G.R. Nos.

94929-30 March 18, 1992

PORT WORKERS UNION OF THE PHILIPPINES (PWUP), petitioner,
vs.
THE HONORABLE UNDERSECRETARY OF LABOR AND EMPLOYMENT
BIENVENIDO E. LAGUESMA, ATTY. ANASTACIO L. BACTIN, MED-ARBITER NCR-
DOLE, Public Respondents; INTERNATIONAL CONTAINER TERMINAL SERVICES,
INC., (ICTSI) and ASSOCIATED PORT CHECKERS AND WORKERS UNION
(APCWU), Private Respondents; SANDIGAN NG MANGGAGAWA SA DAUNGAN
(SAMADA) and PORT EMPLOYEES ASSOCIATION AND LABOR UNION (PEALU),
Nominal Private Respondents, respondents.

CRUZ, J.:
There was muffled excitement among the workers of the International Container Terminal
Services, Inc. (ICTSI) because its collective bargaining agreement with private respondents
Associate Port Checkers and Workers Union (APCWU), the incumbent union, was due to expire
on April 14, 1990. Other unions were seeking to represent the laborers in the negotiation of the
next CBA and were already plotting their moves.
The first challenge to APCWU was hurled on March 14, 1990, when the Sandigan ng Manggagawa
sa Daungan (SAMADA) filed a petition for certification election. The consent signatures of at
least 25% of the employees in the bargaining unit were submitted on March 26, 1990, or eleven
days after the petition.
On April 2, 1990, herein petitioner Port Workers Union of the Philippines (PWUP) filed a petition
for intervention.
Still another petition for certification election was filed by the Port Employees Association and
Labor Union (PEALU), on April 6, 1990. The consent signatures were submitted on May 11, 1990,
or thirty-five days after the filing of the petition.
The petitions of SAMADA and PEALU were consolidated for joint decision. On April 26, 1990,
APCWU filed a motion to dismiss them on the ground that they did not comply with the
requirement set forth in Section 6, Rule V, Book V of the Implementing Rules, quoted in part as
follows:
In a petition involving an organized establishment or enterprise where the majority status
of the incumbent collective bargaining union is questioned through a verified petition by a
legitimate labor organization, the Med-Arbiter shall immediately order the certification
election by secret ballot if the petition is filed during the last sixty (60) days of the collective
bargaining agreement and supported by the written consent of at least twenty-five percent
(25%) of all the employees in the bargaining unit. Any petition filed before or after the
sixty-day freedom period shall be dismissed outright. The twenty-five percent (25%)
requirement shall be satisfied upon the filing of the petition, otherwise the petition shall be
dismissed. (Emphasis supplied.)
Specifically, APCWU faulted both petitions for non-compliance with the requirement for the 25%
consent signatures at the time of filing. This contention was upheld by the Med-Arbiter in an order
dated June 5, 1990, dismissing the consolidated petitions. 1
PWUP appealed to the Secretary of Labor on June 28, 1990, arguing that Article 256 of the Labor
Code did not require the written consent to be submitted simultaneously with the petition for
certification election. The principal petitioners did not appeal. On August 21, 1990, DOLE
Undersecretary Bienvenido Laguesma affirmed the order of the Med-Arbiter and dismissed
PWUP's appeal. 2
Thereafter, ICTSI and APCWU resumed negotiations for a new collective bargaining agreement,
which was concluded on September 28, 1990. This was ratified on October 7, 1990, by a majority
of the workers in the bargaining unit, i.e., 910 out of the 1,223 members, and subsequently
registered with the DOLE.
PWUP is now before us, claiming grave abuse of discretion on the part of the public respondent
in the application of Article 256 of the Labor Code. The article provides in part as follows:
Art. 256. Representation issue in organized establishments. — In organized establishments,
when a verified petition questioning the majority status of the incumbent bargaining agent
is filed before the Department of Labor and Employment within the sixty-day period before
the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically
order an election by secret ballot when the verified petition is supported by the written
consent of at least twenty-five (25%) percent of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. . . .
The petitioner argues that under this article, the Med-Arbiter should automatically order election
by secret ballot when the petition is supported by at least 25% of all employees in the bargaining
unit. SAMADA and PEALU substantially complied with the law when they submitted the required
consent signatures several days after filing the petition. The petitioner complains that the dismissal
of the petitions for certification election, including its own petition for intervention, had the effect
of indirectly certifying APCWU as the sole and exclusive bargaining representative of the ICTSI
employees.
Private respondent ICTSI maintains that the dismissal was based on Article 256 of the Labor Code
as implemented by Section 6, Rule V, Book V of the Implementing Rules, quoted above.
Moreover, under Section 10, Rule V, Book V of the Implementing Rules, decisions of the
Secretary in certification election cases shall be final and unappealable.
ICTSI also cites the following ruling of this Court in Tupas v. Inciong: 3
We find no merit in the petition. As observed by the Solicitor General, while the petition
of TUPAS for a certification election may have the written support of 30 per cent of all the
workers of the bargaining unit, it is also an undisputed fact that UMI (the rival union of
TUPAS) has a clear majority of the said workers, as shown by the fact that 499 workers
out of the total working force of 641 have not only ratified the collective bargaining
agreement concluded between UMI and LUSTEVECO, but also affirmed their
membership in UMI so that there is no more need for holding a certification election.
(Emphasis supplied.)
For its part, APCWU questions PWUP's personality in these proceedings in view of the lack of
consent signatures in its petition, and argues as well that the petitioner has no authority to represent
SAMADA or PEALU, which had not appealed. The private respondent also invokes Tupas and
maintains that the ratification of the new CBA by the majority of the workers was an affirmation
of their membership in the union that negotiated that agreement.
In his own Comment, the Solicitor General agrees with the petitioner that there has been substantial
compliance with the requirements of the law. He submits that Article 256 should be liberally
interpreted pursuant to Article 4 of the Labor Code, stating as follows:
Art. 4. Construction in favor of labor. — All doubts in the implementation and
interpretation of the provisions of this Code including its implementing rules and
regulations, shall be resolved in favor of labor.
The Court has deliberated on the arguments of the parties in their respective pleadings and finds
for the petitioner.
We have held that pursuant to the constitutional provision guaranteeing workers the right to self-
organization and collective bargaining, "the constant and unwavering policy of this Court" has
been "to require a certification election as the best means of ascertaining which labor organization
should be the collective bargaining representative." 4
The certification election is the most democratic and expeditious method by which the laborers
can freely determine the union that shall act as their representative in their dealings with the
establishment where they are working. 5 As we stressed in Belyca Corporation vs. Ferrer-
Calleja, 6 the holding of a certification election is a statutory policy that should not be
circumvented.
This Court also held in Western Agusan Workers Union-Local 101 of the United Lumber and
General Workers of the Philippines vs. Trajano: 7
. . . it has long been settled that the policy of the Labor Code is indisputably partial to the
holding of a certification election so as to arrive in a manner definitive and certain
concerning the choice of the labor organization to represent the workers in a collective
bargaining unit. Conformably to said basic concept, this Court recognized that the Bureau
of Labor Relations in the exercise of sound discretion, may order a certification election
notwithstanding the failure to meet the 30% requirement. (Scout Ramon V. Albano
Memorial College v. Noriel, 85 SCRA 494 [1978]; Vicmico Industrial Wokers Asso. v.
Noriel, 131 SCRA 569 [1984])
In line with the policy, we feel that the administrative rule requiring the simultaneous submission
of the 25% consent signatures upon the filing of petition for certification election should not be
strictly applied to frustrate the determination of the legitimate representative of the workers.
Significantly, the requirement in the rule is not found in Article 256, the law it seeks to implement.
This is all the more reason why the regulation should at best be given only a directory effect.
Accordingly, we hold that the mere filing of a petition for certification election within the freedom
period is sufficient basis for the issuance of an order for the holding of a certification
election, 8 subject to the submission of the consent signatures within a reasonable period from
such filing.
This interpretation is consonant with Philippine Association of Free Labor Unions v. Bureau of
Labor Relations,9where we declared:
. . . even conceding that the statutory requirement of 30% of the labor force asking for a
certification election had not been strictly complied with, respondent Director is still
empowered to order that it be held precisely for the purpose of ascertaining which (of the
contending labor organizations) shall be the exclusive collective bargaining representative.
(National Mines and Allied Workers Union v. Luna, et al., 83 SCRA 607)
It is not denied that the petition to intervene filed by PWUP did not carry the 25% consent
signatures, but that the requirement is in fact not applicable to a petition in intervention. We so
held in PAFLU v. Ferrer-Calleja thus: 10
It is crystal clear from the said provisions that the requisite written consent of at least 20%
of the workers in the bargaining unit applies to petitioners for certification election only
and not to motions for intervention. . . . As long as the motion for intervention has been
properly and timely filed and the intervention would not cause any injustice to anyone, it
should not be denied and this is so even if the eventual purpose of the Motion for
 Intervention is to participate in the Certification Election. After all, the original applicant
had already met the 20% requirement.
The contention that the petitioners had no right to represent the principal petitioners which had not
appealed the dismissal order is also not acceptable. We repeat that the certification election is not
litigation but a mere investigation of a non-adversary character where the rules of procedure are
not strictly applied. 11 Technical rules and objections should not hamper the correct ascertainment
of the labor union that has the support of confidence of the majority of the workers and is thus
entitled to represent them in their dealings with management.
The above-quoted decision affirms the right of PWUP to call for the holding of the election
although it was initially only an intervenor. That recognition should not be defeated by the
circumstance that the other petitioning unions have not seen fit to appeal the dismissal of their
petitions even if such dismissal was questionable and is in fact being reversed here. The petition
for intervention was viable at the time it was filed because the principal petitions had complied
with the requirement for the consent signatures as specified by Article 256. Hence, its intervention
should not be disallowed simply because of the withdrawal or failure to appeal of SAMADA and
PEALU.
It is correct to say that as a matter of strict procedure, a petition for intervention should be deemed
automatically dismissed where the principal petition itself fails. However, that technical rule
should be allowed to prevent a correct determination of the real representative of the workers in
line with their constitutional rights to self-organization and collective bargaining.
Regarding the invocation of Inciong by the private respondents, the Court has modified that
decision in Associated Labor Unions vs. Calleja, 12 where we held:
Finally, the petitioner assails the decision of the respondent Director on the ground
that "the ratification of the collective bargaining agreement renders the certification
election moot and academic."
This contention finds no basis in law.
The petitioner was obviously referring to the contract-bar rule where the law prohibits the
holding of certification elections during the lifetime of the collective bargaining agreement.
Said agreement was hastily and prematurely entered into apparently in an attempt to avoid
the holding of a certification election.
Deviation from the contract-bar rule is justified only where the need for industrial stability is
clearly shown to be imperative. 13 Subject to this singular exception, contracts where the identity
of the authorized representative of the workers is in doubt must be rejected in favor of a more
certain indication of the will of the workers. As we stated in Philippine Association of Free Labor
Union vs. Estrella, 14 any stability that does not establish the type of industrial peace contemplated
by the law must be subordinated to the employees' freedom to choose their real representative.
The private respondents contend that the overwhelming ratification of the CBA is an affirmation
of their membership in the bargaining agent, rendering the representation issue moot and academic
and conclusively barring the holding of a certification election thereon. That conclusion does not
follow. Even Tupas did not say that the mere ratification of the CBA by the majority of the workers
signified their affirmation of membership in the negotiating union. That case required, first,
ratification of the CBA, the second, affirmation of membership in the negotiating union. The
second requirement has not been established in the case at bar as the record does not show that the
majority of the workers, besides ratifying the new CBA, have also formally affiliated with
APCWU.
Section 4, Rule V, Book V of the Omnibus Rules implementing the Labor Code provides that the
representation case shall not be adversely affected by a collective agreement submitted before or
during the last 60 days of a subsisting agreement or during the pendency of the representation
case. As the new CBA was entered into at the time when the representation case was still pending,
it follows that it cannot be recognized as the final agreement between the ICTSI and its workers.
On the allegation that the decision of the Secretary of Labor on certification election is final and
inappealable, this Court held in San Miguel Corp. v. Secretary of Labor 15 that:
It is generally understood that as to administrative agencies exercising quasi-judicial or
legislative power there is an underlying power in the courts to scrutinize the acts of such
agencies on questions of law and jurisdiction even though no right of review is given by
statute. (73, C.J.S. 506, note 56). . . . judicial review is proper in case of lack of jurisdiction,
grave abuse of discretion. error of law, fraud or collusion (Timbancaya v. Vicente, 82 O.G.
9424; Macatangay v. Secretary of Public Works and Communication, 63 O.G. 11236;
Ortua v. Singson Encarnacion, 59 Phil. 440).
There was indeed grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of public respondents when they dismissed the petitions for certification election because the
consent signatures had not been submitted simultaneously with the petition. The issue of majority
representation thus remains open and awaits settlement. Following the rulings above-quoted, we
hereby declare that the newly-concluded CBA cannot constitute a bar to the holding of a
certification election.
It is possible that the APCWU will prevail in the certification election, in which event the new
CBA it concluded with ICTSI will be upheld and recognized. It is also possible that another union
will be chosen, in which event it will have to enter into its own negotiations with ICTSI that may
result in the adoption of a new CBA. In the meantime, however, the old CBA having expired, it is
necessary to lay down the rules regulating the relations of the workers with the management. For
this reason, the Court hereby orders that the new CBA concluded by ICTSI and APCWU shall
remain effective between the parties, subject to the result and effects of the certification election
to be called.
The certification election is the best method of determining the will of the workers on the crucial
question of who shall represent them in their negotiations with the management for a collective
bargaining agreement that will best protect and promote their interests. It is essential that there be
no collusion against this objective between an unscrupulous management and a union covertly
supporting it while professing its loyalty to labor, or at least that the hopes of labor be not frustrated
because of its representation by a union that does not enjoy its approval and support. It is therefore
sound policy that any doubt regarding the real representation of the workers be resolved in favor
of the holding of the certification election. This is preferable to the suppression of the voice of the
workers through the prissy observance of technical rules that will exalt procedure over substantial
justice.
WHEREFORE, the petition is GRANTED. The challenged order dated August 21, 1990, is
REVERSED and SET ASIDE and the public respondent is DIRECTED to schedule and hold
certification election among the workers of the International Container Terminal Services, Inc.,
this to be done with all possible dispatch. No costs.
SO ORDERED.
G.R. No. 77818 August 3, 1988
NATIONAL ASSOCIATION OF FREE TRADE UNIONS (NAFLU-TUCP), petitioner,
vs.
BUREAU OF LABOR RELATIONS (BLR) and SOUTHERN PHILIPPINES
FEDERATION OF LABOR (SPFL), respondents, PACIFIC CEMENT COMPANY, INC.
(PACEMCO), employer.
Hustino E. Horculada for petitioner.
Alfonso S. Casurra for respondent PACEMCO.
Fuentes Law Office for respondent SPFL.

CRUZ, J.:
Will the direct certification of a labor union as the exclusive bargaining agent of the workers
preempt and preclude the calling of a certification election on petition of another labor union in
the same establishment?
The direct certification was obtained on Jane 6, 1986, by the petitioner in this case, the National
Association of Free Trade Unions (NAFLU-TUCP), on the strength of its allegation, as confirmed
by the med-arbiter, that there was no other labor union requesting recognition as representative of
the workers in their negotiations with the management of the Pacific Cement Co.
(PACEMCO). 1 On June 20, 1986, however, and also within the freedom period, the Southern
Philippines Federation of Labor (SPFL), the private respondent herein, filed a petition for
certification election signed by 168 workers, representing over 60% of the total number of rank-
and-filers of the company. 2NAFTU, as forced intervenor, opposed the petition, invoking its own
earlier direct certification, but on August 11, 1986, the med-arbiter who had granted the same
reversed his previous order and authorized the holding of the certification election. 3 On appeal,
his order was sustained by the Bureau of Labor Standards, which held that the certification election
was justified under the circumstances, adding that the workers had the constitutional right to
choose the labor union to represent them in negotiating with the management. 4 Its motion for
reconsideration having been denied, the petitioner then came to this Court to ask for the reversal
of the resolution of the public respondent dated October 24, 1986, on the ground that it was reached
with grave abuse of discretion correctible by writ of certiorari.
The original Article 257 of the Labor Code provided as follows:
ART. 257. Procedure governing representation issues. — When a question concerning the
representation of employees is submitted to the Ministry, a Med-Arbiter shall hear and
decide such controversy and certify to the parties in writing the name of the labor
organization that has been designated or selected by the majority of the workers in the
appropriate bargaining unit as the exclusive bargaining agent. If there is any reasonable
doubt as to which union the employees have chosen as their representative for the purpose
of collective bargaining, the Med-Arbiter shall order an election by secret ballot to be
conducted by the Ministry to ascertain the freely chosen representative of the employees
concerned, under such rules and regulations as the Ministry may prescribe, at which
election representatives of the contending parties shall have the right to act as inspectors.
The labor union receiving the majority of the valid votes cast shall be certified as the
exclusive bargaining representative of the workers.
The petitioner contends that having been directly certified by the med-arbiter as the exclusive
bargaining representative of the workers, it cannot now be replaced through the certification
election, which was not validly called under the above provision. It stresses that the first method
of choosing such representation is by direct certification and, once employed, can no longer be
undone by the certification election which, as the exception to the rule, should be applied only
when there is a reasonable doubt on the real choice of the laborers as their negotiating agent. In
the view of the petitioner, there is no such reasonable doubt to justify reversal of the med-arbiter's
order of June 6, 1986.
For its part, the private respondent invokes the support of the 168 workers who had signed the
petition for certification election, including some of those who had earlier supposedly manifested
their confidence in the petitioner union, and argues that such change of support demonstrates the
need for the holding of a certification election as required by the said article. This election will
erase once and for all the reasonable doubt as to the real choice of the union that will represent the
workers in the negotiation of the new collective bargaining agreement with PACEMCO, besides
giving the workers the freedom to which they are entitled in making this choice.
Assuming that the original provisions of Article 257 are still applicable in this case, the Court
inclines to the position taken by the private respondent as more conformable to the language and
spirit of the said law. This rule precisely called for the holding of a certification election whenever
there appeared to be a reasonable doubt as to whether or not the union directly certified had really
been chosen by the majority of the workers as their exclusive bargaining representative. Such was
the situation in the case at bar. Moreover, a certification election is a more acceptable method than
direct certification, which under the provisions of the aforementioned article, should be resorted
to only where there was no doubt that the union so certified had the full or at least the majority
support of the workers.
In the instant case, we find that the manifestation made by most of the workers in favor of NAFTU
was later questioned on the ground that it was obtained through the suspicious grant of a food
subsidy to the signatories. 5This was denied by the petitioner, which claimed that the said
manifestation was spontaneous and voluntary. At any rate, whether true or not, the charge
generated the reasonable doubt that justified the med-arbiter in reversing his previous direct
certification of the petitioner and in authorizing the holding of a certification election instead.
It is noteworthy that since this case arose in 1986, an important change has been made in Article
257. By virtue of Executive Order No. 111, which became effective on March 4,1987, the direct
certification originally allowed in this article has apparently been discontinued as a method of
selecting the exclusive bargaining agent of the workers. This amendment affirms the superiority
of the certification election over the direct certification which, assuming it was validly made in
favor of the petitioner in 1986, is no longer available to it now under the change in the said
provision. The new rule as amended by the executive order now reads as follows:
ART. 256. Representation issues on organized establishments. — In organized
establishments, when a petition questioning the majority status of the incumbent bargaining
agent is filed before the Ministry within the sixty-day period before the expiration of the
collective bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot to ascertain the will of the employees in the appropriate bargaining unit. To
have a valid election, at least a majority of all eligible voters in the unit must have cast their
votes. The labor union receiving the majority of the valid votes cast shall be certified as
the exclusive bargaining agent of all the workers in the unit. When an election which
provides for three or more choices results in no choice receiving a majority of the valid
cast, a run-off election shall be conducted between the choices receiving the two highest
number of votes.
Additionally, the record discloses that the certification election ordered by the med-arbiter and
sustained by the Bureau of Labor Relations was actually held on March 9, 1987, resulting in the
victory of private respondent SPFL. 6Despite notices duly received by it, the petitioner did not
attend the pre-election conferences and did not participate in the said election after its motion to
reset it was denied. It now says the election should not have been held because this petition was
pending with the Court, although we had not issued any restraining order. It assumes too much, of
course. In any event, after it was ascertained that the SPFL had obtained 201 of the 212 votes cast
at the certification election, it was accordingly certified by the public respondent as the exclusive
bargaining agent of the workers. As such, it thereafter negotiated and finally concluded a collective
bargaining agreement with PACEMCO on September 15, 1987, which contract is now in
force. 7 This is a fait accompli that has rendered this case moot and academic.
It remains to stress, as we have repeatedly declared in earlier decisions, that the certification
election is the most democratic and expeditious method by which the laborers can freely determine
the union that shall act as their representation in their dealings with the establishment where they
are working. Any union sure of the support of the workers should have no reason to resist the
holding of a certification election where it can expect a vote of confidence from them for its efforts
and ability to improve their interests.
WHEREFORE, the petition is DISMISSED, with costs against the petitioner.
SO ORDERED.
 PICOP RESOURCES, G.R. No. 172666
INCORPORATED (PRI),
Represented in this Petition by MR. Present:
WILFREDO D. FUENTES, in his
capacity as PERALTA,* J., Acting Chairperson,
Senior Vice-President and ABAD,
Resident Manager, MENDOZA,
Petitioner, SERENO,* * and
PERLAS-BERNABE, JJ.

- versus -

RICARDO DEQUILLA,
ELMO PABILANDO, Promulgated:
CESAR ATIENZA and
ANICETO ORBETA, JR., December 7, 2011
and NAMAPRI-SPFI,
Respondents.

X -----------------------------------------------------------------------------------------------------X

DECISION

MENDOZA, J.:

This is a petition for review assailing the April 14, 2005 Decision[1] of the Court of
Appeals (CA) which reversed and set aside the Resolutions[2]of the National Labor Relations
Commission (NLRC) dated December 27, 2002 and March 28, 2003, and reinstated the June 9,
2001 Decision[3] of the Labor Arbiter (LA), which declared the dismissal of the private respondents
as illegal.

The Facts
Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rank-and-
file employees of Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a duly
registered labor organization and existing bargaining agent of the PICOP rank-and-file employees.
PICOP and NAMAPRI-SPFL had a collective bargaining agreement (CBA) which would expire
on May 22, 2000.
On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of
the Southern Philippines Federation of Labor (SPFL),advised the PICOP management to terminate
about 800 employees due to acts of disloyalty, specifically, for allegedly campaigning, supporting
and signing a petition for the certification of a rival union, the Federation of Free Workers
Union (FFW) before the 60-day freedom period and during the effectivity of the CBA. Such acts
of disloyalty were construed to be a valid cause for termination under the terms and conditions of
the CBA. Based on the CBA, the freedom period would start on March 22, 2000.
Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP
Legal and Labor Relations Department, issued a memorandum directing the employees concerned
to explain within seventy-two (72) hours why their employment should not be terminated due to
alleged acts of disloyalty. Upon receiving their explanation letters, Atty. Boniel endorsed the same
to Atty. Fuentes who then requested the termination of 46 employees found guilty of acts of
disloyalty.
On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31
of the 46 employees. Private respondents were among the 31 employees dismissed from
employment by PICOP on November 16, 2000.
Enraged at what management did to them, private respondents filed a complaint before the NLRC
Regional Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal
Dismissal with money claims, damages and attorneys fees.

LA Ruling
On June 9, 2001, after the parties submitted their respective position papers, the LA
rendered a decision declaring as illegal the termination of the private respondents. The dispositive
portion of the LA Decision reads:
WHEREFORE, premises considered, judgment is hereby entered:
1. Declaring complainants dismissal illegal; and
2. Ordering respondents PRI and NAMPRI-SPFL to reinstate
complainants to their former or equivalent positions without loss
of seniority rights and to jointly and solidarily pay their backwages
in the total amount of ₱177,403.68, as shown in the computation,
hereto attached and marked as Annex A hereof, plus damages in
the amount of ₱10,000.00 each and attorneys fees equivalent to
10% of the total monetary award.
SO ORDERED. [4]

NLRC Ruling
PICOP elevated the LA decision to the NLRC but its appeal was dismissed in
the November 19, 2002 NLRC Resolution.[5] On motion for reconsideration, however, the NLRC
issued another resolution,[6] dated December 27, 2002, reversing and setting aside its November
19, 2002 Resolution, the dispositive portion of which reads:
WHEREFORE, foregoing premises considered, the above resolution
dated November 19, 2002, is Reversed and Set Aside. In lieu thereof, a new
judgment is rendered DISMISSING the above-entitled case for lack of merit.
SO ORDERED.[7]

CA Ruling
Upon the denial of their motion for reconsideration, the private respondents brought the
case to the CA. On April 14, 2005, the CA rendered the subject decision reversing and setting
aside the December 27, 2002 NLRC resolution and reinstating the June 9, 2001 Decision of the
LA. The decretal portion of the CA decision reads:
WHEREFORE, premises considered, [the] instant petition is GRANTED
and the assailed resolutions of the Public Respondent NLRC are hereby
REVERSED and SET ASIDE. In view thereof, ordered REINSTATED is the
 Decision of Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09 June
2001 which reads:
WHEREFORE, premises considered, judgment is hereby entered:
1. Declaring complainants dismissal illegal; and
2. Ordering Respondents PRI and NAMPRI-SPFL to
reinstate Complainants to their former or equivalent
positions without loss of seniority rights and to jointly and
solidarily pay their backwages in the total amount
of ₱177,403.68, plus damages in the amount
of ₱10,000.00 each and attorneys fees equivalent to 10%
of the total monetary award.
SO ORDERED.[8]
The CA ruled, among others, that although private respondents signed an authorization for
the filing of the petition for certification election of a rival union, PICOP Democratic Trade
Unionist-Federation of Free Workers (FFW), such act was not a sufficient ground to terminate the
employment of private respondents. It explained:
Ruminating from the alleged violation of the CBA, We see no reason,
sufficient and compelling enough, to sustain the Public Respondents raison detre in
overturning the Labor Arbiters ruling in favor of the Petitioners. While it is true
that Petitioners signed the authorization in support of the Petition for certification
election of FFW before the freedom period, such act is not a sufficient ground to
terminate the employment of the Petitioners in as much as the petition itself was
filed during the freedom period. Hence, there is nil a basis to impute acts of
disloyalty to Petitioners. Imputations of an alleged violation of the CBA should not
arise from a vague and all embracing definition of alleged acts of disloyalty. Neither
should it arise from speculative inferences where no evidence appears from the
record that Respondent NAMAPRI-SPFL expressly defined acts of disloyalty.
Besides, to Our mind, signing an authorization for the filing of the petition for
certification election does not constitute an act of disloyalty per se. There must be
proof of contemporaneous acts of resignation or withdrawal of their membership
from the Respondent NAMAPRI-SPFL to which they are members. Respondents
miserably failed to present evidence to justify a valid termination of employees in
pursuance to the CBA allegedly violated. Petitioners, in fact remained in good
standing, a continuing requirement for retaining their employment in the
Respondent PRI. Petitioners neither joined nor affiliated with FFW and
continuously paid their union dues with Respondent NAMAPRI-SPFL.
Consequently, this lends credence to the Labor Arbiters ruling that Petitioners
dismissal was indeed illegal.
Likewise, the advise of the Respondent NAMAPRI-SPFL to the
Respondent PRI to effect the termination of employees, including herein
Petitioners, finds no basis in fact and in law considering that at the time the
Respondent PRI dismissed the Petitioners, among others, on 16 November 2000,
there was no more CBA to speak of after it had already expired on 22 May 2000.[9]
The CA further agreed with private respondents that Article 256 and not Article 253, of the
Labor Code applied in this case. The CA discussed this point as follows:
 We are inclined to favor Petitioners stance that Article 256, supra, is
applicable. The issue of acts of disloyalty relates more to a direct connection on the
alleged violation or breach of loyalty to the majority status of the incumbent union
than on violation of the terms and conditions of the agreement under Article
253, supra, as the Respondents would want Us to believe. Article 256 provides that
at the expiration of the 60-day period reckoned from the expiration date of the CBA,
the employer shall continue to recognize the majority status of the incumbent
bargaining agent only where no petition for certification election is filed. However,
as earlier pointed, a petition was already filed by the Petitioners, among others,
during the 60-day freedom period. Clearly, from the imports of said provision, it
will render nugatory the purpose of the law providing for a freedom period for the
filing of a petition for certification election should the act of signing/filing the said
petition be interpreted as an act of disloyalty and will render farce the need for a
certification election as an instrument of ascertaining the true expression of the will
of the workers as to which labor organization would represent them.
To construe the provision of law in Article 253, supra, as imposing a
restriction against the signing and filing a petition for certification election during
the freedom period, is to violate the constitutional right of the employees to
organize freely. It is a basic precept of statutory construction that statutes should be
construed not so much according to the letters that killeth but in line with the
purpose for which they have been enacted.[10]
Not in conformity with the CA decision, PICOP filed this petition for review posing the
following

ISSUES

WHETHER [OR NOT] AN EXISTING COLLECTIVE

BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE
AND EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD
WHEN NO NEW CBA HAS YET BEEN ENTERED INTO?

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION

AND/OR CONCLUSION OF LAW FALLS WITHIN THE AMBIT OF THE
EXTRA ORDINARY REMEDY OF CERTIORARI UNDER RULE 65,
REVISED RULES OF COURT.[11]

PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the
Labor Code provides that the terms and conditions of a CBA remain in full force and effect even
beyond the 5-year period when no new CBA has yet been reached. It claims that the private
respondents violated this provision when they campaigned for, supported and signed FFWs
petition for certification election on March 19 and 20, 2000, before the onset of the freedom period.
It further argues that private respondents were not denied due process when they were terminated.
Finally, it claims that the decision of the NLRC on the issues raised was not without merit. Even
assuming that it erred in its judgment on the legal issues raised, its error is not equivalent to an
abuse of discretion that should fall within the ambit of the extraordinary remedy of certiorari.
Private respondents position
Private respondents argue that the substantial arguments raised by PICOP in this petition are
basically a rehash of the same issues and arguments contained in its Motion for Reconsideration
of the CA decision. Private respondents adopted and repleaded the ruling of the CA in their
Comment[12]on this petition.

The Courts Ruling

The petition merits a denial.

There is no question that in the CBA entered into by the parties, there is a union security
clause. The clause imposes upon the workers the obligation to join and maintain membership in
the companys recognized union as a condition for employment.

"Union security" is a generic term, which is applied to and comprehends

"closed shop," "union shop," "maintenance of membership," or any other form of
agreement which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment. There is union shop when all
new regular employees are required to join the union within a certain period as a
condition for their continued employment. There is maintenance of membership
shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership
as a condition for continued employment until they are promoted or transferred out
of the bargaining unit, or the agreement is terminated. A closed shop, on the other
hand, may be defined as an enterprise in which, by agreement between the employer
and his employees or their representatives, no person may be employed in any or
certain agreed departments of the enterprise unless he or she is, becomes, and, for
the duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[13]

There is no dispute that private respondents were members of NAMAPRI-SPFL who were
terminated by PICOP due to alleged acts of disloyalty. It is basic in labor jurisprudence that the
burden of proof rests upon management to show that the dismissal of its worker was based on a
just cause. When an employer exercises its power to terminate an employee by enforcing the union
security clause, it needs to determine and prove the following: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision in the
CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee
from the union.[14]

In this case, the resolution thereof hinges on whether PICOP was able to show sufficient
evidence to support the decision of the union to expel private respondents from it.

PICOP basically contends that private respondents were justly terminated from
employment for campaigning, supporting and signing a petition for the certification of FFW, a
rival union, before the 60-day freedom period and during the effectivity of the CBA. Their acts
constitute an act of disloyalty against the union which is valid cause for termination pursuant to
the Union Security Clause in the CBA.

The Court finds Itself unable to agree.

Considering the peculiar circumstances, the Court is of the view that the acts of private
respondents are not enough proof of a violation of the Union Security Clause which would warrant
their dismissal. PICOP failed to show in detail how private respondents campaigned and supported
FFW.Their mere act of signing an authorization for a petition for certification election before the
freedom period does not necessarily demonstrate union disloyalty. It is far from being within the
definition of acts of disloyalty as PICOP would want the Court to believe. The act of signing an
authorization for a petition for certification election is not disloyalty to the union per
se considering that the petition for certification election itself was filed during the freedom period
which started on March 22, 2000.

Moreover, as correctly ruled by the CA, the records are bereft of proof of any
contemporaneous acts of resignation or withdrawal of union membership or non-payment of union
dues. Neither is there proof that private respondents joined FFW. The fact is, private respondents
remained in good standing with their union, NAMAPRI-SPFL. This point was settled in the case
of PICOP Resources, Incorporated (PRI) v. Anacleto L. Taeca,[15]where it was written:

However, as to the third requisite, we find that there is no sufficient

evidence to support the decision of PRI to terminate the employment of the
respondents.

PRI alleged that respondents were terminated from employment based on

the alleged acts of disloyalty they committed when they signed an authorization for
the Federation of Free Workers (FFW) to file a Petition for Certification Election
among all rank-and-file employees of PRI. It contends that the acts of respondents
are a violation of the Union Security Clause, as provided in their Collective
Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere
signing of the authorization in support of the Petition for Certification Election of
FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient
ground to terminate the employment of respondents inasmuch as the petition itself
was actually filed during the freedom period. Nothing in the records would show
that respondents failed to maintain their membership in good standing in the Union.
Respondents did not resign or withdraw their membership from the Union to which
they belong. Respondents continued to pay their union dues and never joined the
FFW.
 Significantly, petitioner's act of dismissing respondents stemmed from the
latter's act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. However, we are constrained
to believe that an "authorization letter to file a petition for certification election" is
different from an actual "Petition for Certification Election." Likewise, as per
records, it was clear that the actual Petition for Certification Election of FFW was
filed only on May 18, 2000. Thus, it was within the ambit of the freedom period
which commenced from March 21, 2000 until May 21, 2000. Strictly speaking,
what is prohibited is the filing of a petition for certification election outside the 60-
day freedom period. This is not the situation in this case. If at all, the signing of the
authorization to file a certification election was merely preparatory to the filing of
the petition for certification election, or an exercise of respondents right to self-
organization.[16]

Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article
256 thereof. The Court agrees with the CA that its argument is misplaced. This issue was tackled
and settled in the same PICOP Resources, Incorporated (PRI) v. Taeca case, to wit:

Moreover, PRI anchored their decision to terminate respondents

employment on Article 253 of the Labor Code which states that "it shall be the duty
of both parties to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the 60-day period and/or
until a new agreement is reached by the parties." It claimed that they are still bound
by the Union Security Clause of the CBA even after the expiration of the CBA;
hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening.

It reads:

Article 256. Representation issue in organized establishments. - In

organized establishments, when a verified petition questioning the majority status
of the incumbent bargaining agent is filed before the Department of Labor and
Employment within the sixty-day period before the expiration of a collective
bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. To have a
valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all the workers in the unit. When an
election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, That the total
number of votes for all contending unions is at least fifty per cent (50%) of the
number of votes cast.
At the expiration of the freedom period, the employer shall continue to
recognize the majority status of the incumbent bargaining agent where no petition
for certification election is filed.

Applying the same provision, it can be said that while it is incumbent for
the employer to continue to recognize the majority status of the incumbent
bargaining agent even after the expiration of the freedom period, they could only
do so when no petition for certification election was filed. The reason is, with a
pending petition for certification, any such agreement entered into by management
with a labor organization is fraught with the risk that such a labor union may not be
chosen thereafter as the collective bargaining representative. The provision
for status quo is conditioned on the fact that no certification election was filed
during the freedom period. Any other view would render nugatory the clear
statutory policy to favor certification election as the means of ascertaining the true
expression of the will of the workers as to which labor organization would represent
them.

In the instant case, four (4) petitions were filed as early as May 12, 2000. In
fact, a petition for certification election was already ordered by the Med-Arbiter of
DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at the
expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL
as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic
renewal pertains only to the economic provisions of the CBA, and does not include
representational aspect of the CBA. An existing CBA cannot constitute a bar to a
filing of a petition for certification election. When there is a representational issue,
the status quo provision in so far as the need to await the creation of a new
agreement will not apply. Otherwise, it will create an absurd situation where the
union members will be forced to maintain membership by virtue of the union
security clause existing under the CBA and, thereafter, support another union when
filing a petition for certification election. If we apply it, there will always be an
issue of disloyalty whenever the employees exercise their right to self-organization.
The holding of a certification election is a statutory policy that should not be
circumvented, or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing
the welfare of the workers. Their freedom to choose who should be their bargaining
representative is of paramount importance. The fact that there already exists a
bargaining representative in the unit concerned is of no moment as long as the
petition for certification election was filed within the freedom period. What is
imperative is that by such a petition for certification election the employees are
given the opportunity to make known of who shall have the right to represent them
 thereafter. Not only some, but all of them should have the right to do so. What is
equally important is that everyone be given a democratic space in the bargaining
unit concerned.

We will emphasize anew that the power to dismiss is a normal prerogative

of the employer. This, however, is not without limitations. The employer is bound
to exercise caution in terminating the services of his employees especially so when
it is made upon the request of a labor union pursuant to the Collective Bargaining
Agreement. Dismissals must not be arbitrary and capricious. Due process must be
observed in dismissing an employee, because it affects not only his position but
also his means of livelihood. Employers should, therefore, respect and protect the
rights of their employees, which include the right to labor. [17]

Considering that private respondents were illegally dismissed, basic law provides that they
shall be entitled to the benefit of full backwages and reinstatement unless the latter is no longer
viable, in which case, a grant of separation pay shall be awarded equivalent to one month salary
for every year of service.

X x x Under Republic Act No. 6715, employees who are illegally dismissed
are entitled to full backwages, inclusive of allowances and other benefits, or their
monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. But if reinstatement
is no longer possible, the backwages shall be computed from the time of their illegal
termination up to the finality of the decision X x x.[18]

Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the
total monetary award as they were compelled to litigate in order to seek redress for their illegal
dismissal.

WHEREFORE, the petition is DENIED.

SO ORDERED.
 REPUBLIC OF THE PHILIPPINES, G.R. No. 160352
represented by Department of Labor
and Employment (DOLE), Present:
Petitioner,
QUISUMBING,* J.,
YNARES-SANTIAGO,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.
KAWASHIMA TEXTILE
MFG., PHILIPPINES, INC., Promulgated:
Respondent. July 23, 2008
x----------------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

The Republic of the Philippines assails by way of Petition for Review on Certiorari under Rule 45 of the
Rules of Court, the December 13, 2002 Decision[1] of the Court of Appeals (CA), which reversed the August
18, 2000 Decision[2] of the Department of Labor and Employment (DOLE), and reinstated the May 17, 2000
Order[3] of Med-Arbiter Anastacio L. Bactin, dismissing the petition of Kawashima Free Workers Union-
PTGWO Local Chapter No. 803 (KFWU) for the conduct of a certification election in Kawashima Textile
Mfg. Phils., Inc. (respondent); and the October 7, 2003 CA Resolution[4] which denied the motion for
reconsideration.

The relevant facts are of record.

On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for Certification Election
to be conducted in the bargaining unit composed of 145 rank-and-file employees of respondent.[5] Attached
to its petition are a Certificate of Creation of Local/Chapter[6] issued on January 19, 2000 by DOLE Regional
Office No. IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by the national
federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of
Local/Chapter.[7]

Respondent filed a Motion to Dismiss[8] the petition on the ground that KFWU did not acquire any legal
personality because its membership of mixed rank-and-file and supervisory employees violated Article 245
of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court
in Progressive Development Corporation v. Secretary, Department of Labor and Employment.[9]
In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWUs legal personality defective and
dismissed its petition for certification election, thus:

We scrutinize the facts and evidences presented by the parties and arrived at a decision that
at least two (2) members of [KFWU], namely: Dany I. Fernandez and Jesus R. Quinto, Jr.
are supervisory employees, having a number of personnel under them. Being supervisory
 employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the
union of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr., Chief
Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen
to the line engineers, mechanics and other non-skilled workers and responsible [for] the
preparation and organization of maintenance shop fabrication and schedules, inventory and
control of materials and supplies and tasked to implement training plans on line engineers
and evaluate the performance of their subordinates. The above-stated actual functions
of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are
supervisory employees.

xxxx

Since petitioners members are mixture of rank and file and supervisory employees,
petitioner union, at this point [in] time, has not attained the status of a legitimate labor
organization. Petitioner should first exclude the supervisory employees from it
membership before it can attain the status of a legitimate labor organization. The above
judgment is supported by the decision of the Supreme Court in the Toyota Case[10] wherein
the High Tribunal ruled:

As respondent unions 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.(Underscoring
omitted.)

xxxx

Furthermore, the commingling of rank and file and supervisory employees in one (1)
bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-election
conference. The above ruling is supported by the Decision of the Supreme Court in Dunlop
Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and Employment, et al., G.R. No.
131248 dated December 11, 1998[11] x x x.

xxxx

WHEREFORE, premises considered, the petition for certification election is hereby

dismissed for lack of requisite legal status of petitioner to file this instant petition.

SO ORDERED.[12] (Emphasis supplied)

On the basis of the aforecited decision, respondent filed with DOLE Regional Office No. IV a
Petition for Cancellation of Charter/Union Registration of KFWU,[13] the final outcome of which,
unfortunately, cannot be ascertained from the records.

Meanwhile, KFWU appealed[14] to the DOLE which issued a Decision on August 18, 2000,
the dispositive portion of which reads:
 WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-
Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be
remanded to the office of origin for the immediate conduct of certification election, subject
to the usual pre-election conference, among the rank-and-file employees of Kawashima
Textile Manufacturing Philippines, Inc. with the following choices:

1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and

2. No union.

Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is hereby
directed to submit to the office of origin the certified list of current employees in the
bargaining unit for the last three months prior to the issuance of this decision.

SO DECIDED.[15]

The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court in Toyota Motor Philippines
Corporation v. Toyota Motor Philippines Corporation Labor Union[16] and Dunlop Slazenger, Inc. v.
Secretary of Labor and Employment[17] was misplaced, for while Article 245 declares supervisory employees
ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the
effect of such prohibited membership on the legitimacy of the labor organization and its right to file for
certification election. Neither was such mixed membership a ground for cancellation of its
registration. Section 11, Paragraph II, Rule XI of Department Order No. 9 provides for the dismissal of a
petition for certification election based on lack of legal personality of a labor organization only on the
following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor Relations in its
registry of legitimate labor organizations; or (2) [KFWU's] legal personality has been revoked or canceled
with finality.[18] The DOLE noted that neither ground existed; on the contrary, KFWU's legal personality was
well-established, for it held a certificate of creation and had been listed in the registry of legitimate labor
organizations.

As to the failure of KFWU to file its books of account, the DOLE held that such omission was not a ground
for revocation of union registration or dismissal of petition for certification election, for under Section 1, Rule
VI of Department Order No. 9, a local or chapter like KFWU was no longer required to file its books of
account.[19]

Respondent filed a Motion for Reconsideration[20] but the DOLE denied the same in its September 28,
2000 Resolution.[21]

However, on appeal by respondent, the CA rendered the December 13, 2002 Decision assailed herein,
reversing the August 18, 2000 DOLE Decision, thus:

Since respondent union clearly consists of both rank and file and supervisory
employees, it cannot qualify as a legitimate labor organization imbued with the
requisite personality to file a petition for certification election. This infirmity in union
membership cannot be corrected in the inclusion-exclusion proceedings during the
pre-election conference.
 Finally, contrary to the pronouncement of public respondent, the application of the doctrine
enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor Philippines
Corporation Labor Union was not construed in a way that effectively denies the fundamental
right of respondent union to organize and seek bargaining representation x x x.

For ignoring jurisprudential precepts on the matter, the Court finds that the Undersecretary
of Labor, acting under the authority of the Secretary of Labor, acted with grave abuse of
discretion amounting to lack or excess of jurisdiction.

WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision

dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of the
Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of the
Med-Arbiter dismissing the petition for certification election filed by Kawashima Free
Workers Union-PTGWO Local Chapter No. 803 is REINSTATED.

SO ORDERED.[22] (Emphasis supplied)

KFWU filed a Motion for Reconsideration[23] but the CA denied it.

The Republic of the Philippines (petitioner) filed the present petition to seek closure on two issues:

First, whether a mixed membership of rank-and-file and supervisory employees in a union

is a ground for the dismissal of a petition for certification election in view of the amendment
brought about by D.O. 9, series of 1997, which deleted the phraseology in the old rule that
[t]he appropriate bargaining unit of the rank-and-file employee shall not include the
supervisory employees and/or security guards; and

Second, whether the legitimacy of a duly registered labor organization can be collaterally
attacked in a petition for a certification election through a motion to dismiss filed by an
employer such as Kawashima Textile Manufacturing Phils., Inc.[24]

The petition is imbued with merit.

The key to the closure that petitioner seeks could have been Republic Act (R.A.) No. 9481.[25] Sections 8 and
9 thereof provide:

Section 8. Article 245 of the Labor Code is hereby amended to read as follows:

"Art. 245. Ineligibility of Managerial Employees to Join any Labor

Organization; Right of Supervisory Employees. - Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in the collective bargaining
unit of the rank-and-file employees but may join, assist or form separate
collective bargaining units and/or legitimate labor organizations of their
own. The rank and file union and the supervisors' union operating within the
same establishment may join the same federation or national union."
 Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows:

"Art. 245-A. Effect of Inclusion as Members of Employees Outside the

Bargaining Unit. - The inclusion as union members of employees
outside the bargaining unit shall not be a ground for the cancellation of
the registration of the union. Said employees are automatically deemed
removed from the list of membership of said
union." (Emphasissupplied)

Moreover, under Section 4, a pending petition for cancellation of registration

will not hinder a legitimate labor organization from initiating a certification election, viz:

Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read as
follows:

"Art. 238-A. Effect of a Petition for Cancellation of Registration. - A

petition for cancellation of union registration shall not suspend the
proceedings for certification election nor shall it prevent the filing of a
petition for certification election.

In case of cancellation, nothing herein shall restrict the right of the union to
seek just and equitable remedies in the appropriate courts."
(Emphasis supplied)

Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to interfere with or thwart a
petition for certification election filed by a legitimate labor organization, to wit:

Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read as
follows:

"Art. 258-A. Employer as Bystander. - In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor
organization, the employer shall not be considered a party thereto with
a concomitant right to oppose a petition for certification election. The
employer's participation in such proceedings shall be limited to: (1)
being notified or informed of petitions of such nature; and (2)
submitting the list of employees during the pre-election conference
should the Med-Arbiter act favorably on the petition."
(Emphasis supplied)

However, R.A. No. 9481 took effect only on June 14, 2007;[26] hence, it applies only to labor representation
cases filed on or after said date.[27] As the petition for certification election subject matter of the present petition
was filed by KFWU on January 24, 2000,[28] R.A. No. 9481 cannot apply to it. There may have been curative
labor legislations[29] that were given retrospective effect,[30] but not the aforecited provisions of R.A. No. 9481,
for otherwise, substantive rights and interests already vested would be impaired in the process.[31]
Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election
on January 24, 2000 are R.A. No. 6715,[32] amending Book V of Presidential Decree (P.D.) No. 442 (Labor
Code),[33] as amended, and the Rules and Regulations Implementing R.A. No. 6715,[34] as amended by
Department Order No. 9, series of 1997.[35]

It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court will now
resolve the two issues raised by petitioner.
If there is one constant precept in our labor laws be it Commonwealth Act No. 213 (1936),[36] R.A. No. 875
(1953),[37] P.D. No. 442 (1974), Executive Order (E.O.) No. 111 (1986)[38] or R.A. No. 6715 (1989) - it is that
only a legitimate labor organization may exercise the right to be certified as the exclusive representative of all
the employees in an appropriate collective bargaining unit for purposes of collective bargaining.[39] What has
varied over the years has been the degree of enforcement of this precept, as reflected in the shifting scope of
administrative and judicial scrutiny of the composition of a labor organization before it is allowed to exercise
the right of representation.

One area of contention has been the composition of the membership of a labor organization, specifically
whether there is a mingling of supervisory and rank-and-file employees and how such questioned mingling
affects its legitimacy.

It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited,[40] to wit:

Sec. 3. Employees right to self-organization. Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to engage
in concerted activities for the purpose of collective bargaining and other mutual aid or
protection. Individuals employed as supervisors shall not be eligible for membership in
a labor organization of employees under their supervision but may form separate
organizations of their own. (Emphasis supplied)

Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the legitimacy of the labor
organization. Under Section 15, the only instance when a labor organization loses its legitimacy is when it
violates its duty to bargain collectively; but there is no word on whether such mingling would also result in
loss of legitimacy. Thus, when the issue of whether the membership of two supervisory employees impairs
the legitimacy of a rank-and-file labor organization came before the Court En Banc in Lopez v. Chronicle
Publication Employees Association,[41] the majority pronounced:

It may be observed that nothing is said of the effect of such ineligibility upon the union itself
or on the status of the other qualified members thereof should such prohibition be
disregarded. Considering that the law is specific where it intends to divest a legitimate labor
union of any of the rights and privileges granted to it by law, the absence of any provision
on the effect of the disqualification of one of its organizers upon the legality of the union,
may be construed to confine the effect of such ineligibility only upon the membership
of the supervisor. In other words, the invalidity of membership of one of the organizers
does not make the union illegal, where the requirements of the law for the organization
thereof are, nevertheless, satisfied and met.[42] (Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875. The provision in the
Labor Code closest to Sec. 3 is Article 290,[43] which is deafeningly silent on the prohibition against
supervisory employees mingling with rank-and-file employees in one labor organization. Even the Omnibus
Rules Implementing Book V of the Labor Code[44] (Omnibus Rules) merely provides in Section 11, Rule II,
thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation. All existing
supervisory unions and unions of security guards shall, upon the effectivity of the Code,
cease to operate as such and their registration certificates shall be deemed automatically
cancelled. However, existing collective agreements with such unions, the life of which
extends beyond the date of effectivity of the Code shall be respected until their expiry date
insofar as the economic benefits granted therein are concerned.

Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file organization. The
determination of who are managerial employees and who are not shall be the subject of
negotiation between representatives of supervisory union and the employer. If no agreement
s reached between the parties, either or both of them ma bring the issue to the nearest
Regional Office for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in Bulletin
v. Sanchez[45] that supervisory employees who do not fall under the category of managerial employees may
join or assist in the formation of a labor organization for rank-and-file employees, but they may not form their
own labor organization.
While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its implementing
rules[46] continued to recognize the right of supervisory employees, who do not fall under the category of
managerial employees, to join a rank-and-file labor organization.[47]

Effective 1989, R.A. No. 6715 restored the prohibition against the questioned mingling in one labor
organization, viz:

Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to
read as follows

Art. 245. Ineligibility of managerial employees to join any labor

organization; right of supervisory employees. Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization
of the rank-and-file employees but may join, assist or form separate
labor organizations of their own. (Emphasis supplied)

Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect any violation of the
prohibition would bring about on the legitimacy of a labor organization.

It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules)
which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions):
 Sec. 1. Who may join unions. x x x Supervisory employees and security guards shall not
be eligible for membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own; Provided, that those
supervisory employees who are included in an existing rank-and-file bargaining unit, upon
the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz:
Sec. 1. Where to file. A petition for certification election may be filed with the Regional
Office which has jurisdiction over the principal office of the employer. The petition shall be
in writing and under oath.

Sec. 2. Who may file. Any legitimate labor organization or the employer, when requested to
bargain collectively, may file the petition.

The petition, when filed by a legitimate labor organization, shall contain, among others:

xxxx

(c) description of the bargaining unit which shall be the employer

unit unless circumstances otherwise require; and provided further, that
the appropriate bargaining unit of the rank-and-file employees shall not
include supervisory employees and/or security guards. (Emphasis
supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered
labor organization from exercising its right to file a petition for certification election.

Thus, when the issue of the effect of mingling was brought to the fore in Toyota,[48] the Court, citing Article
245 of the Labor Code, as amended by R.A. No. 6715, held:

Clearly, based on this provision, a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be
a legitimate labor organization. Not being one, an organization which carries a mixture of
rank-and-file and supervisory employees cannot possess any of the rights of a
legitimate labor organization, including the right to file a petition for certification
election for the purpose of collective bargaining. It becomes necessary,
therefore, anteriorto 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.

xxxx

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.[49] (Emphasis supplied)
In Dunlop,[50] in which the labor organization that filed a petition for certification election was one for
supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated
that such labor organization had no legal right to file a certification election to represent a bargaining unit
composed of supervisors for as long as it counted rank-and-file employees among its members.[51]

It should be emphasized that the petitions for certification election involved

in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence,
the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department
Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c)
of the 1989 Amended Omnibus Rules - that the petition for certification election indicate that the bargaining
unit of rank-and-file employees has not been mingled with supervisory employees - was removed. Instead,
what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus:

Rule XI
Certification Elections

xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and
shall contain, among others, the following: x x x (c) The description of the bargaining unit.[52]

In Pagpalain Haulers, Inc. v. Trajano,[53] the Court had occasion to uphold the validity of the 1997 Amended
Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit:

Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or

national union may directly create a local/chapter by submitting to the Regional Office or to
the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or
national union indicating the creation or establishment of the local/chapter; (b) the names of
the local/chapters officers, their addresses, and the principal office of the local/chapter; and
(c) the local/ chapters constitution and by-laws; provided that where the local/chapters
constitution and by-laws is the same as that of the federation or national union, this fact shall
be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.

which does not require that, for its creation and registration, a local or chapter submit a list of its members.
Then came Tagaytay Highlands Intl. Golf Club, Inc. v. Tagaytay Highlands Employees Union-
PGTWO[54] in which the core issue was whether mingling affects the legitimacy of a labor organization and
its right to file a petition for certification election. This time, given the altered legal milieu, the Court
abandoned the view in Toyota and Dunlop and reverted to its pronouncement in Lopez that while there is a
prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the
Labor Code does not provide for the effects thereof.[55] Thus, the Court held that after a labor organization has
been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling
between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is
not among the grounds for cancellation of its registration, unless such mingling was brought about by
misrepresentation, false statement or fraud under Article 239 of the Labor Code.[56]

In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-
San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW,[57] the Court
explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of
its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of
any question pertaining to its individual members.[58]

More to the point is Air Philippines Corporation v. Bureau of Labor Relations,[59] which involved a
petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership:[60] the Court therein reiterated its ruling
in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the
circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.[61]

All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the
Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for
it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.

Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE granting the petition
for certification election of KFWU.

Now to the second issue of whether an employer like respondent may collaterally attack the legitimacy of a
labor organization by filing a motion to dismiss the latters petition for certification election.

Except when it is requested to bargain collectively,[62] an employer is a mere bystander to any petition for
certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is
to determine which organization will represent the employees in their collective bargaining with the
employer.[63] The choice of their representative is the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a
motion to dismiss or an appeal from it;[64] not even a mere allegation that some employees participating in a
petition for certification election are actually managerial employees will lend an employer legal personality to
block the certification election.[65] The employer's only
right in the proceeding is to be notified or informed thereof.[66]

The amendments to the Labor Code and its implementing rules have buttressed that policy even more.

WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and October 7, 2003
Resolution of the Court of Appeals and the May 17, 2000 Order of Med-
Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE, while the August 18, 2000 Decision and
September 28, 2000 Resolution of the Department of Labor and Employment are REINSTATED.

No costs.
 PICOP RESOURCES, INCORPORATED G.R. No. 160828
(PRI),
Petitioner, Present:

- versus
CARPIO, J., Chairperson,
ANACLETO L. TAECA, GEREMIAS S. NACHURA,
TATO, JAIME N. CAMPOS, PERALTA
MARTINIANO A. MAGAYON, JOSEPH B. ABAD, and
BALGOA, MANUEL G. ABUCAY, MENDOZA, JJ.
MOISES M. ALBARAN, MARGARITO G.
ALICANTE, JERRY ROMEO T. AVILA,
LORENZO D. CANON, RAUL P. DUERO, Promulgated:
DANILO Y. ILAN, MANUEL M.
MATURAN, JR., LUISITO R. POPERA, August 9, 2010
CLEMENTINO C. QUIMAN, ROBERTO
Q. SILOT, CHARLITO D.
SINDAY, REMBERT B. SUZONALLAN J.
TRIMIDAL, and NAMAPRI-SPFL,
Respondents.

x----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal
of the Decision[1] dated July 25, 2003 and Resolution[2] dated October 23, 2003 of the Court of
Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 2001[3] and
April 29, 2002[4] of the National Labor Relations Commission in NLRC CA No. M-006309-2001
and reinstating the Decision[5] dated March 16, 2001 of the Labor Arbiter.

The facts, as culled from the records, are as follows:

On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime
Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a
Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP
Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident
Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern
Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary
General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang
Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes,
Jr.[6] (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members
of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-
SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of
five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are
members of the UNION at the time of the signing of this AGREEMENT shall, as
a condition of continued employment by the COMPANY, maintain their
membership in the UNION in good standing during the effectivity of this
AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position

covered by the bargaining unit shall be advised by the COMPANY that they are
required to file an application for membership with the UNION within thirty (30)
days from the date his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after
compliance with the requirements of the New Labor Code, shall give notice of
termination of services of any employee who shall fail to fulfill the condition
provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to
discharge any employee if it has reasonable grounds to believe either that
membership in the UNION was not available to the employee on the same terms
and conditions generally applicable to other members, or that membership was
denied or terminated for reasons other than voluntary resignation or non-payment
of regular union dues. Separation under the Section is understood to be for cause,
consequently, the dismissed employee is not entitled to separation benefits provided
under the New Labor Code and in this AGREEMENT.[7]

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management
of PRI demanding the termination of employees who allegedly campaigned for, supported and
signed the Petition for Certification Election of the Federation of Free Workers Union (FFW)
during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and
signing the petition for certification election of FFW as an act of disloyalty and a valid basis for
termination for a cause in accordance with its Constitution and By-Laws, and the terms and
conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to
investigate those union members who signed the Petition for Certification Election of FFW during
the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the
authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures
of employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A.
Boniel issued a memorandum addressed to theconcerned employees to explain in writing within
72 hours why their employment should not be terminated due to acts of disloyalty as alleged by
their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served
explanation memorandum submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the
employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of
PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand
for termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46
employees whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty
committed against it when respondents allegedly supported and signed the Petition for
Certification Election of FFW before the freedom period during the effectivity of the CBA. A
Notice dated October 21, 2000 was also served on the Department of Labor and Employment
Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a),
(b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio
Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL
or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL.
They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL.
They pointed out that a patent manifestation of ones disloyalty would have been the explicit
resignation or withdrawal of membership from the Union accompanied by an advice to
management to discontinue union dues and check-off deductions. They insisted that mere
affixation of signature on such authorization to file a petition for certification election was not per
se an act of disloyalty. They claimed that while it may be true that they signed the said
authorization before the start of the freedom period, the petition of FFW was only filed with the
DOLE on May 18, 2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying support to the filing
of a Petition for Certification Election of FFW was merely prompted by their desire to have a
certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation
in due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the letter
dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo
addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely
requested PRI to investigate union members who supported the Petition for Certification Election
of FFW. Respondents claimed that they should have been summoned individually, confronted with
the accusation and investigated accordingly and from where the Union may base its findings of
disloyalty and, thereafter, recommend to management the termination for causes.

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it
was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA
had already expired on May 22, 2000. Hence, there could be no justification in PRIs act of
dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the
wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to
interference with, restraint or coercion of respondents exercise of their right to self-organization.
The act indirectly required petitioners to support and maintain their membership with NAMAPRI-
SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes
and Trujillo amounted to actual restraint and coercion of the petitioners in the exercise of their
rights to self-organization and constituted acts of unfair labor practice.

In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents dismissal
to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions
without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive
portion of which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1. Declaring complainants dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and

NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions
without loss of seniority rights and to jointly and solidarily pay their backwages in
the total amount of P420,339.30 as shown in the said Annex A plus damages in the
amount of P10,000.00 each, or a total of P210,000.00 and attorneys fees equivalent
to 10% of the total monetary award.

SO ORDERED.[9]
PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which
reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from
employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of
merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals
and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed
the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002,
which denied respondents motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the
NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

I
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING
AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN
ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY
CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS
YET BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION
AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE
EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED
RULES OF COURT.[10]

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of
assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment
on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit
of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission.[11] This Court held that the proper vehicle for such review was a
Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should
be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of
courts.[12] Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of
Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended,
known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise
of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon
the evidence, if and when necessary, to resolve factual issues. [13]
We now come to the main issue of whether there was just cause to terminate the
employment of respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in
good faith at the instance of the incumbent union pursuant to the Union Security Clause of the
CBA.
Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they are enjoined
to keep the status quo and continue in full force and effect the terms and conditions of the existing
CBA during the 60-day period and/or until a new agreement is reached by the parties.
Petitioner's argument is untenable.

Union security" is a generic term, which is applied to and comprehends "closed shop,"
union shop," "maintenance of membership," or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a condition
for continued employment until they are promoted or transferred out of the bargaining unit, or the
agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in
which, by agreement between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[15]

However, in terminating the employment of an employee by enforcing the union security

clause, the employer needs to determine and prove that: (1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.[16]

As to the first requisite, there is no question that the CBA between PRI and respondents
included a union security clause, specifically, a maintenance of membership as stipulated in
Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon
written request from the Union, can indeed terminate the employment of the employee who failed
to maintain its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded
from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents
due to their acts of disloyalty to the Union.

However, as to the third requisite, we find that there is no sufficient evidence to support
the decision of PRI to terminate the employment of the respondents.
PRI alleged that respondents were terminated from employment based on the alleged acts of
disloyalty they committed when they signed an authorization for the Federation of Free Workers
(FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It
contends that the acts of respondents are a violation of the Union Security Clause, as provided in
their Collective Bargaining Agreement.

We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere signing of the
authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21,
or before the freedom period, is not sufficient ground to terminate the employment of respondents
inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records
would show that respondents failed to maintain their membership in good standing in the Union.
Respondents did not resign or withdraw their membership from the Union to which they belong.
Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an
authorization letter to file a petition for certification election as they signed it outside the freedom
period. However, we are constrained to believe that an authorization letter to file a petition for
certification election is different from an actual Petition for Certification Election. Likewise, as
per records, it was clear that the actual Petition for Certification Election of FFW was filed only
on May 18, 2000.[17] Thus, it was within the ambit of the freedom period which commenced from
March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition
for certification election outside the 60-day freedom period.[18] This is not the situation in this case.
If at all, the signing of the authorization to file a certification election was merely preparatory to
the filing of the petition for certification election, or an exercise of respondents right to self-
organization.
Moreover, PRI anchored their decision to terminate respondents employment on Article
253 of the Labor Code which states that it shall be the duty of both parties to keep the status quo
and to continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is reached by the parties. It claimed that
they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA;
hence, the need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In

organized establishments, when a verified petition questioning the majority status
of the incumbent bargaining agent is filed before the Department of Labor and
Employment within the sixty-day period before the expiration of a collective
bargaining agreement, the Med-Arbiter shall automatically order an election by
secret ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit to
ascertain the will of the employees in the appropriate bargaining unit. To have a
valid election, at least a majority of all eligible voters in the unit must have cast
their votes. The labor union receiving the majority of the valid votes cast shall be
 certified as the exclusive bargaining agent of all the workers in the unit. When an
election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the
labor unions receiving the two highest number of votes: Provided, That the total
number of votes for all contending unions is at least fifty per cent (50%) of the
number of votes cast.
At the expiration of the freedom period, the employer shall continue to
recognize the majority status of the incumbent bargaining agent where no
petition for certification election is filed.[19]

Applying the same provision, it can be said that while it is incumbent for the employer to
continue to recognize the majority status of the incumbent bargaining agent even after the
expiration of the freedom period, they could only do so when no petition for certification election
was filed. The reason is, with a pending petition for certification, any such agreement entered into
by management with a labor organization is fraught with the risk that such a labor union may not
be chosen thereafter as the collective bargaining representative.[20] The provision for status quo is
conditioned on the fact that no certification election was filed during the freedom period. Any
other view would render nugatory the clear statutory policy to favor certification election as the
means of ascertaining the true expression of the will of the workers as to which labor organization
would represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for
certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August
23, 2000.[22] Therefore, following Article 256, at the expiration of the freedom period, PRI's
obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true
when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to
the economic provisions of the CBA, and does not include representational aspect of the CBA. An
existing CBA cannot constitute a bar to a filing of a petition for certification election. When there
is a representational issue, the status quo provision in so far as the need to await the creation of a
new agreement will not apply. Otherwise, it will create an absurd situation where the union
members will be forced to maintain membership by virtue of the union security clause existing
under the CBA and, thereafter, support another union when filing a petition for certification
election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise
their right to self-organization. The holding of a certification election is a statutory policy that
should not be circumvented,[23] or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the
workers. Their freedom to choose who should be their bargaining representative is of paramount
importance. The fact that there already exists a bargaining representative in the unit concerned is
of no moment as long as the petition for certification election was filed within the freedom period.
What is imperative is that by such a petition for certification election the employees are given the
opportunity to make known of who shall have the right to represent them thereafter. Not only
some, but all of them should have the right to do so. What is equally important is that everyone be
given a democratic space in the bargaining unit concerned.[24]
We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This,
however, is not without limitations. The employer is bound to exercise caution in terminating the
services of his employees especially so when it is made upon the request of a labor union pursuant
to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee, because it affects not only his position but
also his means of livelihood. Employers should, therefore, respect and protect the rights of their
employees, which include the right to labor.[25]
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount
to be awarded shall be equivalent to one month salary for every year of service. Under Republic
Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual reinstatement. But if
reinstatement is no longer possible, the backwages shall be computed from the time of their illegal
termination up to the finality of the decision. Moreover, respondents, having been compelled to
litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorneys fees
equivalent to 10% of the total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the
Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which
set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor
Relations Commission in NLRC CA No. M-006309-2001, are AFFIRMED accordingly.
Respondents are hereby awarded full backwages and other allowances, without qualifications
and diminutions, computed from the time they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of
the full backwages due respondents, in accordance with Article 279 of the Labor Code, as
expeditiously as possible.

SO ORDERED.
NATIONAL UNION OF WORKERS IN
HOTELS, RESTAURANTS AND G.R. No. 181531
ALLIED INDUSTRIES- MANILA
PAVILION HOTEL CHAPTER, Present:
Petitioner,
QUISUMBING, J., Chairperson,
- versus - CARPIO MORALES,
CHICO-NAZARIO,*
LEONARDO-DE CASTRO,** and
SECRETARY OF LABOR AND PERALTA,*** JJ.
EMPLOYMENT, BUREAU OF LABOR
RELATIONS, HOLIDAY INN MANILA
PAVILION HOTEL LABOR UNION
AND ACESITE PHILIPPINES HOTEL Promulgated:
CORPORATION, July 31, 2009
Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

National Union of Workers in Hotels, Restaurants and Allied Industries Manila Pavilion
Hotel Chapter (NUWHRAIN-MPHC), herein petitioner,seeks the reversal of the Court of Appeals
November 8, 2007 Decision[1] and of the Secretary of Labor and Employments January 25, 2008
Resolution[2] in OS-A-9-52-05 which affirmed the Med-Arbiters Resolutions dated January 22,
2007[3] and March 22, 2007.[4]

A certification election was conducted on June 16, 2006 among the rank-and-file employees of
respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with the following results:

EMPLOYEES IN VOTERS LIST = 353

TOTAL VOTES CAST = 346
NUWHRAIN-MPHC = 151
HIMPHLU = 169
NO UNION = 1
SPOILED = 3
SEGREGATED = 22

In view of the significant number of segregated votes, contending unions, petitioner,

NUHWHRAIN-MPHC, and respondent Holiday Inn Manila Pavillion Hotel Labor Union
(HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to decide which
among those votes would be opened and tallied. Eleven (11) votes were initially segregated
because they were cast by dismissed employees, albeit the legality of their dismissal was still
pending before the Court of Appeals. Six other votes were segregated because the employees who
cast them were already occupying supervisory positions at the time of the election. Still five other
votes were segregated on the ground that they were cast by probationary employees and, pursuant
to the existing Collective Bargaining Agreement (CBA), such employees cannot vote. It bears
noting early on, however, that the vote of one Jose Gatbonton (Gatbonton), a probationary
employee, was counted.

By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 out of the 22
segregated votes, specially those cast by the 11 dismissed employees and those cast by the six
supposedly supervisory employees of the Hotel.

Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and Employment
(SOLE), arguing that the votes of the probationary employees should have been opened
considering that probationary employee Gatbontons vote was tallied. And petitioner averred that
respondent HIMPHLU, which garnered 169 votes, should not be immediately certified as the
bargaining agent, as the opening of the 17 segregated ballots would push the number of valid votes
cast to 338 (151 + 169 + 1 + 17), hence, the 169 votes which HIMPHLU garnered would be one
vote short of the majority which would then become 169.

By the assailed Resolution of January 22, 2007, the Secretary of Labor and Employment (SOLE),
through then Acting Secretary Luzviminda Padilla, affirmed the Med-Arbiters Order. It held that
pursuant to Section 5, Rule IX of the Omnibus Rules Implementing the Labor Code on exclusion
and inclusion of voters in a certification election, the probationary employees cannot vote, as at
the time the Med-Arbiter issued on August 9, 2005 the Order granting the petition for the conduct
of the certification election, the six probationary employees were not yet hired, hence, they could
not vote.

The SOLE further held that, with respect to the votes cast by the 11 dismissed employees,
they could be considered since their dismissal was still pending appeal.

As to the votes cast by the six alleged supervisory employees, the SOLE held that their
votes should be counted since their promotion took effect months after the issuance of the above-
said August 9, 2005 Order of the Med-Arbiter, hence, they were still considered as rank-and-file.

Respecting Gatbontons vote, the SOLE ruled that the same could be the basis to include
the votes of the other probationary employees, as the records show that during the pre-election
conferences, there was no disagreement as to his inclusion in the voters list, and neither was it
timely challenged when he voted on election day, hence, the Election Officer could not then
segregate his vote.

The SOLE further ruled that even if the 17 votes of the dismissed and supervisory
employees were to be counted and presumed to be in favor of petitioner, still, the same would not
suffice to overturn the 169 votes garnered by HIMPHLU.

In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive bargaining
agent was proper.
Petitioners motion for reconsideration having been denied by the SOLE by Resolution of March
22, 2007, it appealed to the Court of Appeals.

By the assailed Decision promulgated on November 8, 2007, the appellate court affirmed the
ruling of the SOLE. It held that, contrary to petitioners assertion, the ruling in Airtime Specialist,
Inc. v. Ferrer Calleja[5] stating that in a certification election, all rank-and-file employees in the
appropriate bargaining unit, whether probationary or permanent, are entitled to vote, is
inapplicable to the case at bar. For, the appellate court continued, the six probationary employees
were not yet employed by the Hotel at the time the August 9, 2005 Order granting the certification
election was issued. It thus held that Airtime Specialist applies only to situations wherein the
probationary employees were already employed as of the date of filing of the petition for
certification election.

Respecting Gatbontons vote, the appellate court upheld the SOLEs finding that since it was not
properly challenged, its inclusion could no longer be questioned, nor could it be made the basis to
include the votes of the six probationary employees.

The appellate court brushed aside petitioners contention that the opening of the 17 segregated votes
would materially affect the results of the election as there would be the likelihood of a run-off
election in the event none of the contending unions receive a majority of the valid votes cast. It
held that the majority contemplated in deciding which of the unions in a certification election is
the winner refers to the majority of valid votes cast, not the simple majority of votes cast, hence,
the SOLE was correct in ruling that even if the 17 votes were in favor of petitioner, it would still
be insufficient to overturn the results of the certification election.

Petitioners motion for reconsideration having been denied by Resolution of January 25, 2008, the
present recourse was filed.

Petitioners contentions may be summarized as follows:

1. Inclusion of Jose Gatbontons vote but excluding the vote of the six other probationary
employees violated the principle of equal protection and is not in accord with the ruling
in Airtime Specialists, Inc. v. Ferrer-Calleja;
2. The time of reckoning for purposes of determining when the probationary employees
can be allowed to vote is not August 9, 2005 the date of issuance by Med-Arbiter
Calabocal of the Order granting the conduct of certification elections, but March 10, 2006
the date the SOLE Order affirmed the Med-Arbiters Order.

3. Even if the votes of the six probationary employees were included, still, HIMPHLU
could not be considered as having obtained a majority of the valid votes cast as the
opening of the 17 ballots would increase the number of valid votes from 321 to 338,
hence, for HIMPHLU to be certified as the exclusive bargaining agent, it should have
garnered at least 170, not 169, votes.

Petitioner justifies its not challenging Gatbontons vote because it was precisely its position
that probationary employees should be allowed to vote. It thus avers that justice and equity dictate
that since Gatbontons vote was counted, then the votes of the 6 other probationary employees
should likewise be included in the tally.

Petitioner goes on to posit that the word order in Section 5, Rule 9 of Department Order
No. 40-03 reading [A]ll employees who are members of the appropriate bargaining unit sought to
be represented by the petitioner at the time of the issuance of the order granting the conduct of
certification election shall be allowed to vote refers to an order which has already become final
and executory, in this case the March 10, 2002 Order of the SOLE.

Petitioner thus concludes that if March 10, 2006 is the reckoning date for the determination
of the eligibility of workers, then all the segregated votes cast by the probationary employees
should be opened and counted, they having already been working at the Hotel on such date.

Respecting the certification of HIMPHLU as the exclusive bargaining agent, petitioner

argues that the same was not proper for if the 17 votes would be counted as valid, then the total
number of votes cast would have been 338, not 321, hence, the majority would be 170; as such,
the votes garnered by HIMPHLU is one vote short of the majority for it to be certified as the
exclusive bargaining agent.

The relevant issues for resolution then are first, whether employees on probationary status
at the time of the certification elections should be allowed to vote, and second, whether HIMPHLU
was able to obtain the required majority for it to be certified as the exclusive bargaining agent.

On the first issue, the Court rules in the affirmative.

The inclusion of Gatbontons vote was proper not because it was not questioned but because
probationary employees have the right to vote in a certification election. The votes of the six other
probationary employees should thus also have been counted. As Airtime Specialists, Inc. v. Ferrer-
Calleja holds:

In a certification election, all rank and file employees in the appropriate

bargaining unit, whether probationary or permanent are entitled to vote.This
principle is clearly stated in Art. 255 of the Labor Code which states that the labor
organization designated or selected by the majority of the employees in an
appropriate bargaining unit shall be the exclusive representative of the employees
in such unit for purposes of collective bargaining. Collective bargaining covers all
aspects of the employment relation and the resultant CBA negotiated by the
certified union binds all employees in the bargaining unit. Hence, all rank and file
employees, probationary or permanent, have a substantial interest in the selection
of the bargaining representative. The Code makes no distinction as to their
employment status as basis for eligibility in supporting the petition for
certification election. The law refers to all the employees in the bargaining
unit.All they need to be eligible to support the petition is to belong to the
bargaining unit. (Emphasis supplied)
 Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended Rule XI of
the Omnibus Rules Implementing the Labor Code, provides:

Rule II

Section 2. Who may join labor unions and workers' associations. - All persons
employed in commercial, industrial and agricultural enterprises, including
employees of government owned or controlled corporations without original
charters established under the Corporation Code, as well as employees of religious,
charitable, medical or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or assist labor unions for
purposes of collective bargaining: provided, however, that supervisory employees
shall not be eligible for membership in a labor union of the rank-and-file employees
but may form, join or assist separate labor unions of their own. Managerial
employees shall not be eligible to form, join or assist any labor unions for purposes
of collective bargaining. Alien employees with valid working permits issued by the
Department may exercise the right to self-organization and join or assist labor
unions for purposes of collective bargaining if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the Department
of Foreign Affairs.

For purposes of this section, any employee, whether employed for a

definite period or not, shall beginning on the first day of his/her service, be
eligible for membership in any labor organization.

All other workers, including ambulant, intermittent and other workers, the
self-employed, rural workers and those without any definite employers may form
labor organizations for their mutual aid and protection and other legitimate
purposes except collective bargaining. (Emphasis supplied)

The provision in the CBA disqualifying probationary employees from voting cannot
override the Constitutionally-protected right of workers to self-organization, as well as the
provisions of the Labor Code and its Implementing Rules on certification elections and
jurisprudence thereon.

A law is read into, and forms part of, a contract. Provisions in a contract are valid only if
they are not contrary to law, morals, good customs, public order or public policy.[6]

Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely to support
their position that probationary employees hired after the issuance of the Order granting the
petition for the conduct of certification election must be excluded, should not be read in isolation
and must be harmonized with the other provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz:

Rule XI
xxxx
Section 5. Qualification of voters; inclusion-exclusion. - All employees who are
members of the appropriate bargaining unit sought to be represented by the
petitioner at the time of the issuance of the order granting the conduct of a
certification election shall be eligible to vote. An employee who has been
dismissed from work but has contested the legality of the dismissal in a forum of
appropriate jurisdiction at the time of the issuance of the order for the conduct of a
certification election shall be considered a qualified voter, unless his/her dismissal
was declared valid in a final judgment at the time of the conduct of the certification
election. (Emphasis supplied)

xxxx
Section 13. Order/Decision on the petition. - Within ten (10) days from the date of
the last hearing, the Med-Arbiter shall issue a formal order granting the petition or
a decision denying the same. In organized establishments, however, no order or
decision shall be issued by the Med-Arbiter during the freedom period.

The order granting the conduct of a certification election shall state the
following:

(a) the name of the employer or establishment;

(b) the description of the bargaining unit;

(c) a statement that none of the grounds for dismissal enumerated in the succeeding
paragraph exists;

(d) the names of contending labor unions which shall appear as follows: petitioner
union/s in the order in which their petitions were filed, forced intervenor, and
no union; and

(e) a directive upon the employer and the contending union(s) to submit within
ten (10) days from receipt of the order, the certified list of employees in
the bargaining unit, or where necessary, the payrolls covering the members
of the bargaining unit for the last three (3) months prior to the issuance of the
order. (Emphasis supplied)
xxxx

Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15) days
from receipt of the entire records of the petition within which to decide the
appeal. The filing of the memorandum of appeal from the order or decision of
the Med-Arbiter stays the holding of any certification election.

The decision of the Secretary shall become final and executory after ten (10)
days from receipt thereof by the parties. No motion for reconsideration of the
decision shall be entertained. (Emphasis supplied)
 In light of the immediately-quoted provisions, and prescinding from the principle that all
employees are, from the first day of their employment, eligible for membership in a labor
organization, it is evident that the period of reckoning in determining who shall be included in the
list of eligible voters is, in cases where a timely appeal has been filed from the Order of the Med-
Arbiter, the date when the Order of the Secretary of Labor andEmployment,
whether affirming or denying the appeal, becomes final and executory.

The filing of an appeal to the SOLE from the Med-Arbiters Order stays its execution, in
accordance with Sec. 21, and rationally, the Med-Arbiter cannot direct the employer to furnish
him/her with the list of eligible voters pending the resolution of the appeal.

During the pendency of the appeal, the employer may hire additional employees. To
exclude the employees hired after the issuance of the Med-Arbiters Order but before the appeal
has been resolved would violate the guarantee that every employee has the right to be part of a
labor organization from the first day of their service.

In the present case, records show that the probationary employees, including Gatbonton,
were included in the list of employees in the bargaining unit submitted by the Hotel on May 25,
2006 in compliance with the directive of the Med-Arbiter after the appeal and subsequent motion
for reconsideration have been denied by the SOLE, rendering the Med-Arbiters August 22, 2005
Order final and executory 10 days after the March 22, 2007 Resolution (denying the motion for
reconsideration of the January 22 Order denying the appeal), and rightly so. Because, for purposes
of self-organization, those employees are, in light of the discussion above, deemed eligible to vote.

A certification election is the process of determining the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit for purposes of collective
bargaining. Collective bargaining, refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit.[7]

The significance of an employees right to vote in a certification election cannot thus be

overemphasized. For he has considerable interest in the determination of who shall represent him
in negotiating the terms and conditions of his employment.

Even if the Implementing Rules gives the SOLE 20 days to decide the appeal from the Order of
the Med-Arbiter, experience shows that it sometimes takes months to be resolved. To rule then
that only those employees hired as of the date of the issuance of the Med-Arbiters Order are
qualified to vote would effectively disenfranchise employees hired during the pendency of the
appeal. More importantly, reckoning the date of the issuance of the Med-Arbiters Order as the cut-
off date would render inutile the remedy of appeal to the SOLE.

But while the Court rules that the votes of all the probationary employees should be
included, under the particular circumstances of this case and the period of time which it took for
the appeal to be decided, the votes of the six supervisory employees must be excluded because at
the time the certification elections was conducted, they had ceased to be part of the rank and file,
their promotion having taken effect two months before the election.

As to whether HIMPHLU should be certified as the exclusive bargaining agent, the Court rules in
the negative. It is well-settled that under the so-called double majority rule, for there to be a valid
certification election, majority of the bargaining unit must have voted AND the winning
union must have garnered majority of the valid votes cast.

Prescinding from the Courts ruling that all the probationary employees votes should be
deemed valid votes while that of the supervisory employees should be excluded, it follows that the
number of valid votes cast would increase from 321 to 337. Under Art. 256 of the Labor Code, the
union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the
sole and exclusive bargaining agent of all the workers in the appropriate bargaining unit. This
majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170.

HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU was not
able to obtain a majority vote. The position of both the SOLE and the appellate court that the
opening of the 17 segregated ballots will not materially affect the outcome of the certification
election as for, so they contend, even if such member were all in favor of petitioner, still,
HIMPHLU would win, is thus untenable.

It bears reiteration that the true importance of ascertaining the number of valid votes cast
is for it to serve as basis for computing the required majority, and not just to determine which
union won the elections. The opening of the segregated but valid votes has thus become
material. To be sure, the conduct of a certification election has a two-fold objective: to
determine the appropriate bargaining unit and to ascertain the majority representation of
the bargaining representative, if the employees desire to be represented at all by anyone. It
is not simply the determination of who between two or more contending unions won, but whether
it effectively ascertains the will of the members of the bargaining unit as to whether they want to
be represented and which union they want to represent them.

Having declared that no choice in the certification election conducted obtained the required
majority, it follows that a run-off election must be held to determine which between HIMPHLU
and petitioner should represent the rank-and-file employees.

A run-off election refers to an election between the labor unions receiving the two (2)
highest number of votes in a certification or consent election with three (3) or more choices, where
such a certified or consent election results in none of the three (3) or more choices receiving the
majority of the valid votes cast; provided that the total number of votes for all contending unions
is at least fifty percent (50%) of the number of votes cast.[8]With 346 votes cast, 337 of which are
now deemed valid and HIMPHLU having only garnered 169 and petitioner having obtained 151
and the choice NO UNION receiving 1 vote, then the holding of a run-off election between
HIMPHLU and petitioner is in order.

WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2007 and
Resolution dated January 25, 2008 of the Court of Appeals affirming the Resolutions dated January
22, 2007 and March 22, 2007, respectively, of the Secretary of Labor and Employment in OS-A-
9-52-05 are ANNULLED and SET ASIDE.

The Department of Labor and Employment-Bureau of Labor Relations is DIRECTED to

cause the holding of a run-off election between petitioner, National Union of Workers in Hotels,
Restaurants and Allied Industries-Manila Pavilion Hotel Chapter (NUWHRAIN-MPC), and
respondent Holiday Inn Manila Pavilion Hotel Labor Union (HIMPHLU).

SO ORDERED.
G.R. No. 179146 July 23, 2013
HOLY CHILD CATHOLIC SCHOOL, Petitioner,
vs.
HON. PATRICIA STO. TOMAS, in her official capacity as Secretary of the Department of
Labor and Employment, and PINAG-ISANG TINIG AT LAKAS NG ANAKPAWIS –
HOLY CHILD CATHOLIC SCHOOL TEACHERS AND EMPLOYEES LABOR UNION
(HCCS-TELU-PIGLAS), Respondents.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Civil Procedure are
the April 18, 2007 Decision1 and July 31, 2007 Resolution2 of the Court of Appeals in CA-G.R.
SP No. 76175, which affirmed the December 27, 2002 Decision3 and February 13, 2003
Resolution4 of the Secretary of the Department of Labor and Employment (SOLE) that set aside
the August 10, 2002 Decision5 of the Med-Arbiter denying private respondent’s petition for
certification election.
The factual antecedents are as follows:
On May 31, 2002, a petition for certification election was filed by private respondent Pinag-Isang
Tinig at Lakas ng Anakpawis – Holy Child Catholic School Teachers and Employees Labor Union
(HCCS-TELUPIGLAS), alleging that: PIGLAS is a legitimate labor organization duly registered
with the Department of Labor and Employment (DOLE) representing HCCS-TELU-PIGLAS;
HCCS is a private educational institution duly registered and operating under Philippine laws;
there are approximately one hundred twenty (120) teachers and employees comprising the
proposed appropriate bargaining unit; and HCCS is unorganized, there is no collective bargaining
agreement or a duly certified bargaining agent or a labor organization certified as the sole and
exclusive bargaining agent of the proposed bargaining unit within one year prior to the filing of
the petition.6 Among the documents attached to the petition were the certificate of affiliation with
Pinag-Isang Tinig at Lakas ng Anakpawis Kristiyanong Alyansa ng Makabayang Obrero
(PIGLAS-KAMAO) issued by the Bureau of Labor Relations (BLR), charter certificate issued by
PIGLASKAMAO, and certificate of registration of HCCS-TELU as a legitimate labor
organization issued by the DOLE.7
In its Comment8 and Position Paper,9 petitioner HCCS consistently noted that it is a parochial
school with a total of 156 employees as of June 28, 2002, broken down as follows: ninety-eight
(98) teaching personnel, twenty-five (25) non-teaching academic employees, and thirty-three (33)
non-teaching non-academic workers. It averred that of the employees who signed to support the
petition, fourteen (14) already resigned and six (6) signed twice. Petitioner raised that members of
private respondent do not belong to the same class; it is not only a mixture of managerial,
supervisory, and rank-and-file employees – as three (3) are vice-principals, one (1) is a department
head/supervisor, and eleven (11) are coordinators – but also a combination of teaching and non-
teaching personnel – as twenty-seven (27) are non-teaching personnel. It insisted that, for not being
in accord with Article 24510 of the Labor Code, private respondent is an illegitimate labor
organization lacking in personality to file a petition for certification election, as held in Toyota
Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union; 11 and an
inappropriate bargaining unit for want of community or mutuality of interest, as ruled in Dunlop
Slazenger (Phils.), Inc. v. Secretary of Labor and Employment12 and De La Salle University
Medical Center and College of Medicine v. Laguesma.13
Private respondent, however, countered that petitioner failed to substantiate its claim that some of
the employees included in the petition for certification election holds managerial and supervisory
positions.14 Assuming it to be true, it argued that Section 11 (II),15 Rule XI of DOLE Department
Order (D.O.) No. 9, Series of 1997, provided for specific instances in which a petition filed by a
legitimate organization shall be dismissed by the Med-Arbiter and that "mixture of employees" is
not one of those enumerated. Private respondent pointed out that questions pertaining to
qualifications of employees may be threshed out in the inclusion-exclusion proceedings prior to
the conduct of the certification election, pursuant to Section 2,16 Rule XII of D.O. No. 9. Lastly,
similar to the ruling in In Re: Globe Machine and Stamping Company,17 it contended that the will
of petitioner’s employees should be respected as they had manifested their desire to be represented
by only one bargaining unit. To back up the formation of a single employer unit, private respondent
asserted that even if the teachers may receive additional pay for an advisory class and for holding
additional loads, petitioner’s academic and non-academic personnel have similar working
conditions. It cited Laguna College v. Court of Industrial Relations,18 as well as the case of a union
in West Negros College in Bacolod City, which allegedly represented both academic and non-
academic employees.
On August 10, 2002, Med-Arbiter Agatha Ann L. Daquigan denied the petition for certification
election on the ground that the unit which private respondent sought to represent is inappropriate.
She resolved:
A certification election proceeding directly involves two (2) issues namely: (a) the proper
composition and constituency of the bargaining unit; and (b) the validity of majority representation
claims. It is therefore incumbent upon the Med-Arbiter to rule on the appropriateness of the
bargaining unit once its composition and constituency is questioned.
Section 1 (q), Rule I, Book V of the Omnibus Rules defines a "bargaining unit" as a group of
employees sharing mutual interests within a given employer unit comprised of all or less than all
of the entire body of employees in the employer unit or any specific occupational or geographical
grouping within such employer unit. This definition has provided the "community or mutuality of
interest" test as the standard in determining the constituency of a collective bargaining unit. This
is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their
collective bargaining rights. The application of this test may either result in the formation of an
employer unit or in the fragmentation of an employer unit.
In the case at bar, the employees of petitioner, may, as already suggested, quite easily be
categorized into (2) general classes: one, the teaching staff; and two, the non-teaching-staff. Not
much reflection is needed to perceive that the community or mutuality of interest is wanting
between the teaching and the non-teaching staff. It would seem obvious that the teaching staff
would find very little in common with the non-teaching staff as regards responsibilities and
function, working conditions, compensation rates, social life and interests, skills and intellectual
pursuits, etc. These are plain and patent realities which cannot be ignored. These dictate the
separation of these two categories of employees for purposes of collective bargaining. (University
of the Philippines vs. Ferrer-Calleja, 211 SCRA 451)19
Private respondent appealed before the SOLE, who, on December 27, 2002, ruled against the
dismissal of the petition and directed the conduct of two separate certification elections for the
teaching and the non-teaching personnel, thus:
We agree with the Med-Arbiter that there are differences in the nature of work, hours and
conditions of work and salary determination between the teaching and non-teaching personnel of
petitioner. These differences were pointed out by petitioner in its position paper. We do not,
however, agree with the Med-Arbiter that these differences are substantial enough to warrant the
dismissal of the petition. First, as pointed out by private respondent, "inappropriateness of the
bargaining unit sought to be represented is not a ground for the dismissal of the petition." In fact,
in the cited case of University of the Philippines v. Ferrer-Calleja, supra, the Supreme Court did
not order the dismissal of the petition but ordered the conduct of a certification election, limiting
the same among the non-academic personnel of the University of the Philippines.
It will be recalled that in the U.P. case, there were two contending unions, the Organization of
Non-Academic Personnel of U.P. (ONAPUP) and All U.P. Workers Union composed of both
academic and nonacademic personnel of U.P. ONAPUP sought the conduct of certification
election among the rank-and-file non-academic personnel only while the all U.P. Workers Union
sought the conduct of certification election among all of U.P.’s rank-and-file employees covering
academic and nonacademic personnel. While the Supreme Court ordered a separate bargaining
unit for the U.P. academic personnel, the Court, however, did not order them to organize a separate
labor organization among themselves. The All U.P. Workers Union was not directed to divest itself
of its academic personnel members and in fact, we take administrative notice that the All U.P.
Workers Union continue to exist with a combined membership of U.P. academic and non-
academic personnel although separate bargaining agreements is sought for the two bargaining
units. Corollary, private respondent can continue to exist as a legitimate labor organization with
the combined teaching and non-teaching personnel in its membership and representing both classes
of employees in separate bargaining negotiations and agreements.
WHEREFORE, the Decision of the Med-Arbiter dated 10 August 2002 is hereby REVERSED and
SET ASIDE. In lieu thereof, a new order is hereby issued directing the conduct of two certification
elections, one among the non-teaching personnel of Holy Child Catholic School, and the other,
among the teaching personnel of the same school, subject to the usual pre-election conferences
and inclusion-exclusion proceedings, with the following choices:
A. Certification Election Among Petitioner’s Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
B. Certification Election Among Petitioner’s Non-Teaching Personnel:
1. Holy Child Catholic School Teachers and Employees Labor Union; and
2. No Union.
Petitioner is hereby directed to submit to the Regional Office of origin within ten (10) days from
receipt of this Decision, a certified separate list of its teaching and non-teaching personnel or when
necessary a separate copy of their payroll for the last three (3) months prior to the issuance of this
Decision.20
Petitioner filed a motion for reconsideration21 which, per Resolution dated February 13, 2003, was
denied. Consequently, petitioner filed before the CA a Petition for Certiorari with Prayer for
Temporary Restraining Order and Preliminary Injunction.22 The CA resolved to defer action on
the prayer for TRO pending the filing of private respondent’s Comment.23 Later, private
respondent and petitioner filed their Comment24 and Reply,25 respectively.
On July 23, 2003, petitioner filed a motion for immediate issuance of a TRO, alleging that Hon.
Helen F. Dacanay of the Industrial Relations Division of the DOLE was set to implement the
SOLE Decision when it received a summons and was directed to submit a certified list of teaching
and non-teaching personnel for the last three months prior to the issuance of the assailed
Decision.26 Acting thereon, on August 5, 2003, the CA issued the TRO and ordered private
respondent to show cause why the writ of preliminary injunction should not be
granted.27 Subsequently, a Manifestation and Motion28 was filed by private respondent, stating that
it repleads by reference the arguments raised in its Comment and that it prays for the immediate
lifting of the TRO and the denial of the preliminary injunction. The CA, however, denied the
manifestation and motion on November 21, 200329 and, upon motion of petitioner,30 granted the
preliminary injunction on April 21, 2005.31 Thereafter, both parties filed their respective
Memorandum.32
On April 18, 2007, the CA eventually dismissed the petition. As to the purported commingling of
managerial, supervisory, and rank-and-file employees in private respondent’s membership, it held
that the Toyota ruling is inapplicable because the vice-principals, department head, and
coordinators are neither supervisory nor managerial employees. It reasoned:
x x x While it may be true that they wield power over other subordinate employees of the petitioner,
it must be stressed, however, that their functions are not confined with policy-determining such as
hiring, firing, and disciplining of employees, salaries, teaching/working hours, other monetary and
non-monetary benefits, and other terms and conditions of employment. Further, while they may
formulate policies or guidelines, nonetheless, such is merely recommendatory in nature, and still
subject to review and evaluation by the higher executives, i.e., the principals or executive officers
of the petitioner. It cannot also be denied that in institutions like the petitioner, company policies
have already been pre-formulated by the higher executives and all that the mentioned employees
have to do is carry out these company policies and standards. Such being the case, it is crystal clear
that there is no improper commingling of members in the private respondent union as to preclude
its petition for certification of (sic) election.33
Anent the alleged mixture of teaching and non-teaching personnel, the CA agreed with petitioner
that the nature of the former’s work does not coincide with that of the latter. Nevertheless, it ruled
that the SOLE did not commit grave abuse of discretion in not dismissing the petition for
certification election, since it directed the conduct of two separate certification elections based on
Our ruling in University of the Philippines v. Ferrer-Calleja.34
A motion for reconsideration35 was filed by petitioner, but the CA denied the same;36 hence, this
petition assigning the alleged errors as follows:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RULING IN
THE CASE OF TOYOTA MOTOR PHILIPPINES CORPORATION VS. TOYOTA MOTOR
PHILIPPINES CORPORATION LABOR UNION (268 SCRA 573) DOES NOT APPLY IN THE
CASE AT BAR DESPITE THE [COMMINGLING] OF BOTH SUPERVISORY OR
MANAGERIAL AND RANK-AND-FILE EMPLOYEES IN THE RESPONDENT UNION;
II
THE HONORABLE COURT OF APPEALS ERRED IN ITS CONFLICTING RULING
ALLOWING THE CONDUCT OF CERTIFICATION ELECTION BY UPHOLDING THAT
THE RESPONDENT UNION REPRESENTED A BARGAINING UNIT DESPITE ITS OWN
FINDINGS THAT THERE IS NO MUTUALITY OF INTEREST BETWEEN THE MEMBERS
OF RESPONDENT UNION APPLYING THE TEST LAID DOWN IN THE CASE OF
UNIVERSITY OF THE PHILIPPINES VS. FERRER-CALLEJA (211 SCRA 451).37
We deny.
Petitioner claims that the CA contradicted the very definition of managerial and supervisory
employees under existing law and jurisprudence when it did not classify the vice-principals,
department head, and coordinators as managerial or supervisory employees merely because the
policies and guidelines they formulate are still subject to the review and evaluation of the principal
or executive officers of petitioner. It points out that the duties of the vice-principals, department
head, and coordinators include the evaluation and assessment of the effectiveness and capability
of the teachers under them; that such evaluation and assessment is independently made without
the participation of the higher Administration of petitioner; that the fact that their recommendation
undergoes the approval of the higher Administration does not take away the independent nature of
their judgment; and that it would be difficult for the vice-principals, department head, and
coordinators to objectively assess and evaluate the performances of teachers under them if they
would be allowed to be members of the same labor union.
On the other hand, aside from reiterating its previous submissions, private respondent cites
Sections 9 and 1238 of Republic Act (R.A.) No. 9481 to buttress its contention that petitioner has
no standing to oppose the petition for certification election. On the basis of the statutory provisions,
it reasons that an employer is not a party-in-interest in a certification election; thus, petitioner does
not have the requisite right to protect even by way of restraining order or injunction.
First off, We cannot agree with private respondent’s invocation of R.A. No. 9481. Said law took
effect only on June 14, 2007; hence, its applicability is limited to labor representation cases filed
on or after said date.39 Instead, the law and rules in force at the time private respondent filed its
petition for certification election on May 31, 2002 are R.A. No. 6715, which amended Book V of
Presidential Decree (P.D.) No. 442 (the Labor Code), as amended, and the Rules and Regulations
Implementing R.A. No. 6715, as amended by D.O. No. 9, which was dated May 1, 1997 but took
effect on June 21, 1997.40
However, note must be taken that even without the express provision of Section 12 of RA No.
9481, the "Bystander Rule" is already well entrenched in this jurisdiction. It has been consistently
held in a number of cases that a certification election is the sole concern of the workers, except
when the employer itself has to file the petition pursuant to Article 259 of the Labor Code, as
amended, but even after such filing its role in the certification process ceases and becomes merely
a bystander.41 The employer clearly lacks the personality to dispute the election and has no right
to interfere at all therein.42 This is so since any uncalled-for concern on the part of the employer
may give rise to the suspicion that it is batting for a company union.43 Indeed, the demand of the
law and policy for an employer to take a strict, hands-off stance in certification elections is based
on the rationale that the employees’ bargaining representative should be chosen free from any
extraneous influence of the management; that, to be effective, the bargaining representative must
owe its loyalty to the employees alone and to no other.44
Now, going back to petitioner’s contention, the issue of whether a petition for certification election
is dismissible on the ground that the labor organization’s membership allegedly consists of
supervisory and rank-and-file employees is actually not a novel one. In the 2008 case of Republic
v. Kawashima Textile Mfg., Philippines, Inc.,45 wherein the employer-company moved to dismiss
the petition for certification election on the ground inter alia that the union membership is a mixture
of rank-and-file and supervisory employees, this Court had conscientiously discussed the
applicability of Toyota and Dunlop in the context of R.A. No. 6715 and D.O. No. 9, viz.:
It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited, to wit:
Sec. 3. Employees' right to self-organization. - Employees shall have the right to self-organization
and to form, join or assist labor organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to engage in concerted activities for
the purpose of collective bargaining and other mutual aid or protection. Individuals employed as
supervisors shall not be eligible for membership in a labor organization of employees under their
supervision but may form separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the legitimacy
of the labor organization. Under Section 15, the only instance when a labor organization loses its
legitimacy is when it violates its duty to bargain collectively; but there is no word on whether such
mingling would also result in loss of legitimacy. Thus, when the issue of whether the membership
of two supervisory employees impairs the legitimacy of a rank-and-file labor organization came
before the Court En Banc in Lopez v. Chronicle Publication Employees Association, the majority
pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon the union itself or
on the status of the other qualified members thereof should such prohibition be disregarded.
Considering that the law is specific where it intends to divest a legitimate labor union of any of the
rights and privileges granted to it by law, the absence of any provision on the effect of the
disqualification of one of its organizers upon the legality of the union, may be construed to confine
the effect of such ineligibility only upon the membership of the supervisor. In other words, the
invalidity of membership of one of the organizers does not make the union illegal, where the
requirements of the law for the organization thereof are, nevertheless, satisfied and met. (Emphasis
supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875. The
provision in the Labor Code closest to Sec. 3 is Article 290, which is deafeningly silent on the
prohibition against supervisory employees mingling with rank-and-file employees in one labor
organization. Even the Omnibus Rules Implementing Book V of the Labor Code (Omnibus Rules)
merely provides in Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation. - All existing
supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to
operate as such and their registration certificates shall be deemed automatically cancelled.
However, existing collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code shall be respected until their expiry date insofar as the economic
benefits granted therein are concerned.
Members of supervisory unions who do not fall within the definition of managerial employees
shall become eligible to join or assist the rank and file organization. The determination of who are
managerial employees and who are not shall be the subject of negotiation between representatives
of supervisory union and the employer. If no agreement s reached between the parties, either or
both of them may bring the issue to the nearest Regional Office for determination. (Emphasis
supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in
Bulletin v. Sanchez that supervisory employees who do not fall under the category of managerial
employees may join or assist in the formation of a labor organization for rank-and-file employees,
but they may not form their own labor organization.
While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its
implementing rules continued to recognize the right of supervisory employees, who do not fall
under the category of managerial employees, to join a rank- and-file labor organization.
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned mingling in one
labor organization, viz.:
Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read as follows:
Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory
employees. Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank-
and-file employees but may join, assist or form separate labor organizations of their own
(Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect any
violation of the prohibition would bring about on the legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules)
which supplied the deficiency by introducing the following amendment to Rule II (Registration of
Unions):
Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be
eligible for membership in a labor organization of the rank-and-file employees but may join, assist
or form separate labor organizations of their own; Provided, that those supervisory employees who
are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No.
6715, shall remain in that unit x x x. (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz.;
Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office
which has jurisdiction over the principal office of the employer. The petition shall be in writing
and under oath.
Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to
bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file
employees shall not include supervisory employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and duly
registered labor organization from exercising its right to file a petition for certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing
Article 245 of the Labor Code, as amended by R.A. No. 6715, held:
Clearly, based on this provision, a labor organization composed of both rank-and-file and
supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a
legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-
file and supervisory employees cannot possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a
certification election, to inquire into the composition of any labor organization whenever the status
of the labor organization is challenged on the basis of Article 245 of the Labor Code.
xxxx
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.
(Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification election was one
for supervisory employees, but in which the membership included rank-and-file employees, the
Court reiterated that such labor organization had no legal right to file a certification election to
represent a bargaining unit composed of supervisors for as long as it counted rank-and-file
employees among its members.
It should be emphasized that the petitions for certification election involved in Toyota and Dunlop
were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules
was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by
Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the
requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules - that the petition for
certification election indicate that the bargaining unit of rank-and-file employees has not been
mingled with supervisory employees - was removed. Instead, what the 1997 Amended Omnibus
Rules requires is a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall
contain, among others, the following: x x x (c) The description of the bargaining unit."
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997
Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule
VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union
may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2)
copies of the following: a) a charter certificate issued by the federation or national union indicating
the creation or establishment of the local/chapter; (b) the names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter; and (c) the local/ chapter's constitution and
by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the
federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or the
Treasurer of the local/chapter and attested to by its President.
which does not require that, for its creation and registration, a local or chapter submit a list of its
members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-
PTGWO in which the core issue was whether mingling affects the legitimacy of a labor
organization and its right to file a petition for certification election. This time, given the altered
legal milieu, the Court abandoned the view in Toyota and Dunlop and reverted to its
pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization, the Labor Code does not provide for the effects
thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all
the rights and privileges of a legitimate labor organization. Any mingling between supervisory and
rank-and-file employees in its membership cannot affect its legitimacy for that is not among the
grounds for cancellation of its registration, unless such mingling was brought about by
misrepresentation, false statement or fraud under Article 239 of the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-
San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW, the
Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter
to provide a list of its members, it would be improper for the DOLE to deny recognition to said
local or chapter on account of any question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a
petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file
labor organization on the ground of mixed membership: the Court therein reiterated its ruling in
Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the
grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud
under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as
interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set
the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and
the rules.46
When a similar issue confronted this Court close to three years later, the above ruling was
substantially quoted in Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the
Philippines for Empowerment and Reforms (SMCC-Super) v. Charter Chemical and Coating
Corporation.47 In unequivocal terms, We reiterated that the alleged inclusionof supervisory
employees in a labor organization seeking to represent the bargaining unit of rank-and-file
employees does not divest it of its status as a legitimate labor organization.48
Indeed, Toyota and Dunlop no longer hold true under the law and rules governing the instant case.
The petitions for certification election involved in Toyota and Dunlop were filed on November 26,
1992 and September 15, 1995, respectively; hence, the 1989 Rules and Regulations Implementing
R.A. No. 6715 (1989 Amended Omnibus Rules) was applied. In contrast, D.O. No. 9 is applicable
in the petition for certification election of private respondent as it was filed on May 31, 2002.
Following the doctrine laid down in Kawashima and SMCC-Super, it must be stressed that
petitioner cannot collaterally attack the legitimacy of private respondent by praying for the
dismissal of the petition for certification election:
Except when it is requested to bargain collectively, an employer is a mere bystander to any petition
for certification election; such proceeding is non-adversarial and merely investigative, for the
purpose thereof is to determine which organization will represent the employees in their collective
bargaining with the employer. The choice of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest therein; it cannot interfere with, much
less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere
allegation that some employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the certification election.
The employer's only right in the proceeding is to be notified or informed thereof.
The amendments to the Labor Code and its implementing rules have buttressed that policy even
more.49
Further, the determination of whether union membership comprises managerial and/or supervisory
employees is a factual issue that is best left for resolution in the inclusion-exclusion proceedings,
which has not yet happened in this case so still premature to pass upon. We could only emphasize
the rule that factual findings of labor officials, who are deemed to have acquired expertise in
matters within their jurisdiction, are generally accorded not only with respect but even finality by
the courts when supported by substantial evidence.50 Also, the jurisdiction of this Court in cases
brought before it from the CA via Rule 45 is generally limited to reviewing errors of law or
jurisdiction. The findings of fact of the CA are conclusive and binding. Except in certain
recognized instances,51 We do not entertain factual issues as it is not Our function to analyze or
weigh evidence all over again; the evaluation of facts is best left to the lower courts and
administrative agencies/quasi-judicial bodies which are better equipped for the task.52
Turning now to the second and last issue, petitioner argues that, in view of the improper mixture
of teaching and non-teaching personnel in private respondent due to the absence of mutuality of
interest among its members, the petition for certification election should have been dismissed on
the ground that private respondent is not qualified to file such petition for its failure to qualify as
a legitimate labor organization, the basic qualification of which is the representation of an
appropriate bargaining unit.
We disagree.
The concepts of a union and of a legitimate labor organization are different from, but related to,
the concept of a bargaining unit:
Article 212(g) of the Labor Code defines a labor organization as "any union or association of
employees which exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment." Upon compliance with all the
documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant
labor organization a certificate indicating that it is included in the roster of legitimate labor
organizations. Any applicant labor organization 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.53
In case of alleged inclusion of disqualified employees in a union, the proper procedure for an
employer like petitioner is to directly file a petition for cancellation of the union’s certificate of
registration due to misrepresentation, false statement or fraud under the circumstances enumerated
in Article 239 of the Labor Code, as amended.54 To reiterate, private respondent, having been
validly issued a certificate of registration, should be considered as having acquired juridical
personality which may not be attacked collaterally.
On the other hand, a bargaining unit has been defined as a "group of employees of a given
employer, comprised of all or less than all of the entire body of employees, which the collective
interests of all the employees, consistent with equity to the employer, indicated to be best suited
to serve reciprocal rights and duties of the parties under the collective bargaining provisions of the
law."55 In determining the proper collective bargaining unit and what unit would be appropriate to
be the collective bargaining agency, the Court, in the seminal case of Democratic Labor
Association v. Cebu Stevedoring Company, Inc.,56 mentioned several factors that should be
considered, to wit: (1) will of employees (Globe Doctrine); (2) affinity and unity of employees'
interest, such as substantial similarity of work and duties, or similarity of compensation and
working conditions; (3) prior collective bargaining history; and (4) employment status, such as
temporary, seasonal and probationary employees. We stressed, however, that the test of the
grouping is community or mutuality of interest, because "the basic test of an asserted bargaining
unit's acceptability is whether or not it is fundamentally the combination which will best assure to
all employees the exercise of their collective bargaining rights."57
As the SOLE correctly observed, petitioner failed to comprehend the full import of Our ruling in
U.P. It suffices to quote with approval the apt disposition of the SOLE when she denied petitioner’s
motion for reconsideration:
Petitioner likewise claimed that we erred in interpreting the decision of the Supreme Court in U.P.
v. Ferrer-Calleja, supra. According to petitioner, the Supreme Court stated that the non-academic
rank-andfile employees of the University of the Philippines shall constitute a bargaining unit to
the exclusion of the academic employees of the institution. Hence, petitioner argues, it sought the
creation of separate bargaining units, namely: (1) petitioner’s teaching personnel to the exclusion
of non-teaching personnel; and (2) petitioner’s non-teaching personnel to the exclusion of teaching
personnel.
Petitioner appears to have confused the concepts of membership in a bargaining unit and
membership in a union. In emphasizing the phrase "to the exclusion of academic employees" stated
in U.P. v. Ferrer-Calleja, petitioner believed that the petitioning union could not admit academic
employees of the university to its membership. But such was not the intention of the Supreme
Court.
A bargaining unit is a group of employees sought to be represented by a petitioning union. Such
employees need not be members of a union seeking the conduct of a certification election. A union
certified as an exclusive bargaining agent represents not only its members but also other employees
who are not union members. As pointed out in our assailed Decision, there were two contending
unions in the U.P. case, namely, the Organization of Non-Academic Personnel of U.P. (ONAPUP)
and the All U.P. Worker’s Union composed of both U.P. academic and non-academic personnel.
ONAPUP sought the conduct of a certification election among the rank-and-file non-academic
personnel only, while the All U.P. Workers Union intended to cover all U.P. rank-and-file
employees, involving both academic and non-academic personnel.
The Supreme Court ordered the "non-academic rank-and-file employees of U.P. to constitute a
bargaining unit to the exclusion of the academic employees of the institution", but did not order
them to organize a separate labor organization. In the U.P. case, the Supreme Court did not dismiss
the petition and affirmed the order for the conduct of a certification election among the non-
academic personnel of U.P., without prejudice to the right of the academic personnel to constitute
a separate bargaining unit for themselves and for the All U.P. Workers Union to institute a petition
for certification election.
In the same manner, the teaching and non-teaching personnel of petitioner school must form
separate bargaining units.1âwphi1 Thus, the order for the conduct of two separate certification
elections, one involving teaching personnel and the other involving non-teaching personnel. It
should be stressed that in the subject petition, private respondent union sought the conduct of a
certification election among all the rank-and-file personnel of petitioner school. Since the decision
of the Supreme Court in the U.P. case prohibits us from commingling teaching and non-teaching
personnel in one bargaining unit, they have to be separated into two separate bargaining units with
two separate certification elections to determine whether the employees in the respective
bargaining units desired to be represented by private respondent. In the U.P. case, only one
certification election among the non-academic personnel was ordered, because ONAPUP sought
to represent that bargaining unit only. No petition for certification election among the academic
personnel was instituted by All U.P. Workers Union in the said case; thus, no certification election
pertaining to its intended bargaining unit was ordered by the Court.58
Indeed, the purpose of a certification election is precisely to ascertain the majority of the
employees’ choice of an appropriate bargaining unit – to be or not to be represented by a labor
organization and, if in the affirmative case, by which one.59
At this point, it is not amiss to stress once more that, as a rule, only questions of law may be raised
in a Rule 45 petition. In Montoya v. Transmed Manila Corporation,60 the Court discussed the
particular parameters of a Rule 45 appeal from the CA’s Rule 65 decision on a labor case, as
follows:
x x x In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with
the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits
us to the review of questions of law raised against the assailed CA decision. In ruling for legal
correctness, we have to view the CA decision in the same context that the petition for certiorari it
ruled upon was presented to it; we have to examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In
other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on
appeal, of the NLRC decision challenged before it. This is the approach that should be basic in a
Rule 45 review of a CA ruling in a labor case. In question form, the question to ask is: Did the CA
correctly determine whether the NLRC committed grave abuse of discretion in ruling on the
case?61
Our review is, therefore, limited to the determination of whether the CA correctly resolved the
presence or absence of grave abuse of discretion in the decision of the SOLE, not on the basis of
whether the latter's decision on the merits of the case was strictly correct. Whether the CA
committed grave abuse of discretion is not what is ruled upon but whether it correctly determined
the existence or want of grave abuse of discretion on the part of the SOLE.
WHEREFORE, the pet1t1on is DENIED. The April 18, 2007 Decision and July 31, 2007,
Resolution of the Court of Appeals in CA-G.R. SP No. 76175, which affirmed the December 27,
2002 Decision of the Secretary of the Department of Labor and Employment that set aside the
August 10, 2002 Decision of the Med-Arbiter denying private respondent's petition for
certification election are hereby AFFIRMED.
SO ORDERED.
 BANK OF THE PHILIPPINE G.R. No. 164301
ISLANDS,
Petitioner, Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,*
NACHURA,
LEONARDO-DE CASTRO,
- versus - BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.
BPI EMPLOYEES UNION-DAVAO
CHAPTER-FEDERATION OF
UNIONS Promulgated:
IN BPI UNIBANK,
Respondent. August 10, 2010
x------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

May a corporation invoke its merger with another corporation as a valid ground to exempt its
absorbed employees from the coverage of a union shop clause contained in its existing Collective
Bargaining Agreement (CBA) with its own certified labor union? That is the question we shall
endeavor to answer in this petition for review filed by an employer after the Court of Appeals
decided in favor of respondent union, which is the employees recognized collective bargaining
representative.

At the outset, we should call to mind the spirit and the letter of the Labor Code provisions
on union security clauses, specifically Article 248 (e), which states, x x x Nothing in this Code
or in any other law shall stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment, except those employees who are
already members of another union at the time of the signing of the collective bargaining
agreement.[1] This case which involves the application of a collective bargaining agreement with
a union shop clause should be resolved principally from the standpoint of the clear provisions of
our labor laws, and the express terms of the CBA in question, and not by inference from the general
consequence of the merger of corporations under the Corporation Code, which obviously does not
deal with and, therefore, is silent on the terms and conditions of employment in corporations or
juridical entities.

This issue must be resolved NOW, instead of postponing it to a future time when the CBA
is renegotiated as suggested by the Honorable Justice Arturo D. Brion because the same issue may
still be resurrected in the renegotiation if the absorbed employees insist on their privileged status
of being exempt from any union shop clause or any variant thereof.

We find it significant to note that it is only the employer, Bank of the Philippine Islands (BPI), that
brought the case up to this Court via the instant petition for review; while the employees actually
involved in the case did not pursue the same relief, but had instead chosen in effect to acquiesce
to the decision of the Court of Appeals which effectively required them to comply with the union
shop clause under the existing CBA at the time of the merger of BPI with Far East Bank and Trust
Company (FEBTC), which decision had already become final and executory as to the
aforesaid employees. By not appealing the decision of the Court of Appeals, the aforesaid
employees are bound by the said Court of Appeals decision to join BPIs duly certified labor
union. In view of the apparent acquiescence of the affected FEBTC employees in the Court of
Appeals decision, BPI should not have pursued this petition for review. However, even assuming
that BPI may do so, the same still cannot prosper.

What is before us now is a petition for review under Rule 45 of the Rules of Court of the
Decision[2] dated September 30, 2003 of the Court of Appeals, as reiterated in its Resolution[3] of
June 9, 2004, reversing and setting aside the Decision[4] dated November 23, 2001 of Voluntary
Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-
Davao Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine Islands, et al.

The antecedent facts are as follows:

On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger executed
on January 20, 2000 by and between BPI, herein petitioner, and FEBTC.[5] This Article and Plan
of Merger was approved by the Securities and Exchange Commission on April 7, 2000.[6]

Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred
to and absorbed by BPI as the surviving corporation.FEBTC employees, including those in its
different branches across the country, were hired by petitioner as its own employees, with their
status and tenure recognized and salaries and benefits maintained.

Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank

(hereinafter the Union, for brevity) is the exclusive bargaining agent of BPIs rank and file
employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not
belong to any labor union at the time of the merger. Prior to the effectivity of the merger, or on
March 31, 2000, respondent Union invited said FEBTC employees to a meeting regarding the
Union Shop Clause (Article II, Section 2) of the existing CBA between petitioner BPI and
respondent Union.[7]

The parties both advert to certain provisions of the existing CBA, which are quoted below:
ARTICLE I
Section 1. Recognition and Bargaining Unit The BANK recognizes the UNION as
the sole and exclusive collective bargaining representative of all the regular rank
and file employees of the Bank offices in Davao City.

Section 2. Exclusions

Section 3. Additional Exclusions

Section 4. Copy of Contract

ARTICLE II

Section 1. Maintenance of Membership All employees within the bargaining unit

who are members of the Union on the date of the effectivity of this Agreement as
well as employees within the bargaining unit who subsequently join or become
members of the Union during the lifetime of this Agreement shall as a condition of
their continued employment with the Bank, maintain their membership in the Union
in good standing.

Section 2. Union Shop - New employees falling within the bargaining unit as
defined in Article I of this Agreement, who may hereafter be regularly
employed by the Bank shall, within thirty (30) days after they become regular
employees, join the Union as a condition of their continued employment. It is
understood that membership in good standing in the Union is a condition of their
continued employment with the Bank.[8] (Emphases supplied.)

After the meeting called by the Union, some of the former FEBTC employees joined
the Union, while others refused. Later, however, some of those who initially joined retracted
their membership.[9]

Respondent Union then sent notices to the former FEBTC employees who refused to join,
as well as those who retracted their membership, and called them to a hearing regarding the
matter. When these former FEBTC employees refused to attend the hearing, the president of the
Union requested BPI to implement the Union Shop Clause of the CBA and to terminate their
employment pursuant thereto.[10]

After two months of management inaction on the request, respondent Union informed
petitioner BPI of its decision to refer the issue of the implementation of the Union Shop Clause of
the CBA to the Grievance Committee. However, the issue remained unresolved at this level and
so it was subsequently submitted for voluntary arbitration by the parties.[11]

Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated November 23,

2001, ruled in favor of petitioner BPIs interpretation that the former FEBTC employees were not
covered by the Union Security Clause of the CBA between the Union and the Bank on the ground
that the said employees were not new employees who were hired and subsequently regularized,
but were absorbed employees by operation of law because the former employees of FEBTC can
be considered assets and liabilities of the absorbed corporation. The Voluntary Arbitrator
concluded that the former FEBTC employees could not be compelled to join the Union, as it was
their constitutional right to join or not to join any organization.

Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator denied
the same in an Order dated March 25, 2002.[13]

Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to the Court of
Appeals. In the herein assailed Decision dated September 30, 2003, the Court of Appeals reversed
and set aside the Decision of the Voluntary Arbitrator.[14] Likewise, the Court of Appeals denied
herein petitioners Motion for Reconsideration in a Resolution dated June 9, 2004.

The Court of Appeals pertinently ruled in its Decision:

A union-shop clause has been defined as a form of union security provision

wherein non-members may be hired, but to retain employment must become union
members after a certain period.

There is no question as to the existence of the union-shop clause in the CBA

between the petitioner-union and the company. The controversy lies in its
application to the absorbed employees.

This Court agrees with the voluntary arbitrator that the ABSORBED
employees are distinct and different from NEW employees BUT only in so far as
their employment service is concerned. The distinction ends there. In the case at
bar, the absorbed employees length of service from its former employer is tacked
with their employment with BPI. Otherwise stated, the absorbed employees service
is continuous and there is no gap in their service record.

This Court is persuaded that the similarities of new and absorbed

employees far outweighs the distinction between them. The similarities lies on the
following, to wit: (a) they have a new employer; (b) new working conditions; (c)
new terms of employment and; (d) new company policy to follow. As such, they
should be considered as new employees for purposes of applying the provisions of
the CBA regarding the union-shop clause.

To rule otherwise would definitely result to a very awkward and unfair

situation wherein the absorbed employees shall be in a different if not, better
situation than the existing BPI employees. The existing BPI employees by virtue of
the union-shop clause are required to pay the monthly union dues, remain as
members in good standing of the union otherwise, they shall be terminated from
the company, and other union-related obligations. On the other hand, the absorbed
employees shall enjoy the fruits of labor of the petitioner-union and its members
for nothing in exchange. Certainly, this would disturb industrial peace in the
company which is the paramount reason for the existence of the CBA and the union.

The voluntary arbitrators interpretation of the provisions of the CBA

concerning the coverage of the union-shop clause is at war with the spirit and the
rationale why the Labor Code itself allows the existence of such provision.

The Supreme Court in the case of Manila Mandarin Employees Union vs.
NLRC (G.R. No. 76989, September 29, 1987) rule, to quote:

This Court has held that a valid form of union security, and
such a provision in a collective bargaining agreement is not a
restriction of the right of freedom of association guaranteed by the
Constitution.

A closed-shop agreement is an agreement whereby an

employer binds himself to hire only members of the contracting
union who must continue to remain members in good standing to
keep their jobs. It is THE MOST PRIZED ACHIEVEMENT OF
UNIONISM. IT ADDS MEMBERSHIP AND COMPULSORY
DUES. By holding out to loyal members a promise of employment
in the closed-shop, it wields group solidarity. (Emphasis supplied)

Hence, the voluntary arbitrator erred in construing the CBA literally at the
expense of industrial peace in the company.

With the foregoing ruling from this Court, necessarily, the alternative prayer
of the petitioner to require the individual respondents to become members or if they
refuse, for this Court to direct respondent BPI to dismiss them, follows.[15]

Hence, petitioners present recourse, raising the following issues:

I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE
CONSIDERED NEW EMPLOYEES OF BPI FOR PURPOSES OF APPLYING
THE UNION SHOP CLAUSE OF THE CBA

II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE VOLUNTARY ARBITRATORS INTERPRETATION OF
THE COVERAGE OF THE UNION SHOP CLAUSE IS AT WAR WITH THE
SPIRIT AND THE RATIONALE WHY THE LABOR CODE ITSELF ALLOWS
THE EXISTENCE OF SUCH PROVISION[16]
 In essence, the sole issue in this case is whether or not the former FEBTC employees that
were absorbed by petitioner upon the merger between FEBTC and BPI should be covered by the
Union Shop Clause found in the existing CBA between petitioner and respondent Union.

Petitioner is of the position that the former FEBTC employees are not new employees of BPI for
purposes of applying the Union Shop Clause of the CBA, on this note, petitioner points to Section
2, Article II of the CBA, which provides:

New employees falling within the bargaining unit as defined in Article

I of this Agreement, who may hereafter be regularly employed by the
Bankshall, within thirty (30) days after they become regular employees, join
the Union as a condition of their continued employment. It is understood that
membership in good standing in the Union is a condition of their continued
employment with the Bank.[17] (Emphases supplied.)

Petitioner argues that the term new employees in the Union Shop Clause of the CBA is
qualified by the phrases who may hereafter be regularly employed and after they become regular
employees which led petitioner to conclude that the new employees referred to in, and
contemplated by, the Union Shop Clause of the CBA were only those employees who were new
to BPI, on account of having been hired initially on a temporary or probationary status for possible
regular employment at some future date. BPI argues that the FEBTC employees absorbed by BPI
cannot be considered as new employees of BPI for purposes of applying the Union Shop Clause
of the CBA.[18]

According to petitioner, the contrary interpretation made by the Court of Appeals of this
particular CBA provision ignores, or even defies, what petitioner assumes as its clear meaning and
scope which allegedly contradicts the Courts strict and restrictive enforcement of union security
agreements.

We do not agree.

Section 2, Article II of the CBA is silent as to how one becomes a regular employee of the
BPI for the first time. There is nothing in the said provision which requires that a new regular
employee first undergo a temporary or probationary status before being deemed as such
under the union shop clause of the CBA.

Union security is a generic term which is applied to and comprehends closed shop, union shop,
maintenance of membership or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is
union shop when all new regular employees are required to join the union within a certain period
for their continued employment. There is maintenance of membership shop when employees, who
are union members as of the effective date of the agreement, or who thereafter become members,
must maintain union membership as a condition for continued employment until they are promoted
or transferred out of the bargaining unit or the agreement is terminated. A closed-shop, on the other
hand, may be defined as an enterprise in which, by agreement between the employer and his
employees or their representatives, no person may be employed in any or certain agreed
departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement,
remains a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.[19]
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we ruled that:

It is the policy of the State to promote unionism to enable the workers

to negotiate with management on the same level and with more persuasiveness
than if they were to individually and independently bargain for the
improvement of their respective conditions. To this end, the Constitution
guarantees to them the rights to self-organization, collective bargaining and
negotiations and peaceful concerted actions including the right to strike in
accordance with law. There is no question that these purposes could be thwarted if
every worker were to choose to go his own separate way instead of joining his co-
employees in planning collective action and presenting a united front when they sit
down to bargain with their employers. It is for this reason that the law has
sanctioned stipulations for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor union of their own choice as
their representative in the negotiation of their demands and the protection of their
interest vis--vis the employer. (Emphasis ours.)

In other words, the purpose of a union shop or other union security arrangement is to
guarantee the continued existence of the union through enforced membership for the benefit of the
workers.

All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms. However, under law and jurisprudence, the following
kinds of employees are exempted from its coverage, namely, employees who at the time the
union shop agreement takes effect are bona fide members of a religious organization which
prohibits its members from joining labor unions on religious grounds;[21]employees already in the
service and already members of a union other than the majority at the time the union shop
agreement took effect;[22]confidential employees who are excluded from the rank and file
bargaining unit;[23] and employees excluded from the union shop by express terms of the
agreement.

When certain employees are obliged to join a particular union as a requisite for continued
employment, as in the case of Union Security Clauses, this condition is a valid restriction of the
freedom or right not to join any labor organization because it is in favor of unionism. This Court,
on occasion, has even held that a union security clause in a CBA is not a restriction of the right of
freedom of association guaranteed by the Constitution.[24]
Moreover, a closed shop agreement is an agreement whereby an employer binds himself to hire
only members of the contracting union who must continue to remain members in good standing to
keep their jobs. It is the most prized achievement of unionism. It adds membership and
compulsory dues. By holding out to loyal members a promise of employment in the closed shop, it
wields group solidarity.[25]
 Indeed, the situation of the former FEBTC employees in this case clearly does not fall within
the first three exceptions to the application of the Union Shop Clause discussed earlier. No
allegation or evidence of religious exemption or prior membership in another union or engagement
as a confidential employee was presented by both parties. The sole category therefore in which
petitioner may prove its claim is the fourth recognized exception or whether the former FEBTC
employees are excluded by the express terms of the existing CBA between petitioner and
respondent.

To reiterate, petitioner insists that the term new employees, as the same is used in the Union Shop
Clause of the CBA at issue, refers only to employees hired by BPI as non-regular employees
who later qualify for regular employment and become regular employees, and not those who, as
a legal consequence of a merger, are allegedly automatically deemed regular employees of
BPI. However, the CBA does not make a distinction as to how a regular employee attains such a
status. Moreover, there is nothing in the Corporation Law and the merger agreement mandating
the automatic employment as regular employees by the surviving corporation in the merger.

It is apparent that petitioner hinges its argument that the former FEBTC employees were
absorbed by BPI merely as a legal consequence of a merger based on the characterization by the
Voluntary Arbiter of these absorbed employees as included in the assets and liabilities of the
dissolved corporation - assets because they help the Bank in its operation and liabilities because
redundant employees may be terminated and company benefits will be paid to them, thus reducing
the Banks financial status. Based on this ratiocination, she ruled that the same are not new
employees of BPI as contemplated by the CBA at issue, noting that the Certificate of Filing of the
Articles of Merger and Plan of Merger between FEBTC and BPI stated that x x x the entire assets
and liabilities of FAR EASTERN BANK & TRUST COMPANY will be transferred to
and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining supplied). [26] In
sum, the Voluntary Arbiter upheld the reasoning of petitioner that the FEBTC employees became
BPI employees by operation of law because they are included in the term assets and liabilities.

Absorbed FEBTC Employees are Neither Assets nor

Liabilities

In legal parlance, however, human beings are never embraced in the term assets and
liabilities. Moreover, BPIs absorption of former FEBTC employees was neither by operation of
law nor by legal consequence of contract. There was no government regulation or law that
compelled the merger of the two banks or the absorption of the employees of the dissolved
corporation by the surviving corporation. Had there been such law or regulation, the absorption of
employees of the non-surviving entities of the merger would have been mandatory on the surviving
corporation.[27] In the present case, the merger was voluntarily entered into by both banks
presumably for some mutually acceptable consideration. In fact, the Corporation Code does not
also mandate the absorption of the employees of the non-surviving corporation by the
surviving corporation in the case of a merger. Section 80 of the Corporation Code provides:

SEC. 80. Effects of merger or consolidation. The merger or consolidation, as

provided in the preceding sections shall have the following effects:
 1. The constituent corporations shall become a single corporation which, in case of
merger, shall be the surviving corporation designated in the plan of merger; and, in
case of consolidation, shall be the consolidated corporation designated in the plan
of consolidation;

2. The separate existence of the constituent corporations shall cease, except that of
the surviving or the consolidated corporation;

3. The surviving or the consolidated corporation shall possess all the rights,
privileges, immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under this Code;

4. The surviving or the consolidated corporation shall thereupon and thereafter

possess all the rights, privileges, immunities and franchises of each of the
constituent corporations; and all property, real or personal, and all receivables due
on whatever account, including subscriptions to shares and other choses in action,
and all and every other interest of, or belonging to, or due to each constituent
corporation, shall be taken and deemed to be transferred to and vested in such
surviving or consolidated corporation without further act or deed; and

5. The surviving or the consolidated corporation shall be responsible and liable for
all the liabilities and obligations of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation had itself incurred such
liabilities or obligations; and any claim, action or proceeding pending by or against
any of such constituent corporations may be prosecuted by or against the surviving
or consolidated corporation, as the case may be. Neither the rights of creditors nor
any lien upon the property of any of such constituent corporations shall be impaired
by such merger or consolidated.

Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not contain
any specific stipulation with respect to the employment contracts of existing personnel of the non-
surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold the
reasoning that the general stipulation regarding transfer of FEBTC assets and liabilities to BPI as
set forth in the Articles of Merger necessarily includes the transfer of all FEBTC employees into
the employ of BPI and neither BPI nor the FEBTC employees allegedly could do anything about
it. Even if it is so, it does not follow that the absorbed employees should not be subject to the
terms and conditions of employment obtaining in the surviving corporation.

The rule is that unless expressly assumed, labor contracts such as employment
contracts and collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only
between the parties. A labor contract merely creates an action in personam and
does not create any real right which should be respected by third parties. This
conclusion draws its force from the right of an employer to select his employees
 and to decide when to engage them as protected under our Constitution, and the
same can only be restricted by law through the exercise of the police power.[28]

Furthermore, this Court believes that it is contrary to public policy to declare the former
FEBTC employees as forming part of the assets or liabilities of FEBTC that were transferred and
absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should be deemed
to refer only to property rights and obligations of FEBTC and do not include the employment
contracts of its personnel. A corporation cannot unilaterally transfer its employees to another
employer like chattel. Certainly, if BPI as an employer had the right to choose who to retain among
FEBTCs employees, FEBTC employees had the concomitant right to choose not to be absorbed
by BPI. Even though FEBTC employees had no choice or control over the merger of their
employer with BPI, they had a choice whether or not they would allow themselves to be absorbed
by BPI. Certainly nothing prevented the FEBTCs employees from resigning or retiring and seeking
employment elsewhere instead of going along with the proposed absorption.

Employment is a personal consensual contract and absorption by BPI of a former FEBTC

employee without the consent of the employee is in violation of an individuals freedom to
contract. It would have been a different matter if there was an express provision in the articles of
merger that as a condition for the merger, BPI was being required to assume all the employment
contracts of all existing FEBTC employees with the conformity of the employees. In the absence
of such a provision in the articles of merger, then BPI clearly had the business management
decision as to whether or not employ FEBTCs employees. FEBTC employees likewise retained
the prerogative to allow themselves to be absorbed or not; otherwise, that would be tantamount to
involuntary servitude.

There appears to be no dispute that with respect to FEBTC employees that BPI chose not
to employ or FEBTC employees who chose to retire or be separated from employment instead of
being absorbed, BPIs assumed liability to these employees pursuant to the merger is FEBTCs
liability to them in terms of separation pay,[29] retirement pay[30] or other benefits that may be due
them depending on the circumstances.
Legal Consequences of Mergers

Although not binding on this Court, American jurisprudence on the consequences of

voluntary mergers on the right to employment and seniority rights is persuasive and
illuminating. We quote the following pertinent discussion from the American Law Reports:

Several cases have involved the situation where as a result of mergers,

consolidations, or shutdowns, one group of employees, who had accumulated
seniority at one plant or for one employer, finds that their jobs have been
discontinued except to the extent that they are offered employment at the place or
by the employer where the work is to be carried on in the future. Such cases have
involved the question whether such transferring employees should be entitled to
carry with them their accumulated seniority or whether they are to be compelled to
start over at the bottom of the seniority list in the "new" job. It has been recognized
 in some cases that the accumulated seniority does not survive and cannot be
transferred to the "new" job.

In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work
of three formerly separate railroad corporations, which had previously operated
separate facilities, was consolidated in the shops of one of the roads. Displaced
employees of the other two roads were given preference for the new jobs created in
the shops of the railroad which took over the work. A controversy arose between
the employees as to whether the displaced employees were entitled to carry with
them to the new jobs the seniority rights they had accumulated with their prior
employers, that is, whether the rosters of the three corporations, for seniority
purposes, should be "dovetailed" or whether the transferring employees should go
to the bottom of the roster of their new employer. Labor representatives of the
various systems involved attempted to work out an agreement which, in effect,
preserved the seniority status obtained in the prior employment on other roads, and
the action was for specific performance of this agreement against a demurring
group of the original employees of the railroad which was operating the
consolidated shops. The relief sought was denied, the court saying that, absent
some specific contract provision otherwise, seniority rights were ordinarily limited
to the employment in which they were earned, and concluding that the contract for
which specific performance was sought was not such a completed and binding
agreement as would support such equitable relief, since the railroad, whose
concurrence in the arrangements made was essential to their effectuation, was not
a party to the agreement.

Where the provisions of a labor contract provided that in the event that a
trucker absorbed the business of another private contractor or common carrier, or
was a party to a merger of lines, the seniority of the employees absorbed or
affected thereby should be determined by mutual agreement between the trucker
and the unions involved, it was held in Moore v International Brotherhood of
Teamsters, etc. (1962, Ky) 356 SW2d 241, that the trucker was not required to
absorb the affected employees as well as the business, the court saying that they
could find no such meaning in the above clause, stating that it dealt only with
seniority, and not with initial employment. Unless and until the absorbing company
agreed to take the employees of the company whose business was being absorbed,
no seniority problem was created, said the court, hence the provision of the contract
could have no application. Furthermore, said the court, it did not require that the
absorbing company take these employees, but only that if it did take them the
question of seniority between the old and new employees would be worked out by
agreement or else be submitted to the grievance procedure.[31] (Emphasis ours.)

Indeed, from the tenor of local and foreign authorities, in voluntary mergers, absorption of
the dissolved corporations employees or the recognition of the absorbed employees service with
their previous employer may be demanded from the surviving corporation if required by provision
of law or contract. The dissent of Justice Arturo D. Brion tries to make a distinction as to the terms
and conditions of employment of the absorbed employees in the case of a corporate merger or
consolidation which will, in effect, take away from corporate management the prerogative to make
purely business decisions on the hiring of employees or will give it an excuse not to apply the CBA
in force to the prejudice of its own employees and their recognized collective bargaining agent. In
this regard, we disagree with Justice Brion.

Justice Brion takes the position that because the surviving corporation continues the personality of
the dissolved corporation and acquires all the latters rights and obligations, it is duty-bound to
absorb the dissolved corporations employees, even in the absence of a stipulation in the plan of
merger. He proposes that this interpretation would provide the necessary protection to labor as it
spares workers from being left in legal limbo.

However, there are instances where an employer can validly discontinue or terminate the
employment of an employee without violating his right to security of tenure. Among others, in
case of redundancy, for example, superfluous employees may be terminated and such termination
would be authorized under Article 283 of the Labor Code.[32]

Moreover, assuming for the sake of argument that there is an obligation to hire or absorb all
employees of the non-surviving corporation, there is still no basis to conclude that the terms and
conditions of employment under a valid collective bargaining agreement in force in the surviving
corporation should not be made to apply to the absorbed employees.

The Corporation Code and the Subject Merger

Agreement are Silent on Efficacy, Terms and Conditions
of Employment Contracts

The lack of a provision in the plan of merger regarding the transfer of employment contracts to the
surviving corporation could have very well been deliberate on the part of the parties to the merger,
in order to grant the surviving corporation the freedom to choose who among the dissolved
corporations employees to retain, in accordance with the surviving corporations business needs. If
terminations, for instance due to redundancy or labor-saving devices or to prevent losses, are done
in good faith, they would be valid. The surviving corporation too is duty-bound to protect the rights
of its own employees who may be affected by the merger in terms of seniority and other conditions
of their employment due to the merger. Thus, we are not convinced that in the absence of a
stipulation in the merger plan the surviving corporation was compelled, or may be judicially
compelled, to absorb all employees under the same terms and conditions obtaining in the dissolved
corporation as the surviving corporation should also take into consideration the state of its business
and its obligations to its own employees, and to their certified collective bargaining agent or labor
union.

Even assuming we accept Justice Brions theory that in a merger situation the surviving corporation
should be compelled to absorb the dissolved corporations employees as a legal consequence of the
merger and as a social justice consideration, it bears to emphasize his dissent also recognizes that
the employee may choose to end his employment at any time by voluntarily resigning. For the
employee to be absorbed by BPI, it requires the employees implied or express consent. It is because
of this human element in employment contracts and the personal, consensual nature thereof that
we cannot agree that, in a merger situation, employment contracts are automatically transferable
from one entity to another in the same manner that a contract pertaining to purely proprietary rights
such as a promissory note or a deed of sale of property is perfectly and automatically transferable
to the surviving corporation.

That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool to
adjudicate rights and obligations between and among the merged corporations and the persons that
deal with them. Although in a merger it is as if there is no change in the personality of the employer,
there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his previous tenure and salary
rate is recognized by BPI. It is reasonable to assume that BPI would have different rules and
regulations and company practices than FEBTC and it is incumbent upon the former FEBTC
employees to obey these new rules and adapt to their new environment. Not the least of the changes
in employment condition that the absorbed FEBTC employees must face is the fact that prior to
the merger they were employees of an unorganized establishment and after the merger they became
employees of a unionized company that had an existing collective bargaining agreement with the
certified union. This presupposes that the union who is party to the collective bargaining agreement
is the certified union that has, in the appropriate certification election, been shown to represent a
majority of the members of the bargaining unit.

Likewise, with respect to FEBTC employees that BPI chose to employ and who also chose
to be absorbed, then due to BPIs blanket assumption of liabilities and obligations under the articles
of merger, BPI was bound to respect the years of service of these FEBTC employees and to pay
the same, or commensurate salaries and other benefits that these employees previously enjoyed
with FEBTC.

As the Union likewise pointed out in its pleadings, there were benefits under the CBA that the
former FEBTC employees did not enjoy with their previous employer. As BPI employees,
they will enjoy all these CBA benefits upon their absorption. Thus, although in a sense BPI is
continuing FEBTCs employment of these absorbed employees, BPIs employment of these
absorbed employees was not under exactly the same terms and conditions as stated in the latters
employment contracts with FEBTC. This further strengthens the view that BPI and the former
FEBTC employees voluntarily contracted with each other for their employment in the surviving
corporation.
Proper Appreciation of the Term New Employees Under
the CBA

In any event, it is of no moment that the former FEBTC employees retained the regular
status that they possessed while working for their former employer upon their absorption by
petitioner. This fact would not remove them from the scope of the phrase new employees as
contemplated in the Union Shop Clause of the CBA, contrary to petitioners insistence that the term
new employees only refers to those who are initially hired as non-regular employees for possible
regular employment.
 The Union Shop Clause in the CBA simply states that new employees who during the
effectivity of the CBA may be regularly employed by the Bank must join the union within thirty
(30) days from their regularization. There is nothing in the said clause that limits its application to
only new employees who possess non-regular status, meaning probationary status, at the start
of their employment. Petitioner likewise failed to point to any provision in the CBA expressly
excluding from the Union Shop Clause new employees who are absorbed as regular employees
from the beginning of their employment. What is indubitable from the Union Shop Clause is that
upon the effectivity of the CBA, petitioners new regular employees (regardless of the manner
by which they became employees of BPI) are required to join the Union as a condition of their
continued employment.

The dissenting opinion of Justice Brion dovetails with Justice Carpios view only in their
restrictive interpretation of who are new employees under the CBA. To our dissenting colleagues,
the phrase new employees (who are covered by the union shop clause) should only include new
employees who were hired as probationary during the life of the CBA and were later granted
regular status. They propose that the former FEBTC employees who were deemed regular
employees from the beginning of their employment with BPI should be treated as a special class
of employees and be excluded from the union shop clause.

Justice Brion himself points out that there is no clear, categorical definition of new employee in
the CBA. In other words, the term new employee as used in the union shop clause is used broadly
without any qualification or distinction. However, the Court should not uphold an interpretation
of the term new employee based on the general and extraneous provisions of the Corporation Code
on merger that would defeat, rather than fulfill, the purpose of the union shop clause. To reiterate,
the provision of the Article 248(e) of the Labor Code in point mandates that nothing in the
said Code or any other law should stop the parties from requiring membership in a
recognized collective bargaining agent as a condition of employment.

Significantly, petitioner BPI never stretches its arguments so far as to state that the
absorbed employees should be deemed old employees who are not covered by the Union Shop
Clause. This is not surprising.

By law and jurisprudence, a merger only becomes effective upon approval by the Securities
and Exchange Commission (SEC) of the articles of merger. In Associated Bank v. Court of
Appeals,[33] we held:

The procedure to be followed is prescribed under the Corporation Code. Section 79

of said Code requires the approval by the Securities and Exchange Commission
(SEC) of the articles of merger which, in turn, must have been duly approved by a
majority of the respective stockholders of the constituent corporations. The same
provision further states that the merger shall be effective only upon the issuance by
the SEC of a certificate of merger. The effectivity date of the merger is crucial
for determining when the merged or absorbed corporation ceases to exist; and
when its rights, privileges, properties as well as liabilities pass on to the
surviving corporation. (Emphasis ours.)
 In other words, even though BPI steps into the shoes of FEBTC as the surviving
corporation, BPI does so at a particular point in time, i.e., the effectivity of the merger upon the
SECs issuance of a certificate of merger. In fact, the articles of merger themselves provided that
both BPI and FEBTC will continue their respective business operations until the SEC issues the
certificate of merger and in the event SEC does not issue such a certificate, they agree to hold each
other blameless for the non-consummation of the merger.

Considering the foregoing principle, BPI could have only become the employer of the
FEBTC employees it absorbed after the approval by the SEC of the merger. If the SEC did not
approve the merger, BPI would not be in the position to absorb the employees of FEBTC at
all. Indeed, there is evidence on record that BPI made the assignments of its absorbed employees
in BPI effective April 10, 2000, or after the SECs approval of the merger.[34] In other words, BPI
became the employer of the absorbed employees only at some point after the effectivity of the
merger, notwithstanding the fact that the absorbed employees years of service with FEBTC were
voluntarily recognized by BPI.

Even assuming for the sake of argument that we consider the absorbed FEBTC employees
as old employees of BPI who are not members of any union (i.e., it is their date of hiring by
FEBTC and not the date of their absorption that is considered), this does not necessarily
exclude them from the union security clause in the CBA. The CBA subject of this case was
effective from April 1, 1996 until March 31, 2001. Based on the allegations of the former FEBTC
employees themselves, there were former FEBTC employees who were hired by FEBTC after
April 1, 1996 and if their date of hiring by FEBTC is considered as their date of hiring by BPI,
they would undeniably be considered new employees of BPI within the contemplation of the Union
Shop Clause of the said CBA. Otherwise, it would lead to the absurd situation that we would
discriminate not only between new BPI employees (hired during the life of the CBA) and former
FEBTC employees (absorbed during the life of the CBA) but also among the former FEBTC
employees themselves. In other words, we would be treating employees who are exactly similarly
situated (i.e., the group of absorbed FEBTC employees) differently. This hardly satisfies the
demands of equality and justice.

Petitioner limited itself to the argument that its absorbed employees do not fall within the
term new employees contemplated under the Union Shop Clause with the apparent objective of
excluding all, and not just some, of the former FEBTC employees from the application of the
Union Shop Clause.

However, in law or even under the express terms of the CBA, there is no special class of employees
called absorbed employees. In order for the Court to apply or not apply the Union Shop Clause,
we can only classify the former FEBTC employees as either old or new. If they are not old
employees, they are necessarily new employees. If they are new employees, the Union Shop
Clause did not distinguish between new employees who are non-regular at their hiring but who
subsequently become regular and new employees who are absorbed as regular and permanent from
the beginning of their employment. The Union Shop Clause did not so distinguish, and so neither
must we.
No Substantial Distinction Under the CBA Between
Regular Employees Hired After Probationary Status and
Regular Employees Hired After the Merger

Verily, we agree with the Court of Appeals that there are no substantial differences between
a newly hired non-regular employee who was regularized weeks or months after his hiring and a
new employee who was absorbed from another bank as a regular employee pursuant to a merger,
for purposes of applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they are both already
regular rank and file employees of BPI. They belong to the same bargaining unit being represented
by the Union.They both enjoy benefits that the Union was able to secure for them under the
CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein
were already in effect and neither of them had the opportunity to express their preference for
unionism or not. We see no cogent reason why the Union Shop Clause should not be applied
equally to these two types of new employees, for they are undeniably similarly situated.

The effect or consequence of BPIs so-called absorption of former FEBTC employees should be
limited to what they actually agreed to, i.e. recognition of the FEBTC employees years of service,
salary rate and other benefits with their previous employer. The effect should not be stretched so
far as to exempt former FEBTC employees from the existing CBA terms, company policies and
rules which apply to employees similarly situated. If the Union Shop Clause is valid as to other
new regular BPI employees, there is no reason why the same clause would be a violation of the
absorbed employees freedom of association.

Non-Application of Union Shop Clause Contrary to the

Policy of the Labor Code and Inimical to Industrial Peace

It is but fair that similarly situated employees who enjoy the same privileges of a CBA
should be likewise subject to the same obligations the CBA imposes upon them. A contrary
interpretation of the Union Shop Clause will be inimical to industrial peace and workers
solidarity. This unfavorable situation will not be sufficiently addressed by asking the former
FEBTC employees to simply pay agency fees to the Union in lieu of union membership, as the
dissent of Justice Carpio suggests. The fact remains that other new regular employees, to whom
the absorbed employees should be compared, do not have the option to simply pay the agency fees
and they must join the Union or face termination.
Petitioners restrictive reading of the Union Shop Clause could also inadvertently open an
avenue, which an employer could readily use, in order to dilute the membership base of the
certified union in the collective bargaining unit (CBU). By entering into a voluntary merger with
a non-unionized company that employs more workers, an employer could get rid of its existing
union by the simple expedient of arguing that the absorbed employees are not new employees, as
are commonly understood to be covered by a CBAs union security clause. This could then lead to
a new majority within the CBU that could potentially threaten the majority status of the existing
union and, ultimately, spell its demise as the CBUs bargaining representative.Such a dreaded but
not entirely far-fetched scenario is no different from the ingenious and creative union-busting
schemes that corporations have fomented throughout the years, which this Court has foiled time
and again in order to preserve and protect the valued place of labor in this jurisdiction consistent
with the Constitutions mandate of insuring social justice.

There is nothing in the Labor Code and other applicable laws or the CBA provision at issue
that requires that a new employee has to be of probationary or non-regular status at the beginning
of the employment relationship. An employer may confer upon a new employee the status of
regular employment even at the onset of his engagement. Moreover, no law prohibits an employer
from voluntarily recognizing the length of service of a new employee with a previous employer in
relation to computation of benefits or seniority but it should not unduly be interpreted to exclude
them from the coverage of the CBA which is a binding contractual obligation of the employer and
employees.

Indeed, a union security clause in a CBA should be interpreted to give meaning and effect
to its purpose, which is to afford protection to the certified bargaining agent and ensure that the
employer is dealing with a union that represents the interests of the legally mandated percentage
of the members of the bargaining unit.

The union shop clause offers protection to the certified bargaining agent by ensuring that
future regular employees who (a) enter the employ of the company during the life of the CBA; (b)
are deemed part of the collective bargaining unit; and (c) whose number will affect the number of
members of the collective bargaining unit will be compelled to join the union. Such compulsion
has legal effect, precisely because the employer by voluntarily entering in to a union shop clause
in a CBA with the certified bargaining agent takes on the responsibility of dismissing the new
regular employee who does not join the union.

Without the union shop clause or with the restrictive interpretation thereof as proposed in the
dissenting opinions, the company can jeopardize the majority status of the certified union by
excluding from union membership all new regular employees whom the Company will absorb in
future mergers and all new regular employees whom the Company hires as regular from the
beginning of their employment without undergoing a probationary period.In this manner, the
Company can increase the number of members of the collective bargaining unit and if this increase
is not accompanied by a corresponding increase in union membership, the certified union may lose
its majority status and render it vulnerable to attack by another union who wishes to represent the
same bargaining unit.[35]

Or worse, a certified union whose membership falls below twenty percent (20%) of the total
members of the collective bargaining unit may lose its status as a legitimate labor organization
altogether, even in a situation where there is no competing union.[36] In such a case, an interested
party may file for the cancellation of the unions certificate of registration with the Bureau of Labor
Relations.[37]

Plainly, the restrictive interpretation of the union shop clause would place the certified unions very
existence at the mercy and control of the employer.Relevantly, only BPI, the employer appears
to be interested in pursuing this case. The former FEBTC employees have not joined BPI in this
appeal.
For the foregoing reasons, Justice Carpios proposal to simply require the former FEBTC to pay
agency fees is wholly inadequate to compensate the certified union for the loss of additional
membership supposedly guaranteed by compliance with the union shop clause. This is apart from
the fact that treating these absorbed employees as a special class of new employees does not
encourage worker solidarity in the company since another class of new employees (i.e. those
whose were hired as probationary and later regularized during the life of the CBA) would not have
the option of substituting union membership with payment of agency fees.

Justice Brion, on the other hand, appears to recognize the inherent unfairness of perpetually
excluding the absorbed employees from the ambit of the union shop clause. He proposes that this
matter be left to negotiation by the parties in the next CBA. To our mind, however, this proposal
does not sufficiently address the issue. With BPI already taking the position that employees
absorbed pursuant to its voluntary mergers with other banks are exempt from the union shop
clause, the chances of the said bank ever agreeing to the inclusion of such employees in a future
CBA is next to nil more so, if BPIs narrow interpretation of the union shop clause is sustained by
this Court.

Right of an Employee not to Join a Union is not Absolute

and Must Give Way to the Collective Good of All Members
of the Bargaining Unit

The dissenting opinions place a premium on the fact that even if the former FEBTC
employees are not old employees, they nonetheless were employed as regular and permanent
employees without a gap in their service. However, an employees permanent and regular
employment status in itself does not necessarily exempt him from the coverage of a union shop
clause.

In the past this Court has upheld even the more stringent type of union security clause, i.e., the
closed shop provision, and held that it can be made applicable to old employees who are already
regular and permanent but have chosen not to join a union. In the early case of Juat v. Court of
Industrial Relations,[38] the Court held that an old employee who had no union may be compelled
to join the union even if the collective bargaining agreement (CBA) imposing the closed shop
provision was only entered into seven years after of the hiring of the said employee. To quote from
that decision:

A closed-shop agreement has been considered as one form of union security

whereby only union members can be hired and workers must remain union
members as a condition of continued employment. The requirement for employees
or workers to become members of a union as a condition for employment redounds
to the benefit and advantage of said employees because by holding out to loyal
members a promise of employment in the closed-shop the union wields group
solidarity. In fact, it is said that "the closed-shop contract is the most prized
achievement of unionism."
xxxx
 This Court had categorically held in the case of Freeman Shirt Manufacturing Co.,
Inc., et al. vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28, 1961,
that the closed-shop proviso of a collective bargaining agreement entered into
between an employer and a duly authorized labor union is applicable not only to
the employees or laborers that are employed after the collective bargaining
agreement had been entered into but also to old employees who are not
members of any labor union at the time the said collective bargaining
agreement was entered into. In other words, if an employee or laborer is already
a member of a labor union different from the union that entered into a collective
bargaining agreement with the employer providing for a closed-shop, said
employee or worker cannot be obliged to become a member of that union which
had entered into a collective bargaining agreement with the employer as a condition
for his continued employment. (Emphasis and underscoring supplied.)

Although the present case does not involve a closed shop provision that included even old
employees, the Juat example is but one of the cases that laid down the doctrine that the right not
to join a union is not absolute. Theoretically, there is nothing in law or jurisprudence to prevent an
employer and a union from stipulating that existing employees (who already attained regular and
permanent status but who are not members of any union) are to be included in the coverage of a
union security clause. Even Article 248(e) of the Labor Code only expressly exempts old
employees who already have a union from inclusion in a union security clause.[39]

Contrary to the assertion in the dissent of Justice Carpio, Juat has not been overturned
by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v. Trajano.[41] The factual milieus
of these three cases are vastly different.

In Victoriano, the issue that confronted the Court was whether or not employees who were
members of the Iglesia ni Kristo (INK) sect could be compelled to join the union under a closed
shop provision, despite the fact that their religious beliefs prohibited them from joining a union. In
that case, the Court was asked to balance the constitutional right to religious freedom against a
host of other constitutional provisions including the freedom of association, the non-establishment
clause, the non-impairment of contracts clause, the equal protection clause, and the social justice
provision. In the end, the Court held that religious freedom, although not unlimited, is a
fundamental personal right and liberty, and has a preferred position in the hierarchy of values.[42]

However, Victoriano is consistent with Juat since they both affirm that the right to refrain from
joining a union is not absolute. The relevant portion of Victoriano is quoted below:

The right to refrain from joining labor organizations recognized by Section 3

of the Industrial Peace Act is, however, limited. The legal protection granted to
such right to refrain from joining is withdrawn by operation of law, where a
labor union and an employer have agreed on a closed shop, by virtue of which
the employer may employ only member of the collective bargaining union, and
the employees must continue to be members of the union for the duration of
the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial
 Peace Act, before its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for an employer "to
discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in any labor
organization" the employer is, however, not precluded "from making an
agreement with a labor organization to require as a condition of employment
membership therein, if such labor organization is the representative of the
employees." By virtue, therefore, of a closed shop agreement, before the enactment
of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes
to be employed or to keep his employment, he must become a member of the
collective bargaining union. Hence, the right of said employee not to join the
labor union is curtailed and withdrawn.[43] (Emphases supplied.)

If Juat exemplified an exception to the rule that a person has the right not to join a
union, Victoriano merely created an exception to the exception on the ground of religious freedom.

Reyes, on the other hand, did not involve the interpretation of any union security clause. In that
case, there was no certified bargaining agent yet since the controversy arose during a certification
election. In Reyes, the Court highlighted the idea that the freedom of association included the right
not to associate or join a union in resolving the issue whether or not the votes of members of the
INK sect who were part of the bargaining unit could be excluded in the results of a certification
election, simply because they were not members of the two contesting unions and were expected
to have voted for NO UNION in view of their religious affiliation. The Court upheld the inclusion
of the votes of the INK members since in the previous case of Victoriano we held that INK
members may not be compelled to join a union on the ground of religious freedom and even
without Victoriano every employee has the right to vote no union in a certification election as part
of his freedom of association. However, Reyes is not authority for Justice Carpios proposition that
an employee who is not a member of any union may claim an exemption from an existing union
security clause because he already has regular and permanent status but simply prefers not to join
a union.

The other cases cited in Justice Carpios dissent on this point are likewise inapplicable. Basa v.
Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas,[44] Anucension
v. National Labor Union,[45] and Gonzales v. Central Azucarera de Tarlac Labor Union[46] all
involved members of the INK. In line with Victoriano, these cases upheld the INK members
claimed exemption from the union security clause on religious grounds. In the present case, the
former FEBTC employees never claimed any religious grounds for their exemption from the Union
Shop Clause. As for Philips Industrial Development, Inc. v. National Labor Relations
Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the employees who were
exempted from joining the respondent union or who were excluded from participating in the
certification election were found to be not members of the bargaining unit represented by
respondent union and were free to form/join their own union. In the case at bar, it is undisputed
that the former FEBTC employees were part of the bargaining unit that the Union
represented. Thus, the rulings in Philips and Knitjoy have no relevance to the issues at hand.
 Time and again, this Court has ruled that the individual employees right not to join a union
may be validly restricted by a union security clause in a CBA[49] and such union security clause is
not a violation of the employees constitutional right to freedom of association.[50]

It is unsurprising that significant provisions on labor protection of the 1987 Constitution are found
in Article XIII on Social Justice. The constitutional guarantee given the right to form unions[51] and
the State policy to promote unionism[52] have social justice considerations. In Peoples Industrial
and Commercial Employees and Workers Organization v. Peoples Industrial and Commercial
Corporation,[53] we recognized that [l]abor, being the weaker in economic power and resources
than capital, deserve protection that is actually substantial and material.

The rationale for upholding the validity of union shop clauses in a CBA, even if they
impinge upon the individual employees right or freedom of association, is not to protect the union
for the unions sake. Laws and jurisprudence promote unionism and afford certain protections to
the certified bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union would be in a better
position to demand improved benefits and conditions of work from the employer. This is the
rationale behind the State policy to promote unionism declared in the Constitution, which was
elucidated in the above-cited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.[54]

In the case at bar, since the former FEBTC employees are deemed covered by the Union Shop
Clause, they are required to join the certified bargaining agent, which supposedly has gathered the
support of the majority of workers within the bargaining unit in the appropriate certification
proceeding. Their joining the certified union would, in fact, be in the best interests of the former
FEBTC employees for it unites their interests with the majority of employees in the bargaining
unit. It encourages employee solidarity and affords sufficient protection to the majority status of
the union during the life of the CBA which are the precisely the objectives of union security
clauses, such as the Union Shop Clause involved herein. We are indeed not being called to balance
the interests of individual employees as against the State policy of promoting unionism, since the
employees, who were parties in the court below, no longer contested the adverse Court of Appeals
decision. Nonetheless, settled jurisprudence has already swung the balance in favor of unionism,
in recognition that ultimately the individual employee will be benefited by that policy. In the
hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from
joining a labor organization is subordinate to the policy of encouraging unionism as an instrument
of social justice.

Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire consequences to
the former FEBTC employees who refuse to join the union is the forfeiture of their retirement
benefits. This is clearly not the case precisely because BPI expressly recognized under the merger
the length of service of the absorbed employees with FEBTC. Should some refuse to become
members of the union, they may still opt to retire if they are qualified under the law, the applicable
retirement plan, or the CBA, based on their combined length of service with FEBTC and
BPI. Certainly, there is nothing in the union shop clause that should be read as to curtail an
employees eligibility to apply for retirement if qualified under the law, the existing retirement plan,
or the CBA as the case may be.
 In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause of
the CBA covers the former FEBTC employees who were hired/employed by BPI during the
effectivity of the CBA in a manner which petitioner describes as absorption. A contrary
appreciation of the facts of this case would, undoubtedly, lead to an inequitable and very volatile
labor situation which this Court has consistently ruled against.

In the case of former FEBTC employees who initially joined the union but later withdrew
their membership, there is even greater reason for the union to request their dismissal from the
employer since the CBA also contained a Maintenance of Membership Clause.

A final point in relation to procedural due process, the Court is not unmindful that the
former FEBTC employees refusal to join the union and BPIs refusal to enforce the Union Shop
Clause in this instance may have been based on the honest belief that the former FEBTC employees
were not covered by said clause. In the interest of fairness, we believe the former FEBTC
employees should be given a fresh thirty (30) days from notice of finality of this decision to join
the union before the union demands BPI to terminate their employment under the Union Shop
Clause, assuming said clause has been carried over in the present CBA and there has been no
material change in the situation of the parties.

WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30,
2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement
imposed herein. Former FEBTC employees who opt not to become union members but who
qualify for retirement shall receive their retirement benefits in accordance with law, the applicable
retirement plan, or the CBA, as the case may be.

SO ORDERED.
 GOVERNMENT SERVICE INSURANCE G.R. No. 170132
SYSTEM (GSIS) and WINSTON F. GARCIA,
in his capacity as GSIS President & General Present:
Manager,
Petitioners, PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
*
CORONA,
- versus - AZCUNA, and
GARCIA, JJ.

KAPISANAN NG MGA MANGGAGAWA SA

GSIS, Promulgated:
Respondent.
December 6, 2006
x------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, the Government
Service Insurance System (GSIS) and its President and General Manager Winston F. Garcia
(Garcia, for short) assail and seek to nullify the Decision[1] dated June 16, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 87220, as reiterated in its Resolution[2] of October 18, 2005
denying Garcias motion for reconsideration.

The recourse is cast against the following setting:

A four-day October 2004 concerted demonstration, rallies and en masse walkout

waged/held in front of the GSIS main office in Roxas Boulevard, Pasay City, started it
all. Forming a huge part of the October 4 to October 7, 2004 mass action participants were GSIS
personnel, among them members of the herein respondent Kapisanan Ng Mga Manggagawa sa
GSIS (KMG or the Union), a public sector union of GSIS rank-and-file employees. Contingents
from other government agencies joined causes with the GSIS group. The mass actions target
appeared to have been herein petitioner Garcia and his management style. While the Mayor of
Pasay City allegedly issued a rally permit, the absence of the participating GSIS employees was
not covered by a prior approved leave.[3]

On or about October 10, 2004, the manager of the GSIS Investigating Unit issued a
memorandum directing 131 union and non-union members to show cause why they should not be
charged administratively for their participation in said rally. In reaction, KMGs counsel, Atty.
Manuel Molina, sought reconsideration of said directive on the ground, among others, that the
subject employees resumed work on October 8, 2004 in obedience to the return-to-work order thus
issued. The plea for reconsideration was, however, effectively denied by the filing, on October 25,
2004, of administrative charges against some 110 KMG members for grave misconduct and
conduct prejudicial to the best interest of the service.[4]

What happened next is summarized by the CA in its challenged decision of June 16, 2005,
albeit the herein petitioners would except from some of the details of the appellate courts narration:

Ignoring said formal charges, KMG, thru its President, Albert Velasco,
commenced the instant suit on November 2, 2004, with the filing of the Petition
for Prohibition at bench. On the ground that its members should not be made to
explain why they supported their unions cause, petitioner [KMG] faulted
respondent [Garcia] with blatant disregard of Civil Service Resolution No. 021316,
otherwise known as the Guidelines for Prohibited Mass Action, Section 10 of
which exhorts government agencies to harness all means within their capacity to
accord due regard and attention to employees grievances and facilitate their speedy
and amicable disposition through the use of grievance machinery or any other
modes of settlement sanctioned by law and existing civil service rules. Two
supplements to the foregoing petition were eventually filed by KMG. The first,
apprised [the CA] of the supposed fact that its Speaker, Atty. Molina, had been
placed under preventive suspension for 90 days and that the formal charges thus
filed will not only deprive its members of the privileges and benefits due them but
will also disqualify them from promotion, step increment adjustments and receipt
of monetary benefits, including their 13th month pay and Christmas bonuses. The
second, xxx manifested that, on December 17, 2004, respondent [Garcia] served a
spate of additional formal charges against 230 of KMGs members for their
participation in the aforesaid grievance demonstrations.

In his December 14, 2004 comment to the foregoing petition, respondent

[Garcia] averred that the case at bench was filed by an unauthorized representative
in view of the fact that Albert Velasco had already been dropped from the GSIS
rolls and, by said token, had ceased to be a member much less the President of
KMG. Invoking the rule against forum shopping, respondent [Garcia] called [the
CAs] attention to the supposed fact that the allegations in the subject petition
merely duplicated those already set forth in two petitions for certiorari and
prohibition earlier filed by Albert Velasco . Because said petitions are, in point of
fact, pending before this court as CA-G.R. SP Nos. 86130 and 86365, respondent
[Garcia] prayed for the dismissal of the petition at bench .[5] (Words in bracket
added.)

It appears that pending resolution by the CA of the KMG petition for prohibition in this
case, the GSIS management proceeded with the investigation of the administrative cases filed. As
represented in a pleading before the CA, as of May 18, 2005, two hundred seven (207) out of the
two hundred seventy eight (278) cases filed had been resolved, resulting in the exoneration of
twenty (20) respondent-employees, the reprimand of one hundred eighty two (182) and the
suspension for one month of five (5).[6]
 On June 16, 2005, the CA rendered the herein assailed decision[7] holding
that Garcias filing of administrative charges against 361 of [KMGs] members is tantamount to
grave abuse of discretion which may be the proper subject of the writ of prohibition. Dispositively,
the decision reads:

WHEREFORE, premises considered, the petition [of KMG]

is GRANTED and respondent [Winston F. Garcia] is hereby PERPETUALLY
ENJOINEDfrom implementing the issued formal charges and from issuing other
formal charges arising from the same facts and events.

SO ORDERED. (Emphasis in the original)

Unable to accept the above ruling and the purported speculative factual and erroneous legal
premises holding it together, petitioner Garcia sought reconsideration. In its equally assailed
Resolution[8] of October 18, 2005, however, the appellate court denied reconsideration of its
decision.

Hence, this recourse by the petitioners ascribing serious errors on the appellate court in
granting the petition for prohibition absent an instance of grave abuse of authority on their part.

We resolve to GRANT the petition.

It should be stressed right off that the civil service encompasses all branches and
agencies of the Government, including government-owned or controlled corporations
(GOCCs) with original charters, like the GSIS,[9] or those created by special law.[10] As such,
employees of covered GOCCs are part of the civil service system and are subject to circulars,
rules and regulations issued by the Civil Service Commission (CSC) on discipline, attendance
and general terms/conditions of employment, inclusive of matters involving self-organization,
strikes, demonstrations and like concerted actions. In fact, policies established on public sector
unionism and rules issued on mass action have been noted and cited by the Court in at least
a case.[11] Among these issuances is Executive Order (EO) No. 180, series of 1987, providing
guidelines for the exercise of the right to organize of government employees. Relevant also is
CSC Resolution No. 021316 which provides rules on prohibited concerted mass actions in the
public sector.
There is hardly any dispute about the formal charges against the 278 affected GSIS
employees a mix of KMG union and non-union members - having arose from their having gone
on unauthorized leave of absence (AWOL) for at least a day or two in the October 4 to 7, 2004
stretch to join the ranks of the demonstrators /rallyists at that time. As stated in each of the formal
charges, the employees act of attending, joining, participating and taking part in the strike/rally is
a transgression of the rules on strike in the public sector. The question that immediately comes to
the fore, therefore, is whether or not the mass action staged by or participated in by said GSIS
employees partook of a strike or prohibited concerted mass action. If in the affirmative, then the
denounced filing of the administrative charges would be prima facie tenable, inasmuch as
engaging in mass actions resulting in work stoppage or service disruption constitutes, in the
minimum, the punishable offense of acting prejudicial to the best interest of the service.[12] If in
the negative, then such filing would indeed smack of arbitrariness and justify the issuance of a
corrective or preventive writ.

Petitioners assert that the filing of the formal charges are but a natural consequence of the
service-disrupting rallies and demonstrations staged during office hours by the absenting GSIS
employees, there being appropriate issuances outlawing such kinds of mass action. On the other
hand, the CA, agreeing with the respondents argument, assumed the view and held that the
organized demonstrating employees did nothing more than air their grievances in the exercise of
their broader rights of free expression[13] and are, therefore, not amenable to administrative
sanctions. For perspective, following is what the CA said:

Although the filing of administrative charges against [respondent KMGs] members

is well within [petitioner Garcias] official [disciplinary] prerogatives, [his] exercise
of the power vested under Section 45 of Republic Act No. 8291 was tainted with
arbitrariness and vindictiveness against which prohibition was sought by
[respondent]. xxx the fact that the subject mass demonstrations were directed
against [Garcias] supposed mismanagement of the financial resources of the GSIS,
by and of itself, renders the filing of administrative charges against [KMGs]
member suspect. More significantly, we find the gravity of the offenses and the
sheer number of persons charged administratively to be, at the very least,
antithetical to the best interest of the service.

It matters little that, instead of the 361 alleged by petitioner, only 278 charges were
actually filed [and] in the meantime, disposed of and of the said number, 20 resulted
to exoneration, 182 to reprimand and 5 to the imposition of a penalty of one month
suspension. Irrespective of their outcome, the severe penalties prescribed for the
offense with which petitioners members were charged, to our mind, bespeak of
bellicose and castigatory reaction . The fact that most of the employees [Garcia]
administratively charged were eventually meted with what appears to be a virtual
slap on the wrist even makes us wonder why respondent even bothered to file said
charges at all. xxx.

Alongside the consequences of the right of government employees to form, join or

assist employees organization, we have already mentioned how the broader rights
of free expression cast its long shadow over the case. xxx we find [petitioner
Garcias] assailed acts, on the whole, anathema to said right which has been aptly
characterized as preferred, one which stands on a higher level than substantive
economic and other liberties, the matrix of other important rights of our people.
xxx.[14] (Underscoring and words in bracket added; citations omitted.)

While its decision and resolution do not explicitly say so, the CA equated the right to form
associations with the right to engage in strike and similar activities available to workers in the
private sector. In the concrete, the appellate court concluded that inasmuch as GSIS employees are
not barred from forming, joining or assisting employees organization, petitioner Garcia could not
validly initiate charges against GSIS employees waging or joining rallies and demonstrations
notwithstanding the service-disruptive effect of such mass action. Citing what Justice Isagani Cruz
said in ManilaPublic School Teachers Association [MPSTA] v. Laguio, Jr.,[15] the appellate court
declared:

It is already evident from the aforesaid provisions of Resolution No. 021316

that employees of the GSIS are not among those specifically barred from forming,
joining or assisting employees organization such as [KMG]. If only for this
ineluctable fact, the merit of the petition at bench is readily discernible.[16]

We are unable to lend concurrence to the above CA posture. For, let alone the fact that it
ignores what the Court has uniformly held all along, the appellate courts position is contrary to
what Section 4 in relation to Section 5 of CSC Resolution No. 021316[17] provides. Besides, the
appellate courts invocation of Justice Cruzs opinion in MPSTA is clearly off-tangent, the good
Justices opinion thereat being a dissent. It may be, as the appellate court urged that the freedom of
expression and assembly and the right to petition the government for a redress of grievances stand
on a level higher than economic and other liberties. Any suggestion, however, about these rights
as including the right on the part of government personnel to strike ought to be, as it has been,
trashed. We have made this abundantly clear in our past determinations. For instance, in Alliance
of Government Workers v. Minister of Labor and Employment,[18] a case decided under the aegis
of the 1973 Constitution, an en banc Court declared that it would be unfair to allow employees of
government corporations to resort to concerted activity with the ever present threat of a strike to
wring benefits from Government. Then came the 1987 Constitution expressly guaranteeing, for
the first time, the right of government personnel to self-organization[19] to complement the
provision according workers the right to engage in peaceful concerted activities, including the
right to strike in accordance with law.[20]

It was against the backdrop of the aforesaid provisions of the 1987 Constitution that the
Court resolved Bangalisan v. Court of Appeals.[21] In it, we held, citing MPSTA v.
Laguio, Jr.,[22] that employees in the public service may not engage in strikes or in concerted and
unauthorized stoppage of work; that the right of government employees to organize is limited to
the formation of unions or associations, without including the right to strike.

Jacinto v. Court of Appeals[23] came next and there we explained:

Specifically, the right of civil servants to organize themselves was
positively recognized in Association of Court of Appeals Employees vs. Ferrer-
Caleja. But, as in the exercise of the rights of free expression and of assembly, there
are standards for allowable limitations such as the legitimacy of the purpose of
the association, [and] the overriding considerations of national security . . . .

As regards the right to strike, the Constitution itself qualifies its exercise
with the provision in accordance with law. This is a clear manifestation that the
state may, by law, regulate the use of this right, or even deny certain sectors such
right. Executive Order 180 which provides guidelines for the exercise of the right
 of government workers to organize, for instance, implicitly endorsed an earlier CSC
circular which enjoins under pain of administrative sanctions, all government
officers and employees from staging strikes, demonstrations, mass leaves, walkouts
and other forms of mass action which will result in temporary stoppage or
disruption of public service by stating that the Civil Service law and rules governing
concerted activities and strikes in government service shall be observed. (Emphasis
and words in bracket added; citations omitted)

And in the fairly recent case of Gesite v. Court of Appeals,[24] the Court defined the
limits of the right of government employees to organize in the following wise:

It is relevant to state at this point that the settled rule in this jurisdiction is
that employees in the public service may not engage in strikes, mass leaves,
walkouts, and other forms of mass action that will lead in the temporary stoppage
or disruption of public service. The right of government employees to organize is
limited to the formation of unions or associations only, without including the right
to strike,

adding that public employees going on disruptive unauthorized absences to join concerted mass
actions may be held liable for conduct prejudicial to the best interest of the service.

Significantly, 1986 Constitutional Commission member Eulogio Lerum, answering in the negative
the poser of whether or not the right of government employees to self-organization also includes
the right to strike, stated:

When we proposed this amendment providing for self organization of government

employees, it does not mean that because they have the right to organize, they have
also the right to strike. That is a different matter. xxx[25]

With the view we take of the events that transpired on October 4-7, 2004, what respondents
members launched or participated in during that time partook of a strike or, what contextually
amounts to the same thing, a prohibited concerted activity. The phrase prohibited concerted
activity refers to any collective activity undertaken by government employees, by themselves or
through their employees organization, with the intent of effecting work stoppage or service
disruption in order to realize their demands or force concessions, economic or otherwise; it
includes mass leaves, walkouts, picketsand acts of similar nature.[26] Indeed, for four straight
days, participating KMG members and other GSIS employees staged a walk out and waged or
participated in a mass protest or demonstration right at the very doorstep of the GSIS main office
building. The record of attendance[27] for the period material shows that, on the first day of the
protest, 851 employees, or forty eight per cent (48%) of the total number of employees in the main
office (1,756) took to the streets during office hours, from 6 a.m. to 2 p.m.,[28] leaving the other
employees to fend for themselves in an office where a host of transactions take place every
business day. On the second day, 707 employees left their respective work stations, while 538
participated in the mass action on the third day. A smaller number, i.e., 306 employees, but by no
means an insignificant few, joined the fourth day activity.

To say that there was no work disruption or that the delivery of services remained at the
usual level of efficiency at the GSIS main office during those four (4) days of massive walkouts
and wholesale absences would be to understate things. And to place the erring employees beyond
the reach of administrative accountability would be to trivialize the civil service rules, not to
mention the compelling spirit of professionalism exacted of civil servants by the Code of Conduct
and Ethical Standards for Public Officials and Employees. [29]

The appellate court made specific reference to the parliament of the streets, obviously to
lend concurrence to respondents pretension that the gathering of GSIS employees on October 4-7,
2004 was an assembly of citizens out only to air grievances, not a striking crowd. According to
the respondent, a strike presupposes a mass action undertaken to press for some economic demands
or secure additional material employment benefits.
We are not convinced.

In whatever name respondent desires to call the four-day mass action in October 2004, the
stubborn fact remains that the erring employees, instead of exploring non-crippling activities
during their free time, had taken a disruptive approach to attain whatever it was they were
specifically after. As events evolved, they assembled in front of the GSIS main office building
during office hours and staged rallies and protests, and even tried to convince others to join their
cause, thus provoking work stoppage and service-delivery disruption, the very evil sought to be
forestalled by the prohibition against strikes by government personnel.[30]

The Court can concede hypothetically that the protest rally and gathering in question did
not involve some specific material demand. But then the absence of such economic-related
demand, even if true, did not, under the premises, make such mass action less of a prohibited
concerted activity. For, as articulated earlier, any collective activity undertaken by government
employees with the intent of effecting work stoppage or service disruption in order to realize their
demands or force concessions, economic or otherwise, is a prohibited concerted mass
action[31] and doubtless actionable administratively. Bangalisan even went further to say the
following: [i]n the absence of statute, public employees do not have the right to engage in
concerted work stoppages for any purpose.
To petitioner Garcia, as President and General Manager of GSIS, rests the authority and
responsibility, under Section 45 of Republic Act No. 8291, the GSIS Act of 1997, to remove,
suspend or otherwise discipline GSIS personnel for cause.[32] At bottom then, petitioner Garcia, by
filing or causing the filing of administrative charges against the absenting participants of
the October 4-7, 2004 mass action, merely performed a duty expected of him and enjoined by law.
Regardless of the mood petitioner Garcia was in when he signed the charge sheet, his act can easily
be sustained as legally correct and doubtless within his jurisdiction.

It bears to reiterate at this point that the GSIS employees concerned were proceeded against
- and eventually either exonerated, reprimanded or meted a one-month suspension, as the case may
be - not for the exercise of their right to assemble peacefully and to petition for redress of grievance,
but for engaging in what appeared to be a prohibited concerted activity. Respondent no less
admitted that its members and other GSIS employees might have disrupted public service.[33]

To be sure, arbitrariness and whimsical exercise of power or, in fine, grave abuse of
discretion on the part of petitioner Garcia cannot be simplistically inferred from the sheer number
of those charged as well as the gravity or the dire consequences of the charge of grave misconduct
and conduct prejudicial to the best interest of the service, as the appellate court made it to appear.
The principle of accountability demands that every erring government employee be made
answerable for any malfeasance or misfeasance committed. And lest it be overlooked, the mere
filing of formal administrative case, regardless of the gravity of the offense charged, does not
overcome the presumptive innocence of the persons complained of nor does it shift the burden of
evidence to prove guilt of an administrative offense from the complainant.

Moreover, the Court invites attention to its holding in MPSTA v. Laguio, Jr., a case
involving over 800 public school teachers who took part in mass actions for which the then
Secretary of Education filed administrative complaints on assorted charges, such as gross
misconduct. Of those charged, 650 were dismissed and 195 suspended for at least six (6) months
The Court, however, did not consider the element of number of respondents thereat and/or the dire
consequences of the charge/s as fatally vitiating or beclouding the bona fides of the Secretary of
Educations challenged action. Then as now, the Court finds the filing of charges against a large
number of persons and/or the likelihood that they will be suspended or, worse, dismissed from the
service for the offense as indicating a strong and clear case of grave abuse of authority to justify
the issuance of a writ of prohibition.

The appellate court faulted petitioner Garcia for not first taping existing grievance
machinery and other modes of settlement agreed upon in the GSIS-KMG Collective Negotiations
Agreement (CAN) before going full steam ahead with his formal charges.[34]

The Court can plausibly accord cogency to the CAs angle on grievance procedure but for
the fact that it conveniently disregarded what appears to be the more relevant provision of the
CNA. We refer to Article VI which reads:

The GSIS Management and the KMG have mutually agreed to promote the
principle of shared responsibility on all matters and decisions affecting the rights,
benefits and interests of all GSIS employees . Accordingly, the parties also
mutually agree that the KMG shall not declare a strike nor stage any concerted
action which will disrupt public service and the GSIS management shall not
lockout employees who are members of the KMG during the term of this
agreement. GSIS Management shall also respect the rights of the employees to air
their sentiments through peaceful concerted activities during allowable hours,
subject to reasonable office rules .[35] (Underscoring added)

If the finger of blame, therefore, is to be pointed at someone for non-exhaustion of less

confrontational remedies, it should be at the respondent union for spearheading a concerted mass
action without resorting to available settlement mechanism. As it were, it was KMG, under Atty.
Alberto Velasco, which opened fire first. That none of the parties bothered to avail of the grievance
procedures under the GSIS-KMG CNA should not be taken against the GSIS. At best, both GSIS
management and the Union should be considered as in pari delicto.

With the foregoing disquisitions, the Court finds it unnecessary to discuss at length the
legal standing of Alberto Velasco to represent the herein respondent union and to initiate the
underlying petition for prohibition. Suffice it to state that Velasco, per Joint Resolution No. 04-
10-01 approved on October 5, 2004 by the KMG Joint Executive-Legislative Assembly, had
ceased to be member, let alone president, of the KMG, having previously been dropped from the
rolls of GSIS employees.[36] While the dropping from the rolls is alleged to have been the subject
of a CA-issued temporary restraining order (TRO), the injunction came after Atty. Velasco had in
fact been separated from the service and it appears that the TRO had already expired.

As a final consideration, the Court notes or reiterates the following relevant incidents
surrounding the disposition of the case below:

1. The CA had invoked as part of its ratio decidendi a dissenting opinion in MPSTA, even
going to the extent of describing as instructive and timely a portion, when the majority opinion
thereat, which the appellate court ignored, is the controlling jurisprudence.

2. The CA gave prominence to dispositions and rattled off holdings[37] of the Court, which
appropriately apply only to strikes in the private industry labor sector, and utilized the same as
springboard to justify an inference of grave abuse of discretion. On the other hand, it only gave
perfunctory treatment if not totally ignored jurisprudence that squarely dealt with strikes in the
public sector, as if the right to strike given to unions in private corporations/entities is necessarily
applicable to civil service employees.

3. As couched, the assailed CA decision perpetually bars respondent Garcia and necessarily
whoever succeeds him as GSIS President not only from implementing the formal charges against
GSIS employees who participated in the October 4 - 7, 2004 mass action but also from issuing
other formal charges arising from the same events. The injunction was predicated on a finding that
grave abuse of discretion attended the exercise of petitioner Garcias disciplinary power vested him
under Section 45 of RA 8291.[38] At bottom then, the assailed decision struck down as a nullity,
owing to the alleged attendant arbitrariness, not only acts that have already been done, but those
yet to be done. In net effect, any formal charge arising from the October 4-7, 2004 incident is,
under any and all circumstances, prejudged as necessarily tainted with arbitrariness to be slain at
sight.

The absurdities and ironies easily deducible from the foregoing situations are not lost on
the Court.

We close with the observation that the assailed decision and resolution, if allowed to remain
undisturbed, would likely pave the way to the legitimization of mass actions undertaken by civil
servants, regardless of their deleterious effects on the interest of the public they have sworn to
serve with loyalty and efficiency. Worse still, it would permit the emergence of a system where
public sector workers are, as the petitioners aptly put it, immune from the minimum reckoning for
acts that [under settled jurisprudence] are concededly unlawful. This aberration would be
intolerable.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals

are REVERSED and SET ASIDE and the writ of prohibition issued by that court
is NULLIFIED.

No Cost.

SO ORDERED.
G.R. No. 62386 November 9, 1988

BATANGAS-I ELECTRIC COOPERATIVE LABOR UNION, petitioner,

vs.
ROMEO A. YOUNG, OFFICER IN CHARGE, BUREAU OF LABOR RELATIONS, AND
BATANGAS-I ELECTRIC COOPERATIVE, INC., respondents.

G.R. No. 70880 November 9, 1988

BULACAN II ELECTRIC COOPERATIVE, INC., petitioner,

vs.
HON. ELISEO A. PEÑAFLOR, THE CHIEF MED-ARBITER OF THE REGIONAL
ARBITRATION OFFICE, BRANCH NO. III, SAN FERNANDO, PAMPANGA, HON.
CRESENCIANO B. TRAJANO, THE DIRECTOR, BUREAU OF LABOR RELATIONS,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA, AND FEDERATION OF FREE
WORKERS (BECO II COOP., INC., CHAPTER), respondents.

G.R. No. 74560 November 9, 1988

ALBAY ELECTRIC COOPERATIVE I, petitioner,

vs.
CRESENCIANO B. TRAJANO, DIRECTOR, BUREAU OF LABOR RELATIONS AND
FFW ALECO I CHAPTER, respondents.

MEDIALDEA, J.:

This refers to three (3) separate petitions for certiorari under Rule 65 of the Rules of Court, namely:
(1) G.R. No. 62386, entitled "BATANGAS-I ELECTRIC COOPERATIVE LABOR UNION,
Petitioner, versus ROMEO A. YOUNG, OFFICER IN CHARGE, BUREAU OF LABOR
RELATIONS, AND BATANGAS-I ELECTRIC COOPERATIVE INC., Respondents;" (2) G.R.
No. 70880, entitled "BULACAN II ELECTRIC COOPERATIVE, INCORPORATED, Petitioner,
versus HON. ELISEO A. PENAFLOR, The Chief Med-Arbiter of the Regional Arbitration Office,
Branch IN, San Fernando, Pampanga, et al., Respondents, and (3) G.R. No. 74560, entitled
"ALBAY ELECTRIC COOPERATIVE I, Petitioner, versus CRESENCIO B. TRAJANO,
DIRECTOR, BUREAU OF LABOR RELATIONS AND FFW ALECO I CHAPTER,
Respondents." The same issue is involved in these petitions. The antecedent facts are as follows:

G.R. No. 62386

On June 1, 1981, the Batangas-I Electric Cooperative Union (hereinafter referred to as UNION)
filed with the Regional Office No. IV-A, Ministry of Labor and Employment (now Department of
Labor and Employment), at San Pablo City, a petition for certification election. The UNION
alleged, inter alia, that it is a legitimate labor organization; that the Batangas-I Electric
Cooperative Inc. BATELEC has 150 employees, more or less; that the UNION desires to represent
the regular rank and file employees of BATELEC for purposes of collective bargaining; that there
is no other union existing in BATELEC except the UNION; that there is no certified collective
bargaining agreement in the said cooperative; and that there has been no certification election
conducted in BATELEC during the last twelve (12) months preceding the filing of the petition.
On August 20, 1981, Med-Arbiter Paterno D. Adap issued a resolution (pp. 21-23, Rollo) which
gave due course to the petition and ordered the holding of a certification election. On August 31,
1981, BATELEC filed a motion for reconsideration (pp. 24-30, Rollo) of the Med-Arbiter's
resolution contending, inter alia, that there was a legal impediment to the holding of a certification
election considering that the formation of a union in a cooperative is illegal and invalid, the officers
and members of the union being the owners thereof. This motion was treated as an appeal from
the Med-Arbiter's resolution of August 20, 1981. On November 27, 1981, a resolution (pp. 38-
40, Rollo) was issued by Romeo A. Young, Officer in Charge, Bureau of Labor Relations, granting
the appeal and revoking the Med-Arbiter's order mandating the holding of a certification election.
This Resolution, inter alia, stated:

The sole issue that confronts Us in the instant case is whether or not employees of
an electric cooperative who are at the same time members of the cooperative, may
be allowed to form or join a labor union in the electric cooperative for purposes of
collective bargaining.

We rule in the negative.

A cursory analysis of Section 35, Presidential Decree 269, as amended, readily

shows that employees of an electric cooperative who are themselves members of
the cooperative have no right to form or join a labor organization for purposes of
collective bargaining.

In the first instance, a cooperative is established primarily for the mutual aid and
protection of the members thereof. It was never intended to operate like an ordinary
company or corporation. A cooperative is a non-profit organization, so that if ever
there are gains, income or benefits derived therefrom, the same are equally divided
among its members. For all legal intents and purposes, therefore, members of a
cooperative are part-owners thereof.

In the instant case, petitioner strongly contended that they are not co-owners of the
cooperative because the only benefits that they derive therefrom are in the form of
electrical services and that they never exercise the attributes of ownership
recognized under Article 428 of the New Civil Code. We do not concur. The fact
that these employees/members enjoy free electrical services which are not available
to non-members is a clear indication that these employees are co-owners of the
cooperative. Petitioner must be reminded that benefits from cooperative accruing
to co-owners may not come only in the form of monetary benefits but also in the
form of services.

Petitioner also advanced the theory that if self-employed persons are allowed to
form a labor organization under Article 244, Presidential Decree 442, as amended,
then it is with more reason that employees of the cooperative should also be allowed
to form their union. Article 244, PD 442 as amended, provides:
 ... Ambulant, intermittent and itinerant workers, self employed
people, rural workers and those without any definite employers may
form a labor organization for their mutual aid and protection.

It must be noted that although the self- employed people are allowed by the Labor
Code to form a labor organization, the purpose of such organization is for mutual
aid and protection but not for the purpose of collective bargaining.

Finally, while Article 244, PD 442, as amended, now allows workers of non- profit
institutions to form labor organizations, nevertheless, the same provisions can not
extend to a cooperative considering the absence of employer-employee relationship
therein. (p. 39-40, Rollo).

After its motion for reconsideration was denied, the UNION filed the instant petition contending
that the respondent Director of the Bureau of Labor Relations committed a palpable error of law
and/or grave abuse of discretion amounting to lack of and/or in excess of jurisdiction in finding
and concluding that employees of an electric cooperative who are at the same time members of the
cooperative are not allowed to form or join a labor union in the electric cooperative for purposes
of collective bargaining, and in revoking and setting aside the resolution dated August 20, 1981 of
the Med-Arbiter directing the holding of a certification election among the rank and file employees
of BATELEC.

G.R. No. 70880

On September 1, 1982, the Federation of Free Workers (FFW) filed with the Regional Office IN,
Ministry of Labor and Employment (now Department of Labor and Employment), at San
Fernando, Pampanga, a petition for certification election. The petition alleged, inter alia, that the
FFW is a legitimate labor organization; that the Bulacan II Electric Cooperative Inc. BECO II) is
engaged in the service and supply of electric current and, therefore, an employer under the
provisions of the Labor Code; that the FFW seeks to be certified as the sole and exclusive collective
bargaining representative of the regular rank and file employees and workers of BECO II for
purposes of collective bargaining; that there are more or less 140 regular rank and file employees
and workers of BECO II; that there is no other union existing in BECO II except the FFW and that
there is no certified collective bargaining agreement in said establishment; and that there has been
no certification election conducted in BECO II during the last twelve (12) months preceding the
filing of the petition.

On September 24, 1982, BECO II filed its answer (pp. 17-18, Rollo) contending that the petition
does not comply with the 30% jurisdictional requirement considering that it has a total of 143
employees, 24 of whom are members of the cooperative, 28 are managerial employees, 3 are
confidential employees, 23 are contractual employees and 28 are casual employees, thereby
leaving only 37 employees belonging to the rank and file; and that to grant the petition would be
violative of Article 244 (now Article 243) of the Labor Code and Section 35 of PD 269.
Later, the FFW filed its position paper contending that it has complied substantially with the 30%
jurisdictional requirement with the 73 signatures it submitted and that there is nothing in the law
that prohibits or restricts cooperative members from joining labor organizations.

On the other hand, BECO II, through its position paper dated October 4, 1982 (pp. 19-26, Rollo),
contended, inter alia, that it is not among those covered by Article 244 of the Labor Code, as
amended by BP 70, as it is not a commercial, industrial or agricultural enterprise and neither is it
a religious, charitable, medical or educational institution; that since electric cooperatives are
subject to the supervision and control of the National Electrification Administration pursuant to
PD 269, as amended by PD 1645, BECO II in effect is a government institution; and that there is
no representation issue as there is no other labor organization involved except the FFW.

On October 14, 1982, Eliseo A. Peñaflor, Chief Med-Arbiter of the Regional Office III, issued an
order (pp. 27-28, Rollo) directing the holding of a certification election among the rank and file
employees and workers of BECO II.

BECO II appealed from this Order to the Bureau of Labor Relations. On January 16,1985, Director
Cresenciano Trajano of the said bureau rendered a decision (pp. 42-43, Rollo) dismissing the
appeal and affirming the questioned order. This decision, inter alia, stated:

xxx xxx xxx

... We dismiss the Appeal.

Our resolution in the case of Batangas I Electric Cooperative Labor Union dated 27
November 1981 is not applicable in the case at bar as the facts therein are different.
There, the petition for certification election was supported by workers who are
members of the cooperative. No employer-employee relationship exists between
the members and the cooperative firm. In the case at bai respondent did admit the
existence of employer-employee relationship with workers of the cooperative who
are not cooperative members when it alleced that of the total 143 employees only
24 are cooperative members. Thus, even if we deduct the 24 cooperative members
from the numbelof workers supporting the petition, there still remain 49 signatures
which aie more than enough compliance with the 30% requirement.

Going to Presidential Decree No. 269, there is no showing that that such prohibits
formation of unions between and among employees who are members of the
cooperative. Rather, Section 35 of PD 269 shows that the prohibition against
formation of a labor organization for purposes of collective bar-dining extends to
employees of an electric cooperative who ale themselves members of the
cooperative.

Finally, the fact that tlie petition foi cel tificatioll election was filed already gives
1ise to representation issue, irrespective of whetheronly one union is involved.
 Considering satisfaction of the 30% subscriptional requirement coupled with the
findings that the workers who aie not members of the cooperative are eligible to
uinoii membership, we have no other-alternative but to affirm the Order of the
MedAibitei to hold a certification election. ... (p. 43, Rollo).

BECO II filed the instant petition contending that the public respondents acted with grave abuse
of discretion in ruling that under Article 244 (now Article 243) of the Labor Code, members and
part owners of electric cooperatives are eligible to form, join or assist labor organizations for
purposes of collective bargaining.

On May 29, 1985, a temporary restraining order was issued by this Court enjoiililig the respondents
from enforcing the questioned orders.

G.R. No. 74560

On October 1, 1985, the Federation of Free Workers (FFW) ALECO I Chapter filed a petition for
certification election, alleging, inter alia, that it is a legitimate labor onganization" that the Albay
Electric Cooperative I ALECO 1) is an electric cooperative servicing electricity in the Province of
Albay- that ALECO I has 160 employees, more or less, majority of whom are FFW members; that
there is no other union existing nor a collective bargaining agreement existing in the,cooperative"
that no certification election has been held for the past twelve (12) months prior to the filing of the
petition.

On November 29, 1985, the FFW submitted 63 signatures in support of the petition for certification
election. On the same date, counsel for ALECO I employees for a "NO-UNION STAND"
intervened and submitted a copy of the ALECO I 1985 budget showing that the said cooperative
has a total of 141 rank and file employees.On December 11, 1985, the FFW filed its position paper
contending, inter alia, that the ALECO I is covered by the Labor Code: that it has a right to
organize and be represented by a union; that there is no legal impediment to the holding of a
certification election considering that out of the 141 rank and file employees, 63 supported the
petition.

On December 18, 1985, ALECO I filed its position paper seeking the dismissal of the petition on
the allegation that FFW failed to comply with 30% requirement considering that 112 rank and file
employees have manifested in a "declaration" they that do not desire to be represented by any
union.

On December 24,1985, intervenor ALECO I employees for a "NO-UNION STAND") filed its
position paper (pp. 15- 17, Rollo) seeking likewise the dismissal of the petition, alleging that the
30% written consent requirement has not been complied with. It alleged that of the 63 signatories
to the petition, 51 are not qualified to join the union as they are members-consumers of the ALECO
I and are considered joint owners of the cooperative pursuant to PD 269, and Art. II Sec. I of the
revised by laws of ALECO I.
FFW in its reply (pp. 18-20, Rollo), argued that the 51 disputed signatories to the petition are
regular rank and file employees and workers of ALECO I and are entitled to selforganization under
Article 244 (now Article 243) of the Labor Code.

On February 26, 1986, the Med-Arbiter, finding that there was compliance with the 30%
subscription requirement, issued an Order (pp. 21-25, Rollo) calling for a certification election.
ALECO I appealed from this order to the Bureau of Labor Relations.

In the meantime, on April 25, 1986, the Association of Democratic Labor Organization ADLO
moved to intervene in the petition claiming that it has a legal interest to protect.

On May 15, 1986, Cresenciano B. Trajano, Director of the Bureau of Labor Relations, rendered a
decision (pp. 27-29, Rollo) dismissing ALECO Is appeal for lack of merit, claiming that there was
a "clear proof of compliance with the 30% subscription requirement, coupled with the finding that
the subscribers to the petition who are members/owners of the respondent cooperative can validly
be eligible for union membership." This decision, inter alia, stated:

The sole issue now for resolution is whether or not the petitioners who are
members/owners of the cooperative are eligible to join a labor organization for the
purpose of collective bargaining.

We find for petitioner.

While it may be true that the subscribers to the petition are in themselves
members/owners of the cooperative, nevertheless, as we have often ruled, that alone
does not militate against their exercise of the right of self-organization. ln the
present petition, they are not acting in the capacity of part-owners/members but as
mere employees of the cooperative. As such, they do not have direct control and
management of the affairs and operation of the cooperative. We thus see no conflict
of interest between the organization of the employees into a union and their being
members of the cooperative.

Moreover, the existence of employer- employee relationship with the workers of

the cooperative was not disputed by respondent. Like all other workers, the
petitioners are entitled to the exercise of the right to self organization and collective
bargaining as guaranteed by the Constitution. Surely, it is not the intention of
Presidential Decree No. 269 to discourage unionism of employees. The
encouragement of the right to self organization is expected to promote industrial
peace through the promotion of the workers' moral, social and economic well-
being.

There being clear proof of compliance with the 30% subscription requirement,
coupled with the finding that the subscribers to the petition who are
members/owners of the respondent cooperative can validly be eligible for union
membership, we rule to affirm the Order of the Med-Arbiter.
 WHEREFORE, premises considered, the instant appeal is hereby denied for lack
of merit and the Order of the MedAlbiter dated 26 February 1986 is affirmed with
the modification that the Association of Democratic Labor Organizations ADLO
shall be included as a contending party in the certification election. Let the records
of the case be immediately forwarded to the office of origin for implementation of
this Decision.

SO ORDERED (pp. 28-29, Rollo).

Hence, ALECO I filed the instant petition contending that the public respondent erred in holding
that the FFW ALECO I CHAPTER whose members are members/part owners of the cooperative
are eligible to join a labor organization for collective bargaining.

On June 6, 1986, a temporary restraining order was issued by this Court enjoining the respondents
from enforcing the questioned decision.

The Solicitor General who was earlier required to give his comment, filed on June 11, 1986, a
manifestation and motion to be excused from filing said comment, which was later granted by this
Court. In the said manifestation, the Solicitor General stated:

xxx xxx xxx

2. The issue presented in tlie petition is whether private respondents most of whom
aie members of petitioner Albay Electric Cooperative I may form or joili a labor
union within said cooperative. The same issue was raised in BLR Case No. A-0265-
81, elevated to this Honorable Court as G.R. No. 62386, entitled "Batangas Electric
Cooperative Labor Union vs. BLR Officer in Charge Romeo A. Young, et. al." In
that case respondent BLR Officer-in-Chairge Romeo Young ruled that employees
who aie at the same time members of an electric cooperative are not entitled to form
ol join a labor union. This Office in its comment sustained the decision of BLR OIC
Romeo Young, as follows:

xxx xxx xxx

Petitioner claims that the members of the cooperative may form or join a labor
union within the cooperative for the purpose of collective bargaining because they
fall within the ambit of Art. 244 of the Labor Code, as amended by BP 70, as
follows;

Coverage and employees right to self-organization. — All persons

employed in commercial, industrial and agricultural elitelprises aild
in religious, charitable, medical or educational institutions whether
operating for profit oi not, shall have the iiht to self-organization and
to form, join or assist labor organization of their own choosin folthe
purpose of collective bargaining. ...
 It is submitted that this provision does not apply to the members of the petitioner-
union since they are co-owners of the cooperative. The word 'employed' within the
meaning of the above-cited provisions, eliminates members of cooperatives who
are co-owners of the corporation. Said term means persons strictly under hire and
without any involvement in the ownership of the firm. This construction is
buttressed by the qualification that the labor union formed was for the purpose of
collective bargaining. The duty to bargain exists only between employer and its
employees. An employer has no duty to bargain with its cooperatives of the
corporation.

xxx xxx xxx

At this point, it may be emphasized that the exclusion from the right to self
organization is limited only to membersowners of the electric cooperative.
Employees who are not members of the cooperative are not prohibited to form, join
or assist labor unions because they are not co-owners. However, as already
discussed, members of petitioner union are necessarily co-owners of the electric
cooperative. Therefore, being co-owners of the electric cooperative, members of
petitioner union are not entitled to the right to self- organization within the electric
cooperative.

4. Assuming a position contrary to that taken by BLR OIC Romeo Young in the
above case, public respondent BLR Director Cresenciano B. Trajano in this case
ruled that employees most of whom are members of the electric cooperative may
form or join a labor organization in said cooperative.

5. For this Office, therefore, to sustain the decision of respondent BLR Director
Cresenciano B. Trajano in this case, would be to assume a position directly opposite
and in conflict with that it had previously taken in G.R. No. 62386, now pending
before this Honorable Court (pp. 47-50, Rollo).

The common issue raised in these three (3) instant petitions is whether or not employees of electric
cooperatives are qualified to form or join labor organizations for purposes of collective bargaining.

Eligibility to form, join or assist labor organizations for purposes of collective bargaining is
governed by Article 243 (formerly Article 244) of the Labor Code, as amended, which provides:

Art. 243. Coverage and employees' right to self-organization. — All persons

employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical, or educational institutions whether operating for profit or not,
shall have the right to selforganization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed people, rural workers
and those without any definite employers may form labor organizations for their
mutual aid and protection.
In Cooperative Rural Bank of Davao City, Inc. vs. Pura Ferrer-Calleja, Director, Bureau of Labor
Relations, et al., G.R. No. 77951, September 26, 1988, it was held that an employee of a
cooperative who is a member and co-owner thereof cannot invoke the right to collective
bargaining. The decision in the case, inter alia, stated:

xxx xxx xxx

A cooperative, therefore, is by its nature different from an ordinary business

concern being run either by persons, partnerships, or corporations. Its owners
and/or members are the ones who run and operate the business while the others are
its employees. As above stated, irrespective of the name of shares owned by its
member they are entitled to cast one vote each in deciding upon the affair of the
cooperative. Their share capital eam limited interests. They enjoy special privileges
as — exemption from income tax and sales taxes, preferential right to supply their
products to State agencies and even exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner

thereof cannot invoke the right to collective bargaining for certainly an owner
cannot bargain with himself or his co-owners. In the opinion of August 14, 1981 of
the Solicitor General he correctly opined that employees of cooperatives who are
themselves members of the cooperative have no right to form orjoin labor
organizations for purposes of collective bargaining for being themselves co-owners
of the cooperative.

However, in so far as it involves cooperatives with employees who are not members
or co-owners thereof, certainly such employees are entitled to exercise the rights of
all workers to organization, collective bargaining, negotiations and others as are
enshrined in the Constitution and existing laws of the country.

In the light of the above-stated pronouncement, the assailed resolution dated November 27, 1981
of Romeo A. Young, Officer-in-Charge, Bureau of Labor Relations, in G.R. No. 62386, revoking
the Med-Arbiter's order calling for a certification election must be upheld. The records in this case
do not show that minus the rank and file employees (also members of the respondent BATELEC)
who supported the petition, there was still a sufficient number to constitute 30% of the bargaining
unit as a jurisdictional requirement. On the contrary, there is sufficient evidence showing that all
those who supported the petition were such members. Petitioner UNION admitted in its petition
that its officers and members are also membersconsumers of the cooperative (p. 6, Rollo). Such
being the case, the employees belonging to petitioner UNION are not qualified to form a labor
organization and bargain collectively.

The records in G.R. No. 70880 show that the petitioner BECO II has 143 employees and that 73
employees of the petitioner supported the petition for certification election. No clear evidence was
adduced by petitioner to prove that 28 of its employees are managerial employees. However, 24
employees are members of the cooperative. Thus, even if the 24 cooperative members, assuming,
in gratia arguinenti that all of them supported the petition, are to be deducted from the said 73
employees, there still remain forty-nine (49), a sufficient compliance with the 30% jurisdictional
requirement provided in the old Article 258 of the Labor Code, the law then prevailing.

In sustaining the order of the Med-Arbiter, Director Trajano, inter alia, said:

Considering satisfaction of the 30% subscriptional requirement coupled with the

findings that the workers who are not members of the cooperative are eligible to
union membership, we have no other alternative but to aff iim the Order of the Med-
Arbiter to hold a certification election. (p. 43, Rollo).<äre||anº•1àw>

We find no valid reason to disturb this finding. Employees of a cooperative who are not members
thereof are entitled to exercise the rights of all workers to form, join or assist labor organizations
for purposes of collective bargaining. Compliance with the jurisdictional requirement makes it
mandatory on the part of the Bureau of Labor Relations to order the

In the present Article 257 of the Labor Code, it is now provided that in any establishment where
there is no certified bargaining agent, the petition for certification election filed by a legitimate
labor organization shall be supported by the written consent of at least twenty (20%) percent of all
the employees in the bargaining unit holding of a certification election in order to determine the
exclusive bargaining agent of the employees. With such, the Bureau is left without any discretion
but to order the holding of a certification election Arguelles vs. Young, G.R. No. 59880, September
11, 1987,153 SCRA 690).

With respect to G.R. No. 74560, the decision dated May 15, 1986 of the respondent Director of
the Bureau of Labor Relations, affirming the Med-Arbiter's order for the holding of a certification
election, is reversed. It is clear from the records in this case that the petitioner ALECO I has 141
rank and file employees. Hence, there are 90 rank and file employees, nonmembers of the
cooperative, who may validly form, join or assist labor organizations for purposes of collective
bargaining.

It is likewise clear that 63 rank and file employees supported the petition for certification election
but 51 of them are members of the petitioner cooperative, a fact not disputed by the private
respondent union. Hence, only 12 rank and file employees who were qualified to form, join or
assist labor organizations for purposes of collective bargaining, signed the petition, which
definitely is a number short of the 30% jurisdictional requirement as provided in Article 258 of the
Labor Code, the law then prevailing. Thirty (30%) percent of the 90 rank and file employees who
are not members of the cooperative is 27.

ACCORDINGLY, judgment is hereby rendered as follows:

1. In G.R. No. 62386, the petition is DISMISSED and the challenged decision dated November
27, 1981 of respondent Romeo A. Young, OIC of the Bureau of Labor Relations is AFFIRMED.

2. In G.R. No. 70880, the petition is DISMISSED and the decision dated January 16, 1985 of
respondent Cresenciano B. Trajano, Director, Bureau of Labor Relations, ordering the holding of
a certification election is hereby AFFIRMED. Notwithstanding the inclusion of the 24 members
or co-owners of the cooperative, the 30% subscriptional requirement for the filing of a petition for
certification election has been satisfied. The temporary restraining order dated May 29,1985 is
LIFMD

3. In G.R. No. 74560, the petition is GRANTED and the assailed decision dated May 15, 1986 of
respondent Cresenciano B. Trajano, Director, Bureau of Labor Relations is hereby REVERSED
and SET ASIDE. The temporary restraining order dated June 2, 1986 is LIFTED.

SO ORDERED.
G.R. No. 211145

SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD rep. by its President, ALFIE

ALIPIO, Petitioner
vs.
BUREAU OF LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND
CONSTRUCTION CO., LTD. (HHIC-PIDL.),, Respondents

DECISION

mendoza, J.:

The right to self-organization is not limited to unionism. Workers may also form or join an
association for mutual aid and protection and for other legitimate purposes.

This is a petition for review on certiorari seeking to reverse and set aside the July 4, 2013
Decision1 and the January 28, 2014 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
123397, which reversed the November 28, 2011 Resolution3 of the Bureau of Labor Relations
(BLR) and reinstated the April 20, 2010 Decision 4 of the Department of Labor and Employment
(DOLE) Regional Director, cancelling the registration of Samahan ng Manggagawa sa Hanjin
Shipyard (Samahan) as a worker's association under Article 243 (now Article 249) of the Labor
Code.

The Facts

On February 16, 2010, Samahan, through its authorized representative, Alfie F. Alipio, filed an
application for registration 5 of its name "Samahan ng Mga Manggagawa sa Hanjin
Shipyard" with the DOLE. Attached to the application were the list of names of the association's
officers and members, signatures of the attendees of the February 7, 2010 meeting, copies of their
Constitution and By-laws. The application stated that the association had a total of 120 members.

On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando, Pampanga (DOLE-
Pampanga), issued the corresponding certificate of registration6 in favor of Samahan.

On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co., Ltd. Philippines
(Hanjin), with offices at Greenbeach 1, Renondo Peninsula, Sitio Agustin, Barangay Cawag, Subic
Bay Freeport Zone, filed a petition7 with DOLE-Pampanga praying for the cancellation of
registration of Samahan' s association on the ground that its members did not fall under any of the
types of workers enumerated in the second sentence of Article 243 (now 249).

Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-employed, and those
without definite employers may form a workers' association. It further posited that one third (1/3)
of the members of the association had definite employers and the continued existence and
registration of the association would prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition,8 adding the alternative ground that
Samahan committed a misrepresentation in connection with the list of members and/or voters who
took part in the ratification of their constitution and by-laws in its application for registration.
Hanjin claimed that Samahan made it appear that its members were all qualified to become
members of the workers' association.

On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan requested for a
10-day period to file a responsive pleading. No pleading, however, was submitted. Instead,
Samahan filed a motion to dismiss on April 14, 2010.9

The Ruling of the DOLE Regional Director

On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of Hanjin. He found that
the preamble, as stated in the Constitution and By-Laws of Samahan, was an admission on its part
that all of its members were employees of Hanjin, to wit:

KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay naglalayong na isulong ang
pagpapabuti ng kondisyon sa paggawa at katiyakan sa hanapbuhay sa pamamagitan ng patuloy
na pagpapaunlad ng kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng
aming mga angking lakas, kaalaman at kasanayan ay aming maitataguyod at makapag-aambag
sa kaunlaran ng isang lipunan. Na mararating at makakamit ang antas ng pagkilala, pagdakila at
pagpapahalaga sa mga tulad naming mga manggagawa.

XXX10

The same claim was made by Samahan in its motion to dismiss, but it failed to adduce evidence
that the remaining 63 members were also employees of Hanjin. Its admission bolstered Hanjin's
claim that Samahan committed misrepresentation in its application for registration as it made an
express representation that all of its members were employees of the former. Having a definite
employer, these 57 members should have formed a labor union for collective bargaining. 11 The
dispositive portion of the decision of the Dole Regional Director, reads:

WHEREFORE, premises considered, the petition is hereby GRANTED. Consequently, the

Certificate of Registration as Legitimate Workers Association (LWA) issued to the SAMAHAN
NG MGA MANGGAGAWA SA HANJIN SHIPYARD (SAMAHAN) with Registration
Numbers R0300-1002-WA-009 dated February 26, 2010 is hereby CANCELLED, and said
association is dropped from the roster of labor organizations of this Office.

SO DECIDED.12

The Ruling of the Bureau of Labor Relations

Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had no right to petition
for the cancellation of its registration. Samahan pointed out that the words "Hanjin Shipyard," as
used in its application for registration, referred to a workplace and not as employer or company. It
explained that when a shipyard was put up in Subic, Zambales, it became known as Hanjin
Shipyard. Further, the remaining 63 members signed the Sama-Samang Pagpapatunay which
stated that they were either working or had worked at Hanjin. Thus, the alleged misrepresentation
committed by Samahan had no leg to stand on.14

In its Comment to the Appeal,15 Hanjin averred that it was a party-ininterest. It reiterated that
Samahan committed misrepresentation in its application for registration before DOLE Pampanga.
While Samahan insisted that the remaining 63 members were either working, or had at least
worked in Hanjin, only 10 attested to such fact, thus, leaving its 53 members without any
workplace to claim.

On September 6, 2010, the BLR granted Samahan's appeal and reversed the ruling of the Regional
Director. It stated that the law clearly afforded the right to self-organization to all workers
including those without definite employers.16 As an expression of the right to self-organization,
industrial, commercial and self-employed workers could form a workers' association if they so
desired but subject to the limitation that it was only for mutual aid and protection.17 Nowhere could
it be found that to form a workers' association was prohibited or that the exercise of a workers'
right to self-organization was limited to collective bargaining.18

The BLR was of the opinion that there was no misrepresentation on the part of Samahan. The
phrase, "KAMI, ang mga Manggagawa sa Hanjin Shipyard," if translated, would be: "We, the
workers at Hanjin Shipyard." The use of the preposition "at" instead of "of' would indicate that
"Hanjin Shipyard" was intended to describe a place.19 Should Hanjin feel that the use of its name
had affected the goodwill of the company, the remedy was not to seek the cancellation of the
association's registration. At most, the use by Samahan of the name "Hanjin Shipyard" would only
warrant a change in the name of the association.20 Thus, the dispositive portion of the BLR decision
reads:

WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III Director Ernesto
C. Bihis dated 20 April 2010 is REVERSED and SET ASIDE.

Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in the roster of
legitimate workers' association.21

On October 14, 2010, Hanjin filed its motion for reconsideration.22

In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6, 2010 Decision,
but directed Samahan to remove the words "Hanjin Shipyard" from its name. The BLR explained
that the Labor Code had no provision on the use of trade or business name in the naming of a
worker's association, such matters being governed by the Corporation Code. According to the
BLR, the most equitable relief that would strike a balance between the contending interests of
Samahan and Hanjin was to direct Samahan to drop the name "Hanjin Shipyard" without delisting
it from the roster of legitimate labor organizations. The fallo reads:

WHEREFORE, premises considered, our Decision dated 6 September 2010 is hereby AFFIRMED
with a DIRECTIVE for SAMAHAN to remove "HANJIN SHIPYARD" from its name.
SO RESOLVED.24

Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the CA, docketed as
CA-G.R. SP No. 123397.

In its March 21, 2012 Resolution,26 the CA dismissed the petition because of Samahan's failure to
file a motion for reconsideration of the assailed November 28, 2011 Resolution.

On April 17, 2012, Samahan filed its motion for reconsideration27 and on July 18, 2012, Hanjin
filed its comment28 to oppose the same. On October 22, 2012, the CA issued a resolution granting
Samahan's motion for reconsideration and reinstating the petition. Hanjin was directed to file a
comment five (5) days from receipt of notice.29

On December 12, 2012, Hanjin filed its comment on the petition,30 arguing that to require Samahan
to change its name was not tantamount to interfering with the workers' right to self-
organization.31 Thus, it prayed, among others, for the dismissalof the petition for Samahan's failure
to file the required motion for reconsideration.32

On January 17, 2013, Samahan filed its reply.33

On March 22, 2013, Hanjin filed its memorandum.34

The Ruling of the Court of Appeals

On July 4, 2013, the CA rendered its decision, holding that the registration of Samahan as a
legitimate workers' association was contrary to the provisions of Article 243 of the Labor Code.35 It
stressed that only 57 out of the 120 members were actually working in Hanjin while the phrase in
the preamble of Samahan's Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin
Shipyard," created an impression that all its members were employees of HHIC. Such unqualified
manifestation which was used in its application for registration, was a clear proof of
misrepresentation which warranted the cancellation of Samahan' s registration.

It also stated that the members of Samahan could not register it as a legitimate worker's association
because the place where Hanjin's industry was located was not a rural area. Neither was there any
evidence to show that the members of the association were ambulant, intermittent or itinerant
workers.36

At any rate, the CA was of the view that dropping the words "Hanjin Shipyard" from the
association name would not prejudice or impair its rightto self-organization because it could adopt
other appropriate names. The dispositive portion reads:

WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering that the words
"Hanjin Shipyard" be removed from petitioner association's name, is AFFIRMED. The Decision
dated April 20, 2010 of the DOLE Regional Director in Case No. Ro300-1003-CP-001, which
ordered the cancellation of petitioner association's registration is REINSTATED.
SO ORDERED.37

Hence, this petition, raising the following

ISSUES

I. THE COURT OF APPEALS SEfilOUSLY ERRED IN FINDING THAT SAMAHAN

CANNOT FORM A WORKERS' ASSOCIATION OF EMPLOYEES IN HANJIN AND
INSTEAD SHOULD HA VE FORMED A UNION, HENCE THEIR REGISTRATION AS A
WORKERS' ASSOCIATION SHOULD BE CANCELLED.

II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE

REMOVAL/DELETION OF THE WORD "HANJIN" IN THE NAME OF THE UNION BY
REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE COMP ANY NAME
"HANJIN."38

Samahan argues that the right to form a workers' association is not exclusive to intermittent,
ambulant and itinerant workers. While the Labor Code allows the workers "to form, join or assist
labor organizations of their own choosing" for the purpose of collective bargaining, it does not
prohibit them from forming a labor organization simply for purposes of mutual aid and protection.
All members of Samahan have one common place of work, Hanjin Shipyard. Thus, there is no
reason why they cannot use "Hanjin Shipyard" in their name.39

Hanjin counters that Samahan failed to adduce sufficient basis that all its members were employees
of Hanjin or its legitimate contractors, and that the use of the name "Hanjin Shipyard" would create
an impression that all its members were employess of HHIC.40

Samahan reiterates its stand that workers with a definite employer can organize any association
for purposes of mutual aid and protection. Inherent in the workers' right to self-organization is its
right to name its own organization. Samahan referred "Hanjin Shipyard" as their common place of
work. Therefore, they may adopt the same in their association's name.41

The Court's Ruling

The petition is partly meritorious.

Right to self-organization includes

right to form a union, workers '
association and labor management
councils

More often than not, the right to self-organization connotes unionism. Workers, however, can also
form and join a workers' association as well as labor-management councils (LMC). Expressed in
the highest law of the land is the right of all workers to self-organization. Section 3, Article XIII
of the 1987 Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all. It
shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
xxx [Emphasis Supplied]

And Section 8, Article III of the 1987 Constitution also states:

Section 8. The right of the people, including those employed in the public and private sectors, to
form unions, associations, or societies for purposes not contrary to law shall not be abridged.

In relation thereto, Article 3 of the Labor Code provides:

Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of
work.

[Emphasis Supplied]

As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the
right to form, join or assist labor organizations fer the purpose of collective bargaining through
representatives of their own choosing and to engage in lawful concerted activities for the same
purpose for their mutual aid and protection. This is in line with the policy of the State to foster the
free and voluntary organization of a strong and united labor movement as well as to make sure that
workers participate in policy and decision-making processes affecting their rights, duties and
welfare.42

The right to form a union or association or to self-organization comprehends two notions, to wit:
(a) the liberty or freedom, that is, the absence of restraint which guarantees that the employee may
act for himself without being prevented by law; and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association.43

In view of the revered right of every worker to self-organization, the law expressly allows and
even encourages the formation of labor organizations. A labor organization is defined as "any
union or association o[ employees which exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of employment."44 A
labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the
employer concerning terms and conditions of employment. To bargain collectively is a right given
to a union once it registers itself with the DOLE. Dealing with the employer, on the other hand, is
a generic description of interaction between employer and employees concerning grievances,
wages, work hours and other terms and conditions of employment, even if the employees' group
is not registered with the DOLE.45
A union refers to any labor organization in the private sector organized for collective bargaining
and for other legitimate purpose,46 while a workers' association is an organization of workers
formed for the mutual aid and protection of its members or for any legitimate purpose other than

collective bargaining.47

Many associations or groups of employees, or even combinations of only several persons, may
qualify as a labor organization yet fall short of constituting a labor union. While every labor union
is a labor organization, not every labor organization is a labor union. The difference is one of
organization, composition and operation.48

Collective bargaining is just one of the forms of employee participation. Despite so much interest
in and the promotion of collective bargaining, it is incorrect to say that it is the device and no other,
which secures industrial democracy. It is equally misleading to say that collective bargaining is
the end-goal of employee representation. Rather, the real aim is employee participation in
whatever form it may appear, bargaining or no bargaining, union or no union.49 Any labor
organization which may or may not be a union may deal with the employer. This explains why a
workers' association or organization does not always have to be a labor union and why employer-
employee collective interactions are not always collective bargaining.50

To further strengthen employee participation, Article 255 (now 261)51 of the Labor Code mandates
that workers shall have the right to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect their rights,
benefits and welfare. For this purpose, workers and employers may form LMCs.

A cursory reading of the law demonstrates that a common element between unionism and the
formation of LMCs is the existence of an employer-employee relationship. Where neither party is
an employer nor an employee of the other, no duty to bargain collectively would exist.52 In the
same manner, expressed in Article 255 (now 261) is the requirement that such workers be
employed in the establishment before they can participate in policy and decision making processes.

In contrast, the existence of employer-employee relationship is not mandatory in the formation of

workers' association. What the law simply requires is that the members of the workers' association,
at the very least, share the same interest. The very definition of a workers' association speaks of
"mutual aid and protection."

Right to choose whether to form or

join a union or workers' association
belongs to workers themselves

In the case at bench, the Court cannot sanction the opinion of the CA that Samahan should have
formed a union for purposes of collective bargaining instead of a workers' association because the
choice belonged to it. The right to form or join a labor organization necessarily includes the right
to refuse or refrain from exercising the said right. It is self-evident that just as no one should be
denied the exercise of a right granted by law, so also, no one should be compelled to exercise such
a conferred right.53 Also inherent in the right to self-organization is the right to choose whether to
form a union for purposes of collective bargaining or a workers' association for purposes of
providing mutual aid and protection.

The right to self-organization, however, is subject to certain limitations as provided by law. For
instance, the Labor Code specifically disallows managerial employees from joining, assisting or
forming any labor union. Meanwhile, supervisory employees, while eligible for membership in
labor organizations, are proscribed from joining the collective bargaining unit of the rank and file
employees.54 Even government employees have the right to self-organization. It is not, however,
regarded as existing or available for purposes of collective bargaining, but simply for the
furtherance and protection of their interests.55

Hanjin posits that the members of Samahan have definite employers, hence, they should have
formed a union instead of a workers' association. The Court disagrees. There is no provision in the
Labor Code that states that employees with definite employers may form, join or assist unions
only.

The Court cannot subscribe either to Hanjin's position that Samahan's members cannot form the
association because they are not covered by the second sentence of Article 243 (now 249), to wit:

Article 243. Coverage and employees' right to selforganization. All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions, whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, selfemployed people, rural workers and
those without any definite employers may form labor organizations for their mutual aid and
protection. (As amended by Batas Pambansa Bilang 70, May 1, 1980)

[Emphasis Supplied]

Further, Article 243 should be read together with Rule 2 of Department Order (D. 0.) No. 40-03,
Series of 2003, which provides:

RULE II

COVERAGE OF THE RIGHT TO SELF-ORGANIZATION

Section 1. Policy. - It is the policy of the State to promote the free and responsible exercise of the
right to self-organization through the establishment of a simplified mechanism for the speedy
registration of labor unions and workers associations, determination of representation status and
resolution of inter/intra-union and other related labor relations disputes. Only legitimate or
registered labor unions shall have the right to represent their members for collective bargaining
and other purposes. Workers' associations shall have the right to represent their members for
purposes other than collective bargaining.

Section 2. Who may join labor unions and workers' associations. - All persons employed in
commercial, industrial and agricultural enterprises, including employees of government owned or
controlled corporations without original charters established under the Corporation Code, as well
as employees of religious, charitable, medical or educational institutions whether operating for
profit or not, shall have the right to self-organization and to form, join or assist labor unions for
purposes of collective bargaining: provided, however, that supervisory employees shall not be
eligible for membership in a labor union of the rank-and-file employees but may form, join or
assist separate labor unions of their own. Managerial employees shall not be eligible to form, join
or assist any labor unions for purposes of collective bargaining. Alien employees with valid
working permits issued by the Department may exercise the right to self-organization and join or
assist labor unions for purposes of collective bargaining if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the Department of Foreign
Affairs.

For purposes of this section, any employee, whether employed for a definite period or not, shall
beginning on the first day of his/her service, be eligible for membership in any labor organization.

All other workers, including ambulant, intermittent and other workers, the self-employed, rural
workers and those without any definite employers may form labor organizations for their mutual
aid and protection and other legitimate purposes except collective bargaining.

[Emphases Supplied]

Clearly, there is nothing in the foregoing implementing rules which provides that workers, with
definite employers, cannot form or join a workers' association for mutual aid and protection.
Section 2 thereof even broadens the coverage of workers who can form or join a workers'
association. Thus, the Court agrees with Samahan's argument that the right to form a workers'
association is not exclusive to ambulant, intermittent and itinerant workers. The option to form or
join a union or a workers' association lies with the workers themselves, and whether they have
definite employers or not.

No misrepresentation on the part

of Samahan to warrant cancellation
of registration

In this case, Samahan's registration was cancelled not because its members were prohibited from
forming a workers' association but because they allegedly committed misrepresentation for using
the phrase, "KAMI, ang mga Manggagawa sa HANJIN Shipyard."

Misrepresentation, as a ground for the cancellation of registration of a labor organization, is

committed "in connection with the adoption, or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification, the list of members who took part in the
ratification of the constitution and by-laws or amendments thereto, and those in connection with
the election of officers, minutes of the election of officers, and the list of voters, xxx."56

In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director granted the petition
for the cancellation of certificate of registration of Samahang Lakas Manggagawa sa Takata
(Salamat) after finding that the employees who attended the organizational meeting fell short of
the 20% union registration requirement. The BLR, however, reversed the ruling of the DOLE
Regional Director, stating that petitioner Takata Corporation (Takata) failed to prove deliberate
and malicious misrepresentation on the part of respondent Salamat. Although Takata claimed that
in the list of members, there was an employee whose name appeared twice and another was merely
a project employee, such facts were not considered misrepresentations in the absence of showing
that the respondent deliberately did so for the purpose of increasing their union membership. The
Court ruled in favor of Salamat.

In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for cancellation of
certificate of registration was denied. The Court wrote:

If the union's application is infected by falsification and like serious irregularities, especially
those appearing on the face of the application and its attachments, a union should be denied
recognition as a legitimate labor organization. Prescinding from these considerations, the
issuance to the Union of Certificate of Registration No. R0300-oo-02-UR-0003 necessarily implies
that its application for registration and the supporting documents thereof are prima facie free from
any vitiating irregularities. Another factor which militates against the veracity of the allegations in
the Sinumpaang Petisyon is the lack of particularities on how, when and where respondent
union perpetrated the alleged fraud on each member. Such details are crucial for in the
proceedings for cancellation of union registration on the ground of fraud or
misrepresentation, what needs to be established is that the specific act or omission of the union
deprived the complaining employees-members of their right to choose.

[Emphases Supplied]

Based on the foregoing, the Court concludes that misrepresentation, to be a ground for the
cancellation of the certificate of registration, must be done maliciously and deliberately. Further,
the mistakes appearing in the application or attachments must be grave or refer to significant
matters. The details as to how the alleged fraud was committed must also be indubitably shown.

The records of this case reveal no deliberate or malicious intent to commit misrepresentation on
the part of Samahan.1âwphi1 The use of such words "KAMI, ang mga Manggagawa sa HANJIN
Shipyard" in the preamble of the constitution and by-laws did not constitute misrepresentation so
as to warrant the cancellation of Samahan's certificate of registration. Hanjin failed to indicate how
this phrase constitutes a malicious and deliberate misrepresentation. Neither was there any
showing that the alleged misrepresentation was serious in character. Misrepresentation is a devious
charge that cannot simply be entertained by mere surmises and conjectures.

Even granting arguendo that Samahan' s members misrepresented themselves as employees or

workers of Hanjin, said misrepresentation does not relate to the adoption or ratification of its
constitution and by-laws or to the election of its officers.

Removal of the word "Hanjin Shipyard"

from the association 's name, however,
does not infringe on Samahan 's right to
self-organization
Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be removed in the name
of the association. A legitimate workers' association refers to an association of workers organized
for mutual aid and protection of its members or for any legitimate purpose other than collective
bargaining registered with the DOLE.59Having been granted a certificate of registration,
Samahan's association is now recognized by law as a legitimate workers' association.

According to Samahan, inherent in the workers' right to selforganization is its right to name its
own organization. It seems to equate the dropping of words "Hanjin Shipyard" from its name as a
restraint in its exercise of the right to self-organization. Hanjin, on the other hand, invokes that
"Hanjin Shipyard" is a registered trade name and, thus, it is within their right to prohibit its use.

As there is no provision under our labor laws which speak of the use of name by a workers'
association, the Court refers to the Corporation Code, which governs the names of juridical
persons. Section 18 thereof provides:

No corporate name may be allowed by the Securities and Exchange Commission if the proposed
name is identical or deceptively or confusingly similar to that of any existing corporation or to
any other name already protected by law or is patently deceptive, confusing or contrary to existing
laws. When a change in the corporate name is approved, the Commission shall issue an amended
certificate of incorporation under the amended name.

[Emphases Supplied]

The policy underlying the prohibition in Section 18 against the registration of a corporate name
which is "identical or deceptively or confusingly similar" to that of any existing corporation or
which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the
avoidance of fraud upon the public which would have occasion to deal with the entity concerned,
the evasion of legal obligations and duties, and the reduction of difficulties of administration and
supervision over corporations.60

For the same reason, it would be misleading for the members of Samahan to use "Hanjin Shipyard"
in its name as it could give the wrong impression that all of its members are employed by Hanjin.

Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:

The change of name of a labor organization shall not affect its legal personality. All the rights and
obligations of a labor organization under its old name shall continue to be exercised by the labor
organization under its new name.

Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no abridgement of
Samahan's right to self-organization was committed.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision and the
January 28, 2014 Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE.
The September 6, 2010 Resolution of the Bureau of Labor Relations, as modified by its November
28, 2011 Resolution, is REINSTATED. SO ORDERED.