[G.R. No. 131235. November 16, 1999] UST FACULTY UNION (USTFU vs. Dir. BENEDICTO ERNESTO R.

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

The Petition for Certiorari before us assails the August 15, 1997 Resolution [2] of Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the election of USTFU officers conducted on October 4, 1996 and its election results as null and void ab initio. Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist from acting and performing the duties and functions of the legitimate officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant to [the] unions constitution and by-laws (CBL). The Temporary Restraining Order (TRO ) issued by this Office on December 11, 1996 in connection with the instant petition, is hereby made and declared permanent. [3] Likewise challenged is the October 30, 1997 Resolution [4]of Director Bitonio, which denied petitioners Motion for Reconsideration.
The Facts

The factual antecedents of the case are summarized in the assailed Resolution as follows: Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-year Collective Bargaining Agreement with its employer, the University of Santo Tomas (UST). The CBA was registered with the Industrial Relations Division, DOLE-NCR, on 20 February 1995. It is set to expire on 31 May 1998. On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU, posted a notice addressed to all USTFU members announcing a general assembly to be held on 05 October 1996. Among others, the general assembly was called to elect USTFUs next set of officers. Through the notice, the members were also informed of the constitution of a Committee on Elections (COMELEC) to oversee the elections. (Annex B, petition) On 01 October 1996, some of herein appellants filed a separate petition with the Med-Arbiter, DOLENCR, directed against herein appellees and the members of the COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the petition alleged that the COMELEC was not constituted in accordance with USTFUs constitution and by-laws (CBL) and that no rules had been issued to govern the conduct of the 05 October 1996 election.

On 02 October 1996, the secretary general of UST, upon the request of the various UST faculty club presidents (See paragraph VI, Respondents Comment and Motion to Dismiss), issued notices allowing all faculty members to hold a convocation on 04 October 1996 (See Annex C Petition; Annexes 4 to 10, Appeal). Denominated as [a] general faculty assembly, the convocation was supposed to discuss the state of the unratified UST-USTFU CBA and status and election of USTFU officers (Annex 11, Appeal) On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary restraining order against herein appellees enjoining them from conducting the election scheduled on 05 October 1996. Also on 04 October 1996, and as earlier announced by the UST secretary general, the general faculty assembly was held as scheduled. The general assembly was attended by members of the USTFU and, as admitted by the appellants, also by 'non-USTFU members [who] are members in good standing of the UST Academic Community Collective Bargaining Unit' (See paragraph XI, Respondents Comment and Motion to Dismiss). On this occasion, appellants were elected as USTFUs new set of officers by acclamation and clapping of hands (See paragraphs 40 to 50, Annex '12', Appeal). The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not a member of USTFU, that the USTFU CBL and 'the rules of the election be suspended and that the election be held [on] that day' (See --paragraph 39, Idem.) On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the nullification of the results of the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary restraining order issued in Case No. NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the election as spurious for being violative of USTFUs CBL, specifically because the general assembly resulting in the election of appellants was not called by the Board of Officers of the USTFU; there was no compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the supposed elections were conducted without a COMELEC being constituted by the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were not by secret balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly was convened by faculty members some of whom were not members of USTFU, so much so that non-USTFU members were allowed to vote in violation of Section 1, Article V of the CBL. On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary restraining order, this time alleging that appellants had served the former a notice to vacate the union office. For their part, appellants moved to dismiss the original petition and the subsequent motion on jurisdictional grounds. Both the petition and the motion were captioned to be for Prohibition, Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order. According to the appellants, the med-arbiter has no jurisdiction over petitions for prohibition, 'including the ancillary remedies of restraining order and/or preliminary injunction, which are merely incidental to the main petition for PROHIBITION' (Paragraph XVIII3, Respondents Comment and Motion to Dismiss). Appellants also averred that they now constituted the new set of union officers having been elected in accordance with law after the term of office of appellees had expired. They further maintained that appellees scheduling of the 5 October 1996 elections was illegal because no rules and regulations governing the elections were promulgated as required by USTFUs CBL and that one of the members of the COMELEC was not a registered member of USTFU. Appellants likewise noted that the elections called by the appellees should have been postponed to allow the promulgation of rules and regulations and to 'insure a free, clean, honest and orderly elections and to afford at the same time the greater majority of the general membership to participate' (See paragraph V, Idem). Finally, appellants contended that the holding of the general faculty assembly on 04 October 1996 was under the control of the Council of College/Faculty Club Presidents in cooperation with the USTFU Reformist Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996.

On 03 December 1996, appellants and UST allegedly entered into another CBA covering the period from 01 June 1996 to 31 May 2001 (Annex 11, appellants Rejoinder to the Reply and Opposition). Consequently, appellees again moved for the issuance of a temporary restraining order to prevent appellants from making further representations that [they] had entered into a new agreement with UST. Appellees also reiterated their earlier stand that appellants were usurping the formers duties and functions and should be stopped from continuing such acts. On 11 December 1996, over appellants insistence that the issue of jurisdiction should first be resolved, the med-arbiter issued a temporary restraining order directing the respondents to cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors of USTFU. In the meantime, appellants claimed that the new CBA was purportedly ratified by an overwhelming majority of USTs academic community on 12 December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what it denominated as appellees petition for prohibition on the ground that this had become moot and academic. [5] Petitioners appealed the med-arbiters Decision to the labor secretary, [6] who transmitted the records of the case to the Bureau of Labor Relations which, under Department Order No. 9, was authorized to resolve appeals of intra-union cases, consistent with the last paragraph of Article 241 of the Labor Code.[7]
The Assailed Ruling

Agreeing with the med-arbiter that the USTFU officers purported election held on October 4, 1994 was void for having been conducted in violation of the unions Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners contention that it was a legitimate exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union and its members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had not been convened or authorized by the USTFU. Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by the recognition of the newly elected set of officers by UST or by the alleged ratification of the new CBA by the general membership of the USTFU. Ruled Respondent Bitonio: "This submission is flawed. The issue at hand is not collective bargaining representation but union leadership, a matter that should concern only the members of USTFU. As pointed out by the appellees, the privilege of determining who the union officers will be belongs exclusively to the members of the union. Said privilege is exercised in an election proceeding in accordance with the union's CBL and applicable law. To accept appellants' claim to legitimacy on the foregoing grounds is to invest in appellants the position, duties, responsibilities, rights and privileges of USTFU officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit the employer from interfering with the employees in the latter' exercise of their right to self-organization. To allow appellants to become USTFU officers on the strength of management's recognition of them is to concede to the employer the power of determining who should be USTFU's leaders. This is a clear case of interference in the exercise by USTFU members of their right to self-organization.[8] Hence, this Petition.[9]
The Issues

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

(1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right in that General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding the elections of officers of the union[.] (2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty Assembly is valid pursuant to the constitutional right of the Collective Bargaining Unit to engage in peaceful concerted activities for the purpose of ousting the corrupt regime of the private respondents[.] (3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in behalf of the USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity of the suspension of the Constitution and By-Laws and the elections of October 4, 1996 in the General Faculty Assembly[.]
The Courts Ruling

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

At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma [11] has held that challenges against rulings of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the memoranda in the instant case have been filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to resolve the present controversy directly, instead of remanding it to the Court of Appeals. Having disposed of the foregoing procedural matter, we now tackle the issues in the present case seriatim. Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. [12] Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union.[13] Corollary to this right is the prerogative not to join, affiliate with or assist a labor union.[14] Therefore, to become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. The procedure for union membership is usually embodied in the unions constitution and bylaws. [15] An employee who becomes a union member acquires the rights and the concomitant obligations that go with this new status and becomes bound by the unions rules and regulations. When a man joins a labor union (or almost any other democratically controlled group), necessarily a portion of his individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the members in order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a union dislikes the provisions of the by-laws, he may seek to have them amended or may withdraw from the union; otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-laws of a trade union. On joining a labor union, the constitution and by-laws become a part of the members contract of membership under which he agrees to become bound by the constitution and governing rules of the union so far as it is not inconsistent with controlling principles of law. The constitution and by-laws of an unincorporated trade union express the terms of a contract, which define the privileges and rights secured to, and duties assumed by, those who have become members. The agreement of a member on joining a union to abide by its laws and comply with the will of the lawfully constituted majority

does not require a member to submit to the determination of the union any question involving his personal rights.[16] Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latters incumbency impelled the October 4, 1996 election of the new set of USTFU officers. They assert that such exercise was pursuant to their right to self-organization. Petitioners frustration over the performance of private respondents, as well as their fears of a fraudulent election to be held under the latters supervision, could not justify the method they chose to impose their will on the union. Director Bitonio aptly elucidated:[17] The constitutional right to self-organization is better understood in the context of ILO Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention provides that workers organizations shall have the right to draw up their constitution and rules and to elect their representatives in full freedom, free from any interference from public authorities. The freedom conferred by the provision is expansive; the responsibility imposed on union members to respect the constitution and rules they themselves draw up equally so. The point to be stressed is that the unions CBL is the fundamental law that governs the relationship between and among the members of the union. It is where the rights, duties and obligations, powers, functions and authority of the officers as well as the members are defined. It is the organic law that determines the validity of acts done by any officer or member of the union. Without respect for the CBL, a union as a democratic institution degenerates into nothing more than a group of individuals governed by mob rule.
Union Election vs. Certification Election

A union election is held pursuant to the unions constitution and bylaws, and the right to vote in it is enjoyed only by union members. A union election should be distinguished from a certification election, which is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective bargaining.[18] Specifically, the purpose of a certification election is to ascertain whether or not a majority of the employees wish to be represented by a labor organization and, in the affirmative case, by which particular labor organization.[19] In a certification election, all employees belonging to the appropriate bargaining unit can vote.[20] Therefore, a union member who likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the reverse is not always true; an employee belonging to the appropriate bargaining unit but who is not a member of the union cannot vote in the union election, unless otherwise authorized by the constitution and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-union activity. In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot properly be called a union election, because the procedure laid down in the USTFUs CBL for the election of officers was not followed. It could not have been a certification election either, because representation was not the issue, and the proper procedure for such election was not followed. The participation of non-union members in the election aggravated its irregularity.
Second Issue: USTFUs Constitution and ByLaws Violated

The importance of a unions constitution and bylaws cannot be overemphasized. They embody a covenant between a union and its members and constitute the fundamental law governing the members rights and obligations. [21] As such, the unions constitution and bylaws should be upheld, as long as they are not contrary to law, good morals or public policy. We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the October 4, 1996 election was tainted with irregularities because of the following reasons. First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas. [22] It was not convened in accordance with the provision on general membership meetings as found in the USTFUs CBL, which reads:

ARTICLE VIII-MEETINGS OF THE UNION Section months. to such notices. 1. The Union shall hold regular general membership meetings at least once every three (3) Notices of the meeting shall be sent out by the Secretary-General at least ten (10) days prior meetings by posting in conspicuous places, preferably inside Company premises, said The date, time and place for the meetings shall be determined by the Board of Officers. [23]

Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was called and participated in by management and non-union members. By no legal fiat was such assembly transformed into a union activity by the participation of some union members. Second, there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the USTFUs CBL, which provide: ARTICLE IX - UNION ELECTION Section 1. There shall be a Committee on Election (COMELEC) to be created by the Board of Officers at least thirty (30) days before any regular or special election. The functions of the COMELEC include the following: a) b) c) d) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly election, whether regular or special; Pass upon qualifications of candidates; Rule on any question or protest regarding the conduct of the election subject to the procedure that may be promulgated by the Board of Officers; and Proclaim duly elected officers. Section 2. The COMELEC shall be composed of a chairman and two members all of whom shall be appointed by the Board of Officers. xxx xxx xxx[24] Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFUs CBL, as well as Article 241 (c) of the Labor Code. The foregoing infirmities considered, we cannot attribute grave abuse of discretion to Director Bitonios finding and conclusion. In Rodriguez v. Director, Bureau of Labor Relations,[25] we invalidated the local union elections held at the wrong date without prior notice to members and conducted without regard for duly prescribed ground rules. We held that the proceedings were rendered void by the lack of due process -- undue haste, lack of adequate safeguards to ensure integrity of the voting, and the absence of the notice of the dates of balloting.
Third Issue: Suspension of USTFUs CBL

Petitioners contend that the October 4, 1996 assembly suspended the unions CBL. They aver that the suspension and the election that followed were in accordance with their constituent and residual powers as members of the collective bargaining unit to choose their representatives for purposes of collective bargaining. Again they cite the numerous anomalies allegedly committed by the private respondents as USTFU officers. This argument does not persuade. First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming union members, since they represented management. Thus, Director Bitonio correctly observed: Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson Labor Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a unions full freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not members of the union. The democratic principle that governance is a matter for the governed to decide upon applies to the labor movement which, by law and constitutional mandate, must be assiduously insulated

against intrusions coming from both the employer and complete strangers if the 'protection to labor clause' of the constitution is to be guaranteed. By appellants own evidence, the general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was attended by members and nonmembers alike, and therefore was not a forum appropriate for transacting union matters. The person who moved for the suspension of USTFUs CBL was not a member of USTFU. Allowing a non-union member to initiate the suspension of a unions CBL, and non-union members to participate in a union election on the premise that the unions CBL had been suspended in the meantime, is incompatible with the freedom of association and protection of the right to organize. If there are members of the so-called academic community collective bargaining unit who are not USTFU members but who would nevertheless want to have a hand in USTFUs affairs, the appropriate procedure would have been for them to become members of USTFU first. The procedure for membership is very clearly spelled out in Article IV of USTFUs CBL. Having become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that if a member of the union dislikes the provisions of the by-laws he may seek to have them amended or may withdraw from the union; otherwise he must abide by them. Under Article XVII of USTFUs CBL, there is also a specific provision for constitutional amendments. What is clear therefore is that USTFUs CBL provides for orderly procedures and remedies which appellants could have easily availed [themselves] of instead of resorting to an exercise of their so-called residual power'.[26] Second, the grievances of the petitioners could have been brought up and resolved in accordance with the procedure laid down by the unions CBL [27]and by the Labor Code.[28] They contend that their sense of desperation and helplessness led to the October 4, 1996 election. However, we cannot agree with the method they used to rectify years of inaction on their part and thereby ease bottled-up frustrations, as such method was in total disregard of the USTFUs CBL and of due process. The end never justifies the means. We agree with the solicitor generals observation that the act of suspending the constitution when the questioned election was held is an implied admission that the election held on that date [October 4, 1996] could not be considered valid under the existing USTFU constitution xxx. [29] The ratification of the new CBA executed between the petitioners and the University of Santo Tomas management did not validate the void October 4, 1996 election. Ratified were the terms of the new CBA, not theissue of union leadership -- a matter that should be decided only by union members in the proper forum at the proper time and after observance of proper procedures.
Epilogue

In dismissing this Petition, we are not passing upon the merits of the mismanagement allegations imputed by the petitioners to the private respondents; these are not at issue in the present case. Petitioners can bring their grievances and resolve their differences with private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair treatment of union members by their own leaders. When the latter abuse and violate the rights of the former, they shall be dealt with accordingly in the proper forum after the observance of due process. WHEREFORE, the Petition is Resolutions AFFIRMED. Costs against petitioners. SO ORDERED. Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur. hereby DISMISSED and the assailed

EN BANC

BANK OF THE PHILIPPINE ISLANDS,ersus -BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS N BPI UNIBANK, DECISION LEONARDO-DE CASTRO, J.: May a corporation invoke its merger with another corporation as a valid ground to exempt its absorbed employees from the coverage of a union shop clause contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor union? That is the question we shall endeavor to answer in this petition for review filed by an employer after the Court of Appeals decided in favor of respondent union, which is the employees recognized collective bargaining representative. At the outset, we should call to mind the spirit and the letter of the Labor Code provisions on union security clauses, specifically Article 248 (e), which states, x x xNothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. [1] This case which involves the application of a collective bargaining agreement with a union shop clause should be resolved principally from the standpoint of the clear provisions of our labor laws, and the express terms of the CBA in question, and not by inference from the general consequence of the merger of corporations under the Corporation Code, which obviously does not deal with and, therefore, is silent on the terms and conditions of employment in corporations or juridical entities. This issue must be resolved NOW, instead of postponing it to a future time when the CBA is renegotiated as suggested by the Honorable Justice Arturo D. Brion because the same issue may still be resurrected in the renegotiation if the absorbed employees insist on their privileged status of being exempt from any union shop clause or any variant thereof. We find it significant to note that it is only the employer, Bank of the Philippine Islands (BPI), that brought the case up to this Court via the instant petition for review; while the employees actually involved in the case did not pursue the same relief, but had instead chosen in effect to acquiesce to the decision of the Court of Appeals which effectively required them to comply with the union shop clause under the existing CBA at the time of the merger of BPI with Far East Bank and Trust Company (FEBTC), which decision had already become final and executory as to the aforesaid employees. By not appealing the decision of the Court of Appeals, the aforesaid employees are bound by the said Court of Appeals decision to join BPIs duly certified labor union. In view of the apparent acquiescence of the affected FEBTC employees in the Court of Appeals decision, BPI should not have pursued this petition for review. However, even assuming that BPI may do so, the same still cannot prosper. What is before us now is a petition for review under Rule 45 of the Rules of Court of the Decision[2] dated September 30, 2003 of the Court of Appeals, as reiterated in its Resolution [3] of June 9, 2004, reversing and setting aside the Decision [4] dated November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine Islands, et al. The antecedent facts are as follows: On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC.[5] This Article and Plan of Merger was approved by the Securities and Exchange Commission on April 7, 2000. [6]

Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI as the surviving corporation. FEBTC employees, including those in its different branches across the country, were hired by petitioner as its own employees, with their status and tenure recognized and salaries and benefits maintained. Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank (hereinafter the Union, for brevity) is the exclusive bargaining agent of BPIs rank and file employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not belong to any labor union at the time of the merger. Prior to the effectivity of the merger, or on March 31, 2000, respondent Union invited said FEBTC employees to a meeting regarding the Union Shop Clause (Article II, Section 2) of the existing CBA between petitioner BPI and respondent Union. [7] The parties both advert to certain provisions of the existing CBA, which are quoted below: ARTICLE I Section 1. Recognition and Bargaining Unit The BANK recognizes the UNION as the sole and exclusive collective bargaining representative of all the regular rank and file employees of the Bank offices in Davao City. Section 2. Exclusions Section 3. Additional Exclusions Section 4. Copy of Contract ARTICLE II Section 1. Maintenance of Membership All employees within the bargaining unit who are members of the Union on the date of the effectivity of this Agreement as well as employees within the bargaining unit who subsequently join or become members of the Union during the lifetime of this Agreement shall as a condition of their continued employment with the Bank, maintain their membership in the Union in good standing. Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank. [8] (Emphases supplied.)

After the meeting called by the Union, some of the former FEBTC employees joined the Union, while others refused. Later, however, some of those who initially joined retracted their membership.[9] Respondent Union then sent notices to the former FEBTC employees who refused to join, as well as those who retracted their membership, and called them to a hearing regarding the matter. When these former FEBTC employees refused to attend the hearing, the president of the Union requested BPI to implement the Union Shop Clause of the CBA and to terminate their employment pursuant thereto.[10] After two months of management inaction on the request, respondent Union informed petitioner BPI of its decision to refer the issue of the implementation of the Union Shop Clause of the CBA to the Grievance Committee. However, the issue remained unresolved at this level and so it was subsequently submitted for voluntary arbitration by the parties. [11]

Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated November 23, 2001, ruled in favor of petitioner BPIs interpretation that the former FEBTC employees were not covered by the Union Security Clause of the CBA between the Union and the Bank on the ground that the said employees were not new employees who were hired and subsequently regularized, but were absorbed employees by operation of law because the former employees of FEBTC can be considered assets and liabilities of the absorbed corporation. The Voluntary Arbitrator concluded that the former FEBTC employees could not be compelled to join the Union, as it was their constitutional right to join or not to join any organization. Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator denied the same in an Order dated March 25, 2002. [13] Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to the Court of Appeals. In the herein assailed Decision dated September 30, 2003, the Court of Appeals reversed and set aside the Decision of the Voluntary Arbitrator. [14] Likewise, the Court of Appeals denied herein petitioners Motion for Reconsideration in a Resolution dated June 9, 2004. The Court of Appeals pertinently ruled in its Decision: A union-shop clause has been defined as a form of union security provision wherein non-members may be hired, but to retain employment must become union members after a certain period. There is no question as to the existence of the union-shop clause in the CBA between the petitioner-union and the company. The controversy lies in its application to the absorbed employees. This Court agrees with the voluntary arbitrator that the ABSORBED employees are distinct and different from NEW employees BUT only in so far as their employment service is concerned. The distinction ends there. In the case at bar, the absorbed employees length of service from its former employer is tacked with their employment with BPI. Otherwise stated, the absorbed employees service is continuous and there is no gap in their service record. This Court is persuaded that the similarities of new and absorbed employees far outweighs the distinction between them. The similarities lies on the following, to wit: (a) they have a new employer; (b) new working conditions; (c) new terms of employment and; (d) new company policy to follow. As such, they should be considered as new employees for purposes of applying the provisions of the CBA regarding the union-shop clause. To rule otherwise would definitely result to a very awkward and unfair situation wherein the absorbed employees shall be in a different if not, better situation than the existing BPI employees. The existing BPI employees by virtue of the union-shop clause are required to pay the monthly union dues, remain as members in good standing of the union otherwise, they shall be terminated from the company, and other union-related obligations. On the other hand, the absorbed employees shall enjoy the fruits of labor of the petitioner-union and its members for nothing in exchange. Certainly, this would disturb industrial peace in the company which is the paramount reason for the existence of the CBA and the union. The voluntary arbitrators interpretation of the provisions of the CBA concerning the coverage of the union-shop clause is at war with the spirit and the rationale why the Labor Code itself allows the existence of such provision.

The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC (G.R. No. 76989, September 29, 1987) rule, to quote: This Court has held that a valid form of union security, and such a provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union who must continue to remain members in good standing to keep their jobs. It is THE MOST PRIZED ACHIEVEMENT OF UNIONISM. IT ADDS MEMBERSHIP AND COMPULSORY DUES. By holding out to loyal members a promise of employment in the closed-shop, it wields group solidarity. (Emphasis supplied) Hence, the voluntary arbitrator erred in construing the CBA literally at the expense of industrial peace in the company. With the foregoing ruling from this Court, necessarily, the alternative prayer of the petitioner to require the individual respondents to become members or if they refuse, for this Court to direct respondent BPI to dismiss them, follows.[15] Hence, petitioners present recourse, raising the following issues: I WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE CONSIDERED NEW EMPLOYEES OF BPI FOR PURPOSES OF APPLYING THE UNION SHOP CLAUSE OF THE CBA II WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE VOLUNTARY ARBITRATORS INTERPRETATION OF THE COVERAGE OF THE UNION SHOP CLAUSE IS AT WAR WITH THE SPIRIT AND THE RATIONALE WHY THE LABOR CODE ITSELF ALLOWS THE EXISTENCE OF SUCH PROVISION[16]

In essence, the sole issue in this case is whether or not the former FEBTC employees that were absorbed by petitioner upon the merger between FEBTC and BPI should be covered by the Union Shop Clause found in the existing CBA between petitioner and respondent Union. Petitioner is of the position that the former FEBTC employees are not new employees of BPI for purposes of applying the Union Shop Clause of the CBA, on this note, petitioner points to Section 2, Article II of the CBA, which provides: New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank. [17] (Emphases supplied.) Petitioner argues that the term new employees in the Union Shop Clause of the CBA is qualified by the phrases who may hereafter be regularly employed and after they become regular employees which led petitioner to conclude that the new employees referred to in, and

contemplated by, the Union Shop Clause of the CBA were only those employees who were new to BPI, on account of having been hired initially on a temporary or probationary status for possible regular employment at some future date. BPI argues that the FEBTC employees absorbed by BPI cannot be considered as new employees of BPI for purposes of applying the Union Shop Clause of the CBA.[18] According to petitioner, the contrary interpretation made by the Court of Appeals of this particular CBA provision ignores, or even defies, what petitioner assumes as its clear meaning and scope which allegedly contradicts the Courts strict and restrictive enforcement of union security agreements. We do not agree. Section 2, Article II of the CBA is silent as to how one becomes a regular employee of the BPI for the first time. There is nothing in the said provision which requires that a new regular employee first undergo a temporary or probationary status before being deemed as such under the union shop clause of the CBA. Union security is a generic term which is applied to and comprehends closed shop, union shop, maintenance of membership or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.[19] In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we ruled that: It is the policy of the State to promote unionism to enable the workers to negotiate with management on the same level and with more persuasiveness than if they were to individually and independently bargain for the improvement of their respective conditions. To this end, the Constitution guarantees to them the rights to selforganization, collective bargaining and negotiations and peaceful concerted actions including the right to strike in accordance with law. There is no question that these purposes could be thwarted if every worker were to choose to go his own separate way instead of joining his coemployees in planning collective action and presenting a united front when they sit down to bargain with their employers. It is for this reason that the law has sanctioned stipulations for the union shop and the closed shop as a means of encouraging the workers to join and support the labor union of their own choice as their representative in the negotiation of their demands and the protection of their interest vis--vis the employer. (Emphasis ours.) In other words, the purpose of a union shop or other union security arrangement is to guarantee the continued existence of the union through enforced membership for the benefit of the workers. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, employees who at the time the union shop

agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds;[21] employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect;[22] confidential employees who are excluded from the rank and file bargaining unit;[23] andemployees excluded from the union shop by express terms of the agreement. When certain employees are obliged to join a particular union as a requisite for continued employment, as in the case of Union Security Clauses, this condition is a valid restriction of the freedom or right not to join any labor organization because it is in favor of unionism. This Court, on occasion, has even held that a union security clause in a CBA is not a restriction of the right of freedom of association guaranteed by the Constitution. [24] Moreover, a closed shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union who must continue to remain members in good standing to keep their jobs. It is the most prized achievement of unionism. It adds membership and compulsory dues. By holding out to loyal members a promise of employment in the closed shop, it wields group solidarity.[25] Indeed, the situation of the former FEBTC employees in this case clearly does not fall within the first three exceptions to the application of the Union Shop Clause discussed earlier. No allegation or evidence of religious exemption or prior membership in another union or engagement as a confidential employee was presented by both parties. The sole category therefore in which petitioner may prove its claim is the fourth recognized exception or whether the former FEBTC employees are excluded by the express terms of the existing CBA between petitioner and respondent. To reiterate, petitioner insists that the term new employees, as the same is used in the Union Shop Clause of the CBA at issue, refers only to employees hired by BPI asnon-regular employees who later qualify for regular employment and become regular employees, and not those who, as a legal consequence of a merger, are allegedly automatically deemed regular employees of BPI. However, the CBA does not make a distinction as to how a regular employee attains such a status. Moreover, there is nothing in the Corporation Law and the merger agreement mandating the automatic employment as regular employees by the surviving corporation in the merger. It is apparent that petitioner hinges its argument that the former FEBTC employees were absorbed by BPI merely as a legal consequence of a merger based on the characterization by the Voluntary Arbiter of these absorbed employees as included in the assets and liabilities of the dissolved corporation - assets because they help the Bank in its operation and liabilities because redundant employees may be terminated and company benefits will be paid to them, thus reducing the Banks financial status. Based on this ratiocination, she ruled that the same are not new employees of BPI as contemplated by the CBA at issue, noting that the Certificate of Filing of the Articles of Merger and Plan of Merger between FEBTC and BPI stated that x x x the entire assets and liabilities of FAR EASTERN BANK & TRUST COMPANY will be transferred to and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining supplied). [26] In sum, the Voluntary Arbiter upheld the reasoning of petitioner that the FEBTC employees became BPI employees by operation of law because they are included in the term assets and liabilities. Absorbed FEBTC Employees are Neither Assets nor Liabilities In legal parlance, however, human beings are never embraced in the term assets and liabilities. Moreover, BPIs absorption of former FEBTC employees was neither by operation of law nor by legal consequence of contract. There was no government regulation or law that compelled the merger of the two banks or the absorption of the employees of the dissolved corporation by the surviving corporation. Had there been such law or regulation, the absorption of employees of the

non-surviving entities of the merger would have been mandatory on the surviving corporation. [27] In the present case, the merger was voluntarily entered into by both banks presumably for some mutually acceptable consideration. In fact, the Corporation Code does not also mandate the absorption of the employees of the non-surviving corporation by the surviving corporation in the case of a merger. Section 80 of the Corporation Code provides: SEC. 80. Effects of merger or consolidation. The merger or consolidation, as provided in the preceding sections shall have the following effects: 1. The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation; 2. The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation; 3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code; 4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each of the constituent corporations; and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or due to each constituent corporation, shall be taken and deemed to be transferred to and vested in such surviving or consolidated corporation without further act or deed; and 5. The surviving or the consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any claim, action or proceeding pending by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation, as the case may be. Neither the rights of creditors nor any lien upon the property of any of such constituent corporations shall be impaired by such merger or consolidated. Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not contain any specific stipulation with respect to the employment contracts of existing personnel of the nonsurviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold the reasoning that the general stipulation regarding transfer of FEBTC assets and liabilities to BPI as set forth in the Articles of Merger necessarily includes the transfer of all FEBTC employees into the employ of BPI and neither BPI nor the FEBTC employees allegedly could do anything about it. Even if it is so, it does not follow that the absorbed employees should not be subject to the terms and conditions of employment obtaining in the surviving corporation. The rule is that unless expressly assumed, labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between the parties. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution, and the same can only be restricted by law through the exercise of the police power.[28]

Furthermore, this Court believes that it is contrary to public policy to declare the former FEBTC employees as forming part of the assets or liabilities of FEBTC that were transferred and absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should be deemed to refer only to property rights and obligations of FEBTC and do not include the employment contracts of its personnel. A corporation cannot unilaterally transfer its employees to another employer like chattel. Certainly, if BPI as an employer had the right to choose who to retain among FEBTCs employees, FEBTC employees had the concomitant right to choose not to be absorbed by BPI. Even though FEBTC employees had no choice or control over the merger of their employer with BPI, they had a choice whether or not they would allow themselves to be absorbed by BPI. Certainly nothing prevented the FEBTCs employees from resigning or retiring and seeking employment elsewhere instead of going along with the proposed absorption. Employment is a personal consensual contract and absorption by BPI of a former FEBTC employee without the consent of the employee is in violation of an individuals freedom to contract. It would have been a different matter if there was an express provision in the articles of merger that as a condition for the merger, BPI was being required to assume all the employment contracts of all existing FEBTC employees with the conformity of the employees. In the absence of such a provision in the articles of merger, then BPI clearly had the business management decision as to whether or not employ FEBTCs employees. FEBTC employees likewise retained the prerogative to allow themselves to be absorbed or not; otherwise, that would be tantamount to involuntary servitude. There appears to be no dispute that with respect to FEBTC employees that BPI chose not to employ or FEBTC employees who chose to retire or be separated from employment instead of being absorbed, BPIs assumed liability to these employees pursuant to the merger is FEBTCs liability to them in terms of separation pay, [29]retirement pay[30] or other benefits that may be due them depending on the circumstances. Legal Consequences of Mergers Although not binding on this Court, American jurisprudence on the consequences of voluntary mergers on the right to employment and seniority rights is persuasive and illuminating. We quote the following pertinent discussion from the American Law Reports: Several cases have involved the situation where as a result of mergers, consolidations, or shutdowns, one group of employees, who had accumulated seniority at one plant or for one employer, finds that their jobs have been discontinued except to the extent that they are offered employment at the place or by the employer where the work is to be carried on in the future. Such cases have involved the question whether such transferring employees should be entitled to carry with them their accumulated seniority or whether they are to be compelled to start over at the bottom of the seniority list in the "new" job. It has been recognized in some cases that the accumulated seniority does not survive and cannot be transferred to the "new" job. In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three formerly separate railroad corporations, which had previously operated separate facilities, was consolidated in the shops of one of the roads. Displaced employees of the other two roads were given preference for the new jobs created in the shops of the railroad which took over the work. A controversy arose between the employees as to whether the displaced employees were entitled to carry with them to the new jobs the seniority rights they had accumulated with their prior employers, that is, whether the rosters of the three corporations, for seniority purposes, should be "dovetailed" or whether the transferring employees should go to the bottom of the roster of their new employer. Labor representatives of the various systems involved attempted to work out an agreement which, in effect, preserved the seniority

status obtained in the prior employment on other roads, and the action was for specific performance of this agreement against a demurring group of the original employees of the railroad which was operating the consolidated shops. The relief sought was denied, the court saying that, absent some specific contract provision otherwise, seniority rights were ordinarily limited to the employment in which they were earned, and concluding that the contract for which specific performance was sought was not such a completed and binding agreement as would support such equitable relief, since the railroad, whose concurrence in the arrangements made was essential to their effectuation, was not a party to the agreement. Where the provisions of a labor contract provided that in the event that a trucker absorbed the business of another private contractor or common carrier, or was a party to a merger of lines, the seniority of the employees absorbed or affected thereby should be determined by mutual agreement between the trucker and the unions involved, it was held in Moore v International Brotherhood of Teamsters, etc. (1962, Ky) 356 SW2d 241, that the trucker was not required to absorb the affected employees as well as the business, the court saying that they could find no such meaning in the above clause, stating that it dealt only with seniority, and not with initial employment. Unless and until the absorbing company agreed to take the employees of the company whose business was being absorbed, no seniority problem was created, said the court, hence the provision of the contract could have no application. Furthermore, said the court, it did not require that the absorbing company take these employees, but only that if it did take them the question of seniority between the old and new employees would be worked out by agreement or else be submitted to the grievance procedure. [31] (Emphasis ours.)

Indeed, from the tenor of local and foreign authorities, in voluntary mergers, absorption of the dissolved corporations employees or the recognition of the absorbed employees service with their previous employer may be demanded from the surviving corporation if required by provision of law or contract. The dissent of Justice Arturo D. Brion tries to make a distinction as to the terms and conditions of employment of the absorbed employees in the case of a corporate merger or consolidation which will, in effect, take away from corporate management the prerogative to make purely business decisions on the hiring of employees or will give it an excuse not to apply the CBA in force to the prejudice of its own employees and their recognized collective bargaining agent. In this regard, we disagree with Justice Brion. Justice Brion takes the position that because the surviving corporation continues the personality of the dissolved corporation and acquires all the latters rights and obligations, it is dutybound to absorb the dissolved corporations employees, even in the absence of a stipulation in the plan of merger. He proposes that this interpretation would provide the necessary protection to labor as it spares workers from being left in legal limbo. However, there are instances where an employer can validly discontinue or terminate the employment of an employee without violating his right to security of tenure. Among others, in case of redundancy, for example, superfluous employees may be terminated and such termination would be authorized under Article 283 of the Labor Code. [32] Moreover, assuming for the sake of argument that there is an obligation to hire or absorb all employees of the non-surviving corporation, there is still no basis to conclude that the terms and conditions of employment under a valid collective bargaining agreement in force in the surviving corporation should not be made to apply to the absorbed employees.

The Corporation Code and the Subject Merger Agreement are Silent on Efficacy, Terms and Conditions of Employment Contracts

The lack of a provision in the plan of merger regarding the transfer of employment contracts to the surviving corporation could have very well been deliberate on the part of the parties to the merger, in order to grant the surviving corporation the freedom to choose who among the dissolved corporations employees to retain, in accordance with the surviving corporations business needs. If terminations, for instance due to redundancy or labor-saving devices or to prevent losses, are done in good faith, they would be valid. The surviving corporation too is duty-bound to protect the rights of its own employees who may be affected by the merger in terms of seniority and other conditions of their employment due to the merger. Thus, we are not convinced that in the absence of a stipulation in the merger plan the surviving corporation was compelled, or may be judicially compelled, to absorb all employees under the same terms and conditions obtaining in the dissolved corporation as the surviving corporation should also take into consideration the state of its business and its obligations to its own employees, and to their certified collective bargaining agent or labor union. Even assuming we accept Justice Brions theory that in a merger situation the surviving corporation should be compelled to absorb the dissolved corporations employees as a legal consequence of the merger and as a social justice consideration, it bears to emphasize his dissent also recognizes that the employee may choose to end his employment at any time by voluntarily resigning. For the employee to be absorbed by BPI, it requires the employees implied or express consent. It is because of this human element in employment contracts and the personal, consensual nature thereof that we cannot agree that, in a merger situation, employment contracts are automatically transferable from one entity to another in the same manner that a contract pertaining to purely proprietary rights such as a promissory note or a deed of sale of property is perfectly and automatically transferable to the surviving corporation. That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and the persons that deal with them. Although in a merger it is as if there is no change in the personality of the employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes in his condition of employment even if his previous tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new rules and adapt to their new environment. Not the least of the changes in employment condition that the absorbed FEBTC employees must face is the fact that prior to the merger they were employees of an unorganized establishment and after the merger they became employees of a unionized company that had an existing collective bargaining agreement with the certified union. This presupposes that the union who is party to the collective bargaining agreement is the certified union that has, in the appropriate certification election, been shown to represent a majority of the members of the bargaining unit. Likewise, with respect to FEBTC employees that BPI chose to employ and who also chose to be absorbed, then due to BPIs blanket assumption of liabilities and obligations under the articles of merger, BPI was bound to respect the years of service of these FEBTC employees and to pay the same, or commensurate salaries and other benefits that these employees previously enjoyed with FEBTC. As the Union likewise pointed out in its pleadings, there were benefits under the CBA that the former FEBTC employees did not enjoy with their previous employer. As BPI employees, they will enjoy all these CBA benefits upon their absorption. Thus, although in a sense BPI is continuing FEBTCs employment of these absorbed employees, BPIs employment of these absorbed

employees was not under exactly the same terms and conditions as stated in the latters employment contracts with FEBTC. This further strengthens the view that BPI and the former FEBTC employees voluntarily contracted with each other for their employment in the surviving corporation. Proper Appreciation of the Term New Employees Under the CBA In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase new employees as contemplated in the Union Shop Clause of the CBA, contrary to petitioners insistence that the term new employees only refers to those who are initially hired as non-regular employees for possible regular employment. The Union Shop Clause in the CBA simply states that new employees who during the effectivity of the CBA may be regularly employed by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are absorbed as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioners new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment. The dissenting opinion of Justice Brion dovetails with Justice Carpios view only in their restrictive interpretation of who are new employees under the CBA. To our dissenting colleagues, the phrase new employees (who are covered by the union shop clause) should only include new employees who were hired as probationary during the life of the CBA and were later granted regular status. They propose that the former FEBTC employees who were deemed regular employees from the beginning of their employment with BPI should be treated as a special class of employees and be excluded from the union shop clause. Justice Brion himself points out that there is no clear, categorical definition of new employee in the CBA. In other words, the term new employee as used in the union shop clause is used broadly without any qualification or distinction. However, the Court should not uphold an interpretation of the term new employee based on the general and extraneous provisions of the Corporation Code on merger that would defeat, rather than fulfill, the purpose of the union shop clause. To reiterate, the provision of the Article 248(e) of the Labor Code in point mandates that nothing in the said Code or any other law should stop the parties from requiring membership in a recognized collective bargaining agent as a condition of employment. Significantly, petitioner BPI never stretches its arguments so far as to state that the absorbed employees should be deemed old employees who are not covered by the Union Shop Clause. This is not surprising. By law and jurisprudence, a merger only becomes effective upon approval by the Securities and Exchange Commission (SEC) of the articles of merger. In Associated Bank v. Court of Appeals,[33] we held: The procedure to be followed is prescribed under the Corporation Code. Section 79 of said Code requires the approval by the Securities and Exchange Commission (SEC) of the articles of merger which, in turn, must have been duly approved by a majority of the respective stockholders of the constituent corporations. The same provision further states that the merger shall be effective only upon the issuance by the SEC of a certificate of merger. The

effectivity date of the merger is crucial for determining when the merged or absorbed corporation ceases to exist; and when its rights, privileges, properties as well as liabilities pass on to the surviving corporation. (Emphasis ours.)

In other words, even though BPI steps into the shoes of FEBTC as the surviving corporation, BPI does so at a particular point in time, i.e., the effectivity of the merger upon the SECs issuance of a certificate of merger. In fact, the articles of merger themselves provided that both BPI and FEBTC will continue their respective business operations until the SEC issues the certificate of merger and in the event SEC does not issue such a certificate, they agree to hold each other blameless for the nonconsummation of the merger. Considering the foregoing principle, BPI could have only become the employer of the FEBTC employees it absorbed after the approval by the SEC of the merger. If the SEC did not approve the merger, BPI would not be in the position to absorb the employees of FEBTC at all. Indeed, there is evidence on record that BPI made the assignments of its absorbed employees in BPI effective April 10, 2000, or after the SECs approval of the merger. [34] In other words, BPI became the employer of the absorbed employees only at some point after the effectivity of the merger, notwithstanding the fact that the absorbed employees years of service with FEBTC were voluntarily recognized by BPI. Even assuming for the sake of argument that we consider the absorbed FEBTC employees as old employees of BPI who are not members of any union (i.e., it is their date of hiring by FEBTC and not the date of their absorption that is considered), this does not necessarily exclude them from the union security clause in the CBA. The CBA subject of this case was effective from April 1, 1996 until March 31, 2001. Based on the allegations of the former FEBTC employees themselves, there were former FEBTC employees who were hired by FEBTC after April 1, 1996 and if their date of hiring by FEBTC is considered as their date of hiring by BPI, they would undeniably be considered new employees of BPI within the contemplation of the Union Shop Clause of the said CBA. Otherwise, it would lead to the absurd situation that we would discriminate not only between new BPI employees (hired during the life of the CBA) and former FEBTC employees (absorbed during the life of the CBA) but also among the former FEBTC employees themselves. In other words, we would be treating employees who are exactly similarly situated (i.e., the group of absorbed FEBTC employees) differently. This hardly satisfies the demands of equality and justice. Petitioner limited itself to the argument that its absorbed employees do not fall within the term new employees contemplated under the Union Shop Clause with the apparent objective of excluding all, and not just some, of the former FEBTC employees from the application of the Union Shop Clause. However, in law or even under the express terms of the CBA, there is no special class of employees called absorbed employees. In order for the Court to apply or not apply the Union Shop Clause, we can only classify the former FEBTC employees as either old or new. If they are not old employees, they are necessarily new employees. If they are new employees, the Union Shop Clause did not distinguish between new employees who are non-regular at their hiring but who subsequently become regular and new employees who are absorbed as regular and permanent from the beginning of their employment. The Union Shop Clause did not so distinguish, and so neither must we. No Substantial Distinction Under the CBA Between Regular Employees Hired After Probationary Status and Regular Employees Hired After the Merger

Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated. The effect or consequence of BPIs so-called absorption of former FEBTC employees should be limited to what they actually agreed to, i.e. recognition of the FEBTC employees years of service, salary rate and other benefits with their previous employer. The effect should not be stretched so far as to exempt former FEBTC employees from the existing CBA terms, company policies and rules which apply to employees similarly situated. If the Union Shop Clause is valid as to other new regular BPI employees, there is no reason why the same clause would be a violation of the absorbed employees freedom of association. Non-Application of Union Shop Clause Contrary to the Policy of the Labor Code and Inimical to Industrial Peace

It is but fair that similarly situated employees who enjoy the same privileges of a CBA should be likewise subject to the same obligations the CBA imposes upon them. A contrary interpretation of the Union Shop Clause will be inimical to industrial peace and workers solidarity. This unfavorable situation will not be sufficiently addressed by asking the former FEBTC employees to simply pay agency fees to the Union in lieu of union membership, as the dissent of Justice Carpio suggests. The fact remains that other new regular employees, to whom the absorbed employees should be compared, do not have the option to simply pay the agency fees and they must join the Union or face termination. Petitioners restrictive reading of the Union Shop Clause could also inadvertently open an avenue, which an employer could readily use, in order to dilute the membership base of the certified union in the collective bargaining unit (CBU). By entering into a voluntary merger with a nonunionized company that employs more workers, an employer could get rid of its existing union by the simple expedient of arguing that the absorbed employees are not new employees, as are commonly understood to be covered by a CBAs union security clause. This could then lead to a new majority within the CBU that could potentially threaten the majority status of the existing union and, ultimately, spell its demise as the CBUs bargaining representative. Such a dreaded but not entirely far-fetched scenario is no different from the ingenious and creative union-busting schemes that corporations have fomented throughout the years, which this Court has foiled time and again in order to preserve and protect the valued place of labor in this jurisdiction consistent with the Constitutions mandate of insuring social justice. There is nothing in the Labor Code and other applicable laws or the CBA provision at issue that requires that a new employee has to be of probationary or non-regular status at the beginning of the employment relationship. An employer may confer upon a new employee the status of regular employment even at the onset of his engagement. Moreover, no law prohibits an employer from voluntarily recognizing the length of service of a new employee with a previous employer in relation to computation of benefits or seniority but it should not unduly be interpreted to exclude them from the coverage of the CBA which is a binding contractual obligation of the employer and employees.

Indeed, a union security clause in a CBA should be interpreted to give meaning and effect to its purpose, which is to afford protection to the certified bargaining agent and ensure that the employer is dealing with a union that represents the interests of the legally mandated percentage of the members of the bargaining unit. The union shop clause offers protection to the certified bargaining agent by ensuring that future regular employees who (a) enter the employ of the company during the life of the CBA; (b) are deemed part of the collective bargaining unit; and (c) whose number will affect the number of members of the collective bargaining unit will be compelled to join the union. Such compulsion has legal effect, precisely because the employer by voluntarily entering in to a union shop clause in a CBA with the certified bargaining agent takes on the responsibility of dismissing the new regular employee who does not join the union. Without the union shop clause or with the restrictive interpretation thereof as proposed in the dissenting opinions, the company can jeopardize the majority status of the certified union by excluding from union membership all new regular employees whom the Company will absorb in future mergers and all new regular employees whom the Company hires as regular from the beginning of their employment without undergoing a probationary period. In this manner, the Company can increase the number of members of the collective bargaining unit and if this increase is not accompanied by a corresponding increase in union membership, the certified union may lose its majority status and render it vulnerable to attack by another union who wishes to represent the same bargaining unit.[35] Or worse, a certified union whose membership falls below twenty percent (20%) of the total members of the collective bargaining unit may lose its status as a legitimate labor organization altogether, even in a situation where there is no competing union. [36] In such a case, an interested party may file for the cancellation of the unions certificate of registration with the Bureau of Labor Relations.[37] Plainly, the restrictive interpretation of the union shop clause would place the certified unions very existence at the mercy and control of the employer. Relevantly, only BPI, the employer appears to be interested in pursuing this case. The former FEBTC employees have not joined BPI in this appeal. For the foregoing reasons, Justice Carpios proposal to simply require the former FEBTC to pay agency fees is wholly inadequate to compensate the certified union for the loss of additional membership supposedly guaranteed by compliance with the union shop clause. This is apart from the fact that treating these absorbed employees as a special class of new employees does not encourage worker solidarity in the company since another class of new employees (i.e. those whose were hired as probationary and later regularized during the life of the CBA) would not have the option of substituting union membership with payment of agency fees. Justice Brion, on the other hand, appears to recognize the inherent unfairness of perpetually excluding the absorbed employees from the ambit of the union shop clause. He proposes that this matter be left to negotiation by the parties in the next CBA. To our mind, however, this proposal does not sufficiently address the issue. With BPI already taking the position that employees absorbed pursuant to its voluntary mergers with other banks are exempt from the union shop clause, the chances of the said bank ever agreeing to the inclusion of such employees in a future CBA is next to nil more so, if BPIs narrow interpretation of the union shop clause is sustained by this Court. Right of an Employee not to Join a Union is not Absolute and Must Give Way to the Collective Good of All Members of the Bargaining Unit

The dissenting opinions place a premium on the fact that even if the former FEBTC employees are not old employees, they nonetheless were employed as regular and permanent employees without a gap in their service. However, an employees permanent and regular employment status in itself does not necessarily exempt him from the coverage of a union shop clause. In the past this Court has upheld even the more stringent type of union security clause, i.e., the closed shop provision, and held that it can be made applicable to old employees who are already regular and permanent but have chosen not to join a union. In the early case of Juat v. Court of Industrial Relations,[38] the Court held that an old employee who had no union may be compelled to join the union even if the collective bargaining agreement (CBA) imposing the closed shop provision was only entered into seven years after of the hiring of the said employee. To quote from that decision: A closed-shop agreement has been considered as one form of union security whereby only union members can be hired and workers must remain union members as a condition of continued employment. The requirement for employees or workers to become members of a union as a condition for employment redounds to the benefit and advantage of said employees because by holding out to loyal members a promise of employment in the closedshop the union wields group solidarity. In fact, it is said that "the closed-shop contract is the most prized achievement of unionism." xxxx This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28, 1961, that the closed-shop proviso of a collective bargaining agreement entered into between an employer and a duly authorized labor union is applicable not only to the employees or laborers that are employed after the collective bargaining agreement had been entered into but also to old employees who are not members of any labor union at the time the said collective bargaining agreement was entered into. In other words, if an employee or laborer is already a member of a labor union different from the union that entered into a collective bargaining agreement with the employer providing for a closed-shop, said employee or worker cannot be obliged to become a member of that union which had entered into a collective bargaining agreement with the employer as a condition for his continued employment. (Emphasis and underscoring supplied.)

Although the present case does not involve a closed shop provision that included even old employees, the Juat example is but one of the cases that laid down the doctrine that the right not to join a union is not absolute. Theoretically, there is nothing in law or jurisprudence to prevent an employer and a union from stipulating that existing employees (who already attained regular and permanent status but who are not members of any union) are to be included in the coverage of a union security clause. Even Article 248(e) of the Labor Code only expressly exempts old employees who already have a union from inclusion in a union security clause. [39] Contrary to the assertion in the dissent of Justice Carpio, Juat has not been overturned by Victoriano v. Elizalde Rope Workers Union [40] nor by Reyes v. Trajano.[41] The factual milieus of these three cases are vastly different. In Victoriano, the issue that confronted the Court was whether or not employees who were members of the Iglesia ni Kristo (INK) sect could be compelled to join the union under a closed shop provision, despite the fact that their religious beliefs prohibited them from joining a union. In that case, the Court was asked to balance the constitutional right to religious freedom against a host of other constitutional provisions including the freedom of association, the non-establishment clause, the non-impairment of contracts clause, the equal protection clause, and the social justice provision. In

the end, the Court held that religious freedom, although not unlimited, is a fundamental personal right and liberty, and has a preferred position in the hierarchy of values. [42] However, Victoriano is consistent with Juat since they both affirm that the right to refrain from joining a union is not absolute. The relevant portion of Victoriano is quoted below: The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only member of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization" the employer is, however, not precluded "from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees." By virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn.[43] (Emphases supplied.)

If Juat exemplified an exception to the rule that a person has the right not to join a union, Victoriano merely created an exception to the exception on the ground of religious freedom. Reyes, on the other hand, did not involve the interpretation of any union security clause. In that case, there was no certified bargaining agent yet since the controversy arose during a certification election. In Reyes, the Court highlighted the idea that the freedom of association included the right not to associate or join a union in resolving the issue whether or not the votes of members of the INK sect who were part of the bargaining unit could be excluded in the results of a certification election, simply because they were not members of the two contesting unions and were expected to have voted for NO UNION in view of their religious affiliation. The Court upheld the inclusion of the votes of the INK members since in the previous case of Victoriano we held that INK members may not be compelled to join a union on the ground of religious freedom and even withoutVictoriano every employee has the right to vote no union in a certification election as part of his freedom of association. However, Reyes is not authority for Justice Carpios proposition that an employee who is not a member of any union may claim an exemption from an existing union security clause because he already has regular and permanent status but simply prefers not to join a union. The other cases cited in Justice Carpios dissent on this point are likewise inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas,[44] Anucension v. National Labor Union,[45] and Gonzales v. Central Azucarera de Tarlac Labor Union [46] all involved members of the INK. In line withVictoriano, these cases upheld the INK members claimed exemption from the union security clause on religious grounds. In the present case, the former FEBTC employees never claimed any religious grounds for their exemption from the Union Shop Clause. As for Philips Industrial Development, Inc. v. National Labor Relations Corporation [47]and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the employees who were exempted from joining the respondent union or who were excluded from participating in the certification election were found to be not members of the bargaining unit represented by respondent union and were free to form/join their own union. In the case at bar, it is undisputed that the former FEBTC employees were

part of the bargaining unit that the Union represented. Thus, the rulings in Philips and Knitjoy have no relevance to the issues at hand. Time and again, this Court has ruled that the individual employees right not to join a union may be validly restricted by a union security clause in a CBA [49] and such union security clause is not a violation of the employees constitutional right to freedom of association. [50] It is unsurprising that significant provisions on labor protection of the 1987 Constitution are found in Article XIII on Social Justice. The constitutional guarantee given the right to form unions[51] and the State policy to promote unionism[52] have social justice considerations. In Peoples Industrial and Commercial Employees and Workers Organization v. Peoples Industrial and Commercial Corporation,[53] we recognized that [l]abor, being the weaker in economic power and resources than capital, deserve protection that is actually substantial and material. The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employees right or freedom of association, is not to protect the union for the unions sake. Laws and jurisprudence promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. This is the rationale behind the State policy to promote unionism declared in the Constitution, which was elucidated in the abovecited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc. [54] In the case at bar, since the former FEBTC employees are deemed covered by the Union Shop Clause, they are required to join the certified bargaining agent, which supposedly has gathered the support of the majority of workers within the bargaining unit in the appropriate certification proceeding. Their joining the certified union would, in fact, be in the best interests of the former FEBTC employees for it unites their interests with the majority of employees in the bargaining unit. It encourages employee solidarity and affords sufficient protection to the majority status of the union during the life of the CBA which are the precisely the objectives of union security clauses, such as the Union Shop Clause involved herein. We are indeed not being called to balance the interests of individual employees as against the State policy of promoting unionism, since the employees, who were parties in the court below, no longer contested the adverse Court of Appeals decision. Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice.

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

In the case of former FEBTC employees who initially joined the union but later withdrew their membership, there is even greater reason for the union to request their dismissal from the employer since the CBA also contained a Maintenance of Membership Clause. A final point in relation to procedural due process, the Court is not unmindful that the former FEBTC employees refusal to join the union and BPIs refusal to enforce the Union Shop Clause in this instance may have been based on the honest belief that the former FEBTC employees were not covered by said clause. In the interest of fairness, we believe the former FEBTC employees should be given a fresh thirty (30) days from notice of finality of this decision to join the union before the union demands BPI to terminate their employment under the Union Shop Clause, assuming said clause has been carried over in the present CBA and there has been no material change in the situation of the parties. WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be. SO ORDERED.

SECOND DIVISION [G.R. No. 110399. August 15, 1997] SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN MIGUEL CORPORATION, respondents. DECISION ROMERO, J.: This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-7091[1] entitled In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election. The antecedent facts are undisputed: On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for District Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis. On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent companys Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit. Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis. On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings. On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC[2] case. Said Order reads in part: x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining. In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above courts ruling. Consequently, they are not allowed to participate in the certification election. WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election.[3] Hence this petition. For resolution in this case are the following issues: 1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union. 2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit. On the first issue, this Court rules that said employees do not fall within the term confidential employees who may be prohibited from joining a union. There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245[4] of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not. Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. [5]The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee that is, the confidential relationship must exist between the employees and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. [6] The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the confidential employee rule. The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. [7]Management should not be required to handle labor relations matters through employees who are represented by the union with the company is required to deal and who in the normal performance of their duties may

obtain advance information of the companys position with regard to contract negotiations, the disposition of grievances, or other labor relations matters. [8] There have been ample precedents in this regard, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez,[9] the Court held that if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership. The same rationale was applied to confidential employees in Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more recent case of Philips Industrial Development, Inc. v. NLRC[11] which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them.[12] An important element of the confidential employee rule is the employees need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key questions frequently considered is the employees necessary access to confidential labor relations information.[13] It is the contention of respondent corporation that Supervisory employees 3 and 4 and the exempt employees come within the meaning of the term confidential employees primarily because they answered in the affirmative when asked Do you handle confidential data or documents? in the Position Questionnaires submitted by the Union. [14] In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to labor relations.[15] Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. [16] If access to confidential labor relations information is to be a factor in the determination of an employees confidential status, such information must relate to the employers labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not clause an employee to be excluded from the bargaining unit representing employees of the union or association. [17] Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information[18] or technical trade secrets, will not render an employee a confidential employee. [19] Herein listed are the functions of supervisors 3 and higher: 1. To undertake decisions to discontinue/temporarily stop shift operations when situations require. 2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products. 3. To administer efficient system of evaluation of products in the outlets. 4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials. 5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant.[20] It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employers internal business operations. As held in Westinghouse Electric Corporation v. National Labor Relations Board,[21] an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential

information concerning employers internal business operations and which is not related to the field of labor relations. It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to all workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right bargain collectively through representatives of their choosing. [22] In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle confidential data as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. [23] In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out. It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests. This Court finds the contention of the petitioner meritorious. An appropriate bargaining unit may be defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.[24] A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. [25] It is readily seen that the employees in the instant case have community or mutuality of interest, which is the standard in determining the proper constituency of a collective bargaining unit. [26]It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the Mandate of the Constitution.[27] The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employees of the University of the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance

among the three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative. WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted. SO ORDERED. Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

SECOND DIVISION THE HERITAGE HOTEL MANILA, acting . through its owner, GRAND PLAZA HOTEL CORPORATION, Petitioner, - versus NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAINHHMSC), Respondent. Promulgated: January 12, 2011

x----------------------------------------------------------------------------------x DECISION NACHURA, J.: Before the Court is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) dated May 30, 2005 and Resolution dated June 4, 2007. The assailed Decision affirmed the dismissal of a petition for cancellation of union registration filed by petitioner, Grand Plaza Hotel Corporation, owner of Heritage Hotel Manila, against respondent, National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), a labor organization of the supervisory employees of Heritage Hotel Manila. The case stemmed from the following antecedents: On October 11, 1995, respondent filed with the Department of Labor and EmploymentNational Capital Region (DOLE-NCR) a petition for certification election. [2] The Med-Arbiter granted the petition on February 14, 1996 and ordered the holding of a certification election. [3] On appeal, the DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the Med-Arbiters order and remanded the case to the Med-Arbiter for the holding of a preelection conference on February 26, 1997. Petitioner filed a motion for reconsideration, but it was denied on September 23, 1996. The preelection conference was not held as initially scheduled; it was held a year later, or on February 20, 1998. Petitioner moved to archive or to dismiss the petition due to alleged repeated nonappearance of respondent. The latter agreed to suspend proceedings until further notice. The preelection conference resumed on January 29, 2000. Subsequently, petitioner discovered that respondent had failed to submit to the Bureau of Labor Relations (BLR) its annual financial report for several years and the list of its members since it filed its registration papers in 1995. Consequently, on May 19, 2000, petitioner filed a Petition for Cancellation of Registration of respondent, on the ground of the non-submission of the said documents. Petitioner prayed that respondents Certificate of Creation of Local/Chapter be cancelled and its name be deleted from the list of legitimate labor organizations. It further requested the suspension of the certification election proceedings. [4] On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss or Suspend the [Certification Election] Proceedings, [5] arguing that the dismissal or suspension of the proceedings is warranted, considering that the legitimacy of respondent is seriously being challenged in the petition for cancellation of registration. Petitioner maintained that the resolution of the issue of whether respondent is a legitimate labor organization is crucial to the issue of whether it may exercise rights of a legitimate labor organization, which include the right to be certified as the bargaining agent of the covered employees. Nevertheless, the certification election pushed through on June 23, 2000. Respondent emerged as the winner.[6] On June 28, 2000, petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner,[7] stating that the certification election held on June 23, 2000 was an exercise in futility because, once respondents registration is cancelled, it would no longer be entitled to be certified as the exclusive bargaining agent of the supervisory employees. Petitioner also claimed that some of respondents members were not qualified to join the union because they were either confidential employees or managerial employees. It then prayed that the certification of the election results and winner be deferred until the petition for cancellation shall have been resolved, and that respondents members who held confidential or managerial positions be excluded from the supervisors bargaining unit. Meanwhile, respondent filed its Answer[8] to the petition for the cancellation of its registration. It averred that the petition was filed primarily to delay the conduct of the certification election, the respondents certification as the exclusive bargaining representative of the supervisory employees, and the commencement of bargaining negotiations. Respondent prayed for the dismissal of the

petition for the following reasons: (a) petitioner is estopped from questioning respondents status as a legitimate labor organization as it had already recognized respondent as such during the preelection conferences; (b) petitioner is not the party-in-interest, as the union members are the ones who would be disadvantaged by the non-submission of financial reports; (c) it has already complied with the reportorial requirements, having submitted its financial statements for 1996, 1997, 1998, and 1999, its updated list of officers, and its list of members for the years 1995, 1996, 1997, 1998, and 1999; (d) the petition is already moot and academic, considering that the certification election had already been held, and the members had manifested their will to be represented by respondent. Citing National Union of Bank Employees v. Minister of Labor, et al. [9] and Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,[10] the Med-Arbiter held that the pendency of a petition for cancellation of registration is not a bar to the holding of a certification election. Thus, in an Order[11] dated January 26, 2001, the Med-Arbiter dismissed petitioners protest, and certified respondent as the sole and exclusive bargaining agent of all supervisory employees. Petitioner subsequently appealed the said Order to the DOLE Secretary. [12] The appeal was later dismissed by DOLE Secretary Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the Resolution of August 21, 2002. [13] Petitioner moved for reconsideration, but the motion was also denied.[14] In the meantime, Regional Director Alex E. Maraan (Regional Director Maraan) of DOLE-NCR finally resolved the petition for cancellation of registration. While finding that respondent had indeed failed to file financial reports and the list of its members for several years, he, nonetheless, denied the petition, ratiocinating that freedom of association and the employees right to self-organization are more substantive considerations. He took into account the fact that respondent won the certification election and that it had already been certified as the exclusive bargaining agent of the supervisory employees. In view of the foregoing, Regional Director Maraanwhile emphasizing that the noncompliance with the law is not viewed with favorconsidered the belated submission of the annual financial reports and the list of members as sufficient compliance thereof and considered them as having been submitted on time. The dispositive portion of the decision [15] dated December 29, 2001 reads:

WHEREFORE, premises considered, the instant petition to delist the National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor organizations is hereby DENIED. SO ORDERED.[16] Aggrieved, petitioner appealed the decision to the BLR. [17] BLR Director Hans Leo Cacdac inhibited himself from the case because he had been a former counsel of respondent. In view of Director Cacdacs inhibition, DOLE Secretary Sto. Tomas took cognizance of the appeal. In a resolution [18] dated February 21, 2003, she dismissed the appeal, holding that the constitutionally guaranteed freedom of association and right of workers to self-organization outweighed respondents noncompliance with the statutory requirements to maintain its status as a legitimate labor organization. Petitioner filed a motion for reconsideration, [19] but the motion was likewise denied in a resolution[20] dated May 30, 2003. DOLE Secretary Sto. Tomas admitted that it was the BLR which had jurisdiction over the appeal, but she pointed out that the BLR Director had voluntarily inhibited himself from the case because he used to appear as counsel for respondent. In order to maintain the integrity of the decision and of the BLR, she therefore accepted the motion to inhibit and took cognizance of the appeal.

Petitioner filed a petition for certiorari with the CA, raising the issue of whether the DOLE Secretary acted with grave abuse of discretion in taking cognizance of the appeal and affirming the dismissal of its petition for cancellation of respondents registration. In a Decision dated May 30, 2005, the CA denied the petition. The CA opined that the DOLE Secretary may legally assume jurisdiction over an appeal from the decision of the Regional Director in the event that the Director of the BLR inhibits himself from the case. According to the CA, in the absence of the BLR Director, there is no person more competent to resolve the appeal than the DOLE Secretary. The CA brushed aside the allegation of bias and partiality on the part of the DOLE Secretary, considering that such allegation was not supported by any evidence. The CA also found that the DOLE Secretary did not commit grave abuse of discretion when she affirmed the dismissal of the petition for cancellation of respondents registration as a labor organization. Echoing the DOLE Secretary, the CA held that the requirements of registration of labor organizations are an exercise of the overriding police power of the State, designed for the protection of workers against potential abuse by the union that recruits them. These requirements, the CA opined, should not be exploited to work against the workers constitutionally protected right to selforganization. Petitioner filed a motion for reconsideration, invoking this Courts ruling in Abbott Labs. Phils., Inc. v. Abbott Labs. Employees Union, [21] which categorically declared that the DOLE Secretary has no authority to review the decision of the Regional Director in a petition for cancellation of union registration, and Section 4,[22] Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code. In its Resolution[23] dated June 4, 2007, the CA denied petitioners motion, stating that the BLR Directors inhibition from the case was a peculiarity not present in theAbbott case, and that such inhibition justified the assumption of jurisdiction by the DOLE Secretary. In this petition, petitioner argues that: I. The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction over Petitioners appeal of the Regional Directors Decision in the Cancellation Petition x x x. A. Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the decision of the Regional Director in a petition for cancellation. Such jurisdiction is conferred by law to the BLR. The unilateral inhibition by the BLR Director cannot justify the Labor Secretarys exercise of jurisdiction over the Appeal. The Labor Secretarys assumption of jurisdiction over the Appeal without notice violated Petitioners right to due process. II. The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the mandatory and unequivocal provisions of the Labor Code and its Implementing Rules.[24] The petition has no merit.

B.

C.

Jurisdiction to review the decision of the Regional Director lies with the BLR. This is clearly provided in the Implementing Rules of the Labor Code and enunciated by the Court in Abbott. But as pointed out by the CA, the present case involves a peculiar circumstance that was not present or covered by the ruling in Abbott. In this case, the BLR Director inhibited himself from the case because he was a former counsel of respondent. Who, then, shall resolve the case in his place? In Abbott, the appeal from the Regional Directors decision was directly filed with the Office of the DOLE Secretary, and we ruled that the latter has no appellate jurisdiction. In the instant case, the appeal was filed by petitioner with the BLR, which, undisputedly, acquired jurisdiction over the case. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case.[25] Thus, jurisdiction remained with the BLR despite the BLR Directors inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR. [26] Expounding on the extent of the power of control, the Court, in Araneta, et al. v. Hon. M. Gatmaitan, et al.,[27] pronounced that, if a certain power or authority is vested by law upon the Department Secretary, then such power or authority may be exercised directly by the President, who exercises supervision and control over the departments. This principle was incorporated in the Administrative Code of 1987, which defines supervision and control as including the authority to act directly whenever a specific function is entrusted by law or regulation to a subordinate. [28] Applying the foregoing to the present case, it is clear that the DOLE Secretary, as the person exercising the power of supervision and control over the BLR, has the authority to directly exercise the quasi-judicial function entrusted by law to the BLR Director. It is true that the power of control and supervision does not give the Department Secretary unbridled authority to take over the functions of his or her subordinate. Such authority is subject to certain guidelines which are stated in Book IV, Chapter 8, Section 39(1)(a) of the Administrative Code of 1987.[29] However, in the present case, the DOLE Secretarys act of taking over the function of the BLR Director was warranted and necessitated by the latters inhibition from the case and the objective to maintain the integrity of the decision, as well as the Bureau itself.[30] Petitioner insists that the BLR Directors subordinates should have resolved the appeal, citing the provision under the Administrative Code of 1987 which states, in case of the absence or disability of the head of a bureau or office, his duties shall be performed by the assistant head. [31] The provision clearly does not apply considering that the BLR Director was neither absent nor suffering from any disability; he remained as head of the BLR. Thus, to dispel any suspicion of bias, the DOLE Secretary opted to resolve the appeal herself. Petitioner was not denied the right to due process when it was not notified in advance of the BLR Directors inhibition and the DOLE Secretarys assumption of the case. Well-settled is the rule that the essence of due process is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of. [32] Petitioner had the opportunity to question the BLR Directors inhibition and the DOLE Secretarys taking cognizance of the case when it filed a motion for reconsideration of the latters decision. It would be well to state that a critical component of due process is a hearing before an impartial and disinterested tribunal, for all the elements of due process, like notice and hearing, would be meaningless if the ultimate decision would come from a partial and biased judge.[33] It was precisely to ensure a fair trial that moved the BLR Director to inhibit himself from the case and the DOLE Secretary to take over his function.

Petitioner also insists that respondents registration as a legitimate labor union should be cancelled. Petitioner posits that once it is determined that a ground enumerated in Article 239 of the Labor Code is present, cancellation of registration should follow; it becomes the ministerial duty of the Regional Director to cancel the registration of the labor organization, hence, the use of the word shall. Petitioner points out that the Regional Director has admitted in its decision that respondent failed to submit the required documents for a number of years; therefore, cancellation of its registration should have followed as a matter of course. We are not persuaded. Articles 238 and 239 of the Labor Code read: ART. 238. CANCELLATION OF REGISTRATION; APPEAL The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements herein prescribed.\ ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The following shall constitute grounds for cancellation of union registration: xxxx (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; xxxx (i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau.[35] These provisions give the Regional Director ample discretion in dealing with a petition for cancellation of a unions registration, particularly, determining whether the union still meets the requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late filing of required documents as sufficient compliance with the requirements of the law. After all, the law requires the labor organization to submit the annual financial report and list of members in order to verify if it is still viable and financially sustainable as an organization so as to protect the employer and employees from fraudulent or fly-by-night unions. With the submission of the required documents by respondent, the purpose of the law has been achieved, though belatedly. We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying the petition for cancellation of respondents registration. The union members and, in fact, all the employees belonging to the appropriate bargaining unit should not be deprived of a bargaining agent, merely because of the negligence of the union officers who were responsible for the submission of the documents to the BLR. Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of union registration, lest they be accused of interfering with union activities. In resolving the petition, consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all workers to self-organization, collective bargaining and negotiations,

and peaceful concerted activities. Labor authorities should bear in mind that registration confers upon a union the status of legitimacy and the concomitant right and privileges granted by law to a legitimate labor organization, particularly the right to participate in or ask for certification election in a bargaining unit.[36] Thus, the cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. For without such registration, it loses - as a rule - its rights under the Labor Code.[37] It is worth mentioning that the Labor Codes provisions on cancellation of union registration and on reportorial requirements have been recently amended by Republic Act (R.A.) No. 9481, An Act Strengthening the Workers Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, which lapsed into law on May 25, 2007 and became effective on June 14, 2007. The amendment sought to strengthen the workers right to self-organization and enhance the Philippines compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87,[38] pertaining to the non-dissolution of workers organizations by administrative authority.[39] Thus, R.A. No. 9481 amended Article 239 to read: ART. 239. Grounds for Cancellation of Union Registration.The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides: ART. 242-A. Reportorial Requirements.The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau. Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. ILO Convention No. 87, which we have ratified in 1953, provides that workers and employers organizations shall not be liable to be dissolved or suspended by administrative authority. The ILO has expressed the opinion that the cancellation of union registration by the registrar of labor unions,

which in our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on the organization. [40] The aforesaid amendments and the ILOs opinion on this matter serve to fortify our ruling in this case. We therefore quote with approval the DOLE Secretarys rationale for denying the petition, thus: It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact compliance with reporting requirements. Yet there is more at stake in this case than merely monitoring union activities and requiring periodic documentation thereof. The more substantive considerations involve the constitutionally guaranteed freedom of association and right of workers to self-organization. Also involved is the public policy to promote free trade unionism and collective bargaining as instruments of industrial peace and democracy. An overly stringent interpretation of the statute governing cancellation of union registration without regard to surrounding circumstances cannot be allowed. Otherwise, it would lead to an unconstitutional application of the statute and emasculation of public policy objectives. Worse, it can render nugatory the protection to labor and social justice clauses that pervades the Constitution and the Labor Code. Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable for this Office to order the cancellation of the union and penalize the entire union membership on the basis of the negligence of its officers. In National Union of Bank Employees vs. Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the Supreme Court ruled: As aptly ruled by respondent Bureau of Labor Relations Director Noriel: The rights of workers to self-organization finds general and specific constitutional guarantees. x x x Such constitutional guarantees should not be lightly taken much less nullified. A healthy respect for the freedom of association demands that acts imputable to officers or members be not easily visited with capital punishments against the association itself. At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. To rule differently would be to preclude the union, after having failed to meet its periodic obligations promptly, from taking appropriate measures to correct its omissions. For the record, we do not view with favor appellees late submission. Punctuality on the part of the union and its officers could have prevented this petition.[41] WHEREFORE, premises considered, the Court of Appeals Decision dated May 30, 2005 and Resolution dated June 4, 2007 are AFFIRMED.

ECOND [G.R. No. 161690, July 23,

DIVISION 2008]

S.S. VENTURES INTERNATIONAL, INC., PETITIONER, VS. S.S. VENTURES LABOR UNION (SSVLU) AND DIR. HANS LEO CACDAC, IN HIS CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONS (BLR), RESPONDENTS. DECISION VELASCO JR., J.: Petitioner S.S. Ventures International, Inc. (Ventures), a PEZA- registered export firm with principal place of business at Phase I-PEZA- Bataan Export Zone, Mariveles, Bataan, is in the business of manufacturing sports shoes. Respondent S.S. Ventures Labor Union (Union), on the other hand, is a labor organization registered with the Department of Labor and Employment (DOLE) under Certificate of Registration No. RO300-00-02UR-0003. On March 21, 2000, the Union filed with DOLE-Region III a petition for certification election in behalf of the rank-and-file employees of Ventures. Five hundred forty two (542) signatures, 82 of which belong to 2008. terminated Ventures employees, appeared on the basic documents supporting the petition. On August 21, 2000, Ventures filed a Petition [1] to cancel the Union's certificate of registration invoking the grounds set forth in Article 239(a) of the Labor Code. [2]Docketed as Case No. RO3000008-CP-002 of the same DOLE regional office, the petition alleged the following: (1) The Union deliberately and maliciously included the names of more or less 82 former employees no longer connected with Ventures in its list of members who attended the organizational meeting and in the adoption/ratification of its constitution and by-laws held on January 9, 2000 in Mariveles, Bataan; and the Union forged the signatures of these 82 former employees to make it appear they took part in the organizational meeting and adoption and ratification of the constitution; (2) The Union maliciously twice entered the signatures of three persons namely: Mara Santos, Raymond Balangbang, and Karen Agunos; (3) No organizational meeting and ratification actually took place; and

(4) The Union's application for registration was not supported by at least 20% of the rank-and-file employees of Ventures, or 418 of the total 2,197- employee complement. Since more or less 82 of the 500[3] signatures were forged or invalid, then the remaining valid signatures would only be 418, which is very much short of the 439 minimum (2197 total employees x 20% = 439.4) required by the Labor Code.[4] In its Answer with Motion to Dismiss,[5] the Union denied committing the imputed acts of fraud or forgery and alleged that: (1) the organizational meeting actually took place on January 9, 2000 at the Shoe City basketball court in Mariveles; (2) the 82 employees adverted to in Ventures' petition were qualified Union members for, although they have been ordered dismissed, the one-year prescriptive period to question their dismissal had not yet lapsed; (3) it had complied with the 20%-member registration requirement since it had 542 members; and (4) the "double" signatures were inadvertent human error.

In its supplemental reply memorandum[6] filed on March 20, 2001, with attachments, Ventures cited other instances of fraud and misrepresentation, claiming that the "affidavits" executed by 82 alleged Union members show that they were deceived into signing paper minutes or were harassed to signing their attendance in the organizational meeting. Ventures added that some employees signed the "affidavits" denying having attended such meeting. In a Decision dated April 6, 2001, Regional Director Ana C. Dione of DOLE- Region III found for Ventures, the dispositive portion of which reads: Viewed in the light of all the foregoing, this office hereby grants the petition. WHEREFORE, this office resolved to CANCEL Certificate of Registration No. [RO300-00-02-UR-0003] dated 28 February 2000 of respondent S.S. Ventures Labor Union-Independent. So Ordered.[7] Aggrieved, the Union interposed a motion for reconsideration, a recourse which appeared to have been forwarded to the Bureau of Labor Relations (BLR). Although it would later find this motion to have been belatedly filed, the BLR, over the objection of Ventures which filed a Motion to Expunge, gave it due course and treated it as an appeal. Despite Ventures' motion to expunge the appeal, [8] the BLR Director rendered on October 11, 2002 a decision[9] in BLR-A-C-60-6-11-01, granting the Union's appeal and reversing the decision of Dione. The fallo of the BLR's decision reads: WHEREFORE, the appeal is hereby GRANTED. The Decision of Director Ana C. Dione dated 6 April 2001 is hereby REVERSED and SET ASIDE. S.S. Ventures Labor Union-Independent shall remain in the roster of legitimate labor organizations. SO ORDERED.[10] Ventures sought reconsideration of the above decision but was denied by the BLR. Ventures then went to the Court of Appeals (CA) on a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 74749. On October 20, 2003, the CA rendered a Decision,[11] dismissing Ventures' petition. Ventures' motion for reconsideration met a similar fate. [12] Hence, this petition for review under Rule 45, petitioner Ventures raising the following grounds: I. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN DISREGARDING THE SUBSTANTIAL AND OVERWHELMING EVIDENCE ADDUCED BY THE PETITIONER SHOWING THAT RESPONDENT UNION PERPETRATED FRAUD, FORGERY, MISREPRESENTATION AND MISSTATEMENTS IN CONNECTION WITH THE ADOPTION AND RATIFICATION OF ITS CONSTITUTION AND BYLAWS, AND IN THE PREPARATION OF THE LIST OF MEMBERS WHO TOOK PART IN THE ALLEGED ORGANIZATIONAL MEETING BY HOLDING THAT: A. THE 87 AFFIDAVITS OF ALLEGED UNION MEMBERS HAVE NO EVIDENTIARY WEIGHT. B. THE INCLUSION OF THE 82 EMPLOYEES IN THE LIST OF ATTENDEES TO THE JANUARY 9, 2000 MEETING IS AN INTERNAL MATTER WITHIN THE AMBIT OF THE WORKER'S RIGHT TO SELF-ORGANIZATION AND OUTSIDE THE SPHERE OF INFLUENCE (OF) THIS OFFICE (PUBLIC RESPONDENT IN THIS CASE) AND THE PETITIONER.

II. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN IGNORING AND DISREGARDING THE BLATANT PROCEDURAL LAPSES OF THE RESPONDENT UNION IN THE FILING OF ITS MOTION FOR RECONSIDERATION AND APPEAL. A. BY GIVING DUE COURSE TO THE MOTION FOR RECONSIDERATION FILED BY THE RESPONDENT UNION DESPITE THE FACT THAT IT WAS FILED BEYOND THE REGLEMENTARY PERIOD. B. BY ADMITTING THE APPEAL FILED BY ATTY. ERNESTO R. ARELLANO AND HOLDING THAT THE SAME DOES NOT CONSTITUTE FORUM SHOPPING UNDER SUPREME COURT CIRCULAR NO. 28-91. III. PUBLIC RESPONDENT ACTED RECKLESSLY AND IMPRUDENTLY, GRAVELY ABUSED ITS DISCRETION AND EXCEEDED ITS JURISDICTION IN INVOKING THE CONSTITUTIONAL RIGHT TO SELF- ORGANIZATION AND ILO CONVENTION NO. 87 TO JUSTIFY THE MASSIVE FRAUD, MISREPRESENTATION, MISSTATEMENTS AND FORGERY COMMITTED BY THE RESPONDENT UNION. [13] The petition lacks merit.

The right to form, join, or assist a union is specifically protected by Art. XIII, Section 3 [14] of the Constitution and such right, according to Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code, shall not be abridged. Once registered with the DOLE, a union is considered a legitimate labor organization endowed with the right and privileges granted by law to such organization. While a certificate of registration confers a union with legitimacy with the concomitant right to participate in or ask for certification election in a bargaining unit, the registration may be canceled or the union may be decertified as the bargaining unit, in which case the union is divested of the status of a legitimate labor organization.[15] Among the grounds for cancellation is the commission of any of the acts enumerated in Art. 239(a)[16] of the Labor Code, such as fraud and misrepresentation in connection with the adoption or ratification of the union's constitution and like documents. The Court, has in previous cases, said that to decertify a union, it is not enough to show that the union includes ineligible employees in its membership. It must also be shown that there was misrepresentation, false statement, or fraud in connection with the application for registration and the supporting documents, such as the adoption or ratification of the constitution and by-laws or amendments thereto and the minutes of ratification of the constitution or by-laws, among other documents. [17] Essentially, Ventures faults both the BLR and the CA in finding that there was no fraud or misrepresentation on the part of the Union sufficient to justify cancellation of its registration. In this regard, Ventures makes much of, first, the separate hand-written statements of 82 employees who, in gist, alleged that they were unwilling or harassed signatories to the attendance sheet of the organizational meeting. We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written statements submitted by Ventures on March 20, 2001, or seven months after it filed its petition for cancellation of registration, partake of the nature of withdrawal of union membership executed after the Union's filing of a petition for certification election on March 21, 2000. We have in precedent cases[18] said that the employees' withdrawal from a labor union made before the filing of the petition

for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the same. Now then, if a withdrawal from union membership done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to assume that such withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it concluded that the affidavits of retraction of the 82 members had no evidentiary weight. It cannot be over-emphasized that the registration or the recognition of a labor union after it has submitted the corresponding papers is not ministerial on the part of the BLR. Far from it. After a labor organization has filed the necessary registration documents, it becomes mandatory for the BLR to check if the requirements under Art. 234 [19] of the Labor Code have been sedulously complied with. [20] If the union's application is infected by falsification and like serious irregularities, especial those appearing on the face of the application and its attachments, a union should be denied recognition as a legitimate labor organization. Prescinding from these considerations, the issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that its application for registration and the supporting documents thereof are prima facie free from any vitiating irregularities. Second, Ventures draws attention to the inclusion of 82 individuals to the list of participants in the January 9, 2000 organizational meeting. Ventures submits that the 82, being no longer connected with the company, should not have been counted as attendees in the meeting and the ratification proceedings immediately afterwards. The assailed inclusion of the said 82 individuals to the meeting and proceedings adverted to is not really fatal to the Union's cause for, as determined by the BLR, the allegations of falsification of signatures or misrepresentation with respect to these individuals are without basis. [21] The Court need not delve into the question of whether these 82 dismissed individuals were still Union members qualified to vote and affix their signature on its application for registration and supporting documents. Suffice it to say that, as aptly observed by the CA, the procedure for acquiring or losing union membership and the determination of who are qualified or disqualified to be members are matters internal to the union and flow from its right to self-organization. To our mind, the relevancy of the 82 individuals' active participation in the Union's organizational meeting and the signing ceremonies thereafter comes in only for purposes of determining whether or not the Union, even without the 82, would still meet what Art. 234(c) of the Labor Code requires to be submitted, to wit: Art. 234. Requirements of Registration. -- Any applicant labor organization x x x shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: x x x x

(c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate. The BLR, based on its official records, answered the poser in the affirmative. Wrote the BLR: It is imperative to look into the records of respondent union with this Bureau pursuant to our role as a central registry of union and CBA records under Article 231 of the Labor Code and Rule XVII of the rules implementing Book V of the Labor Code, as amended x x x. In its union records on file with this Bureau, respondent union submitted the names of [542] members x x x. This number easily complied with the 20% requirement, be it 1,928 or 2,202 employees in the establishment. Even subtracting the 82 employees from 542 leaves 460 union members, still

within

440

or

20%

of

the

maximum

total

of

2,202

rank-and-file

employees.

Whatever misgivings the petitioner may have with regard to the 82 dismissed employees is better addressed in the inclusion-exclusion proceedings during a pre-election conference x x x. The issue surrounding the involvement of the 82 employees is a matter of membership or voter eligibility. It is not a ground to cancel union registration. (Emphasis added.) The bare fact that three signatures twice appeared on the list of those who participated in the organizational meeting would not, to our mind, provide a valid reason to cancel Certificate of Registration No. RO300-00-02- UR-0003. As the Union tenably explained without rebuttal from Ventures, the double entries are no more than "normal human error," effected without malice. Even the labor arbiter who found for Ventures sided with the Union in its explanation on the absence of malice.[22] The cancellation of a union's registration doubtless has an impairing dimension on the right of labor to self-organization. Accordingly, we can accord concurrence to the following apt observation of the BLR: "[F]or fraud and misrepresentation [to be grounds for] cancellation of union registration under Article 239 [of the Labor Code], the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members." [23] In its Comment, the Union points out that for almost seven (7) years following the filing of its petition, no certification election has yet been conducted among the rank-and-file employees. If this be the case, the delay has gone far enough and can no longer be allowed to continue. The CA is right when it said that Ventures should not interfere in the certification election by actively and persistently opposing the certification election of the Union. A certification election is exclusively the concern of employees and the employer lacks the legal personality to challenge it.[24] In fact, jurisprudence frowns on the employer's interference in a certification election for such interference unduly creates the impression that it intends to establish a company union. [25] Ventures' allegations on forum shopping and the procedural lapse supposedly committed by the BLR in allowing a belatedly filed motion for reconsideration need not detain us long. Suffice it to state that this Court has consistently ruled that the application of technical rules of procedure in labor cases may be relaxed to serve the demands of substantial justice. [26] So it must be in this case. WHEREFORE, the petition is DENIED. The Decision and Resolution dated October 20, 2003 and January 19, 2004, respectively, of the CA are AFFIRMED. S.S. Ventures Labor Union shall remain in the roster of legitimate labor organizations, unless it has in the meantime lost its legitimacy for causes set forth in the Labor Code. Costs against petitioner. SO Quisumbing, (Chairperson), Ynares-Santiago, Carpio Morales, and Tinga, ORDERED. JJ., concur.

THIRD DIVISION MARIWASA SIAM CERAMICS, INC.,Petitioner, - versus THE SECRETARY OF THE DEPARTMENT OF LABOR DECISION December 21, 2009

NACHURA, J.: This is a petition for review on certiorari[1] under Rule 45 of the Rules of Court, seeking to annul the Decision [2] dated December 20, 2007 and the Resolution[3] datedJune 6, 2008 of the Court of Appeals in CA-G.R. SP No. 98332. The antecedent facts are as follows On May 4, 2005, respondent Samahan Ng Mga Manggagawa Sa Mariwasa Siam Ceramics, Inc. (SMMSC-Independent) was issued a Certificate of Registration [4] as a legitimate labor organization by the Department of Labor and Employment (DOLE), Region IV-A. On June 14, 2005, petitioner Mariwasa Siam Ceramics, Inc. filed a Petition for Cancellation of Union Registration against respondent, claiming that the latter violated Article 234 [5] of the Labor Code for not complying with the 20% requirement, and that it committed massive fraud and misrepresentation in violation of Article 239 [6] of the same code. The case was docketed as Case No. RO400-0506-AU-004. On August 26, 2005, the Regional Director of DOLE IV-A issued an Order granting the petition, revoking the registration of respondent, and delisting it from the roster of active labor unions. Aggrieved, respondent appealed to the Bureau of Labor Relations (BLR). In a Decision[7] dated June 14, 2006, the BLR granted respondents appeal and disposed as follows WHEREFORE, premises considered, the appeal by Samahan ng Manggagawa sa Mariwasa Siam Ceramics, Inc. (SMMSC-Independent) is hereby GRANTED, and the Decision dated 26 August 2005 by DOLE-Region-IV-A Director Maximo B. Lim is hereby REVERSED and SET ASIDE. Samahan ng Manggagawa sa Mariwasa Siam Ceramics, Inc. (SMMSCIndependent), under Registration Certificate No. RO400-200505-UR-002, remains in the roster of legitimate labor organizations. SO DECIDED.[8]

Petitioner filed a Motion for Resolution[9] dated February 2, 2007.

Reconsideration

but

the

BLR

denied

it

in

Petitioner sought recourse with the Court of Appeals (CA) through a Petition for Certiorari; but the CA denied the petition for lack of merit. Petitioners motion for reconsideration of the CA Decision was likewise denied, hence, this petition based on the following grounds Review of the Factual Findings of the Bureau of Labor Relations, adopted and confirmed by the Honorable Court of Appeals is warranted[;] The Honorable Court of Appeals seriously erred in ruling that the affidavits of recantation cannot be given credence[;] The Honorable Court of Appeals seriously erred in ruling that private respondent union complied with the 20% membership requirement[; and] The Honorable Court of Appeals seriously erred when it ruled that private respondent union did not commit misrepresentation, fraud or false statement. [10]

The petition should be denied. The petitioner insists that respondent failed to comply with the 20% union membership requirement for its registration as a legitimate labor organization because of the disaffiliation from the total number of union members of 102 employees who executed affidavits recanting their union membership. It is, thus, imperative that we peruse the affidavits appearing to have been executed by these affiants. The affidavits uniformly state Ako, _____________, Pilipino, may sapat na gulang, regular na empleyado bilang Rank & File sa Mariwasa Siam Ceramics, Inc., Bo. San Antonio, Sto. Tomas, Batangas, matapos na makapanumpa ng naaayon sa batas ay malaya at kusang loob na nagsasaad ng mga sumusunod: 1. Ako ay napilitan at nilinlang sa pagsapi sa Samahan ng mga Manggagawa sa Mariwasa Siam Ceramics, Inc. o SMMSC-Independent sa kabila ng aking pag-aalinlangan[;] 2. Aking lubos na pinagsisihan ang aking pagpirma sa sipi ng samahan, at handa ako[ng] tumalikod sa anumang kasulatan na aking nalagdaan sa kadahilanan na hindi angkop sa aking pananaw ang mga mungkahi o adhikain ng samahan. SA KATUNAYAN NANG LAHAT, ako ay lumagda ng aking pangalan ngayong ika____ ng ______, 2005 dito sa Lalawigan ng Batangas, Bayan ng Sto. Tomas.

____________________ Nagsasalaysay Evidently, these affidavits were written and prepared in advance, and the pro forma affidavits were ready to be filled out with the employees names and signatures. The first common allegation in the affidavits is a declaration that, in spite of his hesitation, the affiant was forced and deceived into joining the respondent union. It is worthy to note, however, that the affidavit does not mention the identity of the people who allegedly forced and deceived the affiant into joining the union, much less the circumstances that constituted such force and deceit. Indeed, not only was this allegation couched in very general terms and sweeping in nature, but more importantly, it was not supported by any evidence whatsoever. The second allegation ostensibly bares the affiants regret for joining respondent union and expresses the desire to abandon or renege from whatever agreement he may have signed regarding his membership with respondent. Simply put, through these affidavits, it is made to appear that the affiants recanted their support of respondents application for registration. In appreciating affidavits of recantation such as these, our ruling in La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor Relations [11] is enlightening,viz.

On the second issuewhether or not the withdrawal of 31 union members from NATU affected the petition for certification election insofar as the 30% requirement is concerned, We reserve the Order of the respondent Director of the Bureau of Labor Relations, it appearing undisputably that the 31 union members had withdrawn their support to the petition before the filing of said petition. It would be otherwise if the withdrawal was made after the filing of the petition for it would then be presumed that the withdrawal was not free and voluntary. The presumption would arise that the withdrawal was procured through duress, coercion or for valuable consideration. In other words, the distinction must be that withdrawals made before the filing of the petition are presumed voluntary unless there is convincing proof to the contrary, whereas withdrawals made after the filing of the petition are deemed involuntary. The reason for such distinction is that if the withdrawal or retraction is made before the filing of the petition, the names of employees supporting the petition are supposed to be held secret to the opposite party. Logically, any such withdrawal or retraction shows voluntariness in the absence of proof to the contrary. Moreover, it becomes apparent that such employees had not given consent to the filing of the petition, hence the subscription requirement has not been met. When the withdrawal or retraction is made after the petition is filed, the employees who are supporting the petition become known to the opposite party since their names are attached to the petition at the time of filing. Therefore, it would not be unexpected that the opposite party would use foul means for the subject employees to withdraw their support. [12] In the instant case, the affidavits of recantation were executed after the identities of the union members became public, i.e., after the union filed a petition for certification election on May 23, 2005, since the names of the members were attached to the petition. The purported withdrawal of support for the registration of the union was made after the documents were submitted to the DOLE, Region IV-A. The logical conclusion, therefore, following jurisprudence, is that the employees were not totally free from the employers pressure, and so the voluntariness of the employees execution of the affidavits becomes suspect. It is likewise notable that the first batch of 25 pro forma affidavits shows that the affidavits were executed by the individual affiants on different dates from May 26, 2005until June 3, 2005, but they were all sworn before a notary public on June 8, 2005. There was also a second set of standardized affidavits executed on different dates from May 26, 2005 until July 6, 2005. While these 77 affidavits were notarized on different dates, 56 of these were notarized on June 8, 2005, the very same date when the first set of 25 was notarized. Considering that the first set of 25 affidavits was submitted to the DOLE on June 14, 2005, it is surprising why petitioner was able to submit the second set of affidavits only on July 12, 2005. Accordingly, we cannot give full credence to these affidavits, which were executed under suspicious circumstances, and which contain allegations unsupported by evidence. At best, these affidavits are self-serving. They possess no probative value. A retraction does not necessarily negate an earlier declaration. For this reason, retractions are looked upon with disfavor and do not automatically exclude the original statement or declaration based solely on the recantation. It is imperative that a determination be first made as to which between the original and the new statements should be given weight or accorded belief, applying the general rules on evidence. In this case, inasmuch as they remain bare allegations, the purported recantations should not be upheld. [13] Nevertheless, even assuming the veracity of the affidavits of recantation, the legitimacy of respondent as a labor organization must be affirmed. While it is true that the withdrawal of support

may be considered as a resignation from the union, the fact remains that at the time of the unions application for registration, the affiants were members of respondent and they comprised more than the required 20% membership for purposes of registration as a labor union. Article 234 of the Labor Code merely requires a 20% minimum membership during the application for union registration. It does not mandate that a union must maintain the 20% minimum membership requirement all throughout its existence.[14] Respondent asserts that it had a total of 173 union members at the time it applied for registration. Two names were repeated in respondents list and had to be deducted, but the total would still be 171 union members. Further, out of the four names alleged to be no longer connected with petitioner, only two names should be deleted from the list since Diana Motilla and T.W. Amutan resigned from petitioner only on May 10, 2005 and May 17, 2005, respectively, or after respondents registration had already been granted. Thus, the total union membership at the time of registration was 169. Since the total number of rank-and-file employees at that time was 528, 169 employees would be equivalent to 32% of the total rank-and-file workers complement, still very much above the minimum required by law. For the purpose of de-certifying a union such as respondent, it must be shown that there was misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with the election of officers, the minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected-appointed officers and their postal addresses to the BLR.[15] The bare fact that two signatures appeared twice on the list of those who participated in the organizational meeting would not, to our mind, provide a valid reason to cancel respondents certificate of registration. The cancellation of a unions registration doubtless has an impairing dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds for cancellation of union registration under the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members. In this case, we agree with the BLR and the CA that respondent could not have possibly committed misrepresentation, fraud, or false statements. The alleged failure of respondent to indicate with mathematical precision the total number of employees in the bargaining unit is of no moment, especially as it was able to comply with the 20% minimum membership requirement. Even if the total number of rank-and-file employees of petitioner is 528, while respondent declared that it should only be 455, it still cannot be denied that the latter would have more than complied with the registration requirement. WHEREFORE, the petition is DENIED. The assailed December 20, 2007 Decision and the June 6, 2008 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.

EAGLE RIDGE VS EAGLE RIDGE, 2010 DECISION VELASCO, JR., J.:

In this petition for certiorari under Rule 65, Eagle Ridge Golf & Country Club (Eagle Ridge) assails and seeks to nullify the Resolutions of the Court of Appeals (CA) dated April 27, 2007[1] and June 6, 2007,[2] issued in CA-G.R. SP No. 98624, denying a similar recourse petitioner earlier interposed to set aside the December 21, 2006 Decision [3] of the Bureau of Labor Relations (BLR), as reiterated in a Resolution[4] of March 7, 2007. Petitioner Eagle Ridge is a corporation engaged in the business of maintaining golf courses. It had, at the end of CY 2005, around 112 rank-and-file employees. The instant case is an off-shot of the desire of a number of these employees to organize themselves as a legitimate labor union and their employers opposition to their aspiration. The Facts On December 6, 2005, at least 20% of Eagle Ridges rank-and-file employeesthe percentage threshold required under Article 234(c) of the Labor Code for union registrationhad a meeting where they organized themselves into an independent labor union, named Eagle Ridge Employees Union (EREU or Union), [5] elected a set of officers,[6] and ratified[7] their constitution and by-laws.[8] On December 19, 2005, EREU formally applied for registration [9] and filed BLR Reg. Form No. I-LO, s. 1998[10] before the Department of Labor and Employment (DOLE) Regional Office IV (RO IV). In time, DOLE RO IV granted the application and issued EREU Registration Certificate (Reg. Cert.) No. RO400-200512-UR-003. The EREU then filed a petition for certification election in Eagle Ridge Golf & Country Club, docketed as Case No. RO400-0601-RU-002. Eagle Ridge opposed this petition, [11] followed by its filing of a petition for the cancellation [12] of Reg. Cert. No. RO400-200512-UR-003. Docketed as RO400-0602-AU-003, Eagle Ridges petition ascribed misrepresentation, false statement, or fraud to EREU in connection with the adoption of its constitution and by-laws, the numerical composition of the Union, and the election of its officers. Going into specifics, Eagle Ridge alleged that the EREU declared in its application for registration having 30 members, when the minutes of its December 6, 2005 organizational meeting showed it only had 26 members. The misrepresentation was exacerbated by the discrepancy between the certification issued by the Union secretary and president that 25 members actually ratified the constitution and by-laws on December 6, 2005 and the fact that 26 members affixed their signatures on the documents, making one signature a forgery. Finally, Eagle Ridge contended that five employees who attended the organizational meeting had manifested the desire to withdraw from the union. The five executed individual affidavits or Sinumpaang Salaysay[13] on February 15, 2006, attesting that they arrived late at said meeting which they claimed to be drinking spree; that they did not know that the documents they signed on that occasion pertained to the organization of a union; and that they now wanted to be excluded from the Union. The withdrawal of the five, Eagle Ridge maintained, effectively reduced the union membership to 20 or 21, either of which is below the mandatory minimum 20% membership requirement under Art.234(c) of the Labor Code. Reckoned from 112 rank-and-file employees of Eagle Ridge, the required number would be 22 or 23 employees. As a counterpoint, EREU, in its Comment, [14] argued in gist: 1) the petition for cancellation was procedurally deficient as it does not contain a certification against forum shopping and that the same was verified by one not duly authorized by Eagle Ridges board;

2) the alleged discrepancies are not real for before filing of its application on December 19, 2005, four additional employees joined the union on December 8, 2005, thus raising the union membership to 30 members as of December 19, 2005; 3) the understatement by one member who ratified the constitution and by-laws was a typographical error, which does not make it either grave or malicious warranting the cancellation of the unions registration; 4) the retraction of 5 union members should not be given any credence for the reasons that: (a) the sworn statements of the five retracting union members sans other affirmative evidence presented hardly qualify as clear and credible evidence considering the joint affidavits of the other members attesting to the orderly conduct of the organizational meeting; (b) the retracting members did not deny signing the union documents; (c) following, Belyca Corporation v. Ferrer-Calleja[15] and Oriental Tin Can Labor Union v. Secretary of Labor and Employment,[16] it can be presumed that duress, coercion or valuable consideration was brought to bear on the retracting members; and (d) citing La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations,[17] BelycaCorporation and Oriental Tin Can Labor Union, where the Court ruled that once the required percentage requirement has been reached, the employees withdrawal from union membership taking place after the filing of the petition for certification election will not affect the petition, it asserted the applicability of said ruling as the petition for certification election was filed on January 10, 2006 or long before February 15, 2006 when the affidavits of retraction were executed by the five union members, thus contending that the retractions do not affect nor be deemed compelling enough to cancel its certificate of registration. The Union presented the duly accomplished union membership forms [18] dated December 8, 2005 of four additional members. And to rebut the allegations in the affidavits of retraction of the five union members, it presented the Sama-Samang Sinumpaang Salaysay[19] dated March 20, 2006 of eight union members; another Sama-Samang Sinumpaang Salaysay,[20] also bearing date March 20, 2006, of four other union members; and the Sworn Statement [21] dated March 16, 2006 of the Unions legal counsel, Atty. Domingo T. Aonuevo. These affidavits attested to the orderly and proper proceedings of the organizational meeting on December 6, 2005. In its Reply,[22] Eagle Ridge reiterated the grounds it raised in its petition for cancellation and asserted further that the four additional members were fraudulently admitted into the Union. As Eagle Ridge claimed, the applications of the four neither complied with the requirements under Section 2, Art. IV of the unions constitution and by-laws nor were they shown to have been duly received, issued receipts for admission fees, processed with recommendation for approval, and approved by the union president. Moreover, Eagle Ridge presented another Sinumpaang Salaysay[23] of retraction dated March 15, 2006 of another union member. The membership of EREU had thus been further reduced to only 19 or 20. This same member was listed in the first Sama-Samang Sinumpaang Salaysay[24] presented by the Union but did not sign it. The Ruling of the DOLE Regional Director After due proceedings, the DOLE Regional Director, Region IV-A, focusing on the question of misrepresentation, issued on April 28, 2006 an Order [25] finding for Eagle Ridge, its petition to cancel Reg. Cert. No. RO400-200512-UR-003 being granted and EREU being delisted from the roster of legitimate labor organizations. Aggrieved, the Union appealed to the BLR, the recourse docketed as BLR A-C-30-5-31-06 (Case No. RO400-0602-AU-003).

The Ruling of the BLR Initially, the BLR, then headed by an Officer-in-Charge (OIC), affirmed[26] the appealed order of the DOLE Regional Director. Undeterred by successive set backs, EREU interposed a motion for reconsideration, contending that: 1) Contrary to the ruling of the BLR OIC Director, a certificate of non-forum shopping is mandatory requirement, under Department Order No. (DO) 40-03 and the Rules of Court, non-compliance with which is a ground to dismiss a petition for cancellation of a certificate of registration; 2) It was erroneous for both the Regional Director and the BLR OIC Director to give credence to the retraction statements of union members which were not presented for reaffirmation during any of the hearings of the case, contrary to the requirement for the admission of such evidence under Sec. 11, Rule XI of DO 40-03. In a Decision dated December 21, 2006, the BLR, now headed by Director Rebecca C. Chato, set aside the July 28, 2006 order of the BLR OIC Director, disposing as follows: WHEREFORE, the motion for reconsideration is hereby GRANTED and our Resolution dated 28 July 2006 is hereby VACATED. Accordingly, the Eagle Ridge Employees Union (EREU) shall remain in the roster of legitimate organizations.

In finding for the Union, the BLR Director eschewed procedural technicalities. Nonetheless, she found as without basis allegations of misrepresentation or fraud as ground for cancellation of EREUs registration. In turn aggrieved, Eagle Ridge sought but was denied reconsideration per the BLRs Resolution dated March 7, 2007. Eagle Ridge thereupon went to the CA on a petition for certiorari. The Ruling of the CA On April 27, 2007, the appellate court, in a terse two-page Resolution,[27] dismissed Eagle Ridges petition for being deficient, as: 1. the questioned [BLR] Decision dated December 21, 2006 and the Resolution dated March 7, 2007 Resolution [appended to the petition] are mere machine copies; and the verification and certification of non-forum shopping was subscribed to by Luna C. Piezas on her representation as the legal counsel of the petitioner, but sans [the requisite] Secretarys Certificate or Board Resolution authorizing her to execute and sign the same. The CA later denied, in its second assailed resolution, Eagle Ridges motion for reconsideration, albeit the latter had submitted a certificate to show that its legal counsel has been authorized, per a board resolution, to represent the corporation. The Issues Eagle Ridge is now before us via this petition for certiorari on the submissions that:

2.

I. [THE CA] COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING THE COMPANYS PETITION FOR CERTIORARI AND DENYING ITS MOTION FOR RECONSIDERATION CONSIDERING THAT THE COMPANYS PREVIOUS COUNSEL WAS AUTHORIZED TO REPRESENT THE COMPANY IN THE PETITION FOR CERTIORARI FILED BEFORE THE [CA]; II. IN ORDER NOT TO FURTHER PREJUDICE THE COMPANY, IT IS RESPECTFULLY SUBMITTED THAT THIS HONORABLE COURT COULD TAKE COGNIZANCE OF THE MERITS OF THIS CASE AND RESOLVE THAT BASED ON THE EVIDENCE ON RECORD, THERE WAS FRAUD, MISREPRESENTATION AND/OR FALSE STATEMENT WHICH WARRANT THE CANCELLATION OF CERTIFICATE OF REGISTRATION OF EREU.[28]

The Courts Ruling We dismiss the petition. Procedural Issue: Lack of Authority Certiorari is an extraordinary, prerogative remedy and is never issued as a matter of right.[29] Accordingly, the party who seeks to avail of it must strictly observe the ruleslaid down by law.[30] Petitions for certiorari under Rule 65 of the Rules of Court require a sworn certification of nonforum shopping as provided in the third paragraph of Section 3, Rule 46. [31] Sec. 3, paragraphs 4 and 6 of Rule 46 pertinently provides: SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. xxxx xxxx xxxx The petitioner shall also submit together with the petition a sworn certification that he has not theretofore commenced any action involving the same issues in the Supreme Court, the Court of Appeals x x x, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same x x x. xxxx The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis supplied.)

Evidently, the Rules requires the petitioner, not his counsel, to sign under oath the requisite certification against non-forum shopping. Such certification is a peculiar personal representation on

the part of the principal party, an assurance to the court that there are no other pending cases involving basically the same parties, issues, and cause of action. [32] In the instant case, the sworn verification and certification of non-forum shopping in the petition for certiorari of Eagle Ridge filed before the CA carried the signature of its counsel without the requisite authority. Eagle Ridge tried to address its faux pas by submitting its board secretarys Certificate[33] dated May 15, 2007, attesting to the issuance on May 10, 2007 of Board Resolution No. ERGCCI 07/III-01 that authorized its counsel of record, Atty. Luna C. Piezas, to represent it before the appellate court. The CA, however, rejected Eagle Ridges virtual plea for the relaxation of the rules on the signing of the verification and certification against forum shopping, observing that the board resolution adverted to was approved after Atty. Piezas has signed and filed for Eagle Ridge the petition for certiorari. The appellate courts assailed action is in no way tainted with grave abuse of discretion, as Eagle Ridge would have this Court believed. Indeed, a certification of non-forum shopping signed by counsel without the proper authorization is defective and constitutes a valid cause for dismissal of the petition.[34] The submission of the board secretarys certificate through a motion for reconsideration of the CAs decision dismissing the petition for certiorari may be considered a substantial compliance with the Rules of Court.[35] Yet, this rule presupposes that the authorizing board resolution, the approval of which is certified to by the secretarys certification, was passed within the reglementary period for filing the petition. This particular situation does not, however, obtain under the premises. The records yield the following material dates and incidents: Eagle Ridge received the May 7, 2007 resolution of the BLR Director on March 9, 2007, thus giving it 60 days or up to May 8, 2007 to file a petition for certiorari, as it in fact filed its petition on April 18, 2007 before the CA. The authorization for its counsel, however, was only issued in a meeting of its board on May 10, 2007 or a couple of days beyond the 60-day reglementary period referred to in filing a certiorari action. Thus, there was no substantial compliance with the Rules. As with most rules of procedure, however, exceptions are invariably recognized and the relaxation of procedural rules on review has been effected to obviate jeopardizing substantial justice.[36] This liberality stresses the importance of review in our judicial grievance structure to accord every party litigant the amplest opportunity for the proper and just disposition of his cause, freed from the constraints of technicalities.[37] But concomitant to a liberal interpretation of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.[38] To us, Eagle Ridge has not satisfactorily explained its failure to comply. It may be true, as Eagle Ridge urges, that its counsels authority to represent the corporation was never questioned before the DOLE regional office and agency. But EREUs misstep could hardly lend Eagle Ridge comfort. And obviously, Eagle Ridge and its counsel erred in equating the latters representation as legal counsel with the authority to sign the verification and the certificate of non-forum shopping in the formers behalf. We note that the authority to represent a client before a court or quasi-judicial agency does not require an authorizing board resolution, as the counsel-client relationship is presumed by the counsels representation by the filing of a pleading on behalf of the client. In filing a pleading, the counsel affixes his signature on it, but it is the client who must sign the verification and the certification against forum shopping, save when a board resolution authorizes the former to sign so.

It is entirely a different matter for the counsel to sign the verification and the certificate of nonforum shopping. The attestation or certification in either verification or certification of non-forum shopping requires the act of the principal party. As earlier indicated, Sec. 3 of Rule 46 exacts this requirement; so does the first paragraph of Sec. 5 of Rule 7 pertinently reading: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. (Emphasis added.)

It is, thus, clear that the counsel is not the proper person to sign the certification against forum shopping. If, for any reason, the principal party cannot sign the petition, the one signing on his behalf must have been duly authorized.[39] In addition, Eagle Ridge maintains that the submitted board resolution, albeit passed after the filing of the petition was filed, should be treated as a ratificatory medium of the counsels act of signing the sworn certification of non-forum shopping. We are not inclined to grant the desired liberality owing to Eagle Ridges failure to sufficiently explain its failure to follow the clear rules. If for the foregoing considerations alone, the Court could very well dismiss the instant petition. Nevertheless, the Court will explore the merits of the instant case to obviate the inequity that might result from the outright denial of the petition. Substantive Issue: No Fraud in the Application Eagle Ridge cites the grounds provided under Art. 239(a) and (c) of the Labor Code for its petition for cancellation of the EREUs registration. On the other hand, theUnion asserts bona fide compliance with the registration requirements under Art. 234 of the Code, explaining the seeming discrepancies between the number of employees who participated in the organizational meeting and the total number of union members at the time it filed its registration, as well as the typographical error in its certification which understated by one the number of union members who ratified the unions constitution and by-laws. Before their amendment by Republic Act No. 9481 [40] on June 15, 2007, the then governing Art. 234 (on the requirements of registration of a labor union) and Art. 239 (on the grounds for cancellation of union registration) of the Labor Code respectively provided as follows: 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 based on the following requirements: (a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of workers who participated in such meetings; (c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; xxxx (e) Four copies (4) of the constitution and by-laws of the applicant union, minutes of its adoption or ratification and the list of the members who participated in it.[41] xxxx ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The following shall constitute grounds for cancellation of union registration: (a) Misrepresentation, false statements or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification,and the list of members who took part in the ratification; xxxx (c) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected/appointed officers and their postal addresses within thirty (30) days from election. [42] (Emphasis supplied.)

A scrutiny of the records fails to show any misrepresentation, false statement, or fraud committed by EREU to merit cancellation of its registration. First. The Union submitted the required documents attesting to the facts of the organizational meeting on December 6, 2005, the election of its officers, and the adoption of the Unions constitution and by-laws. It submitted before the DOLE Regional Office with its Application for Registration and the duly filled out BLR Reg. Form No. I-LO, s. 1998, the following documents, to wit: (a) the minutes of its organizational meeting [43] held on December 6, 2005 showing 26 founding members who elected its union officers by secret ballot; (b) the list of rank-and-file employees[44] of Eagle Ridge who attended the organizational meeting and the election of officers with their individual signatures; (c) the list of rank-and-file employees[45] who ratified the unions constitution and by-laws showing the very same list as those who attended the organizational meeting and the election of officers with their individual signatures except the addition of four employees without their signatures, i.e., Cherry Labajo, Grace Pollo, Annalyn Poniente and Rowel Dolendo; (d) the unions constitution and by-laws[46] as approved on December 6, 2005; (e) the list of officers[47] and their addresses; (f) the list of union members[48] showing a total of 30 members; and

(g) the Sworn Statement[49] of the unions elected president and secretary. All the foregoing documents except the sworn statement of the president and the secretary were accompanied by Certifications[50] by the union secretary duly attested to by the union president.

Second. The members of the EREU totaled 30 employees when it applied on December 19, 2005 for registration. The Union thereby complied with the mandatory minimum 20% membership requirement under Art. 234(c). Of note is the undisputed number of 112 rank-and-file employees in Eagle Ridge, as shown in the Sworn Statement of the Union president and secretary and confirmed by Eagle Ridge in its petition for cancellation. Third. The Union has sufficiently explained the discrepancy between the number of those who attended the organizational meeting showing 26 employees and the list of union members showing 30. The difference is due to the additional four members admitted two days after the organizational meeting as attested to by their duly accomplished Union Membership forms. Consequently, the total number of union members, as of December 8, 2005, was 30, which was truthfully indicated in its application for registration on December 19, 2005. As aptly found by the BLR Director, the Union already had 30 members when it applied for registration, for the admission of new members is neither prohibited by law nor was it concealed in its application for registration. Eagle Ridges contention is flawed when it equated the requirements under Art. 234(b) and (c) of the Labor Code. Par. (b)clearly required the submission of the minutes of the organizational meetings and the list of workers who participated in the meetings, while par. (c) merely required the list of names of all the union members comprising at least 20% of the bargaining unit. The fact that EREU had 30 members when it applied for registration on December 19, 2005 while only 26 actually participated in the organizational meeting is borne by the records. Fourth. In its futile attempt to clutch at straws, Eagle Ridge assails the inclusion of the additional four members allegedly for not complying with what it termed as the sine qua non requirements for union member applications under the Unions constitution and by-laws, specifically Sec. 2 of Art. IV. We are not persuaded. Any seeming infirmity in the application and admission of union membership, most especially in cases of independent labor unions, must be viewed in favor of valid membership. The right of employees to self-organization and membership in a union must not be trammeled by undue difficulties. In this case, when the Union said that the four employee-applicants had been admitted as union members, it is enough to establish the fact of admission of the four that they had duly signified such desire by accomplishing the membership form. The fact, as pointed out by Eagle Ridge, that the Union, owing to its scant membership, had not yet fully organized its different committees evidently shows the direct and valid acceptance of the four employee applicants rather than deter their admissionas erroneously asserted by Eagle Ridge. Fifth. The difference between the number of 26 members, who ratified the Unions constitution and by-laws, and the 25 members shown in the certification of the Union secretary as having ratified it, is, as shown by the factual antecedents, a typographical error. It was an insignificant mistake committed without malice or prevarication. The list of those who attended the organizational meeting shows 26 members, as evidenced by the signatures beside their handwritten names. Thus, the certifications understatement by one member, while not factual, was clearly an error, but neither a misleading one nor a misrepresentation of what had actually happened. Sixth. In the more meaty issue of the affidavits of retraction executed by six union members, we hold that the probative value of these affidavits cannot overcome those of the supporting affidavits of 12 union members and their counsel as to the proceedings and the conduct of the organizational meeting on December 6, 2005. The DOLE Regional Director and the BLR OIC Director obviously

erred in giving credence to the affidavits of retraction, but not according the same treatment to the supporting affidavits. The six affiants of the affidavits of retraction were not presented in a hearing before the Hearing Officer (DOLE Regional Director), as required under the Rules Implementing Book V of the Labor Code covering Labor Relations. Said Rules is embodied in Department Order No. (DO) 40-03 which was issued on February 17, 2003 and took effect on March 15, 2003 to replace DO 9 of 1997. Sec. 11, Rule XI of DO 40-03 specifically requires: Section 11. Affirmation of testimonial evidence. Any affidavit submitted by a party to prove his/her claims or defenses shall be re-affirmed by the presentation of the affiant before theMed-Arbiter or Hearing Officer, as the case may be. Any affidavit submitted without the re-affirmation of the affiant during a scheduled hearing shall not be admitted in evidence, except when the party against whom the affidavit is being offered admits all allegations therein and waives the examination of the affiant.

It is settled that affidavits partake the nature of hearsay evidence, since they are not generally prepared by the affiant but by another who uses his own language in writing the affiants statement, which may thus be either omitted or misunderstood by the one writing them. [51] The above rule affirms the general requirement in adversarial proceedings for the examination of the affiant by the party against whom the affidavit is offered. In the instant case, it is required for affiants to re-affirm the contents of their affidavits during the hearing of the instant case for them to be examined by the opposing party, i.e., the Union. For their non-presentation and consonant to the above-quoted rule, the six affidavits of retraction are inadmissible as evidence against the Union in the instant case. Moreover, the affidavit and joint-affidavits presented by the Union before the DOLE Regional Director were duly re-affirmed in the hearing of March 20, 2006 by the affiants. Thus, a reversible error was committed by the DOLE Regional Director and the BLR OIC Director in giving credence to the inadmissible affidavits of retraction presented by Eagle Ridge while not giving credence to the duly re-affirmed affidavits presented by the Union. Evidently, the allegations in the six affidavits of retraction have no probative value and at the very least cannot outweigh the rebutting attestations of the duly re-affirmed affidavits presented by the Union. Seventh. The fact that six union members, indeed, expressed the desire to withdraw their membership through their affidavits of retraction will not cause the cancellation of registration on the ground of violation of Art. 234(c) of the Labor Code requiring the mandatory minimum 20% membership of rank-and-file employees in the employees union. The six retracting union members clearly severed and withdrew their union membership. The query is whether such separation from the Union can detrimentally affect the registration of the Union. We answer in the negative. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that theUnion complied with the mandatory 20% membership requirement.

Besides, it cannot be argued that the six affidavits of retraction retroact to the time of the application of registration or even way back to the organizational meeting. Prior to their withdrawal, the six employees in question were bona fide union members. More so, they never disputed affixing their signatures beside their handwritten names during the organizational meetings. While they alleged that they did not know what they were signing, it bears stressing that their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little, if any, evidentiary value. With the withdrawal of six union members, there is still compliance with the mandatory membership requirement under Art. 234(c), for the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. Eagle Ridge further argues that the list of union members includes a supervisory employee. This is a factual issue which had not been raised at the first instance before the DOLE Regional Director and cannot be appreciated in this proceeding. To be sure, Eagle Ridge knows well who among its personnel belongs or does not belong to the supervisory group. Obviously, its attempt to raise the issue referred to is no more than an afterthought and ought to be rejected. Eighth. Finally, it may not be amiss to note, given the factual antecedents of the instant case, that Eagle Ridge has apparently resorted to filing the instant case for cancellation of the Unions certificate of registration to bar the holding of a certification election. This can be gleaned from the fact that the grounds it raised in its opposition to the petition for certification election are basically the same grounds it resorted to in the instant case for cancellation of EREUs certificate of registration. This amounts to a clear circumvention of the law and cannot be countenanced. For clarity, we reiterate the following undisputed antecedent facts: (1) On December 6, 2005, the Union was organized, with 26 employees of Eagle Ridge attending; (2) On December 19, 2005, the Union filed its formal application for registration indicating a total of 30 union members with the inclusion of four additional members on December 8, 2005 (Reg. Cert. No. RO400-200512-UR-003 was eventually issued by the DOLE RO IV-A); (3) On January 10, 2006, the Union filed before the DOLE RO IV-A its petition for certification election in Eagle Ridge; (4) On February 13, 2006, Eagle Ridge filed its Position Paper opposing the petition for certification election on essentially the same grounds it raised in the instant case; and (5) On February 24, 2006, Eagle Ridge filed the instant case for cancellation of the Unions certificate of registration on essentially the same grounds it raised in its opposition to the Unions petition for certification election. Evidently, as the Union persuasively argues, the withdrawal of six member-employees from the Union will affect neither the Unions registration nor its petition for certification election, as their affidavits of retraction were executed after the Unions petition for certification election had been filed. The initial five affidavits of retraction were executed on February 15, 2006; the sixth, on March 15, 2006. Indisputably, all six were executed way after the filing of the petition for certification election on January 10, 2006. In Eastland Manufacturing Company, Inc. v. Noriel,[52] the Court emphasized, and reiterated its earlier rulings,[53] that even if there were less than 30% [the required percentage of minimum membership then] of the employees asking for a certification election, that of itself would not be a bar

to respondent Director ordering such an election provided, of course, there is no grave abuse of discretion.[54] Citing Philippine Association of Free Labor Unions v. Bureau of Labor Relations,[55] the Court emphasized that a certification election is the most appropriate procedure for the desired goal of ascertaining which of the competing organizations should represent the employees for the purpose of collective bargaining.[56] Indeed, where the company seeks the cancellation of a unions registration during the pendency of a petition for certification election, the same grounds invoked to cancel should not be used to bar the certification election. A certification election is the most expeditious and fairest mode of ascertaining the will of a collective bargaining unit as to its choice of its exclusive representative.[57] It is the fairest and most effective way of determining which labor organization can truly represent the working force. It is a fundamental postulate that the will of the majority, if given expression in an honest election with freedom on the part of the voters to make their choice, is controlling.[58] The Court ends this disposition by reproducing the following apt excepts from its holding in S.S. Ventures International, Inc. v. S.S. Ventures Labor Union (SSVLU) on the effect of the withdrawal from union membership right before or after the filing of a petition for certification election: We are not persuaded. As aptly noted by both the BLR and CA, these mostly undated written statements submitted by Ventures on March 20, 2001, or seven months after it filed its petition for cancellation of registration, partake of the nature of withdrawal of union membership executed after the Unions filing of a petition for certification election on March 21, 2000. We have in precedent cases said that the employees withdrawal from a labor union made before the filing of the petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is considered to be involuntary and does not affect the same. Now then, if a withdrawal from union membership done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to assume that such withdrawal cannot work to nullify the registration of the union? Upon this light, the Court is inclined to agree with the CA that the BLR did not abuse its discretion nor gravely err when it concluded that the affidavits of retraction of the 82 members had no evidentiary weight. [59] (Emphasis supplied.)

THIRD DIVISIO [G.R. Nos. 87266-69, July 30, 1990] ASSOCIATED WORKERS UNION-PTGWO, PETITIONER, VS. THE NATIONAL LABOR RELATIONS COMMISSION (EN BANC), METRO PORT SERVICE, INC., MARINA PORT SERVICES, INC., ADRIANO S. YUMUL AND 10 OTHER INDIVIDUAL RESPONDENTS REPRESENTED BY ATTY. EPIFANIO JACOSALEM, RESPONDENTS. [G.R. NOS. 91223-26. JULY 30, 1990] MARINA PORT SERVICES, INC., PETITIONER, VS. HON. ARTHUR G. AMANSEC AND ADRIANO YUMUL, PABLITO REANDELAR, MACARIO DE LUNA, JR., ADAN MENDOZA, SMITH CARLOTA, EMERECIANO VERGARA, ROMEO ABACAN, LEONARDO ROMULO, ELINO JOSE, AND CATINDIANO CALUAG (COLLECTIVELY CALLED AWUM), RESPONDENTS. DECISION FELICIANO, J.:

These cases have been unusually difficult for the Court, not because the issues posed are in themselves intellectually demanding, but because of problems generated by the procedure adopted by the parties in coming before this Court. The incidents subject of these cases spawned multiple cases and petitions before the National Labor Relations Commission ("NLRC"). After the NLRC rendered a consolidated decision, the parties, in turn, filed multiple separate certiorari petitions to the Court -- on a staggered and piecemeal basis. This situation resulted in a number of discrete discussions of issues actually inter-related, since the Court, at any one time, could only see a small part of the whole picture and decide only on the basis of what it could see. In what follows, we have tried to put the whole picture together and to render comprehensive and substantial justice to all the parties. On 26 October 1984, petitioner Associated Workers Union ("AWU") - PTGWO, the then bargaining representative of the dockworkers at South Harbor, Port Area, Manila, filed a Notice of Strike against respondent Metro Port Service, Inc. ("Metro"), the thenarrastre contractor in the South Harbor, on the issues, among others, of unfilled vacancies and union busting. This was docketed as NLRC Case No. NCR-NS-10-288-84. On 3 April 1985, the abovementioned case was certified in an Order by the then Minister of Labor and Employment to the NLRC for compulsory arbitration; the Order also forbade the holding of strikes or lockouts.[1] The case was docketed as Certified NLRC Case No. 0403-85. In the latter case, one of the demands raised by AWU was that Metro terminate the employment of respondents Adriano Yumul and ten (10) others (individual respondents), for having organized, on 26 October 1984, the Associated Workers Union in Metroport ("AWUM") among the rank-and-file employees of Metro, ostensibly as a local or chapter of AWU. AWU had earlier expelled individual respondents from membership in AWU for disloyalty and, pursuant to the closed-shop provision of the existing AWU-Metro collective bargaining agreement ("CHA"), sought the termination of their employment. Metro initially resisted AWU's request to terminate the employment of individual respondents, contending that the termination would be premature as individual respondents had not been afforded due process, and that the termination would beviolative of the status quo agreement in NLRC Case No. NCR-NS-10-288-84.[2] Metro, however, eventually relented and suspended individual respondents after AWU -- despite the express prohibition in the Order dated 3 April 1985 -- staged a strike against it. On 18 April 1985, Metro executed a Compromise Agreement ("Agreement") with AWU to end the strike, item No. 2 of which stipulated: "At the instance of the union, [Metro] agrees to preventively suspend (individual respondents] effective immediately."[3] The Agreement was attested to by then Deputy Labor Minister Carmelo Noriel. As a result of Metro's implementation of the Agreement, individual respondents on 30 April 1985 filed a complaint against Metro, docketed as NLRC Case No. NCR-4-1372-85. Metro in that case filed in turn a third-party complaint against AWU and its officers. Metro in April 1985 also filed a complaint for illegal strike with damages against AWU and its officers, docketed as NLRC Case No. NCR-4-1341-85. On 21 June 1985, Labor Arbiter Ceferina Diosana in an Order directed Metro provisionally to reinstate individual respondents pending resolution of the issues raised therein, with which Order Metro complied. On 15 July 1985, AWU filed a petition for injunction against Metro, docketed as NLRC Injunction Case No. 993, praying for issuance of a temporary restraining order stopping the implementation of the Order of provisional reinstatement, and for Metro's compliance with the Agreement providing for the suspension of individual respondents. On 1 August 1985, the NLRC in an En Banc Resolution directed Metro to comply with the Agreement, and Metro complied and re-suspended individual respondents. Individual respondents' petition before the NLRC for preliminary mandatory injunction on 30 August 1985, praying "that pursuant to the Implementing Rules of Batas Pambansa Blg. 130, [Metro] be ordered to pay their salaries and allowances from and after their initial preventive suspension of thirty (30) days and until their actual reinstatement," was not acted upon.

All the above-mentioned cases, to wit: (a) Certified NLRC Case No. 0403-85 (NCR No. NS-10-28884); (b) NLRC Case No. NCR-4-1341-85; (c) NLRC Case No. NCR-4-1372-85; and (d) NLRC Injunction Case No. 993, were ordered consolidated before the NLRC en banc. On 4 September 1986, the NLRC rendered a consolidated Decision. In Certified NLRC Case No. 0403-85, the NLRC ruled that: (a) respondent Metro cannot be compelled to fill up vacancies with AWU's recommendees; (b) respondent Metro cannot be held liable for union busting, the issue of the medically impaired workers having become moot and academic; and (c) the compulsory retirement of AWU's members who have reached the age of 60 years is a valid exercise of management prerogative. In NLRC Case No. NCR-4-1372-85, the NLRC, finding that AWU was a national union, and that individual respondents have the right to organize themselves into a local chapter thereof, the formation of which was a protected activity and could not be considered as disloyalty, held the suspension or dismissal of individual respondents as illegal and, in relation to NLRC Injunction Case No. 993, ordered their reinstatement with backwages, to be paid solidarily by AWU and respondent Metro. In NLRC Case No. NCR-4-1341-85, the NLRC found the strike staged by AWU not illegal, holding that AWU was of the belief, although erroneously, that it could validly stage a strike during the pendency of its motion for reconsideration of the Minister's Order dated 3 April 1985 enjoining a strike or lockout. Both AWU and Metro filed separate motions for reconsideration of the consolidated Decision. Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc. ("Marina"), by virtue of a Special Permit issued by the Philippine Ports Authority, started operations as thearrastre operator at the Manila South Harbor vice Metro. On November 1986, individual respondents in a Motion/Manifestation prayed that Marina be included as party-respondent. On 27 July 1987, the NLRC in a Resolution denied AWU's and Metro's motions for reconsideration of the consolidated Decision dated 4 September 1986, but (acting on individual respondents' Motion/Manifestation) with the modification limiting Metro'sliability for backwages to wages accruing up to July 20, 1986 and ordering Marina to reinstate individual respondents with backwages and allowances starting from 21 July 1986. Marina complied with the Resolution by reinstating individual respondents through its payroll retroactive to 21 July 1986. AWU thereafter in G.R. Nos. 87266-69 filed with the Court a Petition for Certiorari on14 March 1989 praying for the reversal of the decision of the NLRC in NLRC Case No. NCR-NS-10-288-84 and NLRC Injunction Case No. 993 (praying principally for reversal of the order holding that respondent Metro could not be compelled to fill up vacancies with AWU's recommendees) and in NLRC Case No. NCR-4-1372-85 (praying chiefly for reversal of the order reinstating the eleven [11] private respondents to their former positions with backwages payable solidarily by AWU and respondent Metro). These cases (G.R. Nos. 87266-69) were assigned to the Third Division of the Court. Marina, meantime, had gone to the Court on certiorari on 14 June 1988 in G.R. Nos. 81256-59 (entitled "Marina Port Services, Inc. v. National Labor Relations Commission, Metro Port Service, Inc, Associated Workers Union [AWU-PTGWO], and Associated Workers Union in Metro Port [AWUM]") protesting, on grounds of alleged denial of due process, its inclusion by the NLRC as a party in NLRC Case No. NCR-4-1372-85 and its being required to reinstate individual respondents with backwages. In dismissing these cases (G.R. Nos. 81256-59) on 3 August 1988, the Court held that: "x x x [t]he decision to include Marina in the questioned [NLRC Resolution dated 17 July 1987] is based on Par. '7' of the Special Permit granted to Marina which states that 'Labor and personnel of previous operator, except those positions of trust and confidence, shall be absorbed by the grantee.' Besides, the petitioner was able to file not only a Motion for Reconsideration of the Questioned Resolution but also a Motion to Set Aside Motion/ Manifestation and Remarks on the Comment of Metro Port. The lack of due process at the beginning, if any, was cured by the above motions that the petitioner was able to file."[4]

On 13 April 1988, Metro in G.R. No. 82705 (entitled "Metro Port Services, Inc. v. National Labor Relations Commission, Associated Workers Union-PTGWO, Marina Port Services, Inc., and Adriano Yumul [and 10 others]) went to this Court again and assailed the NLRC ruling in NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993, Metro claimed that it should not have been held solidary liable with AWU because it had merely suspended individual respondents pursuant to the Agreement dated 18 April 1985 it had executed with AWU and, later, had merely obeyed the Resolution of the NLRC dated 1 August 1985 ordering Metro to re-suspend individual respondents. In similarly dismissing Metro's petition, the Court in G.R. No. 82705, held: "x x x Considering that the petitioner was a party to the compromise agreement with AWU which provided that 'at the instance of the union, the company agrees to preventively suspend Adriano S. Yumul and eleven associates effective immediately' and accordingly suspended the private respondents despite the suspension being contrary to law, the petitioner should be made solidarily liable with AWU for the backwagesand allowances that the private respondents may have been entitled to during their suspension. The petitioner's liability, however, should not extend to the time that respondent NLRC ordered it to re-suspend the private respondents."[5] (Underscoring supplied) Judgment was entered in G.R. Nos. 81256-59 and G.R. No. 82705 on 23 September 1988 and 4 July 1989, respectively, and the cases were remanded to the Labor Arbiter of origin for execution. On 18 September 1989, the Labor Arbiter issued a writ of execution against Marina to reinstate individual respondents and to pay them the amount of P154,357.00representing salary adjustments. Marina moved to quash the writ of execution questioning the award of P154,357.00, but without success. Marina thereafter appealed to the NLRC assailing the Labor Arbiter's refusal to quash the writ of execution. On 23 November 1989, Marina received an Order from the Executive Labor Arbiter dated 15 November 1989, requiring the release of any garnished deposit from its bank, holding that no seasonable appeal from the 7 November 1989 Order denying Marina's motion to quash had been taken. Marina filed a Manifestation dated 23 November 1989, arguing that it had filed an appeal with the NLRC within the 10-dayreglementary period. On 6 December 1989, the Executive Labor Arbiter issued a writ of execution requiring Marina: (a) to reinstate individual respondents and to pay them the amount of P154,357.00 representing salary adjustments; and (b) to implement and honor the legality of the organization and registration of AWUM as the local chapter of AWU. Marina then once more went to the Court in G.R. Nos. 91223-26 and filed a Petition forCertiorari to invalidate the writ of execution, pleading that: (a) execution had been ordered without due regard for its right of appeal from the Labor Arbiter's Order; and (b) execution would result in its being made to pay more than what is called for by the ruling of the Court in G.R. No. 82705, where the Court affirmed the NLRC ruling that Marina "should be made solidarily liable with AWU for the backwages and allowances that the private respondents may have been entitled to during their suspension [although liability] should not extend to the time that respondent NLRC ordered it to re-suspend the private respondents." These cases (G.R. Nos. 9122326) were assigned to the First Division of the Court. On 20 December 1989, a temporary restraining order was issued by the First Division of the Court to enjoin the implementation of the Executive Labor Arbiter's Order of 6 December 1989. On 16 April 1990, G.R. Nos. 91223-26 were consolidated with G.R. Nos. 87266-69. I 1. Deliberating on the instant Petition for Certiorari, the Court in G.R. Nos. 87266-69considers that petitioner AWU has failed to show grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in Certified NLRC Case No. 0403-85 (NCR No. NS-10-28884). The NLRC was correct there in holding that respondent Metro cannot be compelled to fill up vacancies with AWU's recommendees, as the CBA between AWU and respondent Metro granted the latter the right to "fill or not to fill-up vacancies"; that the issue of the medically impaired employees had already been raised in another Notice of Strike filed by AWU against respondent Metro on 16

September 1985, and both parties had agreed to abide by the recommendation and decision of an examining physician selected by them; and that the existing CBA grants respondent Metro the right to compulsorily retire any member of AWU who had reached 60 years of age, which right has been exercised by Metro. 2. The NLRC, however, misappreciated the relevant facts in NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993. While it is true that AWUM as a local union, being an entity separate and distinct from AWU, is free to serve the interest of all its members and enjoys the freedom to disaffiliate, such right to disaffiliate may be exercised, and is thus considered a protected labor activity, only when warranted by circumstances. Generally, a labor union may disaffiliate from the mother union to form a local or independent union only during the 60-day freedom period immediately preceding the expiration of the CBA. [6] Even before the onset of the freedom period (and despite the closed-shop provision in the CBA between the mother union and management) disaffiliation may still be carried out, but such disaffiliation must be effected by a majority of the members in the bargaining unit.[7] This happens when there is a substantial shift in allegiance on the part of the majority of the members of the union. In such a case, however, the CBA continues to bind the members of the new or disaffiliated and independent union up to the CBA's expiration date.[8] The record does not show that individual respondents had disaffiliated during the freedom period. The record does, however, show that only eleven (11) members of AWU (individual respondents) had decided to disaffiliate from AWU and form AWUM. Respondent Metro had about 4,000 employees, and around 2,000 of these were members of AWU. [9] It is evident that individual respondents had failed to muster the necessary majority in order to justify their disaffiliation. (In fact, it was only on 5 December 1985 that individual respondents were finally able to register an independent union called Metroport Workers Union [MWU].[10] Even then, in the absence of allegation by AWUM [MWU] of the exact number of its members, the Court presumes that only twenty percent [20%] of the employees of Metro had joined MWU. [11]) Thus, in the referendum held on 7 January 1985 at the PTGWO compound (where representatives of the Ministry of Labor and Employment were present) to determine whether individual respondents should be expelled from AWU, 1,229 members (out of 1,695 members present) voted for expulsion of individual respondents. [12] The individual respondents here have failed to present proof of their allegation that the 1,695 members of AWU were not employees of respondent Metro alone; the Court therefore presumes that those who voted for their expulsion were bona fideemployees of respondent Metro. Moreover, individual respondents failed to allege that their expulsion for disloyalty violated AWU's constitution and by-laws.[13] In sum, the attempted disaffiliation of the eleven (11) private respondents from the petitioner mother union and the effort to organize either a new local of the mother union or an entirely new and separate union, did not, under the circumstances of this case, constitute protected activities of the eleven (11) individual respondents. II In view of the conclusion reached above in G.R. Nos. 87266-69, i.e., that AWU was justified in expelling from its membership the eleven (11) individual respondents, the question now arises: how and to what extent does such conclusion affect the liability of Metro, and Marina (as successoremployer)? It will be recalled that the Resolutions of this Court in G.R. Nos. 81256-59 and 82705 dismissing the Petitions for Certiorari of both Metro and Marina assailing the NLRC consolidated Decision of 4 September 1986 insofar as their (Metro's and Marina's) liability for reinstatement and backwages of the individual respondents thereunder is concerned, became final and judgment entered therein, sometime ago. 1. So far as concerns AWU's liability under the NLRC consolidated Decision, it should in the first place be pointed out that the Court did not make any pronouncement either in G.R. Nos. 81256-59 or in G.R. No. 82705 concerning AWU's liability. In G.R. No. 82705, the Court merely acted on the issue raised by petitioner Metro: that Metro should not be liable at all for reinstatement and backwages considering that Metro was only pressed into suspending individual respondents because of AWU's threat to strike. In dismissing Metro's Petition, the Court in G.R. No. 82705 in effect merely held that Metro, whatever the liability of AWU might be in respect of the expulsion of

individual respondents, could not escape liability by throwing all responsibility upon AWU; and that Metro could not validly plead that it was under duress when it executed the Agreement with AWU providing for, among other things, the preventive suspension of individual respondents. The Court is, of course, aware that AWU was a party-respondent in both G.R. Nos. 81256-59 and 82705, and that AWU had in fact filed a Comment in both G.R. Nos. 81256-59 and 82705. Nonetheless, the Court did not either in G.R. Nos. 82156-59 or in G.R. No. 82705 in fact make a determination of the legality of AWU's expulsion of individual respondents from its membership. The Court in G.R. No. 82705 held only that the liability of Metro was solidary in nature, i.e., solidary with AWU, whateverAWU's liability might be; and it may be well to recall that solidary liability is different from secondary liability. In G.R. Nos. 81256-59, the Court simply held that Marinawas properly impleaded in the underlying cases and could not be absolved from responsibility for reinstatement and backwages upon the ground of denial of due process. 2. Thus, so far as concerns the liability of Metro and Marina for reinstatement withbackwages of individual respondents under the consolidated NLRC Decision, the preeminent fact is that the Court's Resolutions in G.R. Nos. 81256-59 and 82705 dismissing their Petitions are already final. The liabilities of Metro and Marina for reinstatement and backwages under the consolidated NLRC Decision have become fixed and definite, with the modification decreed by the Court in G.R. No. 82705 in so far as backwages were concerned. Thus, the conclusion we today have reached in G.R. Nos. 87266-69 cannot benefit Metro and Marina and will not dissolve their already fixed and definite liabilities. 3. Turning to the question of the backwages due to the eleven (11) individual respondents, three (3) different time periods are relevant here and must be distinguished from one another: First Period: From 18 April 1985 to 21 June 1985: the Compromise Agreement between Metro and AWU to end the strike, in which Metro agreed to preventively suspend the eleven (11) individual respondents, was effected on 18 April 1985 and implemented immediately. The Labor Arbiter on 21 June 1985 ordered Metro to reinstate provisionally the eleven (11) individual respondents and Metro complied. Second Period: From 1 August 1985 up to 27 July 1987: the NLRC, pursuant to the urging of AWU, ordered Metro to re-suspend the individual respondents on 1 August 1985 and Metro again complied with this Order. Approximately two (2) years later, on 27 July 1987, NLRC ordered Metro/Marina to reinstate the individual respondents and Marinacomplied by reinstating the individual respondents on the payroll, i.e., paying their salaries although they were not allowed to work on their jobs. Third Period: From 28 July 1987 to 18 September 1989: on 18 September 1989, the Labor Arbiter issued the questioned writ of execution ordering, among other things, Marina to reinstate formally the individual respondents. Under the consolidated NLRC Decision, Metro/Marina are liable for the backwagesaccruing during the First and Third Periods above indicated. In respect of the Second Period, however, the Court in G.R. No. 82705, as already pointed out earlier, held that Metro/Marina should not be held liable for backwages accruing during that period. Strictly speaking, in view of our conclusion above that AWU was justified in expelling individual respondents from its membership, neither AWU nor Metro/Marina would be liable to individual respondents for the backwages accruing during this Second Period. 4. In the interest of substantial and expeditious justice, however, we believe that thebackwages accruing during the Second Period should be paid and shared by AWU and by Metro/Marina, on a 50-50 basis. We here establish this equitable allocation of ultimate responsibility in order to forestall further litigation between AWU and Metro/Marina and individual respondents in respect of claims and countering claims for payment or reimbursement or contribution and to put a definite end to this prolonged and costly confrontation among the several parties. The equitable considerations which impel us to hold AWU liable for one-half (1/2) of the backwages during the Second Period include:

(a) the fact that Metro had been reluctant to comply with the demand of AWU to terminate the services of individual respondents and had wanted to give the latter procedural due process, but gave in to the demands of AWU; (b) that AWU had pressed Metro very hard and indeed went on strike against Metro when Metro refused simply to terminate the services of the individual respondents; (c) that AWU, instead of waiting for final judicial determination of the legality of its expulsion of individual respondents, chose to importune the NLRC to issue the order requiring the re-suspension of the individual respondents on 1 August 1985, with which order Metro eventually complied. 5. Turning to Metro/Marina, we note that, apart from the finality of the Court's Resolutions in G.R. Nos. 81256-59 and 82705, there is independent basis for holding Metro/Marina responsible for reinstatement with backwages accruing throughout the three (3) periods above indicated. The equitable considerations which lead us to hold Metro/Marina responsible for one-half (1/2) of the backwages accruing during the above Second Period relate to the failure of Metro to accord individual respondents procedural due process by giving them reasonable opportunity to explain their side before suspending or dismissing them. Such dismissal was accordingly in violation of the Labor Code.13 Notwithstanding AWU's closed-shop clause in the CBA, Metro was bound to conduct its own inquiry to determine the existence of substantial basis for terminating the employment of individual respondents.[14] That AWU, disregarding the Minister of Labor and Employment's express order, had threatened to go on strike, and indeed actually went on strike, if Metro had continued with the services of individual respondents, did not relieve Metro from the duty to accord procedural due process to individual respondents. [15] 6. The portion of the Writ of Execution issued by the Executive Labor Arbiter requiring Marina to pay salary differentials in the total amount of P154,357.00 accruing during the period from 20 July 1986 up to October 1989, should be modified to conform with the above legal and equitable allocation of liability for the backwages which had accrued during the three (3) Periods above mentioned during which the individual respondents were suspended. The salary differentials, as we understand it, refer to increases in the prevailing wages accruing partly during the Second Period and partly during the Third Period as above indicated. In other words, the salary differentials accruing from 20 July 1986 up to 27 July 1987 should be borne on a 50-50 basis by AWU on the one hand and Metro/Marina on the other. The salary differentials accruing from 28 July 1987 up to 18 September 1989 shall be borne exclusively byMarina. 7. The portion of the Writ of Execution issued by the Executive Labor Arbiter which requires Marina to recognize the legality of the organization and registration of AWUM (now MWU) as a local chapter of AWU, is inconsistent with the conclusions we have set forth in Part I above, and must be deleted. What was in fact eventually established by individual respondents was a separate, independent union called Metro Port Workers Union (MWU) which was not entitled, during the time periods here relevant, to recognition as the bargaining unit in CBA negotiations. ACCORDINGLY, the Court Resolved: In G.R. Nos. 87266-69: (a) to DISMISS the Petition for Certiorari in respect of Certified NLRC Case No. 0403-855 (NCR-NS10-288-84) for lack of merit; and (b) to GRANT partially the Petition for Certiorari in respect of NLRC Case No. NCR-4-1372-85 and NLRC Injunction Case No. 993. The consolidated Decision of the NLRC dated 4 September 1986 ordering AWU and Marina to pay solidarily the backwages of individual respondents, as well as the NLRC Resolution of 27 July 1987 denyingAWU's and Metro's Motions for Reconsideration, are hereby MODIFIED so as to require AWU and Metro/Marina to pay, on a 50-50 basis, to individual respondents the backwages which accrued during the Second Period, i.e., from 1 August 1985 up to 27 July 1987. In G.R. Nos. 91223-26:

to GRANT partially the Petition. The Order of the Executive Labor Arbiter dated 6 December 1989 is hereby MODIFIED so as (a) to require AWU and Metro/Marina on a 50-50 basis to pay the salary differentials accruing during the period from 20 July 1986 up to 27 July 1987, and Marina alone to pay the salary differentials accruing from 28 July 1987 up to 31 October 1989, and so as (b) to delete the portion requiring Marina to recognize AWUM (MWU) as the local chapter of AWU. The Temporary Restraining Order issued by the Court on 20 December 1989 is hereby LIFTED so as to permit enforcement of the Order of the Executive Labor Arbiter as herein modified. No pronouncement as to costs. SO ORDERED. Fernan, C.J., (Chairman), Gutierrez, Jr., Bidin, and Cortes, JJ., concur.