LABOR RELATIONS – HANDOUT ADDENDUM NOTES
Doctrine of Necessary Implication
RIGHT TO SELF ORGANIZATION
p. 4
(1)
In the same Bulletin case, the Court applied Article 246
and held that managerial employees are the very type of
employees who, by the nature of their positions and
functions, have been decreed disqualified from
bargaining with management. This prohibition is based
on the rationale that if managerial employees were to
belong or be affiliated with a union, the union might not
be assured of their loyalty in view of evident conflict of
interest or that the union can be company-dominated
with the presence of managerial employees in the union
membership.20 In the collective bargaining process,
managerial employees are supposed to be on the side of
the employer, to act as its representative, and to see to
it that its interests are well protected. The employer is
not assured of such protection if these employees
themselves become union members
(2)
The test of "supervisory" or "managerial status"
depends on whether a person possesses authority to act
in the interest of his employer in the matter specified in
Article 212 (k) of the Labor Code and Section 1 (m) of its
Implementing Rules and whether such authority is not
merely routinary or clerical in nature, but requires the
use of independent judgment. Thus, where such
recommendatory powers as in the case at bar, are
subject to evaluation, review and final action by the
department heads and other higher executives of the
company, the same, although present, are not effective
and not an exercise of independent judgment as
required by law (National Warehousing Corp. v. CIR, 7
SCRA 602-603 [1963]).
Furthermore, in line with the ruling of this Court, subject
employees are not managerial employees because as
borne by the records, they do not participate in policy
making but are given ready policies to execute and
standard practices to observe, thus having little freedom
of action (National Waterworks and Sewerage Authority
v. NWSA Consolidated, L-18938, 11 SCRA 766 [1964]).
(3)
While Art. 245 of the Labor Code singles out managerial
employees as ineligible to join, assist or form any labor
organization, under the doctrine of necessary
implication, confidential employees are similarly
disqualified. This doctrine states that what is implied in a
statute is as much a part thereof as that which is
expressed, as elucidated in several cases26 the latest of
which is Chua v. Civil Service Commission 27 where we
said:
No statute can be enacted that can provide all the details
involved in its application. There is always an omission
that may not meet a particular situation. What is
thought, at the time of enactment, to be an all-
embracing legislation may be inadequate to provide for
the unfolding events of the future. So-called gaps in the
law develop as the law is enforced. One of the rules of
statutory construction used to fill in the gap is the
doctrine of necessary implication . . . . Every statute is
understood, by implication, to contain all such provisions
as may be necessary to effectuate its object and purpose,
or to make effective rights, powers, privileges or
jurisdiction which it grants, including all such collateral
and subsidiary consequences as may be fairly and
logically inferred from its terms. Ex necessitate
legis . . . .
In applying the doctrine of necessary implication, we
took into consideration the rationale behind the
disqualification of managerial employees expressed
in Bulletin Publishing Corporation v. Sanchez,28 thus: ". .
. if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of
their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-
dominated with the presence of managerial employees
in Union membership." Stated differently, in the
collective bargaining process, managerial employees are
supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interests are well
protected. The employer is not assured of such
protection if these employees themselves are union
members. Collective bargaining in such a situation can
become one-sided.29 It is the same reason that impelled
this Court to consider the position of confidential
employees as included in the disqualification found in
Art. 245 as if the disqualification of confidential
employees were written in the provision. If confidential
employees could unionize in order to bargain for
advantages for themselves, then they could be governed
by their own motives rather than the interest of the
employers. Moreover, unionization of confidential
employees for the purpose of collective bargaining
would mean the extension of the law to persons or
individuals who are supposed to act "in the interest of"
the employers. 30 It is not farfetched that in the course
of collective bargaining, they might jeopardize that
interest which they are duty-bound to protect. Along the
same line of reasoning we held in Golden Farms, Inc. v.
Ferrer-Calleja 31 reiterated in Philips Industrial
Development, Inc. v. NLRC,32 that "confidential
employees such as accounting personnel, radio and
telegraph operators who, having access to confidential
information, may become the source of undue
advantage. Said employee(s) may act as spy or spies of
either party to a collective bargaining agreement."
In fine, only the Branch Managers/OICs, Cashiers and
Controllers of respondent Bank, being confidential
employees, are disqualified from joining or assisting
petitioner Union, or joining, assisting or forming any
other labor organization. But this ruling should be
understood to apply only to the present case based on
the evidence of the parties, as well as to those similarly
situated. It should not be understood in any way to apply
to banks in general.
p. 5
(1)
G.R. No. 169717 March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union
President,Petitioner,
vs.
CHARTER CHEMICAL and COATING
CORPORATION, Respondent.
DEL CASTILLO, J.:
The right to file a petition for certification election is
accorded to a labor organization provided that it
complies with the requirements of law for proper
registration. The inclusion of 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.
that 12 of its members, consisting of batchman, mill
operator and leadman, are supervisory employees. The
job descriptions indicate that the aforesaid employees
exercise recommendatory managerial actions which are
not merely routinary but require the use of independent
judgment, hence, falling within the definition of
supervisory employees under Article 212(m)30 of the
Labor Code. petitioner union consisted of both rank-and-
file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory
employees in petitioner union does not divest it of its
status as a legitimate labor organization.
the Toyota doctrine no longer holds sway under the
altered state of the law and rules applicable to this case,
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,
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v.
Tagaytay Highlands Employees Union-PGTWO 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 Dunlopand 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. As a result, petitioner
union was not divested of its status as a legitimate labor
organization even if some of its members were
supervisory employees; it had the right to file the
subject petition for certification election.
(2)
(THIS WAS OVERTURNED BY ART 254)
G.R. No. 102084 August 12, 1998
DE LA SALLE UNIVERSITY MEDICAL CENTER AND
COLLEGE OF MEDICINE, petitioner,
vs.
HON. BIENVENIDO E. LAGUESMA, Undersecretary of
Labor and Employment; ROLANDO S. DE LA CRUZ, Med-
Arbiter Regional Office No. IV, DE LA SALLE UNIVERSITY
MEDICAL CENTER AND COLLEGE OF MEDICINE
SUPERVISORY UNION-FEDERATION OF FREE
WORKERS, respondents.
MENDOZA, J.:
Conformably with the constitutional mandate, Art. 245 of the Labor
Code now provides for the right of supervisory employees to self-
organization, subject to the limitation that they cannot join an
organization of rank-and-file employees:
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.
The reason for the segregation of supervisory and rank-and-file
employees of a company with respect to the exercise of the right to
self-organization is the difference in their interests. Supervisory
employees are more closely identified with the employer than with
the rank-and-file employees. If supervisory and rank-and-file
employees in a company are allowed to form a single union, the
conflicting interests of these groups impair their relationship and
adversely affect discipline, collective bargaining and strikes. 10 These
consequences can obtain not only in cases where supervisory and
rank-and-file employees in the same company belong to a single
union but also where unions formed independently by supervisory
and rank-and-file employees of a company are allowed to affiliate
with the same national federation.
P.6
(1)
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 107590 February 21, 1995
PAMANTASAN NG LUNGSOD NG MAYNILA
(PLM), petitioner,
vs.
CIVIL SERVICE COMMISSION (CSC), PAMANTASAN NG
LUNGSOD NG MAYNILA FACULTY ORGANIZATION
(PLMFO), ROBERTO AMORES, ROLANDO AUSTRIA,
VICENTE BANAGALE, NEMENCIO CABATUANDO,
MANOLO HINA, ELEANOR JIMENEZ, ANITA LEYSON,
JONATHAN MANZANO, JOSE MEJIA, ESTELITA PINEDA,
LORDEO POQUIZ, ALFREDO RAZON, MA. ZELDA REYES,
SALVACION RODRIGUEZ, BELINDA SANTOS, and
VIRGILIO ZAMORA respondents.
VITUG, J.:
Petitioner stresses that the CSC and the PSLMC both
exercise quasi-judicial functions but not on identical
issues and subject matter; that the PSLMC possesses
jurisdiction only over the unfair labor practice aspect of
private respondents' complaint but that it is the CSC
which alone can take cognizance over the question of
illegal dismissal; and that, therefore, when the CSC has
simply adopted the recommendations of the PSLMC in
the unfair labor practice case in resolving the issue of
illegal dismissal and ordering the reinstatement of
private respondents without conducting further
proceedings of its own, it has effectively denied
petitioner of its right to due process.
Petitioner insists that when CSC has ruled on the matter
of illegal dismissal without conducting any further
hearing of its own, relying, instead, on PSLMC's finding of
unfair labor practice on the part of petitioner, the latter
has thereby been denied due process. Unfortunately for
petitioner, however, the two supposed independent
issues, i.e., the unfair labor practice charge and the
complaint for illegal dismissal both filed by private
respondents, are, in fact, here unavoidably interlinked.
The non-renewal of an employment contract with a
term, it is true, is ordinarily a valid mode of removal at
the end of each
period. 11 This rule, however, must yield to the superior
constitutional right of employees, permanent or
temporary, to self-organization. While, a temporary
employment may be ended with or without cause, it
certainly may not, however, be terminated for
an illegal cause.
(2)
It may be true that the ACAE case involved a certification
election between two unions in a government entity.
However, this does not mean that our previous ruling
cannot apply in the instant case.
The authority of the BLR in assuming jurisdiction over a
certification election, or any inter-union or intra-union
conflicts, is found in Article 226 of the Labor Code of the
Philippines, which reads:
Art. 226. BUREAU OF LABOR RELATIONS. – The Bureau of
Labor Relations and the Labor Relations Division in the
regional offices of the Department of Labor shall have
original and exclusive authority to act, at their own
initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting labor-
management relations in all workplaces whether
agricultural or nonagricultural, except those arising from
the implementation or interpretation of collective
bargaining agreements which shall be the subject of
grievance procedure and/or voluntary arbitration
SEC. 16. The Civil Service and labor laws and procedures,
whenever applicable, shall be followed in the resolution
of complaints, grievances and cases involving
government employees.46
Since Article 226 of the Labor Code has declared that the
BLR shall have original and exclusive authority to act on
all inter-union and intra-union conflicts, then there
should be no more doubt as to its jurisdiction.
We likewise find bereft of merit petitioner’s claim that
his group did not in any way participate in the subject
elections, and therefore, the principle of estoppel cannot
apply.
The finding of the PSLMC that the non-renewal by
petitioner of the questioned contracts of employment
had been motivated by private respondents' union
activities is conclusive on the parties. When the case was
thus referred to the CSC by the PSLMC to take
"appropriate action" it understandably meant that the
CSC should take the necessary steps of reinstating the
illegally dismissed employees.
p.7 (1)
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 169752 September 25, 2007
PHILIPPINE SOCIETY FOR THE PREVENTION OF
CRUELTY TO ANIMALS, Petitioners,
vs.
COMMISSION ON AUDIT, DIR. RODULFO J. ARIESGA (in
his official capacity as Director of the Commission on
Audit), MS. MERLE M. VALENTIN and MS. SUSAN
GUARDIAN (in their official capacities as Team Leader
and Team Member, respectively, of the audit Team of
the Commission on Audit), Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
First, the Court agrees with the petitioner that the
"charter test" cannot be applied.
Essentially, the "charter test" as it stands today
provides:
[T]he test to determine whether a corporation is
government owned or controlled, or private in nature is
simple. Is it created by its own charter for the exercise of
a public function, or by incorporation under the general
corporation law? Those with special charters are
government corporations subject to its provisions, and its
employees are under the jurisdiction of the Civil Service
Commission, and are compulsory members of the
Government Service Insurance System. Xxx
In a legal regime where the charter test doctrine cannot
be applied, the mere fact that a corporation has been
created by virtue of a special law does not necessarily
qualify it as a public corporation.
What then is the nature of the petitioner as a corporate
entity? What legal regime governs its rights, powers, and
duties?
As stated, at the time the petitioner was formed, the
applicable law was the Philippine Bill of 1902, and,
emphatically, as also stated above, no proscription
similar to the charter test can be found therein. There
being neither a general law on the formation and
organization of private corporations nor a restriction on
the legislature to create private corporations by direct
legislation, the Philippine Commission at that moment in
history was well within its powers in 1905 to constitute
the petitioner as a private juridical entity.1â
Second, a reading of petitioner’s charter shows that it is
not subject to control or supervision by any agency of the
State, unlike government-owned and -controlled
corporations. Third. The employees of the petitioner are
registered and covered by the Social Security System at
the latter’s initiative, and not through the Government
Service Insurance System, which should be the case if the
employees are considered government employees.
Fourth. The respondents contend that the petitioner is a
"body politic" because its primary purpose is to secure
the protection and welfare of animals which, in turn,
redounds to the public good. This argument, is, at best,
specious. The fact that a certain juridical entity is
impressed with public interest does not, by that
circumstance alone, make the entity a public
corporation, inasmuch as a corporation may be private
although its charter contains provisions of a public
character, incorporated solely for the public good.
The true criterion, therefore, to determine whether a
corporation is public or private is found in the totality of
the relation of the corporation to the State. If the
corporation is created by the State as the latter’s own
agency or instrumentality to help it in carrying out its
governmental functions, then that corporation is
considered public; otherwise, it is private. Applying the
above test, provinces, chartered cities,
and barangays can best exemplify public corporations.
They are created by the State as its own device and
agency for the accomplishment of parts of its own public
works.
Fifth. The respondents argue that since the charter of the
petitioner requires the latter to render periodic reports
to the Civil Governor, whose functions have been
inherited by the President, the petitioner is, therefore, a
government instrumentality. This contention is
inconclusive. By virtue of the fiction that all corporations
owe their very existence and powers to the State, the
reportorial requirement is applicable to all corporations
of whatever nature, whether they are public, quasi-
public, or private corporations—as creatures of the
State, there is a reserved right in the legislature to
investigate the activities of a corporation to determine
whether it acted within its powers.
P.8
(1)
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 157647 October 15, 2007
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LANTING SECURITY and
WATCHMAN AGENCY, TOMAS LANTING, DANIEL FANILA,* HECTOR
MORENO, ISAURO FERRER,** RUBIN WILFREDO, JESUS DELIMA, JR., MARIA
LEGASPI, SANTIAGO NOTO, JR., and VIRGILIO SORIANO, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.
Articles 106 and 107 of the Labor Code provide:
ART. 106. Contractor or subcontractor.– Whenever an
employer enters into contract with another person for
the performance of the former’s work, the employees of
the contractor and of the latter’s subcontractor, if any,
shall be paid in accordance with the provisions of this
Code.
In the event that the contractor or subcontractor fails
to pay the wage of his employees in accordance with
this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such
employees to the extent of the work performed under
the contract, in the same manner and extent that he is
liable to employees directly employed by him.
xxx
ART. 107 Indirect employer.– The provisions of the
immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which,
not being an employer, contracts with an independent
contractor for the performance of any work, task, job or
project. (Emphasis supplied.)
The joint and several liability of the employer or
principal was enacted to ensure compliance with the
provisions of the Code, principally those on statutory
minimum wage. The contractor or subcontractor is
made liable by virtue of his or her status as a direct
employer, and the principal as the indirect employer of
the contractor’s employees. This liability facilitates, if
not guarantees, payment of the workers’
compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. This
is not unduly burdensome to the employer. Should the
indirect employer be constrained to pay the workers, it
can recover whatever amount it had paid in accordance
with the terms of the service contract between itself
and the contractor.

P9
(1)
EN BANC
G. R. No. 155027 February 28, 2006
THE VETERANS FEDERATION OF THE PHILIPPINES
represented by Esmeraldo R. Acorda, Petitioner,
vs.
Hon. ANGELO T. REYES in his capacity as Secretary of
National Defense; and Hon. EDGARDO E. BATENGA in
his capacity as Undersecretary for Civil Relations and
Administration of the Department of National
Defense, Respondents.
DECISION
CHICO-NAZARIO, J.:
1. Petitioner claims that the VFP does not possess the
elements which would qualify it as a public office,
particularly the possession/delegation of a portion of
sovereign power of government to be exercised for the
benefit of the public;
In the case at bar, the functions of petitioner corporation
enshrined in Section 4 of Rep. Act No. 264031 should
most certainly fall within the category of sovereign
functions. The protection of the interests of war veterans
is not only meant to promote social justice, but is also
intended to reward patriotism. All of the functions in
Section 4 concern the well-being of war veterans, our
countrymen who risked their lives and lost their limbs in
fighting for and defending our nation. It would be
injustice of catastrophic proportions to say that it is
beyond sovereignty’s power to reward the people who
defended her.
2. Petitioner claims that VFP funds are not public funds.
The fact that no budgetary appropriations have been
released to the VFP does not prove that it is a private
corporation. The DBM indeed did not see it fit to propose
budgetary appropriations to the VFP, having itself
believed that the VFP is a private corporation.33 If the
DBM, however, is mistaken as to its conclusion regarding
the nature of VFP’s incorporation, its previous assertions
will not prevent future budgetary appropriations to the
VFP. The erroneous application of the law by public
officers does not bar a subsequent correct application of
the law. Nevertheless, funds in the hands of the VFP from
whatever source are public funds, and can be used only
for public purposes.
3. Petitioner argues that it is a civilian federation where
membership is voluntary.
Petitioner claims that the Secretary of National Defense
"historically did not indulge in the direct or
‘micromanagement’ of the VFP precisely because it is
essentially a civilian organization where membership is
voluntary."41 This reliance of petitioner on what has
"historically" been done is erroneous, since laws are not
repealed by disuse, custom, or practice to the
contrary.42 Furthermore, as earlier stated, the erroneous
application of the law by public officers does not bar a
subsequent correct application of the law.43
Neither is the civilian nature of VFP relevant in this case.
The Constitution does not contain any prohibition,
express or implied, against the grant of control and/or
supervision to the Secretary of National Defense over a
civilian organization.
Petitioner’s stand that the VFP is a private corporation
because membership thereto is voluntary is likewise
erroneous. As stated above, the membership of the VFP
is not the individual membership of the affiliate
organizations, but merely the aggregation of the heads
of such affiliate organizations. These heads forming the
VFP then elect the Supreme Council and the other
officers,45 of this public corporation.
4. Petitioner claims that the Administrative Code of 1987
does not provide that the VFP is an attached agency, and
nor does it provide that it is an entity under the control
and supervision of the DND in the context of the
provisions of said code.
The Administrative Code, by giving definitions of the
various entities covered by it, acknowledges that its
enumeration is not exclusive. The Administrative Code
could not be said to have repealed nor enormously
modified Rep. Act No. 2640 by implication, as such repeal
or enormous modification by implication is not favored
in statutory construction.
5. Petitioner offers as evidence the DBM opinion that the
VFP is a non-government organization in its certification
that the VFP "has not been a direct recipient of any funds
released by the DBM."
Respondents claim that the supposed declaration of the
DBM that petitioner is a non-government organization is
not persuasive, since DBM is not a quasi-judicial agency.
They aver that what we have said of the Bureau of Local
Government Finance (BLGF) in Philippine Long Distance
Telephone Company (PLDT) v. City of Davao47 can be
applied to DBM: