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PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

G.R. No. L-54334 January 22, 1986


KIOK LOY, doing business under the name and style
SWEDEN
ICE
CREAM
PLANT
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and
PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)
CUEVAS, J.:

Petition for certiorari to annul the decision 1 of the National


Labor Relations Commission in 1979 which found
petitioner Sweden Ice Cream guilty of unfair labor
practice for unjustified refusal to bargain, in violation
of par. (g) of Article 249 2 of the New Labor Code, 3 and
declared the draft proposal of the Union for a
collective bargaining agreement as the governing
collective bargaining agreement

Facts:

October 3, 1978 - CE was held, the Pambansang


Kilusang Paggawa (Union for short), a LLF, won and was
subsequently certified in a resolution dated Nov 1978 by
the Bureau of Labor Relations as the sole and exclusive
bargaining agent of the rank-and-file employees of
Sweden Ice Cream Plant. The Company's MR was denied
on January 1978.
December 7, 1978, the Union furnished 4 the Company
with two copies of its CBA. At the same time, it requested
the Company for its counter proposals.
Since theres no response, the Union again wrote the
Company reiterating its request for collective bargaining
negotiations and for the Company to furnish them with its
counter proposals. Both requests were ignored and
remained unacted upon by the Company.

the Union, on February 14, 1979, filed a "Notice of Strike",


with the Bureau of Labor Relations (BLR) on ground of
unresolved economic issues in collective bargaining. 5

Conciliation proceedings then followed during the thirty-day


statutory cooling-off period. But all attempts towards an amicable
settlement failed, prompting the Bureau of Labor Relations to
certify the case to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Presidential
Decree No. 823, as amended.
Andres Fidelino, to whom the case was assigned, set
the initial hearing for April 29, 1979. For failure however, of
the parties to submit their respective position papers as
required, the said hearing was cancelled and reset to another date. Meanwhile, the
Union submitted its position paper. The Company did not , and
The LA,

instead requested for a resetting which was granted. The Company was directed anew to submit
its financial statements for the years 1976, 1977, and 1978.

The case was further reset to May 11, 1979 due to the
withdrawal of the Company's counsel of record, Atty. Rodolfo
dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban
formally entered his appearance as counsel for the Company
only to request for another postponement allegedly for the
purpose of acquainting himself with the case. Meanwhile, the
Company submitted its position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as
scheduled, the Company's representative, Mr. Ching, who
was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement
which the labor arbiter denied. He also ruled that the Company
has waived its right to present further evidence and, therefore,
considered the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its
report to the National Labor Relations Commission. On July 20,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

1979, the National Labor Relations Commission rendered its


decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby
declared guilty of unjustified refusal to bargain, in violation
of Section (g) Article 248 (now Article 249), of P.D. 442, as
amended. Further, the draft proposal for a collective
bargaining agreement (Exh. "E ") hereto attached and
made an integral part of this decision, sent by the Union
(Private respondent) to the respondent (petitioner herein)
and which is hereby found to be reasonable under the
premises, is hereby declared to be the collective
agreement which should govern the relationship between
the parties herein. SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision
contending that the National Labor Relations Commission acted
without or in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in rendering the
challenged decision. On August 4, 1980, this Court dismissed the
petition for lack of merit. Upon motion of the petitioner, however,
the Resolution of dismissal was reconsidered and the petition
was given due course in a Resolution dated April 1, 1981.
Petitioner Company now maintains
a) Right to procedural due process was violated, when
request for further postponement was denied.
b) that the National Labor Relations Commission's finding of
unfair labor practice for refusal to bargain is not supported
by law
c) that it was only on May 24, 1979 when the Union
furnished them with a copy of the proposed Collective
Bargaining Agreement and it was only then that they came
to know of the Union's demands; and

d)

finally, that the CBA approved and adopted by the


National Labor Relations Commission is unreasonable
and lacks legal basis.

The petition lacks merit. Consequently, its dismissal is in order.


Collective bargaining which is defined as negotiations towards a
collective agreement, 6 is one of the democratic frameworks
under the New Labor Code, designed to stabilize the relation
between labor and management and to create a climate of sound
and stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal
obligation. So much so that Article 249, par. (g) of the Labor
Code makes it an unfair labor practice for an employer to refuse
"to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with respect to
wages, hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievance or
question arising under such an agreement and executing a
contract incorporating such agreement, if requested by either
party.
While it is a mutual obligation of the parties to bargain, the
employer, however, is not under any legal duty to initiate
contract
negotiation. 7 The
mechanics
of
collective
bargaining is set in motion only when the following
jurisdictional preconditions are present, namely, (1)
possession of the status of majority representation of the
employees' representative in accordance with any of the
means of selection or designation provided for by the Labor
Code; (2) proof of majority representation; and (3) a demand
to bargain under Article 251, par. (a) of the New Labor
Code . ... all of which preconditions are undisputedly present in
the instant case.
From the over-all conduct of petitioner company in relation
to the task of negotiation, there can be no doubt that the
Union has a valid cause to complain against its (Company's)

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

attitude, the totality of which is indicative of the latter's


disregard of, and failure to live up to, what is enjoined by the
Labor Code to bargain in good faith.
We are in total conformity with respondent NLRC's
pronouncement that petitioner Company is GUILTY of unfair
labor practice.
It has been indubitably established that (1) respondent Union
was a duly certified bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy of the proposed
Collective Bargaining Agreement, to the Company not only once
but twice which were left unanswered and unacted upon; and (3)
the Company made no counter proposal whatsoever all of which
conclusively indicate lack of a sincere desire to negotiate. 8 A
Company's refusal to make counter proposal if considered
in relation to the entire bargaining process, may indicate
bad faith and this is specially true where the Union's request
for a counter proposal is left unanswered. 9 Even during the
period of compulsory arbitration before the NLRC, petitioner
Company's approach and attitude-stalling the negotiation by a
series of postponements, non-appearance at the hearing
conducted, and undue delay in submitting its financial
statements, lead to no other conclusion except that it is unwilling
to negotiate and reach an agreement with the Union. Petitioner
has not at any instance, evinced good faith or willingness to
discuss freely and fully the claims and demands set forth by the
Union much less justify its opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald
Delivery Carriers Union (PAFLU) vs. Herald Publications 11 the
rule had been laid down that "unfair labor practice is
committed when it is shown that the respondent employer,
after having been served with a written bargaining proposal
by the petitioning Union, did not even bother to submit an
answer or reply to the said proposal.

This doctrine was reiterated anew in Bradman vs. Court of


Industrial Relations 12 wherein it was further ruled that "while the
law does not compel the parties to reach an agreement, it does
contemplate that both parties will approach the negotiation with
an open mind and make a reasonable effort to reach a common
ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought
to be reviewed, petitioner capitalizes on the issue of due process
claiming, that it was denied the right to be heard and present its
side when the Labor Arbiter denied the Company's motion for
further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering
the various postponements granted in its behalf, the claimed
denial of due process appeared totally bereft of any legal and
factual support. As herein earlier stated, petitioner had not even
honored respondent Union with any reply to the latter's
successive letters, all geared towards bringing the Company to
the bargaining table. And there was no counter proposal despite
persistent requests made therefor. Certainly, the moves and
overall behavior of petitioner-company were in total derogation of
the policy enshrined in the New Labor Code which is aimed
towards expediting settlement of economic disputes. Hence, this
Court is not prepared to affix its imprimatur to such an illegal
scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that
the Collective Bargaining Agreement which was approved and
adopted by the NLRC is a total nullity for it lacks the company's
consent, much less its argument that once the Collective
Bargaining Agreement is implemented, the Company will face
the prospect of closing down because it has to pay a staggering
amount of economic benefits to the Union that will equal if not
exceed its capital. Such a stand and the evidence in support
thereof should have been presented before the Labor Arbiter
which is the proper forum for the purpose.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

We agree with the pronouncement that it is not obligatory upon


either side of a labor controversy to precipitately accept or agree
to the proposals of the other. But an erring party should not be
tolerated and allowed with impunity to resort to schemes
feigning
negotiations
by
going
through
empty
13
gestures. More so, as in the instant case, where the
intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the
BLR failed. The instant case being a certified one, it must be
resolved by the NLRC pursuant to the mandate of P.D. 873, as
amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment
embodied in any Collective Bargaining Agreement. To that
extent, utmost deference to its findings of reasonableness of any
Collective Bargaining Agreement as the governing agreement by
the employees and management must be accorded due respect
by this Court.
WHEREFORE, the instant petition is DISMISSED. The
temporary restraining order issued on August 27, 1980, is
LIFTED and SET ASIDE. No pronouncement as to costs. SO
ORDERED.

G.R. No. L-38258 November 19, 1982


LAKAS NG MANGGAGAWANG MAKABAYAN (LAKAS) vs.
MARCELO ENTERPRISES and MARCELO TIRE & RUBBER
CORP., MARCELO RUBBER AND LATEX PRODUCTS,
MARCELO STEEL, CORPORATION, MARCELO CHEMICAL &
PIGMENT CORP., POLARIS MARKETING CORPORATION
and THE COURT OF INDUSTRIAL RELATIONS
GUERRERO, J.:
Separate appeals by certiorari from the Decision of the Court of
Industrial Relations (Manila) dated July 20, 1973, as well as the
Resolution of the court en banc dated January 24, 1974 denying
the reconsideration thereof rendered in ULP Case No. 4951
entitled, "Lakas ng Manggagawang Makabayan, Petitioner,
versus Marcelo Enterprises and Marcelo Tire and Rubber
Corporation, Marcelo Rubber and Latex Products, Marcelo Steel
Corporation, Polaris Marketing Corporation, and Marcelo
Chemical and Pigment Corporation, Respondents. "
FACTS:
As found by the respondent CoIR embodied in the appealed
Decision are correct, supported as they are by the evidence on
record. Nevertheless, We find it necessary to make a restatement of the facts that are integrated and inter-related, drawn
from the voluminuous records of these cases which are herein
jointly decided, since it would only be from a statement of all the
relevant facts of the cases made in all fullness, collectively and
comprehensively, can the intricate issues posed in these appeals
be completely and judiciously resolved.
Prior to May 23, 1967, the date which may be stated as the start
of the labor dispute between Lakas ng Manggagawang
Makabayan (hereinafter referred to as complainant LAKAS) and
the management of the Marcelo Tire and Rubber Corporation,
Marcelo Rubber and Latex Products, Inc., Polaris Marketing

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Corporation, Marcelo Chemical and Pigment Corporation, and


the Marcelo Steel Corporation (Nail Plan) (hereinafter referred to
as respondent Marcelo Companies) the Marcelo Companies had
existing collective bargaining agreements (CBAs) with the local
unions then existing within the appropriate bargaining units, viz:
(1) the respondent Marcelo Tire and Rubber Corporation,
with the Marcelo Camelback Tire and Foam Union
(MACATIFU); (2) the respondent Marcelo Rubber and Latex
Products, Inc., with the Marcelo Free Workers Union
(MFWU); and (3) the respondent Marcelo Steel Corporation
with the United Nail Workers Union (UNWU).
These existing CBAs were entered into by and between the
parties while the aforestated local unions were then affiliated with
a national federation, the Philippine Social Security Labor
Union (PSSLU).
It is well to note from the records that when the aforestated CBAs
of the said local unions were nearing their respective expiration
dates (March 15,1967) for MACATIFU and UNWU,
and June 5, 1967 for MFWU), the general situation within the
ranks of labor was far from united.
The MACATIFU in respondent Marcelo Tire and Rubber
Corporation, then headed by Augusto Carreon, did not enjoy the
undivided support of all the workers of the respondent
corporation, as there existed a rival union, the Marcelo United
Employees and Workers Association (MUEWA) whose president
was then Paulino Lazaro.
As events would later develop, the members of the MACATIFU
of Augusto Carreon joined the MUEWA of Paulino Lazaro, after
the latter filed a petition for direct certification which was granted
by the industrial court's Order of July 5, 1967 recognizing and
certifying MUEWA as the sole and exclusive bargaining
representative of all the regular workers of the respondent
corporation. The union rivalry between MACATIFU and

MUEWA did not, however, end with the Order of July 5. 1967,
but more than ever developed into a more pressing problem of
union leadership because 1) Augusto Carreon also claimed to
be the president of the MUEWA by virtue of the affiliation of
his MACATIFU members with MUEWA. Only the UNWU in 2)
The records also reveal that even the ranks of MFWU in
respondent Marcelo Rubber and Latex Products, Inc. was
divided between those supporting Ceferino Ramos and
Cornelio Dizon who both claimed the presidency in said
union. 3) Respondent Marcelo Steel Corporation was then
enjoying relative peace as Jose Roque was solely recognized as
the union's president. The events that followed are hereinafter
stated in chronological order for a clearer understanding of the
present situation.
On March 14, 1967, the management of respondent Marcelo
Steel Corporation received a letter requesting the
negotiation of a new CBA together with a draft thereof, from
the PSSLU president, Antonio Diaz, for and in behalf of
UNWU whose CBA was to expire the following day. Similar
letters and proposals were, likewise, sent to the management of
respondent Marcelo Tire and Rubber Corporation for and in
behalf of MACATIFU, and to respondent Marcelo Rubber and
Latex Products for and in behalf of MFWU, whose respective
CBAs were both to expire on June 5, 1967.
However, on that very same day of March 14, 1967, the
management of respondent Marcelo Tire and Rubber
Corporation received a letter from the UNWU president, Jose
Roque, disauthorizing the PSSLU from representing his union.
Then, on April 14, 1967, Paulino Lazaro of MUEWA requested
negotiation of a new CBA with respondent Marcelo Tire and
Rubber Corporation, submitting therewith his union's own
proposals.
Again, on May 3, 1967, the management of respondents Marcelo
Tire and Rubber Corporation and Marcelo Rubber and Latex

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Products, Inc., received another letter requesting negotiation of


new CBAs also for and in behalf of the MACATIFU and the
MFWU from J.C. Espinas & Associates.
Finally, on May 23, 1967, the management of all the respondent
Marcelo Companies received a letter from Prudencio Jalandoni,
the alleged president of the complainant LAKAS. In this letter of
May 23, 1967, the complainant LAKAS informed management of
the affiliation of the Marcelo United Labor Union (MULU) with it.
Included therein was a 17-points demand for purposes of the
requested collective bargaining with management.
Confronted with a problem of whom to recognize as the
bargaining representative of all its workers, the
management of all the respondent Marcelo Companies
understandably dealt with the problem in this wise, viz: (1) it
asked proof of authority to represent the MFWU and the
MACATIFU from J.C. Espinas & Associates; and (2) in a letter
dated May 25, 1967, it apprised PSSLU, Paulino Lazaro of
MUEWA and complainant LAKAS of the fact of the existing
conflicting demands for recognition as the bargaining
representative in the appropriate units involved, consequently
suggesting to all to settle the question by filing a petition for
certification election before the Court of Industrial Relations,
with an assurance that the management will abide by whatever
orders the industrial court may issue thereon.
PSSLU demurred to management's stand and informed them
of its intention to file an unfair labor practice case because of
management's refusal to bargain with it, pointedly stating that it
was with the PSSLU that the existing CBAs were entered into.
Again, as events later developed, on or about the middle of
August 1981, PSSLU filed a Notice of Strike which became
the subject of conciliation with the respondent companies.
In the case of MUEWA, Paulino Lazaro threatened that his union
will declare a strike against respondent Marcelo Tire and
Rubber Corporation. On the other hand, complainant LAKAS
for MULU filed on June 13, 1967 before the Bureau of Labor

Relations a Notice of Strike against all the respondent


Marcelo Companies, alleging as reasons therefore
harrassment of union officers and members due to union
affiliation and refusal to bargain. This aforestated Notice of Strike
was, however, withdrawn on July 14, 1967.
In the meantime, as stated earlier in this Decision, the MUEWA
filed a petition for direct certification before the industrial
court.
There being no other union or interested person appearing
before the court except the MUEWA, and finding that MUEWA
represented more than the majority of the workers in respondent
Marcelo Tire and Rubber Corporation, the court granted the
petition and by Order of July 5, 1967, certified MUEWA of
Paulino Lazaro as the sole and exclusive bargaining
representative of all the regular workers in said respondent.
On July 11, 1967, Augusto Carreon of MACATIFU wrote the
management of respondent Marcelo Tire and Rubber
Corporation expressly stating that no one was yet
authorized to submit proposals for and in behalf of the union
for the renewal of its CBA, adding that "(a)ny group
representing our Union is not authorized and should not be
entertained."
On July 14, 1967, as earlier stated, the Notice of Strike filed by
complainant LAKAS was withdrawn pursuant to a
Memorandum Agreement signed on the same day by
management and LAKAS.
Thereafter, or on July 20, 1967, letters of proposal for
collective bargaining were sent by Prudencio Jalandoni of
LAKAS to all the respondent Marcelo companies. In answer
thereto, management wrote two (2) letters, both dated July 24,
1967, addressed to Jalandoni, expressing their conformity to sit
down in conference on the points to be negotiated as soon as
LAKAS can present evidence of authority to represent the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

employees of respondent corporations in said conference. The


records disclose that it was in the atmosphere of constant
reservation on the part of management as to the question of
representation recognition that complainant LAKAS and
management sat down for CBA negotiations.
The first conference was held on August 14, 1967, followed by
one on August 16, 1967 whereby management, in formal reply to
union's economic demands, stated its willingness to give pay
adjustments and suggested renewal of other provisions of the old
CBAs.
A third conference was set although no one from LAKAS or the
local unions appeared. On August 29, 1967, the fourth
conference was held where, from a letter dated August 30, 1967
from Jose Delfin of Management to Jose B. Roque of UNWU,
can be inferred that in the conference of August 29, 1967,
the management with respect to respondent Marcelo Steel
Corporation, agreed to give pay adjustments from P0.15 to
P0.25 to meritorious cases only, and to increase its
contribution to the retirement fund from 1-1/2% to 3% provided
the employees' contribution will be increased from 1% to 2%.
Management likewise suggested the renewal of the other
provisions of the existing CBA. Management's offers were not
accepted by complainant LAKAS who insisted on the grant of all
its economic demands and in all of the Marcelo Companies.
As it would later appear during the trial of the ULP case below,
and as found as a fact by the respondent court, only the
economic proposals of complainant LAKAS were the
matters taken up in all these CBA conferences.

Less than a week after the fourth CBA conference, or


on

September 4, 1967, the complainant

declared a strike
Marcelo Companies.

LAKAS

against all the respondent

Acts of violence and vandalism attended the picketing.


Ingress and egress at the respondents' premises were
successfully blocked. One worker, Plaridel Tiangco, was
manhandled by the strikers and was hospitalized.
Windows of the Chemical Plant were badly damaged. As
a consequence, ten (10) strikers were later charged
before the Municipal Court of Malabon, Rizal, four of
whom were convicted while the others were at large.
On September 13, 1967, the respondent Marcelo Companies
obtained a writ of preliminary injunction from the Court of First
Instance of Rizal enjoining the strikers from preventing the
ingress and egress at the respondents' premises.
The following day, a "Return to Work Agreement" (Exhibit
"A") was executed by and among the management,
represented by Jose P. Marcelo and Jose A. Delfin, and the
local unions, together with complainant LAKAS, represented
by Prudencio Jalandoni for LAKAS, Jose B. Roque for
UNWU, Cornelio Dizon for MFWU and Augusto Carreon for
MUEWA, the representations of the latter two, however,
being expressly subjected by management to nonrecognition. Aside from providing for the immediate lifting
of the picket lines, the agreement, more pertinently
provides, to wit,
4. The management agrees to accept all employees who
struck without discrimination or harassment consistent
with an orderly operation of its various plants, provided it is
understood that management has not waived and shall
continue to exercise freely its rights and prerogatives to
punish, discipline and dismiss its employees in
accordance with law and existing rules and regulations that
cases filed in court will be allowed to take their normal course.
By virtue of this agreement, the respondent Marcelo Companies
resumed operations and the strikers went back to work. As found
by the respondent court, all strikers were admitted back to

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

work, except four (4) namely, Wilfredo Jarquio, Leonardo


Sakdalan, Jesus Lim and Arlington Glodeviza, who chose not to
report for work because of the criminal charges filed against
them before the municipal court of Malabon and because of
the administrative investigation conducted by management
in connection with the acts of violence and vandalism
committed during the September 4 strike. Together with Jesus
Lim, three other strikers who reported for work and were
admitted, namely, Jose Roque, Alfredo Cabel and Ramon
Bataycan, were convicted in said criminal case.
After the resumption of normal business, the management of the
respondent Marcelo Companies, the complainant LAKAS
together with the local unions resumed their bargaining
negotiations subject to the conditions earlier mentioned.
On October 4, 1967, the parties met and discussed the
bargaining unit to be covered by the CBA in case one is entered
into, union shop arrangement, check-off, waiver of the employer
of the notice requirement in case of employees' separation,
separation pay in cash equivalent to 12-days pay for every year
of service, retirement plan, and one or two years duration of the
CBA. It was also agreed in that meeting not to negotiate with
respect to respondent Marcelo Tire and Rubber Corporation
inasmuch as a CBA had already been entered into by
management with the MUEWA of Paulino Lazaro, the
recently certified union in said respondent.
Finally, on October 13, 1967, the negotiations reached its
final stage when the management of respondents Marcelo
Rubber and Latex Products, Inc. and Marcelo Steel
Corporation gave the complainant LAKAS a copy of
management's drafts of the collective bargaining proposals
for MFWU and UNWU, respectively.
Unexpectedly and without filing a notice of strike,
complainant LAKAS declared another strike against the

respondent Marcelo Companies on November 7, 1967,


resulting in the complete paralyzation of the business of
said respondents. Because of this second strike, conciliation
conferences were again set by the Conciliation Service Division
of the Department of Labor on November 8, November 23, and
December 4, 1967. On the last aforementioned date,
however, neither complainant LAKAS nor the local unions
appeared.
Instead, on December 13, 1967, Prudencio Jalandoni of
complainant LAKAS, in behalf of the striking unions,
coursed a letter (Exhibit "B") to Jose P. Marcelo of
management advising that, "on Monday, December 18, 1967,
at 7:00 o'clock in the morning, all your striking workers and
employees will return to work under the same terms and
conditions of employment before the strike." The letter was
attested to by Cornelio Dizon for MFWU, Jose Roque for
UNWU and Augusto Carreon for MUEWA. On December
15,1967, the Bureau of Labor Relations was informed by the
complainant LAKAS who requested for the Bureau's
representative to witness the return of the strikers to their
jobs.
The records reveal that in the meantime, prior to December
13, 1967, some of the strikers started going back to work
and were admitted; and that as early as December 4, 1967,
the management started posting notices at the gates of the
respective premises of the respondents for strikers to return
back to work, Similar notices were also posted on December 18
and December 27, 1967.
Upon their return, the reporting strikers were requested to
fill up a certain form (Exhibit "49") wherein they were to
indicate the date of their availability for work in order that
they may be scheduled. According to the respondent Marcelo
Companies, this requirement was asked of the strikers for
legitimate business reasons within management prerogative.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Several of the strikers filled up the required form and were


accordingly scheduled for work. The remaining others, led and
supported by complainant LAKAS, refused and insisted that
they be all admitted back to work without complying with
the aforestated requirement, alleging that the same
constituted a "screening" of the striking workers. As matters
stood, Management refused to forego the requirement; on
the other hand, the remaining strikers demanded to be
readmitted without filing up the form for scheduling.
These then constitute the factual background when the
complainant LAKAS, represented by its counsel, Atty.
Benjamin C. Pineda, on December 26, 1967 , filed before the
respondent court a charge for unfair labor practice against
the respondent Marcelo Companies, alleging nonreadmission of the striking members of the three (3)
affiliated local unions despite the unconditional offer to
return to work after the strike of November 7, 1967.
Based on the allegations of the foregoing charge and after a
preliminary investigation conducted by the acting Prosecutor of
said respondent court, the acting Chief Prosecutor, Atty. Antonio
Tria Tirona, filed on February 12, 1968 the instant complaint
under authority of Section 5(b) of Republic Act 875, otherwise
known as the Industrial Peace Act.
The Complaint below alleges, among others, to wit:
1. That complainant is a legitimate labor organization, with
its affiliates, namely: Marcelo Free Workers Union, United Nail
Workers Union, and Marcelo United Employees Unions, whose
members listed in Annexes "A", "B", and "C" of this complaint
are considered employees of respondent within the meaning of
the Act;
2. ... xxx xxx xxx xxx xxx xxx

3. That individual complaints listed in Annexes "A", "B", and "C"


of this complaint are members of the Marcelo United
Employees and Workers Association, Marcelo Free Workers
Union, and United Nail Workers Union, respectively; that the
members of the Marcelo United Employees and Workers Union
are workers of respondent Marcelo Tire and Rubber
Corporation; that the members of the Marcelo Free Workers
Union compose the workers of the Marcelo Rubber and Latex
Products, Polaris Marketing Corporation, and the members of
the United Nail Workers Union compose the workers of the
Marcelo Steel Corporation (Nail Plant);
4. That each of the aforesaid local unions, before their
affiliation with the complainant union LAKAS, had a
collective bargaining agreement with respondents; that
after the expiration of the collective bargaining agreement
above-mentioned and after the above-mentioned local
unions affiliated with the complainant LAKAS, the said
federation sent to respondents' president, Jose P. Marcelo,
on May 23, 1967, a letter, requesting for a negotiation for
collective bargaining, together with union proposals
thereof, but respondents refused;
5. That after respondents knew of the affiliation of the
aforementioned local unions with the LAKAS, the said
respondents, thru their officers and agents began harassing the
union members, discriminated against them by transferring
some of its officers and members from one section to another
in such a way that their work was reduced to manual labor,
and by suspending them without justifiable cause. in spite
of long years of service with said respondents;
6. That as a result of the abovementioned unfair labor practice
of respondents, and after complainant sent communication
thereto, protesting against the acts of the above-mentioned,
complainant decided to stage a strike on September 4, 1967,
after filing a notice of strike with the Department of Labor;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

10

7. That on September 14, 1967, however, Jose P. Marcelo, and


Jose A. Delfin, president and vice-president of the respondents,
respectively, on one hand and the presidents of the three local
unions above-mentioned and the national president of
complainant union on the other, entered into a Return-to-Work
Agreement. providing among others, as follows:

admitted back to work by respondents, marked as Annexes "A


", "B ", and "C and made as an integral part of this complaint;

4. The management agrees to accept all employees who struck


without discrimination or harassment consistent with an orderly
operation of its various plants provided it is understood that
management has not waived and shall continue to exercise
freely its rights and prerogatives to punish, discipline and
dismiss its employees in accordance with law and existing
rules and regulations and that cases filed in Court will be
allowed to take their normal course.

13. That the above unfair labor practice acts of respondents are
in violation of Section 4, subsections 1, 4 and 6 in relation to
Sections 13, 14 and 15 of Republic Act No. 875.

8. That, contrary to the above Return-to-Work agreement, and


in violation thereof, respondents refused to admit the members
of the three striking local unions; that in admitting union
members back to work, they were screened in spite of their
long employment with respondent, but respondents gave
preference to the casual employees;
9. That, because of the refusal of the respondents to accept
some union members, in violation of the above-mentioned
Return-to-Work agreement and refusal of respondents to
bargain in good faith with complainant, the latter, together with
the members of the three local unions above-mentioned, again
staged a strike on November 7, 1967;
10. That on December 13, 1967, complainant sent a letter to
respondents that the members of the striking unions
abovementioned offered to return to work on December 18,
1967 without any condition, but respondents likewise refused,
and still continue to refuse to reinstate them up to the present;
11. That here to attached are the list of names of the members
of the three local unions above-mentioned who were not

12. That the union members listed in Annexes "A", "B", and "C"
hereof were not able to secure substantial employment in spite
of diligent efforts exerted by them;

The complaint prayed "that after due hearing, judgment be


rendered, declaring respondents guilty of unfair labor practice,
and
(a) Ordering respondents to cease and desist from further
committing the acts complained of;
(b) Ordering respondents to comply with the Return-to-Work
agreement dated September 14, 1967, and to admit back to
work the workers listed in annexes "A", "B " and "C" hereof,
with back wages, without loss of seniority rights and privileges
thereof;
(c) Ordering respondents to bargain in good faith with
complainant union; and
(d) Granting complainant and its complaining members thereof
such other affirmative reliefs and remedies equitable and
proper, in order to effectuate the policies of the Industrial Peace
Act.
On March 16, 1968, after an Urgent Motion for Extension of Time
to File Answer, the respondents filed their Answer denying the
material allegations of the Complaint and alleging as affirmative
defenses,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

I. That the Collective Bargaining Agreement between


respondent Marcelo Steel Corporation and the United Nail
Workers Union expired on March 15, 1967; The Collective
Bargaining Agreement between the United Rubber
Workers Union (which eventually became the Marcelo Free
Workers Union) and the respondent Marcelo Rubber and
Latex Products, Inc., expired on June 5, 1967; the
Collective Bargaining Agreement between Marcelo
Camelback Tire and Foam Union and the Marcelo Tire and
Rubber Corporation expired on June 5, 1967; expired ang
mga CBAs
II. That on May 23, 1967, one Mr. Prudencio Jalandoni of
complainant addressed a communication to Mr. Jose P.
Marcelo of respondents informing him of the alleged affiliation
of the Marcelo United Labor Union with complainant and
submitting a set of collective bargaining proposal to which
counsel for respondents replied suggesting that a petition for
certification election be filed with the Court of Industrial
Relations in view of the several demands for representation
recognition;
III. That the transfers of workers from one job to another were
made in accordance with needs of the service. Respondents
afforded union officers and members affected by the transfers
the privilege to watch out for vacancies and select positions
they prefer to be in. No suspensions without justifiable
cause were made as alleged in the Complaint;
IV. That between May 23, 1967, the date of their first demand
for negotiations, and September 4, 1967, the start of the first
strike, proposals and counter-proposals were had.
Respondents are not aware of whether or not a notice of strike
was filed with the Court of Industrial Relations;
V. That Mr. Jose P. Marcelo is the President of Marcelo Rubber
and Latex Products, Inc., Marcelo Tire and Rubber
Corporation, and Marcelo Steel Corporation, while Mr. Jose A.

11

Delfin is the acting Personnel Manager of respondent Marcelo


Rubber and Latex Products, Inc., Marcelo Tire and Rubber
Corporation, Marcelo Steel Corporation and Marcelo Chemical
and Pigment Corporation;
VI. That respondents did not refuse to admit members of
the striking union. Only four (4) workers who had criminal
cases filed against them voluntarily failed to report to the
Personnel Department for administrative investigation;
VII. That after September 14, 1967, all workers of the different
respondent corporations returned to work except the four
mentioned in the preceding paragraph hereof who have
pending criminal cases; between September 14, 1967, and
November 7, 1967 another strike was declared without
justifiable cause;
VIII. That on November 28, 1967, respondent obtained an
injunction from the Court of First Instance of Rizal, Caloocan
City Branch, against the illegal picketing of the local unions; in
the first week of December, 1967, the striking workers began
returning to work; on December 13, 1967, a letter was received
from complainant advising respondents that its striking workers
were calling off, lifting the picket line and returning to work, that
from the first week of December, 1967, respondents invited the
striking workers desiring to return to work to fill out an
information sheet stating therein their readiness to work and
the exact dates they were available so that proper scheduling
could be done; a number of workers showed no interest in
reporting to work; management posted in the Checkpoint,
Bulletin Boards, and the gates notices calling all workers to
return to work but a number of workers obviously were not
interested in returning anymore;
IX. That respondents posted several times lists of names
of workers who had not returned to work with the
invitation to return to work, but they did not return to work;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

X. That a number of workers in the list Annexes "A", "B" and


"C" have resigned after they found more profitable employment
elsewhere;
XI. That the local unions referred to in the Complaint if they
ever had affiliated with complainant union had subsequently
disaffiliated therefrom;
XII. That the strikes called and declared by the striking
unions were illegal;
XIII. That the local unions were bargaining in bad faith with
respondents,
and praying for the dismissal of the Complaint as well as for the
declaration of illegality of the two (2) strikes called by the striking
unions.

WHEN IS A STRIKE considered illegal


Thereafter, the trial commenced. Then on October 24, 1968, a
development occurred which gave a peculiar aspect to the case
at bar. A Manifestation and Motion signed by the respective
officers and members of the MUEWA, headed by Paulino
Lazaro, was filed by the said union, alleging, to wit,
l. That the above-entitled case purportedly shows that the
Marcelo United Employees and Workers Association is one of
the Complainants being represented by the Petitioner Lakas ng
Manggagawang Makabayan (LMM);
2. That it likewise appears in the above-entitled case that the
services of the herein Petitioner was sought by a certain
Augusto Carreon together with his cohorts who are not
members of the Marcelo United Employees and Workers

12

Association much less connected with the Marcelo Tire and


Rubber Corporation wherein the Marcelo United Employees
and Workers Association has an existing Collective Bargaining
Agreement;
3. That to set the records of this Honorable Court straight, the
undersigned officers and members of the Marcelo United
Employees and Workers Association respectfully manliest that
the aforesaid organization has no complaint whatsoever
against any of the Marcelo Enterprises;
4. ...
5. ..., the Complaint filed by the Petitioner in the above-entitled
case in behalf of the Marcelo United Employees and Workers
Association is without authority from the latter and therefore the
officers and/or representatives of the petitioning labor
organization should be cited for Contempt of Court;
6. ...., the Complaint filed by the Petitioner in the above-entitled
case in behalf of the Marcelo United and Employees and
Workers Association should be considered as withdrawn; xxx
xxx xxx
This was followed by another Manifestation and Motion flied on
November 6, 1968 and signed by the officers and members of
the UNWU, headed by its President, Juan Balgos, alleging, to
wit,
1. That the above-entitled case purportedly shows that the
United Nail Workers Union is being represented by the
Petitioner Lakas ng Manggagawang Makabayan for the alleged
reason that the former is one of the affiliates of the latter;
2. That on January 15, 1968, all the Officers and members of
the United Nail Workers Union disaffiliated from the herein
Petitioning labor organization for the reason that Petitioning
labor organization could not serve the best interest of the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Officers and members of the United Nail Workers Union and as


such is a stumbling block to a harmonious labor- management
relations within all the Marcelo enterprises; ...
3. That the filing of the above-entitled case by the herein
Petitioning labor organization was made over and above the
objections of the officers and members of the United Nail
Workers Union;
4. That in view of all the foregoing, the Officers and members of
the United Nail Workers Union do hereby disauthorize the
Petitioner of the above-entitled case (Re:: Lakas ng
Manggagawang Makabayan) from further representing the
United Nail Workers Union in the above-entitled case;
5. That in view further of the fact that the filing of the aboveentitled case was made over and above the objections of the
Officers and members of the United Nail Workers Union, the
latter therefore manifest their intention to cease and desist as
they hereby ceased and desisted from further prosecuting the
above-entitled case in the interest of a harmonius labormanagement relation within the Marcelo Enterprises; xxx xxx
xxx
Likewise, a Manifestation and Motion signed by the Officers and
members of the MFWU, headed by its president, Benjamin
Maaol, dated October 28, 1968 and filed November 6, 1968,
stated the same allegations as the Manifestation and Motion filed
by the UNWU quoted above, except that the disaffiliation of the
MFWU from LAKAS was made effective January 25, 1968. The
Resolutions of Disaffiliation of both MFWU and UNWU were
attached to these Manifestations.
On November 19, 1968, complainant LAKAS filed an Opposition
to these Manifestations and Motions, materially alleging that, to
wit:

13

1. That complainants respectfully stated that when Charge No.


2265 was filed on December 26, 1967 in this case, giving rise
to the instant complaint, the alleged officers of the unionmovants were not yet officers on the filing of said Charge No.
2265,...
2. That the alleged officers and members who signed the three
(3) Manifestations and Motions are the very employees who
were accepted back to work by the respondents during the
strike by the complainants on September 4, 1967 and
November 7, 1967, and the said alleged officers and members
who signed the said manifestations and motions are still
working up to the present in the establishments of the
respondents.
3. That precisely because of the acceptance back to work of
these alleged officers and members of the union-movants, and
the refusal of respondents to accept back to work all the
individual complainants in this case mentioned in Annexes "A",
"B" and "C" of the instant complaint, inspite of the offer to return
to work by the complainants herein made to the respondents
without any conditions at the time of the strike, as per
complainants' letter of December 13, 1967 (Exh. "B", for the
complainants), which fact precisely gave rise to the filing of this
case. xxx xxx xxx
On January 31, 1969, after the submission of their respective
Memoranda on the motions asking for the dismissal and
withdrawal of the complaint, the Court of Industrial Relations
issued an Order deferring the resolution of the Motions until after
the trial on the merits. To this Order, two separate Motions for
Reconsideration were filed by the respondent companies and the
movant-unions, which motions were, however, denied by the
court en banc by its Resolution dated March 5, 1969.
After the trial on the merits of the case, and after submission by
the parties of their respective memoranda, the respondent court
rendered on July 20, 1973 the Decision subject of these

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

petitions. On the motions for dismissal or withdrawal of the


complaint as prayed for by MUEWA, UNWU and MFWU, the
respondent court denied the same on the ground that the instant
case was filed by the Lakas ng Manggagawang Makabayan for
and in behalf of the individual employees concerned and not for
the movants who were not authorized by said individual
complainants to ask for the dismissal. On the merits of the case,
while the Decision contained opinions to the effect that the
respondent Marcelo Companies were not remiss in their
obligation to bargain, and that the September 4, 1967 strike as
well as the November 7, 1967 strike, were economic strikes, and
were, therefore, illegal because of lack of the required notices of
strike before the strikes were declared in both instances, the
Decision, nevertheless, on the opinion that the "procedure of
scheduling adopted by the respondents was in effect a screening
of those who were to be readmitted," declared respondent
Marcelo
Companies guilty
of unfair
labor practice in
discriminating against the employees named in Annexes "A", "B",
and "C" by refusing to admit them back to work other strikers
were admitted back to work after the strike of November 7, 1967.
The dispositive portion of the appealed Decision states, to wit,
WHEREFORE, in view of all the foregoing, respondents
should be, as they are hereby, declared guilty of unfair
labor practice only for the discrimination on terms or
conditions of employment as hereinbefore discussed in
connection with the return of the strikers complainants
back to work after the second strike, and, therefore,
ordered to pay the individual complainants appearing in
Annexes "A", "B" and "C" of the Complaint, except
Arlington Glodeviza, Jesus Lim, Wilfredo Jarquio,
Leonardo Sakdalan, Jose Roque, Alfredo Cabel, and those
still working, were dismissed for cause, whose contracts
expired or who had resigned as above indicated,
their back wages from December l8, 1967but only up
to June 29, 1970 when this case was submitted for
decision, without reinstatement, minus their earnings
elsewhere for the same period.

14

As to those who died without having been re-employed, the


back wages shall be from December 18, 1967 up to the date of
their demise, as indicated in the body of this Decision, but not
beyond June 20, 1970, likewise less their earnings elsewhere.
The Chief Auditing Examiner of this Court, or his duly
authorized representative, is hereby directed to proceed to the
premises of respondent companies to examine their books,
payrolls, vouchers and other pertinent papers or documents as
may be necessary to compute the back wages due the
individual complainant in line with this Decision, and to submit
his Report thereon not later than twenty (20) days after
completion of such examination for further disposition of the
Court. SO ORDERED.
On August 9, 1973, counsel for respondent Marcelo Companies
filed a Motion for Reconsideration of the above Decision
assigning as errors, to wit,
I. The trial court erred in not finding that complainant Lakas ng
Manggagawang Makabayan (Lakas) has no authority to file
and/or to prosecute the Complaint against respondents in
representation of the local unions and/or individual
complainants and/or members of local unions in their individual
capacities and in not dismissing the complaint on that ground
upon motions of the local unions concerned and/or their
members.
II. The trial court erred in finding that respondent discriminated
against individual complainants who were not readmitted to
work after the November 7, 1967 strike while others were able
to return to their former employment and in holding that the
procedure adopted by respondents was in effect a screening of
those who were readmitted and in finding respondents guilty of
unfair labor practice by reason thereof. "
On August 14, 1973, the individual complainants who had earlier
disauthorized the counsel of record, Atty. Benjamin Pineda, from

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

further representing them and from amicably settling their claims,


on their own behalf filed their arguments in support of their
Motion for Reconsideration, through a newly retained counsel,
Atty. Pablo B. Castillon. Assigned as errors are, to wit,
I. The findings of the trial court excluding some of the
employees from the aforementioned Decision as well as from
the benefits resulting therefrom is not in accordance with law
and the facts.
II. The findings of the trial court declaring the strikes of
September 4 and November 7, 1967 as illegal for being an
economic strike is not in accordance with law and the facts
adduced in this case.
III. The Honorable trial court in ordering the reduction of the
back wages, without reinstatement, appears to have departed
from the substantial evidence rule and established
jurisprudence.
By Resolution of January 24, 1974, the Court en banc denied the
two (2) Motions for Reconsideration filed by both the respondent
Marcelo Companies and the individual complainants. On
February 19, 1974 and on February 20, 1974, both parties filed
their respective Notices of Appeals. Hence, these petitions.
In L-38258, the petition filed by complainant Lakas ng
Manggagawang Makabayan (LAKAS), the following were
assigned as reversible errors, to wit,
I. The respondent court erred in finding the strikes of
September 4 and November 7, 1967 to be economic strikes
and declaring the said strikes illegal for non-compliance with
the procedural requirement of Section 14(d) of Republic Act
875, although its illegality was condoned or waived because of
the Return-to-Work agreement on the first strike, and the
discriminatory rehiring of the striking employees after the
second strike.

15

II. The respondent court erred in denying reinstatement to the


striking complainants in Case No. 4951-ULP, and limiting the
computation of their backwages from December 18, 1967 to
June 29, 1970 only, despite its findings of unfair labor practice
against private respondents herein as a consequence of the
discriminatory rehiring of the striking employees after the
November 7, 1967 strike.
III. The respondent court erred in excluding the other individual
complainants, except those who are still working, those who
resigned on or before December 18, 1967, and those whose
employment contract expired, and denying to these individual
complainants the benefits resulting therefrom.
On the other hand, in L-38260 which is the petition filed by
respondents Marcelo Enterprises, Marcelo Tire and Rubber
Corporation, Marcelo Rubber & Latex Products, Marcelo Steel
Corporation, Marcelo Chemical & Pigment Corporation, and
Polaris Marketing Corporation, the following is the alleged
assignment of errors, to wit,
I. Respondent court erred in not finding that respondent Lakas
ng Manggagawang Makabayan (LAKAS) had no authority to
file and/or to prosecute the complaint against the petitioners
herein in representation of the local unions and/or individual
complainants and/or members of local unions in their individual
capacities and in not dismissing the complaint in Case No.
4951-ULP of respondent court on that ground upon motions of
the local unions concerned and/or their officers and members.
II. Respondent court erred in finding that petitioners herein
discriminated against individual complainants in Case No.
4951-ULP of respondent court who were not readmitted to work
after the November 7, 1967 strike, while others were able to
return to their former employment and in holding that the
procedure adopted by petitioners herein was in effect a
screening of those who were readmitted and in finding

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

petitioners herein guilty of unfair labor practice by reasons


thereof.
III. Respondent court erred in rendering judgment ordering
petitioners herein to pay individual complainants in Case No.
4951-ULP of respondent court backwages from December 18,
1967, to June 29, 1970, minus their earnings elsewhere,
except those who have resigned, those who have been
dismissed for cause, those whose contracts have expired and
those who are already working.
IV. Respondent court erred in holding that petitioners herein
have waived their right to declare the strikes of September 4,
1967 and November 7, 1967, illegal.
From the aforecited assignments of errors respectively made in
both petitions before Us, We find that there are only two basic
issues posed for Our resolution, viz: (1) whether or not the
complaint filed by LAKAS against the Marcelo Companies can be
sustained, in view of the alleged fact that its authority to file and
prosecute the same has been squarely raised in issue at the first
instance before the respondent court; and (2) whether or not the
Marcelo Companies are guilty of unfair labor practice, for which
they should be made liable for backwages and be obliged to
reinstate the employees appearing in Annexes "A", "B", and "C "
of the complaint, taking into consideration the prayer of LAKAS
anent the correct payment of said backwages and the nonexclusion of some employees from the benefits arising from the
appealed Decision.
The first issue poses a procedural question which We shall dwell
on after a resolution of the second issue, this latter issue being of
greater significance to the correct determination of the rights- of
all parties concerned as it treats of the merits of the present
petitions.
Hence, anent the second issue of whether or not the complaint
for unfair labor practice can be sustained, this Court rules in

16

favor of the respondent Marcelo Companies and consequently,


the appealed Decision is reversed. This reversal is inevitable
after this Court has pored through the voluminuous records of
the case as well as after applying the established jurisprudence
and the law on the matters raised. We are not unmindful of the
plight of the employees in this case but We consider it
oppressive to grant their petition in G.R. No. L38258 for not only
is there no evidence which shows that the respondent Marcelo
Companies were seeking for an opportunity to discharge these
employees for union activities, or to discriminate against them
because of such activities, but there is affirmative evidence to
establish the contrary conclusion.
The present controversy is a three-sided conflict, although focus
has been greatly placed upon an alleged labor dispute between
complainant LAKAS and the respondent Marcelo Companies. It
would bear emphasizing, however, that what had been patently
disregarded by the respondent industrial court and the parties
alike, is the fact that LAKAS had never been the bargaining
representative of any and an of the local unions then existing in
the respondent Marcelo Companies.
Contrary to the pretensions of complainant LAKAS, the
respondent Marcelo Companies did not ignore the demand for
collective bargaining contained in its letter of June 20, 1967.
Neither did the companies refuse to bargain at all. What it did
was to apprise LAKAS of the existing conflicting demands for
recognition as the bargaining representative in the appropriate
units involved, and suggested the settlement of the issue by
means of the filing of a petition for certification election before the
Court of Industrial Relations. This was not only the legally
approved procedure but was dictated by the fact that there was
indeed a legitimate representation issue. PSSLU, with whom the
existing CBAs were entered into, was demanding of respondent
companies to collectively bargain with it; so was Paulino Lazaro
of MUEWA, J.C. Espinas & Associates for MACATIFU and the
MFWU, and the complainant LAKAS for MULU which we
understand is the aggrupation of MACATIFU, MFWU and

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

UNWU. On top of all of these, Jose Roque of UNWU


disauthorized the PSSLU from representing his union; and
similarly, Augusta Carreon of MACATIFU itself informed
management as late as July 11, 1967 or after the demand of
LAKAS that no group representing his Union "is not authorized
and should not be entertained. "

17

Indeed, what We said in Philippine Association of Free Labor


Unions (PAFLU) vs. The Bureau of Labor Relations,69 SCRA
132, applies as well to this case.

consequence of these principles is that the employer has the


right to demand of the asserted bargaining agent proof of its
representation of its employees. Having the right to
demonstration of this fact, it is not an 'unfair labor practice' for
an employer to refuse to negotiate until the asserted bargaining
agent has presented reasonable proof of majority
representation. It is necessary however, that such demand be
made in good faith and not merely as a pretext or device for
delay or evasion. The employer's right is however to
reasonable proof. ...

..., in a situation like this where the issue of legitimate


representation in dispute is viewed for not only by one
legitimate labor organization but two or more, there is every
equitable ground warranting the holding of a certification
election. In this way, the issue as to who is really the true
bargaining representative of all the employees may be firmly
settled by the simple expedient of an election.

... Although an employer has the undoubted right to bargain


with a bargaining agent whose authority has been established,
without the requirement that the bargaining agent be officially
certified by the National Labor Relations Board as such, if the
informally presented evidence leaves a real doubt as to the
issue, the employer has a right to demand a certification and to
refuse to negotiate until such official certification is presented."

The above-cited case gives the reason for the need of


determining once and for all the true choice of membership as to
who should be their bargaining representative, which is that,
"(E)xperience teaches us, one of the root causes of labor or
industrial disputes is the problem arising from a questionable
bargaining representative entering into CBA concerning terms
and conditions of employment. "

The clear facts of the case as hereinbefore restated indusputably


show that a legitimate representation issue confronted the
respondent Marcelo Companies. In the face of these facts and in
conformity with the existing jurisprudence.

Respecting the issue of representation and the right of the


employer to demand reasonable proof of majority representation
on the part of the supposed or putative bargaining agent, the
commentaries in Rothenberg on Labor Relations, pp. 42943 1,
are forceful and persuasive, thus:
It is essential to the right of a putative bargaining agent to
represent the employees that it be the delegate of a majority of
the employees and, conversely, an employer is under duty to
bargain collectively only when the bargaining agent is
representative of the majority of the employees. A natural

We hold that there existed no duty to bargain collectively with


The complainant LAKAS on the part of said companies. And
proceeding from this basis, it follows that all acts instigated by
complainant LAKAS such as the filing of the Notice of strike on
June 13, 1967 (although later withdrawn) and the 'two strikes of
September 4, 1967 and November 7, 1967 were calculated ,
designed and intended to compel the respondent Marcelo
Companies to recognize or bargain with it notwithstanding that it
was an uncertified union, or in the case of respondent Marcelo
Tire and Rubber Corporation, to bargain with it despite the fact
that the MUEWA of Paulino Lazaro vas already certified as the
sole bargaining agent in said respondent company. These
concerted activities executed and carried into effect at the
instigation and motivation of LAKAS ire all illegal and violative of

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

the employer's basic right to bargain collectively only with the


representative supported by the majority of its employees in each
of the bargaining units. This Court is not unaware of the present
predicament of the employees involved but much as We
sympathize with those who have been misled and so lost their
jobs through hasty, ill-advised and precipitate moves, We rule
that the facts neither substantiate nor support the finding that the
respondent Marcelo Companies are guilty of unfair labor
practice.
There are also other facts which this Court cannot ignore. the
complaint of LAKAS charge that after their first strike of
September 4, 1967, management and the striking employees
entered into a Return-to-Work Agreement but that it was violated
by the respondent companies who "refused to admit the
members of the three striking local unions ... and gave reference
to the casual employees." (No. 8, Complaint). It is also alleged
that the strike of November 7, 1967 was staged "because of the
refusal of the respondents to accept some union members ... and
refusal of respondents to bargain in good faith with complainant"
(No. 9, Complaint). We find however, that in making these
charges, complainant LAKAS lacked candor, truth and fidelity
towards the courts.
It is a fact found by the respondent court, and as revealed by he
records of the case, that the respondent Marcelo Companies did
not violate the terms of the Return-to-Work Agreement
negotiated after the first strike. All of the strikers were admitted
back to work except four (4) who opted not to report for work
because of the administrative investigation conducted in
connection with the acts of violence perpetrated during the said
strike.
It is also evident from the records that the charge of bargaining in
bad faith imputed to the respondent companies, is hardly
credible. In fact, such charge is valid as only against the
complainant LAKAS. The parties had a total of five (5)
conferences for purposes of collective bargaining. It is worth

18

considering that the first strike of September 4, 1967 was staged


less than a week after the fourth CBA conference and without
any benefit of any previous strike notice. In this connection, it
must be stated that the notice of strike filed on June 13, 1967
could not have been the strike notice for the first strike because it
was already withdrawn on July 14, 1967. Thus, from these stated
facts can be seen that the first strike was held while the parties
were in the process of negotiating. Nor can it be sustained that
the respondent Marcelo Companies bargained in bad faith since
there were proposals offered by them, but the complainant
LAKAS stood pat on its position that all of their economic
demands should be met and that all of these demands should be
granted in all of the respondent Marcelo Companies. The
companies' refusal to accede to the demands of LAKAS appears
to be justified since there is no showing that these companies
were in the same state of financial and economic affairs. There is
reason to believe that the first strike was staged only for the
purpose of compelling the respondent Marcelo Companies to
accede to the inflexible demands of the complainant LAKAS. The
records further establish that after the resumption of normal
operations following the first strike and the consequent Returnto-Work Agreement, the striking unions led by complainant
LAKAS and the management of the respondent Marcelo
Companies resumed their bargaining negotiations. And that on
October 13, 1967, complainant LAKAS sent the final drafts of the
collective bargaining proposals for MFWU and UNWU. The
second strike of November 7, 1967 was then staged immediately
after which strike, as before, was again lacking of a strike notice.
All of these facts show that it was complainant LAKAS, and not
the respondent Marcelo Companies, which refused to negotiate
in the pending collective bargaining process. AR that the facts
show is that the bargaining position of complainant LAKAS was
inflexible and that it was in line with this uncompromising attitude
that the strikes were declared, significantly after notice that
management did not or could not meet all of their 17-points
demand.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Respondent court, upholding the contention of petitioner LAKAS


that after the second strike, the respondent Marcelo Companies,
despite the strikers' unconditional offer to return to work, refused
to readmit them without "screening" which LAKAS insists to be
"discriminatory hiring of the striking employees, " declared that
although the two strikes were illegal, being economic strikes held
in violation of the strike notice requirement, nevertheless held the
Marcelo Companies guilty of unfair labor practice in
discriminating against the complaining employees by refusing to
readmit them while other strikers were admitted back to work.
We do not agree.
It is the settled jurisprudence that it is an unfair labor practice for
an employer not to reinstate, or refuse re-employment of
members of union who abandon their strike and make
unconditional offer to return to work. 1 As indeed Exhibit "B"
presents an unconditional offer of the striking employees to
return to work under the same terms and conditions of
employment before the strike, the question then confronting Us is
whether or not on the part of the respondent companies, there
was refusal to reinstate or re-employ the strikers.
We find as a fact that the respondent Marcelo Companies did not
refuse to reinstate or re-employ the strikers, as a consequence of
which We overrule the finding of unfair labor practice against
said companies based on the erroneous conclusion )f the
respondent court. It is clear from the records that even before the
unconditional offer to return to work contained in , Exhibit "B" was
made, the respondent Marcelo Companies had already posted
notices for the strikers to return back to work.
It is true that upon their return, the strikers were required to fill up
a form (Exhibit "49") wherein they were to indicate the date of
their availability for work. But We are more impressed and are
persuaded to accept as true the contention of the respondent
Marcelo Companies that the aforestated requirement was only
for purposes of proper scheduling of the start of work for each
returning striker. It must be noted that as a consequence of the

19

two strikes which were both attended by widespread acts of


violence and vandalism, the businesses of the respondent
companies were completely paralyzed. It would hardly be
justiciable to demand of the respondent companies to readmit all
the returning workers in one big force or as each demanded
readmission. There were machines that were not in operating
condition because of long disuse during the strikes. Some of the
machines needed more than one worker to operate them so that
in the absence of the needed team of workers, the start of work
by one without his teammates would necessarily be useless, and
the company would be paying for his time spent doing no work.
Finally, We take judicial cognizance of the fact that companies
whose businesses were completely paralyzed by major strikes
cannot resume operations at once and in the same state or force
as before the strikes.
But what strikes Us most in lending credence to respondents'
allegation that Exhibit "49" was not meant to screen the strikers,
is the fact that an of the returning strikers who filled up the form
were scheduled for work and consequently started with their
jobs. It is only those strikers who refused or failed to fill-up the
required form, like the herein complaining employees, who were
not scheduled for work and consequently have not been reemployed by the respondent Marcelo Companies. Even if there
was a sincere belief on their part that the requirement of Exhibit
"49" was a ruse at "screening" them, this fear would have been
dispelled upon notice of the fact that each and all of their costrikers who rued up the required form were in fact scheduled for
work and started to work. The stoppage of their work was not,
therefore, the direct consequence of the respondent companies'
complained act, Hence, their economic loss should not be shifted
to the employer. 2
It was never the state policy nor Our judicial pronouncement that
the employees' right to self-organization and to engage in
concerted activities for mutual aid and protection, are absolute or
be upheld under an circumstances. Thus, in the case of Royal

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Interocean Lines, et al. vs. CIR, 3 We cited these authorities


giving adequate panoply to the rights of employer, to wit:
The protection of workers' right to self-organization in no way
interfere with employer's freedom to enforce such rules and
orders as are necessary to proper conduct of his businesses,
so long as employer's supervision is not for the purpose of
intimidating or coercing his employees with respect to their selforganization and representation. (National Relations Board vs.
Hudson Motor Car Co., C.C.A., 1942, 123 F 2d. 528). "
It is the function of the court to see that the rights of selforganization and collective bargaining guaranteed by the Act
are amply secured to the employee, but in its effort to prevent
the prescribed unfair labor practice, the court must be
mindful of the welfare of the honest employer (Martel Mills
Corp. vs. M.L.R.L., C.C.A., 1940,11471 F2d. 264)."
In Pagkakaisang Itinataguyod ng mga Manggagawa sa Ang
Tibay (PIMA), Eliseo Samson, et al., vs. Ang Tibay, Inc., et al., L22273, May 16, 1967, 20 SCRA 45, We held that the exaction,
by the employer, from the strikers returning to work, of a promise
not to destroy company property and not to commit acts of
reprisal against union members who did not participate in the
strike, cannot be considered an unfair labor practice because it
was not intended to discourage union membership. It was an act
of a self- preservation designed to insure peace and order in the
employer's premises. It was also held therein that what the
Industrial Peace Act regards as an unfair labor practice is the
discrimination committed by the employer in regard to tenure of
employment for the purpose of encouraging or discouraging
union membership.
In the light of the above ruling and taking the facts and
circumstances of the case before Us in relation to the
requirement by the respondent companies in the filling up of
Exhibit "49", We hold and rule that the requirement was an act of
self-preservation, designed to effect cost-savings as well as to

20

insure peace and order within their premises. Accordingly, the


petition in G. R. No. L-38258 should be dismissed, it having
failed to prove, substantiate and justify the unfair labor practice
charges against the respondent Marcelo Companies.
Now to the procedural question posed in the first issue brought
about by the respondent court's denial of the motions to withdraw
the complaint respectively filed by MUEWA, UNWU and MFWU.
In their petition (G.R. L-38260) the respondent Marcelo
Companies maintain that the respondent court erred in not
dismissing the complaint even as it knew fully well that the very
authority of LAKAS to represent the labor unions who had
precisely disaffiliated from the LAKAS, was open to serious
question and was being ventilated before it. On the other hand,
the respondent court rationalized the denial of the aforestated
motions to withdraw by holding that the complaint was filed by
LAKAS on behalf of the individual employees whose names were
attached to the complaint and hence, that the local unions who
were not so authorized by these individual employees, cannot
withdraw the said complaint. The lower court's opinion is
erroneous.
Firstly, LAKAS cannot bring any action for and in behalf of the
employees who were members of MUEWA because, as
intimated earlier in this Decision, the said local union was never
an affiliate of LAKAS. What appears clearly from the records is
that it was Augusto Carreon and his followers who joined
LAKAS, but then Augusto Carreon was not the recognized
president of MUEWA and neither he nor his followers can
claim any legitimate representation of MUEWA. Apparently, it
is this split faction of MUEWA, headed by Augusta Carreon, who
is being sought to be represented by LAKAS. However, it cannot
do so because the members constituting this split faction of
MUEWA were still members of MUEWA which was on its own
right a duly registered labor union. Hence, any suit to be brought
for and in behalf of them can be made only by MUEWA, and not
LAKAS. It appearing then that Augusta Carreon and his cohorts
did not disaffiliate from MUEWA nor signed any individual

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

affiliation with LAKAS, LAKAS bears no legal interest in


representing MUEWA or any of its members.
Nor will the lower court's opinion be availing with respect to the
complaining employees belonging to UNWU and MFWU.
Although it is true, as alleged by LAKAS, that when it filed the
charge on December 26, 1967, the officers of the movant unions
were not yet then the officers thereof, nevertheless, the moment
MFWU and UNWU separated from and disaffiliated with 'LAKAS
to again exercise its rights as independent local unions,
registered before as such, they are no longer affiliates of LAKAS,
as what transpired here. Naturally, there would no longer be
any reason or occasion for LAKAS to continue representing
them. Notable is the fact that the members purportedly
represented by LAKAS constitute the mere minority of the
movant unions, as may be inferred from the allegations of
the movant unions as well as the counter-allegations of LAKAS
filed below. As such, they cannot prevail or dictate upon the
will of the greater majority of the unions to which they still
belong, it appearing that they never disaffiliated from their
unions; or stated in another way, they are bound by the
action of the greater majority.4
In NARIC Workers' Union vs. CIR, 5 We ruled that, "(a) labor
union would go beyond the limits of its legitimate purposes
if it is given the unrestrained liberty to prosecute any case
even for employees who are not members of any union at
all. A suit brought by another in representation of a real party in
interest is defective." Under the uncontroverted facts obtaining
herein, the aforestated ruling is applicable, the only difference
being that, here, a labor federation seeks to represent members
of a registered local union never affiliated with it and members of
registered local unions which, in the course of the proceedings
before the industrial court, disaffiliated from it.
This is not to say that the complaining employees were without
any venue for redress. Under the aforestated considerations,
the respondent court should have directed the amendment

21

of the complaint by dropping LAKAS as the complainant


and allowing the suit to be further prosecuted in the
individual names of those who had grievances. A class suit
under Rule 3, Section 12 of the Rules of Court is authorized and
should suffice for the purpose.
In fairness to the complaining employees, however, We treated
their Motion for Reconsideration of the Decision subject of
appeal as curing the defect of the complaint as the said motion
expressly manifested their collective desire to pursue the
complaint for and in their own behalves and disauthorizing
LAKAS' counsel from further representing them. And We have
also treated their petition before Us in the same manner,
disregarding the fact that LAKAS remained the petitioning party,
as it appears from the verification that the petition in L38258 was
for and in behalf of the complaining employees. The merits of
their petition, however, fall short of substantiating the
charge of unfair labor practice against the respondent
Marcelo Companies. On the other hand, the appeal of the
Marcelo Companies in L-38260 must be upheld and
sustained.

WHEREFORE, upon the foregoing considerations, the


petition in L-38258 is dismissed and the petition in L-38260
is granted. The decision of the Court of Industrial Relations is
hereby REVERSED and SET ASIDE and a new judgment is
rendered holding that the respondent Marcelo Companies are
not guilty of unfair labor practice. No costs. SO ORDERED.
G.R. No. 113856 September 7, 1998
SAMAHANG
MANGGAGAWA
SA
TOP
FORM
MANUFACTURING UNITED WORKERS OF THE PHILIPPINES
(SMTFM-UWP),
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC.
ROMERO, J.:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The issue in this petition for certiorari is whether or not an


employer committed an unfair labor practice by bargaining in bad
faith and discriminating against its employees. The charge arose
from the employer's refusal to grant across-the-board increases
to its employees in implementing Wage Orders Nos. 01 and 02 of
the Regional Tripartite Wages and Productivity Board of the
National Capital Region (RTWPB-NCR). Such refusal was
aggravated by the fact that prior to the issuance of said wage
orders, the employer allegedly promised at the collective
bargaining conferences to implement any government-mandated
wage increases on an across-the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing
United Workers of the Philippines (SMTFM) was the certified
collective bargaining representative of all regular rank and file
employees of private respondent Top Form Manufacturing
Philippines, Inc. At the collective bargaining negotiation held at
the Milky Way Restaurant in Makati, Metro Manila on February
27, 1990, the parties agreed to discuss unresolved economic
issues. According to the minutes of the meeting, Article VII of the
collective bargaining agreement was discussed. The following
appear in said Minutes:
Art. VII, Wages
Sect. 1. Defer
Sect. 2. Status quo
Sec. 3. Union proposed that any future wage increase given by
the government should be implemented by the company
across-the-board or non-conditional.
Management requested the union to retain this provision since
their sincerity was already proven when the P25.00 wage
increase was granted across-the-board. The union
acknowledges management's sincerity but they are worried
that in case there is a new set of management, they can just
show their CBA. The union decided to defer this provision. 1

22

In their joint affidavit dated January 30, 1992, 2 union members


Salve L. Barnes, Eulisa Mendoza, Lourdes Barbero and
Concesa Ibaez affirmed that at the subsequent collective
bargaining negotiations, the union insisted on the incorporation in
the collective bargaining agreement (CBA) of the union proposal
on "automatic across-the-board wage increase." They added
that:
11. On the strength of the representation of the negotiating
panel of the company and the above undertaking/promise
made by its negotiating panel, our union agreed to drop said
proposal relying on the undertakings made by the officials of
the company who negotiated with us, namely, Mr. William
Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo.
Also, in the past years, the company has granted to us
government mandated wage increases on across-the-board
basis.
On October 15, 1990, the RTWPB-NCR issued Wage Order No.
01 granting an increase of P17.00 per day in the salary of
workers. This was followed by Wage Order No. 02 dated
December 20, 1990 providing for a P12.00 daily increase in
salary.
As expected, the union requested the implementation of said
wage orders. However, they demanded that the increase be on
an across-the-board basis. Private respondent refused to accede
to that demand. Instead, it implemented a scheme of increases
purportedly to avoid wage distortion. Thus, private respondent
granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and
below. The P12.00 increase mandated by Wage Order No. 02
was granted to those receiving the salary of P140.00 per day and
below. For employees receiving salary higher than P125.00 or
P140.00 per day, private respondent granted an escalated
increase ranging from P6.99 to P14.30 and from P6.00 to
P10.00, respectively. 3

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

On October 24, 1991, the union, through its legal counsel, wrote
private respondent a letter demanding that it should "fulfill its
pledge of sincerity to the union by granting an across-the-board
wage increases (sic) to all employees under the wage orders."
The union reiterated that it had agreed to "retain the old provision
of CBA" on the strength of private respondent's "promise and
assurance" of an across-the-board salary increase should the
government mandate salary increases. 4Several conferences
between the parties notwithstanding, private respondent
adamantly maintained its position on the salary increases it had
granted that were purportedly designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC
alleging that private respondent's act of "reneging on its
undertaking/promise clearly constitutes act of unfair labor
practice through bargaining in bad faith." It charged private
respondent with acts of unfair labor practices or violation of
Article 247 of the Labor Code, as amended, specifically
"bargaining in bad faith," and prayed that it be awarded actual,
moral and exemplary damages. 5 In its position paper, the union
added that it was charging private respondent with "violation of
Article 100 of the Labor Code." 6
Private respondent, on the other hand, contended that in
implementing Wage Orders Nos. 01 and 02, it had avoided "the
existence of a wage distortion" that would arise from such
implementation. It emphasized that only "after a reasonable
length of time from the implementation" of the wage orders "that
the union surprisingly raised the question that the company
should have implemented said wage orders on an across-theboard basis." It asserted that there was no agreement to the
effect that future wage increases mandated by the government
should be implemented on an across-the-board basis.
Otherwise, that agreement would have been incorporated and
expressly stipulated in the CBA. It quoted the provision of the
CBA that reflects the parties' intention to "fully set forth" therein
all their agreements that had been arrived at after negotiations
that gave the parties "unlimited right and opportunity to make

23

demands and proposals with respect to any subject or matter not


removed by law from the area of collective bargaining." The
same CBA provided that during its effectivity, the parties "each
voluntarily and unqualifiedly waives the right, and each agrees
that the other shall not be obligated, to bargain collectively, with
respect to any subject or matter not specifically referred to or
covered by this Agreement, even though such subject or matter
may not have been within the knowledge or contemplation of
either or both of the parties at the time they negotiated or signed
this Agreement." 7
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a
decision dismissing the complaint for lack of merit. 8 He
considered two main issues in the case: (a) whether or not
respondents are guilty of unfair labor practice, and (b) whether or
not the respondents are liable to implement Wage Orders Nos.
01 and 02 on an across-the-board basis. Finding no basis to rule
in the affirmative on both issues, he explained as follows:
The charge of bargaining in bad faith that the complainant
union attributes to the respondents is bereft of any certitude
inasmuch as based on the complainant union's own admission,
the latter vacillated on its own proposal to adopt an across-theboard stand or future wage increases. In fact, the union
acknowledges the management's sincerity when the latter
allegedly implemented Republic Act 6727 on an across-theboard basis. That such union proposal was not adopted in the
existing CBA was due to the fact that it was the union itself
which decided for its deferment. It is, therefore, misleading to
claim that the management undertook/promised to implement
future wage increases on an across-the-board basis when as
the evidence shows it was the union who asked for the
deferment of its own proposal to that effect.
The alleged discrimination in the implementation of the subject
wage orders does not inspire belief at all where the wage
orders themselves do not allow the grant of wage increases on
an across-the-board basis. That there were employees who

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

were granted the full extent of the increase authorized and


some others who received less and still others who did not
receive any increase at all, would not ripen into what the
complainants
termed
as
discrimination.
That
the
implementation of the subject wage orders resulted into an
uneven implementation of wage increases is justified under the
law to prevent any wage distortion. What the respondents did
under the circumstances in order to deter an eventual wage
distortion without any arbitral proceedings is certainly
commendable.
The alleged violation of Article 100 of the Labor Code, as
amended, as well as Article XVII, Section 7 of the existing CBA
as herein earlier quoted is likewise found by this Branch to
have no basis in fact and in law. No benefits or privileges
previously enjoyed by the employees were withdrawn as a
result of the implementation of the subject orders. Likewise, the
alleged company practice of implementing wage increases
declared by the government on an across-the-board basis has
not been duly established by the complainants' evidence. The
complainants asserted that the company implemented
Republic Act No. 6727 which granted a wage increase of
P25.00 effective July 1, 1989 on an across-the-board basis.
Granting that the same is true, such isolated single act that
respondents adopted would definitely not ripen into a company
practice. It has been said that "a sparrow or two returning to
Capistrano does not a summer make."
Finally, on the second issue of whether or not the employees of
the respondents are entitled to an across-the-board wage
increase pursuant to Wage Orders Nos. 01 and 02, in the face
of the above discussion as well as our finding that the
respondents correctly applied the law on wage increases, this
Branch rules in the negative.
Likewise, for want of factual basis and under the circumstances
where our findings above are adverse to the complainants,

24

their prayer for moral and exemplary damages and attorney's


fees may not be granted.
Not satisfied, petitioner appealed to the NLRC that, in turn,
promulgated
the
assailed
Resolution
of
April
29,
9
1993 dismissing the appeal for lack of merit. Still dissatisfied,
petitioner sought reconsideration which, however, was denied by
the NLRC in the Resolution dated January 17, 1994. Hence, the
instant petition for certiorari contending that:
- A - THE PUBLIC RESPONDENTS GROSSLY ERRED IN
NOT DECLARING THE PRIVATE RESPONDENTS GUILTY
OF ACTS OF UNFAIR LABOR PRACTICES WHEN,
OBVIOUSLY, THE LATTER HAS BARGAINED IN BAD FAITH
WITH THE UNION AND HAS VIOLATED THE CBA WHICH IT
EXECUTED WITH THE HEREIN PETITIONER UNION.
- B - THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN
NOT DECLARING THE PRIVATE RESPONDENTS GUILTY
OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION
OF NCR WAGE ORDER NOS. 01 AND 02.
- C - THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN
NOT FINDING THE PRIVATE RESPONDENTS GUILTY OF
HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE
EXISTING CBA.
- D - THE PUBLIC RESPONDENTS GRAVELY ERRED IN
NOT DECLARING THE PRIVATE RESPONDENTS GUILTY
OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE
OF THE PHILIPPINES, AS AMENDED.
- E - ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC
RESPONDENTS HAVE CORRECTLY RULED THAT THE
PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF
UNFAIR LABOR PRACTICES, THEY COMMITTED SERIOUS
ERROR IN NOT FINDING THAT THERE IS A SIGNIFICANT

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

DISTORTION IN THE WAGE


RESPONDENT COMPANY.

STRUCTURE

OF

THE

- F - THE PUBLIC RESPONDENTS ERRED IN NOT


AWARDING TO THE PETITIONERS HEREIN ACTUAL,
MORAL, AND EXEMPLARY DAMAGES AND ATTORNEY'S
FEES.
As the Court sees it, the pivotal issues in this petition can be
reduced into two, to wit: (a) whether or not private respondent
committed an unfair labor practice in its refusal to grant acrossthe-board wage increases in implementing Wage Orders Nos. 01
and 02, and (b) whether or not there was a significant wage
distortion of the wage structure in private respondent as a result
of the manner by which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its
arguments on the alleged commitment of private respondent to
grant an automatic across-the-board wage increase in the event
that a statutory or legislated wage increase is promulgated. It
cites as basis therefor, the aforequoted portion of the Minutes of
the collective bargaining negotiation on February 27, 1990
regarding wages, arguing additionally that said Minutes forms
part of the entire agreement between the parties.
The basic premise of this argument is definitely untenable. To
start with, if there was indeed a promise or undertaking on the
part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have
requested or demanded that such "promise or undertaking" be
incorporated in the CBA. After all, petitioner union has the means
under the law to compel private respondent to incorporate this
specific economic proposal in the CBA. It could have invoked
Article 252 of the Labor Code defining "duty to bargain," thus, the
duty includes "executing a contract incorporating such
agreements if requested by either party." Petitioner union's
assertion that it had insisted on the incorporation of the same
proposal may have a factual basis considering the allegations in

25

the aforementioned joint affidavit of its members. However,


Article 252 also states that the duty to bargain "does not compel
any party to agree to a proposal or make any concession." Thus,
petitioner union may not validly claim that the proposal embodied
in the Minutes of the negotiation forms part of the CBA that it
finally entered into with private respondent.
The CBA is the law between the contracting parties 10 the
collective bargaining representative and the employer-company.
Compliance with a CBA is mandated by the expressed policy to
give protection to labor. 11 In the same vein, CBA provisions
should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to
serve." 12 This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. 13 It
goes without saying, however, that only provisions embodied in
the CBA should be so interpreted and complied with. Where a
proposal raised by a contracting party does not find print in the
CBA, 14 it is not a part thereof and the proponent has no claim
whatsoever to its implementation.
Hence, petitioner union's contention that the Minutes of the
collective bargaining negotiation meeting forms part of the entire
agreement is pointless. The Minutes reflects the proceedings
and discussions undertaken in the process of bargaining for
worker benefits in the same way that the minutes of court
proceedings show what transpired therein. 15 At the negotiations,
it is but natural for both management and labor to adopt positions
or make demands and offer proposals and counter-proposals.
However, nothing is considered final until the parties have
reached an agreement. In fact, one of management's usual
negotiation strategies is to ". . . agree tentatively as you go along
with the understanding that nothing is binding until the entire
agreement
is
reached." 16 If
indeed
private
respondent promised to continue with the practice of granting
across-the-board salary increases ordered by the government,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

such promise could only be demandable in law if incorporated in


the CBA.
Moreover, by making such promise, private respondent may not
be considered in bad faith or at the very least, resorting to the
scheme of feigning to undertake the negotiation proceedings
through empty promises. As earlier stated, petitioner union had,
under the law, the right and the opportunity to insist on
the foreseeable fulfillment of the private respondent's promise by
demanding its incorporation in the CBA. Because the proposal
was never embodied in the CBA, the promise has remained just
that, a promise, the implementation of which cannot be validly
demanded under the law.
17

Petitioner's reliance on this Court's pronouncements in Kiok


Loy v. NLRC 18 is, therefore, misplaced. In that case, the
employer refused to bargain with the collective bargaining
representative, ignoring all notices for negotiations and requests
for counter proposals that the union had to resort to conciliation
proceedings. In that case, the Court opined that "(a) Company's
refusal to make counter-proposal, if considered in relation to the
entire bargaining process, may indicate bad faith and this is
specially true where the Union's request for a counter-proposal is
left unanswered." Considering the facts of that case, the Court
concluded that the company was "unwilling to negotiate and
reach an agreement with the Union." 19
In the case at bench, however, petitioner union does not deny
that discussion on its proposal that all government-mandated
salary increases should be on an across-the-board basis was
"deferred," purportedly because it relied upon the "undertaking"
of the negotiating panel of private respondent. 20 Neither does
petitioner union deny the fact that "there is no provision of the
1990 CBA containing a stipulation that the company will grant
across-the-board to its employees the mandated wage increase."
They simply assert that private respondent committed "acts of
unfair labor practices by virtue of its contractual commitment
made during the collective bargaining process." 21 The mere fact,

26

however, that the proposal in question was not included in the


CBA indicates that no contractual commitment thereon was ever
made by private respondent as no agreement had been arrived
at by the parties. Thus:
Obviously the purpose of collective bargaining is the reaching of
an agreement resulting in a contract binding on the parties; but
the failure to reach an agreement after negotiations continued
for a reasonable period does not establish a lack of good faith.
The statutes invite and contemplate a collective bargaining
contract, but they do not compel one. The duty to bargain does
not include the obligation to reach an agreement. . . . 32
With the execution of the CBA, bad faith bargaining can no
longer be imputed upon any of the parties thereto. All provisions
in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where
private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the
unilateral activity of petitioner union. The CBA is proof enough
that private respondent exerted "reasonable effort at good faith
bargaining." 23
Indeed, the adamant insistence on a bargaining position to the
point where the negotiations reach an impasse does not
establish bad faith. Neither can bad faith be inferred from a
party's insistence on the inclusion of a particular substantive
provision unless it concerns trivial matters or is obviously
intolerable. 24
The question as to what are mandatory and what are merely
permissive subjects of collective bargaining is of significance
on the right of a party to insist on his position to the point of
stalemate. A party may refuse to enter into a collective
bargaining contract unless it includes a desired provision as to
a matter which is a mandatory subject of collective bargaining;
but a refusal to contract unless the agreement covers a matter
which is not a mandatory subject is in substance a refusal to

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

bargain about matters which are mandatory subjects of


collective bargaining, and it is no answer to the charge of
refusal to bargain in good faith that the insistence on the
disputed clause was not the sole cause of the failure to agree
or that agreement was not reached with respect to other
disputed clauses. 25
On account of the importance of the economic issue proposed by
petitioner union, it could have refused to bargain and to enter into
a CBA with private respondent. On the other hand, private
respondent's firm stand against the proposal did not mean that it
was bargaining in bad faith. It had the right "to insist on (its)
position to the point of stalemate." On the part of petitioner union,
the importance of its proposal dawned on it only after the wage
orders were issued after the CBA had been entered into. Indeed,
from the facts of this case, the charge of bad faith bargaining on
the part of private respondent was nothing but a belated reaction
to the implementation of the wage orders that private respondent
made in accordance with law. In other words, petitioner union
harbored the notion that its members and the other employees
could have had a better deal in terms of wage increases had it
relentlessly pursued the incorporation in the CBA of its proposal.
The inevitable conclusion is that private respondent did not
commit the unfair labor practices of bargaining in bad faith and
discriminating against its employees for implementing the wage
orders pursuant to law.
The Court likewise finds unmeritorious petitioner union's
contention that by its failure to grant across-the-board wage
increases, private respondent violated the provisions of Section
5, Article VII of the existing CBA 26 as well as Article 100 of the
Labor Code. The CBA provision states:
Sec. 5. The COMPANY agrees to comply with all the applicable
provisions of the Labor Code of the Philippines, as amended,
and all other laws, decrees, orders, instructions, jurisprudence,
rules and regulations affecting labor.

27

Art. 100 of the Labor Code on prohibition against elimination or


diminution of benefits provides that "(n)othing in this Book shall
be construed to eliminate or in any way diminish supplements,
or other employee benefits being enjoyed at the time of
promulgation of this Code."
We agree with the Labor Arbiter and the NLRC that no benefits
or privileges previously enjoyed by petitioner union and the other
employees were withdrawn as a result of the manner by which
private respondent implemented the wage orders. Granted that
private respondent had granted an across-the-board increase
pursuant to Republic Act No. 6727, that single instance may not
be considered an established company practice. Petitioner
union's argument in this regard is actually tied up with its claim
that the implementation of Wage Orders Nos. 01 and 02 by
private respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question
of
fact 27 that is within the jurisdiction of the quasi-judicial tribunals
below. Factual findings of administrative agencies are accorded
respect and even finality in this Court if they are supported by
substantial evidence. 28 Thus, in Metropolitan Bank and Trust
Company, Inc. v. NLRC, the Court said:
The issue of whether or not a wage distortion exists as a
consequence of the grant of a wage increase to certain
employees, we agree, is, by and large, a question of fact the
determination of which is the statutory function of the NLRC.
Judicial review of labor cases, we may add, does not go
beyond the evaluation of the sufficiency of the evidence upon
which the labor officials' findings rest. As such, the factual
findings of the NLRC are generally accorded not only respect
but also finality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or
arbitrariness. When, however, the members of the same labor
tribunal are not in accord on those aspects of a case, as in this
case, this Court is well cautioned not to be as so conscious in

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

28

passing upon the sufficiency of the evidence, let alone the


conclusions derived therefrom. 29

hereby DISMISSED and the questioned Resolutions of the


NLRC AFFIRMED. No costs. SO ORDERED.

Unlike in above-cited case where the Decision of the NLRC was


not unanimous, the NLRC Decision in this case which was
penned by the dissenter in that case, Presiding Commissioner
Edna Bonto-Perez unanimously ruled that no wage distortions
marred private respondent's implementation of the wage orders.
The NLRC said:

G.R. Nos. 158930-31


March 3, 2008
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND
ALLIED INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFEDFA-KMU), vs. NESTL PHILIPPINES, INCORPORATED
RESOLUTION
CHICO-NAZARIO, J.:

On the issue of wage distortion, we are satisfied that there was


a meaningful implementation of Wage Orders Nos. 01 and 02.
This debunks the claim that there was wage distortion as could
be shown by the itemized wages implementation quoted
above. It should be noted that this itemization has not been
successfully traversed by the appellants. . . . . 30

On 22 August 2006, this Court promulgated its Decision 1 in the


above-entitled cases, the dispositive part of which reads

The NLRC then quoted the labor arbiter's ruling on wage


distortion.
We find no reason to depart from the conclusions of both the
labor arbiter and the NLRC. It is apropos to note, moreover, that
petitioner's contention on the issue of wage distortion and the
resulting allegation of discrimination against the private
respondent's employees are anchored on its dubious position
that private respondent's promise to grant an across-the-board
increase in government-mandated salary benefits reflected in the
Minutes of the negotiation is an enforceable part of the CBA.
In the resolution of labor cases, this Court has always been
guided by the State policy enshrined in the Constitution that the
rights of workers and the promotion of their welfare shall be
protected. 31 The Court is likewise guided by the goal of attaining
industrial peace by the proper application of the law. It cannot
favor one party, be it labor or management, in arriving at a just
solution to a controversy if the party has no valid support to its
claims. It is not within this Court's power to rule beyond the ambit
of the law. WHEREFORE, the instant petition for certiorari is

WHEREFORE, in view of the foregoing, the Petition in G.R. No.


158930-31 seeking that Nestl be declared to have committed
unfair labor practice in allegedly setting a precondition to
bargaining is DENIED. The Petition in G.R. No. 158944-45,
however, is PARTLY GRANTED in that we REVERSE the
ruling of the Court of Appeals in CA G.R. SP No. 69805 in so
far as it ruled that the Secretary of the DOLE gravely abused
her discretion in failing to confine her assumption of jurisdiction
power over the ground rules of the CBA negotiations; but the
ruling of the Court of Appeals on the inclusion of the Retirement
Plan as a valid issue in the collective bargaining negotiations
between UFE-DFA-KMU and Nestl is AFFIRMED. The parties
are directed to resume negotiations respecting the Retirement
Plan and to take action consistent with the discussions
hereinabove set forth. No costs.
Subsequent thereto, Nestl Philippines, Incorporated (Nestl)
filed a Motion for Clarification2 on 20 September 2006; while
Union of Filipro Employees Drug, Food and Allied Industries
Union Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September
2006, filed a Motion for Partial Reconsideration3 of the foregoing
Decision.
The material facts of the case, as determined by this Court in its
Decision, may be summarized as follows:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

29

UFE-DFA-KMU was the sole and exclusive bargaining agent of


the rank-and-file employees of Nestl belonging to the latters
Alabang and Cabuyao plants. On 4 April 2001, as the existing
collective bargaining agreement (CBA) between Nestl and UFEDFA-KMU4 was to end on 5 June 2001, 5 the Presidents of the
Alabang and Cabuyao Divisions of UFE-DFA-KMU informed
Nestl of their intent to "open [our] new Collective Bargaining
Negotiation for the year 2001-2004 x x x as early as June
2001."6 In response thereto, Nestl informed them that it was
also preparing its own counter-proposal and proposed ground
rules to govern the impending conduct of the CBA negotiations.

ground rules and/or refusing to include the issue of the


Retirement Plan in the CBA negotiations. The result of a strike
vote conducted by the members of UFE-DFA-KMU yielded an
overwhelming approval of the decision to hold a strike. 13

On 29 May 2001, in another letter to the UFE-DFA-KMU


(Cabuyao Division only) 7, Nestl reiterated its stance that
"unilateral grants, one-time company grants, company-initiated
policies and programs, which include, but are not limited to the
Retirement Plan, Incidental Straight Duty Pay and Calling Pay
Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."8

On 29 November 2001, Sec. Sto. Tomas issued an


Order15 assuming jurisdiction over the subject labor dispute. The
fallo of said Order states that:

On 26 November 2001, prior to holding the strike, Nestl filed


with the DOLE a Petition for Assumption of Jurisdiction, 14 praying
for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to
assume jurisdiction over the current labor dispute in order to
effectively enjoin any impending strike by the members of the
UFE-DFA-KMU at the Nestls Cabuyao Plant in Laguna.

CONSIDERING THE FOREGOING, this Office hereby


assumes jurisdiction over the labor dispute at the Nestl
Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of
the Labor Code, as amended.

Dialogue between the company and the union thereafter ensued.


9

On 14 August 2001, however, Nestl requested the National


Conciliation and Mediation Board (NCMB), Regional Office No.
IV, Imus, Cavite, to conduct preventive mediation proceedings
between it and UFE-DFA-KMU owing to an alleged impasse in
said dialogue; i.e., that despite fifteen (15) meetings between
them, the parties failed to reach any agreement on the proposed
CBA.
Conciliation proceedings proved ineffective, though, and the
UFE-DFA-KMU filed a Notice of Strike10 on 31 October 2001 with
the NCMB, complaining, in essence, of a bargaining deadlock
pertaining to economic issues, i.e., "retirement (plan), panel
composition, costs and attendance, and CBA". 11 On 07
November 2001, anotherNotice of Strike12 was filed by the union,
this time predicated on Nestls alleged unfair labor practices,
that is, bargaining in bad faith by setting pre-conditions in the

Accordingly, any strike or lockout is hereby enjoined. The


parties are directed to cease and desist from committing any
act that might lead to the further deterioration of the current
labor relations situation.
The parties are further directed to meet and convene for the
discussion of the union proposals and company counterproposals before the National Conciliation and Mediation Board
(NCMB) who is hereby designated as the delegate/facilitator of
this Office for this purpose. The NCMB shall report to this Office
the results of this attempt at conciliation and delimitation of the
issues within thirty (30) days from the parties receipt of this
Order, in no case later than December 31, 2001. If no
settlement of all the issues is reached, this Office shall
thereafter define the outstanding issues and order the filing of
position papers for a ruling on the merits.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

UFE-DFA-KMU sought reconsideration16 of the above but


nonetheless moved for additional time to file its position paper as
directed by the Assumption of Jurisdiction Order.
On 14 January 2002, Sec. Sto. Tomas denied said motion for
reconsideration.
On 15 January 2002, despite the order enjoining the conduct of
any strike or lockout and conciliation efforts by the NCMB, the
employee members of UFE-DFA-KMU at Nestls Cabuyao Plant
went on strike.
In view of the above, in an Order dated on 16 January 2002,
Sec. Sto. Tomas directed: (1) the members of UFE-DFA-KMU to
return-to-work within twenty-four (24) hours from receipt of such
Order; (2) Nestl to accept back all returning workers under the
same terms and conditions existing preceding to the strike; (3)
both parties to cease and desist from committing acts inimical to
the on-going conciliation proceedings leading to the further
deterioration of the situation; and (4) the submission of their
respective position papers within ten (10) days from receipt
thereof. But notwithstanding the Return-to-Work Order, the
members of UFE-DFA-KMU continued with their strike, thus,
prompting Sec. Sto. Tomas to seek the assistance of the
Philippine National Police (PNP) for the enforcement of said
order.

30

Nestl but not covered by its initial position paper by way of


a Supplemental Position Paper.
UFE-DFA-KMU, instead of filing the above-mentioned
supplement, filed several pleadings, one of which was
aManifestation with Motion for Reconsideration of the Order
dated February 11, 2002 assailing the Order of February 11,
2002 for supposedly being contrary to law, jurisprudence and the
evidence on record. The union posited that Sec. Sto. Tomas
"could only assume jurisdiction over the issues mentioned in the
notice of strike subject of the current dispute," 17 and that the
Amended Notice of Strike it filed did not cite, as one of the
grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for
reconsideration of UFE-DFA-KMU.
Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before
the Court of Appeals, alleging that Sec. Sto. Tomas committed
grave abuse of discretion amounting to lack or excess of
jurisdiction when she issued the Orders of 11 February 2002 and
8 March 2002.
In the interim, in an attempt to finally resolve the crippling labor
dispute between the parties, then Acting Secretary of the DOLE,
Hon. Arturo D. Brion, came out with an Order19 dated 02 April
2002, ruling that:

On 7 February 2002, Nestl and UFE-DFA-KMU filed their


respective position papers. Nestl addressed several issues
concerning economic provisions of the CBA as well as the noninclusion of the issue of the Retirement Plan in the collective
bargaining negotiations. On the other hand, UFE-DFA-KMU
limited itself to the issue of whether or not the retirement plan
was a mandatory subject in its CBA negotiations.

a. we hereby recognize that the present Retirement Plan at the


Nestl Cabuyao Plant is a unilateral grant that the parties have
expressly so recognized subsequent to the Supreme Courts
ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231,
February 4, 1991, and is therefore not a mandatory subject for
bargaining;

On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU


the chance to tender its stand on the other issues raised by

b. the Unions charge of unfair labor practice against the


Company is hereby dismissed for lack of merit;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

c. the parties are directed to secure the best applicable terms


of the recently concluded CBSs between Nestl Phils. Inc. and
it eight (8) other bargaining units, and to adopt these as the
terms and conditions of the Nestl Cabuyao Plant CBA;
d. all union demands that are not covered by the provisions of
the CBAs of the other eight (8) bargaining units in the
Company are hereby denied;
e. all existing provisions of the expired Nestl Cabuyao Plant
CBA without any counterpart in the CBAs of the other eight
bargaining units in the Company are hereby ordered
maintained as part of the new Nestl Cabuyao Plant CBA;
f. the parties shall execute their CBA within thirty (30) days
from receipt of this Order, furnishing this Office a copy of the
signed Agreement;
g. this CBA shall, in so far as representation is concerned, be
for a term of five (5) years; all other provisions shall be
renegotiated not later than three (3) years after its effective
date which shall be December 5, 2001 (or on the first day six
months after the expiration on June 4, 2001 of the superceded
CBA).
UFE-DFA-KMU moved to reconsider the aforequoted ruling, but
such was subsequently denied on 6 May 2002.
For the second time, UFE-DFA-KMU went to the Court of
Appeals via another Petition for Certiorari seeking to annul the
Orders of 02 April 2002 and 06 May 2002 of the Secretary of the
DOLE, having been issued in grave abuse of discretion
amounting to lack or excess of jurisdiction.
On 27 February 2003, the appellate court promulgated its
Decision on the twin petitions for certiorari, ruling entirely in favor
of UFE-DFA-KMU, the dispositive part thereof stating

31

WHEREFORE, in view of the foregoing, there being grave


abuse on the part of the public respondent in issuing all the
assailed Orders, both petitions are hereby GRANTED. The
assailed Orders dated February 11, 2001, and March 8, 2001
(CA-G.R. SP No. 69805), as well as the Orders dated April 2,
2002 and May 6, 2002 (CA-G.R. SP No. 71540) of the
Secretary of Labor and Employment in the case entitled: "IN
RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC.
(CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIVCAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMBRBIV-LAG-NS-11-10-03901) are hereby ANNULLED and
SET ASIDE. Private respondent is hereby directed to resume
the CBA negotiations with the petitioner.20
Both parties appealed the aforequoted ruling. Nestl essentially
assailed that part of the decision finding the DOLE Secretary to
have gravely abused her discretion amounting to lack or excess
of jurisdiction when she ruled that the Retirement Plan was not a
valid issue to be tackled during the CBA negotiations; UFE-DFAKMU, in contrast, questioned the appellate courts decision
finding Nestl free and clear of any unfair labor practice.
Since the motions for reconsideration of both parties were denied
by the Court of Appeals in a joint Resolution dated 27 June 2003,
UFE-DFA-KMU and Nestl separately filed the instant Petitions
for Review on Certiorariunder Rule 45 of the Rules of Court, as
amended.
G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestl
seeking to reverse the Court of Appeals Decision insofar as the
appellate courts failure to find Nestl guilty of unfair labor
practice was concerned; while G.R. No. 158944-45 was
instituted by Nestl against UFE-DFA-KMU likewise looking to
annul and set aside the part of the Court of Appeals Decision
declaring that: 1) the Retirement Plan was a valid collective
bargaining issue; and 2) the scope of the power of the Secretary
of the Department of Labor and Employment (DOLE) to assume
jurisdiction over the labor dispute between UFE-DFA-KMU and

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Nestl was limited to the resolution of questions and matters


pertaining merely to the ground rules of the collective bargaining
negotiations to be conducted between the parties.
On 29 March 2004, this Court resolved 21 to consolidate the two
petitions inasmuch as they (1) involved the same set of parties;
(2) arose from the same set of circumstances, i.e., from several
Orders issued by then DOLE Secretary, Hon. Patricia A. Sto.
Tomas, respecting her assumption of jurisdiction over the labor
dispute between Nestl and UFE-DFA-KMU, Alabang and
Cabuyao Divisions;22 and (3) similarly assailed the same
Decision and Resolution of the Court of Appeals.
After giving due course to the instant consolidated petitions, this
Court promulgated on 22 August 2006 its Decision, now subject
of UFE-DFA-KMUs Motion for Partial Reconsideration and
Nestls Motion for Clarification.
In its Motion for Partial Reconsideration, UFE-DFA-KMU would
have this Court address and discuss anew points or arguments
that have basically been passed upon in this Courts 22 August
2006 Decision. Firstly, it questions this Courts finding that Nestl
was not guilty of unfair labor practice, considering that the
transaction speaks for itself, i.e, res ipsa loquitor. And made an
issue again is the question of whether or not the DOLE Secretary
can take cognizance of matters beyond the amended Notice of
Strike.
As to Nestls prayer for clarification, the corporation seeks
elucidation respecting the dispositive part of this Courts Decision
directing herein parties to resume negotiations on the retirement
compensation package of the concerned employees. It posits
that "[i]n directing the parties to negotiate the Retirement Plan,
the Honorable Court x x x might have overlooked the fact that
here, the Secretary of Labor had already assumed jurisdiction
over the entire 2001-2004 CBA controversy x x x."
As to the charge of unfair labor practice:

32

The motion does not put forward new arguments to substantiate


the prayer for reconsideration of this Courts Decision except for
the sole contention that the transaction speaks for itself, i.e., res
ipsa loquitor. Nonetheless, even a perusal of the arguments of
UFE-DFA-KMU in its petition and memorandum in consideration
of the point heretofore raised will not convince us to change our
disposition of the question of unfair labor practice. UFE-DFAKMU argues therein that Nestls "refusal to bargain on a very
important CBA economic provision constitutes unfair labor
practice."23 It explains that Nestl set as a precondition for the
holding of collective bargaining negotiations the non-inclusion of
the issue of Retirement Plan. In its words, "respondent Nestl
Phils., Inc. insisted that the Union should first agree that the
retirement plan is not a bargaining issue before respondent
Nestl would agree to discuss other issues in the CBA." 24 It then
concluded that "the Court of Appeals committed a legal error in
not ruling that respondent company is guilty of unfair labor
practice. It also committed a legal error in failing to award
damages to the petitioner for the ULP committed by the
respondent."25
We are unconvinced still.
The duty to bargain collectively is mandated by Articles 252 and
253 of the Labor Code, as amended, which state
ART. 252. Meaning of duty to bargain collectively. The duty to
bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement with
respect to wages, hours, of work and all other terms and
conditions of employment including proposals for adjusting any
grievances or questions arising under such agreement and
executing a contract incorporating such agreements if
requested by either party but such duty does not compel any
party to agree to a proposal or to make any concession.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

ART. 253. Duty to bargain collectively when there exists a


collective bargaining agreement. When there is a collective
bargaining agreement, the duty to bargain collectively shall
also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a
written notice to terminate or modify the agreement at least
sixty (60) days prior to its expiration date. It shall be the duty of
both parties to keep the status quo and to continue in full force
and effect the terms of conditions of the existing agreement
during the 60-day period and/or until a new agreement is
reached by the parties.
Obviously, the purpose of collective bargaining is the reaching of
an agreement resulting in a contract binding on the parties; but
the failure to reach an agreement after negotiations have
continued for a reasonable period does not establish a lack of
good faith. The statutes invite and contemplate a collective
bargaining contract, but they do not compel one. The duty to
bargain does not include the obligation to reach an agreement.
The crucial question, therefore, of whether or not a party has met
his statutory duty to bargain in good faith typically turns on the
facts of the individual case. As we have said, there is no per
se test of good faith in bargaining. Good faith or bad faith is an
inference to be drawn from the facts. To some degree, the
question of good faith may be a question of credibility.
The effect of an employers or a unions individual actions is not
the test of good-faith bargaining, but the impact of all such
occasions or actions, considered as a whole, and the inferences
fairly drawn therefrom collectively may offer a basis for the
finding of the NLRC.26
For a charge of unfair labor practice to prosper, it must be shown
that Nestl was motivated by ill will, "bad faith, or fraud, or was
oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social
humiliation, wounded feelings, or grave anxiety resulted x x
x"27 in disclaiming unilateral grants as proper subjects in their

33

collective bargaining negotiations. While the law makes it an


obligation for the employer and the employees to bargain
collectively with each other, such compulsion does not include
the commitment to precipitately accept or agree to the proposals
of the other. All it contemplates is that both parties should
approach the negotiation with an open mind and make
reasonable effort to reach a common ground of agreement.
Herein, the union merely bases its claim of refusal to bargain on
a letter28 dated 29 May 2001 written by Nestl where the latter
laid down its position that "unilateral grants, one-time company
grants, company-initiated policies and programs, which include,
but are not limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature not
proper subjects of CBA negotiations and therefore shall be
excluded therefrom." But as we have stated in this Courts
Decision, said letter is not tantamount to refusal to bargain. In
thinking to exclude the issue of Retirement Plan from the CBA
negotiations, Nestl, cannot be faulted for considering the same
benefit as unilaterally granted, considering that eight out of nine
bargaining units have allegedly agreed to treat the Retirement
Plan as a unilaterally granted benefit. This is not a case where
the employer exhibited an indifferent attitude towards collective
bargaining, because the negotiations were not the unilateral
activity of the bargaining representative. Nestls desire to settle
the dispute and proceed with the negotiation being evident in its
cry for compulsory arbitration is proof enough of its exertion of
reasonable effort at good-faith bargaining.
In the case at bar, Nestle never refused to bargain collectively
with UFE-DFA-KMU. The corporation simply wanted to exclude
the Retirement Plan from the issues to be taken up during CBA
negotiations, on the postulation that such was in the nature of a
unilaterally granted benefit. An employers steadfast insistence to
exclude a particular substantive provision is no different from a
bargaining representatives perseverance to include one that
they deem of absolute necessity. Indeed, an adamant insistence
on a bargaining position to the point where the negotiations

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

reach an impasse does not establish bad faith.[fn24 p.10] It is but


natural that at negotiations, management and labor adopt
positions or make demands and offer proposals and counterproposals. On account of the importance of the economic issue
proposed by UFE-DFA-KMU, Nestle could have refused to
bargain with the former but it did not. And the managements
firm stand against the issue of the Retirement Plan did not mean
that it was bargaining in bad faith. It had a right to insist on its
position to the point of stalemate.
The foregoing things considered, this Court replicates below its
clear disposition of the issue:
The concept of "unfair labor practice" is defined by the Labor
Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND
PROCEDURE FOR PROSECUTION THEREOF. Unfair labor
practices violate the constitutional right of workers and
employees to self-organization, are inimical to the legitimate
interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labormanagement relations.
x x x x.
The same code likewise provides the acts constituting unfair
labor practices committed by employers, to wit:
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS.
It shall be unlawful for an employer to commit any of the
following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;

34

(b) To require as a condition of employment that a person or an


employee shall not join a labor organization or shall withdraw
from one to which he belongs;
(c) To contract out services or functions being performed by
union members when such will interfere with, restrain or coerce
employees in the exercise of their right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including
the giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work, and other
terms and conditions of employment in order to encourage or
discourage membership in any labor organization. Nothing in
this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees
who are already members of another union at the time of the
signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are
not members of the recognized collective bargaining agent may
be assessed a reasonable fee equivalent to the dues and other
fees paid by members of the recognized collective bargaining
agent, if such non-union members accept the benefits under
the collective agreement. Provided, That the individual
authorization required under Article 242, paragraph (o) of this
Code shall not apply to the nonmembers of the recognized
collective bargaining agent; [The article referred to is 241, not
242. CAA]
(f) To dismiss, discharge, or otherwise prejudice or discriminate
against an employee for having given or being about to give
testimony under this Code;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

(g) To violate the duty to bargain collectively as prescribed


by this Code;
(h) To pay negotiation or attorneys fees to the union or its
officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute; or

35

A perusal of the allegations and arguments raised by UFEDFA-KMU in the Memorandum (in G.R. Nos. 158930-31) will
readily disclose the need for the presentation of evidence other
than its bare contention of unfair labor practice in order to make
certain the propriety or impropriety of the ULP charge hurled
against Nestl. Under Rule XIII, Sec. 4, Book V of the
Implementing Rules of the Labor Code:

(i) To violate a collective bargaining agreement.


The provisions of the preceding paragraph notwithstanding,
only the officers and agents of corporations associations or
partnerships who have actually participated, authorized or
ratified unfair labor practices shall be held criminally liable.
(Emphasis supplied.)
Herein, Nestl is accused of violating its duty to bargain
collectively when it purportedly imposed a pre-condition to its
agreement to discuss and engage in collective bargaining
negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at
bar shows that, of the two notices of strike filed by UFE-DFAKMU before the NCMB, it was only on the second that the
ground of unfair labor practice was alleged. Worse, the 7
November 2001 Notice of Strike merely contained a general
allegation that Nestl committed unfair labor practice by
bargaining in bad faith for supposedly "setting pre-condition in
the ground rules (Retirement issue)." (Notice of Strike of 7
November 2001; Annex "C" of UFE-DFA-KMU Position Paper;
DOLE original records, p. 146.) In contrast, Nestl, in its
Position Paper, did not confine itself to the issue of the noninclusion of the Retirement Plan but extensively discussed its
stance on other economic matters pertaining to the CBA. It is
UFE-DFA-KMU, therefore, who had the burden of proof to
present substantial evidence to support the allegation of unfair
labor practice.

x x x. In cases of unfair labor practices, the notice of strike


shall as far as practicable, state the acts complained
of and the efforts to resolve the dispute amicably." (Emphasis
supplied.)
In the case at bar, except for the assertion put forth by UFEDFA-KMU, neither the second Notice of Strike nor the records
of these cases substantiate a finding of unfair labor practice. It
is not enough that the union believed that the employer
committed acts of unfair labor practice when the circumstances
clearly negate even a prima facie showing to warrant such a
belief. (Tiu v. National Labor Relations Commission, G.R. No.
123276, 18 August 1997, 277 SCRA 681, 688.)
Employers are accorded rights and privileges to assure their
self-determination and independence and reasonable return of
capital. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098,
16 September 2005, 470 SCRA 125, 136.) This mass of
privileges comprises the so-called management prerogatives.
(Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16
September 2005, 470 SCRA 125, 136.) In this connection, the
rule is that good faith is always presumed. As long as the
companys exercise of the same is in good faith to advance its
interest and not for purpose of defeating or circumventing the
rights of employees under the law or a valid agreement, such
exercise will be upheld. (Capitol Medical Center, Inc. v. Meris,
G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.)
There is no per se test of good faith in bargaining. (Hongkong
Shanghai Banking Corporation Employees Union v. National

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Labor Relations Commission, G.R. No. 125038, 6 November


1997, 281 SCRA 509, 518.) Good faith or bad faith is an
inference to be drawn from the facts. (Hongkong Shanghai
Banking Corporation Employees Union v. National Labor
Relations Commission, G.R. No. 125038, 6 November 1997,
281 SCRA 509, 518.) Herein, no proof was presented to
exemplify bad faith on the part of Nestl apart from mere
allegation. Construing arguendo that the content of the
aforequoted letter of 29 May 2001 laid down a pre-condition to
its agreement to bargain with UFE-DFA-KMU, Nestls
inclusion in its Position Paper of its proposals affecting other
matters covered by the CBA negates the claim of refusal to
bargain or bargaining in bad faith. Accordingly, since UFE-DFAKMU failed to proffer substantial evidence that would overcome
the legal presumption of good faith on the part of Nestl, the
award of moral and exemplary damages is unavailing.

36

The Secretary of the DOLE simply relied on the Notices of Strike


that were filed by UFE-DFA-KMU as stated in her Order of 08
March 2002, to wit:
x x x The records disclose that the Union filed two Notices of
Strike. The First is dated October 31, 2001 whose grounds are
cited verbatim hereunder:

As to the jurisdiction of the DOLE Secretary under the


amended Notice of Strike:

"A. Bargaining Deadlock


1. Economic issues (specify)
1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA"
The second Notice of Strike is dated November 7, 2001 and
the cited ground is like quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith Setting pre-condition in the ground
rules (Retirement issue)"

This Court is not convinced by the argument raised by UFE-DFAKMU that the DOLE Secretary should not have gone beyond the
disagreement on the ground rules of the CBA negotiations. The
union doggedly asserts that the entire labor dispute between
herein parties concerns only the ground rules.

Nowhere in the second Notice of Strike is it indicated that this


Notice is an amendment to and took the place of the first Notice
of Strike. In fact, our Assumption of Jurisdiction Order dated
November 29, 2001 specifically cited the two (2) Notices of Strike
without any objection on the part of the Union x x x. 29

Lest it be forgotten, it was UFE-DFA-KMU which first alleged a


bargaining deadlock as the basis for the filing of its Notice of
Strike; and at the time of the filing of the first Notice of Strike,
several conciliation conferences had already been undertaken
where both parties had already exchanged with each other their
respective CBA proposals. In fact, during the conciliation
meetings before the NCMB, but prior to the filing of the notices of
strike, the parties had already delved into matters affecting the
meat of the collective bargaining agreement.

Had the parties not been at the stage where the substantive
provisions of the proposed CBA had been put in issue, the union
would not have based thereon its initial notice to strike. This
Court maintains its original position in the Decision that, based
on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of
the DOLE rightly decided on matters of substance. That the
union later on changed its mind is of no moment because to give
premium to such would make the legally mandated discretionary
power of the Dole Secretary subservient to the whims of the
parties.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

As to the point of clarification on the resumption of


negotiations respecting the Retirement Plan:
As for the supposed confusion or uncertainty of the dispositive
part of this Courts Decision, Nestle moves for clarification of the
statement "The parties are directed to resume negotiations
respecting the Retirement Plan and to take action consistent with
the discussion hereinabove set forth. No costs." The entire fallo
of this Courts Decision reads:
WHEREFORE, in view of the foregoing, the Petition in G.R. No.
158930-31 seeking that Nestl be declared to have committed
unfair labor practice in allegedly setting a precondition to
bargaining is DENIED. The Petition in G.R. No. 158944-45,
however, is PARTLY GRANTED in that we REVERSE the
ruling of the Court of Appeals in CA G.R. SP No. 69805 in so
far as it ruled that the Secretary of the DOLE gravely abused
her discretion in failing to confine her assumption of jurisdiction
power over the ground rules of the CBA negotiations; but the
ruling of the Court of Appeals on the inclusion of the Retirement
Plan as a valid issue in the collective bargaining negotiations
between UFE-DFA-KMU and Nestl is AFFIRMED. The parties
are directed to resume negotiations respecting the Retirement
Plan and to take action consistent with the discussions
hereinabove set forth. No costs.
Nestle interprets the foregoing as an order for the parties to
resume negotiations by themselves respecting the issue of
retirement benefits due the employees of the Cabuyao Plant.
Otherwise stated, Nestle posits that the dispositive part of the
Decision directs the parties to submit to a voluntary mode of
dispute settlement.
A read-through of this Courts Decision reveals that the ambiguity
is more ostensible than real. This Courts Decision of 22 August
2006 designated marked boundaries as to the implications of the
assailed Orders of the Secretary of the DOLE. We said therein
that 1) the Retirement Plan is still a valid issue for herein parties

37

collective bargaining negotiations; 2) the Court of Appeals


committed reversible error in limiting to the issue of the ground
rules the scope of the power of the Secretary of Labor to assume
jurisdiction over the subject labor dispute; and 3) Nestl is not
guilty of unfair labor practice. Nowhere in our Decision did we
require parties to submit to negotiate by themselves the tenor of
the retirement benefits of the concerned employees of Nestl,
precisely because the Secretary of the DOLE had already
assumed jurisdiction over the labor dispute subject of herein
petitions. Again, we spell out what encompass the Secretarys
assumption of jurisdiction power. The Secretary of the DOLE has
been explicitly granted by Article 263(g) of the Labor Code the
authority to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to
the national interest, and decide the same accordingly. And, as a
matter of necessity, it includes questions incidental to the labor
dispute; that is, issues that are necessarily involved in the
dispute itself, and not just to that ascribed in the Notice of Strike
or otherwise submitted to him for resolution. In the case at bar,
the issue of retirement benefits was specifically what was
presented before the Secretary of the DOLE; hence, We reject
Nestls interpretation. Our decision is crystal and cannot be
interpreted any other way. The Secretary having already
assumed jurisdiction over the labor dispute subject of these
consolidated petitions, the issue concerning the retirement
benefits of the concerned employees must be remanded back to
him for proper disposition.
All told, in consideration of the points afore-discussed and the
fact that no substantial arguments have been raised by either
party, this Court remains unconvinced that it should modify or
reverse in any way its disposition of herein cases in its earlier
Decision. The labor dispute between the Nestle and UFE-DFAKMU has dragged on long enough. As no other issues are
availing, let this Resolution write an ending to the protracted
labor dispute between Nestl and UFE-DFA-KMU (Cabuyao
Division).

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

WHEREFORE, premises considered, the basic issues of the


case having been passed upon and there being no new
arguments availing, the Motion for Partial Reconsideration is
hereby DENIED WITH FINALITY for lack of merit. Let these
cases be remanded to the Secretary of the Department of Labor
and Employment for proper disposition, consistent with the
discussions in this Courts Decision of 22 August 2006 and as
hereinabove set forth. No costs. SO ORDERED.

[G.R. No. 141471. September 18, 2000]


COLEGIO DE SAN JUAN DE LETRAN vs. ASSOCIATION OF
EMPLOYEES AND FACULTY OF LETRAN and ELEONOR
AMBAS
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal
of the Decision of the Court of Appeals, promulgated on 9 August
1999, dismissing the petition filed by Colegio de San Juan de
Letran (hereinafter, "petitioner") and affirming the Order of the
Secretary of Labor, dated December 2, 1996, finding the
petitioner guilty of unfair labor practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed
by the Court of Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of
respondent union, Association of Employees and Faculty of
Letran, initiated the renegotiation of its Collective Bargaining
Agreement with petitionerColegio de San Juan de Letran for the
last two (2) years of the CBA's five (5) year lifetime from 19891994. On the same year, the union elected a new set of officers
wherein private respondent Eleanor Ambas emerged as the
newly elected President (Secretary of Labor and Employment's
Order dated December 2, 1996, p. 12).

38

Ambas wanted to continue the renegotiation of the CBA but


petitioner, through Fr. Edwin Lao, claimed that the CBA was
already prepared for signing by the parties. The parties
submitted the disputed CBA to a referendum by the union
members, who eventually rejected the said CBA (Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith
before the National Labor Relations Commission (NLRC). Labor
Arbiter Edgardo M. Madriaga decided in favor of petitioner.
However, the Labor Arbiter's decision was reversed on appeal
before the NLRC (Ibid, p. 2).
On January 1996, the union notified the National Conciliation and
Mediation Board (NCMB) of its intention to strike on the grounds
(sic) of petitioner's: non-compliance with the NLRC (1) order to
delete the name of Atty. Federico Leynes as the union's legal
counsel; and (2) refusal to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the
unsigned CBA and to start negotiation on a new five-year CBA
starting 1994-1999. On February 7, 1996, the union submitted its
proposals to petitioner, which notified the union six days later or
on February 13, 1996 that the same had been submitted to its
Board of Trustees. In the meantime, Ambas was informed
through a letter dated February 15, 1996 from her superior that
her work schedule was being changed from Monday to Friday to
Tuesday to Saturday. Ambas protested and requested
management to submit the issue to a grievance machinery under
the old CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on
March 13, 1996. The parties met on March 27, 1996 before the
NCMB to discuss the ground rules for the negotiation. On March
29, 1996, the union received petitioner's letter dismissing Ambas
for alleged insubordination. Hence, the union amended its notice
of strike to include Ambas' dismissal. (Ibid, p. 2-3).

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

On April 20, 1996, both parties again discussed the ground rules
for the CBA renegotiation. However, petitioner stopped the
negotiations after it purportedly received information that a new
group of employees had filed a petition for certification election
(Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996,
public respondent the Secretary of Labor and Employment
assumed jurisdiction and ordered all striking employees including
the union president to return to work and for petitioner to accept
them back under the same terms and conditions before the
actual strike. Petitioner readmitted the striking members except
Ambas. The parties then submitted their pleadings including their
position papers which were filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order
declaring petitioner guilty of unfair labor practice on two counts
and directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which
was denied in an Order dated May 29, 1997 (Petition, pp. 8-9)." [1]
Having been denied its motion for reconsideration, petitioner
sought a review of the order of the Secretary of Labor and
Employment before the Court of Appeals. The appellate court
dismissed the petition and affirmed the findings of the Secretary
of Labor and Employment. The dispositive portion of the decision
of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is
DISMISSED, for being without merit in fact and in law.With cost
to petitioner. SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of
Appeals:
I. THE HONORABLE COURT OF APPEALS ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING

39

THE RULING OF THE SECRETARY OF LABOR AND


EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR
PRACTICE)
FOR
SUSPENDING
THE
COLLECTIVE
BARGAINING NEGOTIATIONS WITH RESPONDENT AEFL,
DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A
PETITION FOR CERTIFICATION ELECTION BY A RIVAL
UNION WHO CLAIMED TO COMMAND THE MAJORITY OF
THE EMPLOYEES WITHIN THE BARGAINING UNIT.
II. THE HONORABLE COURT OF APPEALS ERRED AND
ACTED WITH GRAVE ABUSE OF DISCRETION IN AFFIRMING
THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING
RESPONDENT AMBAS, DESPITE THE FACT THAT HER
DISMISSAL WAS CAUSED BY HER INSUBORDINATE
ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW THE
PRESCRIBED WORK SCHEDULE.[3]
The twin questions of law before this Court are the following:
(1) whether petitioner is guilty of unfair labor practice by refusing
to bargain with the union when it unilaterally suspended the
ongoing negotiations for a new Collective Bargaining Agreement
(CBA) upon mere information that a petition for certification has
been filed by another legitimate labor organization? (2) whether
the termination of the union president amounts to an interference
of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court
finds that petitioner has not shown any compelling reason
sufficient to overturn the ruling of the Court of Appeals affirming
the findings of the Secretary of Labor and Employment. It is
axiomatic that the findings of fact of the Court of Appeals are
conclusive and binding on the Supreme Court and will not be
reviewed or disturbed on appeal. In this case, the petitioner failed

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

to show any extraordinary circumstance justifying a departure


from this established doctrine.
As regards the first issue, Article 252 of the Labor Code
defines the meaning of the phrase "duty to bargain collectively,"
as follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to
bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any
grievances or questions arising under such agreement and
executing a contract incorporating such agreements if requested
by either party but such duty does not compel any party to agree
to a proposal or to make any concession.
Noteworthy in the above definition is the requirement on both
parties of the performance of the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement. Undoubtedly, respondent
Association of Employees and Faculty of Letran (AEFL)
(hereinafter, "union") lived up to this requisite when it presented
its proposals for the CBA to petitioner on February 7, 1996. On
the other hand, petitioner devised ways and means in order to
prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union
is obvious in its failure to make a timely reply to the proposals
presented by the latter. More than a month after the proposals
were submitted by the union, petitioner still had not made any
counter-proposals. This inaction on the part of petitioner
prompted the union to file its second notice of strike on March
13, 1996. Petitioner could only offer a feeble explanation that the
Board of Trustees had not yet convened to discuss the matter as
its excuse for failing to file its reply. This is a clear violation of
Article 250 of the Labor Code governing the procedure in
collective bargaining, to wit:

40

Art. 250. Procedure in collective bargaining. - The following


procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall
serve a written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later
than ten (10) calendar days from receipt of such notice. [4]
xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the
company's refusal to make counter-proposal to the union's
proposed CBA is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the
duty to bargain collectively.[6] In the case at bar, petitioner's
actuation show a lack of sincere desire to negotiate rendering it
guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing
of the first notice of strike in January 1996 show petitioner's
resort to delaying tactics to ensure that negotiation would not
push through. Thus, on February 15, 1996, or barely a few days
after the union proposals for the new CBA were submitted, the
union president was informed by her superior that her work
schedule was being changed from Mondays to Fridays to
Tuesdays to Saturdays. A request from the union president that
the issue be submitted to a grievance machinery was
subsequently denied. Thereafter, the petitioner and the union
met on March 27, 1996 to discuss the ground rules for
negotiation. However, just two days later, or on March 29, 1996,
petitioner dismissed the union president for alleged
insubordination. In
its
final
attempt
to
thwart the bargaining process, petitioner
suspended
the
negotiation on the ground that it allegedly received information
that a new group of employees called the Association of
Concerned Employees of Colegio (ACEC) had filed a petition for
certification election. Clearly, petitioner tried to evade its duty to
bargain collectively.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Petitioner, however, argues that since it has already


submitted the union's proposals to the Board of Trustees and
that a series of conferences had already been undertaken to
discuss the ground rules for negotiation such should already be
considered as acts indicative of its intention to bargain. As
pointed out earlier, the evidence on record belie the assertions of
petitioner.
Petitioner, likewise, claims that the suspension of negotiation
was proper since by the filing of the petition for certification
election the issue on majority representation of the employees
has arose. According to petitioner, the authority of the union to
negotiate on behalf of the employees was challenged when a
rival union filed a petition for certification election. Citing the case
of Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises,
[7]
petitioner asserts that in view of the pendency of the petition
for certification election, it had no duty to bargain collectively with
the union.
We disagree. In order to allow the employer to validly
suspend the bargaining process there must be a valid petition for
certification election raising a legitimate representation issue.
Hence, the mere filing of a petition for certification election does
not ipso facto justify the suspension of negotiation by the
employer. The petition must first comply with the provisions of
the Labor Code and its Implementing Rules. Foremost is that a
petition for certification election must be filed during the sixty-day
freedom period. The "Contract Bar Rule" under Section 3, Rule
XI, Book V, of the Omnibus Rules Implementing the Labor Code,
provides that: " . If a collective bargaining agreement has been
duly registered in accordance with Article 231 of the Code, a
petition for certification election or a motion for intervention can
only be entertained within sixty (60) days prior to the expiry date
of such agreement." The rule is based on Article 232, [8] in relation
to Articles 253, 253-A and 256 of the Labor Code. No petition for
certification election for any representation issue may be filed
after the lapse of the sixty-day freedom period. The old CBA is
extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers

41

the same as continuing in force and effect until a new CBA shall
have been validly executed.[9] Hence, the contract bar rule still
applies.[10] The purpose is to ensure stability in the relationship of
the workers and the company by preventing frequent
modifications of any CBA earlier entered into by them in good
faith and for the stipulated original period. [11]
In the case at bar, the lifetime of the previous CBA was from
1989-1994. The petition for certification election by ACEC,
allegedly a legitimate labor organization, was filed with the
Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom
period. Hence, the filing thereof was barred by the existence of a
valid
and
existing
collective
bargaining
agreement.
Consequently, there is no legitimate representation issue and, as
such, the filing of the petition for certification election did not
constitute a bar to the ongoing negotiation. Reliance, therefore,
by petitioner of the ruling in Lakas Ng Manggagawang
Makabayan v. Marcelo Enterprises[12] is misplaced since that
case involved a legitimate representation issue which is not
present in the case at bar.
Significantly, the same petition for certification election was
dismissed by the Secretary of Labor on October 25, 1996. The
dismissal was upheld by this Court in a Resolution, dated April
21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty
of unfair labor practice by its stern refusal to bargain in good faith
with respondent union.
Concerning the issue on the validity of the termination of the
union president, we hold that the dismissal was effected in
violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union
president was terminated for cause, allegedly for insubordination
for her failure to comply with the new working schedule assigned
to her, and pursuant to its managerial prerogative to discipline
and/or dismiss its employees. While we recognize the right of the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

employer to terminate the services of an employee for a just or


authorized cause, nevertheless, the dismissal of employees must
be made within the parameters of law and pursuant to the tenets
of equity and fair play.[14] The employer's right to terminate the
services of an employee for just or authorized cause must be
exercised in good faith.[15] More importantly, it must not amount to
interfering with, restraining or coercing employees in the exercise
of their right to self-organization because it would amount to, as
in this case, unlawful labor practice under Article 248 of the
Labor Code.
The factual backdrop of the termination of Ms. Ambas leads
us to no other conclusion that she was dismissed in order to strip
the union of a leader who would fight for the right of her coworkers at the bargaining table. Ms. Ambas, at the time of her
dismissal, had been working for the petitioner for ten (10) years
already. In fact, she was a recipient of a loyalty award.Moreover,
for the past ten (10) years her working schedule was from
Monday to Friday. However, things began to change when she
was elected as union president and when she started negotiating
for a new CBA. Thus, it was when she was the union president
and during the period of tense and difficult negotiations when her
work schedule was altered from Mondays to Fridays to Tuesdays
to Saturdays. When she did not budge, although her schedule
was changed, she was outrightly dismissed for alleged
insubordination.[16] We quote with approval the following findings
of the Secretary of Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such
disobedience was not, however, a valid ground to teminate her
employment. The disputed management action was directly
connected with Ms. Ambas' determination to change the
complexion of the CBA. As a matter of fact, Ms. Ambas'
unflinching position in faithfully and truthfully carrying out her
duties and responsibilities to her Union and its members in
getting a fair share of the fruits of their collective endeavors was
the proximate cause for her dismissal, the charge of
insubordination being merely a ploy to give a color of legality to

42

the contemplated management action to dismiss her. Thus, the


dismissal of Ms. Ambas was heavily tainted with and evidently
done in bad faith. Manifestly, it was designed to interfere with the
members' right to self-organization.
Admittedly, management has the prerogative to discipline its
employees for insubordination. But when the exercise of such
management right tends to interfere with the employees' right to
self-organization, it amounts to union-busting and is therefore a
prohibited act. The dismissal of Ms. Ambas was clearly designed
to frustrate the Union in its desire to forge a new CBA with the
College that is reflective of the true wishes and aspirations of the
Union members. Her dismissal was merely a subterfuge to get
rid of her, which smacks of a pre-conceived plan to oust her from
the premises of the College. It has the effect of busting the
Union, stripping it of its strong-willed leadership. When
management refused to treat the charge of insubordination as a
grievance within the scope of the Grievance Machinery, the
action of the College in finally dismissing her from the service
became arbitrary, capricious and whimsical, and therefore
violated Ms. Ambas' right to due process."[17]
In this regard, we find no cogent reason to disturb the
findings of the Court of Appeals affirming the findings of the
Secretary of Labor and Employment. The right to selforganization of employees must not be interfered with by the
employer on the pretext of exercising management prerogative
of disciplining its employees. In this case, the totality of conduct
of the employer shows an evident attempt to restrain the
employees from fully exercising their rights under the law. This
cannot be done under the Labor Code. WHEREFORE, premises
considered, the petition is DENIED for lack of merit. SO
ORDERED.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

G.R. No. 114974


June 16, 2004
STANDARD CHARTERED BANK EMPLOYEES UNION
(NUBE) vs. The Honorable MA. NIEVES R. CONFESOR, in
her
capacity
as
SECRETARY
OF
LABOR
AND
EMPLOYMENT; and the STANDARD CHARTERED BANK
DECISION
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court
filed by the Standard Chartered Bank Employees Union, seeking
the nullification of the October 29, 1993 Order 1 of then Secretary
of Labor and Employment Nieves R. Confesor and her
resolutions dated December 16, 1993 and February 10, 1994.
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign
banking corporation doing business in the Philippines. The
exclusive bargaining agent of the rank and file employees of the
Bank is the Standard Chartered Bank Employees Union (the
Union, for brevity).
In August of 1990, the Bank and the Union signed a five-year
collective bargaining agreement (CBA) with a provision to
renegotiate the terms thereof on the third year. Prior to the
expiration of the three-year period 2 but within the sixty-day
freedom period, the Union initiated the negotiations. On February
18, 1993, the Union, through its President, Eddie L. Divinagracia,
sent a letter3 containing its proposals4 covering political
provisions5and thirty-four (34) economic provisions. 6 Included
therein was a list of the names of the members of the Unions
negotiating panel.7
In a Letter dated February 24, 1993, the Bank, through its
Country Manager Peter H. Harris, took note of the Unions
proposals. The Bank attached its counter-proposal to the non-

43

economic provisions proposed by the Union. 8 The Bank posited


that it would be in a better position to present its counterproposals on the economic items after the Union had presented
its justifications for the economic proposals. 9 The Bank, likewise,
listed the members of its negotiating panel. 10 The parties agreed
to set meetings to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through
Divinagracia, suggested to the Banks Human Resource
Manager and head of the negotiating panel, Cielito Diokno, that
the bank lawyers should be excluded from the negotiating team.
The Bank acceded.11 Meanwhile, Diokno suggested to
Divinagracia that Jose P. Umali, Jr., the President of the National
Union of Bank Employees (NUBE), the federation to which the
Union was affiliated, be excluded from the Unions negotiating
panel.12 However, Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for
the negotiation. Diokno suggested that the negotiation be kept a
"family affair." The proposed non-economic provisions of the
CBA were discussed first.13Even during the final reading of the
non-economic provisions on May 4, 1993, there were still
provisions on which the Union and the Bank could not agree.
Temporarily, the notation "DEFERRED" was placed therein.
Towards the end of the meeting, the Union manifested that the
same should be changed to "DEADLOCKED" to indicate that
such items remained unresolved. Both parties agreed to place
the notation "DEFERRED/DEADLOCKED."14
On May 18, 1993, the negotiation for economic provisions
commenced. A presentation of the basis of the Unions economic
proposals was made. The next meeting, the Bank made a similar
presentation. Towards the end of the Banks presentation, Umali
requested the Bank to validate the Unions "guestimates,"
especially the figures for the rank and file staff. 15 In the
succeeding meetings, Umali chided the Bank for the insufficiency
of its counter-proposal on the provisions on salary increase,
group hospitalization, death assistance and dental benefits. He

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

reminded the Bank, how the Union got what it wanted in 1987,
and stated that if need be, the Union would go through the same
route to get what it wanted.16
Upon the Banks insistence, the parties agreed to tackle the
economic package item by item. Upon the Unions suggestion,
the Bank indicated which provisions it would accept, reject, retain
and agree to discuss.17 The Bank suggested that the Union
prioritize its economic proposals, considering that many of such
economic provisions remained unresolved. The Union, however,
demanded that the Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following
proposals:
Wage Increase:
1st Year Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced
to P60,000.00 per illness annually

from P75,000.00

Death Assistance:
For the employee Reduced from P50,000.00 to P45,000.00
For Immediate Family Member Reduced from P30,000.00
to P25,000.00
Dental and all others No change from the original demand.

18

In the morning of the June 15, 1993 meeting, the Union


suggested that if the Bank would not make the necessary
revisions on its counter-proposal, it would be best to seek a third
party assistance.19 After the break, the Bank presented its
revised counter-proposal20 as follows:
Wage Increase : 1st Year from P1,000 to P1,050.00

44

2nd Year P800.00 no change


Group Hospitalization Insurance
From: P35,000.00 per illness
To : P35,000.00 per illness per year
Death Assistance For employee
From: P20,000.00
To : P25,000.00
Dental Retainer Original offer remains the same 21
The Union, for its part, made the following counter-proposal:
Wage Increase: 1st Year - 40%
2nd Year - 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year
Dental:
Temporary Filling/ P150.00
Tooth Extraction
Permanent Filling 200.00
Prophylaxis 250.00
Root Canal From P2,000 per tooth
To: 1,800.00 per tooth
Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For
Immediate
Family
Member:
From P25,000.00
to P20,000.00.22
The Unions original proposals, aside from the above-quoted,
remained the same.
Another set of counter-offer followed:
Management

Union

Wage Increase
1st Year P1,050.00 40%

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

2nd Year - 850.00

19.0%23

Diokno stated that, in order for the Bank to make a better offer,
the Union should clearly identify what it wanted to be included in
the total economic package. Umali replied that it was impossible
to do so because the Banks counter-proposal was
unacceptable. He furthered asserted that it would have been
easier to bargain if the atmosphere was the same as before,
where both panels trusted each other. Diokno requested the
Union panel to refrain from involving personalities and to instead
focus on the negotiations.24 He suggested that in order to break
the impasse, the Union should prioritize the items it wanted to
iron out. Divinagracia stated that the Bank should make the first
move and make a list of items it wanted to be included in the
economic package. Except for the provisions on signing bonus
and uniforms, the Union and the Bank failed to agree on the
remaining economic provisions of the CBA. The Union declared
a deadlock25 and filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) on June 21, 1993,
docketed as NCMB-NCR-NS-06-380-93.26
On the other hand, the Bank filed a complaint for Unfair Labor
Practice (ULP) and Damages before the Arbitration Branch of the
National Labor Relations Commission (NLRC) in Manila,
docketed as NLRC Case No. 00-06-04191-93 against the Union
on June 28, 1993. The Bank alleged that the Union violated its
duty to bargain, as it did not bargain in good faith. It contended
that the Union demanded "sky high economic demands,"
indicative ofblue-sky bargaining.27 Further, the Union violated its
no strike- no lockout clause by filing a notice of strike before the
NCMB. Considering that the filing of notice of strike was an
illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank
suffered nominal and actual damages and was forced to litigate
and hire the services of the lawyer.28

45

On July 21, 1993, then Secretary of Labor and Employment


(SOLE) Nieves R. Confesor, pursuant to Article 263(g) of the
Labor Code, issued an Order assuming jurisdiction over the labor
dispute at the Bank. The complaint for ULP filed by the Bank
before the NLRC was consolidated with the complaint over which
the SOLE assumed jurisdiction. After the parties submitted their
respective position papers, the SOLE issued an Order on
October 29, 1993, the dispositive portion of which is herein
quoted:
WHEREFORE, the Standard Chartered Bank and the Standard
Chartered Bank Employees Union NUBE are hereby ordered
to execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to
01 April 1993 and shall remain effective for two years
thereafter, or until such time as a new CBA has superseded it.
All provisions in the expired CBA not expressly modified or not
passed upon herein are deemed retained while all new
provisions which are being demanded by either party are
deemed denied, but without prejudice to such agreements as
the parties may have arrived at in the meantime.
The Banks charge for unfair labor practice which it originally
filed with the NLRC as NLRC-NCR Case No. 00-06-04191-93
but which is deemed consolidated herein, is dismissed for lack
of merit. On the other hand, the Unions charge for unfair labor
practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose
sala NLRC-NCR Case No. 00-06-04191-93 is pending for his
guidance and appropriate action. 29
The SOLE gave the following economic awards:
1. Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Fifth year : 5% of basic monthly salary based on


the 4th year adjusted salary
b) Additional fixed amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month
2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00
3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00
4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but
without diminishing existing benefits
5. Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00
6. Death Assistance
a) Employee : P30,000.00
b) Immediate Family Member : P5,000.00
7. Emergency Leave Five (5) days for each contingency
8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the
costs attendant to having ones own home have
tremendously gone up. The need, therefore, to
improve on this benefit cannot be overemphasized.
Thus, the management is urged to increase the
existing and allowable housing loan that the Bank
extends to its employees to an amount that will give
meaning and substance to this CBA benefit. 30
The SOLE dismissed the charges of ULP of both the Union and
the Bank, explaining that both parties failed to substantiate their
claims. Citing National Labor Union v. Insular-Yebana Tobacco
Corporation,31 the SOLE stated that ULP charges would prosper
only if shown to have directly prejudiced the public interest.

46

Dissatisfied, the Union filed a motion for reconsideration with


clarification, while the Bank filed a motion for reconsideration. On
December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration,
which was, likewise, denied on February 10, 1994.
On March 22, 1994, the Bank and the Union signed the
CBA.32 Immediately thereafter, the wage increase was effected
and the signing bonuses based on the increased wage were
distributed to the employees covered by the CBA.
The Present Petition
On April 28, 1994, the Union filed this petition for certiorari under
Rule 65 of the Rules of Procedure alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DISMISSING THE UNIONS CHARGE OF
UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR
EVIDENCE OF RECORD AND ADMISSIONS PROVING THE
UNFAIR LABOR PRACTICES CHARGED.33
B. RESPONDENT HONORABLE SECRETARY COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN FAILING TO RULE ON OTHER UNFAIR
LABOR PRACTICES CHARGED.34
C. RESPONDENT HONORABLE SECRETARY COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN DISMISSING THE CHARGES OF UNFAIR
LABOR PRACTICES ON THE GROUND THAT NO PROOF
OF INJURY TO THE PUBLIC INTEREST WAS PRESENTED.35
The Union alleges that the SOLE acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when it
found that the Bank did not commit unfair labor practice when it
interfered with the Unions choice of negotiator. It argued that,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Dioknos suggestion that the negotiation be limited as a "family


affair" was tantamount to suggesting that Federation President
Jose Umali, Jr. be excluded from the Unions negotiating panel. It
further argued that contrary to the ruling of the public respondent,
damage or injury to the public interest need not be present in
order for unfair labor practice to prosper.
The Union, likewise, pointed out that the public respondent failed
to rule on the ULP charges arising from the Banks surface
bargaining. The Union contended that the Bank merely went
through the motions of collective bargaining without the intent to
reach an agreement, and made bad faith proposals when it
announced that the parties should begin from a clean slate. It
argued that the Bank opened the political provisions "up for
grabs," which had the effect of diminishing or obliterating the
gains that the Union had made.
The Union also accused the Bank of refusing to disclose material
and necessary data, even after a request was made by the
Union to validate its "guestimates."
In its Comment, the Bank prayed that the petition be dismissed
as the Union was estopped, considering that it signed the
Collective Bargaining Agreement (CBA) on April 22, 1994. It
asserted that contrary to the Unions allegations, it was the Union
that committed ULP when negotiator Jose Umali, Jr. hurled
invectives at the Banks head negotiator, Cielito Diokno, and
demanded that she be excluded from the Banks negotiating
team. Moreover, the Union engaged in blue-sky bargaining and
isolated the no strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public
respondent, prayed that the petition be dismissed. It asserted
that the Union failed to prove its ULP charges and that the public
respondent did not commit any grave abuse of discretion in
issuing the assailed order and resolutions.
The Issues

47

The issues presented for resolution are the following: (a) whether
or not the Union was able to substantiate its claim of unfair labor
practice against the Bank arising from the latters alleged
"interference" with its choice of negotiator; surface bargaining;
making bad faith non-economic proposals; and refusal to furnish
the Union with copies of the relevant data; (b) whether or not the
public respondent acted with grave abuse of discretion
amounting to lack or excess of jurisdiction when she issued the
assailed order and resolutions; and, (c) whether or not the
petitioner is estopped from filing the instant action.
The Courts Ruling
The petition is bereft of merit.
"Interference" under Article 248 (a) of the Labor Code
The petitioner asserts that the private respondent committed
ULP, i.e., interference in the selection of the Unions negotiating
panel, when Cielito Diokno, the Banks Human Resource
Manager, suggested to the Unions President Eddie L.
Divinagracia that Jose P. Umali, Jr., President of the NUBE, be
excluded from the Unions negotiating panel. In support of its
claim, Divinagracia executed an affidavit, stating that prior to the
commencement of the negotiation, Diokno approached him and
suggested the exclusion of Umali from the Unions negotiating
panel, and that during the first meeting, Diokno stated that the
negotiation be kept a "family affair."
Citing the cases of U.S. Postal Service36 and Harley Davidson
Motor Co., Inc., AMF,37 the Union claims that interference in the
choice of the Unions bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the
employers violation of Section 8(a)(1) and (5) of the National
Labor Relations Act (NLRA),38 which pertain to the interference,
restraint or coercion of the employer in the employees exercise
of their rights to self-organization and to bargain collectively

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

through representatives of their own choosing; and the refusal of


the employer to bargain collectively with the employees
representatives. In both cases, the National Labor Relations
Board held that upon the employers refusal to engage in
negotiations with the Union for collective-bargaining contract
when the Union includes a person who is not an employee, or
one who is a member or an official of other labororganizations,
such employer is engaged in unfair labor practice under Section
8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co.,
Ltd. Employees Association NATU vs. Insular Life Assurance
Co. Ltd.,39 wherein this Court said that the test of whether an
employer has interfered with and coerced employees in the
exercise of their right to self-organization within the meaning of
subsection (a)(1) is whether the employer has engaged in
conduct which it may reasonably be said, tends to interfere with
the free exercise of employees rights under Section 3 of the
Act.40 Further, it is not necessary that there be direct evidence
that any employee was in fact intimidated or coerced by
statements of threats of the employer if there is a reasonable
inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining. 41

48

Article 2
1. Workers and employers organizations shall enjoy adequate
protection against any acts or interference by each other or
each others agents or members in their establishment,
functioning or administration.
2. In particular, acts which are designed to promote the
establishment of workers organizations under the domination
of employers or employers organizations or to support workers
organizations by financial or other means, with the object of
placing such organizations under the control of employers or
employers organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor
Code, particularly in Article 243 thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELFORGANIZATION. All persons employed in commercial,
industrial and agricultural enterprises and in religious,
charitable, medical or educational institutions whether
operating for profit or not, shall have the right to selforganization and to form, join, or assist labor organizations of
their own choosing for purposes of collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed
people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and
protection.

Under the International Labor Organization Convention (ILO) No.


87 FREEDOM OF ASSOCIATION AND PROTECTION OF THE
RIGHT TO ORGANIZE to which the Philippines is a signatory,
"workers and employers, without distinction whatsoever, shall
have the right to establish and, subject only to the rules of the
organization concerned, to job organizations of their own
choosing without previous authorization." 42

and Articles 248 and 249 respecting ULP of employers and labor
organizations.

Workers and employers organizations shall have the right to


draw up their constitutions and rules, to elect their
representatives in full freedom to organize their administration
and activities and to formulate their programs. 43Article 2 of ILO
Convention No. 98 pertaining to the Right to Organize and
Collective Bargaining, provides:

The said ILO Conventions were ratified on December 29, 1953.


However, even as early as the 1935 Constitution, 44 the State had
already expressly bestowed protection to labor as part of the
general provisions. The 1973 Constitution, 45 on the other hand,
declared it as a policy of the state to afford protection to labor,
specifying that the workers rights to self-organization, collective

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

bargaining, security of tenure, and just and humane conditions of


work would be assured. For its part, the 1987 Constitution, aside
from making it a policy to "protect the rights of workers and
promote their welfare,"46 devotes an entire section, emphasizing
its mandate to afford protection to labor, and highlights "the
principle of shared responsibility" between workers and
employers to promote industrial peace. 47
Article 248(a) of the Labor Code, considers it an unfair labor
practice when an employer interferes, restrains or coerces
employees in the exercise of their right to self-organization or the
right to form association. The right to self-organization
necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its
negotiators or coerces the Union to exclude from its panel of
negotiators a representative of the Union, and if it can be inferred
that the employer adopted the said act to yield adverse effects
on the free exercise to right to self-organization or on the right to
collective bargaining of the employees, ULP under Article 248(a)
in connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the
Labor Code, substantial evidence is required to support the
claim. Substantial evidence has been defined as such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion.48 In the case at bar, the Union bases its
claim of interference on the alleged suggestions of Diokno to
exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not
show that the suggestion made by Diokno to Divinagracia is an
anti-union conduct from which it can be inferred that the Bank
consciously adopted such act to yield adverse effects on the free
exercise of the right to self-organization and collective bargaining
of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation

49

and simultaneously with Divinagracias suggestion that the bank


lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective
bargaining process, with the inclusion of Umali in the Unions
negotiating panel, the negotiations pushed through. The
complaint was made only on August 16, 1993 after a deadlock
was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The
accusation occurred after the arguments and differences over
the economic provisions became heated and the parties had
become frustrated. It happened after the parties started to
involve personalities. As the public respondent noted, passions
may rise, and as a result, suggestions given under less
adversarial situations may be colored with unintended
meanings.49 Such is what appears to have happened in this
case.
The Duty to Bargain Collectively
If at all, the suggestion made by Diokno to Divinagracia should
be construed as part of the normal relations and innocent
communications, which are all part of the friendly relations
between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain;
hence, committed ULP under Article 248(g) when it engaged in
surface bargaining. It alleged that the Bank just went through the
motions of bargaining without any intent of reaching an
agreement, as evident in the Banks counter-proposals. It
explained that of the 34 economic provisions it made, the Bank
only made 6 economic counterproposals. Further, as borne by
the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were
open for discussion, refused to make a list of items it agreed to
include in the economic package.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Surface bargaining is defined as "going through the motions of


negotiating" without any legal intent to reach an
agreement.50 The resolution of surface bargaining allegations
never presents an easy issue. The determination of whether a
party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the
intent of the party in question, and usually such intent can only
be inferred from the totality of the challenged partys conduct
both at and away from the bargaining table. 51 It involves the
question of whether an employers conduct demonstrates an
unwillingness to bargain in good faith or is merely hard
bargaining.52
The minutes of meetings from March 12, 1993 to June 15, 1993
do not show that the Bank had any intention of violating its duty
to bargain with the Union. Records show that after the Union
sent its proposal to the Bank on February 17, 1993, the latter
replied with a list of its counter-proposals on February 24, 1993.
Thereafter, meetings were set for the settlement of their
differences. The minutes of the meetings show that both the
Bank and the Union exchanged economic and non-economic
proposals and counter-proposals.
The Union has not been able to show that the Bank had done
acts, both at and away from the bargaining table, which tend to
show that it did not want to reach an agreement with the Union or
to settle the differences between it and the Union. Admittedly, the
parties were not able to agree and reached a deadlock.
However, it is herein emphasized that the duty to bargain "does
not compel either party to agree to a proposal or require the
making of a concession."53 Hence, the parties failure to agree did
not amount to ULP under Article 248(g) for violation of the duty to
bargain.
We can hardly dispute this finding, for it finds support in the
evidence. The inference that respondents did not refuse to
bargain collectively with the complaining union because they
accepted some of the demands while they refused the others

50

even leaving open other demands for future discussion is


correct, especially so when those demands were discussed at a
meeting called by respondents themselves precisely in view of
the letter sent by the union on April 29, 1960 54
In view of the finding of lack of ULP based on Article 248(g), the
accusation that the Bank made bad-faith provisions has no leg to
stand on. The records show that the Banks counterproposals on
the non-economic provisions or political provisions did not put
"up for grabs" the entire work of the Union and its predecessors.
As can be gleaned from the Banks counterproposal, there were
many provisions which it proposed to be retained. The revisions
on the other provisions were made after the parties had come to
an agreement. Far from buttressing the Unions claim that the
Bank made bad-faith proposals on the non-economic provisions,
all these, on the contrary, disprove such allegations.
We, likewise, find that the Union failed to substantiate its claim
that the Bank refused to furnish the information it needed.
While the refusal to furnish requested information is in itself an
unfair labor practice, and also supports the inference of surface
bargaining,55 in the case at bar, Umali, in a meeting dated May
18, 1993, requested the Bank to validate its guestimates on the
data of the rank and file. However, Umali failed to put his request
in writing as provided for in Article 242(c) of the Labor Code:
Article 242. Rights of Legitimate Labor Organization
(c) To be furnished by the employer, upon written request, with
the annual audited financial statements, including the balance
sheet and the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the request, after the
union has been duly recognized by the employer or certified as
the sole and exclusive bargaining representatives of the
employees in the bargaining unit, or within sixty (60) calendar
days before the expiration of the existing collective bargaining
agreement, or during the collective negotiation;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The Union, did not, as the Labor Code requires, send a written
request for the issuance of a copy of the data about the Banks
rank and file employees. Moreover, as alleged by the Union, the
fact that the Bank made use of the aforesaid guestimates,
amounts to a validation of the data it had used in its presentation.
No Grave Abuse of Discretion On the Part of the Public
Respondent
The special civil action for certiorari may be availed of when the
tribunal, board, or officer exercising judicial or quasi-judicial
functions has acted without or in excess of jurisdiction and there
is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law for the purpose of annulling the
proceeding.56 Grave abuse of discretion implies such capricious
and whimsical exercise of judgment as is equivalent to lack of
jurisdiction, or where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility which
must be so patent and gross as to amount to an invasion of
positive duty or to a virtual refusal to perform the duty enjoined or
to act at all in contemplation of law. Mere abuse of discretion is
not enough.57
While it is true that a showing of prejudice to public interest is not
a requisite for ULP charges to prosper, it cannot be said that the
public respondent acted in capricious and whimsical exercise of
judgment, equivalent to lack of jurisdiction or excess thereof.
Neither was it shown that the public respondent exercised its
power in an arbitrary and despotic manner by reason of passion
or personal hostility.
Estoppel not Applicable In the Case at Bar
The respondent Bank argues that the petitioner is estopped from
raising the issue of ULP when it signed the new CBA. Article
1431 of the Civil Code provides:

51

Through estoppel an admission or representation is rendered


conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to
act in a particular manner, is barred from adopting an
inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another.58
In the case, however, the approval of the CBA and the release of
signing bonus do not necessarily mean that the Union waived its
ULP claim against the Bank during the past negotiations. After
all, the conclusion of the CBA was included in the order of the
SOLE, while the signing bonus was included in the CBA itself.
Moreover, the Union twice filed a motion for reconsideration
respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for
engaging in blue-sky bargaining or making exaggerated or
unreasonable proposals.59 The Bank failed to show that the
economic demands made by the Union were exaggerated or
unreasonable. The minutes of the meeting show that the Union
based its economic proposals on data of rank and file employees
and the prevailing economic benefits received by bank
employees from other foreign banks doing business in the
Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave
abuse of discretion amounting to lack or excess of jurisdiction
when it issued the questioned order and resolutions. While the
approval of the CBA and the release of the signing bonus did not
estop the Union from pursuing its claims of ULP against the
Bank, we find the latter did not engage in ULP. We, likewise, hold
that the Union is not guilty of ULP. IN LIGHT OF THE
FOREGOING, the October 29, 1993 Order and December 16,
1993 and February 10, 1994 Resolutions of then Secretary of

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Labor Nieves R. Confesor are AFFIRMED. The Petition is


hereby DISMISSED. SO ORDERED.
G.R. No. 75321 June 20, 1988
ASSOCIATED TRADE UNIONS (ATU) vs. HON. CRESENCIO
B. TRAJANO
CRUZ .J,:
The resolution of this case has been simplified because it has
been, in Justice Vicente Abad Santos's felicitous phrase,
"overtaken by events."
This case arose when on March 25, 1986, the private respondent
union (TUPAS) filed with the Malolos labor office of the MOLE a
petition for certification election at the Baliwag Transit, Inc.
among its rank-and-file workers.1 Despite opposition from the
herein petitioner, Associated Trade Unions (ATU), the petition
was granted by the med-arbiter on May 14, 1986, and a
certification election was ordered "to determine the exclusive
bargaining agent (of the workers) for purposes of collective
bargaining with respect to (their) terms and conditions of
employment." 2 On appeal, this order was sustained by the
respondent Director of Labor Relations in his order dated June
20, 1986, which he affirmed in his order of July 17, 1986,
denying the motion for reconsideration. 3 ATU then came to this
Court claiming that the said orders are tainted with grave abuse
of discretion and so should be reversed. On August 20, 1986, we
issued a temporary restraining order that has maintained
the status quo among the parties. 4
In support of its petition, ATU claims that the private respondent's
petition for certification election is defective because (1) at the
time it was filed, it did not contain the signatures of 30% of the
workers, to signify their consent to the certification election; and
(2) it was not allowed under the contract-bar rule because a new
collective bargaining agreement had been entered into by ATU
with the company on April 1, 1986. 5

52

TUPAS for its part, supported by the Solicitor General, contends


that the 30% consent requirement has been substantially
complied with, the workers' signatures having been subsequently
submitted and admitted. As for the contract-bar rule, its position
is that the collective bargaining agreement, besides being
vitiated by certain procedural defects, was concluded by ATU
with the management only on April 1, 1986 after the filing of the
petition for certification election on March 25, 1986. 6
This initial sparring was followed by a spirited exchange of views
among the parties which insofar as the first issue is concerned
has become at best only academic now. The reason is that the
30% consent required under then Section 258 of the Labor Code
is no longer in force owing to the amendment of this section by
Executive Order No. 111, which became effective on March 4,
1987.
As revised by the said executive order, the pertinent articles of
the Labor Code now read as follows:
Art. 256. Representation issue in organized establishments. In
organized establishments, when a petition questioning the
majority status of the incumbent bargaining agent is filed before
the Ministry within the sixty-day period before the expiration of
the collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot to ascertain the
will of the employees in the appropriate bargaining unit. To have
a valid election, at least a majority of all eligible voters in the unit
must have cast their votes. The labor union receiving the majority
of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election
which provides for three or more choices results in no choice
receiving a majority of the valid votes cast, a runoff election shall
be conducted between the choices receiving the two highest
number of votes.
Art. 257. Petitions in unorganized establishments. In any
establishment where there is no certified bargaining agent, the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

petition for certification election filed by a legitimate labor


organization shall be supported by the written consent of at least
twenty (20%) percent of all the employees in the bargaining unit.
Upon receipt and verification of such petition, the Med-Arbiter
shall automatically order the conduct of a certification election.
The applicable provision in the case at bar is Article 256 because
Baliwag transit, Inc. is an organized establishment. Under this
provision, the petition for certification election need no longer
carry the signatures of the 30% of the workers consenting to
such petition as originally required under Article 258. The present
rule provides that as long as the petition contains the matters 7
required in Section 2, Rule 5, Book V of the Implementing Rules
and Regulations, as amended by Section 6, Implementing Rules
of E.O. No. 111, the med-arbiter "shall automatically order" an
election by secret ballot "to ascertain the will of the employees in
the appropriate bargaining unit." The consent requirement is now
applied only to unorganized establishments under Article 257,
and at that, significantly, has been reduced to only 20%.
The petition must also fail on the second issue which is based on
the contract-bar rule under Section 3, Rule 5, Book V of the
Implementing Rules and Regulations. This rule simply provides
that a petition for certification election or a motion for intervention
can only be entertained within sixty days prior to the expiry date
of an existing collective bargaining agreement. Otherwise put,
the rule prohibits the filing of a petition for certification election
during the existence of a collective bargaining agreement except
within the freedom period, as it is called, when the said
agreement is about to expire. The purpose, obviously, is to
ensure stability in the relationships of the workers and the
management by preventing frequent modifications of any
collective bargaining agreement earlier entered into by them in
good faith and for the stipulated original period.
ATU insists that its collective bargaining agreement concluded by
it with Baliwag Transit, Inc, on April 1, 1986, should bar the
certification election sought by TUPAS as this would disturb the

53

said new agreement. Moreover, the agreement had been ratified


on April 3, 1986, by a majority of the workers and is plainly
beneficial to them because of the many generous concessions
made by the management. 8
Besides pointing out that its petition for certification election was
filed within the freedom period and five days before the new
collective bargaining agreement was concluded by ATU with
Baliwag Transit, Inc. TUPAS contends that the said agreement
suffers from certain fatal procedural flaws. Specifically, the CBA
was not posted for at least five days in two conspicuous places in
the establishment before ratification, to enable the workers to
clearly inform themselves of its provisions. Moreover, the CBA
submitted to the MOLE did not carry the sworn statement of the
union secretary, attested by the union president, that the CBA
had been duly posted and ratified, as required by Section 1, Rule
9, Book V of the Implementing Rules and Regulations. These
requirements being mandatory, non-compliance therewith
rendered the said CBA ineffective. 9
The Court will not rule on the merits and/or defects of the new
CBA and shall only consider the fact that it was entered into at a
time when the petition for certification election had already been
filed by TUPAS and was then pending resolution. The said CBA
cannot be deemed permanent, precluding the commencement of
negotiations by another union with the management. In the
meantime however, so as not to deprive the workers of the
benefits of the said agreement, it shall be recognized and given
effect on a temporary basis, subject to the results of the
certification election. The agreement may be continued in force if
ATU is certified as the exclusive bargaining representative of the
workers or may be rejected and replaced in the event that
TUPAS emerges as the winner.
This ruling is consistent with our earlier decisions on interim
arrangements of this kind where we declared:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

54

... we are not unmindful that the supplemental collective


bargaining contract, entered into in the meanwhile between
management and respondent Union contains provisions
beneficial to labor. So as not to prejudice the workers involved, it
must be made clear that until the conclusion of a new collective
bargaining contract entered into by it and whatever labor
organization may be chosen after the certification election, the
existing labor contract as thus supplemented should be left
undisturbed. Its terms call for strict compliance. This mode of
assuring that the cause of labor suffers no injury from the
struggle between contending labor organization follows the
doctrine announced in the recent case of Vassar Industries
Employees v. Estrella (L-46562, March 31, 1978). To quote from
the opinion. "In the meanwhile, if as contended by private
respondent labor union the interim collective bargaining
agreement which it engineered and entered into on September
26, 1977 has, much more favorable terms for the workers of
private respondent Vassar Industries, then it should continue in
full force and effect until the appropriate bargaining
representative is chosen and negotiations for a new collective
bargaining agreement thereafter concluded." 10

G.R. No. L-77282 May 5, 1989


ASSOCIATED LABOR UNIONS (ALU) vs. HON. PURA
FERRER-CALLEJA
REGALADO, J.:

It remains for the Court to reiterate that the certification election


is the most democratic forum for the articulation by the workers
of their choice of the union that shall act on their behalf in the
negotiation of a collective bargaining agreement with their
employer. Exercising their suffrage through the medium of the
secret ballot, they can select the exclusive bargaining
representative that, emboldened by their confidence and
strengthened by their support shall fight for their rights at the
conference table. That is how union solidarity is achieved and
union power is increased in the free society. Hence, rather than
being inhibited and delayed, the certification election should be
given every encouragement under the law, that the will of the
workers may be discovered and, through their freely chosen
representatives, pursued and realized. WHEREFORE, the
petition is DENIED. The temporary restraining order of August
20, 1986, is LIFTED. Cost against the petitioner. SO ORDERED.

2. GAW Trading Inc. received the Letter of ALU aforesaid on


the same day of May 7, 1986 as acknowledged thereunder and
responded (sic) ALU in a letter dated May 12, 1986 (Annex D)
indicating its recognition of ALU as the sole and exclusive
bargaining agent for the majority of its employees and for which
it set the time for conference and/or negotiation at 4:00 P.M. on
May 12, 1986 at the Pillsbury Office, Aboitiz Building Juan Luna
Street, Cebu City;

Petitioner Associated Labor Unions (ALU, for brevity) instituted


this special civil action for certiorari and prohibition to overturn
the decision of the respondent direcstor 1 dated December 10,
1986, which ordered the holding of a certification election among
the rank-and-file workers of the private respondent GAW Trading,
Inc. The averments in the petition therefor, which succinctly but
sufficiently detail the relevant factual antecedents of this
proceedings, justify their being quoted in full, thus:
1. The associated Labor Unions (ALU) thru its regional VicePresidents Teofanio C. Nuez, in a letter dated May 7, 1986
(ANNEX C) informed GAW Trading, Inc. that majority of the
latter's employees have authorized ALU to be their sole and
exclusive bargaining representative, and requested GAW
Trading Inc., in the same Letter for a conference for the
execution of an initial Collective Bargaining Agreement (CBA);

3. On the following day of May13, 1986, ALU in behalf of the


majority of the employees of GAW Trading Inc. signed and
excuted the Collective Bargaining (ANNEX F) ...
4. On May 15, 1986, ALU in behalf of the majority of the
employees of GAW Trading Inc. and GAW Trading Inc. signed

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

55

and executed the Collective Bargaining Agreements (ANNEX


F) . . . .

LAbor Relations, Ministry of Labor and Employment, Manila


(ANNEX M);

5. In the meantime, at about 1:00 P.M. of May 9, 1986, the


Southern Philippines Federation of Labor (SPFL) together with
Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a ...
Strike ... after it failed to get the management of GAW Trading
Inc. to sit for a conference respecting its demands presented at
11: A.M. on the same day in an effort to pressure GAW Trading
Inc. to make a turnabout of its standign recognition of ALU as
the sole and exclusive bargaining representative of its
employees, as to which strike GAW Trading Inc. filed a petition
for Restraining Order/Preliminary Injunction, dfated June 1,
1986 (Annex H) and which strike Labor Arbiter Bonifacio B.
Tumamak held as illegal in a decision dated August 5, 1986;

9. Bureau of Labor Relations Director Cresencio B. Trajano,


rendered a Decision on August 13, 1986 (Annex B) granting
ALU's appeal (Motion for Reconsideration) and set aside the
questioned Med-Arbiter Order of June 11, 1986 (Annex K), on
the ground that the CBA has been effective and valid and the
contract bar rule applicable;

6. On May 19, 1986, GAW Lumad Labor Union (GALLUPSSLU) Federation ... filed a Certification Election petition
(ANNEX J), but as found by Med-Arbiter Candido M. Cumba in
its (sic) Order dated Ju ne 11, 1986 (ANNEX K), without having
complied (sic) the subscription requirement for which it was
merely considered an intervenor until compliance thereof in the
other petition for direct recogbnition as bargaining agent filed
on MAy 28, 1986 by southern Philippines Federation of Labor
(SPFL) as found in the same order (ANNEX K);
7. Int he meantime, the Collective Bargaining Agreement
executed by ALU and GAW Trading Inc. (ANNEX F) was duly
filed May 27, 1986 with the Ministry of Labor and Employment
in Region VII, Cebu city;
8. Nevertheless, Med-Arbiter Candido M. Cumba in his order of
June 11, 1986 (Annex K) ruled for the holding of a ceritfication
election in all branches of GAW Trading Inc. in Cebu City, as to
which ALU filed a Motion for Reconsideration dated June 19,
1986 (ANNEX L) which was treated as an appeal on that
questioned Order for which reason the entire record of subject
certification case was forwarded for the Director, Bureau of

10. But the same Decision of Director Crecensio B. Trajano


was sought for reconsideratrion both by Southern Philippines
Federation of Labor (SPFL) on August 26, 1986 (ANNEX N),
supplemented by the 'SUBMISSION OD ADDITIONAL
EVIDENCE' dated September 29, 1986 (ANNEX O), and the
Philppine Social Security Labor Union (PSSLU) on October 2,
1986 (ANNEX P), which were opposed by both GAW Trading,
Inc. on September 2, 1986 (ANNEX Q) and ALU on September
12, 1986 (ANNEX R); 2
The aforesaid decision of then Director Trajano was thereafter
reversed by respondent director in her aforecited decision which
is now assailed in this action. A motion for reconsideration of
ALU 3 appears to have been disregarded, hence, its present
resort grounded on grave abuse of discretion by public
respondent.
Public respondent ordered the holding of a certification election
ruling that the "contract bar rule" relied upon by her predecessor
does not apply in the present controversy. According to the
decision of said respondent, the collective bargaining agreement
involved herein is defective because it "was not duly submitted in
accordance with Section I, Rule IX, Book V of the Implementing
Rules of Batas Pambansa Blg. 130." It was further observed that
"(t)here is no proof tending to show that the CBA has been
posted in at least two conspicuous places in the 1 establishment
at least five days before its ratification and that it has been
ratified by the majority of the employees in the bargaining unit."

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

We find no reversible error in the challenged decision of


respondent director. A careful consideration of the facts culled
from the records of this case, especially the allegations of
petitioner itself as hereinabove quoted, yields the conclusion that
the collective bargaining agreement in question is indeed
defective hence unproductive of the legal effects attributed to it
by the former director in his decision which was subsequently
and properly reversed.
We have previously held that the mechanics of collective
bargaining are set in motion only when the following jurisdictional
preconditions are present, namely, (1) possession of the status
of majority representation by the employees' representative in
accordance with any of the means of selection and/or
designation provided for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain under Article 251,
paragraph (a), of the New Labor Code. 4 In the present case, the
standing of petitioner as an exclusive bargaining representative
is dubious, to say the least. It may be recalled that respondent
company, in a letter dated May 12, 1986 and addressed to
petitioner, merely indicated that it was "not against the desire of
(its) workers" and required petitioner to present proof that it was
supported by the majority thereof in a meeting to be held on the
same date. 5 The only express recognition of petitioner as said
employees' bargaining representative that We see in the records
is in the collective bargaining agreement entered into two days
thereafter. 6 Evidently, there was precipitate haste on the part of
respondent company in recognizing petitioner union, which
recognition appears to have been based on the self-serving
claim of the latter that it had the support of the majority of the
employees in the bargaining unit. Furthermore, at the time of the
supposed recognition, the employer was obviously aware that
there were other unions existing in the unit. As earlier stated,
respondent company's letter is dated May 12, 1986 while the two
other unions, Southern Philippine Federation of Labor (hereafter,
SPFL and Philippine Social Security Labor Union (PSSLU, for
short), went on strike earlier on May 9, 1986. The unusual
promptitude in the recognition of petitioner union by respondent

56

company as the exclusive bargaining representative of the


workers in GAW Trading, Inc. under the fluid and amorphous
circumstances then obtaining, was decidedly unwarranted and
improvident.
It bears mention that even in cases where it was the then
Minister of Labor himself who directly certified the union as the
bargaining representative, this Court voided such certification
where there was a failure to properly determine with legal
certainty whether the union enjoyed a majority representation. In
such a case, the holding of a certification election at a proper
time would not necessarily be a mere formality as there was a
compelling reason not to directly and unilaterally certify a union. 7
An additional infirmity of the collective bargaining agreement
involved was the failure to post the same in at least two (2)
conspicuous places in the establishment at least five days before
its ratification. 8 Petitioners rationalization was that "(b)ecause of
the real existence of the illegal strike staged by SPFL in all the
stores of GAW Trading, Inc. it had become impossible to comply
with the posting requirement in so far as the realization of tits
purpose is concerned as there were no impartial members of the
unit who could be appraised of the CBA's contents. " 9 This
justification is puerile and unacceptable.
In the first place, the posting of copies of the collective
bargaining agreement is the responsibility of the employer which
can easily comply with the requirement through a mere
mechanical act. The fact that there were "no impartial members
of the unit" is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the
contents of said agreement so that they could intelligently decide
whether to accept the same or not. The assembly of the
members of ALU wherein the agreement in question was
allegedly explained does not cure the defect. The contract is
intended for all employees and not only for the members of the
purpoted representative alone. It may even be said the the need
to inform the non-members of the terms thereof is more exigent

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

and compelling since, in all likehood, their contact with the


persons who are supposed to represent them is limited.
Moreover, to repeat, there was an apparent and suspicious hurry
in the formulation and finalization of said collective bargaining
accord. In the sforementioned letter where respondent company
required petitioner union to present proof of its support by the
employees, the company already suggested that petitioner ALU
at the same time submit the proposals that it intended to embody
in the projected agreement. This was on May 12, 1986, and
prompltly on thre following day the negoltiation panel; furnish
respondent company final copies of the desired agreement
whcih, with equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective
bargaining is the finding of respondent director that one hundred
eighty-one( 181) of the two hundred eighty-one (281) workers
who "ratified" the same now " strongly and vehemently deny
and/or repudiate the alleged negotiations and ratification of the
CBA. " 10 Although petitioner claims that only sev en (7) of the
repudiating group of workers belong to the total number who
allegedly ratified the agreement, nevertheless such substantiated
contention weighed against the factujal that the controverted
contract will not promote industrial stability . The Court has long
since declared that:
... Basic to the contract bar rule is the proposition that the delay
of the right to select represen tatives can be justified only
where stability is deemed paramount. Excepted from the
contract which do not foster industrial stability, such as
contracts where the identity of the representative is in doubt.
Any stability derived from such contracts must be subordinated
to the employees' freedom of choice because it does not
establish the type of industrial peace contemplated by the
law. 11
At this juncture, petitioner should be reminded that the technical
rules of rpocedure do not strictly apply in the adjudication of labor
disputes. 12 Consequently, its objection that the evidence with

57

respect to the aforesaid repudiiation of the supposed collective


bargaining agreement cannot be considered for the first time on
appeal on the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.
Both petitioner and private respondent GAW Trading, Inc. allege
that the employees of the latter are now enjoying the benefits of
the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support
this contention. The only evidence cited by petitioner is supposed
payment of union fees by said employees, a premise too tenuous
to sustain the desired conclusion. Even the actual number of
workers in the respondent company is not clear from the records.
Said private respondent claims that it is two hundred eighty-one
(281) 13 but petitioner suggests that it is more than that number.
The said parties should be aware that this Court is not an
adjudicator of facts. Worse, to borrow a trite but apt phrase, they
would heap the Ossa of confusion upon the Pelion of uncertainty
and still expect a definitive ruling on the matter thus confounded.
Additionally, the inapplicability of the contract bar rule is further
underscored by the fact that when the disputed agreement was
filed before the Labor Regional Office on May 27, 1986, a
petition for certification election had already been filed on May
19, 1986. Although the petition was not supported by the
signatures of thirty percent (30%) of the workers in the
bargaining unit, the same was enough to initiate said certification
election.
WHEREFORE, the order of the public respondent for the
conduct of a certification election among the rank-and-file
workers of respondent GAW Trading Inc. is AFFIRMED. The
temporary restraining order issued in this case pursuant to the
Resolution of March 25, 1987 is hereby lifted. SO ORDERED.
G.R. No. 78524 January 20, 1989
PLANTERS PRODUCTS, INC.
RELATIONS COMMISSION

vs.

NATIONAL

LABOR

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

GUTIERREZ, JR., J.:


These are consolidated petitions to review on certiorari the
resolution of the National Labor Relations Commission (NLRC)
affirming with modifications the Labor Arbiter's decision.
The dispositive portion of the resolution reads as follows:
WHEREFORE, there being no reversible error in the decision
appealed from, We hereby AFFIRM with modifications the
same by (1) declaring respondent Planter's Product GUILTY of
unfair labor practice; (2) to direct respondent to pay the
individual complainants, intervenor-complainants, and all
others which (sic) are similarly situated an amount equivalent
to one and one-half (1 1/2) months of basic pay, which is
subject to adjustment, as far as separation pay or termination
allowance is concerned, for those whose service is less than
ten (10) years in accordance with the collective bargaining
agreement for the years 1975 to 1984; (3) that effective upon
the service of this Resolution, and until all sums due are duly
paid to the individual complainants, intervenor-complainants
and all others which (sic) are similarly situated, respondent is
enjoined from disposing of, or otherwise encumbering a portion
or all of its assets to answer for the obligations or payments as
directed herein; and (4) the award for actual, exemplary and
moral damages as well as attorney's fees is hereby set aside.
(pp. 55-56, Rollo)
The facts of the case as found by the labor arbiter and adopted
by the NLRC are as follows:
xxx xxx xxx This case involves about 440 retrenched
employees of the respondent from its Bataan and Makatibased operations. It was filed by the complainants as
individuals, and jointly with their respective unions, as a class
suit on behalf of Bataan-based Planters Products, Inc. ('PPI'
hereafter) employees similarly situated under Section 12, Rule
3 of the Rules of Court, on January 16, 1986., The intervenors,

58

on June 20, 1986, in their behalf and in behalf of similarly


situated Makati-based employees, moved for leave to intervene
because they were similarly situated as the complainants.
Moreover, the Stipulation of Facts entered into by and between
the parties herein succinctly disclosed these undisputed facts,
to wit:
STIPULATION OF FACTS
l. The complainants and Complainants-Intervenors were all
regular employees of the Respondent until their respective
dates of retirement/retrenchment.
2. All the Complainants, except the Complainants-Intervenors,
are members of either one of the following Unions of
workers/employees of the Respondent:
a. Planters Product Employees Union ('PPEU' for brevity);
b. First Line Association of Management Employees ('FLAME'
for brevity); and
c. Super 21, and/or were represented by said unions as their
respective agents.
3. These Unions of former employees of Respondent have
always had collective bargaining agreements (Exhs. A -197578 CBA which was formally ratified; 'A l'- 1978-81 and 'A-2'/'8'1981-84 CBAs which were not formally submitted for
ratification; and 'A-3'/9'-the purported 1984-87 CBA which was
not formally submitted for ratification).
4. On October 11, 1982, the Respondent instituted a
Retirement and Pension Plan (RPP' hereafter for brevity) for all
employees, which was to be effective retroactive to March 31,
1982, (Exhs. 'P' to 'P-14 a').
5. This non-contributory RPP was funded exclusively by PPI.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

6. On February 23, 1984, PPI to institutionalize the RPP,


entered into a Trust Agreement with Philippine Trust Co., Inc.
('PTC' for brevity), under the terms of which, PTC shall
administer and manage the fund.
7. The initial amount deposited with PTC in accord with the
trust agreement, and to fund the RPP initially was
P15,772,421.98 (Exh. 'Q').
8. There were subsequent deposits made into the RPP trust
account, so that by December 31, 1984, the trust fund in the
RPP amounted to P23,789,690.00, more or less (Exh. '5').
9. On September 28, 1984 a CBA for 1984-1987 was signed
between PPI and the directors and principal officers of its
unions, assisted by their lawyer, Atty. Gabriel Manansala (Exh.
'A-3'/'9').
10. Exh. 'A-3'/'9' modified the provisions in the previous CBAs
on 'termination allowance' or benefit, and limited its scope to
separation from the service of PPI by reason solely of disability.
11. The 1984-87 CBA was never formally submitted to the
membership of the Unions for ratification.
12. In March 1984 the RPP was submitted to the Bureau of
Internal Revenue for qualification as an approved Retirement
and Pension Plan (Exh. '4'/'K').
13. On October 10, 1984, the RPP was approved by BIR
Deputy Commissioner Tomas Toledo (Exhs. '6'-' 6-D 'L' and 'L1').
14. After the RPP was approved by the BIR, on November 21,
1984, PPI issued a circular to all employees announcing the
funding of the RPP (Exh. 'B'/'10) and its approval by the BIR
pursuant to R.A. 4917.

59

15. On September 15, 1985, without formally informing the PPI


employees-beneficiaries of the RPP, the RPP was unilaterally
amended by the company, particularly its Part IV, paragraphs
3-5, pursuant to Section J, Part 7 of the RPP and a copy was
later submitted to the BIR for approval on 22 October 1985 and
the amendments were approved by the BIR pursuant to the
provisions of R.A. 4197 (Exhs. '4' to '4-F'/'K' to 'K- 2').
16. On September 26, 1985 a circular was issued to all
employees of RPI (Exh.'H/'16') announcing that employees laid
off from its Bataan operations on July 8 and August 15, 1985,
were being terminated effective as of September 30, 1985;
while those laid off from its Makati office would be terminated
effective as of October 15, 1985. Between their lay-off dates
and their announced termination/retirement dates, all of the
concerned employees did not render service to PPI.
17. On September 27, 1985, individual letters were sent to
each employee notifying them of their formal termination and
the termination benefits that they would be granted (Exh.
'C'/11').
18. On or about October 11, 1985, Mr. Roberto Orig, for PPI,
issued
to
the
individual
Complainants/ComplainantsIntervenors computer print-outs reflecting the respective
computations of their separation benefits for all employees
terminated during the said periods (Exhs. 'I'-'I-123'. 'NINTERVENOR'-N-20-INTERVENOR). Exhs. 'B' to 'B-8', 'NINTERVENOR' to 'N-20-INTERVENOR' AND 'I' to 'I'-133',
shows that the separation pay granted to the Bataan-based
and Makati-based employees who were not retireable, was
only one (1) month of basic pay for each year of service with
one- half paid from the RPP and the balance from PPI
operating funds. As shown by the same Exhibits, all employees
entitled to optional or forced retirement, were granted
retirement benefits based on their basic pay. These benefits
ranged from 1.02 to 1.43 months of basic pay per year of
service as computed in accordance with the RPP. These

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

computations were used in paying the Complainants and the


Complainants-Intervenors the sums indicated on the print outs.
19. The RPP was managed by a Retirement and Pension
Committee of PPI (Exh. 'Q-l').
20. Effective 15 September 1985, before the Complainants and
Complainants-Intervenors
were
retired/retrenched,
the
company amended PPI's RPP particularly Part. IV, Par. D (4)
and (5), pursuant to which Complainants and ComplainantsIntervenors were paid their separation pay/benefits on the
basis of their basic salary.
21. Subsequent to the retirement/retrenchment of the
Complainants and Complainants-Intervenors, all the remaining
employees were paid their computed retirement/retrenchment
benefits from the RPP and the RPP was liquidated on June 23,
1986 (Exhs. 'G/'15'-Caluag letter and Exhs. 'R', ' R-1', 'S') and
22. Some of the employees who were retired/retrenched
effective June 1, 1986, have been subsequently re-hired by PPI
under certain conditions. (pp. 42-45, Rollo - 78739)
The labor arbiter rendered judgment against Planters Products,
Inc., holding it guilty of unfair labor practice. This was affirmed on
appeal to the NLRC, with the modification that it set aside the
award for actual, exemplary and moral damages, and attorney's
fees.
Both parties filed their respective petitions before this Court.
Planters Products, Inc., (PPI) in its petition raised the following
assignments of errors:
In rendering the decision/resolution complained of, public
respondents acted without or in excess of jurisdiction and/or
grave abuse of discretion in that

60

1. The NLRC, and before it, the Labor Arbiter acted without
jurisdiction in resolving this case, jurisdiction over which is
vested exclusively on another judicial authority. (p. 10, Rollo78524)
2.
Assuming arguendo that
public
respondents
have
jurisdiction, they miserably failed to make a sufficient and valid
findings of facts upon which they could reasonably base their
conclusions. (p. 15,Id.)
3. Assuming arguendo that public respondents made sufficient
and valid findings of facts, such findings are clearly and
manifestly erroneous and absolutely devoid of evidentiary
support. (p. 16,Id.) .
a. Total absence of evidence to support conclusion of unfair
labor practice.
b. The finding of bad faith has no basis; Planters's decision to
amend its retirement plan was prompted by its benevolent
desire to give more benefits to its employees. (p. 18, Id.)
4. Public respondents committed gross errors of law in that
(a) Under its express provision, the Retirement Plan may be
amended unilaterally and the validity and enforceability of the
amendment are not nullified by a mere formal defect. (p.
20, Id.)
(b) Private respondents are estopped from questioning the
validity of the amendment to the Retirement Plan. (p. 24, Id.)
(c) The rule on non-diminution of benefits does not apply to a
modification of a provision in the CBA voluntarily negotiated
and entered into by the parties. (p. 26, Id.)
(d) Continued employment is a condition sine qua non to
entitlement to the liquidation proceeds of the Retirement Fund;
non-employees at the time of liquidation are no longer
participants in the Retirement Plan and are, therefore, not
entitled to liquidation proceeds. (p. 28, Id.)

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

5. Public respondents gravely abused their discretion and


denied Planters due process when they deliberately ignored
Planter's evidence. (p. 31, Id.)
On the other hand, the individual complainants and intervenorscomplainants, in their petition for partial review, raised the
following assignments of errors:
A. THE SETTING ASIDE BY THE HONORABLE NLRC OF THE
AWARD OF THE LABOR ARBITER TO THE PETITIONERS
AND INTERVENORS-PETITIONERS OF ACTUAL, MORAL AND
EXEMPLARY DAMAGES, AND ATTORNEYS FEES, IS
INCONSISTENT WITH ITS FINDING OF UNFAIR LABOR
PRACTICE, BREACH OF TRUST, AND VIOLATION OF THE
CBA PROVISIONS ON TERMINATION ALLOWANCES AND
THE PROHIBITION AGAINST THE DIMINUTION OF
EMPLOYEE BENEFITS.
B. THE HONORABLE NLRC ERRED IN EXCLUDING
INTEGRATING THE 10% SALARY ADJUSTMENT AND
ALLOWANCES
IN
THE
COMPUTATION
OF
TERMINATION AND RETIREMENT ENTITLEMENT OF
PETITIONERS AND INTERVENORS-PETITIONERS.

NOT
THE
THE
THE

61

The contention is without merit.


An employee need not seek reinstatement in order to file a
complaint before the Labor Arbiter. (A. Consteel Construction
Co., Inc. v. Intermediate Appellate Court, G.R. No. 64673, Oct.
21, 1988). Money claims of workers as in the instant case, fall
within the original and exclusive jurisdiction of labor arbiters
when these claims have some reasonable causal connection
with the employer-employee relationship (San Miguel Corp. v.
National Labor Relations Commission, G.R. No. 80774, May 31,
1988; Oreshoot Mining Co. v. Arellano, G.R. Nos. 75746-48,
Dec. 14, 1987; Vargas v. Akai Phils., Inc., UDK-7927, Dec. 14,
1987; Samahang Manggagawa ng Liberty Commercial Center v.
Pimentel, G.R. No. 78621, Dec. 2, 1987; and Tuvera v. Dayrit,
G.R. No. 50096, April 15, 1988).
It is a fact that the complainants and complainants-intervenors
were all regular employees of PPI until their respective dates of
retirement/retrenchment (p. 46, Rollo- 78524). They now seek to
improve the terminal benefits granted to them on the allegation
that a different computation was used for the other employees.
Their claims clearly arose from the employer-employee
relationship.

C. THE HONORABLE NLRC ERRED IN NOT FINDING FROM


THE DOCUMENTARY EVIDENCE THAT PETITIONERS AND
INTERVENORS-PETITIONERS ARE ALSO ENTITLED TO
PRO-RATED DEATH BENEFITS. (pp. 3-4, Rollo-78739)

PPI next contends that this should be a purely civil suit against
the duly designated corporate trustee because it is specifically
against the Retirement Fund which was separately administered
and managed by said trustee.

The first issue to resolve is whether or not the NLRC and the
Labor Arbiter have jurisdiction over the present suit.

We disagree. It is stated in the stipulation of facts that the


Retirement and Pension Plan (RPP hereafter) was managed by
a Retirement and Pension Committee of Planters Products, Inc.
Moreover, the RPP was solely funded by PPI.

PPI contends that the public respondents have no jurisdiction


over the case as there is no longer an existing employeremployee relationship between the private parties. The
relationship having been severed, it is believed that the
complainants should have sought reinstatement for the present
action to fall under said respondents' jurisdiction.

We therefore go along with the findings of the Labor Arbiter who


stated:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

62

The RPP was managed by a Retirement and Pension


Committee (RPC' hereafter ) of PPI. Exhibits "P", "P-1" and "Q10" Identify the RPC members as:

PPI alleges that it was denied due process when public


respondents deliberately ignored its evidence. This is a
misapprehension.

Committee Vice-chairman-the Executive Vice-President and


General Manager Members-the Vice-President, Treasurer; the
Vice-President, Corporate Services; the Vice-President,
Controller; the Assistant to the President; the Plant Manager;
and Secretary- the Employee Relations Manager.

The essence of due process is simply an opportunity to be


heard. (Van-Orient Shipping co., Inc. v. Achacoso, G.R. No.
81805, May 31, 1988; Ong, Sr. v. Parel, G.R. No. 76710, Dec.
21, 1987). PPI was given this opportunity. The fact that the public
respondents gave credit to the other party's evidence and not to
the evidence of PPI is not a violation of due process.

The incumbents from the start of the RPP until its liquidation,
were: Messrs. M.B. Cortes, M.C. Ortega, H.G. Buhay, N.Q.
Dungca, J.L. Montelibano and Roberto Orig (Exh. "P-1") They
are agents of PPI. Hence, PPI is the proper party-respondent in
this action. (p. 50, Rollo-78524)
Having determined that the public respondents have jurisdiction
over the present case, we now proceed to the other issues.
PPI questions the findings of fact of the public respondents. The
NLRC merely adopted the findings of facts of the Labor Arbiter.
It is a well-established doctrine that the findings of fact of
administrative agencies are binding on this Court if supported by
substantial evidence. (Llobecera v. National Labor Relations
Commission, G.R. No. 76271, June 28, 1988; PALEA v. Calleja,
G.R. No. 76673, June 22, 1988; Continental Marble Corp. v.
National Labor Relations Commission, G.R. No. L-43825, May 9,
1988; Casin v. Employees' Compensation Commission, G.R. No.
L-46556, May 28, 1988; and Asim B. Castro, G.R. Nos. 7506364, June 30, 1988)
After a close perusal of the records of this petition, we find no
reason to depart from the factual findings of the Labor Arbiter.
The findings were mainly based upon the stipulation of facts
reached by the parties.

The evidence presented by contesting parties are logically


opposing. Necessarily then the agency or court agency or court
tasked to resolve a controversy decides whose evidence shall be
given more weight. That a party's evidence was given more
weight does not amount to a denial of due process to the other
party. Otherwise, it would give rise to the incongruous situation
where all the losing parties would claim a denial of due process
simply because their evidences were not given the desired
weight to resolve the issues in their favor.
The next issue is whether or not PPI was guilty of unfair labor
practice.
The Labor Arbiter ruled that PPI committed an unfair labor
practice by withdrawing the termination allowance in the 1984-87
CBA. (p. 62, Rollo-78524)
Article 248 of the Labor Code provides inter alia that:
... Unfair labor practices of employers, It shall be unlawful for
an employer to commit any of the following unfair labor
practice. xxx xxx xxx
(i) To violate a collective bargaining agreement.
The questioned provision in the 1984-87 Collective Bargaining
Agreement limited the application of the termination allowance
only to those separated from the service due to disability (Sec. 1,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Art. XVI, CBA for 1984- 1987). (pp. 7 & 158, Rollo -78524). The
prior CBAs from 1975 upwards granted a termination allowance,
upon the employee's separation, of at least three (3) weeks to
one (1) month's pay for each year of service depending upon the
total years of service. (p. 76, Rollo-78524)
The provisions of the 1978-1984 CBAs (Exhibits "A" to "A-2"),
Art. XVI, Secs. 1 and 2, uniformly read:
ARTICLE XVI. TERMINATION ALLOWANCE
Section 1. A regular employee who is separated from the
service of the COMPANY shall be given a termination pay
which shall depend on the length of his service and shall be
computed as follows:
Employees with: Amount of Allowance
1-5 years service 3 weeks pay for each year of service
6-9 years service 4 months plus 1 month for each year of
service after the fifth year
10 or more years One month pay for each year
service of service
The termination pay shall be based upon the employee's basic
pay at the time of his termination.
Section 2. An employee who is temporarily laid off, discharged
for cause, resigns or retires from the service of the COMPANY
will not be entitled to any termination pay. (p. 54, Rollo-78524)
The crux of the petition is to determine whether or not the 19841987 CBA was validly entered into and to determine: 1) the
terminal benefits due to the employees, and 2) whether or not
there was an unfair labor practice.
If the prior CBA is applied, the complainants/complainantsintervenors who do not fall under the above stated section 2

63

would be entitled to termination allowance under the CBA, over


and above the benefits extended under the RPP.
PPI computed their terminal benefits by considering the 19841987 CBA and the amended RPP. All employees terminated
effective as of September 30, 1985 (Bataan Operations) and
October 15, 1985 (Makati Office) who were not retireable were
granted a separation pay of one (1) month of basic pay for each
year of service with one-half paid from the RPP and the balance
from PPI operating funds. All employees entitled to optional or
forced retirement were granted retirement benefits based on their
basic pay ranging from 1.02 to 1.43 months of basic pay per year
of service as computed in accordance with the RPP (p. 48, Rollo78524).
It is contended that the 1984-1987 CBA was not only negotiated
in bad faith but was also not formally ratified. There was
allegedly bad faith in limiting the application of the termination
allowance as the company already had plans to retrench the
workers.
We apply the established rule, that a CBA is the Law among the
parties, to the 1984-1987 CBA.
Bad faith in the negotiations was not present considering that the
provision on termination allowance was made to apply to
everybody including those subsequently retrenched or retired
after the complainants' and complainants- intervenors'
retrenchment. There was no singling out of the complainants and
intervenors-complainants.
Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V
of the Implementing Rules, the parties to a collective agreement
are required to furnish copies to the appropriate Regional Office
with accompanying proof of ratification by the majority of all the
workers in the bargaining unit. This was not done in the case at
bar. But we do not declare the 1984-1987 CBA invalid or void
considering that the employees have enjoyed benefits from it.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

They cannot receive benefits under provisions favorable to them


and later insist that the CBA is void simply because other
provisions turn out not to the liking of certain employees.
(Stipulation of Facts, No. 3; p. 46, Rollo-78524). Moreover, the
two CBAs prior to the 1984-1987 CBA were not also formally
ratified, yet the employees are basing their present claims on
these CBAs. It is inequitous to receive benefits from a CBA and
later on disclaim its validity.
There is nothing in the records before us to show that PPI was
guilty of unfair labor practice.
However, PPI erred in not integrating the allowances with the
basic salary in the computation of the separation pay. The salary
base properly used in computing the separation pay should
include not just the basic salary but also the regular allowances
that an employee has been receiving. (Insular Life Assurance
Co., Ltd. v. National Labor Relations Commission, 156 SCRA
740 [1987]; and Soriano v. National Labor Relations
Commission, 155 SCRA 124 [1987]).
The allowances of the remaining PPI employees were made part
of their basic pay. This increased the computation bases for their
terminal benefits. (p. 51, Rollo-78524). This should have been
the case also for the complainants/complainants-intervenors.

64

WHEREFORE, the decisions of the Labor Arbiter and the


National Labor Relations Commission are hereby SET ASIDE
and a NEW ONE is ENTERED ordering Planters Products, Inc.,
under the supervision of the National Labor Relations
Commission, to recompute the terminal benefits of the
complainants/complainants-intervenors
by
including
their
allowances, the amount of which shall be taken from the assets
which the Court enjoined Planters Products, Inc., from disposing.
The temporary restraining orders issued on June 11, 1987 and
February 29, 1988 are hereby LIFTED. SO ORDERED.

[G.R. No. 146728. February 11, 2004]


GENERAL MILLING CORPORATION vs. HON. COURT OF
APPEALS,
GENERAL
MILLING
CORPORATION
INDEPENDENT LABOR UNION (GMC-ILU)
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the
decision[1] dated July 19, 2000, of the Court of Appeals in CAG.R. SP No. 50383, which earlier reversed the decision [2] dated
January 30, 1998 of the National Labor Relations Commission
(NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:

We adopt the Solicitor General's statement on the questioned


death benefits that in any case, the death benefits are payable
only in the event of the death of the employee. Since petitioners
and intervenors-petitioners are still alive, they obviously are not
entitled thereto. (p. 99, Rollo - 78739).
Finally, the complainants/complainants-intervenors are not
entitled to share in the distribution of the RPP. Under Section M,
Part VII of the RPP only existing employees of the Company
have the right to participate in the distribution of the assets of the
fund.

In its two plants located at Cebu City and Lapu-Lapu City,


petitioner General Milling Corporation (GMC) employed 190
workers. They were all members of private respondent General
Milling Corporation Independent Labor Union (union, for brevity),
a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective
bargaining agreement (CBA) which included the issue of
representation effective for a term of three years. The CBA was
effective for three years retroactive to December 1, 1988. Hence,
it would expire on November 30, 1991.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

On November 29, 1991, a day before the expiration of the


CBA, the union sent GMC a proposed CBA, with a request that a
counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received
collective and individual letters from workers who stated that they
had withdrawn from their union membership, on grounds of
religious affiliation and personal differences. Believing that the
union no longer had standing to negotiate a CBA, GMC did not
send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions
officers, Rito Mangubat and Victor Lastimoso. The letter stated
that it felt there was no basis to negotiate with a union which no
longer existed, but that management was nonetheless always
willing to dialogue with them on matters of common concern and
was open to suggestions on how the company may improve its
operations.
In answer, the union officers wrote a letter dated December
19, 1991 disclaiming any massive disaffiliation or resignation
from the union and submitted a manifesto, signed by its
members, stating that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a
union member, on the ground of incompetence. The union
protested and requested GMC to submit the matter to the
grievance procedure provided in the CBA. GMC, however,
advised the union to refer to our letter dated December 16,
1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against
GMC with the NLRC, Arbitration Division, Cebu City. The
complaint alleged unfair labor practice on the part of GMC for: (1)
refusal to bargain collectively; (2) interference with the right to
self-organization; and (3) discrimination. The labor arbiter
dismissed the case with the recommendation that a petition for
certification election be held to determine if the union still enjoyed
the support of the workers.
The union appealed to the NLRC.

65

On January 30, 1998, the NLRC set aside the labor arbiters
decision. Citing Article 253-A of the Labor Code, as amended by
Rep. Act No. 6715,[4] which fixed the terms of a collective
bargaining agreement, the NLRC ordered GMC to abide by the
CBA draft that the union proposed for a period of two (2) years
beginning December 1, 1991, the date when the original CBA
ended, to November 30, 1993. The NLRC also ordered GMC to
pay the attorneys fees.[5]
In its decision, the NLRC pointed out that upon the effectivity
of Rep. Act No. 6715, the duration of a CBA, insofar as the
representation aspect is concerned, is five (5) years which, in the
case of GMC-Independent Labor Union was from December 1,
1988 to November 30, 1993. All other provisions of the CBA are
to be renegotiated not later than three (3) years after its
execution. Thus, the NLRC held that respondent union remained
as the exclusive bargaining agent with the right to renegotiate the
economic provisions of the CBA. Consequently, it was unfair
labor practice for GMC not to enter into negotiation with the
union.
The NLRC likewise held that the individual letters of
withdrawal from the union submitted by 13 of its members from
February to June 1993 confirmed the pressure exerted by GMC
on its employees to resign from the union. Thus, the NLRC also
found GMC guilty of unfair labor practice for interfering with the
right of its employees to self-organization.
With respect to the unions claim of discrimination, the NLRC
found the claim unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its
decision of January 30, 1998, through a resolution dated October
6, 1998. It found GMCs doubts as to the status of the union
justified and the allegation of coercion exerted by GMC on the
unions members to resign unfounded. Hence, the union filed a
petition for certiorari before the Court of Appeals. For failure of
the union to attach the required copies of pleadings and other
documents and material portions of the record to support the
allegations in its petition, the CA dismissed the petition on

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

February 9, 1999. The same petition was subsequently filed by


the union, this time with the necessary documents. In its
resolution dated April 26, 1999, the appellate court treated the
refiled petition as a motion for reconsideration and gave the
petition due course.
On July 19, 2000, the appellate court rendered a decision
the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC
Resolution of October 6, 1998 is hereby SET ASIDE, and its
decision of January 30, 1998 is, except with respect to the award
of attorneys fees which is hereby deleted, REINSTATED.[6]
A motion for reconsideration was seasonably filed by GMC,
but in a resolution dated October 26, 2000, the CA denied it for
lack of merit.
Hence, the instant petition for certiorari alleging that:
I. THE COURT OF APPEALS DECISION VIOLATED THE
CONSTITUTIONAL RULE THAT NO DECISION SHALL BE
RENDERED BY ANY COURT WITHOUT EXPRESSING
THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE
LAW ON WHICH IT IS BASED.
II. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION IN THE
ABSENCE OF ANY FINDING OF SUBSTANTIAL ERROR OR
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION.
III. THE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN NOT APPRECIATING THAT THE NLRC HAS NO
JURISDICTION TO DETERMINE THE TERMS AND
CONDITIONS OF A COLLECTIVE BARGAINING AGREEMENT.
[7]

Thus, in the instant case, the principal issue for our


determination is whether or not the Court of Appeals acted with

66

grave abuse of discretion amounting to lack or excess of


jurisdiction in (1) finding GMC guilty of unfair labor practice for
violating the duty to bargain collectively and/or interfering with
the right of its employees to self-organization, and (2) imposing
upon GMC the draft CBA proposed by the union for two years to
begin from the expiration of the original CBA.
On the first issue, Article 253-A of the Labor Code, as
amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement.
Any Collective Bargaining Agreement that the parties may enter
into shall, insofar as the representation aspect is concerned, be
for a term of five (5) years. No petition questioning the majority
status of the incumbent bargaining agent shall be entertained
and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day
period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions
of the Collective Bargaining Agreement shall be renegotiated not
later than three (3) years after its execution....
The law mandates that the representation provision of a CBA
should last for five years. The relation between labor and
management should be undisturbed until the last 60 days of the
fifth year. Hence, it is indisputable that when the union requested
for a renegotiation of the economic terms of the CBA on
November 29, 1991, it was still the certified collective bargaining
agent of the workers, because it was seeking said renegotiation
within five (5) years from the date of effectivity of the CBA on
December 1, 1988. The unions proposal was also submitted
within the prescribed 3-year period from the date of effectivity of
the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in
good faith with the union. For refusing to send a counterproposal to the union and to bargain anew on the economic
terms of the CBA, the company committed an unfair labor

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

practice under Article 248 of the Labor Code, which provides


that:
ART. 248. Unfair labor practices of employers. It shall be
unlawful for an employer to commit any of the following unfair
labor practice: . . .
(g) To violate the duty to bargain collectively as prescribed by this
Code; . . .
Article 252 of the Labor Code elucidates the meaning of the
phrase duty to bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The duty
to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party
has met his statutory duty to bargain in good faith typically turn$
on the facts of the individual case. [8] There is no per setest of
good faith in bargaining.[9] Good faith or bad faith is an inference
to be drawn from the facts. [10] The effect of an employers or a
unions actions individually is not the test of good-faith
bargaining, but the impact of all such occasions or actions,
considered as a whole.[11]
Under Article 252 abovecited, both parties are required to
perform their mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an
agreement. The union lived up to this obligation when it
presented proposals for a new CBA to GMC within three (3)
years from the effectivity of the original CBA. But GMC failed in
its duty under Article 252. What it did was to devise a flimsy
excuse, by questioning the existence of the union and the status
of its membership to prevent any negotiation.

67

It bears stressing that the procedure in collective bargaining


prescribed by the Code is mandatory because of the basic
interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following
procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall
serve a written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later
than ten (10) calendar days from receipt of such
notice. (Underscoring supplied.)
GMCs failure to make a timely reply to the proposals
presented by the union is indicative of its utter lack of interest in
bargaining with the union. Its excuse that it felt the union no
longer represented the workers, was mainly dilatory as it turned
out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to
the unions proposal for CBA negotiation is an indication of its
bad faith. Where the employer did not even bother to submit an
answer to the bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively.[12]
Failing to comply with the mandatory obligation to submit a
reply to the unions proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor practice. Perforce, the
Court of Appeals did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in finding that GMC is,
under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees right to selforganization? The CA found that the letters between February to
June 1993 by 13 union members signifying their resignation from
the union clearly indicated that GMC exerted pressure on its
employees. The records show that GMC presented these letters
to prove that the union no longer enjoyed the support of the
workers. The fact that the resignations of the union members

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

occurred during the pendency of the case before the labor arbiter
shows GMCs desperate attempts to cast doubt on the legitimate
status of the union. We agree with the CAs conclusion that the
ill-timed letters of resignation from the union members indicate
that GMC had interfered with the right of its employees to selforganization. Thus, we hold that the appellate court did not
commit grave abuse of discretion in finding GMC guilty of unfair
labor practice for interfering with the right of its employees to
self-organization.
Finally, did the CA gravely abuse its discretion when it
imposed on GMC the draft CBA proposed by the union for two
years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a
collective bargaining agreement. ....It shall be the duty of
both parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing
agreement during the 60-day period [prior to its expiration date]
and/or until a new agreement is reached by the parties.
(Underscoring supplied.)
The provision mandates the parties to keep the status
quo while they are still in the process of working out their
respective proposal and counter proposal. The general rule is
that when a CBA already exists, its provision shall continue to
govern the relationship between the parties, until a new one is
agreed upon. The rule necessarily presupposes that all other
things are equal. That is, that neither party is guilty of bad faith.
However, when one of the parties abuses this grace period by
purposely delaying the bargaining process, a departure from the
general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein,
Sweden Ice Cream Plant, refused to submit any counter
proposal to the CBA proposed by its employees certified
bargaining agent. We ruled that the former had thereby lost its

68

right to bargain the terms and conditions of the CBA. Thus, we


did not hesitate to impose on the erring company the CBA
proposed by its employees union - lock, stock and barrel. Our
findings in Kiok Loy are similar to the facts in the present case, to
wit:
petitioner Companys approach and attitude stalling the
negotiation by a series of postponements, non-appearance at the
hearing conducted, and undue delay in submitting its financial
statements, lead to no other conclusion except that it is unwilling
to negotiate and reach an agreement with the Union. Petitioner
has not at any instance, evinced good faith or willingness to
discuss freely and fully the claims and demands set forth by the
Union much less justify its objection thereto.[14]
Likewise, in Divine Word University of Tacloban vs.
Secretary of Labor and Employment,[15] petitioner therein, Divine
Word University of Tacloban, refused to perform its duty to
bargain collectively. Thus, we upheld the unilateral imposition on
the university of the CBA proposed by the Divine Word University
Employees Union. We said further:
That being the said case, the petitioner may not validly assert
that its consent should be a primordial consideration in the
bargaining process. By its acts, no less than its action which
bespeak its insincerity, it has forfeited whatever rights it could
have asserted as an employer.[16]
Applying the principle in the foregoing cases to the instant
case, it would be unfair to the union and its members if the terms
and conditions contained in the old CBA would continue to be
imposed on GMCs employees for the remaining two (2) years of
the CBAs duration. We are not inclined to gratify GMC with an
extended term of the old CBA after it resorted to delaying tactics
to prevent negotiations. Since it was GMC which violated the
duty to bargain collectively, based on Kiok Loy and Divine Word
University of Tacloban, it had lost its statutory right to negotiate

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

or renegotiate the terms and conditions of the draft CBA


proposed by the union.
We carefully note, however, that as strictly distinguished from
the facts of this case, there was no pre-existing CBA between the
parties in Kiok Loy and Divine Word University of Tacloban.
Nonetheless, we deem it proper to apply in this case the
rationale of the doctrine in the said two cases. To rule otherwise
would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either
side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be allowed
to resort with impunity to schemes feigning negotiations by going
through empty gestures.[17] Thus, by imposing on GMC the
provisions of the draft CBA proposed by the union, in our view,
the interests of equity and fair play were properly served and
both parties regained equal footing, which was lost when GMC
thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC
as to the reasonableness of the draft CBA proposed by the union
should not be disturbed since they are supported by substantial
evidence. On this score, we see no cogent reason to rule
otherwise. Hence, we hold that the Court of Appeals did not
commit grave abuse of discretion amounting to lack or excess of
jurisdiction when it imposed on GMC, after it had committed
unfair labor practice, the draft CBA proposed by the union for the
remaining two (2) years of the duration of the original
CBA. Fairness, equity, and social justice are best served in this
case by sustaining the appellate courts decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed
decision dated July 19, 2000, and the resolution dated October
26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383, are
AFFIRMED. Costs against petitioner. SO ORDERED.
G.R. No. 154113

December 7, 2011

DEN
GLADYS
ABARIA
et.
LABOR RELATIONS COMMISSION
DECISION
VILLARAMA, JR., J.:

Al.

vs.

69

NATIONAL

The consolidated petitions before us involve the legality of


mass termination of hospital employees who participated in strike
and picketing activities.
The factual antecedents:
Metro Cebu Community Hospital, Inc. (MCCHI), presently
known as the Visayas Community Medical Center (VCMC), is a
non-stock, non-profit corporation organized under the laws of the
Republic of the Philippines. It operates the Metro Cebu
Community Hospital (MCCH), a tertiary medical institution
located at Osmea Boulevard, CebuCity. MCCH is owned by the
United Church of Christ in the Philippines (UCCP) and Rev.
Gregorio P. Iyoy is the Hospital Administrator.
The National Federation of Labor (NFL) is the exclusive
bargaining representative of the rank-and-file employees of
MCCHI. Under the 1987 and 1991 Collective Bargaining
Agreements (CBAs), the signatories were Ciriaco B. Pongasi, Sr.
for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel)
and Paterno A. Lumapguid as President of NFL-MCCH
Chapter. In the CBA effective from January 1994 until December
31, 1995, the signatories were Sheila E. Buot as Board of
Trustees Chairman, Rev. Iyoy as MCCH Administrator and Atty.
Fernando Yu as Legal Counsel of NFL, while Perla Nava,
President of Nagkahiusang Mamumuo sa MCCH (NAMA-MCCHNFL) signed the Proof of Posting.[1]
On December 6, 1995, Nava wrote Rev. Iyoy expressing
the unions desire to renew the CBA, attaching to her letter a
statement of proposals signed/endorsed by 153 union
members. Nava subsequently requested that the following
employees be allowed to avail of one-day union leave with pay

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

on December 19, 1995: Celia Sabas, Jesusa Gerona, Albina


Baez, Eddie Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma
Remocaldo, Catalina Alsado, Evelyn Ong, Melodia Paulin, Sofia
Bautista, Hannah Bongcaras, Ester Villarin, Iluminada
Wenceslao and Perla Nava. However, MCCHI returned the CBA
proposal for Nava to secure first the endorsement of the legal
counsel of NFL as the official bargaining representative of
MCCHI employees.[2]
Meanwhile, Atty. Alforque informed MCCHI that the
proposed CBA submitted by Nava was never referred to NFL and
that NFL has not authorized any other legal counsel or any
person for collective bargaining negotiations. By January 1996,
the collection of union fees (check-off) was temporarily
suspended by MCCHI in view of the existing conflict between the
federation and its local affiliate. Thereafter, MCCHI attempted to
take over the room being used as union office but was prevented
to do so by Nava and her group who protested these actions and
insisted that management directly negotiate with them for a new
CBA. MCCHI referred the matter to Atty. Alforque, NFLs
Regional Director, and advised Nava that their group is not
recognized by NFL.[3]
In his letter dated February 24, 1996 addressed to Nava,
Ernesto Canen, Jr., Jesusa Gerona, Hannah Bongcaras, Emma
Remocaldo, Catalina Alsado and Albina Baez, Atty. Alforque
suspended their union membership for serious violation of the
Constitution and By-Laws. Said letter states:
During the last General Membership Meeting of the
union on February 20, 1996, you openly declared that you
recognized the officers of the KMU not those of the NFL, that
you submit to the stuctures [sic] and authority of the KMU not
of the NFL, and that you are loyal only to the KMU not to the
NFL.
Also, in the same meeting, you admitted having sent a
proposal for a renewed collective bargaining agreement to the

70

management without any consultation with the NFL. In fact, in


your letter dated February 21, 1996 addressed to Rev.
Gregorio Iyoy, the Administrator of the hospital, you
categorically stated as follows: We do not need any
endorsement from NFL, more particularly from Atty. Armando
Alforque to negotiate our CBA with MCCH. You did not only
ignore the authority of the undersigned as Regional Director
but you maliciously prevented and bluntly refused my request
to join the union negotiating panel in the CBA negotiations.
Your above flagrant actuations, made in the presence
of the union membership, constitute the following offenses:
1. Willful violation of the Constitution and By-Laws of
the Federation and the orders and decisions of duly
constituted authorities of the same (Section 4 (b), Article III),
namely:
a) Defying the decision of the organization disaffiliating
from the KMU; and
b) Section 9 (b), Article IX which pertains to the powers
and responsibilities of the Regional Director, particularly, to
negotiate and sign collective bargaining agreement together
with the local negotiating panel subject to prior ratification by
the general membership;
2. Joining or assisting another labor organization or
helping in the formation of a new labor organization that seeks
or tends to defeat the purpose of the Federation (Section 4 (d),
Article III) in relation to the National Executive Boards
Resolution No. 8, September 26-27, 1994, to wit:
Pursuant to the NEB Resolution disaffiliating from the
KMU dated September 11, 1993, the NEB in session hereby
declare that KMU is deemed an organization that seeks to
defeat the objective of establishing independent and
democratic unions and seeks to replace the Federation as
exclusive representative of its members.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Committing acts that tend to alienate the loyalty of the


members to the Federation, subvert its duly constituted
authorities, and divide the organization in any level with the
objective of establishing a pro-KMU faction or independent
union loyal to the KMU shall be subject to disciplinary action,
suspension or expulsion from union membership, office or
position in accordance with paragraph[s] d and f of Section 4,
Article III, and paragraph h, Section 6, Article VI, paragraph d,
Section 9, Article IX.
You are, therefore, directed to submit written
explanation on the above charges within five (5) days from
receipt hereof. Failure on your part shall be considered a
waiver of your right to be heard and the Federation will act
accordingly.
Considering the gravity of the charges against you, the
critical nature of the undertaking to renew the collective
bargaining agreement, and the serious threat you posed to the
organization, you are hereby placed under temporary
suspension from your office and membership in the union
immediately upon receipt hereof pending investigation and
final disposition of your case in accordance with the unions
constitution and by-laws.
For your guidance and compliance.[4]
On February 26, 1996, upon the request of Atty. Alforque,
MCCHI granted one-day union leave with pay for 12 union
members.[5] The next day, several union members led by Nava
and her group launched a series of mass actions such as
wearing black and red armbands/headbands, marching around
the hospital premises and putting up placards, posters and
streamers. Atty. Alforque immediately disowned the concerted
activities being carried out by union members which are not
sanctioned by NFL. MCCHI directed the union officers led by
Nava to submit within 48 hours a written explanation why they
should not be terminated for having engaged in illegal concerted

71

activities amounting to strike, and placed them under immediate


preventive suspension. Responding to this directive, Nava and
her group denied there was a temporary stoppage of work,
explaining that employees wore their armbands only as a sign of
protest and reiterating their demand for MCCHI to comply with its
duty to bargain collectively. Rev. Iyoy, having been informed that
Nava and her group have also been suspended by NFL, directed
said officers to appear before his office for investigation in
connection with the illegal strike wherein they reportedly uttered
slanderous and scurrilous words against the officers of the
hospital, threatening other workers and forcing them to join the
strike. Said union officers, however, invoked the grievance
procedure provided in the CBA to settle the dispute between
management and the union.[6]
On March 13 and 19, 1996, the Department of Labor and
Employment (DOLE) Regional Office No. 7 issued certifications
stating that there is nothing in their records which shows
that NAMA-MCCH-NFL is a registered labor organization, and
that said union submitted only a copy of its Charter Certificate on
January 31, 1995.[7] MCCHI then sent individual notices to all
union members asking them to submit within 72 hours a written
explanation why they should not be terminated for having
supported the illegal concerted activities of NAMA-MCCH-NFL
which has no legal personality as per DOLE records. In their
collective response/statement dated March 18, 1996, it was
explained that the picketing employees wore armbands to protest
MCCHIs refusal to bargain; it was also contended that MCCHI
cannot question the legal personality of the union which had
actively assisted in CBA negotiations and implementation. [8]
On March 13, 1996, NAMA-MCCH-NFL filed a Notice of
Strike but the same was deemed not filed for want of legal
personality on the part of the filer. The National Conciliation and
Mediation Board (NCMB) Region 7 office likewise denied their
motion for reconsideration on March 25, 1996. Despite such
rebuff, Nava and her group still conducted a strike vote on April

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

2, 1996 during which an overwhelming majority of union


members approved the strike.[9]
Meanwhile, the scheduled investigations did not push
through because the striking union members insisted on
attending the same only as a group. MCCHI again sent notices
informing them that their refusal to submit to investigation is
deemed a waiver of their right to explain their side and
management shall proceed to impose proper disciplinary action
under the circumstances. On March 30, 1996, MCCHI sent
termination letters to union leaders and other members who
participated in the strike and picketing activities. On April 8,
1996, it also issued a cease-and-desist order to the rest of the
striking employees stressing that the wildcat concerted activities
spearheaded by the Nava group is illegal without a valid Notice
of Strike and warning them that non-compliance will compel
management to impose disciplinary actions against them. For
their continued picketing activities despite the said warning, more
than 100 striking employees were dismissed effective April 12
and 19, 1996.
Unfazed, the striking union members held more mass
actions. The means of ingress to and egress from the hospital
were blocked so that vehicles carrying patients and employees
were barred from entering the premises. Placards were placed
at the hospitals entrance gate stating: Please proceed to
another hospital and we are on protest. Employees and
patients reported acts of intimidation and harassment
perpetrated by union leaders and members. With the intensified
atmosphere of violence and animosity within the hospital
premises as a result of continued protest activities by union
members, MCCHI suffered heavy losses due to low patient
admission rates. The hospitals suppliers also refused to make
further deliveries on credit.
With the volatile situation adversely affecting hospital
operations and the condition of confined patients, MCCHI filed a
petition for injunction in the NLRC (Cebu City) onJuly 9,

72

1996 (Injunction Case No. V-0006-96). A temporary restraining


order (TRO) was issued on July 16, 1996. MCCHI presented 12
witnesses (hospital employees and patients), including a security
guard who was stabbed by an identified sympathizer while in the
company of Navas group. MCCHIs petition was granted and a
permanent
injunction
was
issued
on September 18,
1996 enjoining the Nava group from committing illegal acts
mentioned in Art. 264 of the Labor Code.[10]
On August 27, 1996, the City Government of Cebu
ordered the demolition of the structures and obstructions put up
by the picketing employees of MCCHI along the sidewalk, having
determined the same as a public nuisance or nuisance per se.[11]
Thereafter, several complaints for illegal dismissal and
unfair labor practice were filed by the terminated employees
against MCCHI, Rev. Iyoy, UCCP and members of the Board of
Trustees of MCCHI.
On August 4, 1999, Executive Labor Arbiter Reynoso A.
Belarmino rendered his decision [12] dismissing the complaints for
unfair labor practice in NLRC Case Nos. RAB-VII-02-0309-98,
RAB-VII-02-0394-98 and RAB-VII-03-0596-98 filed by Nava and
90 other complainants. Executive Labor Arbiter Belarmino found
no basis for the charge of unfair labor practice and declared the
strike and picketing activities illegal having been conducted by
NAMA-MCCH-NFL which is not a legitimate labor organization.
The termination of union leaders Nava, Alsado, Baez,
Bongcaras, Canen, Gerona and Remocaldo were upheld as valid
but MCCHI was directed to grant separation pay equivalent to
one-half month for every year of service, in the total amount
of P3,085,897.40 for the 84 complainants. [13]
Complainants appealed to the Commission. On March
14, 2001, the NLRCs Fourth Division rendered its Decision,
[14]
the dispositive portion of which reads:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

WHEREFORE, premises considered, the decision of the


Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with
MODIFICATIONS declaring the dismissal of all the
complainants in RAB Case No. 07-02-0394-98 and RAB Case
No. 07-03-0596-98 valid and legal. Necessarily, the award of
separation pay and attorneys fees are hereby Deleted.

73

WHEREFORE, premises considered, the decision of


the Executive Labor Arbiter dismissing the complaint for unfair
labor practice and illegal dismissal is AFFIRMED with
MODIFICATIONS declaring all complainants to have been
validly dismissed. Necessarily, the award of separation pay
and attorneys fees are hereby Deleted. SO ORDERED. [22]

Resolution on RAB Case No. 07-02-0309-98 is hereby


Deferred upon Joint Motion of the parties. SO ORDERED. [15]

The NLRC likewise denied the motion for reconsideration


filed by complainants Yballe, et al. in its Resolution dated April
13, 2004.[23]

In its Resolution dated July 2, 2001, the NLRC denied


complainants motion for reconsideration.[16]

On October 17, 2008, the CA rendered its Decision [24] in


CA-G.R. SP No. 66540, the dispositive portion of which states:

Complainants elevated the case to the Court of Appeals


(CA) (Cebu Station) via a petition for certiorari, docketed as CAG.R. SP No. 66540.[17]

WHEREFORE, premises considered, judgment is hereby


rendered AFFIRMING the Decision of the National Labor
Relations Commission (NLRC) Fourth Division dated March
14, 2001 in NLRC Case No. V-001042-99, WITH
MODIFICATIONS to the effect that (1) the petitioners, except
the union officers, shall be awarded separation pay equivalent
to one-half (1/2) month pay for every year of service, and (2)
petitioner Cecilia Sabas shall be awarded overtime pay
amounting to sixty-three (63) hours. SO ORDERED. [25]

In its Resolution dated November 14, 2001, the CAs


Eighth Division dismissed the petition on the ground that out of
88 petitioners only 47 have signed the certification against forum
shopping.[18] Petitioners moved to reconsider the said dismissal
arguing that the 47 signatories more than constitute the principal
parties as the petition involves a matter of common concern to all
the petitioning employees. [19] By Resolution[20] dated May 28,
2002, the CA reinstated the case only insofar as the 47
petitioners who signed the petition are concerned.
Petitioners challenged the validity of the November 14,
2001 and May 28, 2002 resolutions before this Court in a petition
for review on certiorari, docketed as G.R. No. 154113.
Meanwhile, the NLRCs Fourth Division (Cebu City)
rendered its Decision[21] dated March 12, 2003 in RAB Case Nos.
07-02-0309-98 (NLRC Case No. V-001042-99) pertaining to
complainants Erma Yballe, Evelyn Ong, Nelia Angel and
Eleuteria Cortez as follows:

Petitioners filed a motion for reconsideration while private


respondents filed a motion for partial reconsideration questioning
the award of separation pay. The former also invoked the
decision of this Court in Bascon v. Court of Appeals,[26] while the
latter argued for the application of the ruling in decision rendered
by the CA (Cebu City) inMiculob v. NLRC, et al. (CA-G.R. SP No.
84538),[27] both involving similar complaints filed by dismissed
employees of MCCHI.
By Resolution[28] dated April 17, 2009, the CA denied both
motions:
WHEREFORE, the petitioners Motion for Reconsideration
and the private respondent[s] Motion for Partial

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Reconsideration of the October 17, 2008 Decision are both


DENIED for lack of merit.
The Motions for Substitution of Counsel and Compromise
Agreements submitted by petitioners Bernardito Lawas,
Avelina Bangalao, Dailenda Hinampas and Daylinda Tigo are
hereby approved. Consequently, said petitioners are ordered
dropped from the list of petitioners and the case is deemed
dismissed as to them. SO ORDERED.[29]
Complainants Yballe, et al. also challenged before the CA
the March 12, 2003 Decision and April 13, 2004 Resolution of
the NLRC in a petition for certiorari, docketed as CA-G.R. SP No.
84998 (Cebu City). By Decision[30] dated November 7, 2008, the
CA granted their petition, as follows:

74

In G.R. No. 187778, petitioners Nava, et al. prayed that


the CA decision be set aside and a new judgment be entered by
this Court (1) declaring private respondents guilty of unfair labor
practice and union busting; (2) directing private respondents to
cease and desist from further committing unfair labor practices
against the petitioners; (3) imposing upon MCCH the proposed
CBA or, in the alternative, directing the hospital and its officers to
bargain with the local union; (4) declaring private respondents
guilty of unlawfully suspending and illegally dismissing the
individual
petitioners-employees;
(5)
directing
private
respondents to reinstate petitioners-employees to their former
positions, or their equivalent, without loss of seniority rights with
full backwages and benefits until reinstatement; and (6) ordering
private respondents to pay the petitioners moral damages,
exemplary damages, legal interests, and attorneys fees. [33]

WHEREFORE, the challenged Decision of public


respondent dated March 12, 2003 and its Resolution
dated April 13, 2004 are hereby REVERSED AND SET
ASIDE. Private
respondent Metro Cebu Community Hospital is ordered to
reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia
Angel and Evelyn Ong without loss of seniority rights and
other privileges; to pay them their full backwages inclusive of
their allowances and other benefits computed from the time of
their dismissal up to the time of their actual reinstatement. No
pronouncement as to costs. SO ORDERED.[31]

On the other hand, petitioner MCCHI in G.R. No.


187861 prayed for the modification of the CA decision by deleting
the award of separation pay and reinstating the March 14,
2001 decision of the NLRC.[34]

Private respondents (MCCHI, et al.) moved to reconsider


the above decision but the CA denied their motion on February
22, 2011.[32]

G.R. No. 187861 was consolidated with G.R. Nos. 154113


and 187778 as they involve similar factual circumstances and
identical or related issues. G.R. No. 196156 was later also
consolidated with the aforesaid cases.

Both petitioners and private respondents in CA-G.R. SP


No. 66540 appealed to this Court. Private respondent MCCHI in
CA-G.R. SP No. 84998, under its new name Visayas Community
Medical Center (VCMC), filed a petition for certiorari in this Court.

In G.R. No. 196156, MCCHI/VCMC prayed for the


annulment of the November 7, 2008 Decision and February 22,
2011 Resolution of the CA, for this Court to declare the dismissal
of respondents Yballe, et al. as valid and legal and to reinstate
the March 12, 2003 Decision and April 13, 2004 Resolution of the
NLRC.

The issues are: (1) whether the CA erred in dismissing the


petition for certiorari (CA-G.R. SP No. 66540) with respect to the
petitioners in G.R. No. 154113 for their failure to sign the
certification against forum shopping; (2) whether MCCHI is guilty
of unfair labor practice; (3) whether petitioning employees were

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

illegally dismissed; and (4) if their termination was illegal,


whether petitioning employees are entitled to separation pay,
backwages, damages and attorneys fees.
Dropping of petitioners who did not sign the certification
against forum shopping improper
The Court has laid down the rule in Altres v. Empleo[35] as
culled
from
jurisprudential
pronouncements,
that
the certification against forum shopping must be signed by all the
plaintiffs or petitioners in a case; otherwise, those who did not
sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a common
cause of action or defense, the signature of only one of them in
the certification against forum shopping substantially complies
with the Rule.
In the case at bar, the signatures of 47 out of 88 petitioning
employees in the certification against forum shopping constitute
substantial compliance with the rule. There is no question that
they shared a common interest and invoked a common cause of
action when they filed suit before the Labor Arbiter and NLRC
questioning the validity of their termination and charging MCCHI
with unfair labor practice. Thus, when they appealed their case to
the CA, they pursued the same as a collective body, raising only
one argument in support of their cause of action, i.e., the illegal
dismissal allegedly committed by MCCHI when union members
resorted to strike and mass actions due to MCCHIs refusal to
bargain with officers of the local chapter. There is sufficient basis,
therefore, for the 47 signatories to the petition, to speak for and
in behalf of their co-petitioners and to file the Petition for
Certiorari in the appellate court.[36] Clearly, the CA erred in
dropping as parties-petitioners those who did not sign the
certification against forum shopping.

No. 154113, and as prayed for, the Court shall consider them
parties-petitioners in CA-G.R. SP No. 66540,which case has
already been decided and now subject of appeal in G.R. No.
187778.
MCCHI not guilty of unfair labor practice
Art. 248 (g) of the Labor Code, as amended, makes it an
unfair labor practice for an employer [t]o violate the duty to
bargain collectively as prescribed by the Code. The applicable
provision in this case is Art. 253 which provides:
ART. 253. Duty to bargain collectively when there
exists a collective bargaining agreement. When there is a
collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate
nor modify such agreement during its lifetime. However, either
party can serve a written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo
and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.
NAMA-MCCH-NFL charged MCCHI with refusal to bargain
collectively when the latter refused to meet and convene for
purposes of collective bargaining, or at least give a counterproposal to the proposed CBA the union had submitted and
which was ratified by a majority of the union
membership. MCCHI, on its part, deferred any negotiations until
the local unions dispute with the national union federation (NFL)
is resolved considering that the latter is the exclusive bargaining
agent which represented the rank-and-file hospital employees in
CBA negotiations since 1987.
We rule for MCCHI.

However, instead of remanding the case to the CA for it to


resolve the petition with respect to the herein petitioners in G.R.

75

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Records of the NCMB and DOLE Region 7 confirmed that


NAMA-MCCH-NFL had not registered as a labor organization,
having submitted only its charter certificate as an affiliate or local
chapter of NFL.[37] Not being a legitimate labor organization,
NAMA-MCCH-NFL is not entitled to those rights granted to a
legitimate labor organization under Art. 242, specifically:
(a) To act as the representative of its members for the
purpose of collective bargaining;
(b) To be certified as the exclusive representative of all
the employees in an appropriate collective bargaining unit for
purposes of collective bargaining; x x x x
Aside from the registration requirement, it is only the labor
organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit which is
the exclusive representative of the employees in such unit for the
purpose of collective bargaining, as provided in Art. 255.
[38]
NAMA-MCCH-NFL is not the labor organization certified or
designated by the majority of the rank-and-file hospital
employees to represent them in the CBA negotiations but the
NFL, as evidenced by CBAs concluded in 1987, 1991 and
1994. While it is true that a local union has the right to disaffiliate
from the national federation, NAMA-MCCH-NFL has not done so
as there was no any effort on its part to comply with the legal
requisites for a valid disaffiliation during the freedom
period[39] or the last 60 days of the last year of the CBA, through
a majority vote in a secret balloting in accordance with Art. 241
(d).[40] Nava and her group simply demanded that MCCHI
directly negotiate with the local union which has not even
registered as one.
To prove majority support of the employees, NAMAMCCH-NFL presented the CBA proposal allegedly signed by 153
union members. However, the petition signed by said members
showed that the signatories endorsed the proposed terms and
conditions without stating that they were likewise voting for or
designating the NAMA-MCCH-NFL as their exclusive bargaining

76

representative. In any case, NAMA-MCCH-NFL at the time of


submission of said proposals was not a duly registered labor
organization, hence it cannot legally represent MCCHIs rankand-file employees for purposes of collective bargaining. Hence,
even assuming that NAMA-MCCH-NFL had validly disaffiliated
from its mother union, NFL, it still did not possess the legal
personality to enter into CBA negotiations. A local union which is
not independently registered cannot, upon disaffiliation from the
federation, exercise the rights and privileges granted by law to
legitimate labor organizations; thus, it cannot file a petition for
certification election.[41] Besides, the NFL as the mother union
has the right to investigate members of its local chapter under
the federations Constitution and By-Laws, and if found guilty to
expel such members.[42] MCCHI therefore cannot be faulted for
deferring action on the CBA proposal submitted by NAMAMCCH-NFL in view of the union leaderships conflict with the
national federation. We have held that the issue of disaffiliation
is an intra-union dispute[43] which must be resolved in a different
forum in an action at the instance of either or both the federation
and the local union or a rival labor organization, not the
employer.[44]
Not being a legitimate labor organization nor the certified
exclusive bargaining representative of MCCHIs rank-and-file
employees, NAMA-MCCH-NFL cannot demand from MCCHI the
right to bargain collectively in their behalf. [45] Hence, MCCHIs
refusal to bargain then with NAMA-MCCH-NFL cannot be
considered an unfair labor practice to justify the staging of the
strike.[46]
Strike and picketing activities conducted by union officers
and members were illegal
Art. 263 (b) of the Labor Code, as amended, provides:
ART. 263. Strikes, picketing and lockouts. x x x
(b) Workers shall have the right to engage in concerted
activities for purposes of collective bargaining or for their

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

mutual benefit and protection. The right of legitimate labor


organizations to strike and picket and of employers to
lockout, consistent with the national interest, shall continue to
be recognized and respected. However, no labor union may
strike and no employer may declare a lockout on grounds
involving inter-union and intra-union disputes. x x x
x (Emphasis supplied.)
As borne by the records, NAMA-MCCH-NFL was not a
duly registered or an independently registered union at the time it
filed the notice of strike on March 13, 1996 and when it
conducted the strike vote on April 2, 1996. It could not then
legally represent the union members. Consequently, the
mandatory notice of strike and the conduct of the strike vote
report were ineffective for having been filed and conducted by
NAMA-MCCH-NFL which has no legal personality as a legitimate
labor organization, in violation of Art. 263 (c), (d) and (f) of the
Labor Code and Rule XXII, Book V of the Omnibus Rules
Implementing the Labor Code.[47]
Art. 263 of the Labor Code provides:
ART. 263. Strikes, picketing and lockouts. (a) x x x
xxxx
(c) In cases of bargaining deadlocks, the duly certified
or recognized bargaining agent may file a notice of strike or
the employer may file a notice of lockout with the Department
at least 30 days before the intended date thereof. In cases of
unfair labor practice, the period of notice shall be 15 days
and in the absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed by any
legitimate labor organization in behalf of its
members. However, in case of dismissal from employment of
union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting,
where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take

77

action immediately. (As amended by Executive Order No. 111,


December 24, 1986.)
(d) The notice must be in accordance with such
implementing rules and regulations as the Department of
Labor and Employment may promulgate.
x x x x (f) A decision to declare a strike must be
approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in
meetings or referenda called for that purpose. A decision to
declare a lockout must be approved by a majority of the board
of directors of the corporation or association or of the partners
in a partnership, obtained by secret ballot in a meeting called
for that purpose. The decision shall be valid for the duration of
the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken. The
Department may, at its own initiative or upon the request of
any affected party, supervise the conduct of the secret
balloting. In every case, the union or the employer shall
furnish the Ministry the voting at least seven days before the
intended strike or lockout, subject to the cooling-off period
herein provided. (As amended by Batas Pambansa Bilang
130, August 21, 1981 and further amended by Executive
Order No. 111, December 24, 1986.) (Emphasis supplied.)
Rule XXII, Book V of the Omnibus Rules Implementing
the Labor Code reads:
RULE XXII CONCILIATION, STRIKES AND LOCKOUTS
x x x x SEC. 6. Who may declare a strike or lockout.
Any certified or duly recognized bargaining representative may
declare a strike in cases of bargaining deadlocks and unfair
labor practices. The employer may declare a lockout in the
same cases. In the absence of a certified or duly recognized
bargaining
representative, any
legitimate
labor

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

78

organization in the establishment may declare a strike but


only on grounds of unfair labor practice. (Emphasis supplied.)

Consequences of illegal strike to union officers and


members

Furthermore, the strike was illegal due to the commission


of the following prohibited activities [48]: (1) violence, coercion,
intimidation
and harassment
against
non-participating
employees; and (2) blocking of free ingress to and egress from
the hospital, including preventing patients and their vehicles
from entering the hospital and other employees from reporting
to work, the putting up of placards with a statement
advising incoming patients to proceed to another hospital
because MCCHI employees are on strike/protest. As shown by
photographs[49] submitted by MCCHI, as well as the findings of
the NCMB and Cebu City Government, the hospital premises
and sidewalk within its vicinity were full of placards, streamers
and makeshift structures that obstructed its use by the public
who were likewise barraged by the noise coming from strikers
using
megaphones.[50] On
the other
hand,
the
[51]
affidavits executed by several hospital employees and patients
narrated in detail the incidents of harassment, intimidation,
violence and coercion, some of these witnesses have positively
identified the perpetrators. The prolonged work stoppage and
picketing activities of the striking employees severely disrupted
hospital operations that MCCHI suffered heavy financial losses.

Art. 264 (a) of the Labor Code, as amended, provides for


the consequences of an illegal strike to the participating workers:

The findings of the Executive Labor Arbiter and NLRC, as


sustained by the appellate court, clearly established that the
striking union members created so much noise, disturbance and
obstruction that the local government authorities eventually
ordered their removal for being a public nuisance. This was
followed by an injunction from the NCMB enjoining the union
leaders from further blocking the free ingress to and egress from
the hospital, and from committing threats, coercion and
intimidation against non-striking employees and patients/vehicles
desiring to enter for the purpose of seeking medical
treatment/confinement. By then, the illegal strike had lasted for
almost five months.

x x x Any union officer who knowingly participates in


illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a
strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a
lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had
been hired by the employer during such lawful strike.
The above provision makes a distinction between workers
and union officers who participate in an illegal strike: an ordinary
striking worker cannot be terminated for mere participation in an
illegal strike. There must be proof that he or she committed
illegal acts during a strike. A union officer, on the other hand,
may be terminated from work when he knowingly participates in
an illegal strike, and like other workers, when he commits an
illegal act during a strike.[52]
Considering their persistence in holding picketing activities
despite the declaration by the NCMB that their union was not
duly registered as a legitimate labor organization and the letter
from NFLs legal counsel informing that their acts constitute
disloyalty to the national federation, and their filing of the notice
of strike and conducting a strike vote notwithstanding that their
union has no legal personality to negotiate with MCCHI for
collective bargaining purposes, there is no question that NAMAMCCH-NFL officersknowingly participated in the illegal
strike. The CA therefore did not err in ruling that the termination
of union officers Perla Nava, Catalina Alsado, Albina Baez,
Hannah Bongcaras, Ernesto Canen, Jesusa Gerona and
Guillerma Remocaldo was valid and justified.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

With respect to the dismissed union members, although


MCCHI submitted photographs taken at the picket line, it did not
individually name those striking employees and specify the illegal
act committed by each of them. As to the affidavits executed by
non-striking employees, they identified mostly union officers as
the persons who blocked the hospital entrance, harassed
hospital employees and patients whose vehicles were prevented
from entering the premises. Only some of these witnesses
actually named a few union members who committed similar acts
of harassment and coercion. Consequently, we find no error
committed by the CA in CA-G.R. SP No. 66540 when it modified
the decision of the NLRC and ruled that the dismissal of union
members who merely participated in the illegal strike was
illegal. On the other hand, in CA-G.R. SP No. 84998, the CA
did not err in ruling that the dismissal of Yballe, et al. was illegal;
however, it also ordered their reinstatement with full back wages.
Dismissed union members not entitled to backwages but
should be awarded separation pay in lieu of reinstatement
Since there is no clear proof that union members actually
participated in the commission of illegal acts during the strike,
they are not deemed to have lost their employment status as a
consequence of a declaration of illegality of the strike.
Petitioners in G.R. Nos. 154113 and 187778 assail the CA
in
not
ordering
their
reinstatement
with
back
wages. Invoking stare decisis, they cited the case of Bascon v.
Court of Appeals[53] decided by this Court in 2004 and which
involved two former hospital employees who likewise sued
MCCHI after the latter terminated their employment due to their
participation in the same illegal strike led by NAMA-MCCH-NFL.
In said case we ruled that petitioners Cole and Bascon were
illegally dismissed because MCCHI failed to prove that they
committed illegal acts during the strike. We thus ordered the
reinstatement of petitioners Bascon and Cole without loss of
seniority rights and other privileges and payment of their back
wages inclusive of allowances, and other benefits computed from

79

the time they were dismissed up to the time of their actual


reinstatement. Bascon was also the basis of the award of back
wages in CA-G.R. SP No. 84998.
Stare decisis et non quieta movere. Stand by the decision
and disturb not what is settled. Under the doctrine of stare
decisis, once a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle
and apply it to all future cases where the facts are substantially
the same,[54] even though the parties may be different. It
proceeds from the first principle of justice that, absent any
powerful countervailing considerations, like cases ought to be
decided alike. Thus, where the same questions relating to the
same event have been put forward by parties similarly situated
as in a previous case litigated and decided by a competent court,
the rule of stare decisis is a bar to any attempt to relitigate the
same issue.[55]
The doctrine though is not cast in stone for upon a
showing that circumstances attendant in a particular case
override the great benefits derived by our judicial system from
the doctrine of stare decisis, the Court is justified in setting it
aside.[56] For the Court, as the highest court of the land, may be
guided but is not controlled by precedent. Thus, the Court,
especially with a new membership, is not obliged to follow blindly
a particular decision that it determines, after re-examination, to
call for a rectification.[57]
Although the Bascon case involved the very same illegal
strike in MCCHI which led to the termination of herein petitioners,
its clearly erroneous application of the law insofar only as the
award of back wages warrants setting aside the
doctrine. Indeed, the doctrine of stare decisis notwithstanding,
the Court has abandoned or overruled precedents whenever it
realized that the Court erred in the prior decisions. Afterall, more
important than anything else is that this Court should be right. [58]

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

In G & S Transport Corporation v. Infante,[59] the Court


explained the rationale for its recent rulings deleting back wages
awarded to the dismissed workers if the strike was found to be
illegal. Considering that they did not render work for the
employer during the strike, they are entitled only to
reinstatement.
With respect to backwages, the principle of a fair
days wage for a fair days labor remains as the basic
factor in determining the award thereof. If there is no work
performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to
work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. While it was found
that respondents expressed their intention to report back to
work, the latter exception cannot apply in this case.
In Philippine Marine Officers Guild v. Compaia Maritima, as
affirmed in Philippine Diamond Hotel and Resort v. Manila
Diamond Hotel Employees Union, the Court stressed that for
this exception to apply, it is required that the strike be
legal, a situation that does not obtain in the case at bar.
Under the circumstances, respondents reinstatement
without backwages suffices for the appropriate relief. If
reinstatement is no longer possible, given the lapse of
considerable time from the occurrence of the strike, the award
of separation pay of one (1) month salary for each year of
service, in lieu of reinstatement, is in order.[60] (Emphasis
supplied.)
The CA decision in CA-G.R. SP No. 66540 ordering the
payment of separation pay in lieu of reinstatement without back
wages is thus in order, to conform to the policy ofa fair days
wage for a fair days labor. The amount of separation pay is
increased to one month pay for every year of service, consistent
with jurisprudence. Accordingly, the decision in CA-G.R. SP No.
84998 is modified by deleting the award of back wages and
granting separation pay in lieu of reinstatement.

80

It is to be noted that as early as April 8, 1996, union


members who took part in the concerted activities have been
warned by management that NAMA-MCCH-NFL is not a
legitimate labor organization and its notice of strike was denied
by the NCMB, and directed to desist from further participating in
such illegal activities. Despite such warning, they continued with
their picketing activities and held more mass actions after
management sent them termination notices. The prolonged work
stoppage seriously disrupted hospital operations, which could
have eventually brought MCCHI into bankruptcy had the City
Government of Cebu not issued a demolition order and the
NLRC Region 7 not formally enjoined the prohibited picketing
activities. Also, the illegal dismissal complaints subsequently filed
by the terminated employees did not obliterate the fact that they
did not suffer loss of earnings by reason of the employers
unjustified acts, there being no unfair labor practice committed by
MCCHI. Hence, fairness and justice dictate that back wages be
denied the said employees who participated in the illegal
concerted activities to the great detriment of the employer.
Separation pay is made an alternative relief in lieu of
reinstatement in certain circumstances, like: (a) when
reinstatement can no longer be effected in view of the passage
of a long period of time or because of the realities of the
situation; (b) reinstatement is inimical to the employers interest;
(c) reinstatement is no longer feasible; (d) reinstatement does
not serve the best interests of the parties involved; (e) the
employer is prejudiced by the workers continued employment; (f)
facts that make execution unjust or inequitable have supervened;
or (g) strained relations between the employer and employee. [61]
Considering that 15 years had lapsed from the onset of
this labor dispute, and in view of strained relations that ensued,
in addition to the reality of replacements already hired by the
hospital which had apparently recovered from its huge losses,
and with many of the petitioners either employed elsewhere,
already old and sickly, or otherwise incapacitated, separation pay
without back wages is the appropriate relief. We note that during

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

the pendency of the cases in this Court, some of the petitioners


have entered into compromise agreements with MCCHI, all of
which were duly approved by this Court. Thus, excluded from
the herein monetary awards are the following petitioners whose
compromise agreements have been approved by this Court and
judgment having been entered therein: Gloria Arguilles, Romulo
Alforque, Gerna Patigdas-Barte, Daylinda Tigo Merlyn Nodado,
Ramon Tagnipis, Bernabe Lumapguid, Romeo Empuerto,
Marylen Labra, Milagros Castillo Bernadette Pontillas-Tibay,
Constancio Pagador, Nolan Alvin Panal, Edilberto Villa, Roy
Malazarte, Felecianita Malazarte and Noel Hortelano.

81

The case is hereby remanded to the Executive Labor


Arbiter for the recomputation of separation pay due to each of
the petitioners union members in G.R. Nos. 154113, 187778 and
196156 except those who have executed compromise
agreements approved by this Court. No pronouncement as to
costs. SO ORDERED.
G.R. No. 146206
August 1, 2011
SAN MIGUEL FOODS, INCORPORATED VS. SAN MIGUEL
CORPORATION SUPERVISORS and EXEMPT UNION
DECISION
PERALTA, J.:

Attorneys fees
The dismissed employees having been compelled to
litigate in order to seek redress and protect their rights, they are
entitled to reasonable attorneys fees pursuant to Art. 2208 (2) of
the Civil Code. In view of the attendant circumstances of this
case, we hold that attorneys fees in the amount of P50,000.00 is
reasonable and justified. However, the respondents in G.R. No.
196156 are not entitled to the same relief since they did not
appeal from the CA decision which did not include the award of
attorneys fees.
WHEREFORE, the petition for review on certiorari in G.R.
No. 187861 is DENIED while the petitions in G.R. Nos. 154113,
187778 and 196156 are PARTLY GRANTED. The Decision
dated October 17, 2008 of the Court of Appeals in CA-G.R. SP
No. 66540 is hereby AFFIRMED with MODIFICATIONS in that
MCCHI is ordered to pay the petitioners in G.R. Nos. 154113 and
187778, except the petitioners who are union officers, separation
pay equivalent to one month pay for every year of service, and
reasonable attorneys fees in the amount of P50,000.00. The
Decision
dated November
7,
2008 is
likewise AFFIRMED with MODIFICATIONS in that MCCHI is
ordered to pay the private respondents in G.R. No. 196156
separation pay equivalent to one month pay for every year of
service, and that the award of back wages is DELETED.

The issues in the present case, relating to the inclusion of


employees in supervisor levels 3 and 4 and the exempt
employees in the proposed bargaining unit, thereby allowing their
participation in the certification election; the application of the
community or mutuality of interests test; and the determination
of the employees who belong to the category of confidential
employees, are not novel.
In G.R. No. 110399, entitled San Miguel Corporation
Supervisors and Exempt Union v. Laguesma, [1] the Court held
that even if they handle confidential data regarding technical and
internal business operations, supervisory employees 3 and 4 and
the exempt employees of petitioner San Miguel Foods, Inc.
(SMFI) are not to be considered confidential employees,
because the same do not pertain to labor relations, particularly,
negotiation and settlement of grievances. Consequently, they
were allowed to form an appropriate bargaining unit for the
purpose of collective bargaining. The Court also declared that
the employees belonging to the three different plants of San
Miguel Corporation Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis, having community or
mutuality of interests, constitute a single bargaining unit. They
perform work of the same nature, receive the same wages and
compensation, and most importantly, share a common stake in
concerted activities. It was immaterial that the three plants have

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

different locations as they did not impede the operations of a


single bargaining representative. [2]
Pursuant to the Court's decision in G.R. No. 110399, the
Department of Labor and Employment National Capital Region
(DOLE-NCR) conducted pre-election conferences. [3] However,
there was a discrepancy in the list of eligible voters, i.e.,
petitioner submitted a list of 23 employees for the San Fernando
plant and 33 for the Cabuyao plant, while respondent listed 60
and 82, respectively.[4]
On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan
issued an Order[5] directing Election Officer Cynthia Tolentino to
proceed with the conduct of certification election in accordance
with Section 2, Rule XII of Department Order No. 9.
On September 30, 1998, a certification election was
conducted and it yielded the following results, [6] thus:
Fernando
Yes

Cabuyao
Total
Plant
23

San
Plant
23

46
No

Spoiled

Segregated

41

35

Total Votes
Cast

66

58

0
2

82

[7]

questioning the eligibility to vote by some of its employees on


the grounds that some employees do not belong to the
bargaining unit which respondent seeks to represent or that there
is no existence of employer-employee relationship with
petitioner. Specifically, it argued that certain employees should
not be allowed to vote as they are: (1) confidential employees;
(2) employees assigned to the live chicken operations, which are
not covered by the bargaining unit; (3) employees whose job
grade is level 4, but are performing managerial work and
scheduled to be promoted; (4) employees who belong to the
Barrio Ugong plant; (5) non-SMFI employees; and (6) employees
who are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order
directing respondent to submit proof showing that the employees
in the submitted list are covered by the original petition for
certification election and belong to the bargaining unit it seeks to
represent and, likewise, directing petitioner to substantiate the
allegations contained in its Omnibus Objections and Challenge to
Voters.[8]
In compliance thereto, respondent averred that (1) the
bargaining unit contemplated in the original petition is the Poultry
Division of San Miguel Corporation, now known as San Miguel
Foods, Inc.; (2) it covered the operations in Calamba, Laguna,
Cavite, and Batangas and its home base is either in Cabuyao,
Laguna or San Fernando, Pampanga; and (3) it submitted
individual and separate declarations of the employees whose
votes were challenged in the election. [9]

76
124

On the date of the election, September 30, 1998, petitioner


filed the Omnibus Objections and Challenge to Voters,

Adding the results to the number of votes canvassed


during the September 30, 1998 certification election, the final
tally showed that: number of eligible voters 149; number of
valid votes cast 121; number of spoiled ballots - 3; total number
of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) Yes votes
and 3 No votes.[10]

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The Med-Arbiter issued the Resolution [11] dated February


17, 1999 directing the parties to appear before the Election
Officer of the Labor Relations Division on March 9, 1999, 10:00
a.m., for the opening of the segregated ballots. Thereafter, on
April 12, 1999, the segregated ballots were opened, showing that
out of the 76 segregated
votes, 72 were cast for Yes and 3 for No, with one spoiled
ballot.[12]
Based on the results, the Med-Arbiter issued the
Order[13] dated April 13, 1999, stating that since the Yes vote
received 97% of the valid votes cast, respondent is certified to be
the exclusive bargaining agent of the supervisors and exempt
employees of petitioner's Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE Undersecretary, in the
Resolution[14] dated July 30, 1999, in OS-A-2-70-91 (NCR-OD-M9010-017), affirmed the Order dated April 13, 1999, with
modification that George C. Matias, Alma Maria M. Lozano,
Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded
from the bargaining unit which respondent seeks to
represent. She opined that the challenged voters should be
excluded from the bargaining unit, because Matias and Lozano
are members of Magnolia Poultry Processing Plants Monthly
Employees Union, while Delos Reyes and Pajaron are
employees of San Miguel Corporation, which is a separate and
distinct entity from petitioner.
Petitioners Partial Motion for Reconsideration [15] dated
August 14, 1999 was denied by the then Acting DOLE
Undersecretary in the Order[16] dated August 27, 1999.
In the Decision[17] dated April 28, 2000, in CA-G.R. SP No.
55510, entitled San Miguel Foods, Inc. v. The Honorable Office
of the Secretary of Labor, Bureau of Labor Relations, and San
Miguel Corporation Supervisors and Exempt Union, the Court of
Appeals (CA) affirmed with modification the Resolution dated

83

July 30, 1999 of the DOLE Undersecretary, stating that


those holding the positions of Human Resource Assistant and
Personnel Assistant are excluded from the bargaining unit.
Petitioners Motion for Partial Reconsideration [18] dated
May 23, 2000 was denied by the CA in the Resolution [19] dated
November 28, 2000.
Hence, petitioner filed this present petition raising the
following issues:
I. WHETHER THE COURT OF APPEALS DEPARTED FROM
JURISPRUDENCE WHEN IT EXPANDED THE SCOPE OF
THE BARGAINING UNIT DEFINED BY THIS COURT'S
RULING IN G.R. NO. 110399.
II. WHETHER THE COURT OF APPEALS DEPARTED FROM
JURISPRUDENCE - SPECIFICALLY, THIS COURT'S
DEFINITION OF A CONFIDENTIAL EMPLOYEE - WHEN IT
RULED FOR THE INCLUSION OF THE PAYROLL MASTER
POSITION IN THE BARGAINING UNIT.
III. WHETHER THIS PETITION IS A REHASH OR A
RESURRECTION OF THE ISSUES RAISED IN G.R. NO.
110399, AS ARGUED BY PRIVATE RESPONDENT.
Petitioner contends that with the Court's ruling in G.R. No.
110399[20] identifying the specific employees who can participate
in the certification election, i.e., the supervisors (levels 1 to 4)
and exempt employees of San Miguel Poultry Products Plants in
Cabuyao, San Fernando, and Otis, the CA erred in expanding
the scope of the bargaining unit so as to include employees who
do not belong to or who are not based in its Cabuyao or San
Fernando plants. It also alleges that the employees of the
Cabuyao, San Fernando, and Otis plants of petitioners
predecessor, San Miguel Corporation, as stated in G.R. No.
110399, were engaged in dressed chicken processing, i.e.,
handling and packaging of chicken meat, while the new

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

bargaining unit, as defined by the CA in the present case,


includes employees engaged in live chicken operations, i.e.,
those who breed chicks and grow chickens.
Respondent counters that petitioners proposed exclusion
of certain employees from the bargaining unit was a rehashed
issue which was already settled in G.R. No. 110399. It maintains
that the issue of union membership coverage should no longer
be raised as a certification election already took place on
September 30, 1998, wherein respondent won with 97% votes.
Petitioners contentions are erroneous. In G.R. No.
110399, the Court explained that the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San
Fernando, and Otis constitute a single bargaining unit, which is
not contrary to the one-company, one-union policy. An
appropriate bargaining unit is 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.[21]
In National Association of Free Trade Unions v. Mainit
Lumber Development Company Workers Union United
Lumber and General Workers of the Phils,[22] the Court, taking
into account the community or mutuality of interests test,
ordered the formation of a single bargaining unit consisting of the
Sawmill Division in Butuan City and the Logging Division in
Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit
Lumber Development Company. It held that while the existence
of a bargaining history is a factor that may be reckoned with in
determining the appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be considered. The
test of grouping is community or mutuality of interest. This is so
because the basic test of an asserted bargaining units
acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their

84

collective bargaining rights.[23] Certainly, there is a mutuality of


interest among the employees of the Sawmill Division and the
Logging Division. Their functions mesh with one another. One
group needs the other in the same way that the company needs
them both. There may be differences as to the nature of their
individual assignments, but the distinctions are not enough to
warrant the formation of a separate bargaining unit. [24]
Thus, applying the ruling to the present case, the Court
affirms the finding of the CA that there should be only one
bargaining unit for the employees in Cabuyao, San Fernando,
and Otis[25] of Magnolia Poultry Products Plant involved in
dressed chicken processing and Magnolia Poultry Farms
engaged in live chicken operations. Certain factors, such as
specific line of work, working conditions, location of work, mode
of compensation, and other relevant conditions do not affect or
impede their commonality of interest. Although they seem
separate and distinct from each other, the specific tasks of each
division are actually interrelated and there exists mutuality of
interests which warrants the formation of a single bargaining unit.
Petitioner asserts that the CA erred in not excluding the
position of Payroll Master in the definition of a confidential
employee and, thus, prays that the said position and all other
positions with access to salary and compensation data be
excluded from the bargaining unit.
This argument must fail. Confidential employees are
defined as those who (1) assist or act in a confidential capacity,
in regard (2) to persons who formulate, determine, and effectuate
management policies in the field of labor relations. [26] 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 employee and
his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations. The exclusion from
bargaining units of employees who, in the normal course of their
duties, become aware of management policies relating to labor

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

relations is a principal objective sought to be accomplished by


the confidential employee rule.[27]
A confidential employee is one entrusted with confidence
on delicate, or with the custody, handling or care and protection
of the employers property.[28] Confidential employees, such as
accounting personnel, should be excluded from the bargaining
unit, as their access to confidential information may become the
source of undue advantage.[29] However, such fact does not
apply to the position of Payroll Master and the whole gamut of
employees who, as perceived by petitioner, has access to salary
and compensation data. The CA correctly held that the position
of Payroll Master does not involve dealing with confidential labor
relations information in the course of the performance of his
functions. Since the nature of his work does not pertain to
company rules and regulations and confidential labor relations, it
follows that he cannot be excluded from the subject bargaining
unit.
Corollarily, although Article 245[30] of the Labor Code limits
the ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of
their positions or nature of work are required to assist or act in a
fiduciary manner to managerial employees and, hence, are
likewise privy to sensitive and highly confidential records.
[31]
Confidential employees are thus excluded from the rank-andfile bargaining unit. The rationale for their separate category and
disqualification to join any labor organization is similar to the
inhibition for managerial employees, because if allowed to be
affiliated with a union, the latter might not be assured of their
loyalty in view of evident conflict of interests and the union can
also become company-denominated with the presence of
managerial employees in the union membership. [32] Having
access to confidential information, confidential employees may
also become the source of undue advantage. Said employees
may act as a spy or spies of either party to a collective
bargaining agreement.[33]

85

In this regard, the CA correctly ruled that the positions of


Human Resource Assistant and Personnel Assistant belong to
the category of confidential employees and, hence, are excluded
from the bargaining unit, considering their respective positions
and
job
descriptions. As
Human
Resource Assistant,
[34]
the scope of ones work necessarily involves labor relations,
recruitment and selection of employees, access to employees'
personal files and compensation package, and human resource
management. As regards a Personnel Assistant, [35] one's work
includes the recording of minutes for management during
collective bargaining negotiations, assistance to management
during grievance meetings and administrative investigations, and
securing legal advice for labor issues from the petitioners team
of
lawyers,
and
implementation
of
company
programs. Therefore, in the discharge of their functions, both
gain access to vital labor relations information which outrightly
disqualifies them from union membership.
The proceedings for certification election are quasi-judicial
in nature and, therefore, decisions rendered in such proceedings
can attain finality.[36] Applying the doctrine of res judicata, the
issue in the
present case pertaining to the coverage of the employees who
would constitute the bargaining unit is now a foregone
conclusion.
It bears stressing that a certification election is the sole
concern of the workers; hence, an employer lacks the personality
to dispute the same. The general rule is that an employer has no
standing to question the process of certification election, since
this is the sole concern of the workers. [37] Law and policy
demand that employers take a strict, hands-off stance in
certification elections. The bargaining representative of
employees should be chosen free from any extraneous influence
of management. A labor bargaining representative, to be
effective, must owe its loyalty to the employees alone and to no

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

other.[38] The only exception is where the employer itself has to


file the petition pursuant to Article 258 [39] of the Labor Code
because of a request to bargain collectively.[40]
With the foregoing disquisition, the Court writes finis to the
issues raised so as to forestall future suits of similar nature.
WHEREFORE, the petition is DENIED. The Decision dated April
28, 2000 and Resolution dated November 28, 2000 of the Court
of Appeals, in CA-G.R. SP No. 55510, which affirmed with
modification the Resolutions dated July 30, 1999 and August 27,
1999 of the Secretary of Labor, are AFFIRMED. SO ORDERED.
G.R. Nos. 178222-23
September 29, 2010
MANILA MINING CORP. EMPLOYEES ASSOCIATIONFEDERATION OF FREE WORKERS CHAPTER, SAMUEL G.
ZUIGA vs. MANILA MINING CORP. and/or ARTEMIO F.
DISINI, President
DECISION
PEREZ, J.:
This petition for review on certiorari seeks a reversal of
the 30 June 2006 Decision [1] of the Court of Appeals in CA-G.R.
SP No. 86073 and its Resolution [2] in the same case dated 30
May 2007.
Respondent Manila Mining Corporation (MMC) is a
publicly-listed corporation engaged in large-scale mining for gold
and copper ore. MMC is required by law to maintain a tailings
containment facility to store the waste material generated by its
mining operations. Consequently, MMC constructed several
tailings dams to treat and store its waste materials. One of these
dams was Tailings Pond No. 7 (TP No. 7), which was constructed
in 1993 and was operated under a permit issued by the
Department of Environment and Natural Resources (DENR),
through its Environmental Management Bureau (EMB) in Butuan
City, Agusan del Norte.[3]

86

On 10 January 2000, eleven (11) rank-and-file employees


of MMC, who later became complainants before the labor arbiter,
attended the organizational meeting of MMC-Makati Employees
Association-Federation of Free Workers Chapter (Union). On 3
March 2000, the Union filed with the Department of Labor and
Employment
(DOLE)
all
the
requirements
for
its
registration. The Union acquired its legitimate registration status
on 30 March 2000. Subsequently, it submitted letters to MMC
relating its intention to bargain collectively. On 11 July 2001,
the Union submitted its Collective Bargaining Agreement (CBA)
proposal to MMC.
Upon expiration of the tailings permit on 25 July 2001,
DENR-EMB did not issue a permanent permit due to the inability
of MMC to secure an Environmental Compliance Certificate
(ECC). An essential component of an ECC is social acceptability
or the consent of the residents in the community to allow TP No.
7 to operate, which MMC failed to obtain.[4] Hence, it was
compelled to temporarily shut down its mining operations,
resulting in the temporary lay-off of more than 400 employees in
the mine site.
On 30 July 2001, MMC called for the suspension of
negotiations on the CBA with the Union until resumption of
mining operations.[5]
Among the employees laid-off, complainants Samuel
Zuiga, Myrna Maquio, Doroteo Torre, Arsenio Mark Perez,
Edmundo Galvez, Diana Ruth Rellores, Jonathan Araneta,
Teresita Lagman, Reynaldo Anzures, Gerardo Opena, and Edwin
Tuazon, together with the Union filed a complaint before the
labor arbiter[6] on even date praying for reinstatement, recognition
of the Union as the sole and exclusive representative of its rankand-file employees, and payment of moral and exemplary
damages and attorneys fees.[7]
In their Position Paper,[8] complainants challenged the
validity of their lay-off on the averment that MMC was not

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

suffering from business losses. They alleged that MMC did not
want to bargain collectively with the Union, so that instead of
submitting their counterproposal to the CBA, MMC decided to
terminate all union officers and active members. Petitioners
questioned the timing of their lay-off, and alleged that first, there
was no showing that cost-cutting measures were taken by MMC;
second, no criteria were employed in choosing which employees
to lay-off; and third, the individuals laid-off were those who
signed the attendance sheet of the union organizational meeting.
Petitioners likewise claimed that they were denied due process
because they were not given a 30-day notice informing them of
the lay-off. Neither was the DOLE informed of this lay-off, as
mandated by law.[9]
Respondents justified the temporary lay-off as bona fide in
character and a valid management prerogative pending the
issuance of the permit to continuously operate TP No. 7.
The labor arbiter ruled in favor of MMC and held that the
temporary shutdown of the mining operation, as well as the
temporary lay-off of the employees, is valid.[10]
On appeal, the National Labor Relations Commission
(NLRC) modified the judgment of the labor arbiter and ordered
the payment of separation pay equivalent to one month pay for
every year of service. It ratiocinated that the temporary lay-off,
which exceeded more than six (6) months, had the effect of
severance of the employer-employee relationship. The
dispositive portion of the Decision read:
WHEREFORE, the assailed decision is, as it is
hereby, Vacated and Set Aside and a new one entered
ordering respondent Manila Mining Corporation to pay
the individual complainants their separation pay
computed as follows:
1.

Samuel G. [Z]uiga From Feb. 1, 1995 to


July 27, 2001 = 7 yrs.

87

P14,300/mo.
P14,300 x 7 yrs. x

P 50,050.00
2.
Myrna Maquio
From March 1992 to
July 27, 2001 = 9 yrs.
P14,000/mo.
P14,000 x 9 yrs. x

P 63,000.00
3.
Doroteo J. Torre
From July 1983 to
July 27,
2001 = 18 yrs.
P10,000/mo.
P10,000 x 18 yrs. x
P 90,000.00
4.
Arsenio Mark M. Perez
From June 1996
to
July 27, 2001 =
5 yrs.
P9,500/mo.
P9,500 x 5 yrs. x

P 23,750.00
5.
Edmundo M. Galvez From June 1997 to
July 27, 2001 = 4 yrs.
P9,500/mo.
P9,500 x 4 yrs. x

P 19,000.00
6.
Jonathan Araneta
From March 1992 to
July 27, 2001 = 9 yrs.
P15,500/mo.
P15,500 x 9 yrs. x

P 69,750.00
7.
Teresita D. Lagman
From August 1980 to
July 27, 2001 = 20
yrs.
P10,900/mo.
P10,900 x 20 yrs. x P109,000.00
8.
Gerardo Opena
From October
1997 to

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

July 27, 2001 = 4 yrs.


P8,250/mo.
P8,250 x 4 yrs. x

P 16,500.00
9.
Edwin Tuazon
From August 1994 to
July 27, 2001 = 8 yrs.
P7,000/mo.
P7,000 x 8 yrs. x

P 28,000.00
GRAND
TOTAL
P469,050.00
In addition respondent company is hereby
ordered to pay attorneys fees to complainants
equivalent to 10% of the award. [11]
In an Order[12] dated 31 May 2004, the NLRC affirmed its
Resolution.
Dissatisfied, both parties separately filed their petitions
for certiorari with the Court of Appeals, docketed as CA-G.R. SP
No. 86073 and CA G.R. SP No. 86163.
The two petitions were consolidated upon motion by MMC
in a Resolution dated 3 February 2005.
In its Decision dated 30 June 2006, the Court of Appeals
modified the NLRC ruling, thus:
WHEREFORE, the instant petition is partially
GRANTED and the challenged Resolution dated August 29,
2003 of public respondent National Labor Relations
Commission in NLRC NCR CA No. 033111-(CA No. 03311102) is MODIFIED insofar as it holds MMC liable to pay the
Union attorneys fees equivalent to 10% of the award, which
portion of the questioned decision is now SET ASIDE.

88

The monetary award of separation pay is maintained,


but is MODIFIED from one (1) month pay for every year of
service to ONE-HALF (1/2) MONTH PAY for every year of
service, a fraction of at least six (6) months being considered
as one (1) whole year.[13]
Both parties filed their respective motions for
reconsideration but in a Resolution dated 30 May 2007, the
Court of Appeals denied the motions for lack of merit. [14]
Only the Union elevated the case to this Court via the
instant petition for review on certiorari. The Union attributes bad
faith on the part of MMC in implementing the temporary lay-off
resulting
in
the
complainants
constructive
dismissal. The Union alleges that the failure to obtain a permit to
operate TP No. 7 is largely due to failure on the part of MMC to
comply with the DENR-EMBs conditions.[15]
The Union claims that the temporary lay-off was effected
without any proper notice to the DOLE as mandated by Article
283 of the Labor Code. It further maintains that MMC did not
observe the jurisprudential criteria in the selection of the
employees to be laid-off.[16]
The Union insists that MMC is guilty of unfair labor practice
when it unilaterally suspended the negotiation for a
CBA. The Union avers that the lay-off and subsequent
termination of complainants were due to the formation of the
union at MMC.[17]
MMC defends the temporary lay-off of the employees as
valid and done in the exercise of management prerogative. It
concedes that upon expiration of the 6-month period, coupled
with losses suffered by MMC, the complainants were
constructively dismissed. However, MMC takes exception to the
application of Article 286 of the Labor Code in that the 6-month
period cannot and will not apply to the instant case in order to
consider the employees terminated and to support the payment

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

of separation pay. MMC explains that the 6-month period does


not refer to a situation where the employer does not have any
control over the nature, extent and period of the temporary
suspension of operations. MMC adds that the suspension of
MMCs operations is left primarily to the discretion of the DENREMB, which has the authority to issue MMCs permit to operate
TP No. 7.[18]
MMC further submits that where the closure is due to
serious business losses, such as in this case where the
aggregate losses amounted to over P880,000,000.00, the law
does not impose any obligation upon the employer to pay
separation benefits.[19]
With respect to the charge of unfair labor practice, MMC
avers that it merely deferred responding to the Unions letterproposal until the resumption of its mining operations. It went to
claim further that the employment relationship between the
parties was suspended at the time the request to bargain was
made.[20]
The issue of MMCs temporary suspension of business
operations resulting in the temporary lay-off of some of its
employees was squarely addressed by the labor tribunals and
the Court of Appeals. They sustained in unison the validity of the
temporary suspension, as well as the temporary lay-off.
We agree. The lay-off is neither illegal nor can it be
considered as unfair labor practice.
Despite all efforts exerted by MMC, it did not succeed in
obtaining the consent of the residents of the community where
the tailings pond would operate, one of the conditions imposed
by DENR-EMB in granting its application for a permanent
permit. It is precisely MMCs faultless failure to secure a permit
which caused the temporary shutdown of its mining
operations. As aptly put by the Court of Appeals:

89

The evidence on record indeed clearly shows that


MMCs suspension of its mining operations was bonafide and
the reason for such suspension was supported by substantial
evidence. MMC cannot conduct mining operations without a
tailings disposal system. For this purpose, MMC operates TP
No. 7 under a valid permit from the Department of
Environment and Natural Resources (DENR) through its
Environmental Management Bureau (EMB). In fact, a
Temporary Authority to Construct and Operate was issued
on January 25, 2001 in favor of MMC valid for a period of six
(6) months or until July 25, 2001. The NLRC did not dispute
MMCs claim that it had timely filed an application for renewal
of its permit to operate TP No. 7 but that the renewal permit
was not immediately released by the DENR-EMB, hence,
MMC was compelled to temporarily shutdown its milling and
mining operations. Here, it is once apparent that the
suspension of MMCs mining operations was not due to
its fault nor was it necessitated by financial
reasons. Such suspension was brought about by the nonissuance of a permit for the continued operation of TP No. 7
without which MMC cannot resume its milling and mining
operations. x x x.[21] [Emphasis supplied.]
Unfair labor practice cannot be imputed to MMC since, as
ruled by the Court of Appeals, the call of MMC for a suspension
of the CBA negotiations cannot be equated to refusal to
bargain.
Article 252 of the Labor Code defines the phrase duty to
bargain collectively, to wit:
ARTICLE 252. Meaning of duty to bargain
collectively. - The duty to bargain collectively means the
performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work
and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

under such agreements [and executing a contract incorporating


such agreements] if requested by either party but such duty
does not compel any party to agree to a proposal or to make
any concession.
For a charge of unfair labor practice to prosper, it must be
shown that the employer was motivated by ill-will, bad faith or
fraud, or was oppressive to labor. The employer must have
acted in a manner contrary to morals, good customs, or public
policy causing social humiliation, wounded feelings or grave
anxiety. While the law makes it an obligation for the employer
and the employees to bargain collectively with each other, such
compulsion does not include the commitment to precipitately
accept or agree to the proposals of the other. All it contemplates
is that both parties should approach the negotiation with an open
mind and make reasonable effort to reach a common ground of
agreement.[22]
The Union based its contention on the letter request by
MMC for the suspension of the collective bargaining negotiations
until it resumes operations.[23] Verily, it cannot be said that MMC
deliberately avoided the negotiation. It merely sought a
suspension and in fact, even expressed its willingness to
negotiate once the mining operations resume. There was valid
reliance on the suspension of mining operations for the
suspension, in turn, of the CBA negotiation. The Union failed to
prove bad faith in MMCs actuations.

90

months, or the fulfillment by the employee of a military or civic


duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the
resumption of operations of his employer or from his relief
from the military or civic duty.
Article 286 of the Labor Code allows the bona
fide suspension of operations for a period not exceeding six (6)
months. During the suspension, an employee is not deemed
terminated. As a matter of fact, the employee is entitled to be
reinstated once the employer resumes operations within the 6month period. However, Article 286 is silent with respect to the
rights of the employee if the suspension of operations lasts for
more than 6 months. Thus is bred the issue regarding the
responsibility of MMC toward its employees.
MMC subscribes to the view that for purposes of
determining employer responsibility, an employment should
likewise not be deemed terminated, should the suspension of
operation go beyond six (6) months as long as the continued
suspension is due, as in this case, to a cause beyond the control
of the employer.
We disagree.
As correctly elucidated upon by the Court of Appeals:

Even as we declare the validity of the lay-off, we cannot


say that MMC has no obligation at all to the laid-off employees.
The validity of its act of suspending its operations does not
excuse it from paying separation pay.
MMC seeks refuge in Article 286 which provides:
ART.
286. When
employment
not
deemed
terminated. The bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6)

We observe that MMC was forced by the circumstances,


hence, it resorted to a temporary suspension of its mining and
milling operations. It is clear that MMC had no choice. It
would be well to reiterate at this juncture that the reason for
such suspension cannot be attributed to DENR-EMB. It is
thus, evident, that the MMC declared temporary suspension of
operations to avert further losses.[24]

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The decision to suspend operation ultimately lies with the


employer, who in its desire to avert possible financial losses,
declares, as here, suspension of operations.
Article 283 of the Labor Code applies to MMC and it
provides:
ARTICLE 283. Closure of establishment and reduction of
personnel. - The employer may also terminate the
employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or
the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
Said provision is emphatic that an employee, who was
dismissed due to cessation of business operation, is entitled to
the separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is
higher. And it is jurisprudential that separation pay should also
be paid to employees even if the closure or cessation of
operations is not due to losses.[25]

91

The Court is not impressed with the claim that actual


severe financial losses exempt MMC from paying separation
benefits to complainants. In the first place, MMC did not appeal
the decision of the Court of Appeals which affirmed the NLRCs
award of separation pay to complainants. MMCs failure had the
effect of making the awards final so that MMC could no longer
seek any other affirmative relief. In the second place, the nonissuance of a permit forced MMC to permanently cease its
business operations, as confirmed by the Court of
Appeals. Under Article 283, the employer can lawfully close
shop anytime as long as cessation of or withdrawal from
business operations is bona fidein character and not impelled by
a motive to defeat or circumvent the tenurial rights of employees,
and as long as he pays his employees their termination pay in
the amount corresponding to their length of service. [26] The
cessation of operations, in the case at bar is of such nature. It
was proven that MMC stopped its operations precisely due to
failure to secure permit to operate a tailings pond. Separation
pay must nonetheless be given to the separated employees.
Finding no cogent reason to disturb its ruling, we affirm the
Decision of the Court of Appeals. BASED ON THE
FOREGOING, the petition is DENIED. The Decision of the Court
of Appeals is AFFIRMED. No costs. SO ORDERED.
G.R. No. 149552
March 10, 2010
GENERAL MILLING CORPORATION vs. ERNESTO CASIO et.
al.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court seeking the reversal of the Decision [1] dated
March 30, 2001 and Resolution [2] dated July 18, 2001 of the
Court of Appeals in CA-G.R. SP No. 40280, setting aside the
Voluntary Arbitration Award [3] dated August 16, 1995 of the
National Conciliation and Mediation Board (NCMB), Cebu City, in

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K.


Canonoy-Morada (Canonoy-Morada) dismissed the Complaint
filed by respondents Ernesto Casio, Rolando Igot, Mario
Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr.
and Antonio Aninipok (Casio, et al.) against petitioner General
Milling Corporation (GMC) for unfair labor practice, illegal
suspension, illegal dismissal, and payment of moral and
exemplary damages.
The labor union Ilaw at Buklod ng Mangagawa (IBM)Local 31 Chapter (Local 31) was the sole and exclusive
bargaining agent of the rank and file employees of GMC in LapuLapu City. On November 30, 1991, IBM-Local 31, through its
officers and board members, namely, respondents Virgilio Pino,
[4]
Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc,
Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto
Gonzaga, Edilberto Mendoza and Antonio Panilag (Pino, et al.),
entered into a Collective Bargaining Agreement (CBA) with
GMC. The effectivity of the said CBA was retroactive to August
1, 1991.[5]
The
provisions:

CBA

contained

the

following

union

security

Section 3. MAINTENANCE OF MEMBERSHIP All


employees/workers employed by the Company with the
exception of those who are specifically excluded by law and by
the terms of this Agreement must be members in good
standing of the Union within thirty (30) days upon the signing
of this agreement and shall maintain such membership in
good standing thereof as a condition of their employment or
continued employment.
Section 6. The Company, upon written request of the
Union, shall terminate the services of any employee/worker
who fails to fulfill the conditions set forth in Sections 3 and 4
thereof, subject however, to the provisions of the Labor Laws
of the Philippines and their Implementing Rules and
Regulations. The Union shall absolve the Company from any

92

and all liabilities, pecuniary or otherwise, and responsibilities


to any employee or worker who is dismissed or terminated in
pursuant thereof.[6]
Casio, et al. were regular employees of GMC with daily
earnings ranging from P173.75 to P201.50, and length of service
varying from eight to 25 years. [7] Casio was elected IBM-Local
31 President for a three-year term in June 1991, while his corespondents were union shop stewards.
In a letter[8] dated February 24, 1992, Rodolfo Gabiana
(Gabiana), the IBM Regional Director for Visayas and Mindanao,
furnished Casio, et al. with copies of the Affidavits of GMC
employees Basilio Inoc and Juan Potot, charging Casio, et al.
with acts inimical to the interest of the union. Through the
same letter, Gabiana gave Casio,et al. three days from receipt
thereof within which to file their answers or counteraffidavits. However, Casio, et al. refused to acknowledge receipt
of Gabianas letter.
Subsequently, on February 29, 1992, Pino, et al., as
officers and members of the IBM-Local 31, issued a
Resolution[9] expelling Casio, et al. from the union. Pertinent
portions of the Resolution are reproduced below:
Whereas, Felicisimo Booc, Rolando Igot, Procopio
Obregon, Jr., Antonio Aninipok, Mario Famador, Nelson Lim
and Ernesto Casio, through Ernesto Casio have refused to
acknowledge receipt of the letter-complaint dated February 24,
1992, requiring them to file their answer[s] or counter-affidavits
as against the charge of acts inimical to the interest of the
union and that in view of such refusal to acknowledge receipt,
a copy of said letter complaint was dropped or left in front of E.
Casio;
Whereas, the three (3)[-]day period given to file their
answer or counter-affidavit have already lapsed prompting the
union Board to investigate the charge ex parte;

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Whereas, after such ex parte investigation the said


charge has been more than adequately substantiated by the
affidavits/witnesses and documentary exhibits presented.
NOW, THEREFORE, RESOLVED as it is hereby
RESOLVED, that Ernesto Casio, Felicisimo Booc, Rolando
Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador
and Nelson Lim be expelled as union member[s] of good
standing effectively immediately.
RESOLVED FURTHER, to furnish copy of this Resolution
to the GMC Management for their information and guidance
with the recommendation as it is hereby recommended to
dismiss the above-named employees from work.
Gabiana then wrote a letter[10] dated March 10, 1992,
addressed to Eduardo Cabahug (Cabahug), GMC Vice-President
for Engineering and Plant Administration, informing the company
of the expulsion of Casio, et al. from the union pursuant to the
Resolution dated February 29, 1992 of IBM-Local 31 officers and
board members. Gabiana likewise requested that Casio, et al.
be immediately dismissed from their work for the interest of
industrial peace in the plant.
Gabiana followed-up with another letter [11] dated March 19,
1992, inquiring from Cabahug why Casio, et al. were still
employed with GMC despite the request of IBM-Local 31 that
Casio, et al. be immediately dismissed from service pursuant to
the closed shop provision in the existing CBA. Gabiana
reiterated the demand of IBM-Local 31 that GMC dismiss
Casio, et al., with the warning that failure of GMC to do so would
constitute gross violation of the existing CBA and constrain the
union to file a case for unfair labor practice against GMC.
Pressured by the threatened filing of a suit for unfair labor
practice, GMC acceded to Gabianas request to terminate the
employment of Casio, et al. GMC issued a Memorandum dated
March 24, 1992 terminating the employment of Casio, et al.
effective April 24, 1992 and placing the latter under preventive
suspension for the meantime.

93

On March 27, 1992, Casio, et al., in the name of IBMLocal 31, filed a Notice of Strike with the NCMB-Regional Office
No. VII (NCMB-RO). Casio, et al. alleged as bases for the strike
the illegal dismissal of union officers and members,
discrimination, coercion, and union busting. The NCMB-RO held
conciliation proceedings, but no settlement was reached among
the parties.[12]
Casio, et al. next sought recourse from the National Labor
Relations Commission (NLRC) Regional Arbitration Branch VII
by filing on August 3, 1992 a Complaint against GMC and
Pino, et al. for unfair labor practice, particularly, the termination of
legitimate union officers, illegal suspension, illegal dismissal, and
moral and exemplary damages. Their Complaint was docketed
as NLRC Case No. RAB-VII-08-0639-92.[13]
Finding that NLRC Case No. RAB-VII-08-0639-92 did not
undergo voluntary arbitration, the Labor Arbiter dismissed the
case for lack of jurisdiction, but endorsed the same to the NCMBRO. Prior to undergoing voluntary arbitration before the NCMBRO, however, the parties agreed to first submit the case to the
grievance machinery of IBM-Local 31. On September 7, 1994,
Casio, et al. filed their Complaint with Pino, the Acting President
of IBM-Local 31. Pino acknowledged receipt of the Complaint
and assured Casio, et al. that they would be seasonably notified
of whatever decision and/or action the Board may have in the
instant case.[14] When the IBM-Local 31 Board failed to hold
grievance proceedings on the Complaint of Casio, et al., NCMB
Voluntary Arbitrator Canonoy-Morada assumed jurisdiction over
the same. The Complaint was docketed as VA Case No. AC
389-01-01-95.
Based on the Position Papers and other documents
submitted by the parties,[15] Voluntary Arbitrator Canonoy-Morada
rendered on August 16, 1995 a Voluntary Arbitration Award
dismissing the Complaint in VA Case No. AC 389-01-01-95 for
lack of merit, but granting separation pay and attorneys fees to
Casio, et al. The Voluntary Arbitration Award presented the
following findings: (1) the termination by GMC of the employment

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

of Casio, et al. was in valid compliance with the closed shop


provision in the CBA; (2) GMC had no competence to determine
the good standing of a union member; (3) Casio, et al. waived
their right to due process when they refused to receive Gabianas
letter dated February 24, 1992, which required them to submit
their answer to the charges against them; (4) the preventive
suspension of Casio, et al. by GMC was an act of self-defense;
and (5) the IBM-Local 31 Resolution dated February 29, 1992
expelling Casio, et al. as union members, also automatically
ousted them as union officers.[16] The dispositive portion of the
Voluntary Arbitration Award reads:
WHEREFORE, above premises considered, this case
filed by [Casio, et al.] is hereby ordered DISMISSED for lack of
merit.
Since the dismissal is not for a cause detrimental to the
interest of the company, respondent General Milling
Corporation is, nonetheless, ordered to pay separation pay to
all [Casio, et al.] within seven (7) calendar days upon receipt
of this order at the rate of one-half month per year of service
reckoned from the time of their employment until the date of
their separation on March 24, 1992, thus:
Employee Date
Hired
Rate/Month
Casio
years
Igot
years
Famador
years
Lim
years
Booc
years

=
=
=
=
=

Service
Total
(1/2 mo/yr of service)

April
P47,453.22
May
P29,673.00
Feb.
P37,483.80
Aug.
P41,925.57
Aug.
P34,984.88

24/74

P2,636.29

18

1980

P2,472.75

12

1977

P2,498.92

15

1975

P2,466.21

17

1978

P2,498.92

14

Obregon
May
years
=
P18,185.84
Aninipok
Sept.
years
=
P65,400.25

94

1984

P2,273.23

08

1967

P2,616.01

25

The attorneys fees for [Casio, et al.s] counsel shall be


ten percent (10%) of the total amount due them; and shall be
shared proportionately by all of the same [Casio, et al.].
All other claims are hereby denied.[17]
Dissatisfied with the Voluntary Arbitration Award, Casio, et
al. went to the Court of Appeals by way of a Petition
for Certiorari under Rule 65 of the Rules of Court to have said
Award set aside.
The Court of Appeals granted the writ of certiorari and set
aside the Voluntary Arbitration Award. The appellate court ruled
that while the dismissal of Casio, et al., was made by GMC
pursuant to a valid closed shop provision under the CBA, the
company, however, failed to observe the elementary rules of due
process in implementing the said dismissal. Consequently,
Casio, et al. were entitled to reinstatement with backwages from
the time of their dismissal up to the time of their
reinstatement. Nevertheless, the Court of Appeals did not hold
GMC liable to Casio, et al. for moral and exemplary damages
and attorneys fees, there being no showing that their dismissal
was attended by bad faith or malice, or that the dismissal was
effected in a wanton, oppressive, or malevolent manner, given
that GMC merely accommodated the request of IBM-Local
31. The appellate court, instead, made Pino, et al. liable to
Casio, et al., for moral and exemplary damages and attorneys
fees, since it was on the basis of the imputations and actuations
of Pino, et al. that Casio, et al. were illegally dismissed from
employment. The Court of Appeals thus decreed:
WHEREFORE, the assailed award is hereby SET
ASIDE, and private respondent General Milling Corporation is
hereby ordered to reinstate [Casio, et al.] to their former

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

positions without loss of seniority rights, and to pay their full


backwages, solidarily with [Pino, et al.]. Further, [Pino, et al.]
are ordered to indemnify each of [Casio, et al.] in the form of
moral and exemplary damages in the amounts of P50,000.00
and P30,000.00, respectively, and to pay attorneys fees. [18]
The Motion for Reconsideration of GMC was denied by the
Court of Appeals in the Resolution dated July 18, 2001.
Hence, GMC filed the instant Petition for Review, arguing
that:
I. THE HONORABLE PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
OR EXCESS OF JURISDICTION WHEN IT SET ASIDE THE
AWARD OF THE VOLUNTARY ARBITRATOR, AND IN
AWARDING REINSTATEMENT AND FULL BACKWAGES TO
[Casio, et al.].
II. THE HONORABLE PUBLIC RESPONDENT COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION WHEN IT SAID THAT
PETITIONER GMC FAILED TO ACCORD DUE PROCESS TO
[Casio, et al.].

95

well supported by evidence. GMC further insists that before IBPLocal 31 expelled Casio, et al. from the union and requested
GMC to dismiss Casio, et al. from service pursuant to the closed
shop provision in the CBA, IBP-Local 31 already accorded
Casio, et al. due process, only that Casio, et al. refused to avail
themselves of such opportunity. GMC additionally maintains that
Casio, et al. were expelled by IBP-Local 31 for acts inimical to
the interest of the union, and GMC had no authority to inquire
into or rule on which employee-member is or is not loyal to the
union, this being an internal affair of the union. Thus, GMC had
to rely on the presumption that Pino, et al. regularly performed
their duties and functions as IBP-Local 31 officers and board
members, when the latter investigated and ruled on the charges
against Casio, et al.[19] GMC finally asserts that Pino, et al., the
IBP-Local 31 officers and board members who resolved to expel
Casio, et al. from the union, and not GMC, should be held liable
for the reinstatement of and payment of full backwages to
Casio, et al. for the company had acted in good faith and merely
complied with the closed shop provision in the CBA.

At this point, we take note that Pino, et al. did not appeal
from the decision of the Court of Appeals.

On the other hand, Casio, et al. counters that GMC failed


to identify the specific pieces of evidence supporting the findings
of the Voluntary Arbitrator. Casio, et al. contends that to accord
them due process, GMC itself, as the employer, should have
held proceedings distinct and separate from those conducted by
IBM-Local 31. GMC cannot justify its failure to conduct its own
inquiry using the argument that such proceedings would
constitute an intrusion by the company into the internal affairs of
the union. The claim of GMC that it had acted in good faith when
it dismissed Casio, et al. from service in accordance with the
closed shop provision of the CBA is inconsistent with the failure
of the company to accord the dismissed employees their right to
due process.

GMC avers that in reviewing and reversing the findings of


the Voluntary Arbitrator, the Court of Appeals departed from the
principle of conclusiveness of the trial judges findings. GMC
also claims that the findings of the Voluntary Arbitrator as to the
legality of the termination from employment of Casio, et al. are

In general, in a petition for review on certiorari as a mode


of appeal under Rule 45 of the Rules of Court, the petitioner can
raise only questions of law - the Supreme Court is not the proper
venue to consider a factual issue as it is not a trier of facts. A
departure from the general rule may be warranted where the

III. THE HONORABLE PUBLIC RESPONDENT COMMITTED


GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
OR EXCESS OF JURISDICTION WHEN IT DID NOT ABSOLVE
PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED
THAT IT WAS SOLIDARILY LIABLE WITH THE UNION
OFFICERS FOR THE PAYMENT OF FULL BACKWAGES TO
[Casio, et al.].

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

findings of fact of the Court of Appeals are contrary to the


findings and conclusions of the trial court [or quasi-judicial
agency, as the case may be], or when the same is unsupported
by the evidence on record.[20]
Whether Casio, et al. were illegally dismissed without any
valid reason is a question of fact better left to quasi-judicial
agencies to determine. In this case, the Voluntary Arbitrator was
convinced that Casio, et al. were legally dismissed; while the
Court of Appeals believed the opposite, because even though
the dismissal of Casio, et al. was made by GMC pursuant to a
valid closed shop provision in the CBA, the company still failed to
observe the elementary rules of due process. The Court is
therefore constrained to take a second look at the evidence on
record considering that the factual findings of the Voluntary
Arbitrator and the Court of Appeals are contradictory.
There are two aspects which characterize the concept of
due process under the Labor Code: one is substantive whether
the termination of employment was based on the provision of the
Labor Code or in accordance with the prevailing jurisprudence;
the other is procedural the manner in which the dismissal was
effected.[21]
After a thorough review of the records, the Court agrees
with the Court of Appeals. The dismissal of Casio, et al. was
indeed illegal, having been done without just cause and the
observance of procedural due process.
In Alabang Country Club, Inc. v. National Labor Relations
Commission,[22] the Court laid down the grounds for which an
employee may be validly terminated, thus:
Under the Labor Code, an employee may be validly
terminated on the following grounds: (1) just causes under Art.
282; (2) authorized causes under Art. 283; (3) termination due
to disease under Art. 284, and (4) termination by the employee
or resignation under Art. 285.

96

Another cause for termination is dismissal from


employment due to the enforcement of the union security
clause in the CBA. x x x. (Emphasis ours.)
Union security is a generic term, which is applied to and
comprehends closed shop, union shop, maintenance of
membership, or any other form of agreement which imposes
upon employees the obligation to acquire or retain union
membership as a condition affecting employment. There is
union shop when all new regular employees are required to join
the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when
employees, who are union members as of the effective date of
the agreement, or who thereafter become members, must
maintain union membership as a condition for continued
employment until they are promoted or transferred out of the
bargaining unit or the agreement is terminated. A closed shop, on
the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their
representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a
member in good standing of a union entirely comprised of or of
which the employees in interest are a part. [23]
Union security clauses are recognized and explicitly
allowed under Article 248(e) of the Labor Code, which provides
that:
Art.
248.
Unfair
Employers. x x x

Labor

Practices

of

xxxx
(e) To discriminate in regard to wages, hours of work,
and other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall
stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

employment, except those employees who are already


members of another union at the time of the signing of the
collective bargaining agreement. (Emphasis supplied.)
It is State policy to promote unionism to enable workers to
negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law
has allowed stipulations for union shop and closed shop as
means of encouraging workers to join and support the union of
their choice in the protection of their rights and interest vis-vis the employer.[24]
Moreover, a stipulation in the CBA authorizing the
dismissal of employees are of equal import as the statutory
provisions on dismissal under the Labor Code, since a CBA is
the law between the company and the union and compliance
therewith is mandated by the express policy to give protection to
labor.[25]
In terminating the employment of an employee by
enforcing the union security clause, the employer needs only to
determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient
evidence to support the decision of the union to expel the
employee from the union. These requisites constitute just cause
for terminating an employee based on the union security
provision of the CBA.[26]
There is no question that in the present case, the CBA
between GMC and IBM-Local 31 included a maintenance of
membership and closed shop clause as can be gleaned from
Sections 3 and 6 of Article II. IBM-Local 31, by written request,
can ask GMC to terminate the employment of the
employee/worker who failed to maintain its good standing as a
union member.

97

It is similarly undisputed that IBM-Local 31, through


Gabiana, the IBM Regional Director for Visayas and Mindanao,
twice requested GMC, in the letters dated March 10 and 19,
1992, to terminate the employment of Casio, et al. as a
necessary consequence of their expulsion from the union.
It is the third requisite that there is sufficient evidence to
support the decision of IBM-Local 31 to expel Casio, et al.
which appears to be lacking in this case. The full text of the
individual but identical termination letters, [27] served by GMC on
Casio, et al., is very revealing. They read:
To: [Employees Name]
From: Legal Counsel
Subject: Dismissal Upon Union Request Thru CBA Closed
Shop Provision
The company is in receipt of two letters dated March 10, 1992
and March 19, 1992 respectively from the union at the Mill in
Lapulapu demanding the termination of your employment
pursuant to the closed shop provision of our existing Collective
Bargaining Agreement. It appears from the attached
resolutions that you have been expelled from union
membership and has thus ceased to become a member in
good standing. The resolutions are signed by the same
officers who executed and signed our existing CBA, copies of
the letters and resolutions are enclosed hereto for your
reference.
The CBA in Article II provides the following:
Section 3. MAINTENANCE OF MEMBERSHIP All
employees/workers employed by the Company with the
exception of those who are specifically excluded by law and by
the terms of this Agreement must be members in good
standing of the Union within thirty (30) days upon the signing
of this agreement and shall maintain such membership in
good standing thereof as a condition of their employment or
continued employment.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Section 6. The Company, upon written request of the


Union, shall terminate the services of any employee/worker
who fails to fulfill the conditions set forth in Sections 3 and 4
thereof, subject however, to the provisions of the Labor Laws
of the Philippines and their Implementing Rules and
Regulations. The Union shall absolve the Company from any
and all liabilities, pecuniary or otherwise, and responsibilities
to any employee or worker who is dismissed or terminated in
pursuant thereof.
The provisions of the CBA are clear enough. The
termination of employment on the basis of the closed shop
provision of the CBA is well recognized in law and in
jurisprudence.
There is no valid ground to refuse to terminate. On the other
hand as pointed out in the unions strongly demanding letter
dated March 19, 1992, the company could be sued for
unfair labor practice. While we would have wanted not to
accommodate the unions request, we are left with no
other option. The terms of the CBA should be respected. To
refuse to enforce the CBA would result in the breakdown of
industrial peace and the end of harmonious relations between
the union and management. The company would face the
collective anger and enmity of its employees who are union
members.
In the light of the unions very insistent demand, verbal and in
writing and to avoid the union accusation of coddling you,
and considering the explicitly mandatory language of the
closed shop provision of the CBA, the company is constrained
to terminate your employment, to give you ample time to look
and find another employment, and/or exert efforts to become
again a member of good standing of your union, effective April
24, 1992.
In the meantime, to prevent serious danger to the life and
property of the company and of its employees, we are placing
you under preventive suspension beginning today.

98

It is apparent from the aforequoted letter that GMC


terminated the employment of Casio, et al. relying upon the
Resolution dated February 29, 1992 of Pino, et al. expelling
Casio, et al. from IBM-Local 31; Gabianas Letters dated March
10 and 19, 1992 demanding that GMC terminate the employment
of Casio, et al. on the basis of the closed shop clause in the
CBA; and the threat of being sued by IBM-Local 31 for unfair
labor practice. The letter made no mention at all of the evidence
supporting the decision of IBM-Local 31 to expel Casio, et al.
from the union. GMC never alleged nor attempted to prove that
the company actually looked into the evidence of IBM-Local 31
for expelling Casio, et al. and made a determination on the
sufficiency thereof. Without such a determination, GMC cannot
claim that it had terminated the employment of Casio, et al. for
just cause.
The failure of GMC to make a determination of the
sufficiency of evidence supporting the decision of IBM-Local 31
to expel Casio, et al. is a direct consequence of the nonobservance by GMC of procedural due process in the dismissal
of employees.
As a defense, GMC contends that as an employer, its only
duty was to ascertain that IBM-Local 31 accorded Casio, et al.
due process; and, it is the finding of the company that IBM-Local
31 did give Casio, et al. the opportunity to answer the charges
against them, but they refused to avail themselves of such
opportunity.
This argument is without basis.
The Court has stressed time and again that allegations
must be proven by sufficient evidence because mere allegation
is definitely not evidence.[28] Once more, in Great Southern
Maritime Services Corporation. v. Acua,[29] the Court declared:
Time and again we have ruled that in illegal dismissal
cases like the present one, the onus of proving that the
employee was not dismissed or if dismissed, that the dismissal
was not illegal, rests on the employer and failure to discharge

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

the same would mean that the dismissal is not justified and
therefore illegal. Thus, petitioners must not only rely on the
weakness of respondents evidence but must stand on the
merits of their own defense. A party alleging a critical fact
must support his allegation with substantial evidence for
any decision based on unsubstantiated allegation cannot
stand as it will offend due process. x x x. (Emphasis
supplied.)
The records of this case are absolutely bereft of any
supporting evidence to substantiate the bare allegation of GMC
that Casio, et al. were accorded due process by IBM-Local
31. There is nothing on record that would indicate that IBMLocal 31 actually notified Casio, et al. of the charges against
them or that they were given the chance to explain their side. All
that was stated in the IBM-Local 31 Resolution dated February
29, 1992, expelling Casio, et al. from the union, was that a copy
of the said letter complaint [dated February 24, 1992] was
dropped or left in front of E. Casio. [30] It was not established that
said letter-complaint charging Casio, et al. with acts inimical to
the interest of the union was properly served upon Casio, that
Casio willfully refused to accept the said letter-notice, or that
Casio had the authority to receive the same letter-notice on
behalf of the other employees similarly accused. Its worthy to
note that Casio, et al. were expelled only five days after the
issuance of the letter-complaint against them. The Court cannot
find proof on record when the three-day period, within which
Casio, et al. was supposed to file their answer or counteraffidavits, started to run and had expired. The Court is likewise
unconvinced that the said three-day period was sufficient for
Casio, et al. to prepare their defenses and evidence to refute the
serious charges against them.
Contrary to the position of GMC, the acts of Pino, et al. as
officers and board members of IBM-Local 31, in expelling
Casio, et al. from the union, do not enjoy the presumption of
regularity in the performance of official duties, because the
presumption applies only to public officers from the highest to the

99

lowest in the service of the Government, departments, bureaus,


offices, and/or its political subdivisions.[31]
More importantly, in Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc.,[32] the Court issued the following
reminder to employers:
The power to dismiss is a normal prerogative of the
employer. However, this is not without limitations. The
employer is bound to exercise caution in terminating the
services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective
Bargaining Agreement. x x x. Dismissals must not be arbitrary
and capricious. Due process must be observed in dismissing
an employee because it affects not only his position but also
his means of livelihood. Employers should therefore respect
and protect the rights of their employees, which include the
right to labor. x x x.
The Court reiterated in Malayang Samahan ng mga
Manggagawa sa M. Greenfield v. Ramos [33] that:
While respondent company may validly dismiss the
employees expelled by the union for disloyalty under the union
security clause of the collective bargaining agreement upon
the recommendation by the union, this dismissal should not be
done hastily and summarily thereby eroding the employees
right to due process, self-organization and security of
tenure. The enforcement of union security clauses is
authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due
process. Even on the assumption that the federation had valid
grounds to expel the union officers, due process requires
that these union officers be accorded a separate hearing
by respondent company. (Emphases supplied.)
The twin requirements of notice and hearing constitute the
essential elements of procedural due process. The law requires
the employer to furnish the employee sought to be dismissed
with two written notices before termination of employment can be

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

legally effected: (1) a written notice apprising the employee of the


particular acts or omissions for which his dismissal is sought in
order to afford him an opportunity to be heard and to defend
himself with the assistance of counsel, if he desires, and (2) a
subsequent notice informing the employee of the employers
decision to dismiss him. This procedure is mandatory and its
absence taints the dismissal with illegality.[34]
Irrefragably, GMC cannot dispense with the requirements
of notice and hearing before dismissing Casio, et al. even when
said dismissal is pursuant to the closed shop provision in the
CBA. The rights of an employee to be informed of the charges
against him and to reasonable opportunity to present his side in
a controversy with either the company or his own union are not
wiped away by a union security clause or a union shop clause in
a collective bargaining agreement. An employee is entitled to be
protected not only from a company which disregards his rights
but also from his own union the leadership of which could yield to
the temptation of swift and arbitrary expulsion from membership
and hence dismissal from his job.[35]
In the case at bar, Casio, et al. did not receive any other
communication from GMC, except the written notice of
termination dated March 24, 1992. GMC, by its own admission,
did not conduct a separate and independent investigation to
determine the sufficiency of the evidence supporting the
expulsion of Casio, et al. by IBP-Local 31. It straight away
acceded to the demand of IBP-Local 31 to dismiss Casio, et al.
The very same circumstances took place in Liberty Cotton
Mills, wherein the Court held that the employer-company acted in
bad faith in dismissing its workers without giving said workers an
opportunity to present their side in the controversy with their
union, thus:
While respondent company, under the Maintenance of
Membership provision of the Collective Bargaining Agreement,
is bound to dismiss any employee expelled by PAFLU for
disloyalty, upon its written request, this undertaking should not

100

be done hastily and summarily. The company acted in bad


faith in dismissing petitioner workers without giving them
the benefit of a hearing. It did not even bother to inquire
from the workers concerned and from PAFLU itself about
the cause of the expulsion of the petitioner
workers. Instead, the company immediately dismissed the
workers on May 30, 1964 after its receipt of the request of
PAFLU on May 29, 1964 in a span of only one day stating
that it had no alternative but to comply with its obligation under
the Security Agreement in the Collective Bargaining
Agreement, thereby disregarding the right of the workers to
due process, self-organization and security of tenure.
[36]
(Emphasis ours.)
In sum, the Court finds that GMC illegally dismissed
Casio, et al. because not only did GMC fail to make a
determination of the sufficiency of evidence to support the
decision of IBM-Local 31 to expel Casio, et al., but also to accord
the expelled union members procedural due process, i.e., notice
and hearing, prior to the termination of their employment
Consequently, GMC cannot insist that it has no liability for
the payment of backwages and damages to Casio, et al., and
that the liability for such payment should fall only upon Pino, et
al., as the IBP-Local 31 officers and board members who
expelled Casio, et al. GMC completely missed the point that the
expulsion of Casio, et al. by IBP-Local 31 and the termination of
employment of the same employees by GMC, although related,
are two separate and distinct acts. Despite a closed shop
provision in the CBA and the expulsion of Casio, et al. from IBPLocal 31, law and jurisprudence imposes upon GMC the
obligation to accord Casio, et al. substantive and procedural due
process before complying with the demand of IBP-Local 31 to
dismiss the expelled union members from service. The failure of
GMC to carry out this obligation makes it liable for illegal
dismissal of Casio, et al.
In Malayang Samahan ng mga Manggagawa sa M.
Greenfield,[37] the Court held that notwithstanding the fact that the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

dismissal was at the instance of the federation and that the


federation undertook to hold the company free from any liability
resulting from the dismissal of several employees, the company
may still be held liable if it was remiss in its duty to accord the
would-be dismissed employees their right to be heard on the
matter.
An employee who is illegally dismissed is entitled to the
twin reliefs of full backwages and reinstatement. If reinstatement
is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in
lieu of reinstatement, the amount to be awarded shall be
equivalent to one month salary for every year of service. Under
Republic Act No. 6715, employees who are illegally dismissed
are entitled to full backwages, inclusive of allowances and other
benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time
of their actual reinstatement but if reinstatement is no longer
possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Thus,
Casio, et al. are entitled to backwages and separation pay
considering that reinstatement is no longer possible because the
positions they previously occupied are no longer existing, as
declared by GMC.[38]
Casio, et al., having been compelled to litigate in order to
seek redress for their illegal dismissal, are entitled to the award
of attorneys fees equivalent to 10% of the total monetary award.
[39]
WHEREFORE, the instant petition is hereby DENIED. The
assailed decision of the Court of Appeals dated March 30, 2001
in CA-G.R. SP No. 40280 is AFFIRMED. SO ORDERED.
G.R. No. 58768-70 December 29, 1989
LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO
and POLICARPIO BIASCAN vs. LIBERTY FLOUR MILLS, INC.
PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) and

NATIONAL
LABOR
(NLRC), respondents.
CRUZ, J.:

RELATIONS

101

COMMISSION,

In this petition for certiorari, the resolution of the public


respondent dated August 3, 1978, is faulted for: (a) affirming the
decision of the labor arbiter dismissing the employees' claim for
emergency allowance for lack of jurisdiction; and (b) modifying
the said decision by disallowing the award of back wages to
petitioners Policarpio Biascan and Antonio Evaristo.
The basic facts are as follows:
On February 6, 1974, respondent Philippine Labor Alliance
Council (PLAC) and respondent Liberty Flour Mills, Inc. entered
into a three-year collective bargaining agreement effective
January 1, 1974, providing for a daily wage increase of P2.00 for
1974, Pl.00 for 1975 and another Pl.00 for 1976. The agreement
contained a compliance clause, which will be explained later in
this opinion. Additionally, the parties agreed to establish a union
shop by imposing "membership in good standing for the duration
of the CBA as a condition for continued employment" of
workers. 1
On October 18, 1974, PLAC filed a complaint against the
respondent company for non-payment of the emergency cost of
living allowance under P.D. No. 525. 2 A similar complaint was
filed on March 4, 1975, this time by the petitioners, who
apparently were already veering away from PLAC. 3
On March 20, 1975, petitioners Evaristo and Biascan, after
organizing a union caged the Federation of National Democratic
Labor Unions, filed with the Bureau of Labor Relations a petition
for certification election among the rank-and-file employees of
the respondent company 4 PLAC then expelled the two for
disloyalty and demanded their dismissal by the respondent
company, which complied on May 20, 1975. 5

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The objection of Evaristo and Biascan to their termination were


certified for compulsory arbitration and assigned to Labor Arbiter
Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency
allowance were referred for voluntary arbitration to Edmundo
Cabal, who eventually dismissed the same on the ground that
the allowances were already absorbed by the wage increases.
This latter case was ultimately also certified for compulsory
arbitration and consolidated with the termination case being
heard by Lomabao. His decision was, on appeal, dealt with by
the NLRC as above stated, 6 and the motion for reconsideration
was denied on August 26, 1981. 7

102

In spite of statutory provisions making "final" the decision of


certain administrative agencies, we have taken cognizance of
petitions questioning these decisions where want of jurisdiction,
grave abuse of discretion, violation of due process, denial of
substantial justice, or erroneous interpretation of the law were
brought to our attention. xxx xxx xxx
A voluntary arbitrator by the nature of her functions acts in a
quasi-judicial capacity. There is no reason why her decisions
involving interpretation of law should be beyond this Court's
review. Administrative officials are presumed to act in
accordance with law and yet we do not hesitate to pass upon
their work where a question of law is involved or where a
showing of abuse of authority or discretion in their official acts
is properly raised in petitions for certiorari.

At the outset, we note that the petitioners are taking an


ambivalent position concerning the CBA concluded in 1974.
While claiming that this was entered into in bad faith and to
forestall the payment of the emergency allowances expected to
be decreed, they nonetheless invoke the same agreement to
support their contention that their complaint for emergency
allowances was invalidly referred to voluntary arbitrator Cabal
rather than Froilan M. Bacungan.

Accordingly, the validity of the voluntary arbiter's finding that the


emergency allowance sought by the petitioners are already
absorbed in the stipulated wage increases will now be examined
by the Court itself.

We find there was no such violation as the choice of the


voluntary arbitrator was not limited to Bacungan although he was
probably the first preference. Moreover, the petitioners are
estopped from raising this objection now because they did not
seasonably interpose it and instead willingly submitted to Cabal's
jurisdiction when he undertook to hear their complaint.

The position of the company is that the emergency allowance


required by P.D. No. 525 is already covered by the wage
increases prescribed in the said CBA. Furthermore, pursuant to
its Article VIII, such allowances also include all other statutory
minimum wage increases that might be decreed during the
lifetime of the said agreement.

In sustaining Labor Arbiter Lomabao, the NLRC agreed that the


decision of voluntary Arbiter Cabal was final and unappealable
under Article 262-A of the Labor Code and so could no longer be
reviewed by it. True enough. However, it is equally true that the
same decision is not binding on this Court, as we held
in Oceanic Bic Division (FFW) v. Romero 8 and reiterated
in Mantrade/FMMC Division Employees and Workers Union v.
Bacungan. 9 The rule as announced in these cases is reflected in
the following statements:

That agreement provided in Section 2 thereof as follows:


Section 2. The wage increase in the amounts and during the
period above set forth shall, in the event of any statutory
increase of the minimum wage, either as allowance or as basic
wage, during the life of this Agreement, be considered
compliance and payment of such required statutory increase as
far as it will go and under no circumstances will it be cumulative
nor duplication to the differential amount involved consequent
to such statutory wage increase.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The Court holds that such allowances are indeed absorbed by


the wage increases required under the agreement. This is
because Section 6 of the Interpretative Bulletin on LOI No. 174
specifically provides:
Sec. 6. Allowances under LOI. -All allowances, bonuses,
wage adjustments and other benefits given by employers to
their employees shall be treated by the Department of Labor as
in substantial compliance with the minimum standards set forth
in LOI No. 174 if:
(a) they conform with at least the minimum allowances scales
specified in the immediately preceding Section; and
(b) they are given in response to the appeal of the President in
his speech on 4 January 1974, or to countervail the quantum
jump in the cost of living as a result of the energy crisis starting
in November 1973, or pursuant to Presidential Decree No. 390;
Provided, That the payment is retroactive to 18 February 1974
or earlier.
The allowances and other benefits may be granted unilaterally
by the employer or through collective bargaining, and may be
paid at the same time as the regular wages of the employees.
Allowances and other benefits which are not given in
substantial compliance with the LOI as interpreted herein shall
not be treated by the Department of Labor as emergency
allowances in the contemplation of the LOI unless otherwise
shown by sufficient proof. Thus, without such proof, escalation
clauses in collective bargaining agreements concluded before
the appeal of the President providing for automatic or periodic
wage increases shall not be considered allowances for
purposes of the LOI. (Emphasis supplied.)
The "immediately preceding section" referred to above states:

103

SEC. 5. Determination of Amount of Allowances. In


determining the amount of allowances that should be given by
employers to meet the recommended minimum standards, the
LOI has classified employers into three general categories. As an
implementation policy, the Department of Labor shall consider as
sufficient compliance with the scales of allowances
recommended by the LOI if the following monthly allowances are
given by employers:
(a) P50.00 or higher where the authorized capital stock of the
corporation, or the total assets in the case of other
undertakings, exceeds P 1 million;
(b) P 30.00 or higher where the authorized capital stock of the
corporation, or the total assets in the case of other
undertakings, is not less than P100,000.00 but not more than
P1million; and
(c) P15.00 or higher where the authorized capital stock or total
assets, as the case may be, is less than P100,000.00.
It is not denied that the company falls under paragraph (a), as it
has a capitalization of more than P l million, 10and so must pay a
minimum allowance of P50.00 a month. This amount is clearly
covered by the increases prescribed in the CBA, which required
a monthly increase (on the basis of 30 days) of P60.00 for 1974,
to be increased by P30.00 in 1975 (to P90.00) and another P
30.00 in 1976 (to P120.00). The first increase in 1974 was
already above the minimum allowance of P50.00, which was
exceeded even more with the increases of Pl.00 for each of the
next two years.
Even if the basis used were 26 days a month (excluding
Sundays), the conclusion would remain unchanged as the raise
in wage would be P52.00 for 1974, which amount was increased
to P78.00 in 1975 and to P104.00 in 1976.
But the petitioners contend that the wage increases were the
result of negotiation undertaken long before the promulgation of
P.D. No. 525 and so should not be considered part of the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

emergency allowance decreed. In support of this contention, they


cite Section 15 of the Rules implementing P.D. No. 525,
providing as follows:
Nothing herein shall prevent the employer and his employees,
from entering into any agreement with terms more favorable to
the employees than those provided herein, or be construed to
sanction the diminution of any benefits granted to the
employees under existing laws, agreements, and voluntary
practice.
Obviously, this section should not be read in isolation but must
be related to the other sections above-quoted, to give effect to
the intent and spirit of the decree. The meaning of the section
simply is that any benefit over and above the prescribed
allowances may still be agreed upon by the employees and the
employer or, if already granted, may no longer be withdrawn or
diminished.
The petitioners also maintain that the above-quoted Section 2 of
CBA is invalid because it constitutes a waiver by the laborers of
future benefits that may be granted them by law. They contend
this cannot be done because it is contrary to public policy.
While the principle is correct, the application is not, for there are
no benefits being waived under the provision. The benefits are
already included in the wage increases. It is the law itself that
considers these increases, under the conditions prescribed in
LOI No. 174, as equivalent to, or in lieu of, the emergency
allowance granted by P.D. No. 525.
In fact, the company agreed to grant the emergency allowance
even before the obligation was imposed by the government.
What the petitioners claim they are being made to waive is the
additional P50.00 allowance but the truth is that they are not
entitled to this because they are already enjoying the stipulated
increases. There is no waiver of these increases.

104

Moreover, Section 2 provides that the wage increase shall be


considered payment of any statutory increase of the minimum
wage "as far as it will go," which means that any amount not
covered by such wage increase will have to be made good by
the company. In short, the difference between the stipulated
wage increase and the statutory minimum wage will have to be
paid by the company notwithstanding and, indeed, pursuant to
the said article. There is no waiver as to this.
Curiously, Article 2 was produced verbatim in the collective
bargaining agreement concluded by the petitioners with the
company in 1977 after PLAC had been replaced by the new
labor union formed by petitioners Evaristo and Biascan. 11 It is
difficult to understand the petitioners' position when they blow hot
and cold like this.
Coming now to the second issue, we find that it must also be
resolved against the petitioners.
Evaristo and Biascan claim they were illegally dismissed for
organizing another labor union opposed to PLAC, which they
describe as a company union. Arguing that they were only
exercising the right to self organization as guaranteed by the
Constitution, they insist they are entitled to the back wages which
the NLRC disallowed while affirming their reinstatement.
In its challenged decision, the public respondent held that in
demanding the dismissal of Evaristo and Biascan, PLAC had
acted prematurely because the 1974 CBA providing for union
shop and pursuant to which the two petitioners were dismissed
had not yet been certified. 12 The implication is that it was not yet
in effect and so could not be the basis of the action taken against
the two petitioners. This conclusion is erroneous. It disregards
the ruling of this Court in Tanduay Distillery Labor Union v.
NLRC, 13 were we held:
The fact, therefore, that the Bureau of Labor Relations (BLR)
failed to certify or act on TDLU's request for certification of the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

CBA in question is of no moment to the resolution of the issues


presented in this case. The BLR itself found in its order of July
8, 1982, that the (un)certified CBA was duly filed and submitted
on October 29, 1980, to last until June 30, 1982 is certifiable for
having complied with all the requirements for certification.
(Emphasis supplied.)
The CBA concluded in 1974 was certifiable and was in fact
certified on April 11, 1975, It bears stressing that Evaristo and
Biascan were dismissed only on May 20, 1975, more than a
month after the said certification.
The correct view is that expressed by Commissioner Cecilio P.
Seno in his concurring and dissenting opinion, 14viz.:
I cannot however subscribe to the majority view that the
'dismissal of complainants Biascan and Evaristo, ... was, to say
the least, a premature action on the part of the respondents
because at the time they were expelled by PLAC the contract
containing the union security clause upon which the action was
based was yet to be certified and the representation status of
the contracting union was still in question.
Evidence on record show that after the cancellation of the
registration certificate of the Federation of Democratic Labor
Unions, no other union contested the exclusive representation
of the Philippine Labor Alliance Council (PLAC), consequently,
there was no more legal impediment that stood on the way as
to the validity and enforceability of the provisions of the
collective bargaining agreement entered into by and between
respondent corporation and respondent union. The certification
of the collective bargaining agreement by the Bureau of Labor
Relations is not required to put a stamp of validity to such
contract. Once it is duly entered into and signed by the parties,
a collective bargaining agreement becomes effective as
between the parties regardless of whether or not the same has
been certified by the BLR.

105

To be fair, it must be mentioned that in the certification election


held at the Liberty Flour Mills, Inc. on December 27, 1976, the
Ilaw at Buklod ng Manggagawa, with which the union organized
by Biascan and Evaristo was affiliated, won overwhelmingly with
441 votes as against the 5 votes cast for PLAC. 15 However, this
does not excuse the fact that the two disaffiliated from PLAC as
early as March 1975 and thus rendered themselves subject to
dismissal under the union shop clause in the CBA.
The petitioners say that the reinstatement issue of Evaristo and
Biascan has become academic because the former has been
readmitted and the latter has chosen to await the resolution of
this case. However, they still insist on the payment of their back
wages on the ground that their dismissal was illegal. This claim
must be denied for the reasons already given. The union shop
clause was validly enforced against them and justified the
termination of their services.
It is the policy of the State to promote unionism to enable the
workers to negotiate with management on the same level and
with more persuasiveness than if they were to individually and
independently bargain for the improvement of their respective
conditions. To this end, the Constitution guarantees to them the
rights "to self-organization, collective bargaining and negotiations
and peaceful concerted actions including the right to strike in
accordance with law." There is no question that these purposes
could be thwarted if every worker were to choose to go his own
separate way instead of joining his co-employees in planning
collective action and presenting a united front when they sit down
to bargain with their employers. It is for this reason that the law
has sanctioned stipulations for the union shop and the closed
shop as a means of encouraging the workers to join and support
the labor union of their own choice as their representative in the
negotiation of their demands and the protection of their interest
vis-a-vis the employer.
The Court would have preferred to resolve this case in favor of
the petitioners, but the law and the facts are against them. For all

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

106

the concern of the State, for the well-being of the worker, we


must at all times conform to the requirements of the law as long
as such law has not been shown to be violative of the
Constitution. No such violation has been shown here.
WHEREFORE, the petition is DISMISSED, without any
pronouncement as to costs. It is so ordered.

basis of the union security clause of their collective bargaining


agreement and the Hotel acceded by placing Beloncio on forced
leave effective August 10, 1984.

G.R. No. 76989 September 29, 1987


MANILA MANDARIN EMPLOYEES UNION vs. NATIONAL
LABOR RELATIONS COMMISSION, and MELBA C.
BELONCIO
GUTIERREZ, JR., J.:

Section 2. Dismissals.
xxx xxx xxx
b) Members of the Union who cease to be such members
and/or who fail to maintain their membership in good standing
therein by reason of their resignation from the Union and/or by
reason of their expulsion from the Union in accordance with the
Constitution and By-Laws of the Union, for non-payment of
union dues and other assessment for organizing, joining or
forming another labor organization shall, upon written notice of
such cessation of membership or failure to maintain
membership in the Union and upon written demand to the
company by the Union, be dismissed from employment by the
Company after complying with the requisite due process
requirement; ... (Emphasis supplied) (Rollo, p. 114)

This is a petition to review on certiorari the National Labor


Relations Commission's (NLRC) decision which modified the
Labor Arbiter's decision and ordered the Manila Mandarin
Employees Union to pay the wages and fringe benefits of Melba
C. Beloncio from the time she was placed on forced leave until
she is actually reinstated, plus ten percent (10%) thereof as
attorney's fees. Manila Mandarin Hotel was ordered to reinstate
Beloncio and to pay her whatever service charges may be due
her during that period, which amount would be held in escrow by
the hotel.
The petition was filed on January 19, 1987. The private
respondent filed her comment on March 7, 1987 while the
Solicitor General filed a comment on June 1, 1987 followed by
the petitioner's reply on August 22, 1987. We treat the comment
as answer and decide the case on its merits.

The union security clause of the collective bargaining agreement


provides:

Two days before the effective date of her forced leave or on


August 8, 1984, Beloncio filed a complaint for unfair labor
practice and illegal dismissal against herein petitioner-union and
Manila Mandarin Hotel Inc. before the NLRC, Arbitration Branch.
Petitioner-union filed a motion to dismiss on grounds that the
complainant had no cause of action against it and the NLRC had
no jurisdiction over the subject matter of the complaint.

The facts of the case are undisputed.


This motion was denied by the Labor Arbiter.
Herein private respondent, Melba C. Beloncio, an employee of
Manila Mandarin Hotel since 1976 and at the time of her
dismissal, assistant head waitress at the hotel's coffee shop, was
expelled from the petitioner Manila Mandarin Employees Union
for acts allegedly inimical to the interests of the union. The union
demanded the dismissal from employment of Beloncio on the

After the hearings that ensued and the submission of the parties'
respective position papers, the Labor Arbiter held that the union
was guilty of unfair labor practice when it demanded the
separation of Beloncio. The union was then ordered to pay all the
wages and fringe benefits due to Beloncio from the time she was

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

on forced leave until actual reinstatement, and to pay P30,000.00


as exemplary damages and P10,000.00 as attorney's fees. The
charge against the hotel was dismissed.

107

discussion regarding Beloncio's efforts to make a lazy and


recalcitrant waiter adopt a better attitude towards his work.
We agree with the Solicitor General when he noted that:

The Union then appealed to the respondent NLRC which


modified the Labor Arbiter's decision as earlier stated.
A subsequent motion for reconsideration and a second motion
for reconsideration were denied.
Hence, this present petition.
The petitioner raises the following assignment of errors:
I. THAT RESPONDENT NLRC ERRED IN NOT DECLARING
THAT THE PRESENT CONTROVERSY INVOLVED INTRAUNION CONFLICTS AND THEREFOR IT HAS NO
JURISDICTION OVER THE SUBJECT-MATTER THEREOF.
II. THAT RESPONDENT NLRC SERIOUSLY ERRED IN
HOLDING PETITIONER LIABLE FOR THE PAYMENT OF
PRIVATE RESPONDENT'S SALARY AND FRINGE BENEFITS,
AND AWARD OF 10% ATTORNEY'S FEES, AFTER FINDING
AS UNMERITORIOUS HER PRETENDED CLAIMS OR
COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL
DISMISSAL, AND DAMAGES. (Rollo, pp. 6-9)
On the issue of the NLRC jurisdiction over the case, the Court
finds no grave abuse of discretion in the NLRC conclusion that
the dispute is not purely intra-union but involves an interpretation
of the collective bargaining agreement (CBA) provisions and
whether or not there was an illegal dismissal. Under the CBA,
membership in the union may be lost through expulsion only if
there is non-payment of dues or a member organizes, joins, or
forms another labor organization. The charge of disloyalty
against Beloncio arose from her emotional remark to a waitress
who happened to be a union steward, "Wala akong tiwala sa
Union ninyo." The remark was made in the course of a heated

... The Labor Arbiter explained correctly that "(I)f the only
question is the legality of the expulsion of Beloncio from the
Union undoubtedly, the question is one cognizable by the BLR
(Bureau of Labor Relations). But, the question extended to the
dismissal of Beloncio or steps leading thereto. Necessarily,
when the hotel decides the recommended dismissal, its acts
would be subject to scrutiny. Particularly, it will be asked
whether it violates or not the existing CBA. Certainly, violations
of the CBA would be unfair labor practice."
Article 250 of the Labor Code provides the following:
Art. 250. Unfair labor practices of labor organizations. It shall
be unfair labor practice for a labor organization, its officers,
agents or representatives: xxx xxx xxx
(b) To cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an
employee with respect to whom membership in such
organization has been denied or to terminate an employee on
any ground other than the usual terms and conditions under
which membership or continuation of membership is made
available to other members. (Emphasis supplied)
Article 217 of the Labor Code also provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission
(a) The Labor Arbiters shall have the original and exclusive
jurisdiction to hear and decide ... the following cases involving
all workers, whether agricultural or nonagricultural;
(1) Unfair labor practice cases; xxx xxx xxx

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

108

(b) The Commission shall have exclusive appellate jurisdiction


over all cases decided by Labor Arbiters. (Rollo, pp. 155-157.)

forced leave and to stop payment of her salary from September


1, 1984.

The petitioner also questions the factual findings of the public


respondent on the reasons for Beloncio's dismissal and,
especially, on the argument that she was on forced leave; she
was never dismissed; and not having worked, she deserved no
pay.

Furthermore, as provided for in the collective bargaining


agreement between the petitioner-the Union and the Manila
Mandarin Hotel "the Union shall hold the Company free and
blameless from any and all liabilities that may arise" should the
employee question the dismissal, as has happened in the case
at bar.

The Court finds nothing in the records that indicates reversible


error, much less grave abuse of discretion, in the NLRC's
findings of facts.
It is a well-settled principle that findings of facts quasi-judicial
agencies like the NLRC, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally
accorded not only respect but at times even finality if such
findings are supported by substantial evidence. (Akay Printing
Press vs. Minister of Labor and Employment, 140 SCRA 381;
Alba Patio de Makati vs. Alba Patio de Makati Employees
Association, 128 SCRA 253; Dangan vs. National Labor
Relations Commission, 127 SCRA 706; De la Concepcion vs.
Mindanao Portland Cement Corporation, 127 SCRA 647).
The petitioner now questions the decision of the National Labor
Relations Commission ordering the reinstatement of the private
respondent and directing the Union to pay the wages and fringe
benefits which she failed to receive as a result of her forced
leave and to pay attorney's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio to go on forced
leave were it not for the union's insistence and demand to the
extent that because of the failure of the hotel to dismiss Beloncio
as requested, the union filed a notice of strike with the Ministry of
Labor and Employment on August 17, 1984 on the issue of unfair
labor practice. The hotel was then compelled to put Beloncio on

It is natural for a union to desire that all workers in a particular


company should be its dues-paying members. Since it would be
difficult to insure 100 percent membership on a purely voluntary
basis and practically impossible that such total membership
would continuously be maintained purely on the merits of
belonging to the union, the labor movement has evolved the
system whereby the employer is asked, on the strength of
collective action, to enter into what are now familiarly known as
"union security" agreements.
The collective bargaining agreement in this case contains a
union security clause a closed-shop agreement.
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 welds
group solidarity. (National Labor Union vs. Aguinaldo's Echague,
Inc., 97 Phil. 184). It is a very effective form of union security
agreement.
This Court has held that a closed-shop is 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. (Lirag Textile Mills,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

109

Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development
Company, Inc., 21 SCRA 561).

LEONARDO-DE CASTRO, J.:

The Court stresses, however, that union security clauses are


also governed by law and by principles of justice, fair play, and
legality. Union security clauses cannot be used by union officials
against an employer, much less their own members, except with
a high sense of responsibility, fairness, prudence, and
judiciousness.

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.

A union member may not be expelled from her union, and


consequently from her job, for personal or impetuous reasons or
for causes foreign to the closed-shop agreement and in a
manner characterized by arbitrariness and whimsicality.
This is particularly true in this case where Ms. Beloncio was
trying her best to make a hotel bus boy do his work promptly and
courteously so as to serve hotel customers in the coffee shop
expeditiously and cheerfully. Union membership does not entitle
waiters, janitors, and other workers to be sloppy in their work,
inattentive to customers, and disrespectful to supervisors. The
Union should have disciplined its erring and troublesome
members instead of causing so much hardship to a member who
was only doing her work for the best interests of the employer, all
its employees, and the general public whom they serve.
WHEREFORE, the petition is hereby DISMISSED. The
questioned decision of the National Labor Relations Commission
is AFFIRMED. Costs against the petitioner. SO ORDERED.

G.R. No. 164301


August 10, 2010
BANK OF THE PHILIPPINE ISLANDS vs. BPI EMPLOYEES
UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI
UNIBANK
DECISION

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.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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 LetrondoMontejo, 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

110

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.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

111

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.)

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.

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]

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.

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

Respondent Union filed a Motion for Reconsideration, but


the Voluntary Arbitrator denied the same in an Order dated
March 25, 2002.[13]

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 unionshop 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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

112

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.

COMPULSORY DUES. By holding out to loyal members a


promise of employment in the closed-shop, it wields group
solidarity. (Emphasis supplied)

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.

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]

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.

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]

The Supreme Court in the case of Manila Mandarin


Employees Union vs. NLRC (G.R. No. 76989, September 29,
1987) rule, to quote:

Hence, the voluntary arbitrator erred in construing the


CBA literally at the expense of industrial peace in the company.

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

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.

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.

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

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,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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.

113

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 co-employees
in planning collective action and presenting a united front
when they sit down to bargain with their employers. It is for
this reason that the law has sanctioned stipulations for the
union shop and the closed shop as a means of encouraging

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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]

114

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 asnonregular 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 absorbedby the BANK OF
THE PHILIPPINE ISLANDS x x x (underlining supplied). [26] In
sum, the Voluntary Arbiter upheld the reasoning of petitioner that

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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 nonsurviving 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;

115

3. The surviving or the consolidated corporation shall


possess all the rights, privileges, immunities and powers and
shall be subject to all the duties and liabilities of a corporation
organized under this Code;
4. The surviving or the consolidated corporation shall
thereupon and thereafter possess all the rights, privileges,
immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all
receivables due on whatever account, including subscriptions
to shares and other choses in action, and all and every other
interest of, or belonging to, or due to each constituent
corporation, shall be taken and deemed to be transferred to
and vested in such surviving or consolidated corporation
without further act or deed; and
5. The surviving or the consolidated corporation shall
be responsible and liable for all the liabilities and obligations of
each of the constituent corporations in the same manner as if
such surviving or consolidated corporation had itself incurred
such liabilities or obligations; and any claim, action or
proceeding pending by or against any of such constituent
corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the
rights of creditors nor any lien upon the property of any of such
constituent corporations shall be impaired by such merger or
consolidated.
Significantly, too, the Articles of Merger and Plan of Merger
dated April 7, 2000 did not contain any specific stipulation with
respect to the employment contracts of existing personnel of the
non-surviving entity which is FEBTC. Unlike the Voluntary
Arbitrator, this Court cannot uphold the reasoning that the
general stipulation regarding transfer of FEBTC assets and
liabilities to BPI as set forth in the Articles of Merger necessarily
includes the transfer of all FEBTC employees into the employ of
BPI and neither BPI nor the FEBTC employees allegedly could
do anything about it. Even if it is so, it does not follow that
the absorbed employees should not be subject to the terms

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

116

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.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

117

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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

118

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.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

119

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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

120

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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

121

clause would be a violation of the absorbed employees


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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

122

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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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 intoseven 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
employeesbecause by holding out to loyal members a
promise of employment in the closed-shop the union wields

123

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

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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 nonimpairment 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

124

therein, if such labor organization is the representative of


the employees." By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No. 3350, if
any person, regardless of his religious beliefs, wishes to be
employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed
and withdrawn.[43] (Emphases supplied.)
If Juat exemplified an exception to the rule that a person
has the right not to join a union, Victoriano merely created an
exception to the exception on the ground of religious freedom.
Reyes, on the other hand, did not involve the
interpretation of any union security clause. In that case, there
was no certified bargaining agent yet since the controversy arose
during a certification election. In Reyes, the Court highlighted
the idea that the freedom of association included the right not to
associate or join a union in resolving the issue whether or not the
votes of members of the INK sect who were part of the
bargaining unit could be excluded in the results of a certification
election, simply because they were not members of the two
contesting unions and were expected to have voted for NO
UNION in view of their religious affiliation. The Court upheld the
inclusion of the votes of the INK members since in the previous
case of Victoriano we held that INK members may not be
compelled to join a union on the ground of religious freedom and
even without Victoriano every employee has the right to vote no
union in a certification election as part of his freedom of
association. However, Reyes is not authority for Justice Carpios
proposition that an employee who is not a member of any union
may claim an exemption from an existing union security clause
because he already has regular and permanent status but simply
prefers not to join a union.
The other cases cited in Justice Carpios dissent on this
point are likewise inapplicable. Basa v. Federacion Obrera de la
Industria Tabaquera y Otros Trabajadores de Filipinas,
[44]
Anucension v. National Labor Union,[45] and Gonzales v.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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
[47]
Corporation 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

125

agent in a unionized company because a strong and effective


union presumably benefits all employees in the bargaining
unit since such a union would be in a better position to demand
improved benefits and conditions of work from the
employer. This is the rationale behind the State policy to
promote unionism declared in the Constitution, which was
elucidated in the above-cited case of Liberty Flour Mills
Employees v. Liberty Flour Mills, Inc.[54]
In the case at bar, since the former FEBTC employees are
deemed covered by the Union Shop Clause, they are required to
join the certified bargaining agent, which supposedly has
gathered the support of the majority of workers within the
bargaining unit in the appropriate certification proceeding. Their
joining the certified union would, in fact, be in the best interests
of the former FEBTC employees for it unites their interests with
the majority of employees in the bargaining unit. It encourages
employee solidarity and affords sufficient protection to the
majority status of the union during the life of the CBA which are
the precisely the objectives of union security clauses, such as
the Union Shop Clause involved herein. We are indeed not
being called to balance the interests of individual employees as
against the State policy of promoting unionism, since the
employees, who were parties in the court below, no longer
contested the adverse Court of Appeals decision. Nonetheless,
settled jurisprudence has already swung the balance in favor of
unionism, in recognition that ultimately the individual employee
will be benefited by that policy. In the hierarchy of constitutional
values, this Court has repeatedly held that the right to abstain
from joining a labor organization is subordinate to the policy of
encouraging unionism as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he
maintains that one of the dire consequences to the former
FEBTC employees who refuse to join the union is the forfeiture
of their retirement benefits. This is clearly not the case precisely
because BPI expressly recognized under the merger the length

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

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

126

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.
RENEWAL OF CBA DURING 60-DAY FREEDOM PERIOD
G.R. No. 85085 November 6, 1989
ASSOCIATED LABOR UNIONS (ALU) vs. HON. PURA
FERRER-CALLEJA, DIRECTOR, BUREAU OF LABOR
RELATIONS, DEPARTMENT OF LABOR AND EMPLOYMENT,
NATIONAL FEDERATION OF LABOR UNIONS (NAFLU)
GANCAYCO, J.:
Is the contract bar rule applicable where a collective bargaining
agreement was hastily concluded in defiance of the order of the
med-arbiter enjoining the parties from entering into a CBA until
the issue on representation is finally resolved? This is the
primary issue in this special civil action for certiorari.
The Philippine Associated Smelting and Refining Corporation
(PASAR) is a corporation established and existing pursuant to
Philippine laws and is engaged in the manufacture and
processing of copper cathodes with a plant operating in Isabel,
Leyte. It employs more or less eight hundred fifty (850) rank-andfile employees in its departments.
Petitioner Associated Labor Union (ALU) had a collective
bargaining agreement (CBA) with PASAR which expired on April
1, 1987. Several days before the expiration of the said CBA or on
March 23, 1987, private respondent National Federation of Labor
Unions (NAFLU) filed a petition for certification election with the
Bureau of Labor Relations Regional Office in Tacloban City
docketed as MED-ARB-RO VII Case No. 3-28-87, alleging,
among others, that no certification election had been held in
PASAR within twelve (12) months immediately preceding the
filing of the said petition.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

Petitioner moved to intervene and sought the dismissal of the


petition on the ground that NAFLU failed to present the
necessary signatures in support of its petition. In the order dated
April 21, 1987, 1 Med-Arbiter Bienvenido C. Elorcha dismissed
the petition. However, the order of dismissal was set aside in
another order dated May 8, 1987 and the case was rescheduled
for hearing on May 29, 1987. The said order likewise enjoined
PASAR from entering into a collective bargaining agreement with
any union until after the issue of representation is finally
resolved. In the order dated June 1, 1987, 2 the petition for
certification was dismissed for failure of NAFLU to solicit 20"7c of
the total number of rank and file employees while ALU submitted
33 pages containing the signatures of 88.5% of the rank and file
employees at PASAR.
Private respondent appealed the order of dismissal to the Bureau
of Labor Relations. While the appeal was pending, petitioner ALU
concluded negotiations with PASAR on the proposed CBA. On
July 24, 1987, copies of the newly concluded CBA were posted
in four (4) conspicuous places in the company premises. The
said CBA was ratified by the members of the bargaining unit on
July 28, 1987. 3 Thereafter, petitioner ALU moved for the
dismissal of the appeal alleging that it had just concluded a CBA
with PASAR and that the said CBA had been ratified by 98% of
the regular rank-and-file employees and that at least 75 of
NAFLU's members renounced their membership thereat and
affirmed membership with PEA-ALU in separate affidavits.
In a resolution dated September 30, 1987, the public respondent
gave due course to the appeal by ordering the conduct of a
certification election among the rank-and-file employees of
PASAR with ALU, NAFLU and no union as choices, and denied
petitioner 's motion to dismiss. 4
Both parties moved for reconsideration of the said resolution.
However, both motions were denied by public respondent in the
order dated April 22, 1988.

Hence, the present petition.

127

The petition is anchored on the argument that the holding of


certification elections in organized establishments is mandated
only where a petition is filed questioning the majority status of the
incumbent union and that it is only after due hearing where it is
established that the union claiming the majority status in the
bargaining unit has indeed a considerable support that a
certification election should be ordered, otherwise, the petition
should be summarily dismissed. 6 Petitioner adds that public
respondent missed the legal intent of Article 257 of the Labor
Code as amended by Executive Order No. 111. 7
In effect, petitioner is of the view that Article 257 of the Labor
Code which requires the signature of at least 20% of the total
number of rank-and-file employees should be applied in the case
at bar.
The petition is devoid of merit. As it has been ruled in a long line
of decisions, 8 a certification proceedings is not a litigation in the
sense that the term is ordinarily understood, but an investigation
of a non-adversarial and fact-finding character. As such, it is not
covered by the technical rules of evidence. Thus, as provided
under Article 221 of the Labor Code, proceedings before the
National Labor Relations Commission (NLRC) are not covered
by the technical rules of procedure and evidence. The Court had
previously construed Article 221 as to allow the NLRC or the
labor arbiter to decide the case on the basis of position papers
and other documents submitted without resorting to technical
rules of evidence as observed in regular courts of justice. 9
On the other hand, Article 257 is applicable only to unorganized
labor organizations and not to establishments like PASAR where
there exists a certified bargaining agent, petitioner ALU, which as
the record shows had previously entered into a CBA with the
management. This could be discerned from the clear intent of the
law which provides that

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

ART. 257. Petitions in unorganized establishments. In any


establishment where there is no certified bargaining agent, the
petition for certification election filed by a legitimate labor
organization shall be supported by the written consent of at
least twenty per cent (20%) of all the employees in the
bargaining unit. Upon receipt and verification of such petition,
the Med-Arbiter shall automatically order the conduct of a
certification election.
Said article traverses the claim of the petitioner that in this case
there is a need for a considerable support of the rank-and-file
employees in order that a certification election may be ordered.
Nowhere in the said provision does it require that the petition in
organized establishment should be accompanied by the written
consent of at least twenty percent (20%) of the employees of the
bargaining unit concerned much less a requirement that the
petition be supported by the majority of the rank-and-file
employees. As above stated, Article 257 is applicable only to
unorganized establishments.
The Court reiterates that in cases of organized establishments
where there exists a certified bargaining agent, what is essential
is whether the petition for certification election wasfiled within the
sixty-day freedom period. Article 256 of the Labor Code, as
amended by Executive Order No. 111, provides:
ART. 256. Representation issue in organized establishments.
In organized establishments, when a petition questioning the
majority status of the incumbent bargaining agent is filed before
the Department within the sixty-day period before the expiration
of the collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot to ascertain the
will of the employees in the appropriate bargaining unit. To have
a valid election, at least a majority of all eligible voters in the unit
must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election
which provides for three or more choices results in no choice

128

receiving a majority of the valid votes cast, a run-off election


shall be conducted between the choices receiving the two
highest number of votes.
Article 256 is clear and leaves no room for interpretation. The
mere filing of a petition for certification election within the
freedom period is sufficient basis for the respondent Director to
order the holding of a certification election.
Was the petition filed by NAFLU instituted within the freedom
period? The record speaks for itself. The previous CBA entered
into by petitioner ALU was due to expire on April 1, 1987. The
petition for certification was filed by NAFLU on March 23, 1987,
well within the freedom period.
The contract bar rule is applicable only where the petition for
certification election was filed either before or after the freedom
period. Petitioner, however, contends that since the new CBA
had already been ratified overwhelmingly by the members of the
bargaining unit and that said CBA had already been
consummated and the members of the bargaining unit have
been continuously enjoying the benefits under the said CBA, no
certification election may be conducted, 10 citing, Foamtex Labor
Union-TUPAS vs. Noriel, 11 and Trade Unions of the Phil. and
Allied Services vs. Inciong. 12
The reliance on the aforementioned cases is misplaced.
In Foamtex the petition for certiorari questioning the validity of
the order of the Director of Labor Relations which in turn affirmed
the order of the Med-Arbiter calling for a certification election was
dismissed by the Court on the ground that although a new CBA
was concluded between the petitioner and the management, only
a certified CBA would serve as a bar to the holding of a
certification election, citing Article 232 of the Labor Code.
Foamtex weakens rather than strengthens petitioner's stand. As
pointed out by public respondent, the new CBA entered into
between petitioner on one hand and by the management on the

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

other has not been certified as yet by the Bureau of Labor


Relations.
There is an appreciable difference in Trade Unions of the Phil.
and Allied Services (TUPAS for short). Here, as inFoamtex the
CBA was not yet certified and yet the Court affirmed the order of
the Director of the Bureau of Labor Relations which dismissed
the petition for certification election filed by the labor union. In
TUPAS, the dismissal of the petition for certification, was based
on the fact that the contending union had a clear majority of the
workers concerned since out of 641 of the total working force,
the said union had 499 who did not only ratify the CBA concluded
between the said union and the management but also affirmed
their membership in the said union so that apparently petitioners
therein did not have the support of 30% of all the employees of
the bargaining unit.
Nevertheless, even assuming for the sake of argument that the
petitioner herein has the majority of the rank-and-file employees
and that some members of the NAFLU even renounced their
membership thereat and affirmed membership with the petitioner,
We cannot, however, apply TUPAS in the case at bar. Unlike in
the case of herein petitioner, in TUPAS, the petition for
certification election was filed nineteen (19) days after the CBA
was signed which was well beyond the freedom period.
On the other hand, as earlier mentioned, the petition for
certification election in this case was filed within the freedom
period but the petitioner and PASAR hastily concluded a CBA
despite the order of the Med-Arbiter enjoining them from doing
so until the issue of representation is finally resolved. As pointed
out by public respondent in its comment, 13 the parties were in
bad faith when they concluded the CBA. Their act was clearly
intended to bar the petition for certification election filed by
NAFLU. A collective bargaining agreement which was
prematurely renewed is not a bar to the holding of a certification
election. 14 Such indecent haste in renewing the CBA despite an
order enjoining them from doing so 15 is designed to frustrate the

129

constitutional
right
of
the
employees
to
selforganization. 16Moreover, We cannot countenance the actuation
of the petitioner and the management in this case which is not
conducive to industrial peace.
The renewed CBA cannot constitute a bar to the instant petition
for certification election for the very reason that the same was
not yet in existence when the said petition was filed. 17 The
holding of a certification election is a statutory policy that should
not be circumvented. 18
Petitioner posits the view that to grant the petition for certification
election would open the floodgates to unbridled and scrupulous
petitions the objective of which is to prejudice the industrial
peace and stability existing in the company.
This Court believes otherwise. Our established jurisprudence
adheres to the policy of enhancing the welfare of the workers.
Their freedom to choose who should be their bargaining
representative is of paramount importance. The fact that there
already exists a bargaining representative in the unit concerned
is of no moment as long as the petition for certification was filed
within the freedom period. What is imperative is that by such a
petition for certification election the employees are given the
opportunity to make known who shall have the right to represent
them thereafter. Not only some but all of them should have the
right to do so. 19 Petitioner's contention that it has the support of
the majority is immaterial. What is equally important is that
everyone be given a democratic space in the bargaining unit
concerned. Time and again, We have reiterated that the most
effective way of determining which labor organization can truly
represent the working force is by certification election. 20
Finally, petitioner insists that to allow a certification election to be
conducted will promote divisiveness and eventually cause
polarization of the members of the bargaining unit at the expense
of national interest. 21

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The claim is bereft of merit. Petitioner failed to establish that the


calling of certification election will be prejudicial to the employees
concerned and/or to the national interest. The fear perceived by
the petitioner is more imaginary than real. If it is true, as pointed
out by the petitioner, that it has the support of more than the
majority and that there was even a bigger number of members of
NAFLU who affirmed their membership to petitioner-union, then
We see no reason why petitioner should be apprehensive over
the issue. If their claim is true, then most likely the conduct of a
certification election will strengthen their hold as any doubt will
be erased thereby. With the resolution of such doubts,
fragmentation of the bargaining unit will be avoided, and hence
coherence among the workers will likely follow.
Petitioner's claim that the holding of a certification election will be
inimical to the national interest is far fetched. The workers are at
peace with one another and their working condition is smooth.
There has been no stoppage of work or an occurrence of a
strike. With these facts on hand, to order otherwise will be
repugnant to the well-entrenched right of the workers to
unionism. WHEREFORE, premises considered, the instant
petition is DISMISSED for lack of merit. The temporary
restraining order issued by the Court in the resolution dated
October 10, 1988 22 is hereby lifted. This decision is immediately
executory. No costs. SO ORDERED.
G.R. No. L-14689
July 26, 1960
GENERAL MARITIME STEVEDORES' UNION OF THE
PHILIPPINES, ET AL. vs. SOUTH SEA SHIPPING LINE, ET AL.
MONTEMAYOR, J.:
This is a petition for certiorari to review an order the Court of
Industrial Relations (CIR), dated September 23, 1958, dismissing
the petition for certification election filed by the General Maritime
Stevedores' Union, later referred to as GMSU, and its copetitioners, as well as the order of the court en banc denying the
motion for re-consideration. The purpose of the petition to review

130

is set aside the order of dismissal and to give due course to


GMSU petition for certification election.
Acting on a petition dated October 23, 1953 of the United
Seamen's Union of the Philippines, later referred to as USUP, in
case No. 43-MC, the CIR issued an order dated February 28,
1955, directing that an election be held among the unlicensed
members and crew of the respondent South Sea Shipping Lines,
later referred to as Shipping Lines. In said order, the USUP and
GMSU were considered eligible to be voted for. The certification
election was held on April 15 and June 10, 1955, after which the
CIR issued another order dated June 17, 1955, certifying USUP
as the exclusive bargaining representative of the laborers and
employees of the Shipping Lines. On June 28, 1957, a collective
bargaining agreement was entered into between the Shipping
Line and the USUP. Art. 10 of the agreement provided as follows:
This Agreement shall take effect on July 21, 1957, to continue
in full force and effect for two (2) years until July 20, 1959 and
thereafter for another period of two (2) years, unless either
party shall notify the other in writing not less than sixty (60)
days prior to the expiration date hereof of its intention or
election to terminate the agreement as of the end of the current
term.
GMSU insists that the agreement entered into was but a renewal
of an agreement between the USUP and Shipping Line entered
into sometime in 1955. This statement seems to have been
confirmed by the Shipping Line in its answer where it stated that
"after the above-mentioned order (referring to the order dated
June 17, 1955) or to be specific, on June 28, 1955, a collective
bargaining agreement. ... entered into between the respondent."
On April 30, 1958, that is a little more than two years after the
holding of the last certification election, GMSU and its copetitioners filed with the CIR a petition for certification election,
Case No. 546-MC, later numbered as Case No. 547-MC,
alleging that there were two labor unions, to which were

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

unlicensed crew members of the Shipping Line, namely, the


GMSU and the USUP; that as members of the GMSU petitioners
constituted 10% of all the unlicensed crew members of the
Shipping Line; and that there had not been a certification election
within twelve months before the filing of the petition.
The Shipping Line in its answer, expressed its attitude of strict
neutrality and its willingness to abide by the order of the CIR
although in its amended answer, it also alleged that it considered
the existing collective bargaining agreement between itself and
the USUP as binding until annulled.
The USUP intervened and filed a motion for dismissal of the
petition claiming that there was an existing collective bargaining
agreement between itself and the Shipping Line entered on June
28, 1957, for a period of two years up to July 26, 1959, which
period was reasonable, and which agreement contained
reasonable conditions of employment, and that the existence of
such agreement barred another certification election. As already
stated, the CIR granted the motion to dismiss and refused to give
due course to the GMSU's petition for certification election.
To support its order, the CIR invoked the "contract-bar rule",
explaining that the then existing contract between the Shipping
Line and the USUP, which was for a period of two years, up to
July 20, 1959, contained provisions regarding wages, closed
shops, check off, grievances, machinery and other conditions
regarding employment relationships. According to the CIR, these
circumstances plus the fact that there was no showing that the
contracting union was company dominated support the validity
and reasonableness of the agreement between the Shipping
Line and the USUP, the duly certified bargaining representative,
and that the existence of such contract barred the holding of a
certification election. The CIR further stated:
The "contract-bar rule" is procedural which this Court in its
discretion may apply or waive as the facts of any given case
may demand in the interest of stability and fairness in collective

131

bargaining agreements. (Case No. 54 MC-Cebu, PCLUE, vs.


Caltex, June 25, 1957). the facts of the present case
considered,, it is the opinion of this Court that the policies of the
Industrial Peace Act of promoting stable, sound employeremployee relations is effectuated by collective bargaining
agreement of reasonable duration. The contract between the
intervenor and the company falls under this criterion.
The GMSU, however, equally maintains that it is mandatory for
the CIR to order a certification election once a petition is signed
and submitted by at least 10% of all the workers in a bargaining
unit; and it is also shown that no certification election had been
held within twelve months prior to the filing of such petition
pursuant to the provisions of Section 12 (b) and (c), Republic Act
No. 875, the pertinent portions of which read:
(b) Whenever a question arising concerning the representation
of employees, the Court may investigate such controversy and
certify to the parties in writing the name of the labor
organization that has been designated or selected for the
appropriate bargaining unit. ... Such a balloting shall be known
as "certification election" and the Court shall not order
certifications in the same unit more often than once intwelve
months. The organization receiving the majority votes casts in
such election shall be certified as the exclusive bargaining
representative of such employees.
(c) In an instance where a petition is filed by at least ten
percent of the employees in the appropriate unit requesting an
election, it shall be mandatory on the Court to order an election
for the purpose of determining the representative of the
employees for the appropriate bargaining unit.
The GMSU has expressed fear that if a certification election was
not held as per its petition, the agreement between the
respondent under its renewal clause, may again be renewed with
or without modification by the parties as a result of which, the
existence of the contract as renewed may again be utilized as an

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

132

argument for barring a subsequent petition for certification


election, thereby completely depriving petitioners of the right and
opportunity to prove that they constituted the majority of the
workers and employees of the Shipping Line.

A second solution is to hold that employees may shift their


allegiance during the term of the agreement but that the
contract continues in force with the new union simply replacing
the old. .. .

What is meant by the "Contract-Bar Policy"? When ever a


substantial number of employees in an appropriate bargaining
agreement desires to be represented by a union or organization
other than that which had negotiated a collective bargaining
contract with the management, the CIR is faced with the dilemma
of the right of contract or the right of representation:

The solution to the problem which the National Labor-Relations


Board has adopted lies between the extremes: "The board has
normally refused to proceed to an election, in the presence of a
collective bargaining contract where the contract granted
exclusive recognition is to be effective only for a reasonable
period and was negotiated by a union representing at the time
a majority of the employees (in an appropriate unit) prior to any
claim by a rival labor organization". (Cox, Cases on Labor Law,
pp. 497-498).

Whenever a contract is urged as a bar, the Board is faced with


the problem of balancing two separate interests of employees
and society which the act was designated to protect; the
interest in such stability is as essential to encourage the
effective collective bargaining, and the sometimes conflicting
interest in the freedom of employees to select and change their
representatives. In furtherance of the purpose of the act, we
have repeatedly held that employees are entitled to change
their representatives, if they so desire, at reasonable intervals,
or controversy, that a collective bargaining contract may
preclude a determination of representatives for a reasonable
period. (Reed Roller Bit Co., 72 NLRD 927).
It sometimes occurs that representation petitions are brought
when a bargaining contract already exists. There is then a
question of whether the Board shall respect the contract and let
it constitute a bar or institute proceedings despite the contract.
(Bowman, Public Control of Labor Relations, p. 135.)
As a solution to this problem, there are three possibilities:
One solution of the problem would be to hold that a collective
bargaining agreement valid when made is a bar to a new
certification throughout its existence, regardless of the length of
its term. . . .

The National Labor Relations Board, later referred to as the


Board, which is the counterpart of our CIR, regards the conflict
as one which requires it to strike a balance between the
desirability of achieving stability in industrial relations secured
through bargaining, on the one hand, and the benefits flowing
from the grant to employee full freedom in their choice of
representative, on the other.
But the conflict implicit in the situation is so clear that the Board
has recognized the necessity for some solution. While it is
apparent that the board will not allow the existence of an
agreement to preclude all change, on the other hand has not
suggested absolute abrogation of the contract. (51 Yale Law
Journal p. 470, Change of Bargaining Representative).
In resolving this conflict, the Board "initially took the unqualified
view that the existence of agreements was no bar to
certification of bargaining representatives." (Teller, Labor
Disputes and Collective Bargaining, Vol. 2, p. 901). So, in the
Matter of New England Transportation Co. (1936) 1 NLRB 130,
the Board directed an election despite existing contracts between
the company and an employees' association:

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

133

The whole process of collective bargaining and unrestricted


choice of representatives assumes the freedom of the
employees to change their representatives, while at the same
time continuing the existing agreements under which the
representatives must function. ... These representatives are, of
course, free to bargain with respect to the termination of an
existing contract.

The United States Circuit Court of Appeals, recognizing the


Board's power to promulgate rules and regulations to carry out
the purpose of the Act, gave the Board broad discretion to apply
the "contract-bar policy", as it saw fit, thus:

The above ruling gave support to the doctrine of substitution


whereby a change of representatives would alter an existing
contract only by "substituting the new union for the old under its
substantive terms" (51 Yale Law Journal, Change of Bargaining
Representatives, p. 466). However, the Board subsequently took
the position that a collective bargaining agreement of reasonable
duration is "in the interest of the stability of industrial relations", a
bar to certification elections. (Vol. 2, Teller, Labor Disputes and
Collective Bargaining, p. 902). Thus, evolved the "contract-bar
policy".

The Board's rule that the existence of a valid written and signed
bargaining agreement between an employer and an
appropriate bargaining representative is a bar to a certification
proceedings for a different representation, if applicable to the
facts in this case, is a procedural rule which the Board in its
discretion may apply or waive as the facts of the given case
may demand in the interest of stability and fairness in collective
bargaining agreements. The Board is not the slave of its rules."
National Labor Relations Boardvs. Grace Co. 184 Fed. 2nd p.
126 (U. S. Circuit Ct. of App., 8th Circuit.)

In adopting the "contract-bar policy", the Board, however, was


careful in refusing to announce an inflexible rule as to its
authority, and whenever possible, it avoided a determination of
the contract's effect on its power of certification election:

Where "contract bar policy" of National Labor Relations Board,


along with exceptions thereto, as applicable to representation
proceedings, were solely of board's creation, board could
reasonably expand or restrict such policy as it saw fit.
(Syllabus) Kearney & Treacker Corp. vs. National Labor
Relations Board, 210 Fed. 2nd p. 852 (U.S. Circuit Ct. of App.,
7th Circuit)

. . . Again the Board is bounded by no stereotyped procedure;


rather, the Board exercises discretion to let the circumstances
determine whether proceedings shall go on. . . .
This Board action was not charted by Congress, but the
dilemma of right of contract or right of representation is real.
The resolution of the dilemma is not to decide whether the
primary purpose of the Act is to insure employee freedom to
choose representatives, or to encourage collective contracts,
for either choice leaves an unsatisfactory situation. Hence the
Board's compromise seems wise, even though it is in a sense
contradictory. Such Board flexibility and the refusal to draw
sharp rules open the door to criticism, but the dilemma
demonstrated the necessity of giving broad discretionary power

to an administrative agency. (Public Control of Labor Relations,


Bowman, p. 135, 137).

During the period "when the techniques and potentialities of


collective bargaining were first being slowly developed under the
encouragement and protection of Federal Legislation", the Board
laid greater emphasis upon the right of laborers to select their
respective frequently than upon prolonged adherence to the
bargaining agreement. (General Motors Corporation, 102 NLRB
1140). As a result, when the contract-bar policy was first initiated,
only one-year contracts were held to be a bar to certification
election. (e.g., M & J Tracy, Inc. 12 NLRB 936 (1939); Columbia
Broadcasting System, Inc. 8 NLRB 508 (1938) Hubinger
Company, 3 NLRB 802)

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The net result of the Broad's viewpoint that collective


bargaining agreements of reasonable duration will constitute a
bar to certification, but that agreements unduly long which have
been in effect for at least a year will not constitute a bar is,
when read in connection with the cases, equivalent to the rule
that collective bargaining agreements prevent proceedings for
a period of one year from the time of their execution. (2 Teller,
Labor Disputes and Collective Bargaining, p. 905).
Thus, in the case of Superior Electric Products Co.,
NLRB (1948), the collective bargaining agreement of one year
duration entered into at the time when the contracting union
represented a majority of the respondent-employees was held to
be a bar to certification election. And in the Metro Goldwyn
Mayer case, 7 NLRB 662, involving collective bargaining
agreement of five years duration, the Board granted the petition
for election filed after the agreement had run one year with a
reiteration of its belief that employees' "choice of their
representatives could not be shackled for an unduly long period
just because of the existence of a contract." However, in 1947,
the Board held that thereafter, it would regard a two year contract
as a bar to an election until its expiration, because collective
bargaining had:
So emerged from a stage of trial and error (that) the time has
come when stability of industrial relations can better be served,
without unreasonably restricting employees in their right to
change representatives, by refusing to interfere with bargaining
relations secured by collective agreements for two years'
duration. (Matter of Reed Roller Bit Co. 72 NLRB 927 (1947).
In the light of our experience in administering the Act, we
believe that a contract for a term of 2 years cannot be said to
be of unreasonable duration. ... For large masses of employees
collective bargaining has but recently emerged from a stage of
trial and error, during which its techniques and full potentialities
were being slowly developed under the encouragement and
protection of the Act. To have insisted in the past upon

134

prolonged adherence to a bargaining agent, once chosen,


would have been wholly incompatible with this experimental
and transitional period. It was especially necessary, therefore to
lay emphasis upon the right of workers to select and change
their representatives. Now, however, the emphasis can better
be placed elsewhere.
HOWEVER, in 1953, the same Board announced that:
The time has arrived when stability of labor relations can be
better served, without unreasonably restricting employees in
their right to change representatives, by holding as a bar
collective bargaining agreements even for 5 years' duration
(when) a substantial part of the industry concerned is covered
by contracts with a similar term.
In the case of General Motors Corporation, 102 NLRB 1140
(1953), involving a five years contract, the Board refused to order
a certification election despite the lapse of more than 2 1/2 years
since the agreement became effective. From all this, it may be
seen that the National Labor Relations Board has not adopted an
iron-clad policy, rigid and fixed, but rather one to be applied
according to the changing conditions and industrial practices.
In this jurisdiction, we have had occasion to apply the "contractbar policy". In the case of Philippine Long Distance Employees'
Union vs. PLDT and Free Telephone Workers Union, 97 Phil.,
424; 51 Off. Gaz. [9] 4519, through Mr. Justice Bengzon, we
made the following observation:
It is interesting to note in this regard that in the United States,
where we copied the present Industrial Peace Act, an existing
collective bargaining contract with a union is a bar to
subsequent certification election when ... it has a definite and
reasonable period to run and has not been in existence for too
long a period (history, industry and customs may affect
reasonableness of the contract term ... . (Werne Law of Labor
Relations, p. 27 citing U.S. Finishing Co. 63 NLRB 575).

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

135

Normally, the National Labor Relations Board have been in


existence for more than years, as no obstacle to determining
bargaining representatives. (Werneop cit. pp. 28-29, citing
several cases.)

within those three or four years, a certification election should not


be held, may well be left to the sound discretion of the CIR,
considering the conditions involved in the case, particularly, the
terms and conditions of the bargaining contract.

. . . as this contract between the Company and the petitioner


was signed December 1, 1951, it had been in operation more
than two years in August, 1954 when the certification election
was ordered. It is thereforeno bar to the certification even
under American Labor Laws.

We also hold that where the bargaining contract is to run for


more than two years, the principle of substitution may well be
adopted and enforced by the CIR to the effect that after two
years of the life of bargaining agreement, a certification election
may be allowed by the CIR; that if a bargaining agent other than
the union or organization that executed the contract, is elected,
said new agent would have to respect said contract, but that it
may bargain with the management for the shortening of the life of
the contract if it considers it too long, or refuse to renew the
contract pursuant to an automatic renewal clause.

In a subsequent case, Acoje Mines and Acoje United Workers


Union vs. Acoje Labor Union and Acoje Mining Co. Inc., 105
Phil., 814; 56 Off. Gaz. (6) 1157, on the issue of whether or not
upon submission of a petition for certification election by at least
10% of all the workers in a bargaining union, it is mandatory for
the CIR to order a certification election with no exceptions,
pursuant to Section 12 (c), Republic Act No. 875, through the
same Justice, we made the following statement:
The above command of the Court is not so absolute as it may
appear at first glance. The statute itself expressly recognizes
one exception: When a certification election had occured within
one year. And the judicial administrative agencies have found
two exceptions: where there is an unexpired bargaining
agreement not exceeding two years and when there is a
pending charge of company domination of one of the labor
unions intending to participate in the election.
After reviewing the cases decided by the NLRB of the United
States and our cases, we have arrived at the conclusion that it is
reasonable and proper that when there is a bargaining contract
for more than a year, it is too early to hold a certification election
within a year from the effectivity of said bargaining agreement;
also that a two year bargaining contract is not too long for the
purpose of barring a certification election. For this purpose, a
bargaining agreement may run for three, even four years, but in
such case, it is equally advisable that to decide whether or not

On September 15, 1959, while this case was still pending in this
Tribunal, petitioner filed a manifestation to the effect that the
contract between the USUP and the Shipping Line had expired
on June 28, 1959, and that the same had not been renewed. We
asked for the comment of the other party. the respondent United
Seamen's Union in its counter manifestation dated July 6, 1960,
stated that the collective bargaining agreement involved,
executed on July 28, 1957, was automatically renewed for a
period of two years from July 28, 1959 to July 28 1961, pursuant
to the automatic renewal clause, for the reason that neither party
notified the other in writing not less than sixty days prior to the
expiration date, of its desire to terminate the agreement. So, it
would appear that the contract will still be effective up to July 28,
1961, that is to say, about a year from today.
According to the claim or contention of the petitioners the
bargaining agreement of July 28, 1957 was but a renewal of the
same or similar agreement of July 1955, so that the bargaining
agreement has been in existence for about five years, which is
too long a period within which a certification election has not
been held.

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

In view of the foregoing, we believe and hold that the appealed


order of the CIR dismissing the petition for certification election
and refusing to allow the selection of a new bargaining agent,
was valid under the circumstances obtaining at the time.
However, inasmuch as there has been a renewal of the
bargaining agreement for another two years and because it
seems that the present agreement is but a renewal of the one
entered into way back in 1955, so that until the expiration of the
present agreement, about six years shall have passed, it is
advisable that a new certification election be held. For this
purpose, this case is hereby remanded to the CIR, so that the
petition for certification can be entertained, admitted and given
due course, and that a certification election be held, with the
understanding that if a bargaining agent other tan the one that
negotiated and executed the present bargaining contract, is
elected, said new agent would have to respect the present
bargaining agreement, but without prejudice to its negotiating
with the company for a shortening of the period of the life of the
contract, refuse to renew it when it expires, if it so desires, and
otherwise represent and protect the interest of the members of
the bargaining unit, all of course, within the terms and purview of
the bargaining contract. No costs.
G.R. No. 174179
November 16, 2011
KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT
KAWANI SA MWC-EAST ZONE UNION and EDUARDO
BORELA vs. MANILA WATER COMPANY, INC.
DECISION
BRION, J.:
We resolve the petition for review on certiorari[1] filed
by the petitioners, Kaisahan at Kapatiran ng mga Manggagawa
at Kawani sa MWC-East Zone Union (Union) and Eduardo
Borela, assailing the decision[2] and the resolution[3] of the Court
of Appeals (CA) in CA-G.R. SP No. 83654.[4]
The Factual Antecedents

The background
summarized below.

facts

are

not

disputed

136

and

are

The Union is the duly-recognized bargaining agent of the


rank-and-file employees of the respondent Manila Water
Company, Inc. (Company) while Borela is the Union President.
[5]
On February 21, 1997, the Metropolitan Waterworks and
Sewerage System (MWSS) entered into a Concession
Agreement (Agreement) with the Company to privatize the
operations of the MWSS.[6] Article 6.1.3 of the Agreement
provides that the Concessionaire shall grant [its] employees
benefits no less favorable than those granted to MWSS
employees at the time of [their] separation from
MWSS.[7] Among the benefits enjoyed by the employees of the
MWSS were the amelioration allowance (AA) and the cost-ofliving allowance (COLA) granted in August 1979, pursuant to
Letter of Implementation No. 97 issued by the Office of the
President.[8]
The payment of the AA and the COLA was discontinued
pursuant to Republic Act No. 6758, otherwise known as the
Salary Standardization Law, which integrated the allowances
into the standardized salary.[9] Nonetheless, in 2001,
the Union demanded from the Company the payment of the AA
and the COLA during the renegotiation of the parties Collective
Bargaining Agreement (CBA).[10] The Company initially turned
down this demand, however, it subsequently agreed to an
amendment of the CBA on the matter, which provides:
The Company shall implement the payment of the
Amelioration Allowance and Cost of Living [A]llowance
retroactive August 1, 1997 should the MWSS decide to pay its
employees and all its former employees or upon award of a
favorable order by the MWSS Regulatory Office or upon
receipt of [a] final court judgment.[11]
Thereafter, the Company integrated the AA into the
monthly payroll of all its employees beginning August 1, 2002,

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

payment of the AA and the COLA after an appropriation was


made and approved by the MWSS Board of Trustees. The
Company, however, did not subsequently include the COLA
since the Commission on Audit disapproved its payment because
the Company had no funds to cover this benefit. [12]
As a result, the Union and Borela filed on April 15, 2003 a
complaint against the Company for payment of the AA, COLA,
moral and exemplary damages, legal interest, and attorneys
fees before the National Labor Relations Commission (NLRC).[13]
The Compulsory Arbitration Rulings
In his decision of August 20, 2003, Labor Arbiter Aliman D.
Mangandog (LA) ruled in favor of the petitioners and ordered the
payment of their AA and COLA, six percent (6%) interest of the
total amount awarded, and ten percent (10%) attorneys fees. [14]
On appeal by the Company, the NLRC affirmed with
modification the LAs decision.[15] It set aside the award of the
COLA benefits because the claim was not proven and
established, but ordered the Company to pay the petitioners their
accrued AA of about P107,300,000.00 in lump sum and to
continue paying the AA starting August 1, 2002. It also upheld the
award of 10% attorneys fees to the petitioners.
In its Motion for Partial Reconsideration of the NLRCs
December 19, 2003 decision, the Company pointed out that the
award of ten percent (10%) attorneys fees to the petitioners is
already provided for in their December 19, 2003 Memorandum of
Agreement (MOA) which mandated that attorneys fees shall be
deducted from the AA and CBA receivables. [16] This compromise
agreement, concluded between the parties in connection with a
notice of strike filed by the Union in 2003,[17] provides among
others that:[18]
31. Attorneys fees 10% to be deducted from AA and CBA
receivables.

137

32. All other issues are considered withdrawn. [19]


In their Opposition, the petitioners argued that the MOA
only covered the payment of their share in the contracted
attorneys fees, but did not include the attorneys fees awarded
by the NLRC. To support their claim, the petitioners submitted
Borelas affidavit which relevantly stated:
2. On December 19, 2003, in settlement of the notice of
Strike for CBA Deadlock, Manila Water Company, Inc. and the
Union entered into an Agreement settling the deadlock issued
(sic) of the CBA negotiation including [the] payment of the AA
and the mode of payment thereof.
3. Considering that the AA payment was included in
the Agreement, the Union representation deemed it wise, for
practical reason, to authorize the company to immediately
deduct from the benefits that will be received by the
member/employees the 10% attorneys fees in conformity with
our contract with our counsel.
4. The 10% attorneys fees paid by the
members/employees is separate and distinct from the
obligation of the company to pay the 10% awarded
attorneys fees which we also gave to our counsel as part
of our contingent fee agreement.
5. There was no agreement that we are going to
shoulder the entire attorneys fees as this would cost us 20%
of the amount we would recover. There was also no
agreement that the 10% attorneys fees in the MOA represents
the entire attorneys cost because the said payment
represents only our compliance of our share in the attorneys
fees in conformity with our contract. Likewise, we did not
waive the awarded 10% attorneys fees because the same
belongs to our counsel and not to us and beyond our authority.
[20]
(emphasis ours)

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

The NLRC subsequently denied both parties Motions for


Partial Reconsideration,[21] prompting the Company to elevate
the case to the CA via a petition for certiorariunder Rule 65
of the Rules of Court. It charged the NLRC of grave abuse of
discretion in sustaining the award of attorneys fees on the
grounds that: (1) it is contrary to the MOA [22] concerning the
payment of attorneys fees; (2) there was no finding of unlawful
withholding of wages or bad faith on the part of the Company;
and (3) the attorneys fees awarded are unconscionable.
The CA Decision
In its Decision promulgated on March 6, 2006, [23] the CA
modified the assailed NLRC rulings by deleting [t]he order for
respondent MWCI to pay attorneys fees equivalent to 10% of the
total judgment awards. The CA recognized the binding effect of
the MOA between the Company and the Union; it stressed that
any further award of attorneys fees is unfounded considering
that it did not find anything in the Agreement that is contrary to
law, morals, good customs, public policy or public order.

138

under Article 111 of the Labor Code which provides that


attorneys fees equivalent to ten percent (10%) of the amount of
wages recovered may be assessed only in cases of unlawful
withholding of wages.
The CA ruled that the facts of the case do not indicate any
unlawful withholding of wages or bad faith attributable to the
Company. It also held that the additional grant of 10% attorneys
fees violates Article 111 of the Labor Code considering that the
MOA between the parties already ensured the payment of 10%
attorneys fees, deductible from the AA and CBA receivables of
the Unions members. The CA thus adjudged the NLRC decision
awarding attorneys fees to have been rendered with grave
abuse of discretion.
The Union and Borela moved for reconsideration, but the
CA denied the motion in its resolution of August 15, 2006.
[25]
Hence, the present petition.
The Petition

In resolving the issue, the CA cited our ruling in Traders


Royal Bank Employees Union-Independent v. NLRC,[24] where
we distinguished between the two commonly accepted concepts
of attorneys fees the ordinary and the extraordinary. We held
in that case that under its ordinary concept, attorneys fees are
the reasonable compensation paid to a lawyer by his client for
legal services rendered. On the other hand, we ruled that in its
extraordinary concept, attorneys fees represent an indemnity for
damages ordered by the court to be paid by the losing party in a
litigation based on what the law provides; it is payable to the
client not to the lawyer, unless there is an agreement to the
contrary.

The petitioners seek a reversal of the CA rulings on the


sole ground that the appellate court committed a reversible error
in reviewing the factual findings of the NLRC and in substituting
its own findings an action that is not allowed under Rule 65 of
the Rules of Court. They question the CAs re-evaluation of the
evidence, particularly the MOA, and its conclusion that there was
no unlawful withholding of wages or bad faith attributable to the
Company, thereby contradicting the factual findings of the NLRC.
They also submit that a petition for certiorari under Rule 65 is
confined only to issues of jurisdiction or grave abuse of
discretion, and does not include the review of the NLRCs
evaluation of the evidence and its factual findings. [26]

The CA noted that the fees at issue in this case fall under
the extraordinary concept the NLRC having ordered the
Company, as losing party, to pay the Union and its members ten
percent (10%) attorneys fees. It found the award without basis

The petitioners argue that in the present case, all the


parties arguments and evidence relating to the award of
attorneys fees were carefully studied and weighed by the
NLRC. As a result, the NLRC gave credence to Borelas affidavit

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

claiming that the attorneys fees paid by the Unions members


are separate and distinct from the attorneys fees awarded by the
NLRC. The petitioners stress that whether the NLRC is correct
in giving credence to Borelas affidavit is a question that the CA
cannot act upon in a petition forcertiorari unless grave abuse of
discretion can be shown.[27]

139

case in certiorari proceedings under Rule 65 of the Rules of


Court.[29] However, the rule admits of exceptions. In Mercado
v. AMA Computer College-Paraaque City, Inc.,[30] we held that
the CA may examine the factual findings of the NLRC to
determine whether or not its conclusions are supported by
substantial evidence, whose absence justifies a finding of grave
abuse of discretion. We ruled:

The Case for the Company


[28]

In its Memorandum filed on September 7, 2007, the


Company argues that the correctness of the NLRCs
interpretation of the provision of the MOA, the reasonableness of
the attorneys fees in question, and the application or
interpretation of a provision of the Labor Code on the matter are
questions of law which the CA validly inquired into in
the certiorari proceedings. It argues that the CA correctly ruled
that the NLRC acted with grave abuse of discretion when it
affirmed the LAs award of attorneys fees despite the absence of
a finding of any unlawful withholding of wages or bad faith on the
part of the Company. It finally contends that the Unions
demand, together with the NLRC award, is unconscionable as it
represents 20% of the amount due or about P21.4 million.
Issues
The core issues posed for our resolution are: (1) whether
the CA can review the factual findings of the NLRC in a Rule 65
petition; and (2) whether the NLRC gravely abused its discretion
in awarding ten percent (10%) attorneys fees to the petitioners.
The Courts Ruling

We agree with the petitioners that, as a rule


in certiorari proceedings under Rule 65 of the Rules of Court,
the CA does not assess and weigh each piece of evidence
introduced in the case. The CA only examines the factual
findings of the NLRC to determine whether or not the
conclusions are supported by substantial evidence whose
absence points to grave abuse of discretion amounting to lack
or excess of jurisdiction. In the recent case of Protacio v.
Laya Mananghaya & Co., we emphasized that:
As a general rule, in certiorari proceedings under Rule
65 of the Rules of Court, the appellate court does not assess
and weigh the sufficiency of evidence upon which the Labor
Arbiter and the NLRC based their conclusion. The query in this
proceeding is limited to the determination of whether or not the
NLRC acted without or in excess of its jurisdiction or with
grave abuse of discretion in rendering its decision. However,
as an exception, the appellate court may examine and
measure the factual findings of the NLRC if the same are
not supported by substantial evidence. The Court has not
hesitated to affirm the appellate courts reversals of the
decisions of labor tribunals if they are not supported by
substantial evidence. [31] (italics and emphasis supplied;
citation omitted)

We find the petition and its arguments meritorious.


On the CAs Review of the NLRCs Factual Findings
We agree with the petitioners that as a rule, the CA cannot
undertake a re-assessment of the evidence presented in the

As discussed below, our review of the records and of the


CA decision shows that the CA erred in ruling that the NLRC
gravely abused its discretion in awarding the petitioners ten
percent (10%) attorneys fees without basis in fact and in
law. Corollary to the above-cited rule is the basic approach in

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

the Rule 45 review of Rule 65 decisions of the CA in labor cases


which we articulated in Montoya v. Transmed Manila
Corporation[32] as a guide and reminder to the CA. We laid down
that:
In a Rule 45 review, we consider the correctness of the
assailed CA decision, in contrast with the review for
jurisdictional error that we undertake under Rule
65. Furthermore, Rule 45 limits us to the review of questions
of law raised against the assailed CA decision. In ruling for
legal correctness, we have to view the CA decision in the
same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from
the prism of whether it correctly determined the presence
or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In other
words, we have to be keenly aware that the CA undertook a
Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it. This is the approach that should be basic
in a Rule 45 review of a CA ruling in a labor case. In question
form, the question to ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of
discretion in ruling on the case?[33] (italics and emphases
supplied)
In the present case, we are therefore tasked to determine
whether the CA correctly ruled that the NLRC committed grave
abuse of discretion in awarding 10% attorneys fees to the
petitioners.
On the Award of Attorneys Fees
Article 111 of the Labor Code, as amended, governs the
grant of attorneys fees in labor cases:
Art. 111. Attorneys fees.- (a) In cases of unlawful
withholding of wages, the culpable party may be assessed

140

attorneys fees equivalent to ten percent of the amount of


wages recovered.
(b) It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings for the
recovery of wages, attorneys fees which exceed ten percent
of the amount of wages recovered.
Section 8, Rule VIII, Book III of its Implementing Rules
also provides, viz.:
Section 8. Attorneys fees. Attorneys fees in any
judicial or administrative proceedings for the recovery of
wages shall not exceed 10% of the amount awarded. The
fees may be deducted from the total amount due the winning
party.
We explained in PCL Shipping Philippines, Inc. v. National
Labor Relations Commission [34]that there are two commonly
accepted concepts of attorneys fees the ordinary and
extraordinary. In its ordinary concept, an attorneys fee is the
reasonable compensation paid to a lawyer by his client for the
legal services the former renders; compensation is paid for the
cost and/or results of legal services per agreement or as may be
assessed. In its extraordinary concept, attorneys fees are
deemed indemnity for damages ordered by the court to be
paid by the losing party to the winning party. The instances
when these may be awarded are enumerated in Article 2208 of
the Civil Code, specifically in its paragraph 7 on actions for
recovery of wages, and is payable not to the lawyer but to the
client, unless the client and his lawyer have agreed that the
award shall accrue to the lawyer as additional or part of
compensation.[35]
We also held in PCL Shipping that Article 111 of the Labor
Code, as amended, contemplates the extraordinary concept of
attorneys fees and that Article 111 is an exception to the
declared policy of strict construction in the award of
attorneys fees. Although an express finding of facts and
law is still necessary to prove the merit of the award, there

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

need not be any showing that the employer acted


maliciously or in bad faith when it withheld the wages. In
carrying out and interpreting the Labor Code's provisions and
implementing regulations, the employee's welfare should be the
primary and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate
spirit of the law as embodied in Article 4 of the Labor Code
(which provides that "[a]ll doubts in the implementation and
interpretation of the provisions of [the Labor Code], including its
implementing rules and regulations, shall be resolved in favor of
labor") and Article 1702 of the Civil Code (which provides that
"[i]n case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the
laborer).[36]
We similarly so ruled in RTG Construction, Inc. v.
Facto[37]and in Ortiz v. San Miguel Corporation.[38] In RTG
Construction, we specifically stated:
Settled is the rule that in actions for recovery of wages, or
where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interests, a monetary award
by way of attorneys fees is justifiable under Article 111 of the
Labor Code; Section 8, Rule VIII, Book III of its Implementing
Rules; and paragraph 7, Article 2208 of the Civil Code. The
award of attorneys fees is proper, and there need not be
any showing that the employer acted maliciously or in
bad faith when it withheld the wages. There need only be
a showing that the lawful wages were not paid
accordingly.[39] (emphasis ours)
In PCL Shipping, we found the award of attorneys fees
due and appropriate since the respondent therein incurred legal
expenses after he was forced to file an action for recovery of his
lawful wages and other benefits to protect his rights. [40] From this
perspective and the above precedents, we conclude that the CA
erred in ruling that a finding of the employers malice or bad faith
in withholding wages must precede an award of attorneys fees
under Article 111 of the Labor Code. To reiterate, a plain

141

showing that the lawful wages were not paid without justification
is sufficient.
In the present case, we find it undisputed that the union
members are entitled to their AA benefits and that these benefits
were not paid by the Company. That the Company had no funds
is not a defense as this was not an insuperable cause that was
cited and properly invoked. As a consequence, the union
members represented by the Unionwere compelled to litigate
and incur legal expenses. On these bases, we find no difficulty
in upholding the NLRCs award of ten percent (10%) attorneys
fees.
The more significant issue in this case is the effect of the
MOA provision that attorneys fees shall be deducted from the AA
and CBA receivables. In this regard, the CA held that
the additional grant of 10% attorneys fees by the NLRC violates
Article 111 of the Labor Code, considering that the MOA between
the parties already ensured the payment of 10% attorneys fees
deductible from the AA and CBA receivables of the Unions
members. In addition, the Company also argues that the Unions
demand, together with the NLRC award, is unconscionable as it
represents 20% of the amount due or about P21.4 million.
In Traders Royal Bank Employees Union-Independent v.
NLRC,[41] we expounded on the concept of attorneys fees in the
context of Article 111 of the Labor Code, as follows:
In the first place, the fees mentioned here are the
extraordinary attorneys fees recoverable as indemnity for
damages sustained by and payable to the prevailing
part[y]. In the second place, the ten percent (10%)
attorneys fees provided for in Article 111 of the Labor Code
and Section 11, Rule VIII, Book III of the Implementing
Rules is the maximum of the award that may thus be
granted. Article 111 thus fixes only the limit on the
amount of attorneys fees the victorious party may
recover in any judicial or administrative proceedings and it
does not even prevent the NLRC from fixing an amount lower

PART IV (B) COLLECTIVE BARGAINING AND ADMINSITRATIVE AGREEMENT cases

than the ten percent (10%) ceiling prescribed by the article


when circumstances warrant it.[42] (emphases ours; citation
omitted)
In the present case, the ten percent (10%) attorneys fees
awarded by the NLRC on the basis of Article 111 of the Labor
Code accrue to the Unions members as indemnity for damages
and not to the Unions counsel as compensation for his legal
services, unless, they agreed that the award shall be given to
their counsel as additional or part of his compensation; in
this case the Union bound itself to pay 10% attorneys fees to its
counsel under the MOA and also gave up the attorneys fees
awarded to the Unions members in favor of their counsel. This
is supported by Borelas affidavit which stated that [t]he 10%
attorneys fees paid by the members/employees is separate and
distinct from the obligation of the company to pay the 10%
awarded attorneys fees which we also gave to our counsel as
part of our contingent fee agreement. [43] The limit to this
agreement is that the indemnity for damages imposed by the
NLRC on the losing party (i.e., the Company) cannot exceed
ten percent (10%).
Properly viewed from this perspective, the award cannot
be taken to mean an additional grant of attorneys fees, in
violation of the ten percent (10%) limit under Article 111 of the
Labor Code since it rests on an entirely different legal obligation
than the one contracted under the MOA. Simply stated, the
attorneys fees contracted under the MOA do not refer to the
amount of attorneys fees awarded by the NLRC; the MOA
provision on attorneys fees does not have any bearing at all
to the attorneys fees awarded by the NLRC under Article
111 of the Labor Code. Based on these considerations, it is
clear that the CA erred in ruling that the LAs award of attorneys
fees violated the maximum limit of ten percent (10%) fixed by
Article 111 of the Labor Code.
Under this interpretation, the Companys argument that
the attorneys fees are unconscionable as they represent 20% of
the amount due or about P21.4 million is more apparent than

142

real. Since the attorneys fees awarded by the LA pertained to


the Unions members as indemnity for damages, it was totally
within their right to waive the amount and give it to their counsel
as part of their contingent fee agreement. Beyond the limit fixed
by Article 111 of the Labor Code, such as between the lawyer
and the client, the attorneys fees may exceed ten percent (10%)
on the basis of quantum meruit, as in the present case.[44]
WHEREFORE, premises considered, the petition is
hereby GRANTED. The assailed decision dated March 6, 2006
and the resolution dated August 15, 2006 of the Court of
Appeals in CA-G.R. SP No. 83654 are REVERSED and SET
ASIDE. The Labor Arbiters award of attorneys fees equivalent
to ten percent (10%) of the total judgment award is
hereby REINSTATED. No pronouncement as to costs. SO
ORDERED.