. No Mutual Agreement for voluntary arbitration.

IV. Referred to NLRC for Compulsory Arbitration."cralaw virtua1aw library

The designation of Guray was thus as "Compulsory Arbitrator," 11 and the

proceedings accordingly were actually that of compulsory arbitration with the
right of appeal. However, because of respondent company’s failure to perfect its
appeal on time, the National Labor Relations Commission was divested of its
jurisdiction to entertain the appeal.

The records show that the respondent company’s appeal to the Commission was
filed on March 5, 1974 and was received by the Bureau of Labor Relations
Division on March 6, 1974. 12 It was admitted by said respondent that its counsel
received a copy of the arbitrator’s award on February 22, 1974 and applying
Section 2 of the NLRC Rules and Regulations providing for a ten-day period to
appeal from receipt of the award, it is very clear by mathematical computation
that the appeal was filed out of time; hence, the award attained finality.

It is a well-settled rule that an award or judgment becomes final and executory

upon the expiration of the period to appeal and no appeal was made within the
reglementary period. The basic rule of finality of judgment is applicable
indiscriminately to one and all since the rule is grounded on fundamental
consideration of public policy and sound practice that at the risk of occasional
error, the judgment of courts and award of quasi-judicial agencies must become
final at some definite date fixed by law. 13

The lapse of the appeal period deprives courts of jurisdiction to alter a final
judgment. In the instant case, the decision of the Commission 14 modifying the
award of the arbitrator is null and void for having been issued without jurisdiction
and authority, the appeal taken thereto not having been filed on time. The
perfection of an appeal within the reglementary period is not only mandatory but
jurisdictional. 15

Respondent Company’s contention that it filed its appeal within the reglementary
period should not be given weight. Such allegation is not fully substantiated.
There is here an apparent miscomputation by counsel of the appeal period which
will not arrest the course of the same nor prevent the finality of the judgment, in
simply stating that he filed the appeal on time, otherwise, the definite and
executory character of the judgment would be left to the whim of the losing party,
when it is in the interest of everyone that the date when judgments become final
should remain fixed and ascertainable. 16
In view of the above conclusion reached, there is no further need to discuss the
merits of the dismissal of the employees for insubordination. The award having
attained finality, becomes the law of the case, and must be complied with, no
matter how erroneous it may be.

It may also be pertinent to state that even if the proceedings herein be

considered as in the nature of a voluntary arbitration as so held by the Arbitrator
in his award, for reasons not quite clear from the records, the award appealed
from shall be final and binding between the parties. The award of voluntary
Arbitrators acting within the scope of their authority determines the rights of the
parties, and their decisions have the same legal effects as a judgment of the
Court. Such decisions on matters of fact and law are conclusive, and all matters
in the award are thenceforth res judicata, on the theory that the matter has been
adjudged by the tribunal which the parties have agreed to make final as tribunal
of last resort. 17

WHEREFORE, the decision dated October 17, 1974 of the National Labor
Relations Commission and the Order dated March 24, 1975 of the Secretary of
Labor are hereby set aside and the award of the arbitrator is reinstated in toto.
This decision is immediately executory. No pronouncement as to costs.

SO ORDERED.

[G.R. No. 127374. January 31, 2002]

PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO and FRANCISCO

DAKILA, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER EMERSON TUMANON, PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER (now
UNIFIED PAFLU) and SERAFIN AYROSO, respondents.

[G.R. No. 127431. January 31, 2002]

PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO

CABANIAS, PEPITO RODILLAS, SHARON CASTILLO, DANILO
CARBONEL, MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA,
 RICARDO LUMBA, JOSEPH MARISOL, NERISA MORTEL,
TEOFILOQUIRONG, LEONARDO REYES, MANUEL CADIENTE and
HERMINIA RIOSA, petitioners, vs. PHILIPPINE ASSOCIATION OF
FREE LABOR UNIONS (PAFLU) SEPTEMBER (now UNIFIED PAFLU)
and NATIONAL LABOR RELATIONS COMMISSION, SECOND
DIVISION, respondents.

DECISION
BELLOSILLO, J.:

This is a petition for certiorari[1] seeking to set aside the 31 July 1996
Decision[2] of the National Labor Relations Commission affirming the 30 June 1995
Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc.,
Mariles C. Romulo[3] and Francisco Dakila as well as the elected officers of the
Philippine Skylanders Employees and Workers Association-PAFLU[4] guilty of
unfair labor practice and ordering them to pay private respondent Philippine
Association of Free Labor Union (PAFLU) September[5] P150,000.00 as
damages. Petitioners likewise seek the reversal of the 31 October 1996 Resolution
of the NLRC denying their Motion for Reconsideration.
In November 1993 the Philippine Skylanders Employees Association (PSEA),
a local labor union affiliated with the Philippine Association of Free Labor Unions
(PAFLU) September (PAFLU), won in the certification election conducted among
the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union,
Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately
protested the result of the election before the Secretary of Labor.
Several months later, pending settlement of the controversy, PSEA sent
PAFLU a notice of disaffiliation citing as reason PAFLU's supposed deliberate and
habitual dereliction of duty toward its members. Attached to the notice was a copy
of the resolution adopted and signed by the officers and members of PSEA
authorizing their local union to disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers
(NCW), changed its name to Philippine Skylanders Employees Association -
National Congress of Workers (PSEA-NCW), and to maintain continuity within the
organization, allowed the former officers of PSEA-PAFLU to continue occupying
their positions as elected officers in the newly-forged PSEA-NCW.
On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement
with PSI which was immediately registered with the Department of Labor and
Employment.
Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU
Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of
PSI's audited financial statement.Ayroso explained that with the dismissal of
PSEA-WATUs election protest the time was ripe for the parties to enter into a
collective bargaining agreement.
On 30 July 1994 PSI through its personnel manager Francisco Dakila denied
the request citing as reason PSEA's disaffiliation from PAFLU and its subsequent
affiliation with NCW.
Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso
filed a complaint for unfair labor practice against PSI, its president Mariles Romulo
and personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs
refusal to bargain collectively with its workers, the company through its president
and personnel manager, was also liable for interfering with its employees' union
activities.[6]
Two (2) days later or on 6 October 1994 Ayroso filed another complaint in
behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso
PAFLU claimed that Dakila was present in PSEA's organizational meeting thereby
confirming his illicit participation in union activities. Ayroso added that the members
of the local union had unwittingly fallen into the manipulative machinations of PSI
and were lured into endorsing a collective bargaining agreement which was
detrimental to their interests.[7] The two (2) complaints were thereafter
consolidated.
On 1 February 1995 PAFLU amended its complaint by including the elected
officers of PSEA-PAFLU as additional party respondents. PAFLU averred that the
local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon
Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo
Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel
Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since
they brazenly allowed themselves to be manipulated and influenced by petitioner
Francisco Dakila.[8]
PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved
for the dismissal of the complaint on the ground that the issue of disaffiliation was
an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. On the
other hand, PSEA-NCW took the cudgels for its officers who were being sued in
their capacities as former officers of PSEA-PAFLU and asserted that since PSEA
was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no
personality to file the instant complaint. In support of this assertion, PSEA-NCW
submitted in evidence a Katunayan signed by 111 out of 120 rank and file
employees of PSI disauthorizing Ayroso or PAFLU from instituting any action in
their behalf.[9]
In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's
disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective
officers guilty of unfair labor practice. The Decision explained that despite PSEA-
PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file
employees, the company knowingly sanctioned and confederated with Dakila in
actively assisting a rival union. This, according to the Labor Arbiter, was a classic
case of interference for which PSI could be held responsible. As PSEA-NCW's
personality was not accorded recognition, its collective bargaining agreement with
PSI was struck down for being invalid. Ayroso's legal personality to file the
complaint was sustained on the ratiocination that under the Labor Code no petition
questioning the majority status of the incumbent bargaining agent shall be
entertained outside of the sixty (60)-day period immediately before the expiry date
of such five (5)-year term of the collective bargaining agreement that the parties
may enter into. Accordingly, judgment was rendered ordering PSI, PSEA-PAFLU
and their officers to pay PAFLU P150,000.00 in damages.[10]
PSI, PSEA and their respective officers appealed to the National Labor
Relations Commission (NLRC). But the NLRC upheld the Decision of the Labor
Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's
certification as the sole and exclusive bargaining agent was pending resolution
before the Secretary of Labor, PSEA could not validly separate from PAFLU, join
another national federation and subsequently enter into a collective bargaining
agreement with its employer-company.[11]
Petitioners separately moved for reconsideration but both motions were
denied. Hence, these petitions for certiorari filed by PSI and PSEA-NCW together
with their respective officers pleading for a reversal of the NLRC's Decision which
they claimed to have been rendered in excess of jurisdiction. In due time, both
petitions were consolidated.
In these petitions, petitioner PSEA together with its officers argued that by
virtue of their disaffiliation PAFLU as a mere agent had no authority to represent
them before any proceedings. They further asserted that being an independent
labor union PSEA may freely serve the interest of all its members and readily
disaffiliate from its mother federation when circumstances so warrant. This right,
they averred, was consistent with the constitutional guarantee of freedom of
association.[12]
For their part, petitioners PSI, Romulo and Dakila alleged that their decision to
bargain collectively with PSEA-NCW was actuated, to a large extent, by PAFLU's
behavior. Having heard no objections or protestations from PAFLU relative to
PSEA's disaffiliation, they reckoned that PSEA's subsequent association with
NSW was done bona fide.[13]
The Solicitor General filed a Manifestation in Lieu of Comment recommending
that both petitions be granted. In his Manifestation, the Solicitor General argued
against the Labor Arbiter's assumption of jurisdiction citing the following as
reasons: first, there was no employer-employee relationship between complainant
Ayroso and PSI over which the Labor Arbiter could rightfully assert his
jurisdiction; second, since the case involved a dispute between PAFLU as mother
federation and PSEA as local union, the controversy fell within the jurisdiction of
the Bureau of Labor Relations; and lastly, the relationship of principal-agent
between PAFLU and PSEA had been severed by the local union through the lawful
exercise of its right of disaffiliation.[14]
Stripped of non-essentials, the fundamental issue tapers down to the
legitimacy of PSEA's disaffiliation. To be more precise, may PSEA, which is an
independent and separate local union, validly disaffiliate from PAFLU pending the
settlement of an election protest questioning its status as the sole and exclusive
bargaining agent of PSI's rank and file employees?
At the outset, let it be noted that the issue of disaffiliation is an inter-union
conflict the jurisdiction of which properly lies with the Bureau of Labor Relations
(BLR) and not with the Labor Arbiter.[15] Nonetheless, with due recognition of this
fact, we deem it proper to settle the controversy at this instance since to remand
the case to the BLR would only mean intolerable delay for the parties.
The right of a local union to disaffiliate from its mother federation is not a novel
thesis unillumined by case law. In the landmark case of Liberty Cotton Mills
Workers Union vs. Liberty Cotton Mills, Inc.[16] we upheld the right of local unions
to separate from their mother federation on the ground that as separate and
voluntary associations, local unions do not owe their creation and existence to the
national federation to which they are affiliated but, instead, to the will of their
members. The sole essence of affiliation is to increase, by collective action, the
common bargaining power of local unions for the effective enhancement and
protection of their interests. Admittedly, there are times when without succor and
support local unions may find it hard, unaided by other support groups, to secure
justice for themselves.
Yet the local unions remain the basic units of association, free to serve their
own interests subject to the restraints imposed by the constitution and by-laws of
the national federation, and free also to renounce the affiliation upon the terms laid
down in the agreement which brought such affiliation into existence.
Such dictum has been punctiliously followed since then.[17]
Upon an application of the aforecited principle to the issue at hand, the
impropriety of the questioned Decisions becomes clearly apparent. There is
nothing shown in the records nor is it claimed by PAFLU that the local union was
expressly forbidden to disaffiliate from the federation nor were there any conditions
imposed for a valid breakaway. As such, the pendency of an election protest
involving both the mother federation and the local union did not constitute a bar to
a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of
the 120 members of the local union, or an equivalent of 92.5% of the total union
membership supported the claim of disaffiliation and had in fact disauthorized
PAFLU from instituting any complaint in their behalf. Surely, this is not a case
where one (1) or two (2) members of the local union decided to disaffiliate from the
mother federation, but it is a case where almost all local union members decided
to disaffiliate.
It was entirely reasonable then for PSI to enter into a collective bargaining
agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU,
there would be no restrictions which could validly hinder it from subsequently
affiliating with NCW and entering into a collective bargaining agreement in behalf
of its members.
There is a further consideration that likewise argues for the granting of the
petitions. It stands unchallenged that PAFLU instituted the complaint for unfair
labor practice against the wishes of workers whose interests it was supposedly
protecting. The mere act of disaffiliation did not divest PSEA of its own personality;
neither did it give PAFLU the license to act independently of the local
union. Recreant to its mission, PAFLU cannot simply ignore the demands of the
local chapter and decide for its welfare. PAFLU might have forgotten that as an
agent it could only act in representation of and in accordance with the interests of
the local union. The complaint then for unfair labor practice lodged by PAFLU
against PSI, PSEA and their respective officers, having been filed by a party which
has no legal personality to institute the complaint, should have been dismissed at
the first instance for failure to state a cause of action.
Policy considerations dictate that in weighing the claims of a local union as
against those of a national federation, those of the former must be
preferred. Parenthetically though, the desires of the mother federation to protect
its locals are not altogether to be shunned. It will however be to err greatly against
the Constitution if the desires of the federation would be favored over those of its
members. That, at any rate, is the policy of the law. For if it were otherwise, instead
of protection, there would be disregard and neglect of the lowly workingmen.
WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine
Skylanders and Workers Association-NCW, together with their respective officers,
are GRANTED. TheDecision of the National Labor Relations Commission of 31
July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding
petitioners Philippine Skylanders and Workers Association-NCW, Philippine
Skylanders, Inc. and their respective officers, guilty of unfair labor practice and
ordering them to pay damages to private respondent Philippine Association of Free
Labor Unions (PAFLU) September (now UNIFIED PAFLU) as well as the
Resolution of 31 October 1996 denying reconsideration is REVERSED and SET
ASIDE. No costs.
 SO ORDERED.

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

DOLORES VILLAR, ROMEO PEQUITO, DIONISIO RAMOS, BENIGNO

MAMARALDO, ORLANDO ACOSTA, RECITACION BERNUS, ANSELMA
ANDAN, ROLANDO DE GUZMAN and RITA LLAGAS, petitioners,
vs.
THE HON. AMADO G. INCIONG, as Deputy Minister of the Ministry of Labor,
AMIGO MANUFACTURING INCORPORATED and PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS (PAFLU), respondents.

Aniceto Haber for petitioners.

Roberto T. Neri for respondents.

GUERRERO, J.:

Petition for review by certiorari to set aside the Order dated February 15, 1979 of
respondent Deputy Minister Amado G. Inciong affirming the Decision of the OIC
of Regional Office No. 4 dated October 14, 1978 which jointly resolved RO4-
Case No. T-IV-3549-T and RO4-Case No. RD 4-4088-77-T.

The facts are as follows:

Petitioners were members of the Amigo Employees Union-PAFLU, a duly

registered labor organization which, at the time of the present dispute, was the
existing bargaining agent of the employees in private respondent Amigo
Manufacturing, Inc. (hereinafter referred to as Company). The Company and the
Amigo Employees Union-PAFLU had a collective bargaining agreement
governing their labor relations, which agreement was then about to expire on
February 28, 1977. Within the last sixty (60) days of the CBA, events transpired
giving rise to the present dispute.

On January 5, 1977, upon written authority of at least 30% of the employees in

the company, including the petitioners, the Federation of Unions of Rizal
(hereinafter referred to as FUR) filed a petition for certification election with the
Med-Arbiter's Office, Regional Office No. 4 of the Ministry of Labor and
Employment. The petition was, however, opposed by the Philippine Association
of Free Labor Unions (hereinafter referred to as PAFLU) with whom, as stated
earlier, the Amigo Employees Union was at that time affiliated. PAFLU's
opposition cited the "Code of Ethics" governing inter-federation disputes among
and between members of the Trade Unions Congress of the Philippines
(hereinafter referred to as TUCP). Consequently, the Med-Arbiter indorsed the
case to TUCP for appropriate action but before any such action could be taken
thereon, the petitioners disauthorized FUR from continuing the petition for
certification election for which reason FUR withdrew the petition.

On February 7, 1977, the same employees who had signed the petition filed by
FUR signed a joint resolution reading in toto as follows:

Sama-Samang Kapasiyahan

1. TUMIWALAG bilang kasaping Unyon ng Philippine Association of

Free Labor Unions (PAFLU) at kaalinsabay nito, inaalisan namin ang
PAFLU ng kapangyarihan na katawanin kami sa anumang
pakikipagkasundo (CBA) sa Pangasiwaan ng aming pinapasukan at
kung sila man ay nagkasundo o magkakasundo sa kabila ng
pagtitiwalag na ito, ang nasabing kasunduan ay hindi namin
pinagtitibay at tahasang aming itinatakwil/tinatanggihan;

2. BINABAWI namin ang aming pahintulot sa Federation of Unions

of Rizal (FUR) na katawanin kami sa Petition for Certification
Election (RO4-MED Case No. 743-77) at/o sa sama-samang
pakikipagkasundo sa aming patrons;

3. PANATILIHIN na nagsasarili (independent) ang aming samahan,

AMIGO EMPLOYEES' UNION, alinsunod sa Artikulo 240 ng Labor
Code;

4. MAGHAIN KAAGAD ang aming Unyong nagsasarili, sa

pamumuno ng aming pangsamantalang Opisyal na kinatawan, si
Ginang DOLORES VILLAR, ng Petition for Certification Election sa
Department of Labor, para kilalanin ang aming Unyong nagsasarili
bilang Tanging kinatawan ng mga manggagawa sa sama-samang
pakikipagkasundo (CBA);

5. BIGYAN ng kopya nito ang bawa't kinauukulan at ang mga

kapasiyahang ito ay magkakabisa sa oras na matanggap ng mga
kinauukulan ang kani-kanilang sipi nito.1

Immediately thereafter or on February 9, 1977, petitioner Dolores Villar,

representing herself to be the authorized representative of the Amigo Employees
Union, filed a petition for certification election in the Company before Regional
Office No. 4, with the Amigo Employees Union as the petitioner. The Amigo
Employees Union-PAFLU intervened and moved for the dismissal of the petition
for certification election filed by Dolores Villar, citing as grounds therefor, viz: (a)
the petition lacked the mandatory requisite of at least 30% of the employees in
the bargaining unit; (2) Dolores Villar had no legal personality to sign the petition
since she was not an officer of the union nor is there factual or legal basis for her
claim that she was the authorized representative of the local union; (3) there was
a pending case for the same subject matter filed by the same individuals; (4) the
petition was barred by the new CBA concluded on February 15, 1977; (5) there
was no valid disaffiliation from PAFLU; and (6) the supporting signatures were
procured through false pretenses.

Finding that the petition involved the same parties and causes of action as the
case previously indorsed to the TUCP, the Med-Arbiter dismiss the petition filed
by herein petitioner Villar, which dismissal is still pending appeal before the
Bureau of Labor Relations.

In the meantime, on February 14, 1977, the Amigo Employees Union- PAFLU
called a special meeting of its general membership. A Resolution was thereby
unanimously approved which called for the investigation by the PAFLU national
president, pursuant to the constitution and by-laws of the Federation, of all of the
petitioners and one Felipe Manlapao, for "continuously maligning, libelling and
slandering not only the incumbent officers but even the union itself and the
federation;" spreading 'false propaganda' that the union officers were 'merely
appointees of the management', and for causing divisiveness in the union.

Pursuant to the Resolution approved by the Amigo Employees Union- PAFLU,

the PAFLU, through its national President, formed a Trial Committee to
investigate the local union's charges against the petitioners for acts of disloyalty
inimical to the interest of the local union, as well as directing the Trial Committee
to subpoena the complainants (Amigo Employees Union-PAFLU) and the
respondents (herein petitioners) for investigation, to conduct the said
investigation and to submit its findings and recommendations for appropriate
action.

And on the same date of February 15, 1977, the Amigo Employees Union-
PAFLU and the Company concluded a new CBA which, besides granting
additional benefits to the workers, also reincorporated the same provisions of the
existing CBA, including the union security clause reading, to wit:

ARTICLE III
UNION SECURITY WITH RESPECT TO PRESENT MEMBERS
 All members of the UNION as of the signing of this Agreement shall
remain members thereof in good standing. Therefore, any members
who shall resign, be expelled, or shall in any manner cease to be a
member of the UNION, shall be dismissed from his employment
upon written request of the UNION to the Company. 2

Subsequently, petitioners were summoned to appear before the

PAFLU Trial Committee for the aforestated investigation of the
charges filed against them by the Amigo Employees Union-PAFLU.
Petitioners, however, did not attend but requested for a "Bill of
Particulars" of the charges, which charges were stated by the
Chairman of the committee as follows:

1. Disaffiliating from PAFLU and affiliating with the Federation of

Unions of Rizal (FUR).

2. Filling petition for certification election with the Bureau of Labor

Relations and docketed as Case No. R04-MED-830-77 and
authorizing a certain Dolores Villar as your authorized representative
without the official sanction of the mother Federation- PAFLU.

3. Maligning, libelling and slandering the incumbent officers of the

union as well as of the PAFLU Federation.

4. By spreading false propaganda among members of the Amigo

Employees Union-PAFLU that the incumbent union officers are
'merely appointees' of the management.

5. By sowing divisiveness instead of togetherness among members

of the Amigo Employees Union-PAFLU.

6. By conduct unbecoming as members of the Amigo Employees

Union- PAFLU which is highly prejudicial to the union as well as to
the PAFLU Federation.

All these charges were formalized in a resolution of the incumbent

officers of the Amigo Employees Union-PAFLU dated February 14,
1977. 3

Not recognizing PAFLU's jurisdiction over their case, petitioners again refused to
participate in the investigation rescheduled and conducted on March 9, 1979.
Instead, petitioners merely appeared to file their Answer to the charges and
moved for a dismissal.
Petitioners contend in their Answer that neither the disaffiliation of the Amigo
Employees Union from PAFLU nor the act of filing the petition for certification
election constitute disloyalty as these are in the exercise of their constitutional
right to self-organization. They further contended that PAFLU was without
jurisdiction to investigate their case since the charges, being intra-union
problems within the Amigo Employees Union-PAFLU, should be conducted
pursuant to the provisions of Article XI, Sections 2, 3, 4 and 5 of the local union's
constitution and by-laws.

The complainants, all of whom were the then incumbent officers of the Amigo
Employees Union-PAFLU, however, appeared and adduced their evidence
supporting the charges against herein petitioners.

Based on the findings and recommendations of the PAFLU trial committee, the
PAFLU President, on March 15, 1977, rendered a decision finding the petitioners
guilty of the charges and disposing in the last paragraph thereof, to wit,

Excepting Felipe Manlapao, the expulsion from the AMIGO

EMPLOYEES UNION of all the other nine (9) respondents, Dionisio
Ramos, Recitation Bernus, Dolores Villar, Romeo Dequito, Rolando
de Guzman, Anselma Andan, Rita Llagas, Benigno Mamaradlo and
Orlando Acosta is hereby ordered, and as a consequence the
Management of the employer, AMIGO MANUFACTURING, INC. is
hereby requested to terminate them from their employment in
conformity with the security clause in the collective bargaining
agreement. Further, the Trial Committee is directed to investigate
Felipe Manlapao when he shall have reported back for duty. 4

Petitioners appealed the Decision to the PAFLU, citing the same grounds as
before, and in addition thereto, argued that the PAFLU decision cannot legally
invoke a CBA which was unratified, not certified, and entered into without
authority from the union general membership, in asking the Company to
terminate them from their employment. The appeal was, likewise, denied by
PAFLU in a Resolution dated March 28, 1977.

After denying petitioner's appeal, PAFLU on March 28, 1977 sent a letter to the
Company stating, to wit,

We are furnishing you a copy of our Resolution on the Appeal of the

respondent in Administrative Case No. 2, Series of 1977, Amigo
Employees Union-PAFLU vs. Dionisio Ramos, et al.
 In view of the denial of their appeal and the Decision of March 15,
1977 having become final and executory we would appreciate full
cooperation on your part by implementing the provision of our CBA
on security clause by terminating the respondents concerned from
their employment.5

This was followed by another letter from PAFLU to the Company dated April 25,
1977, reiterating the demand to terminate the employment of the petitioners
pursuant to the security clause of the CBA, with a statement absolving the
Company from any liability or damage that may arise from petitioner's
termination.

Acting on PAFLU's demand, the Company informed PAFLU that it will first secure
the necessary clearances to terminate petitioners. By letter dated April 28, 1977,
PAFLU requested the Company to put petitioners under preventive suspension
pending the application for said clearances to terminate the petitioners, upon a
declaration that petitioners' continued stay within the work premises will "result in
the threat to the life and limb of the other employees of the company."6

Hence, on April 29, 1977, the Company filed the request for clearance to
terminate the petitioners before the Department of Labor, Regional Office No. 4.
The application, docketed as RO4-Case No. 7-IV-3549-T, stated as cause
therefor, "Demand by the Union Pursuant to the Union Security Clause," and
further, as effectivity date, "Termination-upon issuance of clearance; Suspension-
upon receipt of notice of workers concerned." 7 Petitioners were then informed by
memorandum dated April 29, 1977 that the Company has applied for clearance
to terminate them upon demand of PAFLU, and that each of them were placed
under preventive suspension pending the resolution of the said applications. The
security guard was, likewise, notified to refuse petitioners entry into the work
premises. 8

In an earlier development, on April 25, 1977, or five days before petitioners were
placed under preventive suspension, they filed a complaint with application for
preliminary injunction before the same Regional Office No. 4, docketed as RO4-
Case No. RD-4-4088-77-T, praying that after due notice and hearing, "(1) A
preliminary injunction be issued forthwith to restrain the respondents from doing
the act herein complained of, namely: the dismissal of the individual
complainants from their employment; (2) After due hearing on the merits of the
case, an Order be entered denying and/or setting aside the Decision dated
March 15, 1977 and the Resolution dated March 28, 1977, issued by respondent
Onofre P. Guevara, National President of respondent PAFLU; (3) The Appeal of
the individual complainants to the General Membership of the complainant
AMIGO EMPLOYEES UNION, dated March 22, 1977, pursuant to Sections 2, 3,
4 & 5, Article XI in relation of Section 1, Article XII of the Union Constitution and
By-Laws, be given due course; and (4) Thereafter, the said preliminary injunction
be made permanent, with costs, and with such further orders/reliefs that are just
and equitable in the premises."9

In these two cases filed before the Regional Office No. 4, the parties adopted
their previous positions when they were still arguing before the PAFLU trial
committee.

On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of Regional Office

No. 4, rendered a decision jointly resolving said two cases, the dispositive portion
of which states, to wit,

IN VIEW OF THE FOREGOING, judgment is hereby rendered

granting the application of the Amigo Manufacturing, Inc., for
clearance to terminate the employment of Dolores D. Villar, Dionisio
Ramos, Benigno Mamaraldo, Orlando Acosta, Recitacion Bernus,
Anselma Andan, Rolando de Guzman, and Rita Llagas. The
application of oppositors, under RO4-Case No. RD-4-4088-77, for a
preliminary injunction to restrain the Amigo Manufacturing, Inc. from
terminating their employment and from placing them under
preventive suspension, is hereby DISMISSED. 10

Not satisfied with the decision, petitioners appealed to the Office of the Secretary
of Labor. By Order dated February 15, 1979, the respondent Amado G. Inciong,
Deputy Minister of Labor, dismissed their appeal for lack of merit. 11

Hence, the instant petition for review, raising the following issues:

A. Is it not error in both constitutional and statutory law by the

respondent Minister when he affirmed the decision of the RO4-
Officer-in-Charge allowing the preventive suspension and
subsequent dismissal of petitioners by reason of the exercise of their
right to freedom of association?

B. Is it not error in law by the respondent Minister when he upheld

the decision of the RO4 OIC which sustained the availment of the
respondent PAFLU's constitution over that of the local union
constitution in the settlement of intra-union dispute?

C. Is it not error in law amounting to grave abuse of discretion by the

Minister in affirming the conclusion made by the RO4 OIC, upholding
the legal applicability of the security clause of a CBA over alleged
 offenses committed earlier than its conclusion, and within the 60-day
freedom period of an old CBA? 12

The main thrust of the petition is the alleged illegality of the dismiss of the
petitioners by private respondent Company upon demand of PAFLU which
invoked the security clause of the collective bargaining agreement between the
Company and the local union, Amigo Employees Union-PAFLU. Petitioners
contend that the respondent Deputy Minister acted in grave abuse of discretion
when he affirmed the decision granting the clearance to terminate the petitioners
and dismissed petitioners' complaint, and in support thereof, allege that their
constitutional right to self-organization had been impaired. Petitioner's contention
lacks merit.

It is true that disaffiliation from a labor union is not open to legal objection. It is
implicit in the freedom of association ordained by the Constitution. 13 But this
Court has laid down the ruling that a closed shop is a valid form of union security,
and such provision in a collective bargaining agreement is not a restriction of the
right of freedom of association guaranteed by the Constitution. 14

In the case at bar, it appears as an undisputed fact that on February 15, 1977,
the Company and the Amigo Employees Union-PAFLU entered into a Collective
Bargaining Agreement with a union security clause provided for in Article XII
thereof which is a reiteration of the same clause in the old CBA. The quoted
stipulation for closed-shop is clear and unequivocal and it leaves no room for
doubt that the employer is bound, under the collective bargaining agreement, to
dismiss the employees, herein petitioners, for non- union membership.
Petitioners became non-union members upon their expulsion from the general
membership of the Amigo Employees Union-PAFLU on March 15, 1977 pursuant
to the Decision of the PAFLU national president.

We reject petitioners' theory that their expulsion was not valid upon the grounds
adverted to earlier in this Decision. That PAFLU had the authority to investigate
petitioners on the charges filed by their co-employees in the local union and after
finding them guilty as charged, to expel them from the roll of membership of the
Amigo Employees Union-PAFLU is clear under the constitution of the PAFLU to
which the local union was affiliated. And pursuant to the security clause of the
new CBA, reiterating the same clause in the old CBA, PAFLU was justified in
applying said security clause. We find no abuse of discretion on the part of the
OIC of Regional Office No. 4 in upholding the validity of the expulsion and on the
part of the respondent Deputy Minister of Labor in sustaining the same. We
agree with the OIC's decision, pertinent portion of which reads:
Stripped of non-essentials, the basic and fundamental issue in this
case tapers down to the determination of WHETHER OR NOT
PAFLU HAD THE AUTHORITY TO INVESTIGATE OPPOSITORS
AND, THEREAFTER, EXPEL THEM FROM THE ROLL OF
MEMBERSHIP OF THE AMIGO EMPLOYEES UNION-PAFLU.

Recognized and salutary is the principle that when a labor union

affiliates with a mother union, it becomes bound by the laws and
regulations of the parent organization. Thus, the Honorable
Secretary of Labor, in the case of Amador Bolivar, et al. vs. PAFLU,
et al., NLRC Case No. LR-133 & MC-476, promulgated on
December 3, 1973, declared-

When a labor union affiliates with a parent organization or mother

union, or accepts a charter from a superior body, it becomes subject
to the laws of the superior body under whose authority the local
union functions. The constitution, by-laws and rules of the parent
body, together with the charter it issues pursuant thereto to the
subordinate union, constitute an enforceable contract between the
parent body and the subordinate union, and between the members
of the subordinate union inter se. (Citing Labor Unions, Dangel and
Shriber, pp. 279-280).

It is undisputable that oppositors were members of the Amigo

Employees Union at the time that said union affiliated with PAFLU;
hence, under the afore-quoted principle, oppositors are bound by the
laws and regulations of PAFLU.

Likewise, it is undeniable that in the investigation of the charges

against them, oppositors were accorded 'due process', because in
this jurisdiction, the doctrine is deeply entrenched that the term 'due
process' simply means that the parties were given the opportunity to
be heard. In the instant case, ample and unmistakable evidence
exists to show that the oppositors were afforded the opportunity to
present their evidence, but they themselves disdained or spurned
the said opportunity given to them.

PAFLU, therefore, correctly and legally acted when, pursuant to its

Constitution and By-Laws, it conducted and proceeded with the
investigation of the charges against the oppositors and found them
guilty of acts prejudicial and inimical to the interests of the Amigo
Employees Union- PAFLU, to wit: that of falsely and maliciously
slandering the officers of the union; spreading false propaganda
 among the members of the Amigo Employees Union-PAFLU; calling
the incumbent officers as mere appointees and robots of
management; calling the union company-dominated or assisted
union; committing acts unbecoming of the members of the union and
destructive of the union and its members.

Inherent in every labor union, or any organization for that matter, is

the right of self-preservation. When members of a labor union,
therefore, sow the seeds of dissension and strife within the union;
when they seek the disintegration and destruction of the very union
to which they belong, they thereby forfeit their rights to remain as
members of the union which they seek to destroy. Prudence and
equity, as well as the dictates of law and justice, therefore,
compelling mandate the adoption by the labor union of such
corrective and remedial measures in keeping with its laws and
regulations, for its preservation and continued existence; lest by its
folly and inaction, the labor union crumble and fall.

Correctly and legally, therefore, the PAFLU acted when, after proper
investigation and finding of guilt, it decided to remove the oppositors
from the list of members of the Amigo Employees Union-PAFLU,
and thereafter, recommended to the Amigo Manufacturing, Inc.; the
termination of the employment of the oppositors. 15

We see no reason to disturb the same.

The contention of petitioners that the charges against them being intra-union
problems, should have been investigated in accordance with the constitution and
by-laws of the Amigo Employees Union-PAFLU and not of the PAFLU, is not
impressed with merit. It is true that under the Implementing Rules and
Regulations of the Labor Code, in case of intra-union disputes, redress must first
be sought within the organization itself in accordance with its constitution and by-
laws. However, it has been held that this requirement is not absolute but yields to
exception under varying circumstances. Thus, in Kapisanan ng mga
Manggagawa sa MRR vs. Hernandez, 20 SCRA 109, We held:

In the case at bar, noteworthy is the fact that the complaint was filed
against the union and its incumbent officers, some of whom were
members of the board of directors. The constitution and by-laws of
the union provide that charges for any violations thereof shall be
filed before the said board. But as explained by the lower court, if the
complainants had done so the board of directors would in effect be
acting as respondent investigator and judge at the same time. To
 follow the procedure indicated would be a farce under the
circumstances, where exhaustion of remedies within the union itself
would practically amount to a denial of justice or would be illusory or
vain, it will not be insisted upon, particularly where property rights of
the members are involved, as a condition to the right to invoke the
aid of a court.

The facts of the instant petition stand on all fours with the aforecited case that the
principle therein enunciated applies here as well. In the case at bar, the
petitioners were charged by the officers of the Amigo Employees Union- PAFLU
themselves who were also members of the Board of Directors of the Amigo
Employees Union-PAFLU. Thus, were the petitioners to be charged and
investigated according to the local union's constitution, they would have been
tried by a trial committee of three (3) elected from among the members of the
Board who are themselves the accusers. (Section 2, Article 11, Constitution of
the Local Union). Petitioners would be in a far worse position had this procedure
been followed. Nonetheless, petitioners admit in their petition that two (2) of the
six (6) charges, i.e. disaffiliation and filing a petition for certification election, are
not intra-union matters and, therefore, are cognizable by PAFLU.

Petitioners insist that their disaffiliation from PAFLU and filing a petition for
certification election are not acts of disloyalty but an exercise of their right to self-
organization. They contend that these acts were done within the 60-day freedom
period when questions of representation may freely be raised. Under the peculiar
facts of the case, We find petitioners' insistence untenable.

In the first place, had petitioners merely disaffiliated from the. Amigo Employees
Union-PAFLU, there could be no legal objections thereto for it was their right to
do so. But what petitioners did by the very clear terms of their "Sama-Samang
Kapasiyahan" was to disaffiliate the Amigo Employees Union-PAFLU from
PAFLU, an act which they could not have done with any effective consequence
because they constituted the minority in the Amigo Employees Union-PAFLU.

Extant from the records is the fact that petitioners numbering ten (10), were
among the ninety-six (96) who signed the "Sama-Samang Kapasiyahan"
whereas there are two hundred thirty four (234) union members in the Amigo
Employees Union-PAFLU. Hence, petitioners constituted a small minority for
which reason they could not have successfully disaffiliated the local union from
PAFLU. Since only 96 wanted disaffiliation, it can be inferred that the majority
wanted the union to remain an affiliate of PAFLU and this is not denied or
disputed by petitioners. The action of the majority must, therefore, prevail over
that of the minority members. 16
Neither is there merit to petitioners' contention that they had the right to present
representation issues within the 60-day freedom period. It is true, as contended
by petitioners, that under Article 257 of the Labor Code and Section 3, Rule 2,
Book 2 of its Implementing Rules, questions of exclusive bargaining
representation are entertainable within the sixty (60) days prior to the expiry date
of an existing CBA, and that they did file a petition for certification election within
that period. But the petition was filed in the name of the Amigo Employees Union
which had not disaffiliated from PAFLU, the mother union. Petitioners being a
mere minority of the local union may not bind the majority members of the local
union.

Moreover, the Amigo Employees Union, as an independent union, is not duly

registered as such with the Bureau of Labor Relations. The appealed decision of
OIC Leogardo of Regional Office No. 4 states as a fact that there is no record in
the Bureau of Labor Relations that the Amigo Employees Union (Independent) is
registered, and this is not disputed by petitioners, notwithstanding their allegation
that the Amigo Employees Union is a duly registered labor organization bearing
Ministry of Labor Registration Certification No. 5290-IP dated March 27, 1967.
But the independent union organized after the "Sama-Samang Kapasiyahan"
executed February 7, 1977 could not have been registered earlier, much less
March 27, 1967 under Registration Certificate No. 5290-IP. As such unregistered
union, it acquires no legal personality and is not entitled to the rights and
privileges granted by law to legitimate labor organizations upon issuance of the
certificate of registration. Article 234 of the New Labor Code specifically provides:

Art. 234. Requirements of Registration.—Any applicant labor

organization, association, or group of unions or workers shall acquire
legal personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the
certificate of registration. ....

In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40, We
had occasion to interpret Section 23 of R.A. No. 875 (Industrial Peace Act)
requiring of labor unions registration by the Department of Labor in order to
qualify as "legitimate labor organization," and We said:

The theory to the effect that Section 23 of Republic Act No. 875
unduly curtails the freedom of assembly and association guaranteed
in the Bill of Rights is devoid of factual basis. The registration
prescribed in paragraph (b) of said section 17 is not a limitation to the
right of assembly or association, which may be exercised with or
without said registration. The latter is merely a condition sine qua
non for the acquisition of legal personality by labor organizations,
 associations or unions and the possession of the 'rights and
privileges granted by law to legitimate labor organizations.' The
Constitution does not guarantee these rights and privileges, much
less said personality, which are mere statutory creations, for the
possession and exercise of which registration is required to protect
both labor and the public against abuses, fraud, or impostors who
pose as organizers, although not truly accredited agents of the union
they purport to represent. Such requirement is a valid exercise of the
police power, because the activities in which labor organizations,
associations and union or workers are engaged affect public
interest, which should be protected.

Simply put, the Amigo Employees Union (Independent) Which petitioners claim
to represent, not being a legitimate labor organization, may not validly present
representation issues. Therefore, the act of petitioners cannot be considered a
legitimate exercise of their right to self-organization. Hence, We affirm and
reiterate the rationale explained in Phil Association of Free Labor Unions vs. Sec.
of Labor case, supra, in order to protect legitimate labor and at the same time
maintain discipline and responsibility within its ranks.

The contention of petitioners that the new CBA concluded between Amigo
Employees Union-PAFLU and the Company on February 15, 1977 containing the
union security clause cannot be invoked as against the petitioners for offenses
committed earlier than its conclusion, deserves scant consideration. We find it to
be the fact that the union security clause provided in the new CBA merely
reproduced the union security clause provided in the old CBA about to expire.
And since petitioners were expelled from Amigo Employees Union-PAFLU on
March 28, 1982 upon denial of their Motion for Reconsideration of the decision
expelling them, the CBA of February 15, 1977 was already applicable to their
case. The "closed-shop provision" in the CBA provides:

All members of the UNION as of the signing of this Agreement shall

remain members thereof in good standing. Therefore, any members
who shall resign, be expelled, or shall in any manner cease to be a
member of the UNION, shall be dismissed from his employment
upon written request of the UNION to the Company. (Art. III)

A closed-shop is a valid form of union security, and a provision therefor in a

collective bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution. (Manalang, et al. vs. Artex
Development Co., Inc., et al., L-20432, October 30, 1967, 21 SCRA 561). Where
in a closed-shop agreement it is stipulated that union members who cease to be
in good standing shall immediately be dismissed, such dismissal does not
constitute an unfair labor practice exclusively cognizable by the Court of
Industrial Relations. (Seno vs. Mendoza, 21 SCRA 1124).

Finally, We reject petitioners' contention that respondent Minister committed error

in law amounting to grave abuse of discretion when he affirmed the conclusion
made by the RO4 OIC, upholding the legal applicability of the security clause of a
CBA over alleged offenses committed earlier than its conclusion and within the
60-day freedom period of an old CBA. In the first place, as We stated earlier, the
security clause of the new CBA is a reproduction or reiteration of the same
clause in the old CBA. While petitioners were charged for alleged commission of
acts of disloyalty inimical to the interests of the Amigo Employees Union-PAFLU
in the Resolution of February 14, 1977 of the Amigo Employees Union- PAFLU
and on February 15, 1977 PAFLU and the Company entered into and concluded
a new collective bargaining agreement, petitioners may not escape the effects of
the security clause under either the old CBA or the new CBA by claiming that the
old CBA had expired and that the new CBA cannot be given retroactive
enforcement. To do so would be to create a gap during which no agreement
would govern, from the time the old contract expired to the time a new agreement
shall have been entered into with the union. As this Court said in Seno vs.
Mendoza, 21 SCRA 1124, "without any agreement to govern the relations
between labor and management in the interim, the situation would well be
productive of confusion and result in breaches of the law by either party. "

The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously needs
further citation of the facts and the opinion of the Court, speaking through Justice
Makalintal who later became Chief Justice, and We quote:

It appears that petitioners other than Januario T. Seno who is their

counsel, were members of the United Seamen's Union of the
Philippines. Pursuant to a letter-request of the Union stating that
they 'had ceased to be members in good standing' and citing a
closed shop clause in its bargaining agreement with respondent
Carlos A. Go Thong & Co., the latter dismissed said petitioners.
Through counsel, petitioners requested that they be reinstated to
their former positions and paid their backwages, otherwise they
would picket respondents' offices and vessels. The request was
denied on the ground that the dismissal was unavoidable under the
terms of the collective bargaining agreement. ...

We, therefore, hold and rule that petitioners, although entitled to disaffiliate from
their union and form a new organization of their own, must, however, suffer the
consequences of their separation from the union under the security clause of the
CBA.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order appealed from
affirming the joint decision of the OIC of Regional Office No. 4 in RO4-Case No.
T-IV-3549-T and RO4 Case No. RD-4-4088-77-T granting clearance to terminate
petitioners as well as dismissing their complaint with application for preliminary
injunction, is hereby AFFIRMED. No costs.

SO ORDERED.

[G.R. No. L-41955. December 29, 1977.]

ELISCO-ELIROL LABOR UNION (NAFLU) and its OFFICERS AND

MEMBERS OF THE BOARD OF DIRECTORS, Petitioners, v. CARMELO
NORIEL, in his capacity as Director of the Bureau of Labor Relations,
ELIZALDE STEEL CONSOLIDATED, INC. and NATIONAL FEDERATION OF
LABOR UNIONS (NAFLU), Respondents.

Villaluz, Villaluz & Villaluz, Padilla Law Offices and Rizalindo V. Diaz,
for Petitioners.

Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor Reynato

S. Puno and Solicitor Ramon A. Barcelona respondent Director.

Rolando M. Olalia for respondent Union (NAFLU).

DECISION

TEEHANKEE, J.:

The Court sets aside respondent director’s appealed resolution and rules in
accordance with the prevailing law and settled jurisprudence that the petitioner
union consisting of the members employees of respondent corporation is the
principal party to the collective bargaining agreement (rather than the respondent
mother union which is merely its agent) and is therefore entitled to be recognized
as the sole and exclusive bargaining representative entitled to administer and
enforce the collective bargaining agreement with the employer corporation.

The undisputed antecedent facts which gave rise to the present petition are
stated in the petition as follows:jgc:chanrobles.com.ph
"2. That sometime on February 1974, petitioner-Elisco Elirol Labor Union
(NAFLU), negotiated and executed a collective bargaining agreement with
respondent-Elizalde Steel Consolidated, Inc. 1

"3. That upon verification by individual petitioners at the Registration division,

Bureau of Labor Relations, Department of Labor, the Elisco-Elirol Labor Union
(NAFLU), the contracting party in said collective bargaining agreement, was not
then registered and therefore not entitled to the benefits and privileges embodied
in said collective bargaining agreement; thus on March 3, 1975, the members of
petitioner-appellant union in a general membership meeting decided in a
resolution to register their union to protect and preserve the integrity and
inviolability of the collective bargaining agreement between the Elisco-Elirol
Labor Union (NAFLU) and the Elizalde Steel Consolidated, Inc.

"4. That said resolution of the members of petitioner-appellant union was passed
upon by the officers and members of the Board of Directors on May 20, 1975, at
a special meeting called for the purpose, resolution No. 6, s. 1975 was approved
requesting the Acting Directors, Registration Division, Bureau of Labor Relations,
to register the union Elisco-Elirol Labor Union (NAFLU).

"5. That by virtue of resolution No. 6, Petitioner-appellant union applied for

registration with the Bureau of Labor Relations, hence on May 28, 1975,
Certificate of Registration No. 8511-IP was issued by said Office.

"6. That with the issuance of the certificate of registration petitioner-appellant

acquired a personality separate and distinct from any other labor union.

"7. That steps were taken by petitioner-appellant to enforce the collective

bargaining agreement as the principal party to the same representing the
workers covered by such agreement immediately after the issuance of the
certificate of registration.

"8. That on June 10, 1975, at a special meeting called for the purpose, the
general membership of petitioner union decided that their mother union, the
National Federation of Labor Unions, can no longer safeguard the rights of its
members insofar as working conditions and other terms of employment are
concerned and that the interest and welfare of petitioner can be served best if it
will stay independent and disaffiliated from said mother union, hence, the general
membership adopted a resolution to disaffiliate from the National Federation of
Labor Unions.

"9. That on June 11, 1975, Petitioner, acting through its President Hilario Riza
informed respondents of said disaffiliation by means of a letter, and subsequently
requested respondents to recognize petitioner as the sole and exclusive
bargaining representative of the employees thereof.

"10. That respondent without any justifiable reason refused and continues to
refuse to recognize petitioner as the sole and exclusive bargaining representative
of its employees, and, now actually dismissed the petitioner union’s officers and
board members. 2 In this connection, a complaint for unfair labor practice was
filed by petitioners against respondent for the latter’s refusal to bargain
collectively with petitioner, which complaint is presently docketed as Case No.
LR-R04-6-1662.

"11. That by virtue of said refusal of respondent company to recognize petitioner

as the sole and exclusive bargaining representative of the employees, petitioners
filed a petition before the Bureau of Labor Relations, Department of Labor on
July 2, 1975, with Case No. LR-861 against respondent Elizalde Steel
Consolidated, Inc. and the National Federation of Labor Unions be ordered to
stop from presenting itself as the collective bargaining agent and pursuant
thereto, a writ of preliminary mandatory and prohibitory injunction be issued.

"12. That on August 19, 1975. the Bureau of Labor Relations, through Med-
Arbiter Reynaldo B. Carta, before whom the case was heard, issued an Order
dismissing the petition for lack of merit."cralaw virtua1aw library

On appeal to respondent Director of the Bureau of Labor Relations, said

respondent issued his Resolution of October 30, 1975 affirming the dismissal of
petitioner-union’s petition as follows:jgc:chanrobles.com.ph

"On February, 1974 the members of the petitioner union who were then yet
affiliated with the National Association of Free Labor Union negotiated and
executed with the respondent company a collective bargaining agreement with
expiry date in November, 1976.

"On May 28, 1975, after the same members, by valid resolution of the Board of
directors and approved by the general membership, have formed themselves into
an independent organization and applied for registration as a union, a certificate
of registration was issued by the Department of Labor. And on June 10, 1975
again by a valid resolution the same members disaffiliated with the NAFLU.

"The issue for resolution is —

"Which of the two unions should be recognized as the sole and exclusive
bargaining representative of the employees and ultimately recognized to
administer and supervise the enforcement of the collective bargaining
agreement.

"Petitioner-union contends that it having the necessary interest and being the real
party must be the sole union to be recognized and given authority to bargain with
the company.

"Setting aside jurisprudence and the collective bargaining agreement of the

parties, the appellant is correct. For to grant to the former mother union (NAFLU)
the authority to administer and enforce their collective bargaining agreement
without presumably any members in the bargaining unit is quite absurd. But to
transfer also the authority to the newly formed union although the members of
the same were the same members who composed then the local chapter of the
mother union is also in violation of the CBA particularly article IV which is the
union security clause, wherein it is a condition for a continued employment in the
company to maintain membership in the Union. Theoretically therefore, when the
employees disaffiliated from the mother union and formed themselves into a new
union, their status as employees was also terminated. As such they could not
therefore absolutely and legally claim that they still comprise the majority of the
bargaining unit.

"Secondly, to vest, upon the new union the authority to bargain is in violation of
the whole CBA, under the theory that when the mother union (NAFLU) entered
and executed the same in its separate and distinct personality aside from the
people composing the same. In fine, the CBA then was executed by and
between the company and the (NAFLU) with the latter as an entity having its own
capacity and personality different from the members composing the same.

"Lastly, to preserve and avoid unstability and disorder in the labor movement as
correctly ruled by the med-arbiter, the status quo should be preserved, there
being no compelling reason to alter the same." 3

Hence, the petition at bar. We find the petition to be clearly meritorious and
reverse the appealed resolution.cralawnad

I. Respondent director correctly perceived in his Resolution that "to grant to the
former mother union (NAFLU) the authority to administer and enforce their
collective bargaining agreement without presumably any members in the
bargaining unit is quite absurd" but fell unto the grave error of holding that "when
the employees disaffiliated from the mother union and formed themselves into a
new union, their status as employees was also terminated."cralaw virtua1aw
library
His error was in not perceiving that the employees and members of the local
union did not form a new union but merely registered the local union as was their
right. Petitioner Elisco-Elirol Labor Union-NAFLU, consisting of employees and
members of the local union was the principal party to the agreement. NAFLU as
the mother union" in participating in the execution of the bargaining agreement
with respondent company acted merely as agent of the local union, which
remained the basic unit of the association existing principally and freely to serve
the common interest of all its members, including the freedom to disaffiliate when
the circumstances so warranted as in the present case.

2. Contrary to respondent director’s misimpression, our jurisprudence fully

supports petitioner’s stand. In Liberty Cotton Mills Workers Union v. Liberty
Cotton Mills, Inc. 4 , the Court expressly cited and affirmed the basic principle
that" (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."cralaw
virtua1aw library

Corollarily, the "substitutionary" doctrine likewise fully supports petitioner’s stand.

Petitioner union to whom the employees owe their allegiance has from the
beginning expressly avowed that it "does not intend to change and/or amend the
provisions of the present collective bargaining agreement but only to be given the
chance to enforce the same since there is a shift of allegiance in the majority of
the employees at respondent company." As was stressed by the Court in
Benguet Consolidated Inc. v. BCI Employees & Workers Union-PAFLU 5 —

". . . This principle, formulated by the NLRB as its initial compromise solution to
the problem facing it when there occurs a shift in employees’ union allegiance
after the execution of a bargaining contract with their employer, merely states
that even during the effectivity of a collective bargaining agreement executed
between employer and employees thru their agent, the employees can change
said agent but the contract continues to bind them up to its expiration date. They
may bargain however for the shortening of said expiration date.
"In formulating the ‘substitutionary’ doctrine, the only consideration involved as
the employees’ interest in the existing bargaining agreement. The agent’s
interest never entered the picture. In fact, the justification for said doctrine
was:chanrob1es virtual 1aw library

‘. . . that the majority of the employees, as an entity under the statute, is the true
party in interest to the contract, holding rights through the agency of the union
representative. Thus, any exclusive interest claimed by the agent is defeasible at
the will of the principal.’"

3. It need only be mentioned finally that the Secretary of Labor in his decision of
April 23, 1976 and order of January 10, 1977 denying reconsideration in the
sister unfair labor practice case and ordering respondent corporation to
immediately lift the suspension and reinstate the complainant officers and board
members of petitioner union 6 has likewise adhered to the foregoing basic
principles and settled jurisprudence in contrast to respondent director (as well as
therein respondent NLRC which similarly adhered to the archaic and illogical
view that the officers and board members of petitioner local union committed an
"act of disloyalty" in disaffiliating from the mother union when practically all its
members had so voted to disaffiliate and the mother union [as mere agent] no
longer had any local union or members to represent), ruling that (G)ranting
arguendo that the disaffiliation from the NAFLU is a legal cause for expulsion and
dismissal, it could not detract from the fact that only 13 individual complainants
out of almost 700 members who disaffiliated, were singled out for expulsion and
recommended for dismissal. The actuation of NAFLU conclusively constitute
discrimination. Since the suspension of the complainants was effected at the
instance of NAFLU, it should be held liable to the payment of back wages."cralaw
virtua1aw library

The Presidential Assistant for Legal Affairs Ronaldo B. Zamora has likewise
dismissed as untenable in a similar case respondents’ views that "such
maintenance of membership" clause be distorted as intended for the security of
the union rather than the security of tenure for the workers", ruling that" (W)hat is
paramount, as it is expressly and explicitly emphasized in an exacting language
under the New Constitution, is the security of tenure of the workers, not the
security of the union. To impress, therefore, such ‘maintenance of membership’
— which is intended for the security of the union rather than the security of
tenure of the workers — as a bar to employees’ changing their affiliation is not
only to infringe on the constitutional right of freedom of association, but also to
trample upon the constitutional right of workers to security of tenure and to
render meaningless whatever ‘adequate social services’ the State may establish
or maintain in the field of employment ‘to guarantee the enjoyment by the people
of a decent standard of living.’" 7

It is expected that with this decision, any suspension or lay-off of the

complainants officers and board members or employees of petitioner union
arising from the respondents’ misconception of the clearly applicable principles
and jurisprudence upholding the primacy of the employees and their freely
chosen local union as the true party in interest to the collective bargaining
agreement will be forthwith rectified and set aside.chanrobles virtual lawlibrary

ACCORDINGLY, the petition is granted and the appealed resolution is set aside
and petitioner local union is declared to be the sole and exclusive bargaining
representative of the employees of respondent corporation entitled to administer
and enforce any subsisting collective bargaining agreement with said employer
corporation. This decision shall be immediately executory upon its promulgation.

Makasiar, Muñoz Palma, Fernandez and Guerrero, JJ., concur.

Martin, J., took no part.

G.R. No. 87266-69 July 30, 1990

ASSOCIATED WORKERS UNION-PTGWO, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISION (EN BANC), METRO
PORT SERVICE, INC., MARINA PORT SERVICES, INC., ADRIANO S. YUMUL
and 10 OTHER INDIVIDUAL RESPONDENTS REPRESENTED BY ATTY.
EPIFANIO JACOSALEM, respondents.

G.R. Nos. 91223-26 JULY 30, 1990

MANILA PORT SERVICES, INC., petitioner,

vs.
HON. ARTHUR G. AMANSEC AND ADRIANO YUMUL, PABLITO
REANDELAR, MACARIO DE LUNA, JR., ADAN MENDOAZA, SMITH
CARLOTA, EMERECIANO VERGARA, ROMEO ABACAN, LEONARDO
ROMULO, ELINO JOSE, and CATINDIANO CALAUAG (COLLECTIVELY
CALLED AWUM), respondents.

D.T. Dagum, Jr. and P.T. De Quiroz for petitioner in G.R. Nos. 87266-69.

Ramon N. Nalipay, Jr. for petitioner in G.R. Nos. 91223-26.

Cruz, Durian, Agabin, Atienza, Alday & Tuason for respondent MPSI.

Udarbe & Jacosalem for private respondents in G.R. Nos. 91223-26.

FELICIANO, J.:

These cases have been usually difficult for the Court, not because the issues
posed are in themselves intellectually demanding, but because of problems
generated by the procedure adopted by the parties in coming before this Court.
The incidents subject of these cases spawned multiple cases and petitions
before the National Labor Relations Commission ("NLRC"). After the NLRC
rendered a consolidated decision, the parties, in turn, filed multiple
separate certioraripetitions to the Court — on a staggered and piecemeal basis.
This situation resulted in a number of discrete discussions of issues actually
inter-related, since the Court, at any one time, could only see a small part of the
whole picture and decide only on the basis of what it could see. In what follows,
we have tried to put the whole picture together and to render comprehensive and
substantial justice to all the parties.

On 26 October 1984, petitioner Associated Workers Union ("AWU")—PTGWO,

the then bargaining representative of the dockworkers at South Harbor, Port
Area, Manila, filed a Notice of Strike against respondent Metro Port Service, Inc.
("Metro"), the then arrastre contractor in the South Harbor, on the issues, among
others, of unfilled vacancies and union busting. This was docketed as NLRC
Case No. NCR-NS-10-288-84.

On 3 April 1985, the abovementioned case was certified in an Order by the then
Minister of Labor and Employment to the NLRC for compulsory arbitration; the
Order also forbade the holding of strikes or lock-outs. 1 The case was docketed
as Certified NLRC Case No. 0403-85. In the latter case, one of the demands
raised by AWU was that Metro terminate the employment of respondents Adriano
Yumul and ten (10) others (individual respondents), for having organized, on 26
October 1984, the Associated Workers Union in Metroport ("AWUM") among the
rank-and-file employees of Metro, ostensibly as a local or chapter of AWU. AWU
had earlier expelled individual respondents from membership in AUW for
disloyalty and, pursuant to the closed-shop provision of the existing AWU-Metro
collective bargaining agreement ("CBA"), sought the termination of their
employment.

Metro initially resisted AWU's request to terminate the employment of individual

respondents, contending that the termination would be premature as individual
respondents had not been afforded due process, and that the termination would
be violative of the status quo agreement in NLRC Case No. NCR-NS-10-288-
84. 2 Metro, however, eventually relented and suspended individual respondents
after AWU—despite the express prohibition in the Order dated 3 April 1985—
staged a strike against it. On 18 April 1985, Metro executed a Compromise
Agreement ("Agreement") with AWU to end the strike, item No. 2 of which
stipulated:

At the instance of the union, [Metro] agrees to preventively suspend

[individual respondents] effective immediately. 3

The Agreement was attested to by then Deputy Labor Minister Carmelo Noriel.

As a result of Metro's implementation of the Agreement, individual respondents

on 30 April 1985 filed a complaint against Metro, docketed as NLRC Case No.
NCR-4-1372-85. Metro in that case filed in turn a third-party complaint against
AWU and its officers.

Metro in April 1985 also filed a complaint for illegal strike with damages against
AWU and its officers, docketed as NLRC Case No. NCR-4-1341-85. On 21 June
1985, Labor Arbiter Ceferina Diosana in an Order directed Metro provisionally to
reinstate individual respondents pending resolution of the issues raised therein,
with which Order Metro complied.

On 15 July 1985, AWU filed a petition for injunction against Metro, docketed as
NLRC Injunction Case No. 993, praying for issuance of a temporary restraining
order stopping the implementation of the Order of provisional reinstatement, and
for Metro's compliance with the Agreement providing for the suspension of
individual respondents. On 1 August 1985, the NLRC in an En Banc Resolution
directed Metro to comply with the Agreement, and Metro complied and re-
suspended individual respondents. Individual respondents' petition before the
NLRC for preliminary mandatory injunction on 30 August 1985, praying "that
pursuant to the Implementing Rules of Batas Pambansa Blg. 130, [Metro] be
ordered to pay their salaries and allowances from and after their initial preventive
suspension of thirty (30) days and until their actual reinstatement," was not acted
upon.

All the above-mentioned cases, to wit: (a) Certified NLRC Case No. 0403-85
(NCR No. NS-10-288-84); (b) NLRC Case No. NCR-4-1341-85; (c) NLRC Case
No. NCR-4-1372-85; and (d) NLRC Injunction Case No. 993, were ordered
consolidated before the NLRC en banc.
On 4 September 1986, the NLRC rendered a consolidated Decision. In Certified
NLRC Case No. 0403-85, the NLRC ruled that: (a) respondent Metro cannot be
compelled to fill up vacancies with AWU's recommendees; (b) respondent Metro
cannot be held liable for union busting, the issue of the medically impaired
workers having become moot and academic; and (c) the compulsory retirement
of AWUs members who have reached the age of 60 years is a valid exercise of
management prerogative.

In NLRC Case No. NCR-4-1372-85, the NLRC, finding that AWU was a national
union, and that individual respondents have the right to organize themselves into
a local chapter thereof, the formation of which was a protected activity and could
not be considered as disloyalty, held the suspension or dismissal of individual
respondents as illegal and, in relation to NLRC Injuction Case No. 993, ordered
their reinstatement with backwages, to be paid solidarily by AWU and respondent
Metro.

In NLRC Case No. NCR-4-1341-85, the NLRC found the strike staged by AWU
not illegal, holding that AWU was of the belief, although erroneously, that it could
validly stage a strike during the pendency of its motion for reconsideration of the
Minister's Order dated 3 April 1985 enjoining a strike or lockout.

Both AWU and Metro filed separate motions for reconsideration of the
consolidated Decision.

Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc. ("Marina"), by

virtue of a Special Permit issued by the Philippine Ports Authority, started
operations as the arrastre operator at the Manila South Harbor vice Metro. On
November 1986, individual respondents in a Motion/Manifestation prayed that
Marina be included as party-respondent.

On 27 July 1987, the NLRC in a Resolution denied AWU's and Metro's motions
for reconsideration of the consolidated Decision dated 4 September 1986, but
(acting on individual respondents' Motion/Manifestation) with the modification
limiting Metro's liability for backwages to wages accruing up to July 20, 1986 and
ordering Marina to reinstate individual respondents with backwages and
allowances starting from 21 July 1986. Marina complied with the Resolution by
reinstating individual respondents through its payroll retroactive to 21 July 1986.

AWU thereafter in G.R. Nos. 87266-69 filed with the Court a Petition
for certiorari on 14 March 1989 praying for the reversal of the decision of the
NLRC in NLRC Case No. NCR-NS-10-288-84 and NLRC Injunction Case No.
993 (praying principally for reversal of the order holding that respondent Metro
could not be compelled to fill up vacancies with AWUs recommendees) and in
NLRC Case No. NCR-4-1372-85 (praying chiefly for reversal of the order
reinstating the eleven [11] private respondents to their former positions with
backwages payable solidarily by AWU and respondent Metro). These cases
(G.R. Nos. 87266-69) were assigned to the Third Division of the Court.

Marina, meantime, had gone to the Court on certiorari on 14 June 1988 in G.R.
Nos. 81256-59 entitled "Marina Port Services, Inc. v. National Labor Relations
Commission, Metro Port Service, Inc, Associated Workers Union ["AWU"-
PTGWO], and Associated Workers Union in Metro Port [AWUM]" protesting, on
grounds of alleged denial of due process, its inclusion by the NLRC as a party in
NLRC Case No. NCR-4-1372-85 and its being required to reinstate individual
respondents with backwages. In dismissing these cases (G.R. Nos. 81256-59)
on 3 August 1988, the Court held that:

. . . [t]he decision to include Marina in the questioned [NLRC

Resolution dated 17 July 1987] is based on Par. "7" of the Special
Permit granted to Marina which states that "Labor and personnel of
previous operator, except those positions of trust and confidence,
shall be absorbed by the grantee." Besides, the petitioner was able
to file not only a Motion for Reconsideration of the Questioned
Resolution but also a Motion to Set Aside Motion/Manifestation and
Remarks on the Comment of Metro Port. The lack of due process at
the beginning, if any, was cured by the above motions that the
petitioner was able to file.4

On 13 April 1988, Metro in G.R. No. 82705 (entitled "Metro Port Services, Inc. v.
National Labor Relations Commission, Associated Workers Union-PTGWO,
Marina Port Services, Inc., and Adriano Yumul [and 10 others]") went to this court
again and assailed the NLRC ruling in NLRC Case No. NCR-4-1372-85 and
NLRC Injunction Case No. 993. Metro claimed that it should not have been held
solidary liable with AWU because it had merely suspended individual
respondents pursuant to the Agreement dated 18 April 1985 it had executed with
AWU and, later, had merely obeyed the Resolution of the NLRC dated 1 August
1985 ordering Metro to re-suspend individual respondents. In similarly dismissing
Metro's petition, the Court in G.R. No. 82705, held:

. . . Considering that the petitioner was a party to the compromise

agreement with AWU which provided that "at the instance of the
union, the company agrees to preventively suspend Adriano S.
Yumul and eleven associates effective immediately" and accordingly
suspended the private respondents despite the suspension being
contrary to law, the petitioner should be made solidarity liable with
AWU for the backwages and allowances that the private
 respondents may have been entitled to during their suspension. The
petitioner's liability, however, should not extend to the time that
respondent NLRC ordered it to re-suspend the private
respondents. 5 (Emphasis supplied)

Judgment was entered in G.R. Nos. 81256-59 and G.R. No. 82705 on 23
September 1988 and 4 July 1989, respectively, and the cases were remanded to
the Labor Arbiter of origin for execution.

On 18 September 1989, the Labor Arbiter issued a writ of execution against

Marina to reinstate individual respondents and to pay them the amount of
P154,357.00 representing salary adjustments. Marina moved to quash the writ of
execution questioning the award of P154,357.00, but without success. Marina
thereafter appealed to the NLRC assailing the Labor Arbiter's refusal to quash
the writ of execution.

On 23 November 1989, Marina received an Order from the Executive Labor

Arbiter dated 15 November 1989, requiring the release of any garnished deposit
from its bank, holding that no seasonable appeal from the 7 November 1989
Order denying Marina's motion to quash had been taken. Marina filed a
Manifestation dated 23 November 1989, arguing that it had filed an appeal with
the NLRC within the 10-day reglementary period.

On 6 December 1989, the Executive Labor Arbiter issued a writ of execution

requiring Marina: (a) to reinstate individual respondents and to pay them the
amount of P154,357.00 representing salary adjustments; and (b) to implement
and honor the legality of the organization and registration of AWUM as the local
chapter of AWU. Marina then once more went to the Court in G.R. Nos. 91223-
26 and filed a Petition for certiorari to invalidate the writ of execution, pleading
that: (a) execution had been ordered without due regard for its right of appeal
from the Labor Arbiter's Order; and (b) execution would result in its being made
to pay more than what is called for by the ruling of the Court in G.R. No. 82705,
where the Court affirmed the NLRC ruling that Marina "should be made solidarily
liable with AWU for the backwages and allowances that the private respondents
may have been entitled to during their suspension [although liability] should not
extend to the time that respondent NLRC ordered it to re-suspend the private
respondents." These cases (G.R. Nos. 91223-26) were assigned to the First
Division of the Court. On 20 December 1989, a temporary restraining order was
issued by the First Division of the Court to enjoin the implementation of the
Executive Labor Arbiter's Order of 6 December 1989.

On 16 April 1990, G.R. Nos. 91223-26 were consolidated with G.R. Nos. 87266-
69.
 I

1. Deliberating on the instant Petition for Certiorari, the Court in G.R. Nos. 87266-
69 considers that petitioner AWU has failed to show grave abuse of discretion or
any act without or in excess of jurisdiction on the part of the NLRC in Certified
NLRC Case No. 0403-85 (NCR No. NS-10-288-84). The NLRC was correct there
in holding that respondent Metro cannot be compelled to fill up vacancies with
AWU's recommendees, as the CBA between AWU and respondent Metro
granted the latter the right to "fill or not to fill-up vacancies"; that the issue of the
medically impaired employees had already been raised in another Notice of
Strike filed by AWU against respondent Metro on 16 September 1985, and both
parties had agreed to abide by the recommendation and decision of an
examining physician selected by them; and that the existing CBA grants
respondent Metro the right to compulsorily retire any member of AWU who had
reached 60 years of age, which right has been exercised by Metro.

2. The NLRC, however, misappreciated the relevant facts in NLRC Case No.
NCR-4-1372-85 and NLRC Injunction Case No. 993. While it is true that AWUM
as a local union, being an entity separate and distinct from AWU, is free to serve
the interest of all its members and enjoys the freedom to disaffiliate, such right to
disaffiliate may be exercised, and is thus considered a protected labor
activity, only when warranted by circumstances. Generally, a labor union may
disaffiliate from the mother union to form a local or independent union only during
the 60-day freedom period immediately preceding the expiration of the
CBA.6 Even before the onset of the freedom period (and despite the closed-shop
provision in the CBA between the mother union and management) disaffiliation
may still be carried out, but such disaffiliation must be effected by a majority of
the members in the bargaining unit. 7 This happens when there is a substantial
shift in allegiance on the part of the majority of the members of the union. In such
a case, however, the CBA continues to bind the members of the new or
disaffiliated and independent union up to the CBA's expiration date.8

The record does not show that individual respondents had disaffiliated during the
freedom period. The record does, however, show that only eleven (11) members
of AWU (individual respondents) had decided to disaffiliate from AWU and form
AWUM. Respondent Metro had about 4,000 employees, and around 2,000 of
these were members of AWU 9 It is evident that individual respondents had
failed to muster the necessary majority in order to justify their disaffiliation.
(In fact, it was only on 5 December 1985 that individual respondents were
finally able to register an independent union called Metroport Workers
Union [MWU]. 10 Even then, in the absence of allegation by AWUM [MWU] of
the exact number of its members, the Court presumes that only twenty
percent [20%] of the employees of Metro had joined MWU) 11 Thus, in the
referendum held on 7 January 1985 at the PTGWO compound (where
representatives of the Ministry of Labor and Employment were present) to
determine whether individual respondents should be expelled from AWU,
1,229 members (out of 1,695 members present) voted for expulsion of
individual respondents. 12

The individual respondents here have failed to present proof of their allegation
that the 1,695 members of AWU were not employees of respondent Metro alone;
the Court therefore presumes that those who voted for their expulsion were bona
fide employees of respondent Metro. Moreover, individual respondents failed to
allege that their expulsion for disloyalty violated AWU's constitution and by-
laws. 13 In sum, the attempted disaffiliation of the eleven (11) private respondents
from the petitioner mother union and the effort to organize either a new local of
the mother union or an entirely new and separate union, did not, under the
circumstances of this case, constitute protected activities of the eleven (11)
individual respondents.

II

In view of the conclusion reached above in G.R. Nos. 87266-69, i.e., that AWU
was justified in expelling from its membership the eleven (11) individual
respondents, the question now arises: how and to what extent does such
conclusion affect the liability of Metro, and Marina (as successor-employer)? It
will be recalled that the Resolutions of this Court in G.R. Nos. 81256-59 and
82705 dismissing the Petitions for certiorari of both Metro and Marina assailing
the NLRC consolidated Decision of 4 September 1986 insofar as their (Metro's
and Marina's) liability for reinstatement and backwages of the individual
respondents thereunder is concerned, became final and judgment entered
therein, sometime ago.

1. So far as concerns AWU's liability under the NLRC consolidated Decision, it

should in the first place be pointed out that the Court did not make any
pronouncement either in G.R. Nos. 81256-59 or in G.R. No. 82705 concerning
AWU's liability. In G.R. No. 82705, the Court merely acted on the issue raised by
petitioner Metro: that Metro should not be liable at all for reinstatement and
backwages considering that Metro was only pressed into suspending individual
respondents because of AWUs threat to strike. In dismissing Metro's Petition, the
Court in G.R. No. 82705 in effect merely held that Metro, whatever the liability of
AWU might be in respect of the expulsion of individual respondents, could not
escape liability by throwing all responsibility upon AWU; and that Metro could not
validly plead that it was under duress when it executed the Agreement with AWU
providing for, among other things, the preventive suspension of individual
respondents.
The Court is, of course, aware that AWU was a party-respondent in both G.R.
Nos. 81256-59 and 82705, and that AWU had in fact filed a Comment in both
G.R. Nos. 81256-59 and 82705. Nonetheless, the Court did not either in G.R.
Nos. 82156-59 or in G.R. No. 82705 in fact make a determination of the legality
of AWU's expulsion of individual respondents from its membership. The Court in
G.R. No. 82705 held only that the liability of Metro was solidary in nature, i.e.,
solidary with AWU, whatever AWU's liability might be; and it may be well to recall
that solidary liability is different from secondary liability. In G.R. Nos. 81256-59,
the Court simply held that Marina was properly impleaded in the underlying
cases and could not be absolved from responsibility for reinstatement and
backwages upon the ground of denial of due process.

2. Thus, so far as concerns the liability of Metro and Marina for reinstatement
with backwages of individual respondents under the consolidated NLRC
Decision, the pre-eminent fact is that the Court's Resolutions in G.R. Nos. 81256-
59 and 82705 dismissing their Petitions are already final. The liabilities of Metro
and Marina for reinstatement and backwages under the consolidated NLRC
Decision have become fixed and definite, with the modification decreed by the
Court in G.R. No. 82705 in so far as backwages were concerned. Thus, the
conclusion we today have reached in G.R. Nos. 87266-69 cannot benefit Metro
and Marina and will not dissolve their already fixed and definite liabilities.

3. Turning to the question of the backwages due to the eleven (11) individual
respondents, three (3) different time periods are relevant here and must be
distinguished from one another:

First Period: From 18 April 1985 to 21 June 1985: the Compromise

Agreement between Metro and AWU to end the strike, in which
Metro agreed to preventively suspend the eleven (11) individual
respondents, was effected on 18 April 1985 and implemented
immediately. The Labor Arbiter on 21 June 1985 ordered Metro to
reinstate provisionally the eleven (11) individual respondents and
Metro complied.

Second Period: From 1 August 1985 up to 27 July 1987: the NLRC,

pursuant to the urging of AWU, ordered Metro to re-suspend the
individual respondents on 1 August 1985 and Metro again complied
with this Order. Approximately two (2) years later, on 27 July 1987,
NLRC ordered Metro/Marina to reinstate the individual respondents
and Marina complied by reinstating the individual respondents on
the payroll, i.e., paying their salaries although they were not allowed
to work on their jobs.
 Third Period: From 28 July 1987 to 18 September 1989: on 18
September 1989, the Labor Arbiter issued the questioned writ of
execution ordering, among other things, Marina to reinstate formally
the individual respondents.

Under the consolidated NLRC Decision, Metro/Marina are liable for the
backwages accruing during the First and Third Periods above indicated. In
respect of the Second Period, however, the Court in G.R. No. 82705, as already
pointed out earlier, held that Metro/Marina should not be held liable for
backwages accruing during that period. Strictly speaking, in view of our
conclusion above that AWU was justified in expelling individual respondents from
its membership, neither AWU nor Metro/Marina would be liable to individual
respondents for the backwages accruing during this Second Period.

4. In the interest of substantial and expeditious justice, however, we believe that

the backwages accruing during the Second Period should be paid and shared by
AWU and by Metro Marina, on a 50-50 basis. We here establish this equitable
allocation of ultimate responsibility in order to forestall further litigation between
AWU and Metro/Marina and individual respondents in respect of claims and
countering claims for payment or reimbursement or contribution and to put a
definite end to this prolonged and costly confrontation among the several parties.

The equitable considerations which impel us to hold AWU liable for one-half (½)
of the backwages during the Second Period include:

(a) the fact that Metro had been reluctant to comply with the demand
of AWU to terminate the services of individual respondents and had
wanted to give the latter procedural due process, but gave in to the
demands of AWU;

(b) that AWU had pressed Metro very hard and indeed went on
strike against Metro when Metro refused simply to terminate the
services of the individual respondents;

(c) that AWU, instead of waiting for final judicial determination of the
legality of its expulsion of individual respondents, chose to importune
the NLRC to issue the order requiring the re-suspension of the
individual respondents on 1 August 1985, with which order Metro
eventually complied.

5. Turning to Metro/Marina we note that, apart from the finality of the Court's
Resolutions in G.R. Nos. 81256-59 and 82705, there is independent basis for
holding Metro/Marina responsible for reinstatement with backwages accruing
throughout the three (3) periods above indicated. The equitable considerations
which lead us to hold Metro/Marina responsible for one-half (½) of the
backwages accruing during the above Second Period relate to the failure of
Metro to accord individual respondents procedural due process by giving them
reasonable opportunity to explain their side before suspending or dismissing
them. Such dismissal was accordingly in violation of the Labor
Code.14Notwithstanding AWU's closed-shop clause in the CBA, Metro was bound
to conduct its own inquiry to determine the existence of substantial basis for
terminating the employment of individual respondents. 15 That AWU, disregarding
the Minister of Labor and Employment's express order, had threatened to go on
strike, and indeed actually went on strike, if Metro had continued with the
services of individual respondents, did not relieve Metro from the duty to accord
procedural due process to individual respondents. 16

6. The portion of the Writ of Execution issued by the Executive Labor Arbiter
requiring Marina to pay salary differentials in the total amount of P154,357.00
accruing during the period from 20 July 1986 up to October 1989, should be
modified to conform with the above legal and equitable allocation of liability for
the backwages which had accrued during the three (3) Periods above mentioned
during which the individual respondents were suspended. The salary
differentials, as we understands it, refer to increases in the prevailing wages
accruing partly during the Second Period and partly during the Third Period as
above indicated. In other words, the salary differentials accruing from 20 July
1986 up to 27 July 1987 should be borne on a 50-50 basis by AWU on the one
hand and Metro/Marina on the other. The salary differentials accruing from 28
July 1987 up to 18 September 1989 shall be borne exclusively by Marina.

7. The portion of the Writ of Execution issued by the Executive Labor Arbiter
which requires Marina to recognize the legality of the organization and
registration of AWUM (now MWU) as a local chapter of AWU, is inconsistent with
the conclusions we have set forth in Part I above, and must be deleted. What
was in fact eventually established by individual respondents was a separate,
independent union called Metro Port Workers Union (MWU) which was not
entitled, during the time periods here relevant, to recognition as the bargaining
unit in CBA negotiations.

ACCORDINGLY, the Court Resolved:

In G.R. Nos. 87266-69:

(a) to DISMISS the Petition for Certiorari in respect of Certified

NLRC Case No. 0403-855 (NCR-NS-10-288-84) for lack of merit;
and
 (b) to GRANT partially the Petition for Certiorari in respect of NLRC
Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993. The
consolidated Decision of the NLRC dated 4 September 1986
ordering AWU and Marina to pay solidarily the backwages of
individual respondents, as well as the NLRC Resolution of 27 July
1987 denying AWUs and Metro's Motions for Reconsideration, are
hereby MODIFIED so as to require AWU and Metro/Marina to pay,
on a 50-50 basis, to individual respondents the backwages which
accrued during the Second Period, i.e., from 1 August 1985 up to 27
July 1987.

In G.R. Nos. 91223-26:

to GRANT partially the Petition. The Order of the Executive Labor

Arbiter dated 6 December 1989 is hereby MODIFIED so as (a) to
require AWU and Metro/Marina on a 50-50 basis to pay the salary
differentials accruing during the period from 20 July 1986 up to 27
July 1987, and Marina alone to pay the salary differentials accruing
from 28 July 1987 up to 31 October 1989, and so as (b) to delete the
portion requiring Marina to recognize AWU. (MWU) as the local
chapter of AWU. The Temporary Restraining Order issued by the
Court on 20 December 1989 is hereby LIFTED so as to permit
enforcement of the Order of the Executive Labor Arbiter as herein
modified.

No pronouncement as to costs.

SO ORDERED.

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

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU), SOCIAL

SECURITY SYSTEM EMPLOYEES ASSOCIATION-PAFLU, ALFREDO
FAJARDO AND ALL THE OTHER MEMBERS AND OFFICERS OF THE
SOCIAL SECURITY EMPLOYEES ASSOCIATION-PAFLU, Petitioners, v. THE
SECRETARY OF LABOR, THE DIRECTOR OF LABOR RELATIONS, AND
THE REGISTRAR OF LABOR ORGANIZATIONS, Respondents.

Cipriano Cid & Associates and Israel Bocobo, for Petitioners.

Solicitor General Arturo A. Alafriz and Solicitor Camilo D. Quiason

for Respondents.
 SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; INDUSTRIAL PEACE ACT;

REGISTRATION OF LABOR ORGANIZATIONS; REGISTRATION CALLED
FOR BY SECTION 23, R.A. 875 IS NOT A CURTAILMENT OF FREEDOM OF
ASSEMBLY AND ASSOCIATION. — The theory that the registration requirement
on all labor organizations under the Industrial Peace Act unduly curtails the
freedom of assembly and association guaranteed in the Bill of Rights is devoid of
factual basis. The registration prescribed in paragraph (b) of Section 23 of
Republic Act 875 is not a limitation to the right of assembly or association, which
may be exercised with or without said registration. It is merely a condition sine
qua non for the acquisition of legal personality by labor organizations,
associations or unions and the possession of the rights and privileges granted by
law to legitimate labor organizations.

2. ID.; ID.; ID.; ESSENTIAL REQUIREMENTS THEREOF. — To be registered

pursuant to Section 23 (b) of Republic Act No. 875, a labor organization,
association or union of workers must file with the Department of Labor the
following: (a) a copy of the constitution and by-laws of the organization with list of
officers, their addresses and the address of the principal office of the
organization; (b) a sworn statement of all the officers that they are not
Communist Party members and (c) a cow of its last financial report, if the
applicant organization has been in existence for one or more years.

3. ID.; ID.; ID.; SECTION 23(b), R.A. 875 DID NOT DELEGATE JUDICIAL
POWER TO AN ADMINISTRATIVE AGENCY. — The determination of the
question whether the requirements of paragraph (b) have been met, or whether
or not the requisite financial report or non-subversive affidavits have been filed
within the period required by the Act, is not judicial power. Indeed, all officers of
the government, including those in the executive department, are supposed to
act on the basis of facts, as they see the same. This is specially true as regards
administrative agencies given by law the power to investigate and render
decisions concerning details related to the execution of laws the enforcement of
which is entrusted thereto.

4. ID.; ID.; ID.; RIGHTS AND PRIVILEGES GRANTED TO LABOR UNIONS

ARE STATUTORY CREATION. — The Constitution does not guarantee the
rights and privileges granted by law to legitimate labor organizations, much less
to the personality vested in them. They are mere statutory creations to protect
both labor and the public against abuses, fraud, or impostors who pose as
organizers, although not truly accredited agents of the union they purport to
represent. Such requirement is a valid exercise of the police power, because the
activities in which labor organizations, associations, and union of workers are
engaged affect public interest which should be protected.

5. ID.; ID.; ID.; SUBMISSION OF FINANCIAL STATEMENT, A REASONABLE

REGULATION FOR THE BENEFITS OF THE MEMBERS OF THE
ORGANIZATION. — The obligation to submit financial statements, as a condition
for the non-cancellation of a certificate of registration, is a reasonable regulation
for the benefit of the members of the organization, considering that the same
generally solicits funds of membership, as well as oftentimes collects, on behalf
of its members, huge amounts of money due to them or to the organization.

6. ID.; ID.; ID.; SECTION 23 (c) OF R.A. 875 REFERS TO PROCEEDINGS FOR
REGISTRATION. — The 30-day period invoked by the petitioners is inapplicable
to the decision complained of. Said period is prescribed in paragraph (c) of
Section 23, which refers to the proceedings for the "registration" of labor
organizations, associations or unions, not to the "cancellation" of said
registration, which is governed by paragraph (d) of the same Section.

7. ID.; ID.; ID.; PERIOD FOR RULE REGARDING RENDITION OF DECISION IN

REGISTRATION PROCEEDINGS OF LABOR ORGANIZATIONS ARE
DIRECTORY. — We have repeatedly held that legal provisions prescribing the
period within which a decision should be rendered are directory, not mandatory in
nature — in the sense that, a judgment promulgated after the expiration of said
period is not null and void, although the officer who failed to comply with law may
be dealt with administratively, in consequence of his delay - unless the intention
to the contrary is manifest. Such, however, is not the import of said paragraph (c)
of Section 23 of R.A. 875.

8. ID.; ID.; ID.; CANCELLATION OF REGISTRATION CERTIFICATE OF LABOR

ORGANIZATIONS NEED NOT BE APPROVED BY THE SECRETARY OF
LABOR. — There is no law requiring the approval, by the Secretary of Labor, of
the decision of the Registrar decreeing the cancellation of a registration
certificate. In fact, the language of paragraph (d) of Sec. 23 suggest that, once
the conditions therein specified are present, the office concerned "shall" have no
choice but to issue the order of cancellation. Moreover, in the case at bar, there
is nothing, as yet, for the Secretary of Labor to approve or disapprove, since
petitioners’ motion for reconsideration of the Registrar’s decision of October 23,
1963, is still pending resolution. In fact, this circumstance shows, not only that
the present action is premature, but, also, that petitioners have failed to exhaust
the administrative remedies available to them. Indeed, they could ask the
Secretary of Labor to disapprove the Registrar’s decision or object to its
execution or enforcement, in the absence or approval of the former, if the same
were necessary, on which we need not and do not express any
opinion:chanrob1es virtual 1aw library

9. ID.; ID.; ID.; SECTION 23 DOES NOT IMPINGE UPON THE RIGHT OF
ORGANIZATION GUARANTEED IN THE UNIVERSAL DECLARATION OF
HUMAN RIGHTS. — Section 23 does not impinge upon the right of organization
guaranteed in the Declaration of Human Rights, or run counter to Articles 2, 4, 7
and Section 2 of Article 8 of the ILO-Convention No. 87, which provide that
"workers and employers, .. shall have the right to establish and .. join
organizations of their own choosing, without previous authorization" ; that
"workers and employers organizations shall not be liable to be dissolved or
suspended by administrative authority" ; that "the acquisition of legal personality
by workers’ and employers’ organizations, .. shall not be made subject to
conditions of such a character as to restrict the application of the provisions"
above mentioned; and that "the guarantees provided for in" said Convention shall
not be impaired by the law of the land.

10. ID.; ID.; ID.; R.A. NO. 875 IS NOT INCOMPATIBLE WITH THE UNIVERSAL
DECLARATION OF HUMAN RIGHTS. — We have held that there is no
incompatibility between Republic Act No. 875 and the Universal Declaration of
Human Rights. Upon the other hand, the cancellation of the SSSEA’s registration
certificate would not entail a dissolution of said association or its suspension. The
existence of the SSSEA would not be affected by said cancellation, although its
juridical personality and its statutory rights and privileges — as distinguished
from those conferred by the Constitution — would be suspended thereby.

DECISION

CONCEPCION, J.:

Petitioners pray for writs of certiorari and prohibition to restrain respondents, the
Secretary of Labor, the Director of Labor Relations and the Registrar of Labor
Organizations, from enforcing an order of cancellation of the registration
certificate of the Social Security System Employees Association — hereinafter
referred to as the SSSEA — which is affiliated to the Philippine Association of
Free Labor Unions — hereinafter referred to as PAFLU — as well as to annul all
proceedings in connection with said cancellation and to prohibit respondents
from enforcing Section 23 of Republic Act No. 875. Petitioners, likewise, pray for
a writ of preliminary injunction pending the final determination of this case. In
their answer, respondents traversed some allegations of fact and the legal
conclusions made in the petition. No writ of preliminary injunction pendente lite
has been issued.chanroblesvirtuallawlibrary

It appears that on September 25, 1963, the Registrar of Labor Organizations —

hereinafter referred to as the Registrar — issued a notice of hearing, on October
17, 1963, of the matter of cancellation of the registration of the SSSEA, because
of:jgc:chanrobles.com.ph

"1. Failure to furnish the Bureau of Labor Relations with copies of the reports on
the finances of that union duly verified by affidavits which its treasurer or
treasurers rendered to said union and its members covering the periods from
September 24, 1960 to September 23, 1961 and September 24, 1961 to
September 23, 1962, inclusive, within sixty days of the 2 respective latter dates,
which are the end of its fiscal year; and

"2. Failure to submit to this office the names, postal addresses and non-
subversive affidavits of the officers of that union within sixty days of their election
in October (1st Sunday), 1961 and 1963, in conformity with Article IV(1) of its
constitution and by-laws."cralaw virtua1aw library

in violation of Section 23 of Republic Act No. 875. Counsel for the SSSEA moved
to postpone the hearing to October 21, 1963, and to submit then a memorandum,
as well as the documents specified in the notice. The motion was granted, but
nobody appeared for the SSSEA on the date mentioned. The next day, October
22, 1963, Manuel Villagracia, Assistant Secretary of SSSEA, filed, with the Office
of the Registrar, a letter dated October 21, 1963, enclosing the
following:chanrob1es virtual 1aw library

1. Joint non-subversive affidavit of the officers of the SSS Employees’

Association — PAFLU;

2. List of newly elected officers of the Association in its general elections held on
April 29, 1963; and

3. Copy of the amended constitution and by-laws of the Association.

Holding

"1. That the joint non-subversive affidavit and the list of officers mentioned in the
letter of Mr. Manuel Villagracia were not the documents referred to in the notice
of hearing and made the subject matter of the present proceeding; and
"2. That there is no iota of evidence on records to show and/or warrant the
dismissal of the present proceeding."cralaw virtua1aw library

on October 23, 1963, the Registrar rendered a decision cancelling the SSSEA’s
Registration Certificate No. 1-IP-169, issued on September 30, 1960. Soon later,
or on October 28, 1963, Alfredo Fajardo, president of the SSSEA moved for a
reconsideration of said decision and prayed for time, up to November 15, within
which to submit the requisite papers and data. An opposition thereto having been
filed by one Paulino Escueta, a member of the SSSEA, upon the ground that the
latter had never submitted any financial statement to its members, said motion
was heard on November 27, 1963. Subsequently, or on December 4, 1963, the
Registrar issued an order declaring that the SSSEA had "failed to submit the
following requirements to wit:jgc:chanrobles.com.ph

"1. Non subversive affidavits of Messrs. Teodoro Sison, Alfonso Atienza, Rodolfo
Zalameda, Raymundo Sabino and Napoleon Pefianco who were elected along
with others on January 30, 1962.

"2. Names, postal addresses and non-subversive affidavits of all the officers who
were supposedly elected on October (1st Sunday), of its constitution and by-
laws."cralaw virtua1aw library

and granting the SSSEA 15 days from notice to comply with said requirements,
as well as meanwhile holding in abeyance the resolution of its motion for
reconsideration.chanroblesvirtual|awlibrary

Pending such resolution, or on December 16, the PAFLU, the SSSEA, Alfredo
Fajardo "and all the officers and members" of the SSSEA commenced the
present action, for the purpose stated at the beginning of this decision, upon the
ground that Section 23 of Republic Act No. 875 violates their freedom of
assembly and association, and is inconsistent with the Universal Declaration of
Human Rights; that it unduly delegates judicial power to an administrative
agency; that said Section 23 should be deemed repealed by ILO-Convention No.
87; that respondents have acted without or in excess of jurisdiction and with
grave abuse of discretion in promulgating, on November 19, 1963, its decision
dated October 22, 1963, beyond the 30-day period provided in Section 23(c) of
Republic Act No. 875; that "there is no appeal on any other plain, speedy and
adequate remedy in the ordinary course of law" ; that the decision complained of
had not been approved by the Secretary of Labor; and that the cancellation of the
SSSEA’s certificate of registration would cause irreparable injury.

The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails
the freedom of assembly and association guaranteed in the Bill of Rights is
devoid of factual basis. The registration prescribed in paragraph (b) of said
Section 1 is not a limitation to the right of assembly or association, which may be
exercised with or without said registration. 2 The latter is merely a condition sine
qua non for the acquisition of legal personality by labor organizations,
associations or unions and the possession of the "rights and privileges granted
by law to legitimate labor organizations." The Constitution does not guarantee
these rights and privileges, much less said personality, which are mere statutory
creations, for the possession and exercise of which registration is required to
protect both labor and the public against abuses, fraud, or impostors who pose
as organizers, although not truly accredited agents of the union they purport to
represent. Such requirement is a valid exercise of the police power, because the
activities in which labor organizations, associations and union of workers are
engaged affect public interest, which should be protected. 3 Furthermore, the
obligation to submit financial statements, as a condition for the non-cancellation
of a certificate of registration, is a reasonable regulation for the benefit of the
members of the organization, considering that the same generally solicits funds
or membership, as well as oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the organization. 4

For the same reasons, said Section 23 does not impinge upon the right of
organization guaranteed in the Declaration of Human Rights, or run counter to
Articles 2, 4, 7 and Section 2 of Article 8 of the ILO-Convention No. 87, which
provide that "workers and employers,. shall have the right to establish and join
organizations of their own choosing, without previous authorization" ; that
"workers and employers . . . organizations shall not be liable to be dissolved or
suspended by administrative authority" ; that "the acquisition of legal personality
by workers’ and employers’ organizations, . . . shall not be made subject to
conditions of such a character as to restrict the application of the provisions"
above mentioned; and that "the guarantees provided for in" said Convention shall
not be impaired by the law of the land.

In B.S.P. v. Araos 5 , we held that there is no incompatibility between Republic

Act No. 875 and the Universal Declaration of Human Rights. Upon the other
hand, the cancellation of the SSSEA’s registration certificate would not entail a
dissolution of said association or its suspension. The existence of the SSSEA
would not be affected by said cancellation, although its juridical personality and
its statutory rights and privileges — as distinguished from those conferred by the
Constitution — would be suspended thereby.

To be registered, pursuant to Section 23(b) of Republic Act No. 875, a labor

organization, association or union of workers must file with the Department of
Labor the following documents:jgc:chanrobles.com.ph
"(1) A copy of the constitution and by-laws of the organization together with a list
of all officers of the association, their addresses and the address of the principal
office of the organization;

"(2) A sworn statement of all the officers of the said organization, association or
union to the effect that they are not members of the Communist Party and that
they are not members of any organization which teaches the overthrow of the
Government by force or by any illegal or unconstitutional method; and

"(3) If the applicant organization has been in existence for one or more years, a
copy of its last annual financial report."cralaw virtua1aw library

Moreover, paragraph (d) of said Section ordains that:jgc:chanrobles.com.ph

"The registration and permit of a legitimate labor organization shall be cancelled

by the Department of Labor, if the Department has reason to believe that the
labor organization no longer meets one or more of the requirements of paragraph
(b) above; or fails to file with the Department of Labor either its financial report
within the sixty days of the end of its fiscal year or the names of its new officers
along with their non-subversive affidavits as outlined in paragraph (b) above
within sixty days of their election; however, the Department of Labor shall not
order the cancellation of the registration and permit without due notice and
hearing, as provided under paragraph (c) above, and the affected labor
organization shall have the same right of appeal to the courts as previously
provided." 6

The determination of the question whether the requirements of paragraph (b)

have been met, or whether or not the requisite financial report or non-subversive
affidavits have been filed within the period above stated, is not judicial power.
Indeed, all officers of the government, including those in the executive
department, are supposed to act on the basis of facts, as they see the same.
This is specially true as regards administrative agencies given by law the power
to investigate and render decisions concerning details related to the execution of
laws and enforcement of which is entrusted thereto. Hence, speaking for this
Court, Mr. Justice Reyes (J.B.L.) had occasion to say:jgc:chanrobles.com.ph

"The objections of the appellees to the constitutionality of Republic Act No. 2056,
not only as an undue delegation of judicial power to the Secretary of Public
Works but also for being unreasonable and arbitrary, are not tenable. It will be
noted that the Act (R.A. 2056) merely empowers the Secretary to remove
unauthorized obstructions or encroachments upon public streams, constructions
that no private person was anyway entitled to make, because the bed of
navigable streams is public property, and ownership thereof is not acquirable by
adverse possession (Palanca v. Commonwealth, 69 Phil. 449).

"It is true that the exercise of the Secretary’s power under the Act necessarily
involves the determination of some questions of fact, such as the existence of the
stream and its previous navigable character; but these functions, whether judicial
or quasi-judicial, are merely incidental to the exercise of the power granted by
law to clear navigable streams of unauthorized obstructions or encroachments,
and authorities are clear that they are validly conferable upon executive officials
provided the party affected is given opportunity to be heard, as is expressly
required by Republic Act No. 2056, Section 2." 7

It should be noted, also, that, admittedly, the SSSEA had not filed the non-
subversive affidavits of some of its officers — "Messrs. Sison, Tolentino, Atienza,
Zalameda, Sabino and Pefianca" — although said organization avers that these
persons "were either resigned or out on leave as directors or officers of the
union," without specifying who had resigned and who were on leave. This
averment is, moreover, controverted by respondents herein.

Again, the 30-day invoked by the petitioners is inapplicable to the decision

complained of. Said period is prescribed in paragraph (c) 8 of Section 23, which
refers to the proceedings for the "registration" of labor organizations,
associations or unions, not to the "cancellation" of said registration, which is
governed by the above-quoted paragraph (d) of the same Section.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

Independently of the foregoing, we have repeatedly held that legal provisions

prescribing the period within which a decision should be rendered are directory,
not mandatory in nature — in the sense that, a judgment promulgated after the
expiration of said period is not null and void, although the officer who failed to
comply with law may be dealt with administratively, in consequence of his delay 9
— unless the intention to the contrary is manifest. Such, however, is not the
import of said paragraph (c). In the language of Black:jgc:chanrobles.com.ph

"When a statute specifies the time at or within which an act is to be done by a

public officer or body, it is generally held to be directory only as to the time, and
not mandatory, unless time is of the essence of the thing to be done, or the
language of the statute contains negative words, or shows that the designation of
the time was intended as a limitation of power, authority or right." 10

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

IN VIEW OF THE FOREGOING, the petition herein should be, as it is hereby

dismissed, and the writs prayed for denied, with costs against the petitioners. It is
so ordered.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro, Fernando,

Capistrano, Teehankee and Barredo, JJ., concur.

[G.R. No.131374. January 26, 2000]

ABBOTT LABORATORIES PHILIPPINES, INC., petitioner, vs. ABBOTT

LABORATORIES EMPLOYEES UNION, MR. CRESENCIANO TRAJANO, in
his capacity as Acting Secretary of The Department of Labor and
Employment and MR. BENEDICTO ERNESTO BITONIO, JR., in his capacity
as Director IV of the Bureau of Labor Relations, respondents. ULANDU

DECISION

DAVIDE, JR., C.J.:

This special civil action for certiorari and mandamus assails the action of the then
Acting Secretary of Labor and Employment Cresenciano. B. Trajano contained in
its letter dated 19 September 1997,[1]informing petitioner Abbott Laboratories
Philippines, Inc. (hereafter ABBOTT), thru its counsel that the Office of the
Secretary of Labor cannot act on ABBOTT's appeal from the decision of 31
March 1997[2] and the Order of 9 July 1997[3] of the Bureau of Labor Relations,
for lack of appellate jurisdiction.

ABBOTT is a corporation engaged in the manufacture and distribution of

pharmaceutical drugs. On 22 February 1996,[4] the Abbott Laboratories
Employees Union (hereafter ALEU) represented by its president, Alvin B.
Buerano, filed an application for union registration in the Department of Labor
and Employment. ALEU alleged in the application that it is a labor organization
with members consisting of 30 rank-and-file employees in the manufacturing unit
of ABBOTT and that there was no certified bargaining agent in the unit it sought
to represent, namely, the manufacturing unit.

On 28 February 1996,[5] ALEU's application was approved by the Bureau of

Labor Relations, which in due course issued Certificate of Registration No. NCR-
UR-2-1638-96. Consequently, ALEU became a legitimate labor organization.

On 2 April 1996,[6] ABBOTT filed a petition for cancellation of the Certificate of

Registration No. NCR-UR-2-1638-96 in the Regional Office of the Bureau of
Labor Relations. This case was docketed as Case No. OD-M-9604-006.
ABBOTT assailed the certificate of registration since ALEU's application was not
signed by at least 20% of the total 286 rank-and-file employees of the entire
employer unit; and that it omitted to submit copies of its books of account. LEX

On 21 June 1996,[7] the Regional Director of the Bureau of Labor Relations

decreed the cancellation of ALEU's registration certificate No. NCR-UR-II-1585-
95.[8] In its decision, the Regional Director adopted the 13 June 1996[9] findings
and recommendations of the Med-Arbiter. It ruled that the union has failed to
sliow that the rank-and-file employees in the manufacturing unit of ABBOTT were
bound by a common interest to justify the formation of a bargaining unit separate
from those belonging to the sales and office staff units. There was, therefore,
sufficient reason to assume that the entire membership of the rank-and-file
consisting of 286 employees or the "employer unit" make up the appropriate
bargaining unit. However, it was clear on the record that the union's application
for registration was supported by 30 signatures of its members or barely
constituting 10% of the entire rank-and-file employees of ABBOTT. Thus the
Regional Director found that for ALEU's failure to satisfy the requirements of
union registration under Article 234 of the Labor Code; the cancellation of its
certificate of registration was in order.

Forthwith, on 19 August 11996,[10] ALEU appealed said cancellation to the Office

of the Secretary of Labor and Employment, which referred the same to the
Director of the Bureau of Labor Relations. The said appeal was docketed as
Case No. BLR-A-10-25-96.

On 31 March 1997,[11] the Bureau of Labor Relations rendered judgment

reversing the 21 June 1996 decision of the Regional Director, thus:

WHEREFORE, the appeal is GRANTED and the decision of the

Regional Director dated 21 June 1996 is hereby REVERSED. Abbott
Laboratories Employees Union shall remain in the roster of
 legitimate labor organizations, with all the rights, privileges and
obligations appurtenant thereto.[12]

It gave the following reasons to justify the reversal: ( 1) Article 234 of the Labor
Code does not require an applicant union to show proof of the "desirability of
more than one Ibargaining unit within an employer unit," and the absence of such
proof is not a ground for the cancellation of a union's registration pursuant to
Article 239 of Book V, Rule II of the implementing rules of the Labor Code; (2) the
issue pertaining to the appropriateness of a bargaining unit cannot be raised in a
cancellation proceeding but may be threshed out in the exclusion-inclusion
process during a certification election; and (3) the "one-bargaining unit, one-
employer unit policy" must not be interpreted in a manner that shall derogate the
right of the employees to self-organization and freedom of association as
guaranteed by Article III, Section 8 of the 1987 Constitution and Article II of the
International Labor Organization's Convention No.87. Jj sc

Its motion to reconsider the 31 March 1997 decision of the Bureau of Labor
Relations having been denied for lack of merit in the Order[13] of 9 July 1997,
ABBOTT appealed to the Secretary of Labor and Employment. However, in its
letter dated 19 September 1997,[14] addressed to ABBOTT's counsel, the
Secretary of Labor and Employment refused to act on ABBOTT's appeal on the
ground that it has no jurisdiction to review the decision of the Bureau of Labor
Relations on iappeals in cancellation cases emanating from the Regional Offices.
The decision of the Bureau of Labor Relations therein is final and executory
under Section 4, Rule III, Book V of the Rules and Regulations Implementing thc
Labor Code, as amended by Department Order No. 09, s. of 1997. Finally, the
Secretary stated:

It has always been the policy of this Office that pleadings

denominated as appeal thereto over decisions of the BLR in
cancellation cases coming from the Regional Offices are referred
back to the BLR, so that the same may be treated as motions for
reconsideration and disposed of accordingly. However, since your
office has already filed a motion for reconsideration with the BLR
which has been denied in its Order dated 09 July 1997, your
recourse should have been a special civil action for certiorari with
the Supreme Court.

In view of the foregoing, please be informed that the Office of the

Secretary cannot act upon your Appeal, except to cause the BLR to
include it in the records of the case.
Hence, this petition. ABBOTT premised its argument on the authority of the
Secretary of Labor and Employment to review the decision of the Bureau of
Labor Relations and at the same time raised the issue on the validity of ALEU's
certificate of registration.

We find no merit in this petition.

At the outset, it is wortl1y to note that the present petition assails only the letter of
the then Secretary of Labor & Employment refusing to take cognizance of
ABBOTT's appeal for lack of appellate jurisdiction. Hence, in the resolution of the
present petition, it is just appropriate to limit the issue on the power of the
Secretary of Labor and Employment to review the decisions of the Bureau of
Labor Relations rendered in the exercise of its appellate jurisdiction over
decisions of the Regional Director in cases involving cancellations of certificates
of registration of labor unions. The issue anent the validity of ALEU's certificate of
registration is subject of the Bureau of Labor Relations decision dated 31 March
1997. However, said decision is not being assailed in the present petition; hence,
we are not at liberty to review the same. Sc jj

Contrary to ABBOTT's contention, there has been no grave abuse of discretion

on the part of the Secretary of Labor and Employment. Its refusal to take
cognizance of ALEU's appeal from the decision of the Bureau of Labor Relations
is in accordance with the provisions of Rule VIII, Book V of the Omnibus Rules
Implementing the Labor Code as amended by Department Order No. 09.[15] The
rule governing petitions for cancellation of registration of any legitimate labor
organization or worker association, as it now stands, provides:

SECTION 1. Venue of Action --If the respondent to the petition is a

local/chapter, affiliate, or a workers' association with operations
limited to one region, the petition shall be filed with the Regional
Office having jurisdiction over the place where the respondent
principally operates. Petitions filed against federations, national or
industry unions, trade union centers, or workers' associations
operating in more than one regional jurisdiction, shall be filed with
the Bureau.

SECTION 3. Cancellation of registration;. nature and grounds. --

Subject to the requirements of notice and due process, the
registration of any legitimate labor organization or worker's
association may be cancelled by the Bureau or the Regional Office
upon the filing of an independent petition for cancellation based on
any of the following grounds:
 (a) Failure to comply with any of the requirements prescribed under
Articles 234, 237 and 238 of the Code;

(b) Violation of any of the provisions of Article 239 of the Code;

(b) Commission of any of the acts enumerated under Article 241 of

the Code; provided, that no petition for cancellation based on this
ground may be granted unless supported by at least thirty percent
(30%) of all the members of the respondent labor organization or
workers' association.

Section 4. Action on the petition; appeals -- The Regional or Bureau

Director, as the case may be, shall have thirty (30) days from
submission of the case for resolution within which to resolve the
petition. The decision of the Regional or Bureau Director may be
appealed to the Bureau or the Secretary, as the case may be, within
ten (10) days from receipt thereof by the aggrieved party on the
ground of grave abuse of discretion or any violation of these Rules.

The Bureau or the Secretary shall have fifteen ( 15) days from
receipt of the records of the case within which to decide the appeal.
The decision of the Bureau or the Secretary shall be final and
executory. Sj cj

Clearly, the Secretary of Labor and Employment has no jurisdiction to entertain

the appeal of ABBOTT. The appellate jurisdiction of the Secretary .of Labor and
Employment is limited only to a review of cancellation proceedings decided by
the Bureau of Labor Relations in the exercise of its exclusive and original
jurisdiction. The Secretary of Labor and Employment has no jurisdiction over
decisions of the Bureau of Labor Relations rendered in the exercise of its
appellate power to review the decision of the Regional Director in a petition to
cancel the union's certificate of registration, said decisions being final and
inappealable.[16] We sustain the analysis and interpretation of the OSG on this
matter, to wit:

From the foregoing, the Office of the Secretary correctly maintained

that it cannot take cognizance of petitioner's appeal from the
decision of BLR Director Bitonio. Sections 7 to 9[17] (of the
Implementing Rules of the Labor Code) thus provide for two
situations:

(1) The first situation involves a petition for cancellation of union

registration which is filed with a Regional Office. A decision of a
Regional Office cancelling a union's certificate of registration may be
appealed to the BLR whose decision on the matter shall be final and
inappealable.

(2) The second situation involves a petition for cancellation of

certificate of union registration which is filed directly with the BLR. A
decision of the BLR cancelling a union's certificate of registration
may be appealed to the Secretary of Labor whose decision on the
matter shall be final and inappealable.

Respondent Acting Labor Secretary's ruling --that the BLR's decision

upholding the validity of respondent union's certificate of registration
is final and inappealable --is thus in accordance with aforequoted
Omnibus Rules because the petition for cancellation of union
registration was filed by petitioner with a Regional Office,
specifically, with the Regional Office of the BLR, National Capital
Region (vide pp.1-2, Annex 2, Petition). The cancellation
proceedings initiated by petitioner before the Regional Office is
covered by the first situation contemplated by Sections 7 to 9 of the
Omnibus Rules. Hence, an appeal from the decision of the Regional
Office may be brought to the BLR whose decision on the matter is
final and inappealable. Supreme

In the instant case, upon the cancellation of respondent union's

registration by the Regional Office, respondent union incorrectly
appealed said decision to the Office of the Secretary. Nevertheless,
this situation was immediately rectified when the Office of the
Secretary motu proprio referred the appeal to the BLR However,
upon reversal by the BLR of the decision of the Regional Office
cancelling registration, petitioner should have immediately elevated
the BLR decision to the Supreme Court in a special civil action
for certiorari under Rule 65 of the Rules of Court.

Under Sections 3 and 4, Rule VIII of Book V of the Rules and

Regulations implementing the Labor Code, as amended by
Department Order No. 09, petitions for cancellation of union
registration may be filed with a Regional office, or directly, with the
Bureau of Labor Relations. Appeals from the decision of a Regional
Director may be filed with the BLR Director whose decision shall be
final and executory. On the other hand, appeals from the decisions
of the BLR may be filed with the Secretary of Labor whose decision
shall be final and executory .
 Thus, under Sections 7 to 9 of the Omnibus Rules and under
Sections 3 and 4 of the Implementing Rules (as amended by
Department Order No. 09), the finality of the BLR decision is
dependent on whether or not the petition for cancellation was filed
with the BLR directly. Under said Rules, if the petition for
cancellation is directly filed with the BLR, its decision cancelling
union registration is not yet final and executory as it may still be
appealed to the Office of the Secretary. However, if the petition for
cancellation was filed with the Regional Office, the decision of the
BLR resolving an appeal of the decision of said Regional Office is
final and executory.[18] Court

It is clear then that the Secretary of Labor and Employment did not commit grave
abuse of discretion in not acting on ABBOTT's appeal. The decisions of the
Bureau of Labor Relations on cases brought before it on appeal from the
Regional Director are final and executory. Hence, the remedy of the aggrieved
party is to seasonably avail of the special civil action of certiorari under Rule 65
of the Rules of Court.[19]

Even if we relaxed the rule and consider the present petition as a petition
for certiorari not only of the letter of the Secretary of Labor and Employment but
also of the decision of the Bureau of the Labor Relations which overruled the
order of cancellation of ALEU's certificate of registration, the same would still be
dismissable for being time-barred. Under Sec. 4 of Rule 65 of the 1997 Revised
Rules of Court the special civil action for certiorari should be instituted within a
period of sixty (60) days from notice of the judgment, order or resolution sought
to be assailed. ABBOTT received the decision of the Bureau of Labor Relations
on 14 April 1997 and the order denying its motion for reconsideration of the said
decision on 16 July 1997. The present petition was only filed on 28 November
1997, after the laps of more than four months. Thus, for failure to avail of the
correct remd4y within the period provided by law, the decision of the Bureau of
Labor Relations has become final and executory.

WHEREFORE, the Petition is DENIED. The challenged order in BLR-A-10-25-96

of the Secretary of Labor and Employment embodied in its 19 September letter is
hereby AFFIRMED.

SO ORDERED.

[G.R. No. 96425. February 4, 1992.]

PROGRESSIVE DEVELOPMENT CORPORATION, Petitioner, v. THE

HONORABLE SECRETARY, DEPARTMENT OF LABOR AND EMPLOYMENT,
MED-ARBITER EDGARDO DELA CRUZ, AND PAMBANSANG KILUSAN NG
PAGGAWA (KILUSAN)-TUCP, Respondents.

Beltran, Bacungan & Candoy for Petitioner.

Jimenez & Associates co-counsel for Petitioner.

SYLLABUS

1. LABOR LAW; CERTIFICATION ELECTION; HOLDING THEREOF BASED

ON STATUTORY POLICY. — The Court has repeatedly stressed that the
holding of a certification election is based on a statutory policy that cannot be
circumvented (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989],
Belyca Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter
Lines, Inc. v. Associated Labor Unions, 134 SCRA 82 [1986]). The workers must
be allowed to freely express their choice in a determination where everything is
open to their sound judgment and the possibility of fraud and misrepresentation
is eliminated.

2. ID.; ID.; PETITION THEREOF MUST BE FILED BY LEGITIMATE LABOR

ORGANIZATION. — But while Article 257 cited by the Solicitor General directs
the automatic conduct of a certification election in an unorganized establishment,
it also requires that the petition for certification election must be filed by a
legitimate labor organization. Article 242 enumerates the exclusive rights of a
legitimate labor organization among which is the right to be certified as the
exclusive representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining.

3. ID.; LEGITIMATE LABOR ORGANIZATION; DEFINED; LEGITIMACY

ACQUIRED ONLY UPON REGISTRATION WITH THE BLR. — Article 212(h)
defines a legitimate labor organization as "any labor organization duly registered
with the DOLE and includes any branch or local thereof ." Rule I, Section 1 (j),
Book V of the Implementing Rules likewise defines a legitimate labor
organization as "any labor organization duly registered with the DOLE and
includes any branch, local or affiliate thereof ." Ordinarily, a labor organization
acquires legitimacy only upon registration with the BLR.

4. ID.; ID.; APPLICATION FOR REGISTRATION; MUST BE SIGNED BY AT

LEAST 20% OF EMPLOYEES IN A BARGAINING UNIT. — Section 4 of Rule II,
Book V of the Implementing Rules requires that the application should be signed
by at least twenty percent (20%) of the employees in the appropriate bargaining
unit and be accompanied by a sworn statement of the applicant union that there
is no certified bargaining agent or, where there is an existing collective
agreement duly submitted to the DOLE, that the application is filed during the last
sixty (60) days of the agreement.

5. ID.; ID.; PURPOSE OF THE LAW IN REQUIRING REGISTRATION. — The

purpose of the law in prescribing the requisites under Art. 234 of the Code must
be underscored. Thus, in Philippine Association of Free Labor Unions v.
Secretary of Labor, 27 SCRA 40 (1969), the Court declared: "The theory to the
effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of
assembly and association guaranteed in the Bill of Rights is devoid of factual
basis. The registration prescribed in paragraph (b) of said section is not a
limitation to the right of assembly or association, which may be exercised with or
without said registration. The latter is merely a condition sine qua non for the
acquisition of legal personality by labor organizations, associations or unions and
the possession of the "rights and privileges granted by law to legitimate labor
organizations." The Constitution does not guarantee these rights and privileges,
much less said personality, which are mere statutory creations, for the
possession and exercise of which registration is required to protect both labor
and the public against abuses, fraud, or impostors who pose as organizers,
although not truly accredited agents of the union the purport to represent. Such
requirement is a valid exercise of the police power, because the activities in
which labor organizations, associations and unions of workers are engaged
affect public interest, which should be protected. Furthermore, the obligation to
submit financial statements, as a condition for the non-cancellation of a certificate
of registration, is a reasonable regulation for the benefit of the members of the
organization, considering that the same generally solicits funds or membership,
as well as oftentimes collects, on behalf of its members, huge amounts of money
due to them or to the organization."cralaw virtua1aw library

6. ID.; ID.; LOCAL OR CHAPTER OF A FEDERATION; NEED NOT BE

REGISTERED INDEPENDENTLY; REQUIREMENTS OTHERWISE REQUIRED
FOR UNION REGISTRATION, OMITTED; REASON; THEREFOR. — When an
unregistered union becomes a branch, local or chapter of a federation, some of
the aforementioned requirements for registration are no longer required. A local
or chapter need not be independently registered. By force of law (in this case,
Article 212[h]), such local or chapter becomes a legitimate labor organization
upon compliance with the aforementioned provisions of Section 3, Rule II of Book
V of the Implementing Rules. Thus, several requirements that are otherwise
required for union registration are omitted, to wit: 1) The requirement that the
application for registration must be signed by at least 20% of the employees in
the appropriate bargaining unit; 2) The submission of officers’ addresses,
principal address of the labor organization, the minutes of organizational
meetings and the list of the workers who participated in such meetings; 3) The
submission of the minutes of the adoption or ratification of the constitution and by
laws and the list of the members who participated in it. Undoubtedly, the intent of
the law in imposing lesser requirements in the case of a branch or local of a
registered federation or national union is to encourage the affiliation of a local
union with a federation or national union in order to increase the local union’s
bargaining powers respecting terms and conditions of labor.

7. ID.; ID.; ID.; MANDATORY REQUIREMENTS FOR SUBMISSION TO THE

BLR; EFFECT OF NON-COMPLIANCE THEREWITH. — A local or chapter
therefore becomes a legitimate labor organization only upon submission of the
following to the BLR: 1) A charter certificate, within 30 days from its issuance by
the labor federation or national union, and 2) The constitution and by-laws, a
statement on the set of officers, and the books of accounts all of which are
certified under oath by the secretary or treasurer, as the case may be, of such
local or chapter, and attested to by its president. Absent compliance with these
mandatory requirements, the local or chapter does not become a legitimate labor
organization.

8. ID.; ID.; ID.; RELATIONSHIP WITH THE MOTHER UNION; LOCAL UNION
MUST FIRST COMPLY WITH STATUTORY REQUIREMENTS BEFORE BEING
CERTIFIED AS BARGAINING AGENT. — It is important to clarify the
relationship between the mother union and the local union. In the case of Liberty
Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975]),
the Court held that the mother union, acting for and in behalf of its affiliate, had
the status of an agent while the local union remained the basic unit of the
association, free to serve the common interest of all its members subject only to
the restraints imposed by the constitution and by-laws of the association. Thus,
where as in this case the petition for certification election was filed by the
federation which is merely an agent; the petition is deemed to be filed by the
chapter, the principal, which must be a legitimate labor organization. The chapter
cannot merely rely on the legitimate status of the mother union. The Court’s
conclusion should not be misconstrued as impairing the local union’s right to be
certified as the employees’ bargaining agent in the petitioner’s establishment. We
are merely saying that the local union must first comply with the statutory
requirements in order to exercise this right. Big federations and national unions of
workers should take the lead in requiring their locals and chapters to faithfully
comply with the law and the rules instead of merely snapping union after union
into their folds in a furious bid with rival federations to get the most number of
members.

9. ID.; UNION REGISTRATION; RATIONALE FOR CERTIFICATION AND

ATTESTATION REQUIREMENTS. — In the case of union registration, the
rationale for requiring that the submitted documents and papers be certified
under oath by the secretary or treasurer, as the case may be, and attested to by
the president is apparent. The submission of the required documents (and
payment of P50.00 registration fee) becomes the Bureau’s basis for approval of
the application for registration. Upon approval, the labor union acquires legal
personality and is entitled to all the rights and privileges granted by the law to a
legitimate labor organization. The employer naturally needs assurance that the
union it is dealing with is a bona-fide organization, one which has not submitted
false statements or misrepresentations to the Bureau. The inclusion of the
certification and attestation requirements will in a marked degree allay these
apprehensions of management. Not only is the issuance of any false statement
and misrepresentation a ground for cancellation of registration (see Article 239
(a), (c) and (d)); it is also a ground for a criminal charge of perjury. The
certification and attestation requirements are preventive measures against the
commission of fraud. They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-by-
night unions whose sole purpose is to control union funds or to use the union for
dubious ends.

10. ID.; UNION AFFILIATION WITH FEDERATION; DOCUMENTARY

REQUIREMENTS MUST BE COMPLIED WITH BY LOCAL OR CHAPTER. — In
the case of union affiliation with a federation, the documentary requirements are
found in Rule II, Section 3(e), Book V of the Implementing Rules. Since the
"procedure governing the reporting of independently registered unions" refers to
the certification and attestation requirements contained in Article 235, paragraph
2, it follows that the constitution and by-laws, set of officers and books of
accounts submitted by the local and chapter must likewise comply with these
requirements. The same rationale for requiring the submission of duly subscribed
documents upon union registration exists in the case of union affiliation.
Moreover, there is greater reason to exact compliance with the certification and
attestation requirements because, as previously mentioned, several
requirements applicable to independent union registration are no longer required
in the case of the formation of a local or chapter. The policy of the law in
conferring greater bargaining power upon labor unions must be balanced with the
policy of providing preventive measures against the commission of fraud.

DECISION

GUTIERREZ, JR., J.:

The controversy in this case centers on the requirements before a local or
chapter of a federation may file a petition for certification election and be certified
as the sole and exclusive bargaining agent of the petitioner’s employees.

Petitioner Progressive Development Corporation (PDC) filed this petition

for certiorari to set aside the following:chanrob1es virtual 1aw library

1) Resolution dated September 5, 1990, issued by respondent Med-Arbiter

Edgardo dela Cruz, directing the holding of a certification election among the
regular rank-and-file employees of PDC;

2) Order dated October 12, 1990, issued by the respondent Secretary of Labor
and Employment, denying PDC’s appeal; and

3) Order dated November 12, 1990, also issued by the respondent Secretary,
denying the petitioner’s Motion for Reconsideration.

On June 19, 1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN)-

TUCP (hereinafter referred to as Kilusan) filed with the Department of Labor and
Employment (DOLE) a petition for certification election among the rank-and-file
employees of the petitioner alleging that it is a legitimate labor federation and its
local chapter, Progressive Development Employees Union, was issued charter
certificate No. 90-6-1-153. Kilusan claimed that there was no existing collective
bargaining agreement and that no other legitimate labor organization existed in
the bargaining unit.

Petitioner PDC filed its motion to dismiss dated July 11, 1990 contending that the
local union failed to comply with Rule II, Section 3, Book V of the Rules
Implementing the Labor Code, as amended, which requires the submission of:
(a) the constitution and by-laws; (b) names, addresses and list of officers and/or
members; and (c) books of accounts.

On July 16, 1990, respondent Kilusan submitted a rejoinder to PDC’s motion to

dismiss claiming that it had submitted the necessary documentary requirements
for registration, such as the constitution and by-laws of the local union, and the
list of officers/members with their addresses. Kilusan further averred that no
books of accounts could be submitted as the local union was only recently
organized.

In its "Supplemental Position Paper" dated September 3, 1990, the petitioner

insisted that upon verification with the Bureau of Labor Relations (BLR), it found
that the alleged minutes of the organizational meeting was unauthenticated, the
list of members did not bear the corresponding signatures of the purported
members, and the constitution and by-laws did not bear the signatures of the
members and was not duly subscribed. It argued that the private respondent
therefore failed to substantially comply with the registration requirements
provided by the rules. Additionally, it prayed that Med-Arbiter Edgardo dela Cruz
inhibit himself from handling the case for the reason that he allegedly had
prejudged the same.

In his September 5, 1990 resolution, Med-Arbiter dela Cruz held that there was
substantial compliance with the requirements for the formation of a chapter. He
further stated that mere issuance of the charter certificate by the federation was
sufficient compliance with the rules. Considering that the establishment is
unorganized, he maintained that a certification election should be conducted to
resolve the question of representation.

Treating the motion for reconsideration filed by PDC as an appeal to the Office of
the Secretary, Undersecretary Laguesma held that the same was merely a
"reiteration of the issues already ventilated in the proceedings before the Med-
Arbiter, specifically, the matter involving the formal organization of the chapter."
(Rollo, p. 20) PDC’s motion for reconsideration from the aforementioned ruling
was likewise denied. Hence, this petition.

In an order dated February 25, 1991, the Court resolved to issue a temporary
restraining order enjoining the public respondents from carrying out the assailed
resolution and orders or from proceeding with the certification election. (Rollo, pp.
37-39)

It is the petitioner’s contention that a labor organization (such as the Kilusan)

may not validly invest the status of legitimacy upon a local or chapter through the
mere expedient of issuing a charter certificate and submitting such certificate to
the BLR (Rollo, p. 86) Petitioner PDC posits that such local or chapter must at
the same time comply with the requirement of submission of duly subscribed
constitution and by laws, list of officers and books of accounts. (Rollo, p. 35) PDC
points out that the constitution and by-laws and list of officers submitted were not
duly subscribed. Likewise, the petitioner claims that the mere filing of the
aforementioned documents is insufficient; that there must be due recognition or
acknowledgment accorded to the local or chapter by the BLR through a
certificate of registration or any communication emanating from it. (Rollo, p. 86)

The Solicitor General, in behalf of the public respondents, avers that there was
substantial compliance with the requirements for the formation of a chapter.
Moreover, he invokes Article 257 of the Labor Code which mandates the
automatic conduct by the Med-Arbiter of a certification election in any
establishment where there is no certified bargaining agent.

The Court has repeatedly stressed that the holding of a certification election is
based on a statutory policy that cannot be circumvented (Airtime Specialists, Inc.
v. Ferrer-Calleja, 180 SCRA 749 [1989], Belyca Corporation v. Ferrer-Calleja,
168 SCRA 184 [1988]; George and Peter Lines, Inc. v. Associated Labor Unions,
134 SCRA 82 [1986]). The workers must be allowed to freely express their
choice in a determination where everything is open to their sound judgment and
the possibility of fraud and misrepresentation is eliminated.

But while Article 257 cited by the Solicitor General directs the automatic conduct
of a certification election in an unorganized establishment, it also requires that
the petition for certification election must be filed by a legitimate labor
organization. Article 242 enumerates the exclusive rights of a legitimate labor
organization among which is the right to be certified as the exclusive
representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining.

Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor

organization duly registered with the DOLE and includes any branch or local
thereof." (Italics supplied) Rule I, Section 1 (j), Book V of the Implementing Rules
likewise defines a legitimate labor organization as "any labor organization duly
registered with the DOLE and includes any branch, local or affiliate thereof:"
(Italics supplied)

The question that now arises is: when does a branch, local or affiliate of a
federation become a legitimate labor organization?

Ordinarily, a labor organization acquires legitimacy only upon registration with the
BLR. Under Article 234 (Requirements of Registration):chanrob1es virtual 1aw
library

Any applicant labor organization, association or group of unions or workers shall

acquire legal personality and shall be entitled to the rights and privileges granted
by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:chanrob1es virtual 1aw library

(a) Fifty-pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;
(c) The names of all its members comprising at least twenty 20% percent of all
the employees in the bargaining unit where it seeks to operate;

(d) If the applicant has been in existence for one or more years, copies of its
annual financial reports; and

(e) Four copies of the constitution and by-laws of the applicant union, the minutes
of its adoption or ratification and the list of the members who participated in
it."cralaw virtua1aw library

And under Article 235 (Action on Application):jgc:chanrobles.com.ph

"The Bureau shall act on all applications for registration within thirty (30) days
from filing.

All requisite documents and papers shall be certified under oath by the secretary
or the treasurer of the organization, as the case may be, and attested to by its
president."cralaw virtua1aw library

Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that
the application should be signed by at least twenty percent (20%) of the
employees in the appropriate bargaining unit and be accompanied by a sworn
statement of the applicant union that there is no certified bargaining agent or,
where there is an existing collective agreement duly submitted to the DOLE, that
the application is filed during the last sixty (60) days of the agreement.

The respondent Kilusan questions the requirements as too stringent in their

application but the purpose of the law in prescribing these requisites must be
underscored. Thus, in Philippine Association of Free Labor Unions v. Secretary
of Labor, 27 SCRA 40 (1969), the Court declared:jgc:chanrobles.com.ph

"The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails
the freedom of assembly and association guaranteed in the Bill of Rights is
devoid of factual basis. The registration prescribed in paragraph (b) of said
section is not a limitation to the right of assembly or association, which may be
exercised with or without said registration. The latter is merely a condition sine
qua non for the acquisition of legal personality by labor organizations,
associations or unions and the possession of the "rights and privileges granted
by law to legitimate labor organizations." The Constitution does not guarantee
these rights and privileges, much less said personality, which are mere statutory
creations, for the possession and exercise of which registration is required to
protect both labor and the public against abuses, fraud, or impostors who pose
as organizers, although not truly accredited agents of the union the purport to
represent. Such requirement is a valid exercise of the police power, because the
activities in which labor organizations, associations and unions of workers are
engaged affect public interest, which should be protected. Furthermore, the
obligation to submit financial statements, as a condition for the non-cancellation
of a certificate of registration, is a reasonable regulation for the benefit of the
members of the organization, considering that the same generally solicits funds
or membership, as well as oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the organization." (Emphasis supplied)

But when an unregistered union becomes a branch, local or chapter of a

federation, some of the aforementioned requirements for registration are no
longer required. The provisions governing union affiliation are found in Rule II,
Section 3, Book V of the Implementing Rules, the relevant portions of which are
cited below:jgc:chanrobles.com.ph

"SECTION 3. Union affiliation; direct membership with national union. — An

affiliate of a labor federation or national union may be a local or chapter thereof
or an independently registered union.

a) The labor federation or national union concerned shall issue a charter

certificate indicating the creation or establishment of a local or chapter, copy of
which shall be submitted to the Bureau of Labor Relations within thirty (30) days
from issuance of such charter certificate.

b) An independently registered union shall be considered an affiliate of a labor

federation or national union after submission to the Bureau of the contract or
agreement of affiliation within thirty (30) days after its execution.

x x x

e) The local or chapter of a labor federation or national union shall have and
maintain a constitution and by laws, set of officers and books of accounts. For
reporting purposes, the procedure governing the reporting of independently
registered unions, federations or national unions shall be observed."cralaw
virtua1aw library

Paragraph (a) refers to a local or chapter of a federation which did not undergo
the rudiments of registration while paragraph (b) refers to an independently
registered union which affiliated with a federation. Implicit in the foregoing
differentiation is the fact that a local or chapter need not be independently
registered. By force of law (in this case, Article 212[h]), such local or chapter
becomes a legitimate labor organization upon compliance with the
aforementioned provisions of Section 3.

Thus, several requirements that are otherwise required for union registration are
omitted, to wit:chanrob1es virtual 1aw library

1) The requirement that the application for registration must be signed by at least
20% of the employees in the appropriate bargaining unit;

2) The submission of officers’ addresses, principal address of the labor

organization, the minutes of organizational meetings and the list of the workers
who participated in such meetings;

3) The submission of the minutes of the adoption or ratification of the constitution

and by laws and the list of the members who participated in it.

Undoubtedly, the intent of the law in imposing lesser requirements in the case of
a branch or local of a registered federation or national union is to encourage the
affiliation of a local union with a federation or national union in order to increase
the local union’s bargaining powers respecting terms and conditions of labor.

The petitioner maintains that the documentary requirements prescribed in

Section 3(c), namely: the constitution and by-laws, set of officers and books of
accounts, must follow the requirements of law. Petitioner PDC calls for the similar
application of the requirement for registration in Article 235 that all requisite
documents and papers be certified under oath by the secretary or the treasurer
of the organization and attested to by the president.

In the case at bar, the constitution and by-laws and list of officers submitted to
the BLR, while attested to by the chapter’s president, were not certified under
oath by the secretary. Does such defect warrant the withholding of the status of
legitimacy to the local or chapter?

In the case of union registration, the rationale for requiring that the submitted
documents and papers be certified under oath by the secretary or treasurer, as
the case may be, and attested to by the president is apparent. The submission of
the required documents (and payment of P50.00 registration fee) becomes the
Bureau’s basis for approval of the application for registration. Upon approval, the
labor union acquires legal personality and is entitled to all the rights and
privileges granted by the law to a legitimate labor organization. The employer
naturally needs assurance that the union it is dealing with is a bona-fide
organization, one which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the certification and
attestation requirements will in a marked degree allay these apprehensions of
management. Not only is the issuance of any false statement and
misrepresentation a ground for cancellation of registration (see Article 239 (a), (c)
and (d)); it is also a ground for a criminal charge of perjury.

The certification and attestation requirements are preventive measures against

the commission of fraud. They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous or fly-by-
night unions whose sole purpose is to control union funds or to use the union for
dubious ends.

In the case of union affiliation with a federation, the documentary requirements

are found in Rule II, Section 3(e), Book V of the Implementing Rules, which we
again quote as follows:jgc:chanrobles.com.ph

"(c) The local or chapter of a labor federation or national union shall have and
maintain a constitution and by-laws, set of officers and books of accounts. For
reporting purposes, the procedure governing the reporting of independently
registered unions, federations or national unions shall be observed." (Emphasis
supplied)

Since the "procedure governing the reporting of independently registered unions"

refers to the certification and attestation requirements contained in Article 235,
paragraph 2, it follows that the constitution and by-laws, set of officers and books
of accounts submitted by the local and chapter must likewise comply with these
requirements. The same rationale for requiring the submission of duly subscribed
documents upon union registration exists in the case of union affiliation.
Moreover, there is greater reason to exact compliance with the certification and
attestation requirements because, as previously mentioned, several
requirements applicable to independent union registration are no longer required
in the case of the formation of a local or chapter. The policy of the law in
conferring greater bargaining power upon labor unions must be balanced with the
policy of providing preventive measures against the commission of fraud.

A local or chapter therefore becomes a legitimate labor organization only upon

submission of the following to the BLR:chanrob1es virtual 1aw library

1) A charter certificate, within 30 days from its issuance by the labor federation or
national union, and

2) The constitution and by-laws, a statement on the set of officers, and the books
of accounts all of which are certified under oath by the secretary or treasurer, as
the case may be, of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does
not become a legitimate labor organization.

In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the
required documents under oath is fatal to its acquisition of a legitimate status.

We observe that, as borne out by the facts in this case, the formation of a local or
chapter becomes a handy tool for the circumvention of union registration
requirements. Absent the institution of safeguards, it becomes a convenient
device for a small group of employees to foist a not-so-desirable federation or
union on unsuspecting co-workers and pare the need for wholehearted
voluntariness which is basic to free unionism. The records show that on June 16,
1990, Kilusan met with several employees of the petitioner. Excerpts of the
"Minutes of the Organizational/General Membership Meeting of Progressive
Development Employees Union (PDEU)-Kilusan", are quoted
below:jgc:chanrobles.com.ph

"The meeting was formally called to order by Bro. Jose V. Parungao, KILUSAN
secretary for organization by explaining to the general membership the
importance of joining a union. He explained to the membership why they should
join a union, and briefly explained the ideology of the Pambansang Kilusan ng
Paggawa-TUCP as a democratically based organization and then read the
proposed Constitution and By-Laws, after which said Constitution and By-Laws
was duly and unanimously ratified after some clarification.

Bro. Jose Parungao was also unanimously voted by the group to act as the
chairman of the COMELEC in holding the organizational election of officers of the
Union.

Bro. Parungao, officially opened the table for the nomination of candidates after
which the election of officers followed by secret balloting and the following were
the duly elected officers." (Original Record, p. 25)

The foregoing shows that Kilusan took the initiative and encouraged the
formation of 2 union which automatically became its chapter. On June 18, 1990,
Kilusan issued a charter certificate in favor of PDEU-KILUSAN (Records, page
1). It can be seen that Kilusan was moving very fast.

On June 19, 1990, or just three days after the organizational meeting, Kilusan
filed a petition for certification election (Records, pages 2 and 3) accompanied by
a copy each of the charter certificate, constitution and by-laws and minutes of the
organizational meeting. Had the local union filed an application for registration,
the petition for certification election could not have been immediately filed. The
applicant union must first comply with the "20% signature" requirement and all
the other requisites enumerated in Article 234. Moreover, since under Article 235
the BLR shall act on any application for registration within thirty (30) days from its
filing, the likelihood is remote that, assuming the union complied with all the
requirements, the application would be approved on the same day it was filed.

We are not saying that the scheme used by the respondents is per se illegal for
precisely, the law allows such strategy. It is not this Court’s function to augment
the requirements prescribed by law in order to make them wiser or to allow
greater protection to the workers and even their employer. Our only recourse is,
as earlier discussed, to exact strict compliance with what the law provides as
requisites for local or chapter formation.

It may likewise be argued that it was Kilusan (the mother union) and not the local
union which filed the petition for certification election and, being a legitimate labor
organization, Kilusan has the personality to file such petition.

At this juncture, it is important to clarify the relationship between the mother

union and the local union. In the case of Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc., 66 SCRA 512 [1975]), the Court held that the mother
union, acting for and in behalf of its affiliate, had the status of an agent while the
local union remained the basic unit of the association, free to serve the common
interest of all its members subject only to the restraints imposed by the
constitution and by-laws of the association. Thus, where as in this case the
petition for certification election was filed by the federation which is merely an
agent; the petition is deemed to be filed by the chapter, the principal, which must
be a legitimate labor organization. The chapter cannot merely rely on the
legitimate status of the mother union.

The Court’s conclusion should not be misconstrued as impairing the local union’s
right to be certified as the employees’ bargaining agent in the petitioner’s
establishment. We are merely saying that the local union must first comply with
the statutory requirements in order to exercise this right. Big federations and
national unions of workers should take the lead in requiring their locals and
chapters to faithfully comply with the law and the rules instead of merely
snapping union after union into their folds in a furious bid with rival federations to
get the most number of members.

WHEREFORE, the petition is GRANTED. The assailed resolution and orders of

respondents Med-Arbiter and Secretary of Labor and Employment, respectively,
are hereby SET ASIDE. The temporary restraining order dated February 25,
1991 is made permanent.
SO ORDERED.

[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.

DECISION
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
supervisory 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 LEO, 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 II[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.[21] Under 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.

[G.R. No. 131235. November 16, 1999]

UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI,

NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN,
REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESAR
REYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDES
MEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA,
NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITA ESPINA,
ZENAIDA FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA
and LEONCIO CASAL, petitioners vs. Dir. BENEDICTO ERNESTO R.
BITONIO JR. of the Bureau of Labor Relations, Med-Arbiter TOMAS
F. FALCONITIN of The National Capital Region, Department of Labor
and Employment (DOLE), EDUARDO J. MARIO JR., MA. MELVYN
ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO
ASUNCION, ZENAIDA BURGOS, ANTHONY CURA, FULVIO M.
GUERRERO, MYRNA HILARIO, TERESITA MEER, FERNANDO
PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN TIROL
and ROSIE ALCANTARA, respondents.

DECISION
PANGANIBAN, J.:
 There is a right way to do the right thing at the right time for the right reasons, [1] and
in the present case, in the right forum by the right parties. While grievances against
union leaders constitute legitimate complaints deserving appropriate redress, action
thereon should be made in the proper forum at the proper time and after observance of
proper procedures. Similarly, the election of union officers should be conducted in
accordance with the provisions of the unions constitution and bylaws, as well as the
Philippine Constitution and the Labor Code. Specifically, while all legitimate faculty
members of the University of Santo Tomas (UST) belonging to a collective bargaining
unit may take part in a duly convened certification election, only bona fide members of
the UST Faculty Union (USTFU) may participate and vote in a legally called election
for union officers. Mob hysteria, however well-intentioned, is not a substitute for the
rule of law.

The Case

The Petition for Certiorari before us assails the August 15, 1997 Resolution[2] of
Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) in
BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-
Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows:

WHEREFORE, premises considered, judgment is hereby rendered declaring the

election of USTFU officers conducted on October 4, 1996 and its election results as
null and void ab initio.

Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist
from acting and performing the duties and functions of the legitimate officers of [the]
University of Santo Tomas Faculty Union (USTFU) pursuant to [the] unions
constitution and by-laws (CBL).

The Temporary Restraining Order (TRO ) issued by this Office on December 11,
1996 in connection with the instant petition, is hereby made and declared permanent.[3]

Likewise challenged is the October 30, 1997 Resolution[4]of Director Bitonio, which
denied petitioners Motion for Reconsideration.

The Facts

The factual antecedents of the case are summarized in the assailed Resolution as
follows:
Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly
elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-
year Collective Bargaining Agreement with its employer, the University of Santo
Tomas (UST). The CBA was registered with the Industrial Relations Division,
DOLE-NCR, on 20 February 1995. It is set to expire on 31 May 1998.

On 21 September 1996, appellee Collantes, in her capacity as Secretary General of

USTFU, posted a notice addressed to all USTFU members announcing a general
assembly to be held on 05 October 1996.Among others, the general assembly was
called to elect USTFUs next set of officers. Through the notice, the members were
also informed of the constitution of a Committee on Elections (COMELEC) to
oversee the elections. (Annex B, petition)

On 01 October 1996, some of herein appellants filed a separate petition with the Med-
Arbiter, DOLE-NCR, directed against herein appellees and the members of the
COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the petition alleged that
the COMELEC was not constituted in accordance with USTFUs constitution and by-
laws (CBL) and that no rules had been issued to govern the conduct of the 05 October
1996 election.

On 02 October 1996, the secretary general of UST, upon the request of the various
UST faculty club presidents (See paragraph VI, Respondents Comment and Motion to
Dismiss), issued notices allowing all faculty members to hold a convocation on 04
October 1996 (See Annex C Petition; Annexes 4 to 10, Appeal). Denominated as [a]
general faculty assembly, the convocation was supposed to discuss the state of the
unratified UST-USTFU CBA and status and election of USTFU officers (Annex 11,
Appeal)

On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a

temporary restraining order against herein appellees enjoining them from conducting
the election scheduled on 05 October 1996.

Also on 04 October 1996, and as earlier announced by the UST secretary general, the
general faculty assembly was held as scheduled. The general assembly was attended
by members of the USTFU and, as admitted by the appellants, also by 'non-USTFU
members [who] are members in good standing of the UST Academic Community
Collective Bargaining Unit' (See paragraph XI, Respondents Comment and Motion to
Dismiss). On this occasion, appellants were elected as USTFUs new set of officers by
acclamation and clapping of hands (See paragraphs 40 to 50, Annex '12', Appeal).

The election of the appellants came about upon a motion of one Atty. Lopez,
admittedly not a member of USTFU, that the USTFU CBL and 'the rules of the
election be suspended and that the election be held [on] that day' (See --paragraph 39,
Idem.)

On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and
the nullification of the results of the 04 October 1996 election. Appellees alleged that
the holding of the same violated the temporary restraining order issued in Case No.
NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the
election as spurious for being violative of USTFUs CBL, specifically because the
general assembly resulting in the election of appellants was not called by the Board of
Officers of the USTFU; there was no compliance with the ten-day notice rule required
by Section 1, Article VIII of the CBL; the supposed elections were conducted without
a COMELEC being constituted by the Board of Officers in accordance with Section 1,
Article IX of the CBL; the elections were not by secret balloting as required by
Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly
was convened by faculty members some of whom were not members of USTFU, so
much so that non-USTFU members were allowed to vote in violation of Section 1,
Article V of the CBL.

On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary
restraining order, this time alleging that appellants had served the former a notice to
vacate the union office. For their part, appellants moved to dismiss the original
petition and the subsequent motion on jurisdictional grounds. Both the petition and the
motion were captioned to be for Prohibition, Injunction with Prayer for Preliminary
Injunction and Temporary Restraining Order. According to the appellants, the med-
arbiter has no jurisdiction over petitions for prohibition, 'including the ancillary
remedies of restraining order and/or preliminary injunction, which are merely
incidental to the main petition for PROHIBITION' (Paragraph XVIII3, Respondents
Comment and Motion to Dismiss). Appellants also averred that they now constituted
the new set of union officers having been elected in accordance with law after the
term of office of appellees had expired. They further maintained that appellees
scheduling of the 5 October 1996 elections was illegal because no rules and
regulations governing the elections were promulgated as required by USTFUs CBL
and that one of the members of the COMELEC was not a registered member of
USTFU. Appellants likewise noted that the elections called by the appellees should
have been postponed to allow the promulgation of rules and regulations and to 'insure
a free, clean, honest and orderly elections and to afford at the same time the greater
majority of the general membership to participate' (See paragraph V, Idem). Finally,
appellants contended that the holding of the general faculty assembly on 04 October
1996 was under the control of the Council of College/Faculty Club Presidents in
cooperation with the USTFU Reformist Alliance and that they received the
Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07
October 1996 and were not aware of the same on 04 October 1996.

On 03 December 1996, appellants and UST allegedly entered into another CBA
covering the period from 01 June 1996 to 31 May 2001 (Annex 11, appellants
Rejoinder to the Reply and Opposition).

Consequently, appellees again moved for the issuance of a temporary restraining order
to prevent appellants from making further representations that [they] had entered into
a new agreement with UST.Appellees also reiterated their earlier stand that appellants
were usurping the formers duties and functions and should be stopped from
continuing such acts.

On 11 December 1996, over appellants insistence that the issue of jurisdiction should
first be resolved, the med-arbiter issued a temporary restraining order directing the
respondents to cease and desist from performing any and all acts pertaining to the
duties and functions of the officers and directors of USTFU.

In the meantime, appellants claimed that the new CBA was purportedly ratified by an
overwhelming majority of USTs academic community on 12 December 1996
(Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what it
denominated as appellees petition for prohibition on the ground that this had become
moot and academic.[5]

Petitioners appealed the med-arbiters Decision to the labor secretary,[6] who

transmitted the records of the case to the Bureau of Labor Relations which, under
Department Order No. 9, was authorized to resolve appeals of intra-union cases,
consistent with the last paragraph of Article 241 of the Labor Code.[7]

The Assailed Ruling

Agreeing with the med-arbiter that the USTFU officers purported election held on
October 4, 1994 was void for having been conducted in violation of the unions
Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners
contention that it was a legitimate exercise of their right to self-organization. He ruled
that the CBL, which constituted the covenant between the union and its members, could
not be suspended during the October 4, 1996 general assembly of all faculty members,
since that assembly had not been convened or authorized by the USTFU.
Director Bitonio likewise held that the October 4, 1996 election could not be
legitimized by the recognition of the newly elected set of officers by UST or by the
alleged ratification of the new CBA by the general membership of the USTFU. Ruled
Respondent Bitonio:

"This submission is flawed. The issue at hand is not collective bargaining

representation but union leadership, a matter that should concern only the members of
USTFU. As pointed out by the appellees, the privilege of determining who the union
officers will be belongs exclusively to the members of the union. Said privilege is
exercised in an election proceeding in accordance with the union's CBL and
applicable law.

To accept appellants' claim to legitimacy on the foregoing grounds is to invest in

appellants the position, duties, responsibilities, rights and privileges of USTFU
officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL
and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit
the employer from interfering with the employees in the latter' exercise of their right
to self-organization. To allow appellants to become USTFU officers on the strength of
management's recognition of them is to concede to the employer the power of
determining who should be USTFU's leaders. This is a clear case of interference in the
exercise by USTFU members of their right to self-organization.[8]

Hence, this Petition.[9]

The Issues

The main issue in this case is whether the public respondent committed grave abuse
of discretion in refusing to recognize the officers elected during the October 4, 1996
general assembly. Specifically, petitioners in their Memorandum urge the Court to
resolve the following questions:[10]

(1) Whether the Collective Bargaining Unit of all the faculty members in that General
Faculty Assembly had the right in that General Faculty Assembly to suspend the
provisions of the Constitution and By-Laws of the USTFU regarding the elections of
officers of the union[.]

(2) Whether the suspension of the provisions of the Constitution and By-Laws of the
USTFU in that General Faculty Assembly is valid pursuant to the constitutional right
of the Collective Bargaining Unit to engage in peaceful concerted activities for the
purpose of ousting the corrupt regime of the private respondents[.]

(3) Whether the overwhelming ratification of the Collective Bargaining Agreement

executed by the petitioners in behalf of the USTFU with the University of Santo
Tomas has rendered moot and academic the issue as to the validity of the suspension
of the Constitution and By-Laws and the elections of October 4, 1996 in the General
Faculty Assembly[.]

The Courts Ruling

The petition is not meritorious. Petitioners fail to convince this Court that Director
Bitonio gravely abused his discretion in affirming the med-arbiter and in refusing to
recognize the binding effect of the October 4, 1996 general assembly called by the UST
administration.

First Issue: Right to Self-Organization and Union Membership

At the outset, the Court stresses that National Federation of Labor (NFL) v.
Laguesma[11] has held that challenges against rulings of the labor secretary and those
acting on his behalf, like the director of labor relations, shall be acted upon by the Court
of Appeals, which has concurrent jurisdiction with this Court over petitions
for certiorari. However, inasmuch as the memoranda in the instant case have been filed
prior to the promulgation and finality of our Decision in NFL, we deem it proper to
resolve the present controversy directly, instead of remanding it to the Court of
Appeals. Having disposed of the foregoing procedural matter, we now tackle the issues
in the present case seriatim.
Self-organization is a fundamental right guaranteed by the Philippine Constitution
and the Labor Code. Employees have the right to form, join or assist labor organizations
for the purpose of collective bargaining or for their mutual aid and
protection.[12] Whether employed for a definite period or not, any employee shall be
considered as such, beginning on his first day of service, for purposes of membership
in a labor union.[13]
Corollary to this right is the prerogative not to join, affiliate with or assist a labor
union.[14] Therefore, to become a union member, an employee must, as a rule, not only
signify the intent to become one, but also take some positive steps to realize that
intent. The procedure for union membership is usually embodied in the unions
constitution and bylaws.[15] An employee who becomes a union member acquires the
rights and the concomitant obligations that go with this new status and becomes bound
by the unions rules and regulations.

When a man joins a labor union (or almost any other democratically controlled
group), necessarily a portion of his individual freedom is surrendered for the benefit
of all members. He accepts the will of the majority of the members in order that he
may derive the advantages to be gained from the concerted action of all. Just as the
enactments of the legislature bind all of us, to the constitution and by-laws of the
union (unless contrary to good morals or public policy, or otherwise illegal), which
are duly enacted through democratic processes, bind all of the members. If a member
of a union dislikes the provisions of the by-laws, he may seek to have them amended
or may withdraw from the union; otherwise, he must abide by them. It is not the
function of courts to decide the wisdom or propriety of legitimate by-laws of a trade
union.

On joining a labor union, the constitution and by-laws become a part of the members
contract of membership under which he agrees to become bound by the constitution
and governing rules of the union so far as it is not inconsistent with controlling
principles of law. The constitution and by-laws of an unincorporated trade union
express the terms of a contract, which define the privileges and rights secured to, and
duties assumed by, those who have become members. The agreement of a member on
joining a union to abide by its laws and comply with the will of the lawfully
constituted majority does not require a member to submit to the determination of the
union any question involving his personal rights.[16]

Petitioners claim that the numerous anomalies allegedly committed by the private
respondents during the latters incumbency impelled the October 4, 1996 election of the
new set of USTFU officers. They assert that such exercise was pursuant to their right
to self-organization.
Petitioners frustration over the performance of private respondents, as well as their
fears of a fraudulent election to be held under the latters supervision, could not justify
the method they chose to impose their will on the union. Director Bitonio aptly
elucidated:[17]

The constitutional right to self-organization is better understood in the context of ILO

Convention No. 87 (Freedom of Association and Protection of Right to Organize), to
which the Philippines is signatory.Article 3 of the Convention provides that workers
organizations shall have the right to draw up their constitution and rules and to elect
their representatives in full freedom, free from any interference from public
authorities. The freedom conferred by the provision is expansive; the responsibility
imposed on union members to respect the constitution and rules they themselves draw
up equally so. The point to be stressed is that the unions CBL is the fundamental law
that governs the relationship between and among the members of the union. It is
where the rights, duties and obligations, powers, functions and authority of the
officers as well as the members are defined. It is the organic law that determines the
validity of acts done by any officer or member of the union. Without respect for the
CBL, a union as a democratic institution degenerates into nothing more than a group
of individuals governed by mob rule.

Union Election vs. Certification Election

A union election is held pursuant to the unions constitution and bylaws, and the
right to vote in it is enjoyed only by union members. A union election should be
distinguished from a certification election, which is the process of determining, through
secret ballot, the sole and exclusive bargaining agent of the employees in the
appropriate bargaining unit, for purposes of collective bargaining. [18] Specifically, the
purpose of a certification election is to ascertain whether or not a majority of the
employees wish to be represented by a labor organization and, in the affirmative case,
by which particular labor organization.[19]
In a certification election, all employees belonging to the appropriate bargaining
unit can vote.[20] Therefore, a union member who likewise belongs to the appropriate
bargaining unit is entitled to vote in said election. However, the reverse is not always
true; an employee belonging to the appropriate bargaining unit but who is not a member
of the union cannot vote in the union election, unless otherwise authorized by the
constitution and bylaws of the union. Verily, union affairs and elections cannot be
decided in a non-union activity.
In both elections, there are procedures to be followed. Thus, the October 4, 1996
election cannot properly be called a union election, because the procedure laid down in
the USTFUs CBL for the election of officers was not followed. It could not have been
a certification election either, because representation was not the issue, and the proper
procedure for such election was not followed. The participation of non-union members
in the election aggravated its irregularity.

Second Issue: USTFUs Constitution and ByLaws Violated

The importance of a unions constitution and bylaws cannot be

overemphasized. They embody a covenant between a union and its members and
constitute the fundamental law governing the members rights and obligations. [21] As
such, the unions constitution and bylaws should be upheld, as long as they are not
contrary to law, good morals or public policy.
We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the
October 4, 1996 election was tainted with irregularities because of the following
reasons.
 First, the October 4, 1996 assembly was not called by the USTFU. It was merely a
convocation of faculty clubs, as indicated in the memorandum sent to all faculty
members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo
Tomas.[22] It was not convened in accordance with the provision on general membership
meetings as found in the USTFUs CBL, which reads:

ARTICLE VIII-MEETINGS OF THE UNION

Section 1. The Union shall hold regular general membership meetings at least once
every three (3) months. Notices of the meeting shall be sent out by the Secretary-
General at least ten (10) days prior to such meetings by posting in conspicuous places,
preferably inside Company premises, said notices. The date, time and place for the
meetings shall be determined by the Board of Officers.[23]

Unquestionably, the assembly was not a union meeting. It was in fact a gathering
that was called and participated in by management and non-union members. By no legal
fiat was such assembly transformed into a union activity by the participation of some
union members.
Second, there was no commission on elections to oversee the election, as mandated
by Sections 1 and 2 of Article IX of the USTFUs CBL, which provide:

ARTICLE IX - UNION ELECTION

Section 1. There shall be a Committee on Election (COMELEC) to be created by the

Board of Officers at least thirty (30) days before any regular or special election. The
functions of the COMELEC include the following:

a) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly
election, whether regular or special;
b) Pass upon qualifications of candidates;
c) Rule on any question or protest regarding the conduct of the election subject to the procedure
that may be promulgated by the Board of Officers; and
d) Proclaim duly elected officers.

Section 2. The COMELEC shall be composed of a chairman and two members all of
whom shall be appointed by the Board of Officers.

xxx xxx xxx[24]

Third, the purported election was not done by secret balloting, in violation of
Section 6, Article IX of the USTFUs CBL, as well as Article 241 (c) of the Labor Code.
 The foregoing infirmities considered, we cannot attribute grave abuse of discretion
to Director Bitonios finding and conclusion. In Rodriguez v. Director, Bureau of Labor
Relations,[25] we invalidated the local union elections held at the wrong date without
prior notice to members and conducted without regard for duly prescribed ground
rules. We held that the proceedings were rendered void by the lack of due process --
undue haste, lack of adequate safeguards to ensure integrity of the voting, and the
absence of the notice of the dates of balloting.

Third Issue: Suspension of USTFUs CBL

Petitioners contend that the October 4, 1996 assembly suspended the unions
CBL. They aver that the suspension and the election that followed were in accordance
with their constituent and residual powers as members of the collective bargaining unit
to choose their representatives for purposes of collective bargaining. Again they cite the
numerous anomalies allegedly committed by the private respondents as USTFU
officers. This argument does not persuade.
First, as has been discussed, the general faculty assembly was not the proper forum
to conduct the election of USTFU officers. Not all who attended the assembly were
members of the union; some, apparently, were even disqualified from becoming union
members, since they represented management. Thus, Director Bitonio correctly
observed:

Further, appellants cannot be heard to say that the CBL was effectively suspended
during the 04 October 1996 general assembly. A union CBL is a covenant between
the union and its members and among members (Johnson and Johnson Labor Union-
FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention
No. 87 speaks of a unions full freedom to draw up its constitution and rules, it
includes freedom from interference by persons who are not members of the
union. The democratic principle that governance is a matter for the governed to decide
upon applies to the labor movement which, by law and constitutional mandate, must
be assiduously insulated against intrusions coming from both the employer and
complete strangers if the 'protection to labor clause' of the constitution is to be
guaranteed. By appellants own evidence, the general faculty assembly of 04 October
1996 was not a meeting of USTFU. It was attended by members and non-members
alike, and therefore was not a forum appropriate for transacting union matters. The
person who moved for the suspension of USTFUs CBL was not a member of
USTFU. Allowing a non-union member to initiate the suspension of a unions CBL,
and non-union members to participate in a union election on the premise that the
unions CBL had been suspended in the meantime, is incompatible with the freedom of
association and protection of the right to organize.
If there are members of the so-called academic community collective bargaining unit
who are not USTFU members but who would nevertheless want to have a hand in
USTFUs affairs, the appropriate procedure would have been for them to become
members of USTFU first. The procedure for membership is very clearly spelled out in
Article IV of USTFUs CBL. Having become members, they could then draw guidance
from Ang Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein
the Supreme Court held that if a member of the union dislikes the provisions of the
by-laws he may seek to have them amended or may withdraw from the union;
otherwise he must abide by them. Under Article XVII of USTFUs CBL, there is also a
specific provision for constitutional amendments. What is clear therefore is that
USTFUs CBL provides for orderly procedures and remedies which appellants could
have easily availed [themselves] of instead of resorting to an exercise of their so-
called residual power'.[26]

Second, the grievances of the petitioners could have been brought up and resolved
in accordance with the procedure laid down by the unions CBL [27]and by the Labor
Code.[28] They contend that their sense of desperation and helplessness led to the October
4, 1996 election. However, we cannot agree with the method they used to rectify years
of inaction on their part and thereby ease bottled-up frustrations, as such method was in
total disregard of the USTFUs CBL and of due process. The end never justifies the
means.
We agree with the solicitor generals observation that the act of suspending the
constitution when the questioned election was held is an implied admission that the
election held on that date [October 4, 1996] could not be considered valid under the
existing USTFU constitution xxx.[29]
The ratification of the new CBA executed between the petitioners and the
University of Santo Tomas management did not validate the void October 4, 1996
election. Ratified were the terms of the new CBA, not the issue of union leadership -- a
matter that should be decided only by union members in the proper forum at the proper
time and after observance of proper procedures.

Epilogue

In dismissing this Petition, we are not passing upon the merits of the
mismanagement allegations imputed by the petitioners to the private respondents; these
are not at issue in the present case. Petitioners can bring their grievances and resolve
their differences with private respondents in timely and appropriate proceedings. Courts
will not tolerate the unfair treatment of union members by their own leaders.When the
latter abuse and violate the rights of the former, they shall be dealt with accordingly in
the proper forum after the observance of due process.
WHEREFORE, the Petition is hereby DISMISSED and the assailed
Resolutions AFFIRMED. Costs against petitioners.
SO ORDERED.

[G.R. No. 152322. February 15, 2005]

ERNESTO C. VERCELES, DIOSDADO F. TRINIDAD, SALVADOR G.

BLANCIA, ROSEMARIE DE LUMBAN, FELICITAS F. RAMOS,
MIGUEL TEAO, JAIME BAUTISTA and FIDEL ACERO, as Officers
of the University of the East Employees Association, petitioners,
vs. BUREAU OF LABOR RELATIONS-DEPARTMENT OF LABOR
AND EMPLOYMENT, DEPARTMENT OF LABOR AND
EMPLOYMENT-NATIONAL CAPITAL REGION, RODEL E.
DALUPAN, EFREN J. DE OCAMPO, PROCESO TOTTO, JR.,
ELIZABETH ALARCA, ELVIRA S. MANALO, and RICARDO
UY, respondents.

DECISION
CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari under Rule 45 of the 1997

Rules of Civil Procedure, assailing the Decision[1] and Resolution[2] rendered by
the Court of Appeals, dated 24 October 2001 and 15 February 2002,
respectively.

The Facts

Private respondents Rodel E. Dalupan, Efren J. De Ocampo, Proceso Totto,

Jr., Elizabeth Alarca, and Elvira S. Manalo are members of the University of the
East Employees Association (UEEA). On 15 September 1997, they each
received a Memorandum from the UEEA charging them with spreading false
rumors and creating disinformation among the members of the said association.
They were given seventy-two hours from receipt of the Memorandum to submit
their Answer.[3]
 The acts of the respondents allegedly fall under General Assembly
Resolution No. 4, Series of 1979, to wit:
1. Circulating false rumors about the progress of the negotiations for collective
bargaining;
2. Creating distrust or loss of trust and confidence of members in the Association;
3. Creating dissension among the members;
4. Circulating false rumors about the work of the Association or sabotaging the same;
5. Withholding from the Association and/or members material information as to their
rightful entitlement to benefits and/or money claims;
6. Acting as a spy against the Association or divulging confidential matters to persons
not entitled thereto;
7. Such other offenses, which may injure or disrupt the functions of the Association.[4]

Through a collective reply dated 19 September 1997, private respondents

denied the allegations. Thereafter, on 23 September 1997, they sent a letter
dated 22 September 1997 to the Chairman and Members of UEEAs Disciplinary
Committee, informing them that the Memorandum of 15 September 1997 was
vague and without legal basis, therefore, no intelligent answer may be made by
them. They likewise stated that any sanction that will be imposed by the
committee would be violative of their right to due process.[5]
The Disciplinary Committee issued another Memorandum, dated 24
September 1997, giving the respondents another seventy-two hours from
receipt within which to properly reply, explaining that the collective reply letter
and supplemental answer which were earlier submitted were not responsive to
the first Memorandum. Their failure would be construed as an admission of the
truthfulness and veracity of the charges.[6]
On 01 October 1997, the respondents issued a denial for the second time,
and inquired from the Disciplinary Committee as to whether they were being
formally charged.[7]
On 09 October 1997, Ernesto Verceles, in his capacity as president of the
association, through a Memorandum, informed Rodel Dalupan, et al., that their
membership in the association has been suspended and shall take effect
immediately upon receipt thereof. Verceles said he was acting upon the
disciplinary committees finding of a prima facie case against
them. Respondent Ricardo Uy also received a similar memorandum on 03
[8]

November 1997.[9]
On 01 December 1997, a complaint[10] for illegal suspension, willful and
unlawful violation of UEEA constitution and by-laws, refusal to render financial
and other reports, deliberate refusal to call general and special meetings, illegal
holdover of terms and damages was filed by the respondents against herein
petitioners Ernesto C. Verceles, Diosdado F. Trinidad, Salvador G. Blancia,
Rosemarie De Lumban, Felicitas Ramos, Miguel Teao, Jaime Bautista and
Fidel Acero before the Department of Labor and Employment, National Capital
Region (DOLE-NCR).
A few days after the filing of the complaint, i.e., on 10 December 1997, a
resolution[11] was passed by UEEA which reads as follows:

RESOLUTION

WHEREAS, the Association has gone thru a most arduous, difficult, and trying times
in working to obtain the best terms and conditions of employment for its members,
specifically for the period 1992 to 1996;

WHEREAS, said difficulties are in the form of near strikes, cases with the
Department of Labor and Employment and its agencies, as well as with the Supreme
Court;

WHEREAS, the general membership (has) shown exceptional patience and

perseverance and generally (had) demonstrated full trust and confidence in the
Association officers and accordingly approved the manner and/or actions undertaken
in pursuing said difficult task of arriving at a most beneficial agreement for the
general membership;

NOW, THEREFORE, be it resolved as it is hereby resolved that:

...

b) the general membership reiterate its loyalty to the Association and

commends the Association officers for their effort expended in working
for the benefit of the whole membership.

APPROVED.

Manila. 10 December 1997.

On 22 November 1999, a decision[12] was rendered by Regional Director

Maximo B. Lim, adverse to petitioners, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent[s] [are] hereby ordered:

1. to immediately lift suspension imposed upon the complainants;

 2. to hold a general membership meeting wherein they (respondents) make open and
available the unions/associations books of accounts and other documents
pertaining to the union funds [and] thereby explain the financial status of the union;
3. to regularly conduct special and general membership meetings in accordance with
the unions constitution and by-laws;
4. to immediately hold/conduct an election of officers in accordance with the unions
constitution and by-laws.

Accordingly, the claims of complainants for damages [are] hereby ordered dismissed
for lack of jurisdiction.

However, within ten (10) days upon receipt of this Order, the complainants are hereby
directed to submit a written report whether or not the respondents had complied with
this Order.

The petitioners appealed to the Bureau of Labor Relations of the

Department of Labor and Employment (BLR-DOLE). During the pendency of
this appeal, or on 07 April 2000, an election of officers was held by the UEEA.
The appeal, however, was dismissed for lack of merit in a Resolution[13] dated
22 September 2000, the decretal portion of which reads:

WHEREFORE, the appeal is hereby DISMISSED for lack of merit and the decision
dated 22 (November) 1999 of Regional Director Maximo B. Lim, DOLE-NCR, is
AFFIRMED.

Meanwhile, Resolution No. 8, Series of 2000, was passed by the UEEA,

wherein the members allegedly reiterated their support and approval of the acts
and collateral actions of the officers.[14]
A Motion for Reconsideration[15] was filed by the petitioners with the BLR-
DOLE, but was denied in a Resolution[16] dated 15 January 2001.
A special civil action for certiorari[17] was thereafter filed before the Court of
Appeals citing grave abuse of discretion amounting to lack or excess of
jurisdiction. In a Resolution[18]dated 22 February 2001, the Court of Appeals
dismissed the petition outright for failure to comply with the provisions of Section
1, Rule 65 in relation to Section 3, Rule 46 of the 1997 Rules of Civil Procedure.
A Motion for Reconsideration[19] was filed which was granted in a
Resolution[20] dated 24 April 2001, thus, reinstating the petition.
On 24 October 2001, the Court of Appeals rendered a
Decision[21] dismissing the petition, the dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is DENIED DUE
COURSE and DISMISSED for lack of merit. No pronouncement as to costs.

A Motion for Reconsideration[22] was thereafter filed by the petitioners. In a

Resolution[23] dated 15 February 2002, the Court of Appeals modified its earlier
decision. The decretal portion of which states:

WHEREFORE, the questioned decision of this court is MODIFIED. The 22

September 2000 and 15 January 2001 resolutions of the BLR insofar as they affirmed
the part of the 22 November 1999 decision of the Regional Director of DOLE-NCR
ordering the immediate holding of election are HEREBY ANNULLED AND SET
ASIDE. All the other aspects of the assailed Resolutions are AFFIRMED.

Not satisfied, the petitioners filed a petition for review on certiorari[24] before
this Court.

The Issues

The petitioners raise the following issues:

1. WHETHER OR NOT THERE IS REVERSIBLE ERROR IN THE COURT OF
APPEALS UPHOLDING THE DOLE-NCR AND BLR-DOLE DECISIONS BASED
ONLY ON THE COMPLAINT AND ANSWER;
2. WHETHER OR NOT IT IS REVERSIBLE ERROR FOR THE COURT OF APPEALS
TO HOLD THE ELECTION OF APRIL 7, 2000 AS INVALID AND A NULLITY;
3. WHETHER OR NOT IT IS REVERSIBLE ERROR TO UPHOLD BLR-DOLES
FINDING THAT THE SUSPENSION WAS ILLEGAL; and
4. WHETHER OR NOT THE ALLEGED NON-HOLDING OF MEETINGS AND
ALLEGED NON-SUBMISSION OF REPORTS ARE MOOT AND ACADEMIC, AND
WHETHER THE DECISION TO HOLD MEETINGS AND SUBMIT REPORTS
CONTRADICT AND OVERRIDE THE SOVEREIGN WILL OF THE MAJORITY.[25]

The Courts Rulings

We shall discuss the issues in seriatim.
First Issue: was the court a quo correct in upholding the DOLE-NCR and
BLR-DOLE decisions based only on the complaint and answer?
Petitioners contend that the complaint filed by the private respondents in
DOLE-NCR was a mere recital of bare, self serving and unsubstantiated
allegations. Both parties did not submit position papers, and the DOLE-NCR
resolved the case based only on the complaint and answer. Also, by failing to
submit a reply to the answer, private respondents, in effect admitted the
petitioners controversion of the charges.[26] They further argue that the private
respondents did not exhaust administrative remedies and that the requirement
of support by at least 30% of the members of the association pursuant to
Section 1, Rule XIV, Article I, Department Order No. 9 of DOLE, was not
complied with.[27]
Private respondents, on the other hand, assert that the records show that
despite their failure to submit their position papers, they nonetheless moved
that the case be resolved by DOLE-NCR based on the complaint, answer and
available exhibits or annexes integrated with the aforesaid pleadings.[28] The
principle of non-exhaustion of administrative remedies that would warrant the
dismissal of the case should not operate against them because they were
deprived of their right to due process when they were indefinitely suspended
without the benefit of a formal charge which is sufficient in form and
substance.[29] The respondents also point out that the thirty percent (30%)
support requirement pursuant to Section 1, Rule XIV, Article I, Department
Order No. 9, is not applicable to them because their complaint was primordially
predicated on their suspension while the rest of the causes of action were mere
collateral consequences of the principal cause of action.[30]
It is worthy to note that the BLR-DOLE, in its Resolution dated 22 September
2000, underscored the negligence of herein petitioners not only in the
submission of their pleadings but also in attending the hearings called for the
purpose.[31] Even the Court of Appeals, in its decision, made this observation,
thus:

It is apparent, however, that petitioners were to blame for their predicament. They
repeatedly failed to appear in a series of conferences scheduled by the DOLE-NCR,
asked for resetting of hearings, and requested for extension of time to file its answer.
Hence, when they again did not attend a hearing on a date they themselves asked for,
private respondents (complainants therein) moved for the submission of the case
based on their complaint, position paper and annexes attached thereto.

When DOLE-NCR directed the parties to submit their respective position papers,
petitioners again moved for extension of time to file the same. When another notice
was given to the parties to comply with the directive, petitioners prayed for another
extension of time. (Private respondents, however, reiterated their earlier motion to
have the case resolved based on available pleadings.) After six (6) months or so,
petitioners finally filed not their position paper but their answer.[32]

The Court of Appeals was justified in upholding the DOLE-NCR and BLR-
DOLE decisions based on the complaint and answer. We cannot accept
petitioners line of reasoning that since no position papers were submitted, no
decision may be made by the adjudicating body. As ruled by Regional Director
Maximo B. Lim in his decision, the complaint and the answer thereto were
adopted as the parties position papers. Thereafter, the case shall be deemed
submitted for resolution.[33]
Labor laws mandate the speedy disposition of cases, with the least attention
to technicalities but without sacrificing the fundamental requisites of due
process.[34] The essence of due process is simply an opportunity to be
heard.[35] In this case, it cannot be said that there was a denial of due process
on the part of the petitioners because they were given all the chances to refute
the allegations of the private respondents, and the delay in the proceedings
before the DOLE-NCR was clearly attributable to them.
The argument that there was failure to exhaust administrative remedies
cannot be sustained. One of the instances when the rule of exhaustion of
administrative remedies may be disregarded is when there is a violation of due
process.[36] In this case, the respondents have chronicled from the very
beginning that they were indefinitely suspended without the benefit of a formal
charge sufficient in form and substance. Therefore, the rule on exhaustion of
administrative remedies cannot squarely apply to them.
On the matter concerning the 30% support requirement needed to report
violations of rights and conditions of union membership, as found in the last
paragraph of Article 241 of the Labor Code,[37] we likewise cannot sanction the
petitioners. We have already made our pronouncement in the case
of Rodriguez v. Director, Bureau of Labor Relations[38] that the 30% requirement
is not mandatory. In this case, the Court, speaking through Chief Justice Andres
R. Narvasa,[39] held in part:

The respondent Directors ruling, however, that the assent of 30% of the union
membership, mentioned in Article 242 of the Labor Code, was mandatory and
essential to the filing of a complaint for any violation of rights and conditions of
membership in a labor organization (such as the arbitrary and oppressive increase of
union dues here complained of), cannot be affirmed and will be reversed. The very
article relied upon militates against the proposition. It states that a report of a violation
of rights and conditions of membership in a labor organization may be made by (a)t
least thirty percent (30%) of all the members of a union or any member or members
specially concerned. The use of the permissive may in the provision at once negates
the notion that the assent of 30% of all the members is mandatory. More decisive is
the fact that the provision expressly declares that the report may be made,
alternatively by any member or members specially concerned. And further
confirmation that the assent of 30% of the union members is not a factor in the
acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article
226 of the same Labor Code, which grants original and exclusive jurisdiction to the
Bureau, and the Labor Relations Division in the Regional Offices of the Department
of Labor, over all inter-union and intra-union conflicts, and all disputes, grievances
or problems arising from or affecting labor management relations, making no
reference whatsoever to any such 30%-support requirement. Indeed, the officials
mentioned are given the power to act on all inter-union and intra-union conflicts
(1)upon request of either or both parties as well as (2) at their own initiative.

Second Issue: was the election held on 07 April 2000 valid or a nullity?
This issue arose from the fact that the original decision of the DOLE-NCR
dated 22 November 1999, ordered petitioners, among other things, to
immediately hold/conduct an election of officers . . . Petitioners, it must be
recalled, appealed from the DOLE-NCR decision to the BLR-DOLE. During the
pendency of the appeal, however, an election of officers was held on 07 April
2000. Subsequently, the BLR-DOLE affirmed the decision of the DOLE-NCR,
but with the pronouncement that . . . the supposed election conducted on (07)
April 2000 is null and void and cannot produce legal effects adverse to
appellants.[40]
The petitioners contend that since the election was held on 07 April 2000,
and the original complaint before the DOLE-NCR was filed on 01 December
1997, the former could not have been the subject of the complaint. There was,
according to petitioners, reversible error in the BLR-DOLEs adding to the
DOLE-NCRs decision, the nullification of the 07 April 2000 election. The
BLRDOLE should have limited itself to affirming, modifying or setting aside and
canceling the provisions of the dispositive portion of the DOLE-NCRs decision
which was subject of the appeal. The election was held because the term of the
petitioners (extended for five years under Republic Act No. 6715[41]) expired on
07 April 2000. As amended by Republic Act 6715, paragraph (c) of Article 241
of the Labor Code now reads:

(c) The members shall directly elect their officers in the local union, as well as their
national officers in the national union or federation to which they or their local union
is affiliated, by secret ballots at intervals of five (5) years.

It just so happened that the holding of the election coincided with the DOLE-
NCR decision.[42]
The private respondents, in answer to this, point out that the 07 April 2000
election, as appearing in the 22 September 2000 Resolution of the BLR-DOLE,
was set aside not on the flimsy reason that there was no complaint to invalidate
it, but due to the appeal of the petitioners questioning the BLR-DOLEs order.
The appeal effectively suspended the effect of the DOLE-NCR Regional
Directors order for the immediate holding of election of officers in accordance
with the unions constitution and by-laws.[43]
On this matter, the Court of Appeals made the following observation:

Consequently, the Regional Director of DOLE-NCR erred in ordering the immediate

holding of election of officers of UEEA, and the Bureau of Labor Relations (BLR)-
Department of Labor and Employment, insofar as it affirmed this particular order,
committed an act amounting to grave abuse of discretion.

Nonetheless, despite of this finding, the election of UEEA officers on 7 April 2000
cannot acquire a semblance of legality. First, it was conducted pursuant to the
aforesaid (erroneous) order of the Regional Director as manifested by the petitioners.
Second, it was purposely done to pre-empt the resolution of the case by the BLR and
to deprive private respondents their substantial right to participate in the election.
Third, petitioners cannot be allowed to take an inconsistent position to later on claim
that the election of 7 April 2000 was held because it was already due while previously
declaring that it was made in line with the order of the Regional Director, for this
would go against the principle of fair play.

Thus, while the BLR was wrong in affirming the order of the Regional Director for
the immediate holding of election, it was right in nullifying the 7 April 2000 UEEA
election of officers. It was simply improper for the petitioners to implement the said
order which was then one of the subjects of their appeal in the BLR. To hold
otherwise would be to dispossess the BLR of its inherent power to control the conduct
of the proceedings of cases pending before it for resolution.[44]

Based on the prevailing facts of this case, we affirm the foregoing findings
of the court a quo. We cannot hold the election of 07 April 2000 valid as this
would make us condone an iniquitous act. Said election was perceptibly done
to hinder any resolution or decision that would be made by BLR-DOLE. The
Regional Director indeed ordered the immediate holding of an election in its
Order dated 22 November 1999. The records show that the petitioners
questioned this order of the Regional Director before the BLR-DOLE by way of
appeal,[45] and yet, they conducted the election, allegedly because it was due
under Republic Act No. 6715. Why this was done by the petitioners escapes
us. But as rightfully observed by the BLR-DOLE:

. . . Indeed, it is obvious that the general membership meeting and election of officers
was done purposely to pre-empt our resolution of this case and, more importantly, the
participation of appellees in the election. This cannot be tolerated.[46]
 Third Issue: was the indefinite suspension of the private respondents
illegal?
We rule in the affirmative.
The petitioners posit the theory that the records do not support the findings
of the BLR-DOLE that no investigation was conducted making the suspension
illegal because of lack of due process.
It is best to remind the petitioners that this Court, as we have held in a long
line of decisions, is not a trier of facts.[47] The instant case is a petition for review
on certiorari[48] where only questions of law may be raised. The exceptions[49] to
this rule find no application here. This being the case, the findings of fact of the
DOLE-NCR and the BLR-DOLE as affirmed by the Court of Appeals to the
effect that no investigation was conducted, shall not be disturbed. As properly
held by the court a quo:

Petitioners have failed to show that the findings of facts and conclusions of law of
both the DOLE-NCR and BLR-DOLE were arrived at with grave abuse of discretion
or without substantial evidence. A careful review of the pleadings before Us reveals
that the decision and resolutions of the concerned agencies were correctly anchored in
law and on substantial evidence.[50]

Fourth Issue: is the non-holding of meetings and non-submission of reports

by the petitioners moot and academic, and whether the decision to hold
meetings and submit reports contradict and override the sovereign will of the
majority?
We do not believe so.
This issue was precipitated by the Court of Appeals decision affirming the
order of DOLE Regional Director Maximo B. Lim for the petitioners to hold a
general membership meeting wherein they make open and available the
unions/associations books of accounts and other documents pertaining to the
union funds, and to regularly conduct special and general membership
meetings in accordance with the unions constitution and by-laws.[51] It is to be
recalled that the private respondents, when they filed a complaint before the
DOLE-NCR also complained of petitioners refusal to render financial and other
reports, and deliberate refusal to call general and special meetings.
Petitioners do not hide the fact that they belatedly submitted their financial
reports and the minutes of their meetings to the DOLE. The issue of belatedly
submitting these reports, according to the petitioners, had been rendered moot
and academic by their eventual compliance. Besides, this has been the practice
of the association.[52] Moreover, the petitioners likewise maintain that the
passage of General Assembly Resolution No. 10 dated 10 December 1997 and
Resolution No. 8, Series of 2000, following the application of the principle that
the sovereign majority rules, cured any liability that may have been brought
about by their belated actions.[53]
As found by the Court of Appeals, the financial statements for the years
1995 up to 1997 were submitted to DOLE-NCR only on 06 February 1998 while
that for the year 1998 was submitted only on 16 March 1999.[54] The last
associations meeting was conducted on 21 April 1995, and the copy of the
minutes thereon was submitted to BLR-DOLE only on 24 February 1998.
The passage of General Assembly Resolution No. 10 dated 10 December
1997 and Resolution No. 8, Series of 2000,[55] which supposedly cured the
lapses committed by the associations officers and reiterated the approval of the
general membership of the acts and collateral actions of the associations
officers cannot redeem the petitioners from their predicament. The obligation to
hold meetings and render financial reports is mandated by UEEAs constitution
and by-laws. This fact was never denied by the petitioners. Their eventual
compliance, as what happened in this case, shall not release them from the
obligation to accomplish these things in the future.
Prompt compliance in rendering financial reports together with the holding
of regular meetings with the submission of the minutes thereon with the BLR-
DOLE and DOLE-NCR shall negate any suspicion of dishonesty on the part of
UEEAs officers. This is not only true with UEEA, but likewise with other
unions/associations, as this matter is imbued with public interest. Undeniably,
transparency in the official undertakings of union officers will bolster genuine
trade unionism in the country.
WHEREFORE, in view of all the foregoing, the Decision and Resolution of
the Court of Appeals subjects of the instant case, are AFFIRMED. Costs
against the petitioners.
SO ORDERED.

[G.R. No. 74453. May 5, 1989.]

AMBROCIO VENGCO, RAMON MOISES, EUGENIA REYES, RAFAEL WAGAS and 80 others per
attached list, Petitioners, v. HON. CRESENCIO B. TRAJANO, in his capacity as Director of the
Bureau of Labor Relations and EMMANUEL TIMBUNGCO, Respondents.

Jose T. Maghari, for Petitioners.

Benjamin C. Sebastian for Private Respondent.

 SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR UNIONS; ATTORNEY’S FEES MAY NOT BE
DEDUCTED OR CHECKED OFF WITHOUT WORKER’S WRITTEN CONSENT, EXCEPT FOR MANDATORY
ACTIVITY; MANDATORY ACTIVITY, DEFINED. — It is very clear from Art. 241 of the Labor Code that
attorney’s fees may not be deducted or checked off from any amount due to an employee without his
written consent except for mandatory activities under the Code. A mandatory activity has been
defined as a judicial process of settling dispute laid down by the law. (Carlos P. Galvadores, Et. Al. v.
Cresenciano B. Trajano, Director of the Bureau of Labor Relations, Et Al., G.R. No. L-70067,
September 15, 1986, 144 SCRA 138).

2. ID.; ID.; ID.; CASE AT BAR IS NOT A MANDATORY ACTIVITY. — The amicable settlement entered
into by the management and the union — whereby the company will pay to the union members the
sum of P150,000.00 for their claims arising from the unpaid emergency cost of living allowance
(ECOLA) and other benefits — can not be considered as a mandatory activity under the Code. It is
true that the union filed a claim for emergency cost of living allowance and other benefits before the
Ministry of Labor. But this case never reached its conclusion in view of the parties’ agreement.

3. ID.; ID.; ID.; WRITTEN CONSENT IS DISPENSED WITH IN JUDICIAL OR ADMINISTRATIVE

PROCEEDINGS FOR RECOVERY OF WAGES. — Book III, Rule VIII, Section II of the Implementing
Rules cited by Timbungco which dispenses with the required written authorization from the employees
concerned does not apply in this case. This provision envisions a situation where there is a judicial or
administrative proceedings for recovery of wages. Upon termination of the proceedings, the law allows
a deduction for attorney’s fees of 10% from the total amount due to a winning party.

4. ID.; ID.; ID.; VIOLATION THEREOF JUSTIFIES LAWYER’S EXPULSION FROM UNION PRESIDENCY.
— Considering the violations of Timbungco, (i.e. deducting attorney’s fees from the workers’ fringe
benefits) there can be no question that he should bear the consequences of his acts. We find that the
penalty of expulsion from the union presidency imposed upon Timbungco is justified.

5. ID.; EMERGENCY COST OF LIVING ALLOWANCE, EXCLUDED FROM SALARIES OR WAGES. — In the
herein case, the fringe benefits received by the union members consist of back payments of their
unpaid emergency cost of living allowances which are totally distinct from their wages. Allowances are
benefits over and above the basic salaries of the employees (University of Pangasinan Faculty Union v.
University of Pangasinan, G.R. No. L-63122, February 20, 1984, 127 SCRA 691). We have held that
such allowances are excluded from the concept of salaries or wages (Cebu Institute of Technology
(CIT) v. Ople, G.R. No. L-58870, December 18, 1987, 156 SCRA 629).

DECISION

MEDIALDEA, J.:

This is a petition for certiorari which seeks to annul: (1) the Order of respondent Director of the
Bureau of Labor Relations dated May 23, 1983 in BLR Case No. A-0179-82 entitled "Ambrocio Vengco,
Et. Al. v. Emmanuel Timbungco" setting aside the decision dated December 29, 1982; and (2) the
Order dated April 2, 1986 denying the motion for reconsideration of the Order dated May 23, 1983.

The antecedent facts are as follows: chanrob 1es vi rtual 1aw lib rary

Sometime in the latter part of 1981, the Management of the Anglo-American Tobacco Corporation and
the Kapisanan ng Manggagawa sa Anglo-American Tobacco Corporation. (FOI-TAF) entered into a
compromise agreement whereby the company will pay to the union members the sum of P150,000.00
for their claims arising from the unpaid emergency cost of living allowance (ECOLA) and other benefits
which were the subject of their compliant before the Ministry of Labor. Respondent Emmanuel
Timbungco (Timbungco, for short) who is the union president received the money which was paid in
installments. Thereafter, he distributed the amount among the union members. Petitioners Ambrocio
Vengco, Ramon Moises, Rafael Wagas and 80 others (Vengco, Et Al., for short) who are union
members noted that Timbungco was not authorized by the union workers to get the money; and that
ten percent (10%) of the P150,000.00 had been deducted to pay for attorney’s fees without their
written authorization in violation of Article 242(o) of the Labor Code. So, they demanded from
Timbungco an accounting of how the P150,000.00 was distributed to the members. Timbungco did not
give in to their demand. Thus Vengco, Et. Al. filed a complaint with the Ministry of Labor praying for:"
(1) the expulsion of Emmanuel Timbungco as president of the union for violation of (the) union
constitution and by-laws and the rights and conditions of union members under the Labor Code; (2)
an order to require Timbungco to render an accounting of how the P150,000.00 was distributed; and
(3) an order to require private respondent to publish in the bulletin board the list of the members and
the corresponding amount they each received from the P150,000.00." (Memorandum for Petitioners,
p. 150, Rollo).

In his answer with counterclaim, Timbungco alleged among others, that he was authorized by a
resolution signed by the majority of the union members to receive and distribute the P150,000.00
among the workers; that the computation of the benefits was based on the payroll of the company;
that the ten percent (10%) attorney’s fees was in relation to the claim of the local union for payment
of emergency cost of living allowance before the Ministry of Labor which is totally distinct and separate
from the negotiation of the CBA; and that the ten percent (10%) deduction was in accordance with
Section II, Rule No. VIII, Book No. III of the Rules and Regulations implementing the Labor Code and
therefore, no authorization from the union members is required.

On July 19, 1982, Med-Arbiter Willie B. Rodriguez issued an Order dismissing the complaint for lack of
merit. (p. 33, Rollo)

Vengco, Et. Al. appealed the aforesaid order to the Bureau of Labor Relations.

On December 29, 1982, respondent Director of the Bureau of Labor Relations Cresenciano B. Trajano
(Trajano, for short) rendered a decision, the dispositive portion of which states:
jgc:chanrob les.c om.ph

"Wherefore, premises considered, the instant appeal is hereby granted and the Med-Arbiter’s Order
dated 19 July 1982 hereby set aside. Accordingly, respondent Emmanuel Timbungco is hereby ordered
to render a full accounting of the One Hundred Fifty Thousand Pesos (P150,000.00) he received from
the management of Anglo-American Tobacco Corporation in behalf of the members of the Kapisanan
ng mga Manggagawa sa Associated Anglo-American Tobacco Corporation (FOITAF) and to publish in
the union’s bulletin board the list of all recipient union members and the respective amounts they
have received, within ten (10) days from receipt hereof. Further, respondent is hereby expelled as
president of the Kapisanan ng Manggagawa sa Anglo American Tobacco Corporation (FOITAF). Lastly,
the counterclaim interposed by the respondent’s counsel, Atty. Benjamin Sebastian is hereby ordered
dismissed.

So decided." (p. 50, Rollo.)

Timbungco filed a motion for reconsideration of the above-quoted decision while Vengco, Et. Al. filed
their opposition to the said motion.

On May 23, 1983, Officer-in-Charge Victoriano R. Calaycay issued an Order which held, thus: jgc:cha nro bles. com.ph

"Wherefore, premises considered, our resolution dated 29 December 1982 is hereby set aside.
However, an audit examination of the Books of Account of Kapisanan ng Manggagawa sa Associated
Anglo-American Tobacco Corporation (FOITAF) is hereby ordered.

SO RESOLVED." (p. 62, Rollo)

Vengco, et al, sought reconsideration of the aforementioned order. They contended that the
examination of the books of accounts of the union is irrelevant considering that the issue involved in
the case does not consist of union funds but back pay received by the union members from the
company. Likewise, they pointed out that Timbungco did not give the money to the union treasurer
and consequently, the amount was not entered in the records of the union.

On April 2, 1986, Trajano issued an order which affirmed the resolution of May 23, 1983 and denied
the motion for reconsideration for lack of merit. (p. 58, Rollo)

Hence, the present recourse by Vengco, Et. Al.

The issues raised in this case are as follows: chanro b1es vi rtua l 1aw lib ra ry

(1) Whether or not Timbungco is guilty of illegally deducting 10% attorneys’ fees from petitioners’
backwages; and

(2) Whether or not Trajano gravely abused his discretion amounting to lack of jurisdiction in ordering
examination of union books instead of affirming his previous Order expelling Timbungco from the
union and ordering him to render an accounting of P150,000.00 received by him. (p. 151, Rollo)

In the resolution of June 4, 1986, We required the respondents to comment on the petition.

In his comment, Timbungco reiterates the defenses he raised in his answer to the complaint filed
against him before the Med-Arbiter. In addition, he claims that he already filed an accounting report
on the P150,000.00 with the Bureau of Labor Relations which enumerated the names of the workers
and the corresponding amounts they received with their respective signatures opposite their names,
the sub-total of the amount of benefits received per department and the grand total of the amount
distributed duly certified by the Union Treasurer and Secretary and duly noted by Timbungco as Union
President. (p. 73, Rollo)
chanrobles vi rtual lawlib rary

The Solicitor General, in his comment, agrees with Vengco, Et. Al. and recommends that the petition
be given due course. (p. 100, Rollo)

Timbungco filed a reply to the aforesaid comment of the Solicitor General which restates the
arguments raised in his comment. (p. 121, Rollo)

The petition is meritorious.

Article 241(o) of the Labor Code provides: jgc:chanrobles. com.ph

"ART. 241. Rights and conditions of membership in a labor organization. — The following are the
rights and conditions of membership in a labor organization.

x x x

"(o) Other than for mandatory activities under the Code, no special assessment, attorney’s fees,
negotiation fees or any other extraordinary fees may be checked off from any amount due an
employee without an individual written authorization duly signed by an employee. The authorization
should specifically state the amount, purpose and beneficiary of the deduction.

x x x

It is very clear from the above-quoted provision that attorney’s fees may not be deducted or checked
off from any amount due to an employee without his written consent except for mandatory activities
under the Code. A mandatory activity has been defined as a judicial process of settling dispute laid
down by the law. (Carlos P. Galvadores, Et. Al. v. Cresenciano B. Trajano, Director of the Bureau of
Labor Relations, Et Al., G.R. No. L-70067, September 15, 1986, 144 SCRA 138). In the instant case,
the amicable settlement entered into by the management and the union can not be considered as a
mandatory activity under the Code. It is true that the union filed a claim for emergency cost of living
allowance and other benefits before the Ministry of Labor. But this case never reached its conclusion in
view of the parties’ agreement. It is not also shown from the records that Atty. Benjamin Sebastian
was instrumental in forging the said agreement on behalf of the union members.

Timbungco maintains that the "Kapasiyahan" gave him the authority to make the deduction. This
contention is unfounded. Contrary to his claim, the undated "Kapasiyahan" or resolution did not confer
upon him the power to deduct 10% of the P150,000.00 despite the alleged approval of the majority of
the union workers. A reading of the said resolution (p. 75, Rollo) yields the same conclusion arrived at
by Trajano who declared it defective. We quote with approval Trajano’s findings on this point: jgc:chanro bles. com.ph

"Further, a cursory examination of the alleged resolution shows that it is quite defective. Not only that
it is not dated but also that, with the exception of the first page, the remaining pages were not
captioned and did not state the very purpose for which it was prepared. Thus, the alleged signatories
were not properly apprised thereof. There is, therefore, truth in complainant’s contention that they
never authorized, more so, they had no knowledge of the deduction of 10% attorney’s fees until it was
actually effected. Consequently, the deduction was not valid." (p. 45, Rollo)

Moreover, the law is explicit. It requires the individual written authorization of each employee
concerned, to make the deduction of attorney’s fees valid.

Likewise, We find that the other "Kapasiyahan" dated September 18, 1981 submitted by Timbungco
belied his claim that he was authorized by the union workers to receive the sum of P150,000.00 on
their behalf. The pertinent portion of the said "Kapasiyahan" provides: jgc:chan robles .com.p h

"3. Na sa dahilang hindi bigla ang pagbabayad sa nasabing "CLAIM" bukod pa sa marami kaming
naghati-hati sa nasabing halaga ipinapasiya naming na kusang-loob na kunin ang aming bahagi sa
aming kapisanan sa unang linggo ng Disyembre, 1981 at ito’y ipinaalam namin sa Pangulo ng
Kapisanan na si Ginoong Emmanuel Timbungco." (p. 47, Rollo)

The above-quoted statement merely indicated the intention of the workers to get their claim on the
first week of December, 1981 and to inform Timbungco of their intention. Clearly, this statement can
not be construed to confer upon Timbungco the authority to receive the fringe benefits for the
workers. Absent such authority, Timbungco should not have kept the money to himself but should
have turned it over to the Union Treasurer. He, therefore, exceeded his authority as President of the
Union.chan roble s virtualawli bra ry cha nrob les.com: chan roble s.com.p h

Moreover, Book III, Rule VIII, Section II of the Implementing Rules cited by Timbungco which
dispenses with the required written authorization from the employees concerned does not apply in this
case. This provision envisions a situation where there is a judicial or administrative proceedings for
recovery of wages. Upon termination of the proceedings, the law allows a deduction for attorney’s fees
of 10% from the total amount due to a winning party. In the herein case, the fringe benefits received
by the union members consist of back payments of their unpaid emergency cost of living allowances
which are totally distinct from their wages. Allowances are benefits over and above the basic salaries
of the employees (University of Pangasinan Faculty Union v. University of Pangasinan, G.R. No. L-
63122, February 20, 1984, 127 SCRA 691). We have held that such allowances are excluded from the
concept of salaries or wages (Cebu Institute of Technology (CIT) v. Ople, G.R. No. L-58870, December
18, 1987, 156 SCRA 629). In addition, the payment of the fringe benefits were effected through an
amicable settlement and not in an administrative proceeding.

The submission by Timbungco of an accounting report on the distribution of P150,000.00 is of no

moment in the face of our findings that the deduction of 10% for attorney’s fees is illegal and void for
failure to comply with the requirements of the law.

Considering the aforestated violations of Timbungco, there can be no question that he should bear the
consequences of his acts. We find that the penalty of expulsion from the union presidency imposed
upon Timbungco is justified. cralawna d

In view of the foregoing, We hold that the Orders dated May 23, 1983 and April 2, 1986 were issued
with grave abuse of discretion. The herein controversy involves the propriety of the 10% deduction
from the fringe benefits of the union workers which they received from the management in settlement
of their claims. Such issue does not touch on union dues or funds. Besides, the sum of P150,000.00
was not entered into the records of the Union since, as earlier stated, the money was not turned over
by Timbungco to the Union Treasurer. Consequently, the said Orders have no basis.

ACCORDINGLY, the petition is granted. The assailed Orders dated May 23, 1983 of Officer-in-Charge
Victoriano R. Calaycay of the Bureau of Labor Relations, and April 2, 1986 of respondent Director
Cresenciano B. Trajano of the same Bureau are REVERSED and SET ASIDE and the latter’s decision
dated December 29, 1982 is hereby reinstated. No costs.

SO ORDERED.

[G.R. No. L-20203. May 19, 1975.]

LA CARLOTA SUGAR CENTRAL, Petitioner, v. COURT OF INDUSTRIAL RELATIONS, NATIONAL

SUGAR WORKERS UNION (PAFLU) and JOSE VILLANUEVA, Respondents.

Cipriano Cid & Associates for Private Respondents.

SYNOPSIS

Petitioner assailed the order of respondent court awarding overtime pay to its employees who rendered
overtime services during Sundays and legal holidays. It contended that the Court of Industrial Relations had
no jurisdiction to pass upon the issues involving money claims arising out of, or in connection with,
employment since the matter falls within the jurisdiction of the ordinary judicial tribunals. Petitioner who
alleged that procedural due process was not observed because the employees whose statutory right for
overtime pay as found in the challenged order were not respected had not been included as parties. The
Supreme Court did not find such grounds meritorious.

Petition dismissed and the appealed orders affirmed.

SYLLABUS

1. COURTS; COURT OF INDUSTRIAL RELATIONS; JURISDICTION TO ENTERTAIN MONEY CLAIMS ARISING

OUT OF EMPLOYMENT. — The then existing Court of Industrial Relations had jurisdiction over all claims such
as those related to the Minimum Wage Law and the Eight-Hour Labor Law provided that the employer-
employee relationship was still in existence or was sought to be reestablished because of its wrongful
severance. Where the employment had terminated and no reinstatement was sought, the claims became
mere money claims falling under the jurisdiction of the regular courts.

2. LABOR LAW; INDUSTRIAL PEACE ACT; RIGHT TO SELF-ORGANIZATION; LABOR UNION HAS THE
PERSONALITY TO REPRESENT ITS MEMBERS. — A labor union possesses the requisite personality to sue on
behalf of its members for their individual money claims. It would be an unwarranted impairment of the right
to self-organization if such collective entities are barred from instituting such actions in their representative
capacity.

3. ID.; ID.; ID.; BENEFITS RESULTING FROM COLLECTIVE CONTRACTS EXTEND EVEN TO THOSE WHO DO
NOT BELONG TO THE CHOSEN LABOR UNION. — Once a collective contract is entered into, its benefits
extend not only to all the laborers and employees in the collective bargaining unit, but also to those who do
not belong to the labor organization chosen to represent the employees.

4. CONSTITUTIONAL LAW; PROCEDURAL DUE PROCESS; THERE IS NO DENIAL OF DUE PROCESS WHERE A
PARTY HAD BEEN DULY HEARD. — There is no denial of due process where a party had been fully heard and
accorded the right to resist what it considered unwarranted money claims at all stages of the proceedings.

RESOLUTION
 FERNANDO, J.:

The main thrust in this appeal by certiorari against the then existing Court of Industrial Relations is its
alleged lack of jurisdiction over money claims for overtime services on Sundays and legal holidays by
employees still forming part of the labor force of petitioner firm, La Carlota Sugar Central. At the time the
proceedings were had before respondent Court, leading to the challenged awards for overtime pay, there
was some lurking doubt as to whether ordinary judicial tribunals or respondent Court had the competence to
pass upon the matter. Since then, however, as will subsequently be made clear, the definitive ruling is that
respondent Court was vested with the requisite power. As a matter of fact, this very petition yielded the
impression that its stand was not too strongly entrenched in law. For there were indications even then that
respondent Court was the proper agency to decide such issue. Petitioner would raise another point, the
alleged lack of procedural process. Its effort in that direction is equally unavailing. We affirm.

In the main resolution challenged, respondent Court after stating that a previous order was already final and
executory ruled that the employees named in the Examiner’s Report were entitled to the additional
compensation. 1 Further: "The contention of the respondent that the overtime pay due the petitioners are
already included in their salary as agreed upon by them is without foundation for any agreement to waive
one’s overtime pay is null and void as the same is contrary to law." 2 It was therein likewise stated:
"Concerning the last issue, the Court believes that the workers are entitled to the amount paid to them
during the entire period stated in the report. Concerning the period prior to 1956 it appears that there are
no records existing in the company for such periods. It, therefore, behooves on the petitioning Union to
prove by secondary evidence the matter of services rendered on Sundays and legal holidays so as to enable
the Court on the basis of such evidence to determine and compute the additional compensation in favor of
the petitioners." 3 There was a motion for reconsideration by petitioner firm, and respondent Court in its
resolution of May 21, 1962 excluded certain employees, but otherwise found no sufficient justification for
altering [its] Order . . ." 4

As mentioned at the outset, there is no valid ground for reversal.

1. The authoritative precedent on the pivotal question of jurisdiction is supplied by Price Stabilization
Corporation v. Court of Industrial Relations. 5 In that case, this Court, through Justice Barrera, categorically
affirmed the underlying principle to be "that where the employer-employee relationship is still existing or is
sought to be reestablished because of its wrongful severance (as where the employees seeks
reinstatement), the Court of Industrial Relations has jurisdiction over all claims arising out of, or in
connection with employment, such as those related to the Minimum Wage Law and the Eight-Hour Labor
Law. After the termination of the relationship and no reinstatement is sought, such claims become mere
money claims, and come within the jurisdiction of the regular courts." 6 Since then, up to the time the Court
of Industrial Relations was abolished, that ruling had been adhered to. 7 There is thus futility in the attempt
of petitioner to impress on this Tribunal that respondent Court was devoid of jurisdiction.

2. Petitioner firm would make much of the due process claim. This plea it would support by the allegation
that only respondent National Sugar Workers Union and respondent Jose Villanueva were named as parties.
It is its contention then that those employees whose statutory rights for overtime pay as found in the
challenged orders were not respected had to file the action as individuals. Again there is misapprehension of
the law on the part of petitioner firm. Only lately, in Liberty Manufacturing Workers Union v. Court of First
Instance, 8 this Court reiterated the view that a labor union has the requisite personality to sue on behalf of
its members for their individual money claims. It would be an unwarranted impairment of the right to self-
organization through formation of labor associations if thereafter such collective entities would be barred
from instituting action in their representative capacity. So marked is the respect under the Constitution and
the statutes to such a right to self-organization as a result of which it may enter into collective bargaining
agreements that in another decision, Mactan Workers Union v. Aboitiz, 9 it was held by his Court that once
such a collective contract is entered into, its benefits extend to all the laborers and employees in the
collective bargaining unit. That would include those who do not belong to the labor organization that was
chosen to represent the employees. This doctrine goes back to Leyte Land Transportation v. Leyte Farmers’
and Laborers’ Union, 10 a 1948 decision. Under the peculiar circumstances on this case where the
controversy as to the right to overtime pay for work performed on Sundays and holidays dated back to
September 24, 1956, with respondent Court having held a number of hearings with petitioner firm having at
all stages resisting, as it ought to, what it considered to be unwarranted demands, there is an air of
implausibility to any allegation that it was denied procedural due process. It was not only duly informed as
to the claims it had to meet, but also was thereon fully heard.

WHEREFORE, this appeal by certiorari is dismissed for lack of merit and the challenged orders of respondent
Court affirmed. The preliminary injunction issued by this Court is hereby lifted and set aside. Costs against
petitioner La Carlota Sugar Central.

[G.R. No. 152322. February 15, 2005]

ERNESTO C. VERCELES, DIOSDADO F. TRINIDAD, SALVADOR G.

BLANCIA, ROSEMARIE DE LUMBAN, FELICITAS F. RAMOS,
MIGUEL TEAO, JAIME BAUTISTA and FIDEL ACERO, as Officers
of the University of the East Employees Association, petitioners,
vs. BUREAU OF LABOR RELATIONS-DEPARTMENT OF LABOR
AND EMPLOYMENT, DEPARTMENT OF LABOR AND
EMPLOYMENT-NATIONAL CAPITAL REGION, RODEL E.
DALUPAN, EFREN J. DE OCAMPO, PROCESO TOTTO, JR.,
ELIZABETH ALARCA, ELVIRA S. MANALO, and RICARDO
UY, respondents.

DECISION
CHICO-NAZARIO, J.:

Before Us is a petition for review on certiorari under Rule 45 of the 1997

Rules of Civil Procedure, assailing the Decision[1] and Resolution[2] rendered by
the Court of Appeals, dated 24 October 2001 and 15 February 2002,
respectively.

The Facts

Private respondents Rodel E. Dalupan, Efren J. De Ocampo, Proceso Totto,

Jr., Elizabeth Alarca, and Elvira S. Manalo are members of the University of the
East Employees Association (UEEA). On 15 September 1997, they each
received a Memorandum from the UEEA charging them with spreading false
rumors and creating disinformation among the members of the said association.
They were given seventy-two hours from receipt of the Memorandum to submit
their Answer.[3]
 The acts of the respondents allegedly fall under General Assembly
Resolution No. 4, Series of 1979, to wit:
1. Circulating false rumors about the progress of the negotiations for collective
bargaining;
2. Creating distrust or loss of trust and confidence of members in the Association;
3. Creating dissension among the members;
4. Circulating false rumors about the work of the Association or sabotaging the same;
5. Withholding from the Association and/or members material information as to their
rightful entitlement to benefits and/or money claims;
6. Acting as a spy against the Association or divulging confidential matters to persons
not entitled thereto;
7. Such other offenses, which may injure or disrupt the functions of the Association.[4]

Through a collective reply dated 19 September 1997, private respondents

denied the allegations. Thereafter, on 23 September 1997, they sent a letter
dated 22 September 1997 to the Chairman and Members of UEEAs Disciplinary
Committee, informing them that the Memorandum of 15 September 1997 was
vague and without legal basis, therefore, no intelligent answer may be made by
them. They likewise stated that any sanction that will be imposed by the
committee would be violative of their right to due process.[5]
The Disciplinary Committee issued another Memorandum, dated 24
September 1997, giving the respondents another seventy-two hours from
receipt within which to properly reply, explaining that the collective reply letter
and supplemental answer which were earlier submitted were not responsive to
the first Memorandum. Their failure would be construed as an admission of the
truthfulness and veracity of the charges.[6]
On 01 October 1997, the respondents issued a denial for the second time,
and inquired from the Disciplinary Committee as to whether they were being
formally charged.[7]
On 09 October 1997, Ernesto Verceles, in his capacity as president of the
association, through a Memorandum, informed Rodel Dalupan, et al., that their
membership in the association has been suspended and shall take effect
immediately upon receipt thereof. Verceles said he was acting upon the
disciplinary committees finding of a prima facie case against
them. Respondent Ricardo Uy also received a similar memorandum on 03
[8]

November 1997.[9]
On 01 December 1997, a complaint[10] for illegal suspension, willful and
unlawful violation of UEEA constitution and by-laws, refusal to render financial
and other reports, deliberate refusal to call general and special meetings, illegal
holdover of terms and damages was filed by the respondents against herein
petitioners Ernesto C. Verceles, Diosdado F. Trinidad, Salvador G. Blancia,
Rosemarie De Lumban, Felicitas Ramos, Miguel Teao, Jaime Bautista and
Fidel Acero before the Department of Labor and Employment, National Capital
Region (DOLE-NCR).
A few days after the filing of the complaint, i.e., on 10 December 1997, a
resolution[11] was passed by UEEA which reads as follows:

RESOLUTION

WHEREAS, the Association has gone thru a most arduous, difficult, and trying times
in working to obtain the best terms and conditions of employment for its members,
specifically for the period 1992 to 1996;

WHEREAS, said difficulties are in the form of near strikes, cases with the
Department of Labor and Employment and its agencies, as well as with the Supreme
Court;

WHEREAS, the general membership (has) shown exceptional patience and

perseverance and generally (had) demonstrated full trust and confidence in the
Association officers and accordingly approved the manner and/or actions undertaken
in pursuing said difficult task of arriving at a most beneficial agreement for the
general membership;

NOW, THEREFORE, be it resolved as it is hereby resolved that:

...

b) the general membership reiterate its loyalty to the Association and

commends the Association officers for their effort expended in working
for the benefit of the whole membership.

APPROVED.

Manila. 10 December 1997.

On 22 November 1999, a decision[12] was rendered by Regional Director

Maximo B. Lim, adverse to petitioners, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent[s] [are] hereby ordered:

1. to immediately lift suspension imposed upon the complainants;

 2. to hold a general membership meeting wherein they (respondents) make open and
available the unions/associations books of accounts and other documents
pertaining to the union funds [and] thereby explain the financial status of the union;
3. to regularly conduct special and general membership meetings in accordance with
the unions constitution and by-laws;
4. to immediately hold/conduct an election of officers in accordance with the unions
constitution and by-laws.

Accordingly, the claims of complainants for damages [are] hereby ordered dismissed
for lack of jurisdiction.

However, within ten (10) days upon receipt of this Order, the complainants are hereby
directed to submit a written report whether or not the respondents had complied with
this Order.

The petitioners appealed to the Bureau of Labor Relations of the

Department of Labor and Employment (BLR-DOLE). During the pendency of
this appeal, or on 07 April 2000, an election of officers was held by the UEEA.
The appeal, however, was dismissed for lack of merit in a Resolution[13] dated
22 September 2000, the decretal portion of which reads:

WHEREFORE, the appeal is hereby DISMISSED for lack of merit and the decision
dated 22 (November) 1999 of Regional Director Maximo B. Lim, DOLE-NCR, is
AFFIRMED.

Meanwhile, Resolution No. 8, Series of 2000, was passed by the UEEA,

wherein the members allegedly reiterated their support and approval of the acts
and collateral actions of the officers.[14]
A Motion for Reconsideration[15] was filed by the petitioners with the BLR-
DOLE, but was denied in a Resolution[16] dated 15 January 2001.
A special civil action for certiorari[17] was thereafter filed before the Court of
Appeals citing grave abuse of discretion amounting to lack or excess of
jurisdiction. In a Resolution[18]dated 22 February 2001, the Court of Appeals
dismissed the petition outright for failure to comply with the provisions of Section
1, Rule 65 in relation to Section 3, Rule 46 of the 1997 Rules of Civil Procedure.
A Motion for Reconsideration[19] was filed which was granted in a
Resolution[20] dated 24 April 2001, thus, reinstating the petition.
On 24 October 2001, the Court of Appeals rendered a
Decision[21] dismissing the petition, the dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is DENIED DUE
COURSE and DISMISSED for lack of merit. No pronouncement as to costs.

A Motion for Reconsideration[22] was thereafter filed by the petitioners. In a

Resolution[23] dated 15 February 2002, the Court of Appeals modified its earlier
decision. The decretal portion of which states:

WHEREFORE, the questioned decision of this court is MODIFIED. The 22

September 2000 and 15 January 2001 resolutions of the BLR insofar as they affirmed
the part of the 22 November 1999 decision of the Regional Director of DOLE-NCR
ordering the immediate holding of election are HEREBY ANNULLED AND SET
ASIDE. All the other aspects of the assailed Resolutions are AFFIRMED.

Not satisfied, the petitioners filed a petition for review on certiorari[24] before
this Court.

The Issues

The petitioners raise the following issues:

1. WHETHER OR NOT THERE IS REVERSIBLE ERROR IN THE COURT OF
APPEALS UPHOLDING THE DOLE-NCR AND BLR-DOLE DECISIONS BASED
ONLY ON THE COMPLAINT AND ANSWER;
2. WHETHER OR NOT IT IS REVERSIBLE ERROR FOR THE COURT OF APPEALS
TO HOLD THE ELECTION OF APRIL 7, 2000 AS INVALID AND A NULLITY;
3. WHETHER OR NOT IT IS REVERSIBLE ERROR TO UPHOLD BLR-DOLES
FINDING THAT THE SUSPENSION WAS ILLEGAL; and
4. WHETHER OR NOT THE ALLEGED NON-HOLDING OF MEETINGS AND
ALLEGED NON-SUBMISSION OF REPORTS ARE MOOT AND ACADEMIC, AND
WHETHER THE DECISION TO HOLD MEETINGS AND SUBMIT REPORTS
CONTRADICT AND OVERRIDE THE SOVEREIGN WILL OF THE MAJORITY.[25]

The Courts Rulings

We shall discuss the issues in seriatim.
First Issue: was the court a quo correct in upholding the DOLE-NCR and
BLR-DOLE decisions based only on the complaint and answer?
Petitioners contend that the complaint filed by the private respondents in
DOLE-NCR was a mere recital of bare, self serving and unsubstantiated
allegations. Both parties did not submit position papers, and the DOLE-NCR
resolved the case based only on the complaint and answer. Also, by failing to
submit a reply to the answer, private respondents, in effect admitted the
petitioners controversion of the charges.[26] They further argue that the private
respondents did not exhaust administrative remedies and that the requirement
of support by at least 30% of the members of the association pursuant to
Section 1, Rule XIV, Article I, Department Order No. 9 of DOLE, was not
complied with.[27]
Private respondents, on the other hand, assert that the records show that
despite their failure to submit their position papers, they nonetheless moved
that the case be resolved by DOLE-NCR based on the complaint, answer and
available exhibits or annexes integrated with the aforesaid pleadings.[28] The
principle of non-exhaustion of administrative remedies that would warrant the
dismissal of the case should not operate against them because they were
deprived of their right to due process when they were indefinitely suspended
without the benefit of a formal charge which is sufficient in form and
substance.[29] The respondents also point out that the thirty percent (30%)
support requirement pursuant to Section 1, Rule XIV, Article I, Department
Order No. 9, is not applicable to them because their complaint was primordially
predicated on their suspension while the rest of the causes of action were mere
collateral consequences of the principal cause of action.[30]
It is worthy to note that the BLR-DOLE, in its Resolution dated 22 September
2000, underscored the negligence of herein petitioners not only in the
submission of their pleadings but also in attending the hearings called for the
purpose.[31] Even the Court of Appeals, in its decision, made this observation,
thus:

It is apparent, however, that petitioners were to blame for their predicament. They
repeatedly failed to appear in a series of conferences scheduled by the DOLE-NCR,
asked for resetting of hearings, and requested for extension of time to file its answer.
Hence, when they again did not attend a hearing on a date they themselves asked for,
private respondents (complainants therein) moved for the submission of the case
based on their complaint, position paper and annexes attached thereto.

When DOLE-NCR directed the parties to submit their respective position papers,
petitioners again moved for extension of time to file the same. When another notice
was given to the parties to comply with the directive, petitioners prayed for another
extension of time. (Private respondents, however, reiterated their earlier motion to
have the case resolved based on available pleadings.) After six (6) months or so,
petitioners finally filed not their position paper but their answer.[32]

The Court of Appeals was justified in upholding the DOLE-NCR and BLR-
DOLE decisions based on the complaint and answer. We cannot accept
petitioners line of reasoning that since no position papers were submitted, no
decision may be made by the adjudicating body. As ruled by Regional Director
Maximo B. Lim in his decision, the complaint and the answer thereto were
adopted as the parties position papers. Thereafter, the case shall be deemed
submitted for resolution.[33]
Labor laws mandate the speedy disposition of cases, with the least attention
to technicalities but without sacrificing the fundamental requisites of due
process.[34] The essence of due process is simply an opportunity to be
heard.[35] In this case, it cannot be said that there was a denial of due process
on the part of the petitioners because they were given all the chances to refute
the allegations of the private respondents, and the delay in the proceedings
before the DOLE-NCR was clearly attributable to them.
The argument that there was failure to exhaust administrative remedies
cannot be sustained. One of the instances when the rule of exhaustion of
administrative remedies may be disregarded is when there is a violation of due
process.[36] In this case, the respondents have chronicled from the very
beginning that they were indefinitely suspended without the benefit of a formal
charge sufficient in form and substance. Therefore, the rule on exhaustion of
administrative remedies cannot squarely apply to them.
On the matter concerning the 30% support requirement needed to report
violations of rights and conditions of union membership, as found in the last
paragraph of Article 241 of the Labor Code,[37] we likewise cannot sanction the
petitioners. We have already made our pronouncement in the case
of Rodriguez v. Director, Bureau of Labor Relations[38] that the 30% requirement
is not mandatory. In this case, the Court, speaking through Chief Justice Andres
R. Narvasa,[39] held in part:

The respondent Directors ruling, however, that the assent of 30% of the union
membership, mentioned in Article 242 of the Labor Code, was mandatory and
essential to the filing of a complaint for any violation of rights and conditions of
membership in a labor organization (such as the arbitrary and oppressive increase of
union dues here complained of), cannot be affirmed and will be reversed. The very
article relied upon militates against the proposition. It states that a report of a violation
of rights and conditions of membership in a labor organization may be made by (a)t
least thirty percent (30%) of all the members of a union or any member or members
specially concerned. The use of the permissive may in the provision at once negates
the notion that the assent of 30% of all the members is mandatory. More decisive is
the fact that the provision expressly declares that the report may be made,
alternatively by any member or members specially concerned. And further
confirmation that the assent of 30% of the union members is not a factor in the
acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article
226 of the same Labor Code, which grants original and exclusive jurisdiction to the
Bureau, and the Labor Relations Division in the Regional Offices of the Department
of Labor, over all inter-union and intra-union conflicts, and all disputes, grievances
or problems arising from or affecting labor management relations, making no
reference whatsoever to any such 30%-support requirement. Indeed, the officials
mentioned are given the power to act on all inter-union and intra-union conflicts
(1)upon request of either or both parties as well as (2) at their own initiative.

Second Issue: was the election held on 07 April 2000 valid or a nullity?
This issue arose from the fact that the original decision of the DOLE-NCR
dated 22 November 1999, ordered petitioners, among other things, to
immediately hold/conduct an election of officers . . . Petitioners, it must be
recalled, appealed from the DOLE-NCR decision to the BLR-DOLE. During the
pendency of the appeal, however, an election of officers was held on 07 April
2000. Subsequently, the BLR-DOLE affirmed the decision of the DOLE-NCR,
but with the pronouncement that . . . the supposed election conducted on (07)
April 2000 is null and void and cannot produce legal effects adverse to
appellants.[40]
The petitioners contend that since the election was held on 07 April 2000,
and the original complaint before the DOLE-NCR was filed on 01 December
1997, the former could not have been the subject of the complaint. There was,
according to petitioners, reversible error in the BLR-DOLEs adding to the
DOLE-NCRs decision, the nullification of the 07 April 2000 election. The
BLRDOLE should have limited itself to affirming, modifying or setting aside and
canceling the provisions of the dispositive portion of the DOLE-NCRs decision
which was subject of the appeal. The election was held because the term of the
petitioners (extended for five years under Republic Act No. 6715[41]) expired on
07 April 2000. As amended by Republic Act 6715, paragraph (c) of Article 241
of the Labor Code now reads:

(c) The members shall directly elect their officers in the local union, as well as their
national officers in the national union or federation to which they or their local union
is affiliated, by secret ballots at intervals of five (5) years.

It just so happened that the holding of the election coincided with the DOLE-
NCR decision.[42]
The private respondents, in answer to this, point out that the 07 April 2000
election, as appearing in the 22 September 2000 Resolution of the BLR-DOLE,
was set aside not on the flimsy reason that there was no complaint to invalidate
it, but due to the appeal of the petitioners questioning the BLR-DOLEs order.
The appeal effectively suspended the effect of the DOLE-NCR Regional
Directors order for the immediate holding of election of officers in accordance
with the unions constitution and by-laws.[43]
On this matter, the Court of Appeals made the following observation:

Consequently, the Regional Director of DOLE-NCR erred in ordering the immediate

holding of election of officers of UEEA, and the Bureau of Labor Relations (BLR)-
Department of Labor and Employment, insofar as it affirmed this particular order,
committed an act amounting to grave abuse of discretion.

Nonetheless, despite of this finding, the election of UEEA officers on 7 April 2000
cannot acquire a semblance of legality. First, it was conducted pursuant to the
aforesaid (erroneous) order of the Regional Director as manifested by the petitioners.
Second, it was purposely done to pre-empt the resolution of the case by the BLR and
to deprive private respondents their substantial right to participate in the election.
Third, petitioners cannot be allowed to take an inconsistent position to later on claim
that the election of 7 April 2000 was held because it was already due while previously
declaring that it was made in line with the order of the Regional Director, for this
would go against the principle of fair play.

Thus, while the BLR was wrong in affirming the order of the Regional Director for
the immediate holding of election, it was right in nullifying the 7 April 2000 UEEA
election of officers. It was simply improper for the petitioners to implement the said
order which was then one of the subjects of their appeal in the BLR. To hold
otherwise would be to dispossess the BLR of its inherent power to control the conduct
of the proceedings of cases pending before it for resolution.[44]

Based on the prevailing facts of this case, we affirm the foregoing findings
of the court a quo. We cannot hold the election of 07 April 2000 valid as this
would make us condone an iniquitous act. Said election was perceptibly done
to hinder any resolution or decision that would be made by BLR-DOLE. The
Regional Director indeed ordered the immediate holding of an election in its
Order dated 22 November 1999. The records show that the petitioners
questioned this order of the Regional Director before the BLR-DOLE by way of
appeal,[45] and yet, they conducted the election, allegedly because it was due
under Republic Act No. 6715. Why this was done by the petitioners escapes
us. But as rightfully observed by the BLR-DOLE:

. . . Indeed, it is obvious that the general membership meeting and election of officers
was done purposely to pre-empt our resolution of this case and, more importantly, the
participation of appellees in the election. This cannot be tolerated.[46]
 Third Issue: was the indefinite suspension of the private respondents
illegal?
We rule in the affirmative.
The petitioners posit the theory that the records do not support the findings
of the BLR-DOLE that no investigation was conducted making the suspension
illegal because of lack of due process.
It is best to remind the petitioners that this Court, as we have held in a long
line of decisions, is not a trier of facts.[47] The instant case is a petition for review
on certiorari[48] where only questions of law may be raised. The exceptions[49] to
this rule find no application here. This being the case, the findings of fact of the
DOLE-NCR and the BLR-DOLE as affirmed by the Court of Appeals to the
effect that no investigation was conducted, shall not be disturbed. As properly
held by the court a quo:

Petitioners have failed to show that the findings of facts and conclusions of law of
both the DOLE-NCR and BLR-DOLE were arrived at with grave abuse of discretion
or without substantial evidence. A careful review of the pleadings before Us reveals
that the decision and resolutions of the concerned agencies were correctly anchored in
law and on substantial evidence.[50]

Fourth Issue: is the non-holding of meetings and non-submission of reports

by the petitioners moot and academic, and whether the decision to hold
meetings and submit reports contradict and override the sovereign will of the
majority?
We do not believe so.
This issue was precipitated by the Court of Appeals decision affirming the
order of DOLE Regional Director Maximo B. Lim for the petitioners to hold a
general membership meeting wherein they make open and available the
unions/associations books of accounts and other documents pertaining to the
union funds, and to regularly conduct special and general membership
meetings in accordance with the unions constitution and by-laws.[51] It is to be
recalled that the private respondents, when they filed a complaint before the
DOLE-NCR also complained of petitioners refusal to render financial and other
reports, and deliberate refusal to call general and special meetings.
Petitioners do not hide the fact that they belatedly submitted their financial
reports and the minutes of their meetings to the DOLE. The issue of belatedly
submitting these reports, according to the petitioners, had been rendered moot
and academic by their eventual compliance. Besides, this has been the practice
of the association.[52] Moreover, the petitioners likewise maintain that the
passage of General Assembly Resolution No. 10 dated 10 December 1997 and
Resolution No. 8, Series of 2000, following the application of the principle that
the sovereign majority rules, cured any liability that may have been brought
about by their belated actions.[53]
As found by the Court of Appeals, the financial statements for the years
1995 up to 1997 were submitted to DOLE-NCR only on 06 February 1998 while
that for the year 1998 was submitted only on 16 March 1999.[54] The last
associations meeting was conducted on 21 April 1995, and the copy of the
minutes thereon was submitted to BLR-DOLE only on 24 February 1998.
The passage of General Assembly Resolution No. 10 dated 10 December
1997 and Resolution No. 8, Series of 2000,[55] which supposedly cured the
lapses committed by the associations officers and reiterated the approval of the
general membership of the acts and collateral actions of the associations
officers cannot redeem the petitioners from their predicament. The obligation to
hold meetings and render financial reports is mandated by UEEAs constitution
and by-laws. This fact was never denied by the petitioners. Their eventual
compliance, as what happened in this case, shall not release them from the
obligation to accomplish these things in the future.
Prompt compliance in rendering financial reports together with the holding
of regular meetings with the submission of the minutes thereon with the BLR-
DOLE and DOLE-NCR shall negate any suspicion of dishonesty on the part of
UEEAs officers. This is not only true with UEEA, but likewise with other
unions/associations, as this matter is imbued with public interest. Undeniably,
transparency in the official undertakings of union officers will bolster genuine
trade unionism in the country.
WHEREFORE, in view of all the foregoing, the Decision and Resolution of
the Court of Appeals subjects of the instant case, are AFFIRMED. Costs
against the petitioners.
SO ORDERED.

G.R. No. L-23331-32 December 27, 1969

HEIRS OF TEODOLO M. CRUZ, (represented by ARSENIA, FREDESWINDA, TEODOLO, JR.,

ERLINDA, EDGARDO and MYRNA, all surnamed CRUZ), MARY CONCEPCION and EDGARDO
CRUZ, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS, SANTIAGO RICE MILL and KING HONG AND
COMPANY, respondents.
Mary Concepcion and Eduardo P. Cruz for petitioners.
Tolentino and Garcia and D. R. Cruz for respondents.

G.R. No. L-23361-62 December 27, 1969

LYDIA BULOS, PACIENCIA BATOON, NATIVIDAD V. MALGAPO, FAUSTINO ABEDOZA,

CARMELITA AGGASID, LYDIA ALBINO, JUANITO ANDRES, LEONILA ANDRES, AIDA
BATOON, CORNELIO BANGOT, PABLO BAUTISTA, CONSOLACION GALAD, AVELINA
CADUAS, ELENA DE LA CRUZ, VICTORIANO DE LA CRUZ, LEOCADIO DASALLA, VIRGINIA
DASALLA, FLORA S. DUCAY, CRESENCIA EVIDENCIO, CATALINO GIMENEZ, DIONISIA
GUILLERMO, ARSENIA LABASAN, FRANCISCO LAPLANO, DIONISIO LABASAN, MAURICIA
LAZATIN, LORETA MACAPAGAL, IGNACIA LUNA, FELICITA MANGADAP, FELICIDAD
MARIANO, JULIAN MELCHOR, RICARDO MELCHOR, ANITA MENDOZA, ALBERTO MIGUEL,
FERNANDO NAVALTA, PEDRO NOOL, JUANITA ORANI, NEMESIA SOLA, VERONICA SOLA,
CECILIA SOLIVEN, MANUEL SAGABAIN, FILEMON SAGABAIN, ANICETA RESPONSO,
FELICIANO RICO, PETRONILA RIVERA, ROSALINA TULAWAN and MARIA
VILLANUEVA, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS, HONORABLE EMILIANO TABIGNE, HONORABLE
AMANDO BUGAYONG, HONORABLE ANSBERTO PAREDES, ASSOCIATE JUDGES, COURT
OF INDUSTRIAL RELATIONS; SANTIAGO RICE MILL; KING HONG CO., INC.; SANTIAGO
LABOR UNION alias MAGAT LABOR UNION, respondents.

Emilio D. Castellanes for petitioners.

Dioscoro P. Avanceña for respondent Santiago Labor Union.

TEEHANKEE, J.:

These cases are separate appeals filed by respective petitioners from respondent Court's Orders of
November 8, 1963 and March 9, 1964 approving by a split 3 to 1 vote the settlement for
P100,000.00 of the estimated P423,756.74 — judgment liability of respondent firm in favor of the
claimants-members of the Santiago labor Union, executed on November 8, 1963 between
respondent firm and the labor union as represented by a majority of its board of directors. The
appeals are jointly resolved in this decision.

Petitioners in Cases L-23331-32 are the retained lawyers of the Santiago Labor Union who question
respondent Court's approval of respondent firm's settlement of the union members' judgment claims
with the union board of directors, without their knowledge and consent, notwithstanding their duly
recorded attorneys' lien, and over the objection of a board member that the union board had no
authority to compromise or quit-claim the judgment rights of the union members.1

Petitioners in Cases L-23361-62 are forty-nine (49) claimants-members of the Santiago Labor Union
who assail respondent Court's approval of the questioned settlement, without their authority as the
real parties in interest, and who denounce the settlement as unconscionable and having been
entered into by the majority of the union board "under circumstances of fraud, deceit,
mispresentation and/or concealment, especially where a member of the Court has actively used his
official and personal influence to effect the settlement which is manifestly unjust to laborers who by
reason of their financial disadvantages in a conflict with their employers need all the aid of the Court
for their protection, consonant with law, justice and equity."2
The factual background goes as far back as June 21, 1952, when the Santiago Labor Union,
composed of workers of the Santiago Rice Mill, a business enterprise engaged in the buying and
milling of palay at Santiago, Isabela, and owned operated by King Hong Co., filed before the
respondent Court of Industrial Relations Cases Nos. 709-V and V-1 hereof, a petition for overtime
pay, premium pay for night, Sunday and holiday work, and for reinstatement of workers illegally laid
off. As of then, the total sum claimed by the workers, as itemized in their amended petition of
September 2, 1952 — P100,816.36 for overtime pay, P19,350.00 for premium pay and P3,360.00
for differential pay under the Minimum Wage Law — amounted to P123,526.36.3

As recorded in this Court's decision of August 31, 1962 in Santiago Rice Mill, et al. vs. Santiago
Labor Union,4which affirmed the Court of Industrial Relations judgment in favor of the workers, "on
September 19, 1958, after a protracted hearing during which scores of witnesses and voluminous
exhibits were presented, the court, thru Judge Emiliano G. Tabigne, rendered decision dismissing
the petition of the union for lack of merit and want of jurisdiction; but, upon a motion for
reconsideration, the Court of Industrial en banc, by a split decision of 3-2 vote, issued a resolution
reversing the decision of the trial judge. The dispositive part of said resolution reads:

"WHEREFORE, the respondents are hereby ordered to pay the overtime claim of both male
and female claimants herein computed at their basic pay for each period in question; the
legal premium for night, Sunday and holiday work or services rendered by the male
claimants herein computed also on the proven basic wage or salary at the time in question;
to pay the overtime claim of their drivers computed on their respective monthly salaries; to
pay the differentials due each of the women claimants on their wages from August 4, 1951 at
the rate of P2.00 daily and P3.000 daily from August 4, 1952; and to reinstate the claimants
both male and female, who have testified and proved their having been illegally laid-off, with
the right of respondents to deduct from the back wages due each claimant any amount
earned during the period of the illegal dismissal."

The worker's decade of travail was not yet to be at an end, however, despite this Court's affirmance
of the judgment for the workers. After the remand of the records for enforcement by respondent
Court, and the corresponding examination of books, said Court's Chief Examiner filed his Partial
Report of December 14, 1962, wherein the judgment award in favor of the workers was determined
and computed, as follows:

(a) For back wages from January 1, 1953 to April 30, 1962 of
all the 35 employees and laborers (26 workers, 6 laborers and
3 drivers) who testified in court, per dispositive part of the
judgment, "before deducting the amounts earned during the
period of the back wages by each claimant and before
deduction of amounts corresponding to the back wages of
claimants who died before April 30, 1962" at P6,380.00 for
each of the 32 workers and P28,000.00 for each of the 3
drivers P288,160.00

(b) For overtime and premium pay from January 1, 1948 to

December 31, 1952 of some 104 workers, in varying
amounts.5 125,216.74

(c) For minimum wage differentials of P2.00 daily from

September 10, 1951 to December 31, 1951 of 60 women
workers 10,380.00
 TOTAL P423,756.74

Petitioners claim, furthermore, that "in this computation, however, the filed examiners did not include
the claims of seventy (70) other laborers whose total claims (for back wages), at the rate of
P6,300.00 each, would be P441,000.00. Therefore, the correct grand total amount due the laborers
would be P864,756.74."6

The Chief Examiner's Report showed respondent firm's total assets as at October 31, 1962 to be
P191.151.08 (cash account of P148,411.20, fixed assets of buildings, machinery & equipment, corn
mill, etc. with a book value of P40,073.75 and deferred charges of P2,666.14), and its net worth to
be in the same amount of P191,151.08, (capital stock paid up of P232,000.00 less deficit of
P40,848.92). the Report further stated that in January, 1962 and on August 9, 1962, respondent firm
sold its trucks, jeep and one car, with a net book value of P2,628.71 for P27,000.00 or a net gain of
P24,371.29. Petitioners claim that the book value of respondent firm's fixed assets is only one-sixth
of their actual market value of P240.442.50, and that its total leviable assets therefore amounted to
close to P390,000.00, without taking into account the huge income potential of its rice mill
operations. Respondent firm disputes such a figure as "completely gratuitous and without basis in
fact."7

A general opposition to the Chief Examiner's Report was filed by respondent firm. Judge Emiliano G.
Tabigne, as the trial judge, supra, ordered a hearing thereon on December 22, 1962, as a condition
precedent to execution of the judgment. Such Report was submitted for resolution and approval at
the hearing of December 22, 1962, but the records before us fail to show that the trial judge ever
acted on or approved the Report.

Before and after the submittal of the Chief Examiner's Report of December 14, 1962, the union
pressed for execution of the final judgment in favor of its claimants-members. It filed, furthermore, on
December 20, 1962, an Urgent Motion for Preliminary Attachment, in view of the disposition by
respondent firm of its trucks and automotive equipment and by virtue of the fact admitted by
respondent firm that it had stopped operations preparatory to liquidation, by reason of the alien
nationality of most of its stockholders, under the provisions of Republic Act No. 3018 nationalizing
the rice and corn industry. In another motion of December 4, 1962, the union had asked that the
Court at least order respondent firm to put up a bond of P500,000.00 to answer for the payment of
the judgment or to deposit said amount in Court.

Petitioners assert that these motions were left hanging until the union filed a mandamus petition with
this Court,8after which the trial judge issued and released on April 15, 1963 his Order dated March
30, 1963. In this Order, the trial Judge, recognizing that "petitioner (union) and its members
concerned should be extended the necessary protection of their rights" ordered respondent firm,
within 10 days from its finality, to deposit in Court the sum of one hundred thousand (P100,000.00)
pesos and to file a surety bond of equal amount, "to guarantee the payment of whatever amount (a)
due petitioner (union) and its members concerned after this Court shall have finally decided the
obligation of herein respondents under the judgment." This Order was affirmed by respondent
court en banc, in its Resolution denying respondent firm's motion for reconsideration thereof.

Respondent sought a review by this Court of the said Order and Resolution requiring it to deposit
P100,000.00 and to file a surety bond of equal amount to guarantee payment of its judgment
obligation in Santiago Rice Mill et al. vs. Santiago Labor Union, etc., docketed as Cases G.R. Nos.
L-21758-59 of this Court. this Court, in its Resolution of September 20, 1963, dismissed for lack of
merit respondent's petition for review, and the dismissal became final on October 24, 1963.
Earlier, June 25, 1963, pursuant to the request of the parties, who had advised the trial judge that
they would meet at the premises of respondent firm at Santiago, Isabela, to take up direct
negotiations for the possible settlement of the judgment, a team of employees of the Court had been
sent to help in the negotiations. the transcript of the negotiations records that respondent had then
offered the Union the maximum amount of P110,000.00 in full settlement of its obligations to the
members-claimants of the Union under the judgment, but that the union rejected the offer and
counter-offered the minimum amount of P200,000.00.

The Union meanwhile filed to no avail a series of urgent motions on May 8, July 1, August 29 and
September 6, 1963 for approval of the Chief Examiner's Partial Report of December 14, 1962 and
for enforcement, through a writ of execution or contempt proceedings, of the Order of March 30,
1963 requiring firm to deposit a total of P200,000 in cash and bond to guarantee payment of the
judgment. Upon the finality of this Court's Resolution dismissing respondent's petition for a review of
said Order of March 30, 1963, the union again filed on October 29, 1963 still another Urgent Motion,
advising the trial judge of this Court's action rejecting respondent's appeal and invoking the Court's
ministerial duty of enforcing its said Order — in vain again, as shall presently be seen.

The trial judge took no action on this latest Urgent Motion of the Union, wherein it emphasized that
respondent, with this Court's action rejecting its appeal, no longer had any excuse for refusing its
appeal, no longer had any excuse for refusing to comply with the deposit Order. Instead, an
unscheduled conference was called and held on October 31, 1963 in the chambers of the trial judge,
and attended by representatives of respondent firm, including their counsels of record, on one hand
and Segundino S. Maylem, president of the union and eight directors of the union, on the other. Four
of these nine union representatives, including the union president himself, had no claims of rewards
whatever under the judgment. Said union officials were not assisted by counsel, as petitioner Mary
Concepcion, counsel of record of the union, was not present, not having been notified of the
conference.

At this conference of October 31, 1963, respondent firm made again the same offer to settle and
quitclaim the judgment in favor of the union members for the same amount of P110,000.00, which
offer had already been rejected by the union at the earlier conference held on June 25, 1963 at
Santiago, Isabela, supra. But this time, as appears from the transcript of the conference, respondent
and the directors of the union decided to settle the case amicably with the payment by the firm of the
same amount of P110,000.00 which was deposited with the Court's disbursing officer "immediately
upon the signing of the settlement which will be prepared by the respondent firm through its
counsel." The complete transcript of the conference, as reproduced by respondent in its brief,
follows:

COURT:

The parties have solicited the intervention of the court for the settlement of this case.
They have decided to settle it amicably with the condition that the management will
pay ONE HUNDRED TEN THOUSAND PESOS (P110,000.00) cash, and that the
said amount will be deposited with the Disbursing Officer of the Court immediately
upon the signing of the settlement which will be prepared by the respondent firm
through its counsel. Now, Mr. Maylem, make your manifestation on record.

MR. MAYLEM:

As per unanimous decision of the present members of the board composing of nine,
the three are not members of the board, present before this Honorable Court to date,
(sic) they have agreed to accept the proffer of ONE HUNDRED TEN THOUSAND
 PESOS (P110,000.00) as full settlement of their claims in Cases Nos. 709-V and
709-V (1).

ATTY. GARCIA:

In behalf of the respondent and the management of the said respondent and also in
behalf of Mr. Pino, who is the attorney-in-fact of the respondent corporation, with full
power to enter into this settlement, we wish to manifest and uniform this Honorable
Court that the acceptance of the proffer of P110,000.00 in full settlement of the
claims of petitioners is with the full agreement of the said respondent. We are
disposed to deposit the amount of P110,000.00 on or about Friday, November 8,
1963, and said deposit to be made with the Disbursing Officer of this Court and said
deposit to be in certified checks of a local bank and which is actually equivalent to
cash. In line further with the suggestion of the Honorable Judge, we ware willing to
assume the payment of the deposit fee upon our depositing the said amount of
P110,000.00. There is a previous understanding which was not made of record as to
the fact that to enable the members of the board of directors of the petitioner union to
come back to Manila next week to enable them to sign the settlement papers, we
have agreed to advance the sum of TWO HUNDRED PESOS (P200.00) to the
petitioner for the account of said settlement and which will be used by the said
petitioners in their travelling expenses between Manila and Santiago, going and
coming.

COURT:

Noted.

MR. MAYLEM:

We request the Court that Mrs. Mary Concepcion should be presented during the
signing of the agreement on or about November 8, 1963, at 2:30 P.M.

COURT:

NOTED.9

As against the official transcript of the proceedings of the conference above reproduced, petitioner
Natividad Magalpo, a director of the union, together with petitioners Lydia Bulos and Paciencia
Batoon, both union members-claimants, filed on November 5, 1963, through their present counsel,
who duly entered their appearance, their verified "Manifestation and Objection with Ex-Parte Urgent
Motion", relating what transpired at the conference, charging the union president, Maylem, with bad
faith in that he never previously advised the union representatives that the conference of October 31,
1963 was to discuss a compromise settlement nor that this court's resolution dismissing
respondent's appeal from the trial judge's Order dated March 30, 1963 requiring respondent to
deposit P200,000.00 in cash and surety bond had already become final, and asking the trial judge to
shelve the proposed settlement until respondent firm shall have complied with the said deposit order.
The pertinent portions of said Objection and Urgent Motion read:

3. That during the conference, the matter of amicably settling the case was discussed;
petitioners representatives pressed for at least P150,000.00 as a fair amount and the
representatives of the respondents were insisting on their offer of a definite sum of
P110,000.00;
4. That in the course of the conference, no mention at all was made of the entry of judgment
in G.R. Nos. L-21758-59, Supreme Court of the Philippines, entitled "Santiago Rice Mill, et
al. vs. Santiago Labor Union, etc." on October 24, 1963, thereby becoming final and
executory; that the aforesaid entry of judgment reads as follows:

"After a consideration of the allegation of the petition filed in cases

L-21758 and L-21759 (Santiago rice Mill, etc. vs. Santiago Labor Union, et al.) for
review of the order and resolution of the Court of Industrial Relations referred to
therein, the COURT RESOLVED to dismiss the petition for lack of merit."

5. That by the terms of the afore-cited entry of judgment, the Respondent's, in effect, are
ordered to deposit the sum of P100,000 in cash, Philippine Currency and similar amount
P100,000 in surety bond, pursuant to the order of this Honorable court of March 30, 1963,
which was affirmed in the abovecited Supreme Court resolutions;

6. That as a consequence of the ignorance of the Board of Directors of Petitioner of this

entry, then present, they tentatively agreed to the offer of P110,000.00 of Respondents, until
November 8, 1963 when the final conference before this Honorable Court will be held;

7. That movants consented to come to Manila on the understanding that the conference was
to be held with the Attorney-in-fact of the petitioner, the "CREAM, INC.," formerly, Credit
Research and Intelligence, its exclusive authorized representative for the evaluation,
adjustment and liquidation of its claim against Respondent, that they were very much taken
back in having been taken to the Court of Industrial Relations on October 31, 1963 by the
President of the Petitioner, Mr. Segundino S. Maylem; that even while they were already
inside the building, they were informed that the purpose was to talk about a compromise
settlements with respondent's representatives; as a result of these circumstances, your
movants although present, were not able to register their objections to the proceedings; that
immediately after the aforesaid conference, the herein movants came to know of the entry of
judgment in the Supreme Court, infra; (sic)

8. That the herein Movant's register and manifest their objections to the proceeding held and
to the tentative agreement manifested by the Board of Directors of the Santiago Labor Union
then present, on the following grounds:

a) That the Board of Directors did not have any express authority of the members of
the Santiago Labor Union to enter into any compromise for the sum of P110,000.00;
on the contrary, the latest authority granted its Attorney-in-fact, the "CREAM, INC."
was for the sum of P150,000.00 which authority was given only, very recently:

b) That the proceedings on October 31, 1963 was tainted by apparent bad faith on
the part of the President of the Petitioner, Mr. Segundino s. Maylem, in that there
never was a time before the conference when he intimated or otherwise made known
to the movants, that a conference would be held before Judge Emiliano Tabigne. The
only reason for the trip to Manila was the conference with "CREAM, Inc." officials;

c) That the effect of the entry of judgment in G.R. Nos.

L-21758-59, infra, was not explained to the members of the Board of Petitioner at
any time, much less made known, although it was later ascertained that President
Segundino s. Maylem all the time, BEFORE THE CONFERENCE, knew of the
existence of the order; what was emphasized was the claim of the Respondents that
they are unable to pay more than P110,000.00; (emphasis supplied.)
 d) That the amount of P110,000.00 is unconscionable, considering that the total
claims of the members of the Petitioner, is more than P400,000, not to mention that
all the time the negotiations were being made the Supreme Court's final order makes
mandatory Respondent's deposit of P100,000, cas in Philippine Currency and
P100,000 in surety bond.

9. That Movant's vehemently disagree to any settlement as tentatively agreed upon, for, in
effect, they will only get fourteen percent, (14%) approximately, or one-seventh of
the amounts as computed by the Chief Examiner of this Honorable Court;

xxx xxx xxx

WHEREFORE, it is respectfully prayed that:

a) Respondent be required to deposit the sum of P100,000.00 in cash, Philippine Currency,

and P100,000.00 in surety bond, pursuant to the entry of judgment in G.R. Nos. L-21758-59;

b) That these movants be afforded opportunity by this Honorable Court to be heard regarding
the surety bond to be submitted by the Respondent, before approval thereof;

c) The tentative settlement be shelved;

d) The further action on any settlement or compromise be held in abeyance to await

compliance by the Respondent of the entry of judgment in G.R. Nos. L-21758-59;

e) Hearings on the Report of the Chief Examiner be resumed immediately and without
interruption in view of the provisions of Republic Act 3108, until final termination as soon as
possible long before December 31, 1963,10

There petitioners further filed on the same date, November 4, 1963 an urgent Ex parte Motion for the
issuance of a writ of execution for the enforcement of the deposit order against respondent firm, and
asked the trial judge to act on their two urgent motions upon receipt thereof.

Both urgent motions were totally ignored by both the trial judge as well as by the respondent firm,
despite due notice on the latter. The request of the union president, Maylem, at the October 31,
1963 conference that the trial judge have the union counsel present during the proposed signing of
the settlement agreement set for November 8, 1963, as expressly noted by the trial judge, was
likewise ignored. Notwithstanding that notice of the conference set for November 8, 1963 at 2:30
p.m. was served on November 5, 1963 on the union counsel, petitioner Mary Concepcion, the
scheduled conference was never held.

Unexplained, Maylem, the union president and nine other members of the union's board of directors
(out of 13 board members) even before the scheduled hour of the conference of November 8, 1963
at 2:30 p.m. had earlier executed a "Settlement" on said date, without the knowledge, advice, and
conformity of the union counsel, with respondent firm's attorney-in- fact, who was duly assisted by
respondent's two counsels, who likewise executed the "Settlement." In this "Settlement", the said
union officials claiming to act "with the authorization of the Board of Directors and its members, "in
consideration of the sum of P110,000.00, or one-fourth of the estimated P423,756.74-judgment
liability of respondent firm, as computed in the respondent Court's Chief Examiner's Partial Report of
December 14, 1962, "waived and quitclaimed . . . any and all claims it (the union) may have against
the respondent as well as the claim of each and every one of the members of the said petitioner
union against the respondent firm." The union further "warranted" in said "Settlement" "that aside
from the petitioner (union) itself and the members thereof, there are no other persons who have any
interest over the judgment debt and that if it should happen that other persons shall make a claim
against the respondent and/or said judgment debt, that the respondent, nevertheless, shall no longer
be liable therefor."11

The "Settlement" was immediately submitted to the trial judge who forthwith on the same day,
November 8, 1963, issued his Order, approving the same, and entered into respondent Court's
records at 1:45 p.m. of the same day, as follows:

Considering that the bases of the above quoted settlement is well founded and justified and
not contrary to law, morals and/or public policy, approval of the same is, therefore, in order.

WHEREFORE, the Court hereby approves the settlement of the parties in these cases; and
shall as between the parties to the same be deemed to be a decision and/or award in these
matters therein treated in the aforesaid settlement; and upon acknowledgment of the sum of
money in the said settlement, these cases shall be deemed closed and terminated.

Petitioners-lawyers Mary Concepcion, et al. upon learning of the "Settlement" and respondent's
deposit with the Court of the sum of P110,000.00 in pursuance thereof filed in the afternoon of
November 8, 1963 a motion for withdrawal of the sum of P33,000.00 equivalent to their 30%
contingent fee, without prejudice to such action as they may take for enforcing their lien to its full
extent. The trial judge granted such motion in its Order of November 9, 1963. In due course, said
petitioners moved for reconsideration and setting aside of the trial judge's Order of November 8,
1963 approving the "Settlement" and prayed respondent Court en banc to reinstate the judgment
against respondent and to enforce the deposit order dated March 30, 1963.

Petitioners Magalpo, Bulos and Batoon, likewise moved respondent Court en banc to reconsider and
set aside the trial judge's approval of the "Settlement", in disregard of their objection and pending
motions of November 5, 1963 to shelve the proposed settlement and to enforce the deposit Order.
On December 26, 1963, they were joined in their plea for reconsideration by forty-seven other union
members-claimants, Co-petitioners at bar.

Respondent, on the other hand, filed its opposition to the motions for reconsideration, questioning
the personality and interest of petitioners-movants Magalpo and her 2 other co-movants and
asserting that they were bound by the "Settlement" entered into by their union's board of directors. It
alleged that it had deposited with respondent Court the sum of P110,000.00 stipulated in the
"Settlement" on the same day of its approval by the trial judge. It filed with respondent Court on
November 21, 1963 a letter of ratification dated November 10, 1963 addressed to the trial judge and
purportedly signed by some 79 union members-claimants confirming and accepting the settlement
executed by the union board. Petitioners in their brief list 21 of these signatures as questionable,
asserting that they are at variance with other corresponding signatures in the Payroll dated
November 8, 1963 submitted to respondent Court on November 21, 1963, such that "either one or
the other signature is a forgery." Respondent counters that there is "absolutely no truth to the claim"
and that the signers of the ratification letter "have all received their individual shares of the
P110,000.00 settlement paid by respondent company and this in itself is a ratification on their part of
said settlement." Nothing appears in the record, however, as to whether and in what manner the
respondent Court determined the authenticity of the signatures. Respondent further filed on
December 18, 1963 a motion for reconsideration of the trial judge's Order approving payment of
P33,000.00 to the petitioners-attorneys by way of attorneys' fees.
On August 1, 1964, and August 4, 1964, after petitioners had filed on November 29, December 2
and 17, 1963 and January 16, 1964 various urgent motions to set for hearing and for resolution, they
were served with copies of respondent Court's en banc Resolution dated March 9, 1964, penned by
the trial judge, "finding no sufficient justifications to set aside, disturb or modify the Order issued in
these cases on November 8 and 9, 1963" and denying all three motions for reconsideration. Judges
Amando C. Bugayong and Ansberto F. Paredes concurred under date of July 29, 1964 with the
Resolution, while Judge Arsenio Martinez took no part. No statement of the material allegations of,
and issues raised in, the pertinent pleadings set out in detail hereinabove nor reasons for the
conclusion of insufficient justification reached by the majority resolution are given therein.

Then Presiding Judge Jose S. Bautista dissented. "Taking into account the precipitate approval of
settlement over the objection of some union members concerned and without hearing them, on the
strength simply of the manifestation of the petitioner's Board of Directors that it had authority to
compromise when previously said union members concerned had already manifested in Annex "E"
(Exhibit "G", at bar) that there was no such authority," he voted "that the case be restored to
the status quo as of October 30, 1963, but the payment already made to the union members be
considered as partial payments on account, subject to final liquidation and adjustment; that an order
of execution of the judgment in cases Nos. G.R. L-21758 and L-21759 of the Supreme Court be
issued (upholding the Order of March 30, 1963 for deposit of P200,000.00 in cash and surety bond)
be issued and that the Hearing Officer shall resume the hearing of the Examiner's Report.

Hence, the appeals of petitioners.

The Santiago Labor Union, impleaded as party respondent in Cases L-23361-62, filed its Answer on
September 24, 1964, "putting its weight behind the prayers of the petitioners." The Answer reveals
that the union members, feeling betrayed, had disauthorized and removed from office Maylem, the
union president and his board of directors who had executed the "Settlement" with respondent firm
and disclaimed the documents of ratification that they had signed at the behest of Maylem. The
union averred in its Answer that:

a) The real parties in interest in Cases 709-V and 709 V(1), CIR, are the members of
respondent Labor Union;

b) The records of the respondent labor union do not show any grant by the members to the
former incumbency of any previous authority to negotiate the claim or subsequent ratification
of the settlement for P110,000.00 for it is unthinkable and ridiculous for the real parties in
interest to give away gratuitously what had been awarded to them in a final judgment, for a
much lesser amount than that of the award;

c) The members are unanimous in the assertion that the documents they signed at the
behest of former President Segundino S. Maylem were represented and understood to be
but an authority to collect a part of the court award to the members;

d) That the records of the respondent labor union disclose that the members of the union
have unanimously acted, in their individual capacities to proceed with the prosecution and
collection of whatever sums they might yet be entitled to collect, in order to show
unequivocally that the negotiation made by former President Segundino S. Maylem and his
board of directors was unauthorized, and to spotlight the betrayal of the members of the
Union by said Segundino S. Maylem and his board of directors of the former union
incumbency;
6. That fundamentally, there is no contentious issue between the petitioners and respondent labor
union; if at all, the only distinction is between the personality of the real parties in interest, the union
members who have initiated and instituted this petition as against the limited and formal personality
of the respondent labor union to represent them when so authorized by their collective will."12

The core question is whether this Court can give its sanction to respondent Court's majority
resolution upholding the trial judge's approval of the union board's settlement for P110,000.00 of the
estimated P423,766.74-judgment liability of respondent firm in favor of the individual union
members, over the timely opposition formally filed by three members (later joined by forty-seven
other members) expressly calling attention to the union board's bad faith in the premises and lack of
any express authority to enter into the settlement, and without giving the union the opportunity of
being heard and assisted by counsel and notwithstanding the fact that respondent firm, which had
sufficient cash and fixed assets, was under legal compulsion by virtue of respondent court's own
final order to deposit P100,000.00 in cash and another P100,000.00 in surety bond to guarantee
payment of the union members' judgment claims?

The question answers itself. The precipitate approval of the purported settlement under the
circumstances goes against the grain of fundamental considerations of justice, equity and due
process.

1. To begin with, petitioners were not accorded due process of law, when, for reasons unexplained
in the record, the conference set for November 8, 1963 at 2:30 p.m. to take up formally the proposed
settlement was cancelled and never held. (supra, pp. 8-9) Notice thereof had been served on the
union counsel, in accordance with the express request of the union president, as expressly noted by
the trial judge. Yet, such notice was deliberately disregarded and the union was deprived of the
assistance of its counsel.13 Instead, the settlement as unilaterally drafted by respondent's counsel
(supra, p. 7) was executed ahead of the scheduled hour of the conference that turned out to be a
non-conference, by the union president with nine other members of the union's board of directors,
without the knowledge, advice and conformity of the union counsel, while respondent was duly
assisted by its two counsels. By 1:45 p.m. of the same day, the settlement had been approved by
the trial judge as "not contrary to law, morals and public policy." Similarly, petitioners Magalpo, a
board member herself and her co-petitioners Bulos and Batoon were not accorded an opportunity for
a fair hearing on their grave charges against the union leadership and their urgent motions to shelve
the proposed settlement and to enforce the final order of respondent court requiring respondent firm
to deposit P200,000.00 in cash and surety bond for satisfaction of the union members' judgment, as
said motions were totally ignored by the trial judge and not touched upon at all in his Order rashly
approving the settlement.

2. The lack of due deliberation and caution in the trial judge's instant approval of the settlement is
seen from the stipulations therein that the union thereby waived and quitclaimed any and all claims
which it may have against the respondent, as well as the claim of each and every one of the
members of the union against respondent, when precisely the authority of the union board members
to enter into any such compromise or settlement was under express challenge by petitioner
Magalpo, a board member herself in her Objection and Urgent Motion to shelve the settlement filed
on November 5, 1963, which the trial judge completely disregarded. Petitioner Magalpo further made
serious charges that Maylem, the union president, had misled the board members into attending the
unscheduled conference held on October 31, 1963 before the trial judge, and had deliberately
concealed from them the fact of entry on October 24, 1963 of the Order of this Court in G.R. Nos. L-
21758-59 upholding the P200,000.00 deposit Order of respondent court and the effect thereof of
making mandatory upon the trial judge, in accordance with the terms of his own order, the issuance
of a writ for execution or enforcement to compel respondent to so deposit P100,000.00 in cash and
an equal amount in surety bond to guarantee satisfaction of the union members' judgment against
respondent. In point of facts, the union's own Urgent Motion of October 29, 1963, emphasizing that
respondent no longer had any excuse for not complying with the deposit order, as well as petitioner
Magalpo, et al.'s Urgent ex parte motion of November 4, 1963 to the same effect were pending
before the trial judge, unresolved and unacted upon. Petitioners Magalpo, et al. had reason
therefore, to assail the proposed settlement for P110,000.00 as unconscionable, when at the very
least the union members could be assured of P200,000.00 under the deposit order to satisfy their
judgment credit, while the report of respondent court's examiner showed that respondent firm had
sufficient assets, (supra, p. 5), and considering that their partial judgment credit, as estimated by
respondent court's examiner, amounted to more than P400,000.00.

3. The trial judge's rush approval of the settlement disregarded the grave adverse consequences
thereof to the union members. The settlement, as prepared by respondent's counsel, provided for a
union warranty that aside from the union itself and the members thereof, "there are no other persons
who have any interests over the judgment debt and that if it should happen that other persons shall
make a claim against the respondent and/or said judgment debt, that the respondent, nevertheless,
shall no longer be liable therefor." Such warranty was against the very facts of record, which showed
that as early as June 21, 1963, petitioners-counsels in Cases L-23331-32 had duly recorded their
attorneys' lien of "30 % of whatever amount may finally be awarded in favor of the petitioner." Thus,
technically, since the award in favor of the union members amounted to more than P400,000.00, the
settlement for P110,000.00 would conceivably just about cover the 30% attorneys' fees payable to
the petitioners-counsels under the contract, if they were so minded to enforce it and bad faith on the
union's part were shown, with the union members left holding an empty bag.14 Such onerous terms
of the settlement could not then properly be approved by the trial judge as "not contrary to law,
morals and public policy."

4. All these underscore the failure of due process when petitioners were deprived of the formal
conference on the proposed settlement scheduled for November 8, 1963 and of their right to be
assisted by the union counsel as expressly requested, so that a fair hearing could be accorded
petitioners and an opportunity afforded them to air their serious charges of bad faith and lack of
authority against the union leadership. Certainly, all these serious questions and charges made by
petitioners could have been threshed out and verified, if the formal conference scheduled for
November 8, 1963 had been held with the presence of union counsel, considering that the latter
likewise had a right to be heard, since they had duly made of record their attorneys' lien upon the
judgment.15Respondent, in its brief, asserts that it vividly remembers that the trial judge repeatedly
made mention of the P200,000.00 deposit order during the unscheduled conference of October 31,
1963 and "even explained the matter to the members of the board in their native dialect." But the
transcript of the conference reproduced above (supra, pp. 7-9) does not bear out this assertion. The
transcript is obviously deficient and does not reflect the actual discussions and proceedings. This is
to be deplored, for in a matter of such great importance, especially where the union officials were
unassisted by counsel in an unscheduled conference, care should be taken by the trial judge that the
proceedings are faithfully recorded. Thus, although the transcript again fails to make any mention of
it, respondent, in its brief, in effect provides support for petitioners' plaint against the unscheduled
conference and precipitate approval of the settlement behind the back of union counsel, when it
states that "the presiding judge tried to help the parties reach a settlement by stressing to the union
that there was no sense in demanding more than P110,000.00 from the respondent if that was all it
could afford, and that any more delay in the execution of its award to the union members might lead
to their getting much less than the P110,000.00 already being offered by respondents," and "while it
is true that the presiding judge took an active part in helping the parties reach such settlement, it was
only in line with the policy of the law encouraging settlement of cases even after final
judgment."16The obvious fallacy of this untenable posture assumed by the trial judge, of course, is
that with this Court having upheld his P200,000.00 deposit order, it made every sense to enforce
execution of said order, which it was practically his ministerial duty to do so, to assure the union
members of recovery of their judgment credit at the very least to the extent of P200,000.00, as the
trial judge had expressly recognized therein that "petitioner (union) and its members
concerned should be extended the necessary protection of their rights." Any further delay in the
execution of the judgment award in favor of the union members could readily be obviated, if the trial
judge would but expedite the hearings for approval of the Court examiner's Report which had been
filed and left pending since December 14, 1962. As correctly contended by petitioners, he could
have placed the union members, unassisted as they were by counsel, on an equal footing in
negotiating with respondent by a mere stroke of his pen by ordering the enforcement of his final
P200,000.00 deposit order, as to which there no longer existed any obstacle. We find the forcing
through of the settlement, under such circumstances, arbitrary, unfair and unconscionable.

5. Another vital reason for striking down the settlement is the lack of any express or specific authority
of the president and majority of the union board of directors to execute the same and scale down the
estimated P423,756.74-judgment liability of respondent firm in favor of the individual union members
to P110,000.00. On the contrary, petitioner board member Magalpo timely challenged the authority
of the union board to execute any such settlement, expressly informing the trial judge that the union
had specifically appointed an entity in Manila, the "CREAM, Inc.", formerly Credit Research and
Intelligence, as its attorney-in-fact and "exclusive authorized representative for the evaluation,
adjustment and liquidation of its claim against respondent." Forty-seven other union members-
claimants joined petitioner Magalpo in their denunciation of the union board's unauthorized action,
and in their plea for reconsideration with respondent court. Forty-nine union members-claimants
entitled to the bulk of the judgment award have filed this appeal from the adverse rulings of the Court
below. These union members have repudiated the former union president, Maylem and his board of
directors, for having betrayed the union members, and the new union leadership, in its Answer filed
with the Court, has joined petitioners in their prayer for redress, categorically asserting that the union
records do not show any grant by the members to the former union board under Maylem to
"negotiate the claim or subsequent ratification of the settlement for P110,000.00" which is
"unthinkable and ridiculous." (supra, p. 15) Under such circumstances, the letter of ratification of the
settlement purportedly signed by some 79 members, many of whose signatures thereon are
denounced as forgeries and which ratification was not authenticated in the proceedings below and
has been expressly disowned by petitioners herein, cannot be given any legal significance or effect.

6. When it is further taken into consideration that the judgment award, as affirmed by this Court's
decision of August 31, 1962,17 was for the payment of overtime, premium and differential pay to
the individual union members as claimants and for the reinstatement of the individual union
members who testified and proved their having been illegally laid-off, which represent a personal
material interest directly in favor of the individual union members, as against the lack of material
interest on the part of the union as such, the union's lack of authority to execute the settlement, in
the absence of express or specific authorization by the union members, becomes patent. The
authority of the union as such, to execute a settlement of the judgment award in favor of the
individual union members, cannot be presumed but must be expressly granted.

7. Recently, in the analogous case of La Campana Food Products, Inc. etc. Employees Ass'n vs.
Court of Industrial Relations, et al.,18 this Court ruled upon the merits of the union's appeal, and set
aside the Industrial Court's questioned orders which would reopen its previous judgment finding the
employer guilty of unfair labor practice and ordering the reinstatement of, and payment of back
wages from December 4, 1963 to, twenty-one (21) union members. In handing down its decision,
this Court disregarded the petitioner union's motion to dismiss the appeal, filed through new counsel
while the case was pending decision, alleging that the union's legislative council had adopted a
resolution relieving the former union counsel of his services and authorizing the dismissal of the
case, on the premise that such dismissal "would serve the best interests of both parties who are now
in the process of formulating a collective bargaining agreement in their earnest desire to establish
industrial peace and promote the economic well-being of all the parties concerned." For this Court
ruled that the union's loss of interest in the case was no ground for dismissing the case, since "the
labor union as a body in reality has not so great a material interest in the controversy as would
prejudice it in the event of dismissal. It is the twenty-one (21) members for whose benefit the ULP
case was prosecuted who stand to take tremendous losses" and suffer injustice. Upholding the
individual union members in their stand of vindicating their rights acquired under the final judgment
as against the union's legislative council's resolution to dismiss the case, this Court, speaking
through Mr. Justice Sanchez, thus held: —

We now come to the motion to dismiss filed in this Court on March 10, 1969 by new counsel
for petitioner. In that motion, we read the averment that the petitioning union, "after careful
and serious consideration of their Petition, taken in the light of recent developments affecting
their relationship with the respondent-company, have decided that they have lost interest in
the further prosecution of their claims"; that the union's legislative council, on February 5,
1969, adopted a resolution authorizing the new counsel to file a motion dismissing this case;
that the former counsel who directed this case before this Court, Atty. Eulogio R. Lerum, had
been relieved of his services in a letter of the union dated January 13, 1969; and that "the
dismissal of this instant case would serve the best interests of both parties who are now in
the process of formulating a collective bargaining agreement in their earnest desire to
establish industrial peace and promote the economic well-being of all parties concerned."
This drew a reply from Atty. Eulogio R. Lerum that "while he admits that he had received
termination notice from the alleged officers of the abovenamed union, he had not been
disauthorized by the complainants who had retained him to appear in their behalf" and that
"said complainants are against the dismissal of their case for the reason that they want to
vindicate their rights and it is against public policy to settle an unfair labor practice by
amicable settlement (Sec. 5 [a], Rep. Act 875)."

While it may be true that the labor union itself has lost interest in the case, we do not believe
that such should give ground for the dismissal of this case. The labor union as a body in
reality has not so great a material interest in the controversy as would prejudice it in the
event of dismissal. It is the twenty-one (21) members for whose benefit the ULP case was
prosecuted who stand to take tremendous losses. Nor is the argument that union and
employer are now in the process of formulating a collective bargaining agreement of any
consequence. That would not be affected by the decision we now render as an aftermath of
the ULP case. Unless of course such a dismissal is a quid pro quo before the parties could
sit around the bargaining table. Which surely enough is not to the 'best interests' of the
laborers.

And, as we examine the record, we observe none of the members of the legislative council
who adopted the resolution relied upon in the motion to dismiss is personally affected by the
decision rendered by the CIR in Case 3985-ULP. That decision, it will be recalled, directs
private respondents herein not only to reinstate the twenty-one (21) union members without
loss of seniority and other benefits and privileges but also to pay their respective backwages
from December 4, 1963, date of filing of the charge, basis of the complaint, until actual
reinstatement. It is easy enough to perceive the injustice which may be visited upon these
twenty-one (21) union members if the petition herein were to be dismissed. For then, a new
trial will be had, with the consequent trouble, expense, anxiety and another long delay before
they could enjoy the fruits of their victory which they have legally and definitely won only after
a long and protracted legal battle. At any rate, it is better on balance that we foreclose a
flanking movement which could destroy rather than uphold the rights — to reinstatement and
monetary award — of individual laborers acquired under the final judgment.

8. Just as this Court has stricken down unjust exploitation of laborers by oppressive employers, so
will it strike down their unfair treatment by their own unworthy leaders. The Constitution enjoins the
State to afford protection to labor.19 Fair dealing is equally demanded of unions as well as of
employers in their dealings with employees. The union has been evolved as an organization of
collective strength for the protection of labor against the unjust exactions of capital, but equally
important is the requirement of fair dealing between the union and its members, which is fiduciary in
nature, and arises out of two factors: "one is the degree of dependence of the individual employee
on the union organization; the other, a corollary of the first, is the comprehensive power vested in the
union with respect to the individual."20 The union may be considered but the agent of its members for
the purpose of securing for them fair and just wages and good working conditions and is subject to
the obligation of giving the members as its principals all information relevant to union and labor
matters entrusted to it. As already discussed above, the union leadership in the case at bar was
recreant in its duty towards the union members in apparently having failed to disclose to the union
members the full situation of their judgment credit against respondent, to wit, that they were in the
advantageous position of being able to require enforcement of the respondent court's P200,000.00-
deposit order, and in presuming that it had authority to waive and quitclaim the estimated
P423,756.74-judgment credit of the union members for the unconscionable amount of P110,000.00,
which had already been previously rejected by the workers. Respondent firm could not claim that it
dealt in good faith with the union officials, for it hastily executed the purported settlement
notwithstanding the serious charges of bad faith against the union leadership, and the non-holding of
the scheduled conference where the union leaders, at their express request, could be duly assisted
by union counsel. It is noteworthy that respondent never filed with the court below any denial or
responsive pleading traversing the factual allegations in petitioner Magalpo's Manifestation and
Objection charging that at the unscheduled conference of October 31, 1963, the proposed
settlement was in effect railroaded with the fact of the finality of the P200,000.00-deposit order not
having been disclosed to the union representatives. Such failure on the part of respondent
constitutes an implied admission of the material averments. Respondent's justification now that it did
not file any responsive pleading or denial because Magalpo and her co-petitioners had no
personality to file their pleadings as they were not parties to the cases in the lower court is of no
avail, for they were actually the awardees and beneficiaries under the judgment against respondent
and the union was but their agent. Deplorable also is the failure of the trial judge to defer precipitate
action on approval of the settlement until the union could be afforded the opportunity of a hearing
thereon duly assisted by counsel, and failure later of the majority of respondent court in the
reconsideration proceedings, as well, to look seriously into the grave charges of bad faith and
deception against the union officials and their lack of authority to execute the settlement. All of these
charges were just swept under the rug, and summarily dismissed, without even being mentioned, in
the unreasoned en banc Resolution, finding arbitrarily as against the facts herein collated by this
Court from the pertinent pleadings and annexes furnished it, "no sufficient justification to set aside,
disturb or modify" the questioned approval of the settlement. .

9. The cases of Jesalva, et al. vs. Bautista,21 and Diomela, et al. vs. Court of Industrial
Relations,22 cited by respondent, clearly have no application in the present case. In Jesalva,
seventeen cases in different stages of hearing or execution before the Industrial Court were settled
by a compromise agreement, and this Court held that the three petitioners who questioned the
settlement were "bound by the actions of the Union, that is to say, a majority of the members of the
union." There was no question there that the union had acted with the authority of the union
membership. No deceit or concealment or misrepresentation tainted the settlement. Neither was the
amount of the settlement denounced as unconscionable. The employer there, Premiere Productions,
Inc., agreed to pay the amount of P200,000.00 which appeared to be a reasonable settlement as
against the judgment credit of the union workers, and further agreed to lease to the union its
equipment and facilities for the Union to produce two moving pictures, apparently to cover the other
wage claims of the union workers which were still pending trial and resolution. In Diomela, the labor-
management disputes were settled amicably with the unfair labor practice charge against the
employer, Squibb and Sons, (Phil.) being withdrawn, upon motion signed by the union president and
the three employees against whom the acts of unfair labor practice charged in the complaint had
been allegedly committed, to which motion the Court's prosecutor gave his conformity, and with the
employer, which had secured a permanent writ of injunction restraining the strikers who had
apparently declared an illegal strike, against the commission of acts of violence, threats and
intimidation, agreeing to pay three months separation pay to each striking employee. There was no
question, therefore, of the authority of the union president to withdraw the unfair labor practice
charge, as the three employees directly affected had co-signed the withdrawal motion with him. The
subsequent move of Diomela and 23 co-petitioners to disauthorize the union and its counsel of
record, was by their own pleading overruled by the majority of the union membership. The other acts
of unfair labor practice sought to be filed by Diomela and his companions were there ruled out as
splitting a cause of action and harassing the employer with subsequent charges, based upon acts
committed during the same period of time and which should have been included in the charges first
preferred. What should be borne in mind is that the interests of the individual worker can be better
protected on the whole by a strong union aware of its moral and legal obligations to represent the
rank and file faithfully and secure for them the best wages and working terms and conditions in the
process of collective bargaining. As has been aptly pointed out, the will of the majority must prevail
over that of the minority in the process, for "under the philosophy of collective responsibility, an
employer who bargains in good faith should be entitled to rely upon the promises and agreements of
the union representatives with whom he must deal under the compulsion of law and contract. The
collective bargaining process should be carried on between parties who can mutually respect and
rely upon the authority of each other."23 Where, however, collective bargaining process is not
involved, and what is at stake are back wages already earned by the individual workers by way of
overtime, premium and differential pay, and final judgment has been rendered in their favor, the
present case, the real parties in interest with direct material interest, as against the union which has
only served as a vehicle for collective action to enforce their just claims, are the individual workers
themselves.24 Authority of the union to waive or quitclaim all or part of the judgment award in favor of
the individual workers cannot be lightly presumed but must be expressly granted, and the employer,
as judgment debtor, must deal in all good faith with the union as the agent of the individual workers.
The Court in turn should certainly verify and assure itself of the fact and extent of the authority of the
union leadership to execute any compromise or settlement of the judgment on behalf of the
individual workers who are the real judgment creditors.

We therefore sustain the minority opinion of then Presiding Judge Bautista of respondent Court that
the settlement was precipitately approved without verification of the union board's authority to
execute the compromise settlement, and find that there was no such authority. The said settlement
is therefore set aside and the cases below are restored to the status quo, as of October 30, 1963,
with the payments already made to the union members to be considered as partial payments on
account, subject to final liquidation and adjustment. It is directed that an order for the enforcement of
the P200,000.00-deposit order dated March 30, 1963 issued in the cases below, and upheld in
Cases G.R. Nos. L-21758-59 of this Court dismissing the respondent's petition for review, be
forthwith issued, and that hearings on the Chief Examiner's Report of December 14, 1962 be
resumed immediately and without interruption so that the amounts due under the judgment to the
individual union members may be finally determined without further delay. It is unfortunate that
pending these proceedings, no application for preliminary injunction restraining respondent firm from
disposing of its assets was made, since as stated above, (supra, p. 5) respondent had stopped
operations in 1962 preparatory to liquidation, by virtue of the provisions of Republic Act No. 3018
nationalizing the rice and corn industry. The respondent firm's stockholders are, however, charged
with notice of the firm's liability by virtue of the pendency of these appeals, and should any
liquidating dividends have been distributed and paid to them in the meantime, they shall stand liable
for the satisfaction of the union workers' judgment against respondent to the extent of such dividends
respectively paid to and received by them. Similarly, any outstanding unpaid subscriptions or
balances of subscriptions to the firm's capital stock, estimated at P20,000.00,25 shall be subject to
garnishment and execution in satisfaction of the judgment. As to the contingent 30% attorneys' fees
of petitioners-lawyers, the Court deems it proper at this stage, to direct in the exercise of its authority
to control the amount of such fees, that petitioners-lawyers may collect their stipulated contingent
30% attorneys' fees to the extent that additional amounts may be realized on the union workers'
judgment up to the sum of P150,000.00, including the initial payment of P110,000.00, (on which they
have already collected their corresponding fee), such that any further amounts collected beyond said
sum of P150,000.00 shall no longer be subject to said contingent fee.

WHEREFORE, the respondent Court's Orders of November 8, 1963 and March 9, 1964 are hereby
declared null and void and set aside. The respondent court is directed to proceed immediately with
the execution of the judgment rendered by it against respondent firm in Cases Nos. 709-V and V-1
as affirmed by this Court's decision of August 31,
1962,26 in accordance with the directives set forth in the next preceding paragraph, which is
incorporated by reference as an integral portion of the dispositive part of this decision. With costs
against private respondent in both cases herein decided.

[G.R. Nos. 113666-68. January 19, 2000]

GOLDEN DONUTS, INC. and LEOPOLDO PRIETO, petitioners,

vs. NATIONAL LABOR RELATIONS COMMISSION, AGAPITO
MACANDOG, LEONISA M. HONTIVEROS, ROSITA D. TAMARGO,
LUCITA TEGIO and ALMA MAGTARAYO, respondents.

DECISION

PARDO, J.:

The petition at bar is actually one for certiorari impugning the resolution of the
[1] [2]

National Labor Relations Commission (NLRC), which modified the Labor Arbiters
decision and ordered petitioner to reinstate complainants (respondents) to their former
positions without loss of seniority rights and back wages limited to three (3) years
from dismissal up to time of reinstatement and to pay respondents Rosita Tamargo,
Lucita Tegio, Alma Magtarayo, and Leonisa Hontiveros each separation pay of
P4,000.00; to pay complainant Agapito Macandog separation pay of P4,000.00,
unpaid salary of P1,000.00; thirteenth month pay of P1,329.25 and attorneys fee of ten
(10%) per cent of the total amount due; and the order denying reconsideration of the
[3]

aforementioned resolution.

Private respondents Macandog, Hontiveros, Tamargo, Tegio and Magtarayo, were

employees of petitioner Golden Donuts, Inc., and were the complainants in three
consolidated cases filed in September 1990 with the Labor Arbiter.

The facts are aptly summarized in the Labor Arbiters decision dated January 29, 1993,
as follows:

"Complainants were members of the Kapisanan ng Manggagawa sa

Dunkin Donut-CFW (KMDD-CFW, for short) whose collective
bargaining agreement with the corporation expired on November 16,
1989. During the freedom period, or on October 17, 1989, respondents
through its Human Resources and Industrial Relations Manager
informed the President of the Union that the initial CBA negotiation was
on October 26, 1989 and, at the same time, requested for the
confirmation of the people who shall be the regular members of the
union panel in order to avoid any misunderstanding. At which date
however, despite the absence of Leopoldo Prieto, Jr., the management
representative, and the President of the Union, both panels were able to
agree on the rules regarding the negotiation, including the time, date and
number of days the panels had to meet. On November 7, 1989 (sic) CBA
negotiations, the management panel arrived late, or at 1:35 P.M. which
was thirty five minutes late, thus prompting the union panel to walkout.
Despite the management request to go back and proceed with the
agenda, the union simply ignored the same. A day after, or on November
8, 1989, the management addressed a letter of apology to the union and
requested that the CBA negotiation be resumed on November 9, 15 and
17, 1989 which was discredited in the following wise:

November 9,
1989

Oldmiso

The Management CBA Negotiating Panel Golden Donuts, Inc.

Attention: Ms. Gertrudes P. Bangalan

HRIR Manager

We are in receipt of your letter expressing your sincere apology for the
incident that happened last Nov. 7, 1989 at AIT.

Truly, it is our interest to come up with a peaceful negotiation, as we had

displayed during our previous meetings. From punctuality even up to the
manner of discussion we had shown our concern and sincere interest that
we could finish our CBA as soon as possible smoothly and peacefully.

However, as we go on with the process, we observed that you are taking

our CBA negotiation for granted, not considering it as one of your
priorities.

However further, we would like to inform you that our final decision is
to declare the negotiation DEADLOCK (sic).
Thus, we regret to inform you that we could not attent (sic) to your
scheduled meeting this afternoon.

Sincerely yours,

Florante M. Vicedo
'KMDD President

"Came November 15 and 17, but the union panel did not show up
despite the management letters advising the former about the CBA
meetings. Again, on November 20, 1989 management sent a letter
informing the union regarding the resumption of the negotiation, but the
same turned out fruitless. Finally, despite managements open letter of
admonition under date of November 23, 1989, the union struck on
December 18, 1989. Ncm

"On the ground that the strike was illegal because (a) it was started
without the union having first exercised the ritht (sic) to collective
bargaining in violation of Article 264 (a) of the Labor Code; (b) the
strikers barricaded the company premises, barring ingress to and egress
from the premises, which resulted to the trapping of officers and
employees; (c) the strikers, on December 19, 1989, overturned the
companys Isuzu Kc-20 Van with Plate No. 506 and, thereafter, smashed
its windshield, headlights and sidemirrors; (d) the strikers brandished
broken bottles of Coca-Cola and effectively prevented Ernesto de
Castillo, the traffic dispatcher, and his driver, Narciso Urjal, from
making any move to pacify the mob; and (e) the strike was affected
without any strike vote for the purpose and without the approval of the
majority of the membership, and for not having reported the same to the
Ministry (now Department) of Labor and Employment; a Complaint
with Prayer for Preliminary Injunction was filed by Golden Donuts, Inc.
on January 9, 1990, seeking the following relief (sic): a) to declare the
strike illegal and to dismiss all officers of the union and members who
participated in the commission of illegal acts; b) to pay petitioner actual
damages as may be proven, the sum of Five Hundred Thousand
(P500,000.00) Pesos and Three Hundred Thousand (P300,000.00) Pesos,
respectively, as moral and exemplary damages, plus attorneys fees. After
KMUs Atty. Pontenciano Flores was retained as counsel by the union
and strikers, and sensing the gravity of the penalties attendant to the
strike resorted to, including the financial award that may be due the
 Golden Donuts, Inc. and civil liabilities that may be awarded thereafter,
said counsel pleaded for a comprome (sic). Hence, on July 16, 1990, a
compromise agreement was entered into by the KMDD-CFW and
Golden Donuts, Inc. whereby:

4.4. The parties agree to withdraw/dismiss with prejudice

any and all cases, whether criminal, civil or labor filed
against each other and agree to execute affidavit of
desistance and/or Motion to Dismiss to ensure the dismissal
of these cases.

5. Upon execution of this Agreement, the parties undertake

not to file any other charges/complaints against each other
as this act constitutes a general waiver or release/quitclaim
by them (sic).

apart from the separation pay said strikers, 262 in all, should receive
from the corporation, the variable amounts of which are stated in the list
of workers attached to the agreement. Out of the said 262 striking force,
only the five (5) aforenamed complainants disagree (sic) and did not
receive the amount due, arguing that the compromise agreement was
entered into by their counsel and the President of the Union without their
individual consent and/or authority and that the same was not approved
nor ratified by the majority of the union membership. Hence, these
complaints which were filed on the dates mentioned earlier." [4]

On January 29, 1993, the Labor Arbiter rendered a decision upholding the dismissal
of private respondents and ruling that they were bound by the compromise agreement
entered into by the union with petitioners. The dispositive portion of the decision
states: Ncmmis

"WHEREFORE, in conformity with the opinion above expressed,

judgment is hereby rendered ordering the Golden Donuts, Inc.:

"1. To pay complainants Rosita D. Tamargo, Lucita N. Tegio, Alma

Magtarayo and Lenisa Hontiveros each the sum of Four Thousand Five
Hundred (P4,500.00) Pesos as separation pay;

"2. To pay complainant Agapito Macandog the following amounts:

a.Four Thousand Five Hundred (P4,500.00) Pesos as

separation pay;
 b.One Thousand (P1,000.00) Pesos as unpaid salary;

c.One Thousand Three Hundred Twenty-Nine and Twenty

Five (P1,329.25) Centavos as balance of his thirteenth
month pay.

"3. To pay complainants counsel ten percent (10%) of the total amount
due them as attorneys fees.

SO ORDERED." [5]

In due time, private respondents interposed an appeal to the NLRC, claiming that the
union had no authority to waive or compromise their individual rights and that they
were not bound by the compromise agreement entered into by the union with
petitioners.

On October 29, 1993, the NLRC issued a resolution which disposed of the case as
follows:

"WHEREFORE, the decision of the Labor Arbiter is hereby accordingly

modified and a new one entered ordering respondent to reinstate
complainants to their former positions without loss of seniority rights
and back-wages limited to three years from the time of their dismissal up
to the time of reinstatement.

"Furthermore, respondent is hereby ordered as follows:

"1. To pay complainants Rosita D. Tamargo, Lucita N. Tegio, Alma

Magtarayo and Leonisa Hontiveros each the sum of Four Thousand Five
Hundred (P4,500.00) Pesos as separation pay;

"2. To pay complainant Agapito Macandog the following amounts:

"a. Four Thousand Five Hundred (P4,500.00) Pesos as

separation pay; Scncm

"b. On Thousand (P1,000.00) Pesos as unpaid salary;

"c. One Thousand Three Hundred Twenty-Nine and

Twenty-Five (P1,329.25) Centavos as balance of his
thirteenth month pay.
 "3. To pay complainants counsel ten percent (10%) of the total amount
due them as attorneys fees." [6]

On January 31, 1994, the NLRC denied petitioners motion for reconsideration of the
resolution, for lack of an assignment of "palpable" or "patent" errors.
[7]

Hence, this petition. [8]

The questions presented in the petition are: (1) whether or not a union may
compromise or waive the rights to security of tenure and money claims of its minority
members, without the latters consent, and (2) whether or not the compromise
agreement entered into by the union with petitioner company, which has not been
consented to nor ratified by respondents minority members has the effect of res
judicata upon them.

As a consequence of a negative ruling on the foregoing issues, there arises the issue of
whether private respondents are entitled to monetary benefits subject of their
individual complaints.

The petition is anchored on the argument that a preponderant majority of the union
members, that is, 257 out of 262 members, having agreed to a compromise settlement
whereby they shall be paid separation pay in exchange for the dismissal of the
criminal and unfair labor practice cases filed by petitioners against them, the union is
authorized to waive and compromise even the claims of those who did not consent to
the terms of such compromise agreement. In other words, petitioners claim that the
compromise agreement is binding on union members including those who did not
consent thereto, such as private respondents.

We find the petition without merit.

First, even if a clear majority of the union members agreed to a settlement with the
employer, the union has no authority to compromise the individual claims of members
who did not consent to such settlement. Rule 138 Section 23 of the 1964 Revised
Rules of Court requires a special authority before an attorney may compromise his
clients litigation. "The authority to compromise cannot lightly be presumed and
should be duly established by evidence." [9]

In the case at bar, minority union members did not authorize the union to compromise
their individual claims. Absent a showing of the unions special authority to
compromise the individual claims of private respondents for reinstatement and back
wages, there is no valid waiver of the aforesaid rights. As private respondents did not
authorize the union to represent them in the compromise settlement, they are not
bound by the terms thereof. Sdaamiso
[10]

Second, whether minority union members who did not consent to a compromise
agreement are bound by the majority decision approving a compromise settlement has
been resolved in the negative. [11]

In La Campana, we explicitly declared:

"Money claims due to laborers cannot be the object of settlement or

compromise effected by a union or counsel without the specific
individual consent of each laborer concerned. The beneficiaries are the
individual complainants themselves. The union to which they belong can
only assist them but cannot decide for them." [12]

The case of La Campana was re-affirmed in the General Rubber case as follows:

"In the instant case, there is no dispute that private respondent has not
ratified the Return-to-Work Agreement. It follows, and we so hold, that
private respondents cannot be held bound by the Return-to-Work
Agreement. The waiver of money claims, which in this case were
accrued money claims, by workers and employees must be regarded as a
personal right, that is, a right that must be personally exercised. For a
waiver thereof to be legally effective, the individual consent or
ratification of the workers or employees involved must be shown.
Neither the officers nor the majority or the union had any authority to
waive the accrued rights pertaining to the dissenting minority members,
even under a collective bargaining agreement which provided for a union
shop. The same considerations of public policy which impelled the Court
to reach the conclusion it did in La Campana, are equally compelling in
the present case. The members of the union need the protective shield of
this doctrine not only vis--vis their employer but also, at times, vis--vis
the management of their own union, and at other times even against their
own imprudence or impecuniousness." [13]

We have consistently ruled that "a compromise is governed by the basic principle that
the obligations arising therefrom have the force of law between the parties."[14]

Consequently, private respondents may pursue their individual claims against

petitioners before the Labor Arbiter.
The judgment of the Labor Arbiter based on the compromise agreement in question
does not have the effect of res judicata upon private respondents who did not agree
thereto. Sdaad

"A compromise, once approved by final orders of the court has the force of res
judicata between the parties and should not be disturbed except for vices of consent or
forgery." A compromise is basically a contract perfected by mere consent. "Consent
[15]

is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract." A compromise agreement is not valid
[16]

when a party in the case has not signed the same or when someone signs for and in
behalf of such party without authority to do so. [17]

In SMI Fish Industries, Inc. vs. NLRC, this Court declared that where the
[18]

compromise agreement was signed by only three of the five respondents, the non-
signatories cannot be bound by that amicable settlement. This is so as a compromise
agreement is a contract and cannot affect third persons who are not parties to it. [19]

Private respondents were not parties to the compromise agreement. Hence, the
judgment approving such agreement cannot have the effect of res judicata upon them
since the requirement of identity of parties is not satisfied. A judgment upon a
[20]

compromise agreement has all the force and effect of any other judgment, hence
conclusive only upon parties thereto and their privies. [21]

Viewed in light of the foregoing legal principles, the conclusion is inescapable that
private respondents are not bound by the compromise agreement entered into by the
union without their consent. They have not waived their right to security of tenure nor
can they be barred from entitlement of their individual claims.

Since the Labor Arbiter found no evidence showing that private respondents
committed any illegal act during the strike, petitioners failure to reinstate them after
the settlement of the strike amounts to illegal dismissal, entitling them to the twin
reliefs of reinstatement and back wages. Scsdaad
[22]

"The burden is on the employer to prove that the termination was after due process,
and for a valid or authorized cause. For the two requisites in our jurisdiction to
[23]

constitute a valid dismissal are: (a) the existence of a cause expressly stated in Article
282 of the Labor Code; and (b) the observance of due process, including the
opportunity given the employee to be heard and defend himself." [24]

However, the separation pay must be deleted, as private respondents are entitled to
reinstatement and back wages and there is no showing of strained relations as would
prevent their reinstatement.[25]
WHEREFORE, the Court DISMISSES the petition and AFFIRMS the NLRC
resolution dated October 29, 1993 and the order dated January 31, 1994, in NLRC
NCR Case Nos. 00-08-04180-90, 00-09-04807-90, and 00-09-04840-90, with
modification deleting the award of separation pay to private respondents.

No costs.

SO ORDERED.

[G.R. No. 156292. January 11, 2005]

ME-SHURN CORPORATION AND SAMMY CHOU, petitioners, vs. ME-

SHURN WORKERS UNION-FSM
AND ROSALINA CRUZ, respondents.


DECISION
PANGANIBAN, J.:

To justify the closure of a business and the termination of the services of

the concerned employees, the law requires the employer to prove that it
suffered substantial actual losses. The cessation of a companys operations
shortly after the organization of a labor union, as well as the resumption of
business barely a month after, gives credence to the employees claim that the
closure was meant to discourage union membership and to interfere in union
activities. These acts constitute unfair labor practices.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court,

[1]

seeking to annul the November 29, 2002 Decision of the Court of Appeals (CA)
[2]

in CA-GR SP No. 69675, the decretal portion of which reads:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment must be, as
it hereby is, AFFIRMED, and the present petition DISMISSED for lack of merit.
Costs shall be taxed against petitioners.
[3]
 The affirmed November 29, 2001 Decision of the National Labor Relations
[4]

Commission (NLRC), Third Division, disposed as follows:

WHEREFORE, the decision appealed from is hereby SET ASIDE, and respondent
Me-Shurn Corp. is hereby ordered to pay the complainants who appeared in the
proceedings conducted by the Labor Arbiter their full backwages from the date their
wages were withheld from them to the date of the finality of this decision.
[5]

The Facts

On June 7, 1998, the regular rank and file employees of Me-Shurn

Corporation organized Me-Shurn Workers Union-FSM, an affiliate of the
February Six Movement (FSM). Respondent union had a pending application
[6]

for registration with the Bureau of Labor Relations (BLR) through a letter dated
June 11, 1998. [7]

Ten days later, or on June 17, 1998, petitioner corporation started placing
on forced leave all the rank and file employees who were members of the unions
bargaining unit. [8]

On June 23, 1998, respondent union filed a Petition for Certification Election
with the Med-Arbitration Unit of the Department of Labor and Employment
(DOLE), Regional Office No. 3. [9]

Instead of filing an answer to the Petition, the corporation filed on July 27,
1998, a comment stating that it would temporarily lay off employees and cease
operations, on account of its alleged inability to meet the export quota required
by the Board of Investment. [10]

While the Petition was pending, 184 union members allegedly submitted a
retraction/withdrawal thereof on July 14, 1998. As a consequence, the med-
arbiter dismissed the Petition. On May 7, 1999, Department of Labor and
Employment (DOLE) Undersecretary Rosalinda Dimapilis-Baldoz granted the
unions appeal and ordered the holding of a certification election among the rank
and file employees of the corporation. [11]

Meanwhile, on August 4, 1998, respondent union filed a Notice of Strike

against petitioner corporation on the ground of unfair labor practice (illegal
lockout and union busting). This matter was docketed as Case No. NCMB-RO3-
BEZ-NZ-08-42-98. [12]

On August 31, 1998, Chou Fang Kuen (alias Sammy Chou, the other
petitioner herein) and Raquel Lamayra (the Filipino administrative manager of
the corporation) imposed a precondition for the resumption of operation and the
rehiring of laid off workers. He allegedly required the remaining union officers
to sign an Agreement containing a guarantee that upon their return to work, no
union or labor organization would be organized. Instead, the union officers were
to serve as mediators between labor and management. After the signing of
[13]

the Agreement, the operations of the corporation resumed in September 1998. [14]

On November 5, 1998, the union reorganized and elected a new set of

officers. Respondent Rosalina Cruz was elected president. Thereafter, it filed
[15]

two Complaints docketed as NLRC Case Nos. RAB-III-11-9586-98 and RAB-

III-09-0322-99. These cases were consolidated and assigned to Labor Arbiter
Henry Isorena for compulsory arbitration. Respondents charged petitioner
corporation with unfair labor practice, illegal dismissal, underpayment of wages
and deficiency in separation pay, for which they prayed for damages and
attorneys fees.
The corporation countered that because of economic reversals, it was
compelled to close and cease its operations to prevent serious business losses;
that under Article 283 of the Labor Code, it had the right to do so; that in August
1998, it had paid its 342 laid off employees separation pay and benefits in the
total amount of P1,682,863.88; and that by virtue of these payments, the cases
had already become moot and academic. It also averred that its resumption of
operations in September 1998 had been announced and posted at the Bataan
Export Processing Zone, and that some of the former employees had reapplied.
Petitioner corporation questioned the legality of the representation of
respondent union. Allegedly, it was not the latter, but the Me-Shurn Independent
Employees Union -- with Christopher Malit as president -- that was recognized
as the existing exclusive bargaining agent of the rank and file employees and
as the one that had concluded a Collective Bargaining Agreement (CBA) with
the corporation on May 19, 1999. Hence, the corporation asserted that
[16]

Undersecretary Dimapilis-Baldozs Decision ordering the holding of a

certification election had become moot and academic.
On the other hand, respondents contested the legality of the formation of
the Me-Shurn Independent Employees Union and petitioners recognition of it
as the exclusive bargaining agent of the employees. Respondents argued that
the pendency of the representation issue before the DOLE had barred the
alleged recognition of the aforementioned union.
Labor Arbiter Isorena dismissed the Complaints for lack of merit. He ruled
that (1) actual and expected losses justified the closure of petitioner corporation
and its dismissal of its employees; (2) the voluntary acceptance of separation
pay by the workers precluded them from questioning the validity of their
dismissal; and (3) the claim for separation pay lacked factual basis. [17]

On appeal, the NLRC reversed the Decision of Labor Arbiter Isorena.

Finding petitioners guilty of unfair labor practice, the Commission ruled that the
closure of the corporation shortly after respondent union had been organized,
as well as the dismissal of the employees, had been effected under false
pretenses. The true reason therefor was allegedly to bar the formation of the
union. Accordingly, the NLRC held that the illegally dismissed employees were
entitled to back wages. [18]

After the denial of their Motion for Reconsideration, petitioners elevated

[19]

the cases to the CA via a Petition for Certiorari under Rule 65. They [20]

maintained that the NLRC had committed grave abuse of discretion and serious
errors of fact and law in reversing the Decision of the labor arbiter and in finding
that the corporations cessation of operations in August 1998 had been tainted
with unfair labor practice.
Petitioners added that respondent unions personality to represent the
affected employees had already been repudiated by the workers themselves in
the certification election conducted by the DOLE. Pursuant to the Decision of
Undersecretary Dimapilis-Baldoz in Case No. RO3 00 9806 RU 001, a
certification election was held on September 7, 2000, at the premises of
petitioner corporation under the supervision of the DOLE. The election had the
following results:

Me Shurn Workers Union-FSM 1

No Union 135

Spoiled 2

Challenged 52

Total Votes Cast 190 [21]

Ruling of the Court of Appeals

The CA dismissed the Petition because of the failure of petitioners to submit

sufficient proof of business losses. It found that they had wanted merely to abort
or frustrate the formation of respondent union. The burden of proving that the
dismissal of the employees was for a valid or authorized cause rested on the
employer.
The appellate court further affirmed the unions legal personality to represent
the employees. It held that (1) registration was not a prerequisite to the right of
a labor organization to litigate; and (2) the cases may be treated as
representative suits, with respondent union acting for the benefit of all its
members.
Hence, this Petition. [22]

Issues

In their Supplemental Memorandum, petitioners submit the following issues

for our consideration:
(1) Whether the dismissal of the employees of petitioner Meshurn Corporation is for an
authorized cause, and
(2) Whether respondents can maintain a suit against petitioners.[23]

The Courts Ruling

The Petition lacks merit.

First Issue:
Validity of the Dismissal

The reason invoked by petitioners to justify the cessation of corporate

operations was alleged business losses. Yet, other than generally referring to
the financial crisis in 1998 and to their supposed difficulty in obtaining an export
quota, interestingly, they never presented any report on the financial operations
of the corporation during the period before its shutdown. Neither did they submit
any credible evidence to substantiate their allegation of business losses.
Basic is the rule in termination cases that the employer bears the burden of
showing that the dismissal was for a just or authorized cause. Otherwise, the
dismissal is deemed unjustified. Apropos this responsibility, petitioner
corporation should have presented clear and convincing evidence of imminent [24]

economic or business reversals as a form of affirmative defense in the

proceedings before the labor arbiter or, under justifiable circumstances, even
on appeal with the NLRC.
 However, as previously stated, in all the proceedings before the two quasi-
judicial bodies and even before the CA, no evidence was submitted to show the
corporations alleged business losses. It is only now that petitioners have
belatedly submitted the corporations income tax returns from 1996 to 1999 as
proof of alleged continued losses during those years.
Again, elementary is the principle barring a party from introducing fresh
defenses and facts at the appellate stage. This Court has ruled that matters
[25]

regarding the financial condition of a company -- those that justify the closing of
its business and show the losses in its operations -- are questions of fact that
must be proven below. Petitioners must bear the consequence of their
[26]

neglect. Indeed, their unexplained failure to present convincing evidence of

losses at the early stages of the case clearly belies the credibility of their present
claim.[27]

Obviously, on the basis of the evidence -- or the lack thereof -- the appellate
court cannot be faulted for ruling that the NLRC did not gravely abuse its
discretion in finding that the closure of petitioner corporation was not due to
alleged financial losses.
At any rate, even if we admit these additional pieces of evidence, the
circumstances surrounding the cessation of operations of the corporation reveal
the doubtful character of its supposed financial reason.
First, the claim of petitioners that they were compelled to close down the
company to prevent further losses is belied by their resumption of operations
barely a month after the corporation supposedly folded up.
Moreover, petitioners attribute their loss mainly to their failure to obtain an
export quota from the Garments and Textile Export Board (GTEB). Yet, as
pointed out by respondents, the corporation resumed its business without first
obtaining an export quota from the GTEB. Besides, these export quotas pertain
only to business with companies in the United States and do not preclude the
corporation from exporting its products to other countries. In other words, the
business that petitioner corporation engaged in did not depend entirely on
exports to the United States.
If it were true that these export quotas constituted the determining and
immediate cause of the closure of the corporation, then why did it reopen for
business barely a month after the alleged cessation of its operations?
Second, the Statements of Income and Deficit for the years 1996 and 1997
show that at the beginning of 1996, the corporation had a deficit of P2,474,505.
Yet, the closure was effected only after more than a year from such year-end
deficit; that is, in the middle of 1998, shortly after the formation of the union.
 On the other hand, the Statement of Income and Deficit for the year 1998
does not reflect the extent of the losses that petitioner corporation allegedly
suffered in the months prior to its closure in July/August 1998. This document
is not an adequate and competent proof of the alleged losses, considering that
it resumed operations in the succeeding month of September.
Upon careful study of the evidence, it is clear that the corporation was more
profitable in 1997 than in 1996. By the end of 1997, it had a net income
of P1,816,397.
If petitioners were seriously desirous of averting losses, why did the
corporation not close in 1996 or earlier, when it began incurring deficits? They
have not satisfactorily explained why the workers dismissal was effected only
after the formation of respondent union in September 1998.
We also take note of the allegation that after several years of attempting to
organize a union, the employees finally succeeded on June 7, 1998. Ten days
later, without any valid notice, all of them were placed on forced leave, allegedly
because of lack of quota.
All these considerations give credence to their claim that the closure of the
corporation was a mere subterfuge, a systematic approach intended to dampen
the enthusiasm of the union members. [28]

Third, as a condition for the rehiring of the employees, the union officers
were made to sign an agreement that they would not form any union upon their
return to work. This move was contrary to law.
Fourth, notwithstanding the Petition for Certification Election filed by
respondents and despite knowledge of the pendency thereof, petitioners
recognized a newly formed union and hastily signed with it an alleged Collective
Bargaining Agreement. Their preference for the new union was at the expense
of respondent union. Moncada Bijon Factory v. CIR held that an employer
[29]

could be held guilty of discrimination, even if the preferred union was not
company-dominated.
Fifth, petitioners were not able to prove their allegation that some of the
employees contracts had expired even before the cessation of operations. We
find this claim inconsistent with their position that all 342 employees of the
corporation were paid their separation pay plus accrued benefits in August
1998.
Sixth, proper written notices of the closure were not sent to the DOLE and
the employees at least one month before the effectivity date of the termination,
as required under the Labor Code. Notice to the DOLE is mandatory to enable
the proper authorities to ascertain whether the closure and/or dismissals were
being done in good faith and not just as a pretext for evading compliance with
the employers just obligations to the affected employees. This requirement is
[30]

intended to protect the workers right to security of tenure. The absence of such
requirement taints the dismissal.
All these factors strongly give credence to the contention of respondents
that the real reason behind the shutdown of the corporation was the formation
of their union. Note that, to constitute an unfair labor practice, the dismissal
need not entirely and exclusively be motivated by the unions activities or
affiliations. It is enough that the discrimination was a contributing factor. If the
[31]

basic inspiration for the act of the employer is derived from the affiliation or
activities of the union, the formers assignment of another reason, no matter how
seemingly valid, is unavailing. [32]

Concededly, the determination to cease operations is a management

prerogative that the State does not usually interfere in. Indeed, no business can
be required to continue operating at a loss, simply to maintain the workers in
employment. That would be a taking of property without due process of law. But
where it is manifest that the closure is motivated not by a desire to avoid further
losses, but to discourage the workers from organizing themselves into a union
for more effective negotiations with management, the State is bound to
intervene.[33]

Second Issue:
Legal Personality of Respondent Union

Neither are we prepared to believe petitioners argument that respondent

union was not legitimate. It should be pointed out that on June 29, 1998, it filed
a Petition for Certification Election. While this Petition was initially dismissed by
the med-arbiter on the basis of a supposed retraction, note that the appeal was
granted and that Undersecretary Dimapilis-Baldoz ordered the holding of a
certification election.
The DOLE would not have entertained the Petition if the union were not a
legitimate labor organization within the meaning of the Labor Code. Under this
Code, in an unorganized establishment, only a legitimate union may file a
petition for certification election. Hence, while it is not clear from the record
[34]

whether respondent union is a legitimate organization, we are not readily

inclined to believe otherwise, especially in the light of the pro-labor policies
enshrined in the Constitution and the Labor Code. [35]

Verily, the union has the requisite personality to sue in its own name in order
to challenge the unfair labor practice committed by petitioners against it and its
members. It would be an unwarranted impairment of the right to self-
[36]

organization through formation of labor associations if thereafter such collective

entities would be barred from instituting action in their representative capacity.
[37]

Finally, in view of the discriminatory acts committed by petitioners against

respondent union prior to the holding of the certification election on September
27, 2000 -- acts that included their immediate grant of exclusive recognition to
another union as a bargaining agent despite the pending Petition for certification
election -- the results of that election cannot be said to constitute a repudiation
by the affected employees of the unions right to represent them in the present
case.
WHEREFORE, the Petition is DENIED, and the assailed Decision
AFFIRMED. Costs against the petitioners.
SO ORDERED.