Juat v.

CIR This is a petition for certiorari to review the decision dated August 15, 1962 and the resolution en banc dated October 30, 1962, of the Court of Industrial Relations in its Case No. 2889-ULP. After investigating charges of unfair labor practice filed by petitioner Santos Juat before the Court of Industrial Relations against respondents Bulaklak Publications and its Executive Officer, Acting Prosecutor Alberto Cruz of the Court of Industrial Relations filed a complaint, docketed as Case No. 2889-ULP, charging Bulaklak Publications and/or Juan N. Evangelista of unfair labor practice within the meaning of Section 4 (a) subsections 1, 4 and 5 of Republic Act 875, alleging, among others, that complainant Santos Juat was an employee of the respondent company since August 1953; that on or about July 15, 1960, and on several occasions thereafter, complainant Santos Juat was asked by his respondent employer to join the Busocope Labor Union, but he refused to do so; that respondent employer suspended him without justifiable cause; that two separate cases were filed by complainant against the respondents one on March 13, 1961 for unfair labor practice, and another on March 18, 1961 for payment of wages for overtime work and work on Sundays and holidays, the filing of which cases had come to the knowledge of the respondents; that on March 15, 1961, respondent employer dismissed him from the service without justifiable cause and that from the time of his dismissal up to the filing of the complaint he had not found any substantial employment for himself. In their answer, dated August 3, 1961, respondent alleged, among others, that complainant Santos Juat was suspended for cause; that while Case No. 1462-V was filed with the Court of Industrial Relations on March 13, 1961, the same came to the knowledge of respondents only when they received the summons and a copy of the petition on March 24, 1961, and while case No. 2789-ULP was filed on April 3, 1961, the same became known to respondents long after the employeremployee relationship between respondent employer and Santos Juat had been terminated, so that the suspension of the complainant on March 1, 1961 and his subsequent separation from the service were not acts of reprisal because of the filing of those two cases; that it was complainant Juat who had caused his separation when he ignored the letter sent to him by Juan N. Evangelista, executive officer of respondent company, requiring him to report for work; that the principal reason why complainant refused to work with respondent company was because he was occupied with his work in the Juat Printing Press Co. of which he was a stockholder and the treasurer. Respondent company thereby made a counterclaim for damages because of complainant's having filed an unwarranted and malicious action against it. On August 15, 1962, after hearing, Associate Judge Baltazar N. Villanueva of the Court of Industrial Relations rendered a decision dismissing the complaint but made no pronouncement regarding respondent's counterclaim. Petitioner filed a motion for reconsideration of the decision, and in a resolution dated October 30, 1962, the Court of Industrial Relations en banc denied the motion for reconsideration. Hence, this petition for certiorari to review said decision and resolution. The facts of this case may best be gathered from the findings and conclusions of the Court of Industrial Relations in its decision, as follows: On December 1, 1959, a collective bargaining agreement was entered into between the Bulaklak Publications and the BUSOCOPE LABOR UNION, to remain in effect for 3 years, and renewable for another term of 3 years. Section 4 of said agreement contains a closed shop proviso. On December 27, 1960, said Section 4 of said agreement was amended to read as follows:

"All employees and/or workers who on January 1, 1960 are members of the Union in good standing in accordance with its Constitution and By-Laws and all members who become members after that date shall, as a condition of employment, maintain their membership in the Union for the duration of this Agreement. All employees and/or workers who on January 1, 1961 are not yet members of the Union shall, as a condition of maintaining their employment, become members of such union." It is clear that it was by virtue of the above-mentioned closed shop provision of the collective bargaining agreement between the Busocope Labor Union and the Bulaklak Publications that the management of the latter required Santos Juat to become a member of the former. In requiring Santos Juat to become a member of said Union, it was only obeying the law between the parties, which is their collective bargaining agreement. Because of the refusal of Santos Juat to become a member of said Union, Mr. Juan N. Evangelists, the executive officer of respondent company, suspended him for 15 days. After the expiration of the suspension of Santos Juat, Mr. Evangelista addressed a letter to the former, ordering him to report back for duty, and in spite of said letter, Santos Juat did not report for work, consequently, Santos Juat was dropped from the service of the company. Juat could afford not to report for duty because he has his own business by the name of JUAT PRINTING PRESS CO., INC. The refusal of Santos Juat to become a member of the Busocope Labor Union as well as his refusal to report for work when ordered by his superior officer, shows the lack of respect on the part of Santos Juat toward his superior officer. With such attitude, the continuation in the service of the company of Santos Juat is indeed inimical to the interest of his employer. The charge of complainant to the effect that on March 13, 1961, he filed a petition with this Court against respondent company which was docketed as Case No. 1462-V is of no moment, because according to the decision of the Supreme Court in Case G.R. No. L11745, Royal Interocean Lines, et al. vs. Hon. Court of Industrial Relations, et al., Promulgated October 31, 1960, it was held that an employee's having filed charges or having given testimony or being about to give testimony has no relation to union activities. With respect to Case No. 2789-ULP, Mr. Evangelista stated that he did not know anything about its having been filed in Court. It is now contended by the petitioner before this Court that: 1. The Court of Industrial Relations erred, or committed a grave abuse of discretion, when it applied to the petitioner the collective bargaining agreement with closed shop proviso between the respondent Bulaklak Publications and the Busocope Labor Union, he being an old employee; 2. The Court of Industrial Relations erred, or committed a grave abuse of discretion, in holding that the respondent Bulaklak Publications did not commit unfair labor practice when it dismissed petitioner for his refusal to join the Busocope Labor Union; and 3. The Court of Industrial Relations committed a grave abuse of discretion when it dismissed the complaint of petitioner because its allegations; are not supported by substantial evidence. The contentions of the petitioner are without merit, The closed-shop proviso in a collective bargaining agreement between employer and employee is sanctioned by law. The pertinent provision of the law, in this connection, says:

Provided, that nothing in this Act or in any Act or statute of the Republic of the Philippines shall preclude an employer 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 as provided in said section twelve; ... ." (Section 4, subsection [a] par. 4 of Republic Act No. 875, known as the Industrial Peace Act). The validity of a closed-shop agreement has been upheld by this Court. In one particular case this Court held: There is no need for us to take sides and give reasons because our Congress, in the exercise of its policy-making power, has chosen to approve the closed-shop, when it legalized in Sec. 4, sub-section (a) paragraph 4 of Republic Act 875 (Magna Charta of Labor) "any agreement of the employer with a labor organization requiring membership in such organization as condition of employment," provided such labor organization properly represents the employees (National Labor Union vs. Aguinaldo's Echague, et al., G.R. No. L7358, May 31, 1955.) The foregoing pronouncement of this Court had been reiterated in the cases of Tolentino, et al. vs. Angeles, et al., G.R. No. L-8150, May 30, 1956; Ang Malayang Manggagawa Ng Ang Tibay Enterprises, et al., vs. Ang Tibay, et al., G.R. No. L-8259, Dec. 23, 1957; Confederated Sons of Labor vs. Anakan Lumber Co., et al., G.R. No. L-12503, April 20, 1960; Bacolod-Murcia Milling Co., et al. vs. National Employees Workers Security Union, 53 O.G. 615. 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" (National Labor Union vs. Aguinaldo's-Echague, Inc. et al., supra). Coming now to the closed-shop proviso of the collective bargaining agreement between the respondent Bulaklak Publications and the Busocope Labor Union, it is clearly provided that "All employees and/or workers who on January 1, 1961 are not yet members of the Union shall, as condition of maintaining their employment, become members of such Union." The question now before Us is whether the above-quoted proviso of the said collective bargaining agreement applies to the petitioner Santos Juat. The contention of said petitioner is that the said proviso cannot apply, and should not be applied to him because he is an old employee of the Bulaklak Publications. It is not disputed that petitioner had been employed with the Bulaklak Publications since 1953, and the collective bargaining agreement embodying the closed-shop proviso in question was entered into only on December 1, 1959 and amended on December 27, 1960. It has been established, however, that said petitioner was not a member of any labor union when that collective bargaining agreement was entered into, and in fact he had never been a member of any labor union. 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. This Court in that Freeman case made this clear pronouncement: The closed-shop agreement authorized under Sec. 4 sub-sec. a (4) of the Industrial Peace Act above-quoted should, however, apply only to persons to be hired or to employees who are not yet members of any labor organization. It is inapplicable to those already in the service who are members of another union. To hold otherwise, i.e., that the employees in a company who are members of a minority union may be compelled to disaffiliate from their union and join the majority or contracting union, would render nugatory the right of all employees to self-organization and to form, joint or assist labor organizations of their own choosing, a right guaranteed by the Industrial Peace Act (sec. 3, Rep. Act No. 875) as well as by the Constitution (Art. III, see. 1 [6]). Section 12 of the Industrial Peace Act, providing that when there is reasonable doubt as to who the employees have chosen as their representative the Industrial Court can order a certification election, would also become useless. For once a union has been certified by the court and enters into a collective bargaining agreement with the employer a closed-shop clause applicable to all employees be they union or non-union members, the question of majority representation among the members would be closed forever. Certainly, there can no longer exist any petition for certification election, since eventually the majority or contracting union will become a perpetual labor union. This alarming result could not have been the intention of Congress. The Industrial Peace Act was enacted precisely for the promotion of unionism in this country. (Emphasis supplied) Villar v. Inciong The facts are as follows: Petitioners were members of the Amigo Employees Union-PAFLU, a duly registered labor organization which, at the time of the present dispute, was the existing bargaining agent of the employees in private respondent Amigo Manufacturing, Inc. (hereinafter referred to as Company). The Company and the Amigo Employees Union-PAFLU had a collective bargaining agreement governing their labor relations, which agreement was then about to expire on February 28, 1977. Within the last sixty (60) days of the CBA, events transpired giving rise to the present dispute. On January 5, 1977, upon written authority of at least 30% of the employees in the company, including the petitioners, the Federation of Unions of Rizal (hereinafter referred to as FUR) filed a petition for certification election with the Med-Arbiter's Office, Regional Office No. 4 of the Ministry of Labor and Employment. The petition was, however, opposed by the Philippine Association of Free Labor Unions (hereinafter referred to as PAFLU) with whom, as stated earlier, the Amigo Employees Union was at that time affiliated. PAFLU's opposition cited the "Code of Ethics" governing interfederation disputes among and between members of the Trade Unions Congress of the Philippines (hereinafter referred to as TUCP). Consequently, the Med-Arbiter indorsed the case to TUCP for appropriate action but before any such action could be taken thereon, the petitioners disauthorized FUR from continuing the petition for certification election for which reason FUR withdrew the petition. On February 7, 1977, the same employees who had signed the petition filed by FUR signed a joint resolution reading in toto as follows: Sama-Samang Kapasiyahan

1. TUMIWALAG bilang kasaping Unyon ng Philippine Association of Free Labor Unions (PAFLU) at kaalinsabay nito, inaalisan namin ang PAFLU ng kapangyarihan na katawanin kami sa anumang pakikipagkasundo (CBA) sa Pangasiwaan ng aming pinapasukan at kung sila man ay nagkasundo o magkakasundo sa kabila ng pagtitiwalag na ito, ang nasabing kasunduan ay hindi namin pinagtitibay at tahasang aming itinatakwil/tinatanggihan; 2. BINABAWI namin ang aming pahintulot sa Federation of Unions of Rizal (FUR) na katawanin kami sa Petition for Certification Election (RO4-MED Case No. 743-77) at/o sa sama-samang pakikipagkasundo sa aming patrons; 3. PANATILIHIN na nagsasarili (independent) ang aming samahan, AMIGO EMPLOYEES' UNION, alinsunod sa Artikulo 240 ng Labor Code; 4. MAGHAIN KAAGAD ang aming Unyong nagsasarili, sa pamumuno ng aming pangsamantalang Opisyal na kinatawan, si Ginang DOLORES VILLAR, ng Petition for Certification Election sa Department of Labor, para kilalanin ang aming Unyong nagsasarili bilang Tanging kinatawan ng mga manggagawa sa sama-samang pakikipagkasundo (CBA); 5. BIGYAN ng kopya nito ang bawa't kinauukulan at ang mga kapasiyahang ito ay magkakabisa sa oras na matanggap ng mga kinauukulan ang kani-kanilang sipi nito. 1 Immediately thereafter or on February 9, 1977, petitioner Dolores Villar, representing herself to be the authorized representative of the Amigo Employees Union, filed a petition for certification election in the Company before Regional Office No. 4, with the Amigo Employees Union as the petitioner. The Amigo Employees Union-PAFLU intervened and moved for the dismissal of the petition for certification election filed by Dolores Villar, citing as grounds therefor, viz: (a) the petition lacked the mandatory requisite of at least 30% of the employees in the bargaining unit; (2) Dolores Villar had no legal personality to sign the petition since she was not an officer of the union nor is there factual or legal basis for her claim that she was the authorized representative of the local union; (3) there was a pending case for the same subject matter filed by the same individuals; (4) the petition was barred by the new CBA concluded on February 15, 1977; (5) there was no valid disaffiliation from PAFLU; and (6) the supporting signatures were procured through false pretenses. Finding that the petition involved the same parties and causes of action as the case previously indorsed to the TUCP, the Med-Arbiter dismiss the petition filed by herein petitioner Villar, which dismissal is still pending appeal before the Bureau of Labor Relations. In the meantime, on February 14, 1977, the Amigo Employees Union- PAFLU called a special meeting of its general membership. A Resolution was thereby unanimously approved which called for the investigation by the PAFLU national president, pursuant to the constitution and by-laws of the Federation, of all of the petitioners and one Felipe Manlapao, for "continuously maligning, libelling and slandering not only the incumbent officers but even the union itself and the federation;" spreading 'false propaganda' that the union officers were 'merely appointees of the management', and for causing divisiveness in the union. Pursuant to the Resolution approved by the Amigo Employees Union- PAFLU, the PAFLU, through its national President, formed a Trial Committee to investigate the local union's charges against the petitioners for acts of disloyalty inimical to the interest of the local union, as well as directing the Trial Committee to subpoena the complainants (Amigo Employees Union-PAFLU) and the respondents

(herein petitioners) for investigation, to conduct the said investigation and to submit its findings and recommendations for appropriate action. And on the same date of February 15, 1977, the Amigo Employees Union- PAFLU and the Company concluded a new CBA which, besides granting additional benefits to the workers, also reincorporated the same provisions of the existing CBA, including the union security clause reading, to wit: ARTICLE III UNION SECURITY WITH RESPECT TO PRESENT MEMBERS All members of the UNION as of the signing of this Agreement shall remain members thereof in good standing. Therefore, any members who shall resign, be expelled, or shall in any manner cease to be a member of the UNION, shall be dismissed from his employment upon written request of the UNION to the Company. 2 Subsequently, petitioners were summoned to appear before the PAFLU Trial Committee for the aforestated investigation of the charges filed against them by the Amigo Employees Union-PAFLU. Petitioners, however, did not attend but requested for a "Bill of Particulars" of the charges, which charges were stated by the Chairman of the committee as follows: 1. Disaffiliating from PAFLU and affiliating with the Federation of Unions of Rizal (FUR). 2. Filling petition for certification election with the Bureau of Labor Relations and docketed as Case No. R04-MED-830-77 and authorizing a certain Dolores Villar as your authorized representative without the official sanction of the mother FederationPAFLU. 3. Maligning, libelling and slandering the incumbent officers of the union as well as of the PAFLU Federation. 4. By spreading false propaganda among members of the Amigo Employees UnionPAFLU that the incumbent union officers are 'merely appointees' of the management. 5. By sowing divisiveness instead of togetherness among members of the Amigo Employees Union-PAFLU. 6. By conduct unbecoming as members of the Amigo Employees Union- PAFLU which is highly prejudicial to the union as well as to the PAFLU Federation. All these charges were formalized in a resolution of the incumbent officers of the Amigo Employees Union-PAFLU dated February 14, 1977. 3 Not recognizing PAFLU's jurisdiction over their case, petitioners again refused to participate in the investigation rescheduled and conducted on March 9, 1979. Instead, petitioners merely appeared to file their Answer to the charges and moved for a dismissal. Petitioners contend in their Answer that neither the disaffiliation of the Amigo Employees Union from PAFLU nor the act of filing the petition for certification election constitute disloyalty as these are in

the exercise of their constitutional right to self-organization. They further contended that PAFLU was without jurisdiction to investigate their case since the charges, being intra-union problems within the Amigo Employees Union-PAFLU, should be conducted pursuant to the provisions of Article XI, Sections 2, 3, 4 and 5 of the local union's constitution and by-laws. The complainants, all of whom were the then incumbent officers of the Amigo Employees UnionPAFLU, however, appeared and adduced their evidence supporting the charges against herein petitioners. Based on the findings and recommendations of the PAFLU trial committee, the PAFLU President, on March 15, 1977, rendered a decision finding the petitioners guilty of the charges and disposing in the last paragraph thereof, to wit, Excepting Felipe Manlapao, the expulsion from the AMIGO EMPLOYEES UNION of all the other nine (9) respondents, Dionisio Ramos, Recitation Bernus, Dolores Villar, Romeo Dequito, Rolando de Guzman, Anselma Andan, Rita Llagas, Benigno Mamaradlo and Orlando Acosta is hereby ordered, and as a consequence the Management of the employer, AMIGO MANUFACTURING, INC. is hereby requested to terminate them from their employment in conformity with the security clause in the collective bargaining agreement. Further, the Trial Committee is directed to investigate Felipe Manlapao when he shall have reported back for duty. 4 Petitioners appealed the Decision to the PAFLU, citing the same grounds as before, and in addition thereto, argued that the PAFLU decision cannot legally invoke a CBA which was unratified, not certified, and entered into without authority from the union general membership, in asking the Company to terminate them from their employment. The appeal was, likewise, denied by PAFLU in a Resolution dated March 28, 1977. After denying petitioner's appeal, PAFLU on March 28, 1977 sent a letter to the Company stating, to wit, We are furnishing you a copy of our Resolution on the Appeal of the respondent in Administrative Case No. 2, Series of 1977, Amigo Employees Union-PAFLU vs. Dionisio Ramos, et al. In view of the denial of their appeal and the Decision of March 15, 1977 having become final and executory we would appreciate full cooperation on your part by implementing the provision of our CBA on security clause by terminating the respondents concerned from their employment. 5 This was followed by another letter from PAFLU to the Company dated April 25, 1977, reiterating the demand to terminate the employment of the petitioners pursuant to the security clause of the CBA, with a statement absolving the Company from any liability or damage that may arise from petitioner's termination. Acting on PAFLU's demand, the Company informed PAFLU that it will first secure the necessary clearances to terminate petitioners. By letter dated April 28, 1977, PAFLU requested the Company to put petitioners under preventive suspension pending the application for said clearances to terminate the petitioners, upon a declaration that petitioners' continued stay within the work premises will "result in the threat to the life and limb of the other employees of the company." 6

Hence, on April 29, 1977, the Company filed the request for clearance to terminate the petitioners before the Department of Labor, Regional Office No. 4. The application, docketed as RO4-Case No. 7-IV-3549-T, stated as cause therefor, "Demand by the Union Pursuant to the Union Security Clause," and further, as effectivity date, "Termination-upon issuance of clearance; Suspension-upon receipt of notice of workers concerned." 7 Petitioners were then informed by memorandum dated April 29, 1977 that the Company has applied for clearance to terminate them upon demand of PAFLU, and that each of them were placed under preventive suspension pending the resolution of the said applications. The security guard was, likewise, notified to refuse petitioners entry into the work premises. 8 In an earlier development, on April 25, 1977, or five days before petitioners were placed under preventive suspension, they filed a complaint with application for preliminary injunction before the same Regional Office No. 4, docketed as RO4-Case No. RD-4-4088-77-T, praying that after due notice and hearing, "(1) A preliminary injunction be issued forthwith to restrain the respondents from doing the act herein complained of, namely: the dismissal of the individual complainants from their employment; (2) After due hearing on the merits of the case, an Order be entered denying and/or setting aside the Decision dated March 15, 1977 and the Resolution dated March 28, 1977, issued by respondent Onofre P. Guevara, National President of respondent PAFLU; (3) The Appeal of the individual complainants to the General Membership of the complainant AMIGO EMPLOYEES UNION, dated March 22, 1977, pursuant to Sections 2, 3, 4 & 5, Article XI in relation of Section 1, Article XII of the Union Constitution and By-Laws, be given due course; and (4) Thereafter, the said preliminary injunction be made permanent, with costs, and with such further orders/reliefs that are just and equitable in the premises." 9 In these two cases filed before the Regional Office No. 4, the parties adopted their previous positions when they were still arguing before the PAFLU trial committee. On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of Regional Office No. 4, rendered a decision jointly resolving said two cases, the dispositive portion of which states, to wit, IN VIEW OF THE FOREGOING, judgment is hereby rendered granting the application of the Amigo Manufacturing, Inc., for clearance to terminate the employment of Dolores D. Villar, Dionisio Ramos, Benigno Mamaraldo, Orlando Acosta, Recitacion Bernus, Anselma Andan, Rolando de Guzman, and Rita Llagas. The application of oppositors, under RO4-Case No. RD-4-4088-77, for a preliminary injunction to restrain the Amigo Manufacturing, Inc. from terminating their employment and from placing them under preventive suspension, is hereby DISMISSED. 10 Not satisfied with the decision, petitioners appealed to the Office of the Secretary of Labor. By Order dated February 15, 1979, the respondent Amado G. Inciong, Deputy Minister of Labor, dismissed their appeal for lack of merit. 11 Hence, the instant petition for review, raising the following issues: A. Is it not error in both constitutional and statutory law by the respondent Minister when he affirmed the decision of the RO4-Officer-in-Charge allowing the preventive suspension and subsequent dismissal of petitioners by reason of the exercise of their right to freedom of association?

B. Is it not error in law by the respondent Minister when he upheld the decision of the RO4 OIC which sustained the availment of the respondent PAFLU's constitution over that of the local union constitution in the settlement of intra-union dispute? C. Is it not error in law amounting to grave abuse of discretion by the Minister in affirming the conclusion made by the RO4 OIC, upholding the legal applicability of the security clause of a CBA over alleged offenses committed earlier than its conclusion, and within the 60-day freedom period of an old CBA? 12 The main thrust of the petition is the alleged illegality of the dismiss of the petitioners by private respondent Company upon demand of PAFLU which invoked the security clause of the collective bargaining agreement between the Company and the local union, Amigo Employees Union-PAFLU. Petitioners contend that the respondent Deputy Minister acted in grave abuse of discretion when he affirmed the decision granting the clearance to terminate the petitioners and dismissed petitioners' complaint, and in support thereof, allege that their constitutional right to self-organization had been impaired. Petitioner's contention lacks merit. It is true that disaffiliation from a labor union is not open to legal objection. It is implicit in the freedom of association ordained by the Constitution. 13 But this Court has laid down the ruling that a closed shop is a valid form of union security, and such provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. 14 In the case at bar, it appears as an undisputed fact that on February 15, 1977, the Company and the Amigo Employees Union-PAFLU entered into a Collective Bargaining Agreement with a union security clause provided for in Article XII thereof which is a reiteration of the same clause in the old CBA. The quoted stipulation for closed-shop is clear and unequivocal and it leaves no room for doubt that the employer is bound, under the collective bargaining agreement, to dismiss the employees, herein petitioners, for non- union membership. Petitioners became non-union members upon their expulsion from the general membership of the Amigo Employees Union-PAFLU on March 15, 1977 pursuant to the Decision of the PAFLU national president. We reject petitioners' theory that their expulsion was not valid upon the grounds adverted to earlier in this Decision. That PAFLU had the authority to investigate petitioners on the charges filed by their co-employees in the local union and after finding them guilty as charged, to expel them from the roll of membership of the Amigo Employees Union-PAFLU is clear under the constitution of the PAFLU to which the local union was affiliated. And pursuant to the security clause of the new CBA, reiterating the same clause in the old CBA, PAFLU was justified in applying said security clause. We find no abuse of discretion on the part of the OIC of Regional Office No. 4 in upholding the validity of the expulsion and on the part of the respondent Deputy Minister of Labor in sustaining the same. We agree with the OIC's decision, pertinent portion of which reads: Stripped of non-essentials, the basic and fundamental issue in this case tapers down to the determination of WHETHER OR NOT PAFLU HAD THE AUTHORITY TO INVESTIGATE OPPOSITORS AND, THEREAFTER, EXPEL THEM FROM THE ROLL OF MEMBERSHIP OF THE AMIGO EMPLOYEES UNION-PAFLU. Recognized and salutary is the principle that when a labor union affiliates with a mother union, it becomes bound by the laws and regulations of the parent organization. Thus, the Honorable Secretary of Labor, in the case of Amador Bolivar, et al. vs. PAFLU, et al., NLRC Case No. LR-133 & MC-476, promulgated on December 3, 1973, declared-

When a labor union affiliates with a parent organization or mother union, or accepts a charter from a superior body, it becomes subject to the laws of the superior body under whose authority the local union functions. The constitution, by-laws and rules of the parent body, together with the charter it issues pursuant thereto to the subordinate union, constitute an enforceable contract between the parent body and the subordinate union, and between the members of the subordinate union inter se. (Citing Labor Unions, Dangel and Shriber, pp. 279-280). It is undisputable that oppositors were members of the Amigo Employees Union at the time that said union affiliated with PAFLU; hence, under the afore-quoted principle, oppositors are bound by the laws and regulations of PAFLU. Likewise, it is undeniable that in the investigation of the charges against them, oppositors were accorded 'due process', because in this jurisdiction, the doctrine is deeply entrenched that the term 'due process' simply means that the parties were given the opportunity to be heard. In the instant case, ample and unmistakable evidence exists to show that the oppositors were afforded the opportunity to present their evidence, but they themselves disdained or spurned the said opportunity given to them. PAFLU, therefore, correctly and legally acted when, pursuant to its Constitution and By-Laws, it conducted and proceeded with the investigation of the charges against the oppositors and found them guilty of acts prejudicial and inimical to the interests of the Amigo Employees Union- PAFLU, to wit: that of falsely and maliciously slandering the officers of the union; spreading false propaganda among the members of the Amigo Employees Union-PAFLU; calling the incumbent officers as mere appointees and robots of management; calling the union company-dominated or assisted union; committing acts unbecoming of the members of the union and destructive of the union and its members. Inherent in every labor union, or any organization for that matter, is the right of selfpreservation. When members of a labor union, therefore, sow the seeds of dissension and strife within the union; when they seek the disintegration and destruction of the very union to which they belong, they thereby forfeit their rights to remain as members of the union which they seek to destroy. Prudence and equity, as well as the dictates of law and justice, therefore, compelling mandate the adoption by the labor union of such corrective and remedial measures in keeping with its laws and regulations, for its preservation and continued existence; lest by its folly and inaction, the labor union crumble and fall. Correctly and legally, therefore, the PAFLU acted when, after proper investigation and finding of guilt, it decided to remove the oppositors from the list of members of the Amigo Employees Union-PAFLU, and thereafter, recommended to the Amigo Manufacturing, Inc.; the termination of the employment of the oppositors. 15 We see no reason to disturb the same. The contention of petitioners that the charges against them being intra-union problems, should have been investigated in accordance with the constitution and by-laws of the Amigo Employees UnionPAFLU and not of the PAFLU, is not impressed with merit. It is true that under the Implementing Rules and Regulations of the Labor Code, in case of intra-union disputes, redress must first be sought within the organization itself in accordance with its constitution and by-laws. However, it has

been held that this requirement is not absolute but yields to exception under varying circumstances. Thus, in Kapisanan ng mga Manggagawa sa MRR vs. Hernandez, 20 SCRA 109, We held: In the case at bar, noteworthy is the fact that the complaint was filed against the union and its incumbent officers, some of whom were members of the board of directors. The constitution and by-laws of the union provide that charges for any violations thereof shall be filed before the said board. But as explained by the lower court, if the complainants had done so the board of directors would in effect be acting as respondent investigator and judge at the same time. To follow the procedure indicated would be a farce under the circumstances, where exhaustion of remedies within the union itself would practically amount to a denial of justice or would be illusory or vain, it will not be insisted upon, particularly where property rights of the members are involved, as a condition to the right to invoke the aid of a court. The facts of the instant petition stand on all fours with the aforecited case that the principle therein enunciated applies here as well. In the case at bar, the petitioners were charged by the officers of the Amigo Employees Union- PAFLU themselves who were also members of the Board of Directors of the Amigo Employees Union-PAFLU. Thus, were the petitioners to be charged and investigated according to the local union's constitution, they would have been tried by a trial committee of three (3) elected from among the members of the Board who are themselves the accusers. (Section 2, Article 11, Constitution of the Local Union). Petitioners would be in a far worse position had this procedure been followed. Nonetheless, petitioners admit in their petition that two (2) of the six (6) charges, i.e. disaffiliation and filing a petition for certification election, are not intra-union matters and, therefore, are cognizable by PAFLU. Petitioners insist that their disaffiliation from PAFLU and filing a petition for certification election are not acts of disloyalty but an exercise of their right to self-organization. They contend that these acts were done within the 60-day freedom period when questions of representation may freely be raised. Under the peculiar facts of the case, We find petitioners' insistence untenable. In the first place, had petitioners merely disaffiliated from the. Amigo Employees Union-PAFLU, there could be no legal objections thereto for it was their right to do so. But what petitioners did by the very clear terms of their "Sama-Samang Kapasiyahan" was to disaffiliate the Amigo Employees Union-PAFLU from PAFLU, an act which they could not have done with any effective consequence because they constituted the minority in the Amigo Employees Union-PAFLU. Extant from the records is the fact that petitioners numbering ten (10), were among the ninety-six (96) who signed the "Sama-Samang Kapasiyahan" whereas there are two hundred thirty four (234) union members in the Amigo Employees Union-PAFLU. Hence, petitioners constituted a small minority for which reason they could not have successfully disaffiliated the local union from PAFLU. Since only 96 wanted disaffiliation, it can be inferred that the majority wanted the union to remain an affiliate of PAFLU and this is not denied or disputed by petitioners. The action of the majority must, therefore, prevail over that of the minority members. 16 Neither is there merit to petitioners' contention that they had the right to present representation issues within the 60-day freedom period. It is true, as contended by petitioners, that under Article 257 of the Labor Code and Section 3, Rule 2, Book 2 of its Implementing Rules, questions of exclusive bargaining representation are entertainable within the sixty (60) days prior to the expiry date of an existing CBA, and that they did file a petition for certification election within that period. But the petition was filed in the name of the Amigo Employees Union which had not disaffiliated from PAFLU, the mother union. Petitioners being a mere minority of the local union may not bind the majority members of the local union.

Moreover, the Amigo Employees Union, as an independent union, is not duly registered as such with the Bureau of Labor Relations. The appealed decision of OIC Leogardo of Regional Office No. 4 states as a fact that there is no record in the Bureau of Labor Relations that the Amigo Employees Union (Independent) is registered, and this is not disputed by petitioners, notwithstanding their allegation that the Amigo Employees Union is a duly registered labor organization bearing Ministry of Labor Registration Certification No. 5290-IP dated March 27, 1967. But the independent union organized after the "Sama-Samang Kapasiyahan" executed February 7, 1977 could not have been registered earlier, much less March 27, 1967 under Registration Certificate No. 5290-IP. As such unregistered union, it acquires no legal personality and is not entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration. Article 234 of the New Labor Code specifically provides: Art. 234. Requirements of Registration.Any applicant labor organization, association, or group of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration. .... In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40, We had occasion to interpret Section 23 of R.A. No. 875 (Industrial Peace Act) requiring of labor unions registration by the Department of Labor in order to qualify as "legitimate labor organization," and We said: The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the freedom of assembly and association guaranteed in the Bill of Rights is devoid of factual basis. The registration prescribed in paragraph (b) of said section 17 is not a limitation to the right of assembly or association, which may be exercised with or without said registration. The latter is merely a condition sine qua non for the acquisition of legal personality by labor organizations, associations or unions and the possession of the 'rights and privileges granted by law to legitimate labor organizations.' The Constitution does not guarantee these rights and privileges, much less said personality, which are mere statutory creations, for the possession and exercise of which registration is required to protect both labor and the public against abuses, fraud, or impostors who pose as organizers, although not truly accredited agents of the union they purport to represent. Such requirement is a valid exercise of the police power, because the activities in which labor organizations, associations and union or workers are engaged affect public interest, which should be protected. Simply put, the Amigo Employees Union (Independent) Which petitioners claim to represent, not being a legitimate labor organization, may not validly present representation issues. Therefore, the act of petitioners cannot be considered a legitimate exercise of their right to self-organization. Hence, We affirm and reiterate the rationale explained in Phil Association of Free Labor Unions vs. Sec. of Labor case, supra, in order to protect legitimate labor and at the same time maintain discipline and responsibility within its ranks. The contention of petitioners that the new CBA concluded between Amigo Employees Union-PAFLU and the Company on February 15, 1977 containing the union security clause cannot be invoked as against the petitioners for offenses committed earlier than its conclusion, deserves scant consideration. We find it to be the fact that the union security clause provided in the new CBA merely reproduced the union security clause provided in the old CBA about to expire. And since petitioners were expelled from Amigo Employees Union-PAFLU on March 28, 1982 upon denial of their Motion for Reconsideration of the decision expelling them, the CBA of February 15, 1977 was already applicable to their case. The "closed-shop provision" in the CBA provides:

All members of the UNION as of the signing of this Agreement shall remain members thereof in good standing. Therefore, any members who shall resign, be expelled, or shall in any manner cease to be a member of the UNION, shall be dismissed from his employment upon written request of the UNION to the Company. (Art. III) A closed-shop is a valid form of union security, and a provision therefor in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Manalang, et al. vs. Artex Development Co., Inc., et al., L-20432, October 30, 1967, 21 SCRA 561). Where in a closed-shop agreement it is stipulated that union members who cease to be in good standing shall immediately be dismissed, such dismissal does not constitute an unfair labor practice exclusively cognizable by the Court of Industrial Relations. (Seno vs. Mendoza, 21 SCRA 1124). Finally, We reject petitioners' contention that respondent Minister committed error in law amounting to grave abuse of discretion when he affirmed the conclusion made by the RO4 OIC, upholding the legal applicability of the security clause of a CBA over alleged offenses committed earlier than its conclusion and within the 60-day freedom period of an old CBA. In the first place, as We stated earlier, the security clause of the new CBA is a reproduction or reiteration of the same clause in the old CBA. While petitioners were charged for alleged commission of acts of disloyalty inimical to the interests of the Amigo Employees Union-PAFLU in the Resolution of February 14, 1977 of the Amigo Employees Union- PAFLU and on February 15, 1977 PAFLU and the Company entered into and concluded a new collective bargaining agreement, petitioners may not escape the effects of the security clause under either the old CBA or the new CBA by claiming that the old CBA had expired and that the new CBA cannot be given retroactive enforcement. To do so would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement shall have been entered into with the union. As this Court said in Seno vs. Mendoza, 21 SCRA 1124, "without any agreement to govern the relations between labor and management in the interim, the situation would well be productive of confusion and result in breaches of the law by either party. " The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously needs further citation of the facts and the opinion of the Court, speaking through Justice Makalintal who later became Chief Justice, and We quote: It appears that petitioners other than Januario T. Seno who is their counsel, were members of the United Seamen's Union of the Philippines. Pursuant to a letterrequest of the Union stating that they 'had ceased to be members in good standing' and citing a closed shop clause in its bargaining agreement with respondent Carlos A. Go Thong & Co., the latter dismissed said petitioners. Through counsel, petitioners requested that they be reinstated to their former positions and paid their backwages, otherwise they would picket respondents' offices and vessels. The request was denied on the ground that the dismissal was unavoidable under the terms of the collective bargaining agreement. ... We, therefore, hold and rule that petitioners, although entitled to disaffiliate from their union and form a new organization of their own, must, however, suffer the consequences of their separation from the union under the security clause of the CBA Asia Bed Factory v. Kapok Industries On June 2, 1953, the petitioner Asia Bed Factory and respondent labor union entered into a collective bargaining agreement which contained, among other things, the following clause:

XI. PAYMENTS FROM MONTHLY TO DAILY Employees now paid on a monthly basis shall be paid under this agreement on the daily basis at rates based on their present compensation plus the additional increase of (P0.30) THIRTY CENTAVOS a day, with the understanding that these employees shall be provided with work on Sundays at time and one-half; and that in the event that no work on Sundays is available through no fault of the employee or employees, they shall be entitled to payment of the equivalent of their wages as if they had performed referred to that day. The rates of payment of these employees above referred to shall be computed in the attached document marked as annex "a" and made an integral part of this agreement. In the event that an employee shall absent himself for no excusable reasons, the Company shall be entitled to reduce the corresponding wage or wages. The petitioner faithfully complied with the terms of the above clause until it was forced to suspend its business on Sundays in obedience to the provisions of Republic Act No. 946, known as the Blue Sunday Law, which took effect on September 8, 1953, prohibiting the opening of any commercial, industrial or agricultural enterprise on Sundays. As some of petitioner's employees claimed that under the terms of their bargaining agreement they were entitled to their Sunday wages even if they did not work on those days, petitioner filed a petition in the Court of First Instance of Manila for a declaratory judgment that it ceased to be bound by the above-quoted clause of the collective bargaining agreement when the Blue Sunday Law went into effect. Without disputing the facts alleged in the petition, the respondent labor union, by way of answer, filed a motion for a summary judgment declaring that petitioner's employees were entitled to Sunday wages notwithstanding the passage of the Blue Sunday Law. On the basis of the pleadings thus filed, the lower court rendered judgment holding that, in view of the provision of the Blue Sunday Law prohibiting the opening of commercial and industrial establishments on Sundays, the petitioner was relieved from compliance with its agreement "to provide its employees with work on Sundays and to pay them for Sundays." Reconsideration of the judgment having been denied, the respondents appealed directly to this Court on a pure question of law. The question for determination is whether the approval of the Blue Sunday Law relieved petitioner from complying with its agreement to pay its laborers Sunday wages since they can not be given work on Sundays because of the closure of the petitioner's business on those days as required by said law. The lower court answers the question in the affirmative on the ground that the clause in question provided for mutual prestations between the contracting parties the petitioner to provide its employees with work on Sundays and pay them for such work and the employees to do the work given them on those days and that these prestations became impossible of performance when the Blue Sunday Law prohibited the opening of commercial and industrial establishments on Sundays. To this view we are inclined to agree. The bargaining agreement puts the employees on a daily basis at rates of compensation therein provided, with the express stipulation that work shall be provided on Sundays and at higher compensation. As the trial court says, payment for Sundays is in return for work done. It is true the agreement provides for the payment of wages on Sundays if no work is made available on those days through no fault of the employees. But the fact is that the agreement does give the employer the right to provide work on Sundays. And it would seem the height of injustice to deprive the employer of this right without, at the same time, relieving him of the obligation to pay the employees.

Section 6 of the Blue Sunday Law which says that "it shall be unlawful for any employer to reduce the compensation of any of his employees or laborers by reason of the provisions of this Act" does not militate against this view. There is here no attempt on the part of the employer to reduce the compensation of his employees. It is the law itself which in effect reduces that compensation by depriving the employees of work on Sundays, thus preventing them from earning the wages stipulatedin the bargaining agreement. There is nothing to the contention that to apply the Blue Sunday Law to present agreement would infringe the constitutional prohibition against the impairment of the obligations of contract. The Blue Sunday Law is intended for the health, well-being and happiness of the working class and is a legitimate exercise of the police power. De los Reyes v. Alojado On or about January 22, 1905, Veronica Alojado received, as a loan, from Benito de los Reyes that the sum P67 .60, for the purpose of paying a debt she owed to Olimpia Zaballa. It was agreed between Alojado and Reyes that the debtor should remain as a servant in the house and in the service of her creditor, without any renumeration whatever, until she should find some one who would furnish her with the said sum where with to repeat the loan. The defendant, Veronica Alojado, afterwards left the house of the plaintiff, on March 12, 1906, without having paid him her debt, nor did she do so at any subsequent date, notwithstanding his demands. The plaintiff, therefore, on the 15th of march, 1906, filed suit in the court of the justice of the peace of Santa Rosa, La Laguna, against Veronica Alojado to recover the said sum or, in a contrary case, to compel her to return to his service. The trial having been had, the justice of the peace, on April 14, 1906, rendered judgment whereby he sentenced the defendant to pay to the plaintiff the sum claimed and declared that, in case the debtor should be insolvent, she should be obliged to fulfill the agreement between her and the plaintiff. The costs of the trial were assessed against the defendant. The defendant appealed from the said judgment to the Court of First Instance to which the plaintiff, after the case had been docketed by the clerk of court, made a motion on May 4, 1906, requesting that the appeal interposed by the defendant be disallowed, with the costs of both instances against her. The grounds alleged in support of this motion. were that the appeal had been filed on the sixth day following that when judgment was rendered in the trial, on April 14th, and that it, therefore, did not come within the period of the five days prescribed by section 76 of the Code of Civil Procedure, as proven by the certificate issued by the justice of the peace of Santa Rosa. The Court of First Instance, however, by order of July 16, 1906, overruled the motion of the plaintiff-appellee, for the reasons therein stated, namely, that the defendant was not notified of the judgment rendered in the case on April 14th of that year until the 16th of the same month, and the appeal having been filed four days later, on the 20th, it could having seen that the five days specified by section 76 of the Code of Civil Procedure had not expired. The plaintiff was advised to reproduce his complaint within ten days, in order that due procedure might he had thereupon. The plaintiff took exception to the aforementioned order and at the same time reproduced the complaint he had filed in the court of the justice of the peace, in which, after relating to the facts hereinbefore stated, added that the defendant, besides the sum above-mentioned, had also received from the plaintiff, under the same conditions, various small amounts between the dates of January 22, 1905, and March 10, 1906, aggregating altogether P11.97, and that they had not been repaid to him. He therefore asked that judgment be rendered sentencing the defendant to comply with the said contract and to pay to the plaintiff the sums referred to, amounting in all to P79.57, and that until this amount should have been in paid, the defendant should remain gratuitously in the service of plaintiff's household, and that she should pay the costs of the trial.

The defendant, in her written answer of August 15, 1906, to the aforesaid complaint, denied the allegations contained in paragraphs 1 and 2 of the complaint and alleged that, although she had left the plaintiff's service, it was because the latter had paid her no sum whatever for the services she had rendered in his house. The defendant likewise denied the conditions expressed in paragraph 4 of the complaint, averring that the effects purchased, to the amount of P11.97, were in the possession of the plaintiff, who refused to deliver them to her. She therefore asked that she be absolved from the complaint and that the plaintiff be absolved from the complaint the wages due her for the services she had rendered. The case came to trial on October 19, 1906, and, after the production of testimony by both parties, the judge, on November 21st of the same year, rendered judgment absolving the defendant from the complain, with the costs against the plaintiff, and sentencing the latter to pay to the former the sum of P2.43, the balance found to exist between the defendant's debt of P79.57 and the wages due her by the plaintiff, which amounted to P82. The plaintiff, on the 6th of December, filed a written exception to the judgment aforesaid through the regular channels, and moved for a new trial on the ground that the findings of fact set forth in the judgment were manifestly contrary to the weight of the evidence. This motion was overruled on the 17th of the same month, to which exception was taken by the appellant, who afterwards filed the proper bill of exceptions, which was approved, certified, and forwarded to the clerk of this court. The present suit, initiated in a justice of the peace court and appealed to the Court of First Instance of La Laguna at a time prior to the enactment of Act No. 1627, which went into effect on July 1, 1907, which limited to two instances the procedure to be observed in verbal actions, concerns the collection of certain sum received as a loan by the defendant from the plaintiff, and of the wages earned by the former for services rendered as a servant in the said plaintiff's house. Notwithstanding the denial of the defendant, it is a fact clearly proven, as found in the judgment appealed from, that the plaintiff did deliver to Hermenegildo de los Santos the sum of P67.60 to pay a debt was paid by De los Santos with the knowledge and in behalf of the said defendant who, of her free will, entered the service of the plaintiff and promised to pay him as soon as she should find the money wherewith to do so. The duty to pay the said sum, as well as that of P11.97 delivered to the defendant in small amounts during the time that she was in the plaintiff's house, is unquestionable, inasmuch as it is a positive debt demandable of the defendant by her creditor. (Arts. 1754, 1170, Civil Code.) However, the reason alleged by the plaintiff as a basis for the loan is untenable, to wit, that the defendant was obliged to render service in his house as a servant without remuneration whatever and to remain therein so long as she had not paid her debt, inasmuch as this condition is contrary to law and morality. (Art. 1255, Civil Code.) Domestic services are always to be remunerated, and no agreement may subsist in law in which it is stipulated that any domestic service shall be absolutely gratuitous, unless it be admitted that slavery may be established in this country through a covenant entered into between the interested parties. Articles 1583, 1584, and 1585 of the Civil Code prescribe rules governing the hiring of services of domestics servants, the conditions of such hire, the term during which the service may rendered and the wages that accrue to the servant, also the duties of the latter and of the master. The first of the articles cited provides that a hiring for life by either of the contracting parties is void, and, according to the last of three articles just mentioned, besides what is prescribed in the preceding articles with regard to masters and servants, the provisions of special laws and local ordinances shall be observed.

During the regime of the former sovereignty, the police regulations governing domestic service, of the date of September 9, 1848, were in force, article 19 of which it is ordered that all usurious conduct toward the servants and employees of every class is prohibited, and the master who, under pretext of an advance of pay or of having paid the debts or the taxes of his servant, shall have succeeded in retaining the latter in his service at his house, shall be compelled to pay to such servant all arrears due him and any damages he may have occasioned him, and the master shall also be fined. The aforementioned article 1585 of the Civil Code undoubtedly refers to the provisions of the regulations just cited. When legal regulations prohibit even a usurious contract and all abuses prejudicial to subordinates and servant, in connection with their salaries and wages, it will be understood at once that the compact whereby service rendered by a domestic servant in the house of any inhabitant of this country is to be gratuitous, is in all respects reprehensible and censurable; and consequently, the contention of the plaintiff, that until the defendant shall have paid him her debt she must serve him in his house gratuitously is absolutely inadmissible. The trial record discloses no legal reason for the rejection of the findings of fact and of law contained in the judgment appealed from, nor for an allowance of the errors attributed appealed from, nor for an allowance of the errors attributed thereto; on the contrary, the reasons hereinabove stated show the propriety of the said judgment. Kaisahan ng mga Manggagawa sa Kahoy sa Pilipinas v. Gotamco Saw Mill In its petition for a writ of certiorari, the "Kaisahan ng mga Manggagawa sa Kahoy sa Pilipinas" prays, for the reasons therein set forth, that we reverse and vacate the orders of the Court of Industrial Relations dated September 23, 1946 (Annex A) and March 28, 1947 (Annex B) and its resolution of July 11, 1947 (Annex C). In the order of September 23, 1946, it is recited that the laborers in the main case (case No. 31-V of the Court of Industrial Relations) declared a strike on September 10, 1946, "which suspended all the work in the respondent company"; that on September 19, 1946 (presumably after the case had been brought to the Court of Industrial Relations) said court informed the parties that the continuation of the strike would necessarily prejudice both parties, and that a temporary solution, satisfactory to both parties, must be found to put an end to it, at the same time, urging both parties to be reasonable in their attitude towards each other; that ample opportunity was given to both parties to iron out their differences until September 21, 1946, when the court continued the conference at which, among other things, the leader of the laborers informed the court that, although said laborers were not exactly satisfied with the arrangement, in order to cooperate with the court and with the parties so that the laborers could return to work and the company resume its operation, they had no objection to accepting a temporary settlement of P3.50 without meal, as against the proposal of the company of P2.00 without meal; that after a series of conferences held on September 23, 1946, the date of the order now under consideration, the labor leader decided to accept a temporary arrangement of the wage problem as proposed by management, that is, P2.00 over-all increase without meal to all striking laborers; that Francisco Cruz, President of the Union, manifested that he would have a hard time convincing the laborers, but in view of their desire to preserve that harmony which used to exist between the parties, they were going to accede to this proposition, provided that the management would permit the laborers to bring with them home, if available, small pieces of lumber to be utilized as firewood; that the negotiations culminated in an agreement by which the laborers would return to their work on Tuesday, September 24, 1946, at 7:00 o'clock in the morning, and the respondent company would resume its operation on said date under the following conditions:

(1) That all the laborers and workingmen will receive an over-all increase of P2.00 daily, without meal, over the wages received by them before the strike; (2) That the management will permit the laborers to bring with them home, if available, small pieces of lumber to be utilized as firewood; and (3) That the foregoing increase and privilege will take effect upon the return of the workingmen to work until the final determination of the present controversy. The same order then proceeds as follows: Finding the above temporary agreement between the parties to be reasonable and advantageous to both, the court approves the same and orders the striking laborers of the respondent company to return to their work on Tuesday, September 24, 1946 at 7:00 o'clock in the morning, and the respondent company to resume its operation and admit the striking laborers. The respondent company is enjoined not to lay-off, suspend or dismiss any laborer affiliated with the petitioning union, nor suspend the operation of the temporary agreement, and the labor union is enjoined not to stage a walk-out or strike during the pendency of the hearing. From the order of March 27, 1947, it appears that on January 7, 1947, the respondent Gotamco Saw Mill filed with the Court of Industrial relations an urgent motion asking that the petitioning union be held for contempt of court for having staged a strike during the pendency of the main case "in violation of the order of this court dated September 23, 1946"; that on January 9, 1947, petitioner filed an answer with a counter-petition alleging, among other things, that a representative of petitioner conferred with respondent regarding certain discriminations obtaining in the respondent's saw mill, but instead of entertaining their grievances said respondent in a haughty and arbitrary manner ordered the stoppage of the work and consequently the workers did then and there stop working; and in the counter-petition said petitioner asked the respondent be held for contempt for having employed four new Chinese laborers during the pendency of the hearing of the main case, without express authority of the court and in violation of section 19 of Commonwealth Act No. 103, as amended. It is also recited in the said order of March 28, 1947, that on that same date, January 9, 1947, respondent filed with the court another urgent motion for contempt against the petitioning union for picketing on the premises of the respondent's saw mill and for grave threats which prevented the remaining laborers from working. Upon request of both parties, the court required the presentation of evidence pertinent to the incidents thus raised. Thereafter, the said order of March 28, 1947, was entered, and the court stated therein the three questions to be determined as follows: first, if there was a violation by the petitioning union of the order of said court of September 23, 1946, which would warrant the commencement of contempt proceedings; second, whether the facts and circumstances attending the picketing constitute contempt of court; third, whether there was a violation by the respondent of section 19 of the Commonwealth Act No. 103, as amended, in taking four Chinese laborers pending the hearing and without express authority of the court; and fourth, whether the dismissal of Maximino Millan was with or without just cause. The court, passing upon these questions, found and held: (1) That there was a violation of the order of the court dated September 23, 1946, by the petitioning union and thereby ordered Atty. Pastor T. Reyes, special agent of the court, to take such action as may be warranted in the premises against the person or persons responsible therefor for contempt:

(2) That the question of picketing being closely and intimately related to the strike which had been found illegal, did not need to be passed upon, it being imbibed by question No. 1; (3) That there being no strong and clear proof on the question of respondent having violated section 19 of Commonwealth Act No. 103, as amended, respondent was thereby exonerated from any liability in connection with the alleged employment of four Chinamen; (4) That Maximino Millan being of troublesome nature and unworthy to work among his fellow laborers, his petition for reinstatement contained in demand No. 5 of the main case was thereby denied. The above cited resolution of July 11, 1947, was entered by the Court of Industrial Relations, sitting in banc, and denied reconsideration of its order of March 28, 1947, as requested by the petitioning union's contention is recited that the provisions of section 19 of Commonwealth Act No. 103, as amended, upon which order of September 23, 1946, was based, had not been complied with; in other words, that the said order was not issued in conformity with the requisites of said section, because, it was said, before its issuance there had been no proper hearing and there was and there was no express finding by the court that public interest required the return of the striking workers. The further contention is therein recited that, granting that the order of September 23, 1946, was issued in conformity with said section 19, said provision is unconstitutional for being in violation of the organic proscription of involuntary servitude. Passing upon these contentions, the Court of Industrial Relations said: The order of September 23, 1946, was issued in conformity with the provisions of section 19. Said order was proposed and issued on the basis of the agreement entered into by the parties after the preliminary hearings and conferences. While it is true that the order of the Court now in question did not make any express finding as to whether public interest required the return of the striking workers, it is undeniable, however, that until the numerous incidents arising therefrom since the certification of the dispute promptly, need not be stated in the said order because it is a fact which is borne out by the entire record of the case. If the petitioner was aggrieved by the terms of the order, it could have objected right then and there and could have appealed said order within the period prescribed by law, and nor to wait after it had become final, definite, and conclusive. The record shows that the petitioner in its answer answer and counter-petition for contempt based its complaint upon section 19 (incidental Case No. 31-V [4]). It is, indeed, strange that after taking advantage of this order and enjoyed (enjoying) the benefits thereunder, the petitioner now comes to impugn and challenge the validity. The second motion for reconsideration is the sad instance where the petitioner attacks the validity of an order under which it once took shelter. The court believes that section 19 is constitutional. To start with, this section is presumed to be constitutional. Several laws promulgated which apparently infringe the human rights of individuals were "subjected to regulation by the State basically in the exercise of its paramount police power". The provisions of Act No. 103 were inspired by the constitutional injunction making it the concern of the State to promote social justice to insure the well being and economic security of all the people. In order to attain this object, section 19 was promulgated which grants to labor what it grants to capital and denies to labor what it denies to capital. Section 19 complements the power of the Court to settle industrial disputes and renders effective such powers which are conferred upon it by the different provisions of the Court's organic law, more particularly, sections 1 and 4, and "other plenary powers conferred upon the Court to enable it to settle all questions matters, controversies or disputes arising between, and/or affecting employers and employees", "to prevent non-pacific methods in the determination of industrial or agricultural disputes" (International HardWood and Venser

Co. vs The Pangil Federation of Laborers, G.R. No. 47178, cited in the case of Mindanao Bus Co. vs. Mindanao Bus Co. Employees' Association, 40 Off. Gaz., 115). Section 4 has been upheld in the case aforecited. It appearing that the power of this Court to execute its orders under section 19 is also the same power it possesses under section 4 of the same act, it inferentially follows that section 19 is likewise valid. (Manila Trading and Supply Co. vs. Philippine Labor Union, G.R. No. 47796.) In Manila Trading and Supply Company vs. Philippine Labor Union, supra, this Court said: In the first place, the ultimate effect of petitioner's theory is to concede to the Court of Industrial Relations the power to decide a case under section 19 but deny it, the power to execute its decision thereon. The absurdity of this proposition, is too evident to require argument. In the second place considering that the jurisdiction of the Court of Industrial Relations under section 19 is merely incidental to the same jurisdiction it has previously acquired under section 4 of the law, if follows that the power to execute its orders under section 19 is also the same power that it possesses under section 4. (40 Off. Gaz., [14th Supp.], No. 23, p. 178.) Among the powers thus conferred is that to punish a violation of an order such as those now under consideration as for contempt of court. We agree with the Court of Industrial Relations that section 19 of Commonwealth Act No. 103 is constitutional. It does not offend against the constitutional inhibition prescribing involuntary servitude. An employee entering into a contract of employment said law went into effect, voluntarily accepts, among other conditions, those prescribed in said section 19, among which is the "implied condition that when any dispute between the employer or landlord and the employee, tenant or laborer has been submitted to the Court of Industrial Relations for settlement or arbitration, pursuant to the provisions of this Act, and pending award or decision by it, the employee, tenant or laborer shall not strike or walk out of his employment when so joined by the court after hearing and when public interest so requires, and if he has already done so, that he shall forthwith return to it, upon order of the court, which shall be issued only after hearing when public interest so requires or when the dispute can not, in its opinion, be promptly decided or settled ...". (Emphasis supplied.) The voluntariness of the employee's entering into such a contract of employment he has a free choice between entering into it or not with such an implied condition, negatives the possibility of involuntary servitude ensuing. The resolution of July 11, 1947, states that the order of September 23, 1946, was issued after a series of preliminary hearings or conferences, and we are satisfied that these were "hearings" within the meaning of the above mentioned section 19 of the law. The record certainly reveals that what was done during and what resulted from said preliminary hearings or conferences were reported to the court at a formal hearing. As to public interest requiring that the court enjoin the strike or walk out, or the return of striking laborers, aside from the legal presumption that the Court of Industrial Relations complied with the provisions of the law in this respect, we think that, considering the universally known fact, of which this Court takes judicial notice, that as a result of the destructions wrought by the late war, the economic and social rehabilitation of the country urgently demands the reconstruction work will inevitably tend to paralyze, impede or slow down the country's program of rehabilitation which, for obvious and natural reasons, the government is striving to accelerate as much as is humanly possible. Besides, the order of the court was for the striking workers to return to their work. And that order was made after hearing, and, moreover, section 19 of Commonwealth Act No. 103, in providing for an order of the court fro the return of striking workers, authorizes such order, among other cases, "when the dispute can not, in its opinion, be promptly decided or settled". The provision says: "... and if he has already done so (struck or walked out),that he shall forthwith return to it, upon order of the court,

which shall be issued only after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled, (emphasis supplied). In other words the order to return, if the dispute can be promptly decided or settled, may be issued "only after hearing when public interest so requires", but if in the court's opinion the dispute can not be promptly decided or settled, then it is also authorized after hearing to issue the order: we construe the provision to mean that the very impossibility of prompt decision or settlement of the dispute confers upon the court the power to issue the order for the reason that the public has an interest in preventing undue stoppage or paralyzation of the wheels of industry. And, as well stated by the court's resolution of July 11, 1947, this impossibility of prompt decision or settlement was a fact which was borne out by the entire record of the case and did not need express statement in the order. Finally, this Court is not authorized to review the findings of fact made by the Court of Industrial Relations (Commonwealth Act No. 103, section 15, as amended by Commonwealth Act 559, section 2; Rule 44, Rules of Court; National Labor Union vs. Phil. Match Co., 40 Off. Gaz. 8th Supp. p. 134, Bardwell Brothers vs. Phil. Labor Union, 39 Off. Gaz. 1032; Pasumil Workers' Union vs. Court of Industrial Relations, 40 Off. Gaz. 6th Supp., p. 71). However, Mr. Justice Briones thinks that we should expressly reserve our opinion on the constitutionality of the above statutory and reglementary provisions should it, in the future, become necessary to decide it. PAGKAKAISA NG MGA MANGGAGAWA SA TRIUMPH INTERNATIONAL-UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES v. Calleja Once again we uphold the existing law which encourages one union, one company policy in this petition forcertiorari with prayer for preliminary injunction, The petitioner assails the resolutions of the public respondent dated August 24, 1988 and October 28, 1988 both ordering the holding of a certification election among certain monthly-paid employees of Triumph International Philippines, Inc. (Triumph International for brevity). The petitioner is the recognized collective bargaining agent of the rank-and-file employees of Triumph International with which the latter has a valid and existing collective bargaining agreement effective up to September 24, 1989. On November 25, 1987, a petition for certification election was filed by the respondent union with the Department of Labor and Employment. On January 30, 1988, a motion to dismiss the petition for certification election was filed by Triumph International on the grounds that the respondent union cannot lawfully represent managerial employees and that the petition cannot prosper by virtue of the contract-bar rule. On the same grounds, the petitioner, as intervenor, filed its opposition to the petition oil February 18, 1988. On April 13, 1988, the Labor Arbiter issued an order granting the petition for certification election and directing the holding of a certification election to determine the sole and exclusive bargaining representative of all monthly-paid administrative, technical, confidential and supervisory employees of Triumph International. On appeal, the public respondent on August 24, 1988 affirmed the Labor Arbiter's order with certain modifications as follows: WHEREFORE, premises considered, the order appealed from is hereby affirmed subject to the modification in that the subject employees sought to be represented by

the petitioner union are given the option whether to join the existing bargaining unit composed of daily paid rank-and-file employees. If they opt to join, the pertinent provision of the existing CBA should be amended so as to include them in its coverage. (Rollo, p. 19) On September 5, 1988, Triumph International filed a motion for reconsideration which was denied by the public respondent in a resolution dated October 28, 1988. The sole issue presented by the petitioner in the instant case is whether or not the public respondent gravely abused its discretion in ordering the immediate holding of a certification election among the workers sought to be represented by the respondent union. The petitioner argues that the members of respondent union and managerial employees who are expressly excluded from joining, assisting or forming any labor organization under Art. 245 of the Labor Code. In the determination of whether or not the members of respondent union are managerial employees, we accord due respect and, therefore, sustain the findings of fact made by the public respondent pursuant to the time-honored rule that findings of fact of quasi-judicial agencies like the Bureau of Labor Relations which are supported by substantial evidence are binding on us and entitled to great respect considering their expertise in their respective fields. (see Phil. Airlines Employees Asso. (PALEA) v. Ferrer-Calleja, 162 SCRA 426 [1988]; Producers Bank of the Philippines v. National Labor Relations Commission, G.R. No. 76001, September 5, 1988; Salvador Lacorte v. Hon. Amado G. Inciong, et al., G.R. No. 52034, September 27, 1988: Johnson and Johnson Labor Union-FFW et al. v. Director cf. Labor Relations, G.R. No. 76427, February 21, 1989; Teofila Arica, et al. v. National Labor Relations Commission, et al., G.R. No. 78210, February 28, 1989; A.M. Oreta & Co. Inc. v. National Labor Relations Commission, G.R. No. 74004, August 10, 1989). According to the Med-Arbiter, while the functions, and we may add, the titles of the personnel sought to be organized appear on paper to involve an apparent exercise of managerial authority, the fact remains that none of them discharge said functions. The petitioner has failed to show reversible error insofar as this finding is concerned. In ruling that the members of respondent union are rank and file and not managerial employees, the public respondent made the following findings: . . . (1) They do not have the power to lay down and execute management policies as they are given ready policies merely to execute and standard practices to observe; 2) they do not have the power to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees but only to recommend for such actions as the power rests upon the personnel manager; and 3) they do not have the power to effectively recommend any managerial actions as their recommendations have to pass through the department manager for review, the personnel manager for attestation and general manager/president for final actions. . . . (At pp. 17-18, Rollo) The petitioner further argues that while it has recognized those signatories and employees occupying the positions of Assistant Manager, Section Chief, Head Supervisor and Supervisor as managerial employees under the existing collective bargaining agreement, in the event that they are declared as rank-and-file employees in the present case they are not precluded from joining and they should join the petitioner. We find the aforesaid contention of the petitioner meritorious in the absence of a showing that there are compelling reasons such as the denial of the right to join the petitioner which is the certified

bargaining unit to the members of respondent union or that there are substantial distinctions warranting the recognition of a separate group of rank-and-file employees even as there is an existing bargaining agent for rank and file employees. Thus, the right of supervisory employees to organize under the Industrial Peace Act is once more recognized under the present amendments to the Labor Code. (see Adamson & Adamson Inc., v. The Court of Industrial Relations, 127 SCRA 268 [1984]). In the absence of any grave abuse of discretion on the part of the public respondent as to the status of the members of the respondent union, we adopt its findings that the employees sought to be represented by the respondent union are rank-and-file employees. There is no evidence in the records which sufficiently distinguishes and clearly separates the group of employees sought to be represented by the private respondents into managerial and supervisory on one hand or supervisory and rank-and-file on the other. The respondents' pleadings do not show the distinctions in functions and responsibilities which differentiate the managers from the supervisors and sets apart the rank-and-file from either the managerial or supervisory groups. As a matter of fact, the formation of a supervisor's union was never before the Labor Arbiter and the Bureau of Labor Relations and neither is the issue before us. We, therefore, abide by the public respondent's factual findings in the absence of a showing of grave abuse of discretion. In the case at bar, there is no dispute that the petitioner is the exclusive bargaining representative of the rank-and-file employees of Triumph International. A careful examination of the records of this case reveals no evidence that rules out the commonality of interests among the rank-and-file members of the petitioner and the herein declared rank-and-file employees who are members of the respondent union. Instead of forming another bargaining unit, the law requires them to be members of the existing one. The ends of unionism are better served if all the rank-and-file employees with substantially the same interests and who invoke their right to self-organization are part of a single unit so that they can deal with their employer with just one and yet potent voice. The employees' bargaining power with management is strengthened thereby. Hence, the circumstances of this case impel us to disallow the holding of a certification election among the workers sought to be represented by the respondent union for want of proof that the right of said workers to selforganization is being suppressed. Once again we enunciate that the proliferation of unions in an employer unit is discouraged as a matter of policy unless compelling reasons exist which deny a certain and distinct class of employees the right to self-organization for purposes of collective bargaining. (see General Rubber & Footwear Corporation v. Bureau of Labor Relations, 155 SCRA 283 [1987]). Anent the correlative issue of whether or not the contract-bar rule applies to the present case, Rule V, Section 3, Book V of the Implementing Rules and Regulations of the Labor Code is written in plain and simple terms. It provides in effect that if a collective bargaining agreement validly exists, a petition for certification election can only be entertained within sixty (60) days prior to the expiry date of said agreement. Respondent union's petition for certification election was filed on November 25, 1987. At the time of the filing of the said petition, a valid and existing CBA was present between petitioner and Triumph International. The CBA was effective up to September 24, 1989. There is no doubt that the respondent union's CBA constituted a bar to the holding of the certification election as petitioned by the respondent union with public respondent. (see Associated Trade Unions [ATU] v. Trajano, 162 SCRA 318 [1988], Federation of Democratic Trade Union v. Pambansang Kilusan ng Paggawa, 156 SCRA 482 [1987]); Tanduay Distillery Labor Union v. National Labor Relations Commission, 149 SCRA 470 [1987]). The members of the respondent union should wait for the proper time.

The CBA in this case expired on September 24, 1989. If a new CBA with the same provisions as the old one has been executed, its terms should be amended so as to conform to the tenor of this decision. Beneco v. Calleja On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations (hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and exclusive bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification election has been conducted for the last 12 months; that there is no existing collective bargaining representative of the rank and file employees sought to represented by BWLU- ADLO; and, that there is no collective bargaining agreement in the cooperative. An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as BELU) contending that it was certified as the sole and exclusive bargaining representative of the subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending resolution by the National Labor Relations Commission are two cases it filed against BENECO involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars any representation question. BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric cooperative engaged in providing electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing because they are members and joint owners of the cooperative. On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification election. However, the med-arbiter limited the election among the rank and file employees of petitioner who are non-members thereof and without any involvement in the actual ownership of the cooperative. Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37) employees who are not members and without any involvement in the actual ownership of the cooperative. The dispositive portion of the med-arbiter's order is as follows: WHEREFORE, premises considered, a certification election should be as it is hereby ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all the rank and file employees (non-members/consumers and without any involvement in the actual ownership of the cooperative) with the following choices: 1. BENECO WORKERS LABOR UNION-ADLO 2. BENECO EMPLOYEES LABOR UNION 3. NO UNION The payroll for the month of June 1985 shall be the basis in determining the qualified voters who may participate in the certification election to be conducted.

SO ORDERED. [Rollo, pp. 22-23.] BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March 25,1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for preliminary injunction and /or restraining order, docketed as G.R. No. 74209, which the Supreme Court dismissed for lack of merit in a minute resolution dated April 28, 1986. The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO's counsel verbally manifested that "the cooperative is protesting that employees who are members-consumers are being allowed to vote when . . . they are not eligible to be members of any labor union for purposes of collective bargaining; much less, to vote in this certification election." [Rollo, p. 28]. Petitioner submitted a certification showing that only four (4) employees are not members of BENECO and insisted that only these employees are eligible to vote in the certification election. Canvass of the votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast. Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that the issue as to whether or not member-consumers who are employees of BENECO could form, assist or join a labor union has been answered in the affirmative by the Supreme Court in G.R. No. 74209, the med-arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO. Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General agreed with BENECO's stance and prayed that the petition be given due course. In view of this respondent director herself was required by the Court to file a Comment. On April 19, 1989 the Court gave due course to the petition and required the parties to submit their respective memoranda. The main issue in this case is whether or not respondent director committed grave abuse of discretion in certifying respondent BELU as the sole and exclusive bargaining representtative of the rank and file employees of BENECO. Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit." Petitioner BENECO asserts that the certification election held on October 1, 1986 was null and void since members-employees of petitioner cooperative who are not eligible to form and join a labor union for purposes of collective bargaining were allowed to vote therein. Respondent director and private respondent BELU on the other hand submit that members of a cooperative who are also rank and file employees are eligible to form, assist or join a labor union [Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99100]. The Court finds the present petition meritorious. The issue of whether or not employees of a cooperative are qualified to form or join a labor organization for purposes of collective bargaining has already been resolved and clarified in the case of Cooperative Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No. 7795, September 26,1988] and reiterated in the cases ofBatangas-Electric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386, 70880 and 74560 November 9, 1988] and San Jose City Electric Service

Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. With respect, however, to employees who are neither members nor co-owners of the cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by the 1987 Constitution and applicable statutes. Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor union of their own choice for purposes of collective bargaining would amount to a patent violation of their right to self-organization. She points out that: Albeit a person assumes a dual capacity as rank and file employee and as member of a certain cooperative does not militate, as in the instant case, against his/her exercise of the right to self-organization and to collective bargaining guaranteed by the Constitution and Labor Code because, while so doing, he/she is acting in his/her capacity as rank and file employee thereof. It may be added that while the employees concerned became members of petitioner cooperative, their status employment as rank and filers who are hired for fixed compensation had not changed. They still do not actually participate in the management of the cooperative as said function is entrusted to the Board of Directors and to the elected or appointed officers thereof. They are not vested with the powers and prerogatives to lay down and execute managerial policies; to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees; and/or to effectively recommend such managerial functions [Comment of Respondent Director, p. 4; Rollo, p. 125.] Private respondent BELU concurs with the above contention of respondent director and, additionally, claims that since membership in petitioner cooperative is only nominal, the rank and file employees who are members thereof should not be deprived of their right to self-organization. The above contentions are untenable. Contrary to respondents' claim, the fact that the membersemployees of petitioner do not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor organization for the purpose of collective bargaining with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of collective bargaining. Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the constitutional protections afforded to labor, then there would be no hindrance for employers to grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim that since their employees are not stockholders [of the corporation], albeit in a minimal and involuntary manner, they are now also co-owners and thus disqualified to form unions." To allow this, BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which the Constitution endeavors to protect and which welfare it promises to promote." [Comment of BELU, p. 10; Rollo, p. 100].

The above contention of respondent union is based on the erroneous presumption that membership in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise some of the rights and privileges given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was precisely because of the special nature of cooperatives, that the Court held in the Davao City case that members-employees thereof cannot form or join a labor union for purposes of collective bargaining. The Court held that: A cooperative ... is by its nature different from an ordinary business concern being run either by persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the number of shares owned by each member they are entitled to cast one vote each in deciding upon the affairs of the cooperative. Their share capital earn limited interest. They enjoy special privileges as-exemption from income tax and sales taxes, preferential right to supply their products to State agencies and even exemption from the minimum wage laws. An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made a specific finding that there are only thirty-seven (37) employees of petitioner who are not members of the cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form or join a labor union for purposes of collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p. 22]. However, the minutes of the certification election [Annex "C" of the Petition: Rollo, p. 28] show that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent union. Thus, even if We agree with respondent union's contention that the thirty seven (37) employees who were originally non-members of the cooperative can still vote in the certification election since they were only "forced and compelled to join the cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still null and void since even those who were already members of the cooperative at the time of the issuance of the med-arbiter's order, and therefore cannot claim that they were forced to join the union were allowed to vote in the election. Article 256 of the Labor Code provides, among others, that: To have a valid, election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit . . . [Italics supplied.] In this case it cannot be determined whether or not respondent union was duly elected by the eligible voters of the bargaining unit since even employees who are ineligible to join a labor union within the cooperative because of their membership therein were allowed to vote in the certification election. Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion in certifying respondent union as the sole and exclusive bargaining representative of the rank and file employees of petitioner cooperative.

National Multi Service Labor Union v. Agcaoili The assumption of jurisdiction by the then respondent Judge of the Court of First Instance of Manila, now Associate Justice of the Court of Appeals Mariano V. Agcaoili, 1 is assailed by petitioner Nation Multi Service Labor Union and the individual employees concerned 2 in this certiorari and prohibition proceeding, primarily on the ground that in doing so, respondent Judge acted contrary to the basic purpose of Presidential Decree No. 21 creating the now defunct National Labor Relations Commission. Its objective of assuring the effective and speedy determination of labor controversies was, so it is contended, set at naught. Petitioners find no justification in the long travail undergone by them to vindicate their rights disregarded by private respondents, needlessly prolonged. Stress is laid on the fact that the matter in controversy had been heard and passed upon first by a compulsory arbitrator, then the National Labor Relations Commission, and lastly by the Secretary of Labor. With the then respondent Judge entertaining a suit for prohibition 3 filed by private respondents, there resulted a frustration of the implementation of an order that had reached the stage of finality. For it is only the President who under such decree can overrule him. 4 That step private respondents did not take. Clearly the fruits of victory were in effect denied petitioners. Even on the assumption then that not even the presence of a legal question, one of constitutional dimension in the opinion of the then respondent Judge, could be relied upon for the exercise of the conceded judicial power to inquire into a grave abuse of discretion, it does not by any means follow that this present petition is lacking in merit. For a careful study of what had transpired would indicate that the alleged lack of procedural due process, merely because at the stage of appeal to the National Labor Relations Commission private respondents were not notified, would not suffice to justify judicial intervention. As admitted by them, they were heard by the compulsory arbitrator and by the Secretary of Labor. It is difficult to resist the conclusion that while the then respondent Judge could not be said to be devoid of competence, there is nothing in the prohibition suit filed by private respondents to warrant any further delay in the enforcement of the decision of the Secretary of Labor in favor of petitioners. They are thus entitled to the remedies prayed for. There was no denial of the factual allegations in the petition in the comment of private respondents considered as their answer. The present controversy originated from three unfair labor practice cases filed with the National Labor Relations Commission created under Presidential Decree No. 21. 5 A certain Francisco Jose was designated compulsory arbitrator. 6 Then hearings were held with private respondents presenting their respective witnesses, two of them being Eustacio Maloles and George Crame. Documentary evidence was likewise introduced. After which, on March 25, 1974, the compulsory arbitrator handed down his decision declaring respondents guilty of unfair labor practice acts, violative of Presidential Decree No. 21. 7 There was an appeal by private respondents to the National Labor Relations Commission. 8 It was fruitless. After a study of the evidence, the Commission on July 19, 1974, modified the appealed decision of the compulsory arbitrator and held that private respondents are the employers of the individual petitioners. 9 Not satisfied, private respondents elevated the matter to the Secretary of Labor. 10 Petitioners interposed an objection to such appeal as it was not under oath and was moreover filed after the reglementary period. 11 Nonetheless, the Secretary considered such appeal on its merits, reviewed the evidence on record submitted by the parties during the compulsory arbitration and promulgated a resolution dated October 23, 1974 affirming in toto the decision of the NLRC en banc specifically declaring that private respondents are the employers of herein petitioners. 12 Notwithstanding the finality of the Secretary of Labor's decision, which are appealable only to the President, under Presidential Decree No. 21, private respondents on October 26, 1974, instituted with the Court of First Instance of Manila presided over by the respondent Judge, a petition for certiorari with prayer for preliminary injunction to nullify the decision of the Secretary of Labor. 13 Then, without notice and hearing, it issued the temporary restraining order dated November 8, 1974. 14

Petitioners on the above facts, to repeat, must prevail. Even if it be conceded that the Court of First Instance is vested with jurisdiction, there was a grave abuse of discretion. Certiorari and prohibition lie. 1. Petitioners have in their favor an order from the Secretary of Labor Blas F. Ople, dated October 23, 1974. It reads thus: "Respondents, through counsel, interposed this present appeal from the Decision of the National Labor Relations Commission dated 19 July 1974, ordering respondent Ambassador Hotel, Inc. to reinstate the complainants with backwages. After a review of the records we find no sufficient reason or justification to alter or modify the Decision of the Commission appealed from, and the same is hereby [affirmed]. It may, in addition, be observed that the records clearly reflect the employer-employee relationship between the individual complainants and respondent Ambassador Hotel, Inc., gleaned from the different certifications of employment and other pertinent documents issued by Ambassador's president manager, Santiago Soliven, and its executive housekeeper, Mrs. Violeta P. Coronel. [In the light of the foregoing circumstances,] and considering the dismissal of complainants from their work by reason of their union affiliations and activities, respondent Ambassador Hotel, Inc. is hereby ordered to reinstate the complainants to their former positions with backwages. Respondent's appeal is dismissed for lack of merit and the Commission decision appealed from affirmed." 15 Under Presidential Decree No. 21, it has attained the status of finality. The appropriate step to take if private respondents were dissatisfied was to appeal to the President. So it was provided in such decree. They did not do so. It would have been executed then were it not for the action instituted in the sala of respondent Judge, who is on record as entertaining such suit only because of the vehemence with which the private respondents raised the procedural due process objection. A more careful scrutiny, however, would have yielded a different conclusion. The factual basis for a binding determination was laid before the compulsory arbitrator. He sustained petitioners, except that he did not agree that there was an employeremployee relationship between individual petitioners and private respondents. There was an appeal to the former National Labor Relations Commission. He was reversed, the finding being to the effect that there was employer-employee relationship. Then the matter was elevated to the Secretary of Labor, who, as shown above, ruled squarely and categorically in favor of petitioners. It is true that in the appeal to the National Labor Relations Commission, there was an oversight. Private respondents were not notified. That is not to be visited with fatal consequences for petitioners. At that stage, no additional factual evidence could have been introduced. The compulsory arbitrator was reversed on a question of law by the Commission. It was the ruling that he was mistaken in his appraisal of the proof offered. There was an employer-employee relationship contrary to what he did find. At any rate, private respondents still had a remedy. The Secretary of Labor was there to protect their interest assuming they had a valid grievance. An appeal was taken to him as provided in the decree. The Secretary of Labor categorically observed "that the records clearly reflect the employer-employee relationship between the individual complainants and respondent Ambassador Hotel, Inc., gleaned from the different certifications of employment and other pertinent documents issued by Ambassador's president manager, Santiago Soliven, and its executive housekeeper, Mrs. Violeta P. Coronel." 16 How can it complain then about the failure to comply with the procedural due process requirement? Only recently, inMaglasang v. Ople, 17 it was, held: "It is thus apparent that even granting the absence of any hearing at the stage of mediation and factfinding, petitioner was afforded the occasion to explain matters fully and present its controversy twice, the first time in his appeal with respondent Commission and thereafter in the review conducted by respondent Secretary of Labor. It would follow that the objection premised on lack of respect for the due process guarantee lacks support in the record." 18 Considering then the above circumstances, with private respondents having a full and unimpeded opportunity to cure any due process deficiency, its reliance on such objection is vain and futile. Such is the prevailing doctrine. Under such a view, a restraining order could have been avoided. Such an approach would be in consonance with the constitutional mandates of protection to labor 19 and social justice. 20 Petitioners

are thus entitled to the remedies of certiorari and prohibition as they have clearly made out a grave abuse of discretion. 21 2. It is also a matter of significance that there was an appeal to the President. So it is explicitly provided by the Decree. That was a remedy both adequate and appropriate. It was in line with the executive determination, after the proclamation of martial law, to leave the solution of labor disputes as much as possible to administrative agencies and correspondingly to limit judicial participation. That was to reflect a trend both here and abroad to expedite the disposition of such cases. Unfortunately, private respondents were of different persuasion. They were not above the employment of a strategem the effect of which would be to countenance evasion. The judiciary must be alert to such tactics. In the more traditional language of the law, there should be an insistence on the exhaustion of administrative remedies. 22 Lastly, from the procedural standpoint, it bears repeating that prohibition is available only if there is no remedy by appeal. 23 Such is not the case here. What other conclusion is there except that the suit for prohibition filed by private respondents with respondent Judge was bereft of support in law? 3. It is to be made clear that this decision deals specifically with a proceeding before the defunct National Labor Relations Commission. Nothing in the opinion should be construed as having reference to the procedure to be followed and the role of the courts where judicial intervention is sought in controversies passed upon by the present National Labor Relations Commission created under the new Labor Code. PAL v. CAB This Special Civil Action for Certiorari and Prohibition under Rule 65 of the Rules of Court seeks to prohibit respondent Civil Aeronautics Board from exercising jurisdiction over private respondent's Application for the issuance of a Certificate of Public Convenience and Necessity, and to annul and set aside a temporary operating permit issued by the Civil Aeronautics Board in favor of Grand International Airways (GrandAir, for brevity) allowing the same to engage in scheduled domestic air transportation services, particularly the Manila-Cebu, Manila-Davao, and converse routes. The main reason submitted by petitioner Philippine Airlines, Inc. (PAL) to support its petition is the fact that GrandAir does not possess a legislative franchise authorizing it to engage in air transportation service within the Philippines or elsewhere. Such franchise is, allegedly, a requisite for the issuance of a Certificate of Public Convenience or Necessity by the respondent Board, as mandated under Section 11, Article XII of the Constitution. Respondent GrandAir, on the other hand, posits that a legislative franchise is no longer a requirement for the issuance of a Certificate of Public Convenience and Necessity or a Temporary Operating Permit, following the Court's pronouncements in the case of Albano vs. Reyes, 1 as restated by the Court of Appeals in Avia Filipinas International vs. Civil Aeronautics Board 2 and Silangan Airways, Inc. vs. Grand International Airways, Inc., and the Hon. Civil Aeronautics Board. 3 On November 24, 1994, private respondent GrandAir applied for a Certificate of Public Convenience and Necessity with the Board, which application was docketed as CAB Case No. EP12711. 4 Accordingly, the Chief Hearing Officer of the CAB issued a Notice of Hearing setting the application for initial hearing on December 16, 1994, and directing GrandAir to serve a copy of the application and corresponding notice to all scheduled Philippine Domestic operators. On December 14, 1994, GrandAir filed its Compliance, and requested for the issuance of a Temporary Operating Permit. Petitioner, itself the holder of a legislative franchise to operate air transport services, filed an

Opposition to the application for a Certificate of Public Convenience and Necessity on December 16, 1995 on the following grounds: A. The CAB has no jurisdiction to hear the petitioner's application until the latter has first obtained a franchise to operate from Congress. B. The petitioner's application is deficient in form and substance in that: 1. The application does not indicate a route structure including a computation of trunkline, secondary and rural available seat kilometers (ASK) which shall always be maintained at a monthly level at least 5% and 20% of the ASK offered into and out of the proposed base of operations for rural and secondary, respectively. 2. It does not contain a project/feasibility study, projected profit and loss statements, projected balance sheet, insurance coverage, list of personnel, list of spare parts inventory, tariff structure, documents supportive of financial capacity, route flight schedule, contracts on facilities (hangars, maintenance, lot) etc. C. Approval of petitioner's application would violate the equal protection clause of the constitution. D. There is no urgent need and demand for the services applied for.
E. To grant petitioner's application would only result in ruinous competition contrary to Section 4(d) of R.A. 776. 5

At the initial hearing for the application, petitioner raised the issue of lack of jurisdiction of the Board to hear the application because GrandAir did not possess a legislative franchise. On December 20, 1994, the Chief Hearing Officer of CAB issued an Order denying petitioner's Opposition. Pertinent portions of the Order read: PAL alleges that the CAB has no jurisdiction to hear the petitioner's application until the latter has first obtained a franchise to operate from Congress. The Civil Aeronautics Board has jurisdiction to hear and resolve the application. In Avia Filipina vs.CAB, CA G.R. No. 23365, it has been ruled that under Section 10 (c) (I) of R.A. 776, the Board possesses this specific power and duty. In view thereof, the opposition of PAL on this ground is hereby denied. SO ORDERED. Meantime, on December 22, 1994, petitioner this time, opposed private respondent's application for a temporary permit maintaining that: 1. The applicant does not possess the required fitness and capability of operating the services applied for under RA 776; and,

2. Applicant has failed to prove that there is clear and urgent public need for the services applied for. 6

On December 23, 1994, the Board promulgated Resolution No. 119(92) approving the issuance of a Temporary Operating Permit in favor of Grand Air 7 for a period of three months, i.e., from December 22, 1994 to March 22, 1994. Petitioner moved for the reconsideration of the issuance of the Temporary Operating Permit on January 11, 1995, but the same was denied in CAB Resolution No. 02 (95) on February 2, 1995. 8 In the said Resolution, the Board justified its assumption of jurisdiction over GrandAir's application. WHEREAS , the CAB is specifically authorized under Section 10-C (1) of Republic Act No. 776 as follows: (c) The Board shall have the following specific powers and duties: (1) In accordance with the provision of Chapter IV of this Act, to issue, deny, amend revise, alter, modify, cancel, suspend or revoke, in whole or in part, upon petitionercomplaint, or upon its own initiative, any temporary operating permit or Certificate of Public Convenience and Necessity; Provided, however; that in the case of foreign air carriers, the permit shall be issued with the approval of the President of the Republic of the Philippines. WHEREAS, such authority was affirmed in PAL vs. CAB, (23 SCRA 992), wherein the Supreme Court held that the CAB can even on its own initiative, grant a TOP even before the presentation of evidence; WHEREAS, more recently, Avia Filipinas vs. CAB, (CA-GR No. 23365), promulgated on October 30, 1991, held that in accordance with its mandate, the CAB can issue not only a TOP but also a Certificate of Public Convenience and Necessity (CPCN) to a qualified applicant therefor in the absence of a legislative franchise, citing therein as basis the decision of Albano vs. Reyes (175 SCRA 264) which provides (inter alia) that: a) Franchises by Congress are not required before each and every public utility may operate when the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of certain public utilities; b) The Constitutional provision in Article XII, Section 11 that the issuance of a franchise, certificate or other form of authorization for the operation of a public utility does not necessarily imply that only Congress has the power to grant such authorization since our statute books are replete with laws granting specified agencies in the Executive Branch the power to issue such authorization for certain classes of public utilities. WHEREAS, Executive Order No. 219 which took effect on 22 January 1995, provides in Section 2.1 that a minimum of two (2) operators in each route/link shall be encouraged and that routes/links presently serviced by only one (1) operator shall be open for entry to additional operators. RESOLVED, (T)HEREFORE, that the Motion for Reconsideration filed by Philippine Airlines on January 05, 1995 on the Grant by this Board of a Temporary Operating Permit (TOP) to Grand International Airways, Inc. alleging among others that the

CAB has no such jurisdiction, is hereby DENIED, as it hereby denied, in view of the foregoing and considering that the grounds relied upon by the movant are not indubitable. On March 21, 1995, upon motion by private respondent, the temporary permit was extended for a period of six (6) months or up to September 22, 1995. Hence this petition, filed on April 3, 1995. Petitioners argue that the respondent Board acted beyond its powers and jurisdiction in taking cognizance of GrandAir's application for the issuance of a Certificate of Public Convenience and Necessity, and in issuing a temporary operating permit in the meantime, since GrandAir has not been granted and does not possess a legislative franchise to engage in scheduled domestic air transportation. A legislative franchise is necessary before anyone may engage in air transport services, and a franchise may only be granted by Congress. This is the meaning given by the petitioner upon a reading of Section 11, Article XII, 9 and Section 1, Article VI, 10 of the Constitution. To support its theory, PAL submits Opinion No. 163, S. 1989 of the Department of Justice, which reads: Dr. Arturo C. Corona Executive Director Civil Aeronautics Board PPL Building, 1000 U.N. Avenue Ermita, Manila Sir: This has reference to your request for opinion on the necessity of a legislative franchise before the Civil Aeronautics Board ("CAB") may issue a Certificate of Public Convenience and Necessity and/or permit to engage in air commerce or air transportation to an individual or entity. You state that during the hearing on the application of Cebu Air for a congressional franchise, the House Committee on Corporations and Franchises contended that under the present Constitution, the CAB may not issue the abovestated certificate or permit, unless the individual or entity concerned possesses a legislative franchise. You believe otherwise, however, for the reason that under R.A. No. 776, as amended, the CAB is explicitly empowered to issue operating permits or certificates of public convenience and necessity and that this statutory provision is not inconsistent with the current charter. We concur with the view expressed by the House Committee on Corporations and Franchises. In an opinion rendered in favor of your predecessor-in-office, this Department observed that, . . . it is useful to note the distinction between the franchise to operate and a permit to commence operation. The former is sovereign and legislative in nature; it can be conferred only by the lawmaking authority (17 W and P, pp. 691-697). The latter is administrative and regulatory in character (In re Application of Fort Crook-Bellevue Boulevard Line, 283 NW 223); it is granted by an administrative agency, such as the Public Service Commission [now Board of Transportation], in the case of land

transportation, and the Civil Aeronautics Board, in case of air services. While a legislative franchise is a pre-requisite to a grant of a certificate of public convenience and necessity to an airline company, such franchise alone cannot constitute the authority to commence operations, inasmuch as there are still matters relevant to such operations which are not determined in the franchise, like rates, schedules and routes, and which matters are resolved in the process of issuance of permit by the administrative. (Secretary of Justice opn No. 45, s. 1981) Indeed, authorities are agreed that a certificate of public convenience and necessity is an authorization issued by the appropriate governmental agency for the operation of public services for which a franchise is required by law (Almario, Transportation and Public Service Law, 1977 Ed., p. 293; Agbayani, Commercial Law of the Phil., Vol. 4, 1979 Ed., pp. 380-381). Based on the foregoing, it is clear that a franchise is the legislative authorization to engage in a business activity or enterprise of a public nature, whereas a certificate of public convenience and necessity is a regulatory measure which constitutes the franchise's authority to commence operations. It is thus logical that the grant of the former should precede the latter. Please be guided accordingly. (SGD.) SEDFR EY A. ORDO NEZ Secret ary of Justice Respondent GrandAir, on the other hand, relies on its interpretation of the provisions of Republic Act 776, which follows the pronouncements of the Court of Appeals in the cases of Avia Filipinas vs. Civil Aeronautics Board, andSilangan Airways, Inc. vs. Grand International Airways (supra). In both cases, the issue resolved was whether or not the Civil Aeronautics Board can issue the Certificate of Public Convenience and Necessity or Temporary Operating Permit to a prospective domestic air transport operator who does not possess a legislative franchise to operate as such. Relying on the Court's pronouncement in Albano vs.Reyes (supra), the Court of Appeals upheld the authority of the Board to issue such authority, even in the absence of a legislative franchise, which authority is derived from Section 10 of Republic Act 776, as amended by P.D. 1462. 11 The Civil Aeronautics Board has jurisdiction over GrandAir's Application for a Temporary Operating Permit. This rule has been established in the case of Philippine Air Lines Inc., vs. Civil Aeronautics Board, promulgated on June 13, 1968. 12 The Board is expressly authorized by Republic Act 776 to issue a temporary operating permit or Certificate of Public Convenience and Necessity, and nothing contained in the said law negates the power to issue said permit before the completion of the applicant's evidence and that of the oppositor thereto on the main petition. Indeed, the CAB's authority to grant a temporary permit "upon its own initiative" strongly suggests the power to exercise said authority, even before the presentation of said evidence has begun. Assuming arguendothat a legislative franchise is prerequisite to the issuance of a permit, the absence of the same does not

affect the jurisdiction of the Board to hear the application, but tolls only upon the ultimate issuance of the requested permit. The power to authorize and control the operation of a public utility is admittedly a prerogative of the legislature, since Congress is that branch of government vested with plenary powers of legislation.
The franchise is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities. The grant, when made, binds the public, and is, directly or indirectly, the act of the state. 13

The issue in this petition is whether or not Congress, in enacting Republic Act 776, has delegated the authority to authorize the operation of domestic air transport services to the respondent Board, such that Congressional mandate for the approval of such authority is no longer necessary. Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts. 14 It is generally recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative nature. 15 In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the Legislature. 16 The trend of modern legislation is to vest the Public Service Commissioner with the power to regulate and control the operation of public services under reasonable rules and regulations, and as a general rule, courts will not interfere with the exercise of that discretion when it is just and reasonable and founded upon a legal right. 17 It is this policy which was pursued by the Court in Albano vs. Reyes. Thus, a reading of the pertinent issuances governing the Philippine Ports Authority, 18 proves that the PPA is empowered to undertake by itself the operation and management of the Manila International Container Terminal, or to authorize its operation and management by another by contract or other means, at its option. The latter power having been delegated to the to PPA, a franchise from Congress to authorize an entity other than the PPA to operate and manage the MICP becomes unnecessary. Given the foregoing postulates, we find that the Civil Aeronautics Board has the authority to issue a Certificate of Public Convenience and Necessity, or Temporary Operating Permit to a domestic air transport operator, who, though not possessing a legislative franchise, meets all the other requirements prescribed by the law. Such requirements were enumerated in Section 21 of R.A. 776. There is nothing in the law nor in the Constitution, which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator. Although Section 11 of Article XII recognizes Congress' control over any franchise, certificate or authority to operate a public utility, it does not mean Congress has exclusive authority to issue the same. Franchises issued by Congress are not required before each and every public utility may operate. 19 In many instances, Congress has seen it fit to delegate this function to government agencies, specialized particularly in their respective areas of public service. A reading of Section 10 of the same reveals the clear intent of Congress to delegate the authority to regulate the issuance of a license to operate domestic air transport services:

Sec. 10. Powers and Duties of the Board. (A) Except as otherwise provided herein, the Board shall have the power to regulate the economic aspect of air transportation, and shall have general supervision and regulation of, the jurisdiction and control over air carriers, general sales agents, cargo sales agents, and air freight forwarders as well as their property rights, equipment, facilities and franchise, insofar as may be necessary for the purpose of carrying out the provision of this Act. In support of the Board's authority as stated above, it is given the following specific powers and duties: (C) The Board shall have the following specific powers and duties: (1) In accordance with the provisions of Chapter IV of this Act, to issue, deny, amend, revise, alter, modify, cancel, suspend or revoke in whole or in part upon petition or complaint or upon its own initiative any Temporary Operating Permit or Certificate of Public Convenience and Necessity: Provided however, That in the case of foreign air carriers, the permit shall be issued with the approval of the President of the Republic of the Philippines. Petitioner argues that since R.A. 776 gives the Board the authority to issue "Certificates of Public Convenience and Necessity", this, according to petitioner, means that a legislative franchise is an absolute requirement. It cites a number of authorities supporting the view that a Certificate of Public Convenience and Necessity is issued to a public service for which a franchise is required by law, as distinguished from a "Certificate of Public Convenience" which is an authorization issued for the operation of public services for which no franchise, either municipal or legislative, is required by law. 20 This submission relies on the premise that the authority to issue a certificate of public convenience and necessity is a regulatory measure separate and distinct from the authority to grant a franchise for the operation of the public utility subject of this particular case, which is exclusively lodged by petitioner in Congress. We do not agree with the petitioner. Many and varied are the definitions of certificates of public convenience which courts and legal writers have drafted. Some statutes use the terms "convenience and necessity" while others use only the words "public convenience." The terms "convenience and necessity", if used together in a statute, are usually held not to be separable, but are construed together. Both words modify each other and must be construed together. The word 'necessity' is so connected, not as an additional requirement but to modify and qualify what might otherwise be taken as the strict significance of the word necessity. Public convenience and necessity exists when the proposed facility will meet a reasonable want of the public and supply a need which the existing facilities do not adequately afford. It does not mean or require an actual physical necessity or an indispensable thing. 21
The terms "convenience" and "necessity" are to be construed together, although they are not synonymous, and effect must be given both. The convenience of the public must not be circumscribed by according to the word "necessity" its strict meaning or an essential requisites. 22

The use of the word "necessity", in conjunction with "public convenience" in a certificate of authorization to a public service entity to operate, does not in any way modify the nature of such

certification, or the requirements for the issuance of the same. It is the law which determines the requisites for the issuance of such certification, and not the title indicating the certificate. Congress, by giving the respondent Board the power to issue permits for the operation of domestic transport services, has delegated to the said body the authority to determine the capability and competence of a prospective domestic air transport operator to engage in such venture. This is not an instance of transforming the respondent Board into a mini-legislative body, with unbridled authority to choose who should be given authority to operate domestic air transport services.
To be valid, the delegation itself must be circumscribed by legislative restrictions, not a "roving commission" that will give the delegate unlimited legislative authority. It must not be a delegation "running riot" and "not canalized with banks that keep it from overflowing." Otherwise, the delegation is in legal effect an abdication of legislative authority, a total surrender by the legislature of its prerogatives in favor of the delegate. 23

Congress, in this instance, has set specific limitations on how such authority should be exercised. Firstly, Section 4 of R.A. No. 776, as amended, sets out the following guidelines or policies: Sec. 4. Declaration of policies. In the exercise and performance of its powers and duties under this Act, the Civil Aeronautics Board and the Civil Aeronautics Administrator shall consider the following, among other things, as being in the public interest, and in accordance with the public convenience and necessity: (a) The development and utilization of the air potential of the Philippines; (b) The encouragement and development of an air transportation system properly adapted to the present and future of foreign and domestic commerce of the Philippines, of the Postal Service and of the National Defense; (c) The regulation of air transportation in such manner as to recognize and preserve the inherent advantages of, assure the highest degree of safety in, and foster sound economic condition in, such transportation, and to improve the relations between, and coordinate transportation by, air carriers; (d) The promotion of adequate, economical and efficient service by air carriers at reasonable charges, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; (e) Competition between air carriers to the extent necessary to assure the sound development of an air transportation system properly adapted to the need of the foreign and domestic commerce of the Philippines, of the Postal Service, and of the National Defense; (f) To promote safety of flight in air commerce in the Philippines; and, (g) The encouragement and development of civil aeronautics. More importantly, the said law has enumerated the requirements to determine the competency of a prospective operator to engage in the public service of air transportation.

Sec. 12. Citizenship requirement. Except as otherwise provided in the Constitution and existing treaty or treaties, a permit authorizing a person to engage in domestic air commerce and/or air transportation shall be issued only to citizens of the Philippines 24

Sec. 21. Issuance of permit. The Board shall issue a permit authorizing the whole or any part of the service covered by the application, if it finds: (1) that the applicant is fit, willing and able to perform such service properly in conformity with the provisions of this Act and the rules, regulations, and requirements issued thereunder; and (2) that such service is required by the public convenience and necessity; otherwise the application shall be denied. Furthermore, the procedure for the processing of the application of a Certificate of Public Convenience and Necessity had been established to ensure the weeding out of those entities that are not deserving of public service. 25 In sum, respondent Board should now be allowed to continue hearing the application of GrandAir for the issuance of a Certificate of Public Convenience and Necessity, there being no legal obstacle to the exercise of its jurisdiction. Quintos v. National Stud Farm In this case certified to us by a resolution of the Court of Appeals 1 on the ground that the appeal from an order of dismissal by the lower court "is beyond[its] competent jurisdiction ... considering that, as correctly pointed out by defendants-appellees National Stud Farm and its Board of Trustees in their comment ... "what is involved here is a pure legal question", and that is whether or not the lower court erred in dismissing appellant's complaint for failure to exhaust administrative remedies." 2 Such a principle is, of course, of compelling force in this jurisdiction. 3 But there are exceptions, one of them being the invocation of the due process clause which is precisely the basis from the judicial review sought by plaintiff before the lower court. While his stand was put forth with vigor and plausibility in the memorandum of his counsel, 4 still the point-by-point refutation of his arguments by Solicitor General Estelito P. Mendoza 5 and deference to controlling principles of administrative law in terms of primary jurisdiction and ripeness of review call for the affirmance of the appealed judgment. So we rule. The basis for the complaint by plaintiff, now appellant, Eduardo Quintos, Jr., before the lower court 6 was set forth therein thus. "2. That Plaintiff is the legitimate owner of a race horse named "King's Toss" which was duly and officially registered on February 17, 1970 with defendant National Stud Farm and which certificate of Registration No. 002426 was issued by said defendant for said race horse, thereby acknowledging it to participate in horse races and sweepstakes draws that were held and are being held in legally authorized racing, clubs or tracks ...; 3. That the race horse "King's Toss" by virtue of its official registration as such, has since participated or taken part in horse races and sweepstakes draws starting with its debut on March 15, 1970 up to June 11, 1972; 4. That in line with the standard operating procedure and usual racing practices for horse owners to apply for and submit the names of race horses for inclusion in a particular race at least three days, the plaintiff on June 13, 1972 applied for and submitted the name of his race horse "King's Toss" to the defendant Philippine Racing Club, Inc., at Makati, Rizal, for either the races programmed for June 17, or 18, 1972, which application was duly accepted [and] approved by said defendant, consequent to which race horse "King's Toss" was declared eligible to participate [and] take part in the actual race that was conducted on June 17, 1972, more particularly in Race No. 15 thereof, resulting in the inclusion of said race horse in the racing list or program "Lucky Choice" for the scheduled race on June 17, 1972 ...; 5. That on June 17, 1972, the very day when plaintiff's race horse "King's Toss" was scheduled to participate in race No. 15 at the racing tracks of defendant Philippine Racing Club,

Inc., an announcement was made through the public address system before the start of Race 13 that plaintiff's race horse "King's Toss" is being scratched or excluded from taking part in Race 15 where it is supposed to run that racing day ... ." 7 It was then alleged that such withdrawal or cancellation of the certificate of registration of plaintiffs race horse was arbitrary and oppressive, due process being denied him in the absence of a formal investigation or inquiry prior thereto. 8 Such actuation was characterized by plaintiff as not only amounting to defendant National Stud Farm and its Board of Trustees gravely abusing its discretion, but also exceeding "its legitimate function and authority [thus resulting in] lack of jurisdiction, ... ." 9 There was an answer filed on behalf of the aforesaid defendants by the Solicitor General wherein the special defenses of immunity from suit as well as the lack of cause of action and the failure to exhaust administrative remedies were interposed. As noted at the outset, the lower court, in its order of October 9, 1972, dismissed the complaint primarily on the ground of lack of exhaustion of administrative remedies. Thus: "The Court is convinced that Quinto's instant complaint was prematurely instituted. His administrative remedy is to ask the Board of Trustees of National Stud Farm to reconsider its resolution cancelling the certificate of registration of "King's Toss" and in case the reconsideration is denied, to appeal to the Games and Amusements Board or to the Office of the President of the Philippines." 10 As noted at the outset, the order of dismissal based on non exhaustion of administrative remedies is invulnerable to attack. We therefore affirm. 1. Plaintiff is not unaware of the impress of authoritativeness affixed to the basic principle of administrative remedies having to be fully utilized before resort to courts is allowable. Nonetheless, he would seek its operation in the case at hand by the invocation of the alleged denial of due process. It is to be admitted that under certain circumstances, such a plea would not go unheeded because of the inadequacy of the remedy that could be supplied administratively. Before its invocation, however, is to be accorded a degree of plausibility, it must first be ascertained whether from the standpoint of what still could be done by the higher authorities in the Executive branch, plaintiff would really have a valid cause for complaint. The Solicitor General, in his comment certainly disputed such a claim. He would hit a grave inaccuracy in the allegation that there was lack of notice of the investigation conducted by defendant National Stud Farm, there being two letters requiring him to answer the complaint of a certain Mr. Elwick Jr. sent to him, one by regular mail on December 18, 1970 and the other by registered mail on February 5, 1971. With the presumption that the sending thereof ordinarily is followed by their receipt, the assertion, as he pointed out, was far from persuasive. 11 Plaintiff, moreover, did know of the cancellation of the registration papers of his race horse on June 17, 1970, but he next moved for a reconsideration thereof prior to his going to court on June 21 of that year. 12 Even without according due weight to the allegation that protection of public interest did require such cancellation, a step that can be taken without a hearing, the additional argument offered in such comment as to the exhaustion of administrative remedies not being procedurally impossible does commend itself for approval thus: "Appellant's allegation that he could not have appealed to the Executive Secretary at the time he filed his complaint in the lower court on June 21, 1972 is also inaccurate. There is no question that on June 17, 1972, appellant already had knowledge of the revocation of the certificate of registration of his race horse. This is admitted in paragraph 5 of, the Complaint of appellant, ... . Despite this knowledge on June 17, 1972, appellant did not appeal the resolution in question to the Executive Secretary. Instead he premature instituted a suit in court for damages. The reason for this short circuiting of administrative processes is not explained by appellant. He gives no reason for his failure to exhaust administrative remedies. Indeed there is none." 13 The order of dismissal therefore, cannot considered as being in derrogation of the due process guarantee. 2. What further lends support to the decision now on appeal is that the failure to apply such a basic concept as exhaustion of administrative remedies would be attended with consequences adverse to

such equally well-settled postulates in administrative law of primary jurisdiction and ripeness of review. It is true that the doctrine of primary jurisdiction 14 or prior resort 15 goes no further than to determine whether it is the court or the agency that should make the initial decision. 16 Parker, in his text, would put the matter thus: "The fact that a governmental authority is empowered to deal with a given type of matter gives rise to a presumption that it has exclusive jurisdiction over the matter. If the law delegates A to make decisions this means that in dubio B is not so delegated." 17 Davis clarifies the point in this wise: "The precise function of the doctrine of primary jurisdiction is to guide a court in determining whether the court should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court." 18 The important thing is that the dispute be determined according to the judgment, in the language of an American Supreme Court decision, "of a tribunal appointed by law and informed by experience." 19 In this particular case, as pointed out by the Solicitor General even prior to the Executive Secretary, the question could have been resolved in a manner satisfactory to the parties if the Games and Amusements Board which certainly had the necessary qualifications to view its manifold aspects were appealed to. When, therefore, as was likewise adverted to by the Solicitor General, the judicial forum was sought by plaintiff, there was in effect an unwarranted disregard of the concept of primary jurisdiction. In the traditional language of administrative law, the stage of ripeness for judicial review had not been reached. 20 As so well put by another authoritative treatise writer, Jaffe, that would be to ignore factors not predetermined "by formula but by seasoned balancing [thereof] for and against the assumption of jurisdiction." 21All that had been said so far would seem to indicate that under such a test, the lower court's insistence on the observance of the fundamental requirement of exhausting administrative remedies is more than justified. WHEREFORE, the order of dismissal of the lower court of October 9, 1972 is affirmed. With costs against plaintiff-appellant.