ATLAS LITHOGRAPHIC SERVICES, INC.
, petitioner, Implementing the Labor Code, that supervisory unions are presently no longer
vs.
UNDERSECRETARY BIENVENIDO E. LAGUESMA (Department of Labor
and Employment) and ATLAS LITHOGRAPHIC SERVICES, INC.
SUPERVISORY, ADMINISTRATIVE, PERSONNEL, PRODUCTION,
ACCOUNTING AND CONFIDENTIAL EMPLOYEES ASSOCIATION-
KAISAHAN NG MANGGAWANG PILIPINO (KAMPIL-
KATIPUNAN), respondents.
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the
modification of the Order dated 14 December 1990 and the Resolution dated 21
November 1990 issued by the public respondents.
The antecedent facts of the case as gathered from the records are as follows:
On July 16, 1990, the supervisory, administrative personnel, production,
accounting and confidential employees of the petitioner Atlas Lithographic
Services, Inc. (ALSI) affiliated with private respondent Kaisahan ng , Pilipino, a
national labor organization. The local union adopted the name Atlas Lithographic
Services, Inc. Supervisory, Administrative, Personnel, Production, Accounting
and Confidential Employees Association or ALSI-SAPPACEA-KAMPIL in short
and which we shall hereafter refer to as the "supervisors" union.
Shortly thereafter, private respondent Kampil-Katipunan filed on behalf of the
"supervisors" union a petition for certification election so that it could be the sole
and exclusive bargaining agent of the supervisory employees.
The petitioners opposed the private respondent's petition claiming that under
Article 245 of the Labor bode the private respondent cannot represent the
supervisory employees for collective bargaining purposeless because the private
respondent also represents the rank-and-file employees' union.
On September 18, 1990, the Med-Arbiter issued an order in favor of the private
respondent, the dispositive portion of which provides:
WHEREFORE, premises considered, a certification election among the
supervisory employees belonging to the Administrative, Personnel, Production,
Accounting Departments as well as confidential employees performing
supervisory functions of Atlas Lithographic Services, Incorporated is hereby
ordered conducted within 20 days from receipt hereof, subject to usual pre-
election conference, with the following choices:
1. KAMPIL (KATIPUNAN);
2. No union.
SO ORDERED. (Rollo, pp. 39-40)
The petitioners, as expected, appealed for the reversal of the above order. The
public respondent, however, issued a resolution affirming the Med-Arbiter's order.
The petitioners, in turn, filed a motion for reconsideration but the same was
denied. Hence, this petition for certiorari.
The sole issue to be resolved in this case is whether or not, under Article 245
of the Labor Code, a local union of supervisory employees may be allowed to
affiliate with a national federation of labor organizations of rank-and-file
employees and which national federation actively represents its affiliates in
collective bargaining negotiations with the same employer of the supervisors and
in the implementation of resulting collective bargaining agreements.
The petitioner argues that KAMPIL-KATIPUNAN already represents its rank-
and-file employees and, therefore, to allow the supervisors of those employees
to affiliate with the private respondent is tantamount to allowing the circumvention
of the principle of the separation of unions under Article 245 of the Labor Code.
It further argues that the intent of the law is to prevent a single labor
organization from representing different classes of employees with conflicting
interests.
The public respondent, on the other hand, contends that despite affiliation with
a national federation, the local union does not lose its personality which is
separate, and distinct from the national federation. It cites as its legal basis the
case of Adamson & Adamson, Inc. v. CIR (127 SCRA 268 [1984]).
It maintains that Rep. Act No. 6715 contemplates the principle laid down by this
Court in the Adamson case interpreting Section 3 of Rep. Act No. 875 (the
Industrial Peace Act) on the right of a supervisor's union to affiliate. The private
respondent asserts that the legislature must have noted the Adamson ruling then
prevailing when it conceived the reinstatement in the present Labor Code of a
similar provision on the right of supervisors to organize.
Under the Industrial Peace Act of 1953, employees were classified into three
groups, namely: (1) managerial employees; (2) supervisors; and (3) rank-and file
employees. Supervisors, who were considered employees in relation to their
employer could join a union but not a union of rank-and-file employees.
With the enactment in 1974 of the Labor Code (Pres Decree No. 442),
employees were classified into managerial and rank-and-file employees. Neither
the category of supervisors nor their right to organize under the old statute were
recognized. So that, in Bulletin Publishing Corporation v. Sanchez (144 SCRA
628 [1986]), the Court interpreted the superseding labor law to have removed
from supervisors the right to unionize among themselves. The Court ruled:
In the light of the factual background of this case, We are constrained to hold
that the supervisory employees of petitioner firm may not, under the law, form a
supervisors union, separate and distinct from the existing bargaining unit (BEU),
composed of the rank-and-file employees of the Bulletin Publishing Corporation.
It is evident that most of the private respondents are considered managerial
employees. Also, it is distinctly stated in Section 11, Rule II, of the Omnibus Rules
recognized nor allowed to exist and operate as such. (pp. 633, 634)
In Section 11, Rule II, Book V of the Omnibus Rules implementing Pres. Decree
No. 442, the supervisory unions existing since the effectivity of the New Code in
January 1, 1975 ceased to operate as such and the members who did not qualify
as managerial employees under this definition in Article 212 (k) therein became
eligible to form, to join or assist a rank-and-file union.
A revision of the Labor Code undertaken by the bicameral Congress brought
about the enactment of Rep. Act No. 6715 in March 1989 in which employees
were reclassified into three groups, namely: (1) the managerial employees; (2)
supervisors; and (3) the rank and file employees. Under the present law, the
category of supervisory employees is once again recognized. Hence, Art. 212
(m) states:
(m) . . . Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority
is not merely routinary or clerical in nature but requires the use of independent
judgment. . . .
The rationale for the amendment is the government's recognition of the right of
supervisors to organize with the qualification that they shall not join or assist in
the organization of rank-and-file employees. The reason behind the Industrial
Peace Act provision on the same subject matter has been adopted in the present
statute. The interests of supervisors on the one hand, and the rank-and-file
employees on the other, are separate and distinct. The functions of supervisors,
being recommendatory in nature, are more identified with the interests of the
employer. The performance of those functions may, thus, run counter to the
interests of the rank-and-file.
This intent of the law is made clear in the deliberations of the legislators on then
Senate Bill 530 now enacted as Rep. Act No. 6715.
The definition of managerial employees was limited to those having authority
to hire and fire while those who only recommend effectively the hiring or firing or
transfers of personnel would be considered as closer to rank-and-file employees.
The exclusion, therefore, of middle level executives from the category of
managers brought about a third classification, the supervisory employees. These
supervisory employees are allowed to form their own union but they are not
allowed to join the rank-and-file union because of conflict of interest (Journal of
the Senate, First Regular Session, 1987, 1988, Volume 3,
p. 2245).
In terms of classification, however, while they are more closely identified with
the rank-and-file they are still not allowed to join the union of rank-and-file
employees. To quote the Senate Journal:
In reply to Sen. Guingona's query whether "supervisors" are included in the
term "employee", Sen. Herrera stated that while they are considered as rank-and-
file employees, they cannot join the union and they would have to form their own
supervisors' union pursuant to Rep. Act 875. (supra, p. 2288)
The peculiar role of supervisors is such that while they are not managers, when
they recommend action implementing management policy or ask for the discipline
or dismissal of subordinates, they identify with the interests of the employer and
may act contrary to the interests of the rank-and-file.
We agree with the petitioner's contention that a conflict of interest may arise in
the areas of discipline, collective bargaining and strikes.
Members of the supervisory union might refuse to carry out disciplinary
measures against their co-member rank-and-file employees.
In the area of bargaining, their interests cannot be considered identical. The
needs of one are different from those of the other. Moreover, in the event of a
strike, the national federation might influence the supervisors' union to conduct a
sympathy strike on the sole basis of affiliation.
More important, the factual issues in the Adamson case are different from the
present case. First, the rank-and-file employees in the Adamson case are not
directly under the supervisors who comprise the supervisors' union. In the case
at bar, the rank-and file employees are directly under the supervisors organized
by one and the same federation.
The contemplation of the law in Sec. 3 of the Industrial Peace Act is to prohibit
supervisors from joining a labor organization of employees under their
supervision. Sec. 3 of the Industrial Peace Act provides:
Sec. 3 — Employees' Right to Self Organization. Employees shall have the
right to self-organization and to form, join or assist labor organizations of their
own choosing for the purpose of collective bargaining through representatives of
their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. Individuals employed as
supervisors shall not be eligible for membership in a labor organization of
employees under their supervision but may form separate organizations of their
own (Emphasis supplied).
This was not the consideration in the Adamson case because as mentioned
earlier, the rank-and-file employees in the Adamson case were not under the
supervision of the supervisors involved.
Meanwhile, Article 245 of the Labor Code as amended by Rep. Act No. 6715
provides:
Art. 245. Ineligibility of managerial employees to join any labor organization:
right of supervisory employees. — Managerial employees are not eligible to join,
assist or form any labor organization. Supervisory employees shall not be eligible
for membership in a labor organization of the rank-and-file employees but may
join, assist or form separate labor organizations of their own.
 The Court construes Article 245 to mean that, as in Section 3 of the Industrial
Peace Act, supervisors shall not be given an occasion to bargain together with
the rank-and-file against the interests of the employer regarding terms and
conditions of work
Second, the national union in the Adamson case did not actively represent its
local chapters. In the present case, the local union is actively represented by the
national federation. In fact, it was the national federation, the KAMPIL-
KATIPUNAN, which initially filed a petition for certification in behalf of the
respondent union.
Thus, if the intent of the law is to avoid a situation where supervisors would
merge with the rank and-file or where the supervisors' labor organization would
represent conflicting interests, then a local supervisors' union should not be
allowed to affiliate with the national federation of union of rank-and-file employees
where that federation actively participates in union activity in the company.
The petitioner further contends that the term labor organization includes a
federation considering that Art. 212 (g) mentions "any union or association of
employees."
The respondent, however, argues that the phrase refers to a local union only in
which case, the prohibition in Art. 245 is inapplicable to the case at bar.
The prohibition against a supervisors' union joining a local union of rank-and-
file is replete with jurisprudence. The Court emphasizes that the limitation is not
confined to a case of supervisors wanting to join a rank-and-file local union. The
prohibition extends to a supervisors' local union applying for membership in a
national federation the members of which include local unions of rank-and-file
employees. The intent of the law is clear especially where, as in the case at bar,
the supervisors will be co-mingling with those employees whom they directly
supervise in their own bargaining unit.
Technicalities should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. (Rapid Manpower
Consultants, Inc. v. NLRC, 190 SCRA 747 [1990]) What should be paramount is
the intent behind the law, not its literal construction. Where one interpretation
would result in mischievous consequences while another would bring about
equity, justice, and the promotion of labor peace, there can be no doubt as to
what interpretation shall prevail.
Finally, the respondent contends that the law prohibits the employer from
interfering with the employees' right to self-organization.
There is no question about this intendment of the law. There is, however, in the
present case, no violation of such a guarantee to the employee. Supervisors are
not prohibited from forming their own union. What the law prohibits is their
membership in a labor organization of rank-and-file employees (Art. 245, Labor
Code) or their joining a national federation of rank-and-file employees that
includes the very local union which they are not allowed to directly join.
In a motion dated November 15, 1991 it appears that the petitioner has
knuckled under to the respondents' pressures and agreed to let the national
federation KAMPIL-KATIPUNAN represent its supervisors in negotiating a
collective bargaining agreement. Against the advise of its own counsel and on
the basis of alleged "industrial peace", the petitioner expressed a loss of interest
in pursuing this action. The petitioner is, of course, free to grant whatever
concessions it wishes to give to its employees unilaterally or through negotiations
but we cannot allow the resulting validation of an erroneous ruling and policy of
the Department of Labor and Employment (DOLE) to remain on the basis of the
petitioner's loss of interest. The December 14, 1990 order and the November 21,
1990 resolution of DOLE are contrary to law and must be declared as such.
WHEREFORE, the petition is hereby GRANTED. The private respondent is
disqualified from affiliating with a national federation of labor organizations which
includes the petitioner's rank-and-file employees.
SO ORDERED.
DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLEGE OF
MEDICINE, petitioner, vs. HON. BIENVENIDO E. LAGUESMA,
Undersecretary of Labor and Employment; ROLANDO S. DE LA CRUZ, Med-
Arbiter Regional Office No. IV, DE LA SALLE UNIVERSITY MEDICAL
CENTER AND COLLEGE OF MEDICINE SUPERVISORY UNION-
FEDERATION OF FREE WORKERS, respondents.
DECISION
MENDOZA, J.:
Petitioner De La Salle University Medical Center and College of Medicine
(DLSUMCCM) is a hospital and medical school at Dasmarias, Cavite. Private
respondent Federation of Free WorkersDe La Salle University Medical Center
and College of Medicine Supervisory Union Chapter (FFW-DLSUMCCMSUC),
on the other hand, is a labor organization composed of the supervisory
employees of petitioner DLSUMCCM.
On April 17, 1991, the Federation of Free Workers (FFW), a national federation
of labor unions, issued a certificate to private respondent FFW-DLSUMCCMSUC
recognizing it as a local chapter. On the same day, it filed on behalf of private
respondent FFW-DLSUMCCMSUC a petition for certification election among the
supervisory employees of petitioner DLSUMCCM. Its petition was opposed by
petitioner DLSUMCCM on the grounds that several employees who signed the
petition for certification election were managerial employees and that the FFW-
DLSUMCCMSUC was composed of both supervisory and rank-and-file
employees in the company.[1]
In its reply dated May 22, 1991, private respondent FFW-DLSUMCCMSUC
denied petitioners allegations. It contended that
2. Herein petition seeks for the holding of a certification election among the
supervisory employees of herein respondent. It does not intend to include
managerial employees.
....
6. It is not true that supervisory employees are joining the rank-and-file
employees union. While it is true that both regular rank-and-file employees and
supervisory employees of herein respondent have affiliated with FFW, yet there
are two separate unions organized by FFW. The supervisory employees have a
separate charter certificate issued by FFW.[2]
On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the
Department of Labor and Employment Regional Office No. IV, issued an order
granting respondent unions petition for certification election. He said:
. . . . [petitioner] . . . claims that based on the job descriptions which will be
presented at the hearing, the covered employees who are considered managers
occupy the positions of purchasing officers, personnel officers, property officers,
cashiers, heads of various sections and the like.
[Petitioner] also argues that assuming that some of the employees concerned
are not managerial but mere supervisory employees, the Federation of Free
Workers (FFW) cannot extend a charter certificate to this group of employees
without violating the express provision of Article 245 which provides that
supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own because the FFW had similarly issued a charter
certificate to its rank-and-file employees.
....
In its position paper, [petitioner] stated that most, if not all, of the employees
listed in . . . the petition are considered managerial employees, thereby admitting
that it has supervisory employees who are undoubtedly qualified to join or form a
labor organization of their own. The record likewise shows that [petitioner]
promised to present the job descriptions of the concerned employees during the
hearing but failed to do so. Thus, this office has no basis in determining at this
point in time who among them are considered managerial or supervisory
employees. At any rate, there is now no question that [petitioner] has in its employ
supervisory employees who are qualified to join or form a labor
union. Consequently, this office is left with no alternative but to order the holding
of certification election pursuant to Article 257 of the Labor Code, as amended,
which mandates the holding of certification election if a petition is filed by a
legitimate labor organization involving an unorganized establishment, as in the
case of herein respondent.
As to the allegation of [petitioner] that the act of the supervisory employees in
affiliating with FFW to whom the rank-and-file employees are also affiliated is
violative of Article 245 of the Labor Code, suffice it to state that the two groups
are considered separate bargaining units and local chapters of FFW. They are,
for all intents and purposes, separate with each other and their affiliation with
FFW would not make them members of the same labor union. This must be the
case because it is settled that the locals are considered the basic unit or principal
with the labor federation assuming the role of an agent. The mere fact, therefore,
that they are represented by or under the same agent is of no moment. They are
still considered separate with each other.[3]
On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary of Labor
and Employment, citing substantially the same arguments it had raised before
the med-arbiter. However, its appeal was dismissed. In his resolution, dated
August 30, 1991, respondent Undersecretary of Labor and Employment
Bienvenido E. Laguesma found the evidence presented by petitioner
DLSUMCCM concerning the alleged managerial status of several employees to
be insufficient. He also held that, following the ruling of this Court in Adamson &
Adamson, Inc. v. CIR,[4] unions formed independently by supervisory and rank-
and-file employees of a company may legally affiliate with the same national
federation.
Petitioner moved for a reconsideration but its motion was denied. In his order
dated September 19, 1991, respondent Laguesma stated:
We reviewed the records once more, and find that the issues and arguments
adduced by movant have been squarely passed upon in the Resolution sought
to be reconsidered. Accordingly, we find no legal justification to alter, much less
set aside, the aforesaid resolution. Perforce, the motion for reconsideration must
fail.
WHEREFORE, the instant motion for reconsideration is hereby denied for lack
of merit and the resolution of this office dated 30 August 1991 STANDS.
No further motions of a similar nature shall hereinafter be entertained. [5]
Hence, this petition for certiorari.
Petitioner DLSUMCCM contends that respondent Laguesma gravely abused
his discretion. While it does not anymore insist that several of those who joined
the petition for certification election are holding managerial positions in the
company, petitioner nonetheless pursues the question whether unions formed
independently by supervisory and rank-and-file employees of a company may
validly affiliate with the same national federation. With respect to this question, it
argues:
THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA,
UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS,
ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO ACTING
WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE DENIED THE
PETITIONERS APPEAL AND ORDERED THE HOLDING OF A
CERTIFICATION ELECTION AMONG THE MEMBERS OF THE
SUPERVISORY UNION EMPLOYED IN PETITIONERS COMPANY DESPITE
THE FACT THAT SAID SUPERVISORY UNION WAS AFFILIATED WITH THE
FEDERATION OF FREE WORKERS TO WHICH THE RANK-AND-FILE
EMPLOYEES OF THE SAME COMPANY ARE LIKEWISE AFFILIATED,
CONTRARY TO THE EXPRESS PROVISIONS OF ARTICLE 245 OF THE
LABOR CODE, AS AMENDED.[6]
The contention has no merit.
Supervisory employees have the right to self-organization as do other classes
of employees save only managerial ones. The Constitution states that the right
of the people, including those employed in the public and private sectors, to form
unions, associations or societies for purposes not contrary to law, shall not be
abridged.[7] As we recently held in UnitedPepsi-Cola Supervisory Union v.
Laguesma,[8] the framers of the Constitution intended, by this provision, to restore
the right of supervisory employees to self-organization which had been withdrawn
from them during the period of martial law. Thus:
Commissioner Lerum sought to amend the draft of what was later to become
Art. III, 8 of the present Constitution:
....
MR. LERUM. . . . Also, we have unions of supervisory employees and of
security guards. But what is tragic about this is that after the 1973 Constitution
was approved and in spite of an express recognition of the right to organize in
P.D. No. 442, known as the Labor Code, the right of government workers,
supervisory employees and security guards to form unions was abolished.
....
We are afraid that without any corresponding provision covering the private
sector, the security guards, the supervisory employees ... will still be excluded
and that is the purpose of this amendment.
....
In sum, Lerums proposal to amend Art. III, 8 of the draft Constitution by
including labor unions in the guarantee of organizational right should be taken in
the context of statements that his aim was the removal of the statutory ban
against security guards and supervisory employees joining labor
organizations. The approval by the Constitutional Commission of his proposal
can only mean, therefore, that the Commission intended the absolute right to
organize of government workers, supervisory employees, and security guards to
be constitutionally guaranteed.[9]
Conformably with the constitutional mandate, Art. 245 of the Labor Code now
provides for the right of supervisory employees to self-organization, subject to the
limitation that they cannot join an organization of rank-and-file employees:
Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.
The reason for the segregation of supervisory and rank-and-file employees of
a company with respect to the exercise of the right to self-organization is the
difference in their interests. Supervisory employees are more closely identified
with the employer than with the rank-and-file employees. If supervisory and rank-
and-file employees in a company are allowed to form a single union, the
conflicting interests of these groups impair their relationship and adversely affect
discipline, collective bargaining, and strikes.[10] These consequences can obtain
not only in cases where supervisory and rank-and-file employees in the same
company belong to a single union but also where unions formed independently
by supervisory and rank-andfile employees of a company are allowed to affiliate
with the same national federation. Consequently, this Court has held in Atlas
Lithographic Services Inc. v. Laguesma[11] that -
To avoid a situation where supervisors would merge with the rank-and-file or
where the supervisors labor organization would represent conflicting interests,
then a local supervisors union should not be allowed to affiliate with a national
federation of unions of rank-and-file employees where that federation actively
participates in union activities in the company.
As we explained in that case, however, such a situation would obtain only
where two conditions concur: First, the rank-and-file employees are directly under
the authority of supervisory employees.[12] Second, the national federation is
actively involved in union activities in the company. [13] Indeed, it is the presence
of these two conditions which distinguished Atlas Lithographic Services, Inc. v.
Laguesma from Adamson & Adamson, Inc. v. CIR[14] where a different conclusion
was reached.
The affiliation of two local unions in a company with the same national
federation is not by itself a negation of their independence since in relation to the
employer, the local unions are considered as the principals, while the federation
is deemed to be merely their agent. This conclusion is in accord with the policy
that any limitation on the exercise by employees of the right to self-organization
guaranteed in the Constitution must be construed strictly. Workers should be
allowed the practice of this freedom to the extent recognized in the fundamental
law. As held in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.:[15]
The locals are separate and distinct units primarily designed to secure and
maintain an equality of bargaining power between the employer and their
employee members in the economic struggle for the fruits of the joint productive
effort of labor and capital; and the association of locals into the national unionwas
in furtherance of the same end. These associations are consensual entities
capable of entering into such legal relations with their members. The essential
purpose was the affiliation of the local unions into a common enterprise to
increase by collective action the common bargaining power in respect of the
terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, and free also
to renounce the affiliation for mutual welfare upon the terms laid down in the
agreement which brought it to existence.[16]
The questions in this case, therefore, are whether the rank-and-file employees
of petitioner DLSUMCCM who compose a labor union are directly under the
supervisory employees whose own union is affiliated with the same national
federation (Federation of Free Workers) and whether such national federation is
actively involved in union activities in the company so as to make the two unions
in the same company, in reality, just one union.
Although private respondent FFW-DLSUMCCMSUC and another union
composed of rank-and-file employees of petitioner DLSUMCCM are indeed
affiliated with the same national federation, the FFW, petitioner DLSUMCCM has
not presented any evidence showing that the rank-and-file employees composing
the other union are directly under the authority of the supervisory employees. As
held in Adamson & Adamson, Inc. v. CIR,[17] the fact that the two groups of
workers are employed by the same company and the fact that they are affiliated
with a common national federation are not sufficient to justify the conclusion that
their organizations are actually just one. Their immediate professional
relationship must be established. To borrow the language of Adamson &
Adamson, Inc. v. CIR:[18]
We find without merit the contention of petitioner that if affiliation will be allowed,
only one union will in fact represent both supervisors and rank-and-file employees
of the petitioner; that there would be an indirect affiliation of supervisors and rank-
andfile employees with one labor organization; that there would be a merging of
the two bargaining units; and that the respondent union will lose its independence
because it becomes an alter ego of the federation. [19]
Mention has already been made of the fact that the petition for certification
election in this case was filed by the FFW on behalf of the local union. This
circumstance, while showing active involvement by the FFW in union activities at
the company, is by itself insufficient to justify a finding of violation of Art. 245 since
there is no proof that the supervisors who compose the local union have direct
authority over the rank-and-file employees composing the other local union which
is also affiliated with the FFW. This fact differentiates the case from Atlas
Lithographic Services, Inc. v. Laguesma,[20] in which, in addition to the fact that
the petition for certification election had been filed by the national federation, it
was shown that the rank-and-file employees were directly under the supervisors
organized by the same federation.
It follows that respondent labor officials did not gravely abuse their discretion.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB
INCORPORATED, petitioner, vs. TAGAYTAY HIGHLANDS EMPLOYEES
UNION-PGTWO, respondent.
DECISION
CARPIO-MORALES, J.:
Before this Court on certiorari under Rule 45 is the petition of the Tagaytay
Highlands International Golf Club Incorporated (THIGCI) assailing the February
15, 2002 decision of the Court of Appeals denying its petition to annul the
Department of Labor and Employment (DOLE) Resolutions of November 12,
1998 and December 29, 1998.
On October 16, 1997, the Tagaytay Highlands Employees Union
(THEU)Philippine Transport and General Workers Organization (PTGWO), Local
Chapter No. 776, a legitimate labor organization said to represent majority of the
rank-and-file employees of THIGCI, filed a petition for certification election before
the DOLE Mediation-Arbitration Unit, Regional Branch No. IV.
THIGCI, in its Comment[1] filed on November 27, 1997, opposed THEUs
petition for certification election on the ground that the list of union members
submitted by it was defective and fatally flawed as it included the names and
signatures of supervisors, resigned, terminated and absent without leave (AWOL)
employees, as well as employees of The Country Club, Inc., a corporation distinct
and separate from THIGCI; and that out of the 192 signatories to the petition, only
71 were actual rank-and-file employees of THIGCI.
THIGCI thus submitted a list of the names of its 71 actual rank-and-file
employees which it annexed[2] to its Comment to the petition for certification
election. And it therein incorporated the following tabulation[3] showing the
number of signatories to said petition whose membership in the union was being
questioned as disqualified and the reasons for disqualification:
# of Signatures Reasons for Disqualification
13 Supervisors of THIGCI
6 Resigned employees of THIGCI
2 AWOL employees of THIGCI
53 Rank-and-file employees of The Country Club at Tagaytay Highlands, Inc.
14 Supervisors of The Country Club at Tagaytay Highlands, Inc.
6 Resigned employees of The Country Club at Tagaytay Highlands, Inc.
3 Terminated employees of The Country Club at Tagaytay Highlands, Inc.
1 AWOL employees of The Country Club at Tagaytay Highlands, Inc.
 4 Signatures that cannot be deciphered
16 Names in list that were erased
2 Names with first names only
THIGCI also alleged that some of the signatures in the list of union members
were secured through fraudulent and deceitful means, and submitted copies of
the handwritten denial and withdrawal of some of its employees from participating
in the petition.[4]
Replying to THIGCIs Comment, THEU asserted that it had complied with all the
requirements for valid affiliation and inclusion in the roster of legitimate labor
organizations pursuant to DOLE Department Order No. 9, series of 1997,[5] on
account of which it was duly granted a Certification of Affiliation by DOLE on
October 10, 1997;[6] and that Section 5, Rule V of said Department Order
provides that the legitimacy of its registration cannot be subject to collateral
attack, and for as long as there is no final order of cancellation, it continues to
enjoy the rights accorded to a legitimate organization.
THEU thus concluded in its Reply[7] that under the circumstances, the Med-
Arbiter should, pursuant to Article 257 of the Labor Code and Section 11, Rule XI
of DOLE Department Order No. 09, automatically order the conduct of a
certification election.
By Order of January 28, 1998, [8] DOLE Med-Arbiter Anastacio Bactin ordered
the holding of a certification election among the rank-and-file employees of
THIGCI in this wise, quoted verbatim:
We evaluated carefully this instant petition and we are of the opinion that it is complete
in form and substance. In addition thereto, the accompanying documents show that
indeed petitioner union is a legitimate labor federation and its local/chapter was duly
reported to this Office as one of its affiliate local/chapter. Its due reporting through
the submission of all the requirements for registration of a local/chapter is a clear showing
that it was already included in the roster of legitimate labor organizations in this Office
pursuant to Department Order No. 9 Series of 1997 with all the legal right and personality
to institute this instant petition. Pursuant therefore to the provisions of Article 257 of the
Labor Code, as amended, and its Implementing Rules as amended by Department Order
No. 9, since the respondents establishment is unorganized, the holding of a certification
election is mandatory for it was clearly established that petitioner is a legitimate labor
organization. Giving due course to this petition is therefore proper and
appropriate.[9] (Emphasis supplied)
Passing on THIGCIs allegation that some of the union members are
supervisory, resigned and AWOL employees or employees of a separate and
distinct corporation, the Med-Arbiter held that the same should be properly raised
in the exclusion-inclusion proceedings at the pre-election conference. As for the
allegation that some of the signatures were secured through fraudulent and
deceitful means, he held that it should be coursed through an independent
petition for cancellation of union registration which is within the jurisdiction of the
DOLE Regional Director. In any event, the Med-Arbiter held that THIGCI failed
to submit the job descriptions of the questioned employees and other
supporting documents to bolster its claim that they are disqualified from
joining THEU.
THIGCI appealed to the Office of the DOLE Secretary which, by Resolution of
June 4, 1998, set aside the said Med-Arbiters Order and accordingly dismissed
the petition for certification election on the ground that there is a clear absence of
community or mutuality of interests, it finding that THEU sought to represent two
separate bargaining units (supervisory employees and rank-and-file employees)
as well as employees of two separate and distinct corporate entities.
Upon Motion for Reconsideration by THEU, DOLE Undersecretary Rosalinda
Dimalipis-Baldoz, by authority of the DOLE Secretary, issued DOLE Resolution
of November 12, 1998[10] setting aside the June 4, 1998 Resolution dismissing
the petition for certification election. In the November 12, 1998
Resolution, Undersecretary Dimapilis-Baldoz held that since THEU is a local
chapter, the twenty percent (20%) membership requirement is not necessary for
it to acquire legitimate status, hence, the alleged retraction and withdrawal of
support by 45 of the 70 remaining rank-and-file members . . . cannot negate the
legitimacy it has already acquired before the petition; that rather than disregard
the legitimate status already conferred on THEU by the Bureau of Labor
Relations, the names of alleged disqualified supervisory employees and
employees of the Country Club, Inc., a separate and distinct corporation, should
simply be removed from the THEUs roster of membership; and that regarding the
participation of alleged resigned and AWOL employees and those whose
signatures are illegible, the issue can be resolved during the inclusion-exclusion
proceedings at the pre-election stage.
The records of the case were thus ordered remanded to the Office of the Med-
Arbiter for the conduct of certification election.
THIGCIs Motion for Reconsideration of the November 12, 1998 Resolution
having been denied by the DOLE Undersecretary by Resolution of December 29,
1998,[11] it filed a petition for certiorari before this Court which, by Resolution of
April 14, 1999,[12] referred it to the Court of Appeals in line with its pronouncement
in National Federation of Labor (NFL) v. Hon. Bienvenido E. Laguesma, et
al.,[13] and in strict observance of the hierarchy of courts, as emphasized in the
case of St. Martin Funeral Home v. National Labor Relations Commission.[14]
By Decision of February 15, 2000,[15] the Court of Appeals denied THIGCIs
Petition for Certiorari and affirmed the DOLE Resolution dated November 12,
1998. It held that while a petition for certification election is an exception to the
innocentbystander rule, hence, the employer may pray for the dismissal of such
petition on the basis of lack of mutuality of interests of the members of the union
as well as lack of employer-employee relationship following this Courts ruling
in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation
Labor Union et al[16] and Dunlop Slazenger [Phils.] v. Hon. Secretary of Labor and
Employment et al,[17] petitioner failed to adduce substantial evidence to
support its allegations.
Hence, the present petition for certiorari, raising the following
ISSUES/ASSIGNMENT OF ERRORS:
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE
RESOLUTION DATED 12 NOVEMER 1998 HOLDING THAT SUPERVISORY
EMPLOYEES AND NON-EMPLOYEES COULD SIMPLY BE REMOVED FROM
APPELLEES ROSTER OF RANK-AND-FILE MEMBERSHIP INSTEAD OF
RESOLVING THE LEGITIMACY OF RESPONDENT UNIONS STATUS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN AFFIRMING THE
RESOLUTION DATED 12 NOVEMBER 1998 HOLDING THAT THE
DISQUALIFIED EMPLOYEES STATUS COULD READILY BE RESOLVED
DURING THE INCLUSION AND EXCLUSION PROCEEDINGS
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT HOLDING THAT
THE ALLEGATIONS OF PETITIONER HAD BEEN DULY PROVEN BY FAILURE
OF RESPONDENT UNION TO DENY THE SAME AND BY THE SHEER WEIGHT
OF EVIDENCE INTRODUCED BY PETITIONER AND CONTAINED IN THE
RECORDS OF THE CASE[18]
The statutory authority for the exclusion of supervisory employees in a rank-
and-file union, and vice-versa, is Article 245 of the Labor Code, to wit:
Article 245. Ineligibility of managerial employees to join any labor organization; right
of supervisory employees. Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.
While above-quoted Article 245 expressly prohibits supervisory employees
from joining a rank-and-file union, it does not provide what would be the effect if
a rank-and-file union counts supervisory employees among its members, or vice-
versa.
Citing Toyota[19] which held that a labor organization composed of both rank-
and-file and supervisory employees is no labor organization at all, and the
subsequent case of Progressive Development Corp. Pizza Hut v.
Ledesma[20] which held that:
The Labor Code requires that in organized and unorganized establishments, a petition
for certification election must be filed by a legitimate labor organization. The acquisition
of rights by any union or labor organization, particularly the right to file a petition for
certification election, first and foremost, depends on whether or not the labor
organization has attained the status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the petitioners prayer
that the former look into the legitimacy of the respondent Union by a sweeping
declaration that the union was in the possession of a charter certificate so that for all
intents and purposes, Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate
organization,[21] (Underscoring and emphasis supplied),
petitioner contends that, quoting Toyota, [i]t becomes necessary . . ., anterior
to the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code.[22]
Continuing, petitioner argues that without resolving the status of THEU, the
DOLE Undersecretary conveniently deferred the resolution on the serious
infirmity in the membership of [THEU] and ordered the holding of the certification
election which is frowned upon as the following ruling of this Court shows:
We also do not agree with the ruling of the respondent Secretary of Labor that the
infirmity in the membership of the respondent union can be remedied in the pre-election
conference thru the exclusion-inclusion proceedings wherein those employees who are
occupying rank-and-file positions will be excluded from the list of eligible voters. Public
respondent gravely misappreciated the basic antipathy between the interest of supervisors
and the interest of rank-and-file employees. Due to the irreconcilability of their interest
we held in Toyota Motor Philippines v. Toyota Motors Philippines Corporation Labor
Union, viz:
xxx
Clearly, based on this provision [Article 245], a labor organization composed of both
rank-and-file and supervisory employees is no labor organization at all. It cannot, for any
guise or purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot posses any of the
rights of a legitimate labor organization, including the right to file a petition for
certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to
inquire into the composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code. (Emphasis by
petitioner) (Dunlop Slazenger (Phils.), v. Secretary of Labor, 300 SCRA 120
[1998]; Underscoring and emphasis supplied by petitioner.)
The petition fails. After a certificate of registration is issued to a union, its legal
personality cannot be subject to collateral attack. It may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book
IV of the Rules to Implement the Labor Code (Implementing Rules) which section
reads:
Sec. 5. Effect of registration. The labor organization or workers association shall be
deemed registered and vested with legal personality on the date of issuance of its
certificate of registration. Such legal personality cannot thereafter be subject to collateral
attack, but may be questioned only in an independent petition for cancellation in
accordance with these Rules. (Emphasis supplied)
The grounds for cancellation of union registration are provided for under Article
239 of the Labor Code, as follows:
Art. 239. Grounds for cancellation of union registration. The following shall constitute
grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification;
(b) Failure to submit the documents mentioned in the preceding paragraph within thirty
(30) days from adoption or ratification of the constitution and by-laws or amendments
thereto;
(c) Misrepresentation, false statements or fraud in connection with the election of
officers, minutes of the election of officers, the list of voters, or failure to subject these
documents together with the list of the newly elected/appointed officers and their postal
addresses within thirty (30) days from election;
(d) Failure to submit the annual financial report to the Bureau within thirty (30) days
after the losing of every fiscal year and misrepresentation, false entries or fraud in the
preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in the cabo system, or otherwise engaging
in any activity prohibited by law;
(f) Entering into collective bargaining agreements which provide terms and conditions
of employment below minimum standards established by law;
(g) Asking for or accepting attorneys fees or negotiation fees from employers;
(h) Other than for mandatory activities under this Code, checking off special
assessments or any other fees without duly signed individual written authorizations of the
members;
(i) Failure to submit list of individual members to the Bureau once a year or whenever
required by the Bureau; and
(j) Failure to comply with the requirements under Articles 237 and 238, (Emphasis
supplied),
while the procedure for cancellation of registration is provided for in Rule VIII,
Book V of the Implementing Rules.
The inclusion in a union of disqualified employees is not among the grounds for
cancellation, unless such inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in Sections (a) and (c) of
Article 239 of above-quoted Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be
considered to have already acquired juridical personality which may not be
assailed collaterally.
As for petitioners allegation that some of the signatures in the petition for
certification election were obtained through fraud, false statement and
misrepresentation, the proper procedure is, as reflected above, for it to file a
petition for cancellation of the certificate of registration, and not to intervene in a
petition for certification election.
Regarding the alleged withdrawal of union members from participating in the
certification election, this Courts following ruling is instructive:
[T]he best forum for determining whether there were indeed retractions from some of
the laborers is in the certification election itself wherein the workers can freely express
their choice in a secret ballot. Suffice it to say that the will of the rank-and-file employees
should in every possible instance be determined by secret ballot rather than by
administrative or quasi-judicial inquiry. Such representation and certification election
cases are not to be taken as contentious litigations for suits but as mere investigations of
a non-adversary, fact-finding character as to which of the competing unions represents
the genuine choice of the workers to be their sole and exclusive collective bargaining
representative with their employer.[23]
As for the lack of mutuality of interest argument of petitioner, it, at all events,
does not lie given, as found by the court a quo, its failure to present substantial
evidence that the assailed employees are actually occupying supervisory
positions.
While petitioner submitted a list of its employees with their corresponding job
titles and ranks,[24] there is nothing mentioned about the supervisors respective
duties, powers and prerogatives that would show that they can effectively
recommend managerial actions which require the use of independent
judgment.[25]
As this Court put it in Pepsi-Cola Products Philippines, Inc. v. Secretary of
Labor:[26]
Designation should be reconciled with the actual job description of subject employees
x x x The mere fact that an employee is designated manager does not necessarily make
him one. Otherwise, there would be an absurd situation where one can be given the title
just to be deprived of the right to be a member of a union. In the case of National Steel
Corporation vs. Laguesma (G. R. No. 103743, January 29, 1996), it was stressed that:
What is essential is the nature of the employees function and not the nomenclature
or title given to the job which determines whether the employee has rank-and-file or
managerial status or whether he is a supervisory employee. (Emphasis supplied).[27]
WHEREFORE, the petition is hereby DENIED. Let the records of the case be
remanded to the office of origin, the Mediation-Arbitration Unit, Regional Branch
No. IV, for the immediate conduct of a certification election subject to the usual
pre-election conference.
SO ORDERED.
G.R. No. 164301
Present:
BANK OF THE PHILIPPINE CORONA, C.J.,
ISLANDS, CARPIO,
Petitioner, CARPIO MORALES,
VELASCO, JR.,*
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
- versus - ABAD,
VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.
Promulgated:
BPI EMPLOYEES UNION- August 10, 2010
DAVAO CHAPTER-FEDERATION
OF UNIONS
IN BPI UNIBANK,
Respondent.
x------------------------------------------------x
May a corporation invoke its merger with another corporation as a valid ground to
exempt its absorbed employees from the coverage of a union shop clause contained in its
existing Collective Bargaining Agreement (CBA) with its own certified labor union? That
is the question we shall endeavor to answer in this petition for review filed by an employer
after the Court of Appeals decided in favor of respondent union, which is the employees
recognized collective bargaining representative.
At the outset, we should call to mind the spirit and the letter of the Labor Code
provisions on union security clauses, specifically Article 248 (e), which states, x x
x Nothing in this Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at the
time of the signing of the collective bargaining agreement.[1] This case which involves the
application of a collective bargaining agreement with a union shop clause should be
resolved principally from the standpoint of the clear provisions of our labor laws, and the
express terms of the CBA in question, and not by inference from the general consequence
of the merger of corporations under the Corporation Code, which obviously does not deal
with and, therefore, is silent on the terms and conditions of employment in corporations
or juridical entities.
This issue must be resolved NOW, instead of postponing it to a future time when the
CBA is renegotiated as suggested by the Honorable Justice Arturo D. Brion because the
same issue may still be resurrected in the renegotiation if the absorbed employees insist
on their privileged status of being exempt from any union shop clause or any variant
thereof.
We find it significant to note that it is only the employer, Bank of the Philippine Islands
(BPI), that brought the case up to this Court via the instant petition for review; while the
employees actually involved in the case did not pursue the same relief, but had instead
chosen in effect to acquiesce to the decision of the Court of Appeals which effectively
required them to comply with the union shop clause under the existing CBA at the time
of the merger of BPI with Far East Bank and Trust Company (FEBTC), which decision
had already become final and executory as to the aforesaid employees. By not
appealing the decision of the Court of Appeals, the aforesaid employees are bound by the
said Court of Appeals decision to join BPIs duly certified labor union. In view of the
apparent acquiescence of the affected FEBTC employees in the Court of Appeals
decision, BPI should not have pursued this petition for review. However, even assuming
that BPI may do so, the same still cannot prosper.
What is before us now is a petition for review under Rule 45 of the Rules of Court of
the Decision[2] dated September 30, 2003 of the Court of Appeals, as reiterated in its
Resolution[3] of June 9, 2004, reversing and setting aside the Decision[4] dated November
23, 2001 of Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP No. 70445,
entitled BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank v.
Bank of the Philippine Islands, et al.
The antecedent facts are as follows:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger
executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC. [5] This
Article and Plan of Merger was approved by the Securities and Exchange Commission
on April 7, 2000.[6]
 Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC
were transferred to and absorbed by BPI as the surviving corporation. FEBTC
employees, including those in its different branches across the country, were hired by
petitioner as its own employees, with their status and tenure recognized and salaries and
benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI
Unibank (hereinafter the Union, for brevity) is the exclusive bargaining agent of BPIs
rank and file employees in Davao City. The former FEBTC rank-and-file employees in
Davao City did not belong to any labor union at the time of the merger. Prior to the
effectivity of the merger, or on March 31, 2000, respondent Union invited said FEBTC
employees to a meeting regarding the Union Shop Clause (Article II, Section 2) of the
existing CBA between petitioner BPI and respondent Union.[7]
The parties both advert to certain provisions of the existing CBA, which are quoted
below:
ARTICLE I
Section 1. Recognition and Bargaining Unit The BANK recognizes the
UNION as the sole and exclusive collective bargaining representative of all
the regular rank and file employees of the Bank offices in Davao City.
Section 2. Exclusions
Section 3. Additional Exclusions
Section 4. Copy of Contract
ARTICLE II
Section 1. Maintenance of Membership All employees within the
bargaining unit who are members of the Union on the date of the effectivity
of this Agreement as well as employees within the bargaining unit who
subsequently join or become members of the Union during the lifetime of this
Agreement shall as a condition of their continued employment with the Bank,
maintain their membership in the Union in good standing.
Section 2. Union Shop - New employees falling within the bargaining unit
as defined in Article I of this Agreement, who may hereafter be regularly
employed by the Bank shall, within thirty (30) days after they become regular
employees, join the Union as a condition of their continued employment. It is
understood that membership in good standing in the Union is a condition of
their continued employment with the Bank.[8] (Emphases supplied.)
After the meeting called by the Union, some of the former FEBTC employees joined
the Union, while others refused. Later, however, some of those who initially joined
retracted their membership.[9]
Respondent Union then sent notices to the former FEBTC employees who refused to
join, as well as those who retracted their membership, and called them to a hearing
regarding the matter. When these former FEBTC employees refused to attend the hearing,
the president of the Union requested BPI to implement the Union Shop Clause of the
CBA and to terminate their employment pursuant thereto. [10]
After two months of management inaction on the request, respondent Union informed expense of industrial peace in the company.
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 of the petitioner to require the individual respondents to become members or
parties.[11]
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated November 23,
2001, ruled in favor of petitioner BPIs interpretation that the former FEBTC employees
were not covered by the Union Security Clause of the CBA between the Union and the
Bank on the ground that the said employees were not new employees who were hired and
subsequently regularized, but were absorbed employees by operation of law because
the former employees of FEBTC can be considered assets and liabilities of the
absorbed corporation. The Voluntary Arbitrator concluded that the former FEBTC IN RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE
employees could not be compelled to join the Union, as it was their constitutional right CONSIDERED NEW EMPLOYEES OF BPI FOR PURPOSES OF
to join or not to join any organization.
Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator
denied the same in an Order dated March 25, 2002.[13]
Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to the Court
of Appeals. In the herein assailed Decision dated September 30, 2003, the Court of
Appeals reversed and set aside the Decision of the Voluntary Arbitrator. [14] Likewise, the
Court of Appeals denied herein petitioners Motion for Reconsideration in a Resolution
dated June 9, 2004.
The Court of Appeals pertinently ruled in its Decision:
A union-shop clause has been defined as a form of union security provision
wherein non-members may be hired, but to retain employment must become
union members after a certain period.
There is no question as to the existence of the union-shop clause in the CBA
between the petitioner-union and the company. The controversy lies in its
application to the absorbed employees.
This Court agrees with the voluntary arbitrator that the ABSORBED
employees are distinct and different from NEW employees BUT only in so far
as their employment service is concerned. The distinction ends there. In the
case at bar, the absorbed employees length of service from its former employer
is tacked with their employment with BPI. Otherwise stated, the absorbed
employees service is continuous and there is no gap in their service record.
This Court is persuaded that the similarities of new and absorbed employees
far outweighs the distinction between them. The similarities lies on the
following, to wit: (a) they have a new employer; (b) new working conditions;
(c) new terms of employment and; (d) new company policy to follow. As such,
they should be considered as new employees for purposes of applying the
provisions of the CBA regarding the union-shop clause.
To rule otherwise would definitely result to a very awkward and unfair
situation wherein the absorbed employees shall be in a different if not, better
situation than the existing BPI employees. The existing BPI employees by
virtue of the union-shop clause are required to pay the monthly union dues,
remain as members in good standing of the union otherwise, they shall be
terminated from the company, and other union-related obligations. On the
other hand, the absorbed employees shall enjoy the fruits of labor of the
petitioner-union and its members for nothing in exchange. Certainly, this
would disturb industrial peace in the company which is the paramount reason
for the existence of the CBA and the union.
The voluntary arbitrators interpretation of the provisions of the CBA
concerning the coverage of the union-shop clause is at war with the spirit and
the rationale why the Labor Code itself allows the existence of such provision.
The Supreme Court in the case of Manila Mandarin Employees Union vs.
NLRC (G.R. No. 76989, September 29, 1987) rule, to quote:
This Court has held that a valid form of union security, and such
a provision in a collective bargaining agreement is not a restriction
of the right of freedom of association guaranteed by the
Constitution.
A closed-shop agreement is an agreement whereby an employer
binds himself to hire only members of the contracting union who
must continue to remain members in good standing to keep their
jobs. It is THE MOST PRIZED ACHIEVEMENT OF
UNIONISM. IT ADDS MEMBERSHIP AND
COMPULSORY DUES. By holding out to loyal members a
promise of employment in the closed-shop, it wields group
solidarity. (Emphasis supplied)
Hence, the voluntary arbitrator erred in construing the CBA literally at the
With the foregoing ruling from this Court, necessarily, the alternative prayer
if they refuse, for this Court to direct respondent BPI to dismiss them,
follows.[15]
Hence, petitioners present recourse, raising the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
APPLYING THE UNION SHOP CLAUSE OF THE CBA
II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN FINDING THAT THE VOLUNTARY ARBITRATORS
INTERPRETATION OF THE COVERAGE OF THE UNION SHOP
CLAUSE IS AT WAR WITH THE SPIRIT AND THE RATIONALE WHY
THE LABOR CODE ITSELF ALLOWS THE EXISTENCE OF SUCH
PROVISION[16]
In essence, the sole issue in this case is whether or not the former FEBTC employees
that were absorbed by petitioner upon the merger between FEBTC and BPI should be
covered by the Union Shop Clause found in the existing CBA between petitioner and employees who are excluded from the rank and file bargaining unit; [23] and employees
respondent Union. excluded from the union shop by express terms of the agreement.

Petitioner is of the position that the former FEBTC employees are not new employees When certain employees are obliged to join a particular union as a requisite for
of BPI for purposes of applying the Union Shop Clause of the CBA, on this note, continued employment, as in the case of Union Security Clauses, this condition is a valid
petitioner points to Section 2, Article II of the CBA, which provides: 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
New employees falling within the bargaining unit as defined in Article is not a restriction of the right of freedom of association guaranteed by the Constitution.[24]
I of this Agreement, who may hereafter be regularly employed by the Moreover, a closed shop agreement is an agreement whereby an employer binds
Bank shall, within thirty (30) days after they become himself to hire only members of the contracting union who must continue to remain
regular employees, join the Union as a condition of their continued members in good standing to keep their jobs. It is the most prized achievement of
employment. It is understood that membership in good standing in the Union unionism. It adds membership and compulsory dues. By holding out to loyal members a
[17]
is a condition of their continued employment with the Bank. (Emphases promise of employment in the closed shop, it wields group solidarity.[25]
supplied.) 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
Petitioner argues that the term new employees in the Union Shop Clause of the CBA is union or engagement as a confidential employee was presented by both parties. The sole
qualified by the phrases who may hereafter be regularly employed and after they become category therefore in which petitioner may prove its claim is the fourth recognized
regular employees which led petitioner to conclude that the new employees referred to in, exception or whether the former FEBTC employees are excluded by the express terms of
and contemplated by, the Union Shop Clause of the CBA were only those employees who the existing CBA between petitioner and respondent.
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 To reiterate, petitioner insists that the term new employees, as the same is used in the
employees absorbed by BPI cannot be considered as new employees of BPI for purposes Union Shop Clause of the CBA at issue, refers only to employees hired by BPI as non-
of applying the Union Shop Clause of the CBA.[18] regular employees who later qualify for regular employment and become regular
employees, and not those who, as a legal consequence of a merger, are allegedly
According to petitioner, the contrary interpretation made by the Court of Appeals of automatically deemed regular employees of BPI. However, the CBA does not make a
this particular CBA provision ignores, or even defies, what petitioner assumes as its clear distinction as to how a regular employee attains such a status. Moreover, there is nothing
meaning and scope which allegedly contradicts the Courts strict and restrictive in the Corporation Law and the merger agreement mandating the automatic employment
enforcement of union security agreements. as regular employees by the surviving corporation in the merger.

We do not agree. 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
Section 2, Article II of the CBA is silent as to how one becomes a regular employee of characterization by the Voluntary Arbiter of these absorbed employees as included in the
the BPI for the first time. There is nothing in the said provision which requires that a assets and liabilities of the dissolved corporation - assets because they help the Bank in
new regular employee first undergo a temporary or probationary status before its operation and liabilities because redundant employees may be terminated and
being deemed as such under the union shop clause of the CBA. 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
Union security is a generic term which is applied to and comprehends closed shop, contemplated by the CBA at issue, noting that the Certificate of Filing of the Articles of
union shop, maintenance of membership or any other form of agreement which imposes Merger and Plan of Merger between FEBTC and BPI stated that x x x the entire assets
upon employees the obligation to acquire or retain union membership as a condition and liabilities of FAR EASTERN BANK & TRUST COMPANY will be transferred to
affecting employment. There is union shop when all new regular employees are required and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining
to join the union within a certain period for their continued employment. There is supplied).[26] In sum, the Voluntary Arbiter upheld the reasoning of petitioner that the
maintenance of membership shop when employees, who are union members as of the FEBTC employees became BPI employees by operation of law because they are included
effective date of the agreement, or who thereafter become members, must maintain union in the term assets and liabilities.
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 Absorbed FEBTC Employees
the other hand, may be defined as an enterprise in which, by agreement between the are Neither Assets nor
employer and his employees or their representatives, no person may be employed in any Liabilities
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 In legal parlance, however, human beings are never embraced in the term assets and
comprised of or of which the employees in interest are a part. [19] liabilities. Moreover, BPIs absorption of former FEBTC employees was neither by
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we ruled operation of law nor by legal consequence of contract. There was no government
that: 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
It is the policy of the State to promote unionism to enable the workers law or regulation, the absorption of employees of the non-surviving entities of the merger
to negotiate with management on the same level and with more would have been mandatory on the surviving corporation. [27] In the present case, the
persuasiveness than if they were to individually and independently merger was voluntarily entered into by both banks presumably for some mutually
bargain for the improvement of their respective conditions. To this end, acceptable consideration. In fact, the Corporation Code does not also mandate the
the Constitution guarantees to them the rights to self-organization, collective absorption of the employees of the non-surviving corporation by the surviving
bargaining and negotiations and peaceful concerted actions including the right corporation in the case of a merger. Section 80 of the Corporation Code provides:
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 SEC. 80. Effects of merger or consolidation. The merger or consolidation,
instead of joining his co-employees in planning collective action and as provided in the preceding sections shall have the following effects:
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 1. The constituent corporations shall become a single corporation which, in
union shop and the closed shop as a means of encouraging the workers to join case of merger, shall be the surviving corporation designated in the plan of
and support the labor union of their own choice as their representative in the merger; and, in case of consolidation, shall be the consolidated corporation
negotiation of their demands and the protection of their interest vis--vis the designated in the plan of consolidation;
employer. (Emphasis ours.)
2. The separate existence of the constituent corporations shall cease, except
In other words, the purpose of a union shop or other union security arrangement is to that of the surviving or the consolidated corporation;
guarantee the continued existence of the union through enforced membership for the
benefit of the workers. 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
All employees in the bargaining unit covered by a Union Shop Clause in their CBA liabilities of a corporation organized under this Code;
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 4. The surviving or the consolidated corporation shall thereupon and
at the time the union shop agreement takes effect are bona fide members of a religious thereafter possess all the rights, privileges, immunities and franchises of each
organization which prohibits its members from joining labor unions on religious of the constituent corporations; and all property, real or personal, and all
grounds;[21] employees already in the service and already members of a union other receivables due on whatever account, including subscriptions to shares and
than the majority at the time the union shop agreement took effect;[22] confidential other choses in action, and all and every other interest of, or belonging to, or
due to each constituent corporation, shall be taken and deemed to be
transferred to and vested in such surviving or consolidated corporation without
further act or deed; and
5. The surviving or the consolidated corporation shall be responsible and
liable for all the liabilities and obligations of each of the constituent
corporations in the same manner as if such surviving or consolidated
corporation had itself incurred such liabilities or obligations; and any claim,
action or proceeding pending by or against any of such constituent
corporations may be prosecuted by or against the surviving or consolidated
corporation, as the case may be. Neither the rights of creditors nor any lien
upon the property of any of such constituent corporations shall be impaired by
such merger or consolidated.
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
did not contain any specific stipulation with respect to the employment contracts of
existing personnel of the non-surviving entity which is FEBTC. Unlike the Voluntary
Arbitrator, this Court cannot uphold the reasoning that the general stipulation regarding
transfer of FEBTC assets and liabilities to BPI as set forth in the Articles of Merger
necessarily includes the transfer of all FEBTC employees into the employ of BPI and
neither BPI nor the FEBTC employees allegedly could do anything about it. Even if it is
so, it does not follow that the absorbed employees should not be subject to the terms
and conditions of employment obtaining in the surviving corporation.
The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties. A labor contract merely
creates an action in personam and does not create any real right which should
be respected by third parties. This conclusion draws its force from the right of
an employer to select his employees and to decide when to engage them as
protected under our Constitution, and the same can only be restricted by law
through the exercise of the police power.[28]
Furthermore, this Court believes that it is contrary to public policy to declare the former
FEBTC employees as forming part of the assets or liabilities of FEBTC that were
transferred and absorbed by BPI in the Articles of Merger.Assets and liabilities, in this
instance, should be deemed to refer only to property rights and obligations of FEBTC and
do not include the employment contracts of its personnel. A corporation cannot
unilaterally transfer its employees to another employer like chattel. Certainly, if BPI as
an employer had the right to choose who to retain among FEBTCs employees, FEBTC
employees had the concomitant right to choose not to be absorbed by BPI. Even though
FEBTC employees had no choice or control over the merger of their employer with BPI,
they had a choice whether or not they would allow themselves to be absorbed by
BPI. Certainly nothing prevented the FEBTCs employees from resigning or retiring and
seeking employment elsewhere instead of going along with the proposed absorption.
Employment is a personal consensual contract and absorption by BPI of a former
FEBTC employee without the consent of the employee is in violation of an individuals
freedom to contract. It would have been a different matter if there was an express
provision in the articles of merger that as a condition for the merger, BPI was being
required to assume all the employment contracts of all existing FEBTC employees with
the conformity of the employees. In the absence of such a provision in the articles of
merger, then BPI clearly had the business management decision as to whether or not
employ FEBTCs employees. FEBTC employees likewise retained the prerogative to
allow themselves to be absorbed or not; otherwise, that would be tantamount to
involuntary servitude.
There appears to be no dispute that with respect to FEBTC employees that BPI chose
not to employ or FEBTC employees who chose to retire or be separated from employment the employment of an employee without violating his right to security of tenure. Among
instead of being absorbed, BPIs assumed liability to these employees pursuant to the others, in case of redundancy, for example, superfluous employees may be terminated
merger is FEBTCs liability to them in terms of separation pay, [29] retirement pay[30] or and such termination would be authorized under Article 283 of the Labor Code. [32]
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 that the terms and conditions of employment under a valid collective bargaining
voluntary mergers on the right to employment and seniority rights is persuasive and agreement in force in the surviving corporation should not be made to apply to the
illuminating. We quote the following pertinent discussion from the American Law absorbed employees.
Reports:
Several cases have involved the situation where as a result of mergers,
consolidations, or shutdowns, one group of employees, who had accumulated
seniority at one plant or for one employer, finds that their jobs have been
discontinued except to the extent that they are offered employment at the place
or by the employer where the work is to be carried on in the future. Such cases
have involved the question whether such transferring employees should be
entitled to carry with them their accumulated seniority or whether they are to
be compelled to start over at the bottom of the seniority list in the "new" job.
It has been recognized in some cases that the accumulated seniority does not
survive and cannot be transferred to the "new" job.
In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of
three formerly separate railroad corporations, which had previously operated
separate facilities, was consolidated in the shops of one of the roads. Displaced
employees of the other two roads were given preference for the new jobs
created in the shops of the railroad which took over the work. A controversy
arose between the employees as to whether the displaced employees were
entitled to carry with them to the new jobs the seniority rights they had
accumulated with their prior employers, that is, whether the rosters of the three
corporations, for seniority purposes, should be "dovetailed" or whether the
transferring employees should go to the bottom of the roster of their new
employer. Labor representatives of the various systems involved attempted to
work out an agreement which, in effect, preserved the seniority status obtained
in the prior employment on other roads, and the action was for specific
performance of this agreement against a demurring group of the original
employees of the railroad which was operating the consolidated shops. The
relief sought was denied, the court saying that, absent some specific contract
provision otherwise, seniority rights were ordinarily limited to the
employment in which they were earned, and concluding that the contract for
which specific performance was sought was not such a completed and binding
agreement as would support such equitable relief, since the railroad, whose
concurrence in the arrangements made was essential to their effectuation, was
not a party to the agreement.
Where the provisions of a labor contract provided that in the event that a
trucker absorbed the business of another private contractor or common
carrier, or was a party to a merger of lines, the seniority of the
employees absorbed or affected thereby should be determined by mutual
agreement between the trucker and the unions involved, it was held in Moore
v International Brotherhood of Teamsters, etc. (1962, Ky) 356 SW2d 241,
that the trucker was not required to absorb the affected employees as well as
the business, the court saying that they could find no such meaning in the
above clause, stating that it dealt only with seniority, and not with initial
employment. Unless and until the absorbing company agreed to take the
employees of the company whose business was being absorbed, no seniority
problem was created, said the court, hence the provision of the contract could
have no application. Furthermore, said the court, it did not require that the
absorbing company take these employees, but only that if it did take them the
question of seniority between the old and new employees would be worked out
by agreement or else be submitted to the grievance procedure.[31] (Emphasis
ours.)
Indeed, from the tenor of local and foreign authorities, in voluntary mergers, absorption
of the dissolved corporations employees or the recognition of the absorbed employees
service with their previous employer may be demanded from the surviving corporation if
required by provision of law or contract. The dissent of Justice Arturo D. Brion tries to
make a distinction as to the terms and conditions of employment of the absorbed
employees in the case of a corporate merger or consolidation which will, in effect, take
away from corporate management the prerogative to make purely business decisions on
the hiring of employees or will give it an excuse not to apply the CBA in force to the
prejudice of its own employees and their recognized collective bargaining agent. In this
regard, we disagree with Justice Brion.
Justice Brion takes the position that because the surviving corporation continues the
personality of the dissolved corporation and acquires all the latters rights and obligations,
it is duty-bound to absorb the dissolved corporations employees, even in the absence of a
stipulation in the plan of merger. He proposes that this interpretation would provide the
necessary protection to labor as it spares workers from being left in legal limbo.
However, there are instances where an employer can validly discontinue or terminate
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
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 employment with BPI should be treated as a special class of employees and be excluded
surviving corporation too is duty-bound to protect the rights of its own employees who from the union shop clause.
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 Justice Brion himself points out that there is no clear, categorical definition of new
stipulation in the merger plan the surviving corporation was compelled, or may be employee in the CBA. In other words, the term new employee as used in the union shop
judicially compelled, to absorb all employees under the same terms and conditions clause is used broadly without any qualification or distinction.However, the Court should
obtaining in the dissolved corporation as the surviving corporation should also take into not uphold an interpretation of the term new employee based on the general and
consideration the state of its business and its obligations to its own employees, and to extraneous provisions of the Corporation Code on merger that would defeat, rather than
their certified collective bargaining agent or labor union. 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
Even assuming we accept Justice Brions theory that in a merger situation the surviving other law should stop the parties from requiring membership in a recognized
corporation should be compelled to absorb the dissolved corporations employees as a collective bargaining agent as a condition of employment.
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 Significantly, petitioner BPI never stretches its arguments so far as to state that the
employment at any time by voluntarily resigning. For the employee to be absorbed by absorbed employees should be deemed old employees who are not covered by the Union
BPI, it requires the employees implied or express consent. It is because of this human Shop Clause. This is not surprising.
element in employment contracts and the personal, consensual nature thereof that we
cannot agree that, in a merger situation, employment contracts are automatically By law and jurisprudence, a merger only becomes effective upon approval by the
transferable from one entity to another in the same manner that a contract pertaining to Securities and Exchange Commission (SEC) of the articles of merger. In Associated Bank
purely proprietary rights such as a promissory note or a deed of sale of property is v. Court of Appeals,[33] we held:
perfectly and automatically transferable to the surviving corporation.
The procedure to be followed is prescribed under the Corporation Code.
That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as Section 79 of said Code requires the approval by the Securities and Exchange
a tool to adjudicate rights and obligations between and among the merged corporations Commission (SEC) of the articles of merger which, in turn, must have been
and the persons that deal with them. Although in a merger it is as if there is no change in duly approved by a majority of the respective stockholders of the constituent
the personality of the employer, there is in reality a change in the situation of the corporations. The same provision further states that the merger shall be
employee. Once an FEBTC employee is absorbed, there are presumably changes in his effective only upon the issuance by the SEC of a certificate of merger. The
condition of employment even if his previous tenure and salary rate is recognized by effectivity date of the merger is crucial for determining when the merged
BPI. It is reasonable to assume that BPI would have different rules and regulations and or absorbed corporation ceases to exist; and when its rights, privileges,
company practices than FEBTC and it is incumbent upon the former FEBTC employees properties as well as liabilities pass on to the surviving
to obey these new rules and adapt to their new environment. Not the least of the changes corporation. (Emphasis ours.)
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 In other words, even though BPI steps into the shoes of FEBTC as the surviving
bargaining agreement with the certified union. This presupposes that the union who is corporation, BPI does so at a particular point in time, i.e., the effectivity of the merger
party to the collective bargaining agreement is the certified union that has, in the upon the SECs issuance of a certificate of merger. In fact, the articles of merger
appropriate certification election, been shown to represent a majority of the members of themselves provided that both BPI and FEBTC will continue their respective business
the bargaining unit. operations until the SEC issues the certificate of merger and in the event SEC does not
issue such a certificate, they agree to hold each other blameless for the non-consummation
Likewise, with respect to FEBTC employees that BPI chose to employ and who also of the merger.
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 Considering the foregoing principle, BPI could have only become the employer of the
FEBTC employees and to pay the same, or commensurate salaries and other benefits that FEBTC employees it absorbed after the approval by the SEC of the merger. If the SEC
these employees previously enjoyed with FEBTC. 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
As the Union likewise pointed out in its pleadings, there were benefits under the CBA absorbed employees in BPI effective April 10, 2000, or after the SECs approval of the
that the former FEBTC employees did not enjoy with their previous employer. As merger.[34] In other words, BPI became the employer of the absorbed employees only at
BPI employees, they will enjoy all these CBA benefits upon their absorption. Thus, some point after the effectivity of the merger, notwithstanding the fact that the absorbed
although in a sense BPI is continuing FEBTCs employment of these absorbed employees, employees years of service with FEBTC were voluntarily recognized by BPI.
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 Even assuming for the sake of argument that we consider the absorbed FEBTC
strengthens the view that BPI and the former FEBTC employees voluntarily contracted employees as old employees of BPI who are not members of any union (i.e., it is their
with each other for their employment in the surviving corporation. date of hiring by FEBTC and not the date of their absorption that is considered),
Proper Appreciation of the this does not necessarily exclude them from the union security clause in the CBA. The
Term New Employees Under CBA subject of this case was effective from April 1, 1996 until March 31, 2001. Based
the CBA 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
In any event, it is of no moment that the former FEBTC employees retained the regular FEBTC is considered as their date of hiring by BPI, they would undeniably be considered
status that they possessed while working for their former employer upon their absorption new employees of BPI within the contemplation of the Union Shop Clause of the said
by petitioner. This fact would not remove them from the scope of the phrase new CBA. Otherwise, it would lead to the absurd situation that we would discriminate not
employees as contemplated in the Union Shop Clause of the CBA, contrary to petitioners only between new BPI employees (hired during the life of the CBA) and former FEBTC
insistence that the term new employees only refers to those who are initially hired as non- employees (absorbed during the life of the CBA) but also among the former FEBTC
regular employees for possible regular employment. 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
The Union Shop Clause in the CBA simply states that new employees who during the satisfies the demands of equality and justice.
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 Petitioner limited itself to the argument that its absorbed employees do not fall within
its application to only new employees who possess non-regular status, meaning the term new employees contemplated under the Union Shop Clause with the apparent
probationary status, at the start of their employment. Petitioner likewise failed to point to objective of excluding all, and not just some, of the former FEBTC employees from the
any provision in the CBA expressly excluding from the Union Shop Clause new application of the Union Shop Clause.
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 However, in law or even under the express terms of the CBA, there is no special class
of the CBA, petitioners new regular employees (regardless of the manner by which of employees called absorbed employees. In order for the Court to apply or not apply the
they became employees of BPI) are required to join the Union as a condition of their Union Shop Clause, we can only classify the former FEBTC employees as either old or
continued employment. new. If they are not old employees, they are necessarily new employees. If they are new
employees, the Union Shop Clause did not distinguish between new employees who
The dissenting opinion of Justice Brion dovetails with Justice Carpios view only in are non-regular at their hiring but who subsequently become regular and new employees
their restrictive interpretation of who are new employees under the CBA. To our who are absorbed as regular and permanent from the beginning of their employment. The
dissenting colleagues, the phrase new employees (who are covered by the union shop Union Shop Clause did not so distinguish, and so neither must we.
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 No Substantial Distinction
FEBTC employees who were deemed regular employees from the beginning of their Under the CBA Between
Regular Employees Hired After Company will absorb in future mergers and all new regular employees whom the
Probationary Status and Company hires as regular from the beginning of their employment without undergoing a
Regular Employees Hired After probationary period. In this manner, the Company can increase the number of members
the Merger 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
Verily, we agree with the Court of Appeals that there are no substantial differences same bargaining unit.[35]
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 Or worse, a certified union whose membership falls below twenty percent (20%) of the
employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both total members of the collective bargaining unit may lose its status as a legitimate labor
employees were hired/employed only after the CBA was signed. At the time they are organization altogether, even in a situation where there is no competing union. [36] In such
being required to join the Union, they are both already regular rank and file employees of a case, an interested party may file for the cancellation of the unions certificate of
BPI. They belong to the same bargaining unit being represented by the Union. They both registration with the Bureau of Labor Relations.[37]
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 Plainly, the restrictive interpretation of the union shop clause would place the certified
effect and neither of them had the opportunity to express their preference for unionism or unions very existence at the mercy and control of the employer. Relevantly, only BPI,
not. We see no cogent reason why the Union Shop Clause should not be applied equally the employer appears to be interested in pursuing this case.The former FEBTC
to these two types of new employees, for they are undeniably similarly situated. employees have not joined BPI in this appeal.

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

Non-Application of Union Justice Brion, on the other hand, appears to recognize the inherent unfairness of
Shop Clause Contrary to the perpetually excluding the absorbed employees from the ambit of the union shop
Policy of the Labor Code and clause. He proposes that this matter be left to negotiation by the parties in the next
Inimical to Industrial Peace CBA. To our mind, however, this proposal does not sufficiently address the issue. With
BPI already taking the position that employees absorbed pursuant to its voluntary mergers
It is but fair that similarly situated employees who enjoy the same privileges of a CBA with other banks are exempt from the union shop clause, the chances of the said bank
should be likewise subject to the same obligations the CBA imposes upon them. A ever agreeing to the inclusion of such employees in a future CBA is next to nil more so,
contrary interpretation of the Union Shop Clause will be inimical to industrial peace and if BPIs narrow interpretation of the union shop clause is sustained by this Court.
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 Right of an Employee not to
membership, as the dissent of Justice Carpio suggests. The fact remains that other new Join a Union is not Absolute
regular employees, to whom the absorbed employees should be compared, do not have and Must Give Way to the
the option to simply pay the agency fees and they must join the Union or face termination. Collective Good of All Members
Petitioners restrictive reading of the Union Shop Clause could also inadvertently open of the Bargaining Unit
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 The dissenting opinions place a premium on the fact that even if the former FEBTC
merger with a non-unionized company that employs more workers, an employer could employees are not old employees, they nonetheless were employed as regular and
get rid of its existing union by the simple expedient of arguing that the absorbed permanent employees without a gap in their service. However, an employees permanent
employees are not new employees, as are commonly understood to be covered by a CBAs and regular employment status in itself does not necessarily exempt him from the
union security clause. This could then lead to a new majority within the CBU that could coverage of a union shop clause.
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 In the past this Court has upheld even the more stringent type of union security
scenario is no different from the ingenious and creative union-busting schemes that clause, i.e., the closed shop provision, and held that it can be made applicable to old
corporations have fomented throughout the years, which this Court has foiled time and employees who are already regular and permanent but have chosen not to join a union. In
again in order to preserve and protect the valued place of labor in this jurisdiction the early case of Juat v. Court of Industrial Relations,[38] the Court held that an old
consistent with the Constitutions mandate of insuring social justice. 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
There is nothing in the Labor Code and other applicable laws or the CBA provision at into seven years after of the hiring of the said employee. To quote from that decision:
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 A closed-shop agreement has been considered as one form of union security
employee the status of regular employment even at the onset of his whereby only union members can be hired and workers must remain union
engagement. Moreover, no law prohibits an employer from voluntarily recognizing the members as a condition of continued employment. The requirement for
length of service of a new employee with a previous employer in relation to computation employees or workers to become members of a union as a condition for
of benefits or seniority but it should not unduly be interpreted to exclude them from the employment redounds to the benefit and advantage of said
coverage of the CBA which is a binding contractual obligation of the employer and employees because by holding out to loyal members a promise of
employees. employment in the closed-shop the union wields group solidarity. In fact, it
is said that "the closed-shop contract is the most prized achievement of
Indeed, a union security clause in a CBA should be interpreted to give meaning and unionism."
effect to its purpose, which is to afford protection to the certified bargaining agent and xxxx
ensure that the employer is dealing with a union that represents the interests of the legally This Court had categorically held in the case of Freeman Shirt
mandated percentage of the members of the bargaining unit. 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
The union shop clause offers protection to the certified bargaining agent by ensuring bargaining agreement entered into between an employer and a duly authorized
that future regular employees who (a) enter the employ of the company during the life of labor union is applicable not only to the employees or laborers that are
the CBA; (b) are deemed part of the collective bargaining unit; and (c) whose number employed after the collective bargaining agreement had been entered into
will affect the number of members of the collective bargaining unit will be compelled to but also to old employees who are not members of any labor union at the
join the union. Such compulsion has legal effect, precisely because the employer by time the said collective bargaining agreement was entered into. In other
voluntarily entering in to a union shop clause in a CBA with the certified bargaining agent words, if an employee or laborer is already a member of a labor union different
takes on the responsibility of dismissing the new regular employee who does not join the from the union that entered into a collective bargaining agreement with the
union. 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
Without the union shop clause or with the restrictive interpretation thereof as proposed bargaining agreement with the employer as a condition for his continued
in the dissenting opinions, the company can jeopardize the majority status of the certified employment. (Emphasis and underscoring supplied.)
union by excluding from union membership all new regular employees whom the

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]
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]

Contrary to the assertion in the dissent of Justice Carpio, Juat has not been overturned It is unsurprising that significant provisions on labor protection of the 1987 Constitution
by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v. Trajano.[41] The factual are found in Article XIII on Social Justice. The constitutional guarantee given the right to
milieus of these three cases are vastly different. form unions[51] and the State policy to promote unionism[52] have social justice
considerations. In Peoples Industrial and Commercial Employees and Workers
In Victoriano, the issue that confronted the Court was whether or not employees who Organization v. Peoples Industrial and Commercial Corporation,[53] we recognized that
were members of the Iglesia ni Kristo (INK) sect could be compelled to join the union [l]abor, being the weaker in economic power and resources than capital, deserve
under a closed shop provision, despite the fact that their religious beliefs prohibited them protection that is actually substantial and material.
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 The rationale for upholding the validity of union shop clauses in a CBA, even if they
freedom of association, the non-establishment clause, the non-impairment of contracts impinge upon the individual employees right or freedom of association, is not to protect
clause, the equal protection clause, and the social justice provision. In the end, the Court the union for the unions sake. Laws and jurisprudence promote unionism and afford
held that religious freedom, although not unlimited, is a fundamental personal right and certain protections to the certified bargaining agent in a unionized company because a
liberty, and has a preferred position in the hierarchy of values.[42] 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
However, Victoriano is consistent with Juat since they both affirm that the right to conditions of work from the employer. This is the rationale behind the State policy to
refrain from joining a union is not absolute. The relevant portion of Victoriano is quoted promote unionism declared in the Constitution, which was elucidated in the above-cited
below: case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.[54]

The right to refrain from joining labor organizations recognized by In the case at bar, since the former FEBTC employees are deemed covered by the Union
Section 3 of the Industrial Peace Act is, however, limited. The legal Shop Clause, they are required to join the certified bargaining agent, which supposedly
protection granted to such right to refrain from joining is withdrawn by has gathered the support of the majority of workers within the bargaining unit in the
operation of law, where a labor union and an employer have agreed on a appropriate certification proceeding. Their joining the certified union would, in fact, be
closed shop, by virtue of which the employer may employ only member in the best interests of the former FEBTC employees for it unites their interests with the
of the collective bargaining union, and the employees must continue to be majority of employees in the bargaining unit. It encourages employee solidarity and
members of the union for the duration of the contract in order to keep affords sufficient protection to the majority status of the union during the life of the CBA
their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its which are the precisely the objectives of union security clauses, such as the Union Shop
amendment by Republic Act No. 3350, provides that although it would be Clause involved herein. We are indeed not being called to balance the interests of
an unfair labor practice for an employer "to discriminate in regard to individual employees as against the State policy of promoting unionism, since the
hire or tenure of employment or any term or condition of employment to employees, who were parties in the court below, no longer contested the adverse Court
encourage or discourage membership in any labor organization" the of Appeals decision. Nonetheless, settled jurisprudence has already swung the balance in
employer is, however, not precluded "from making an agreement with a favor of unionism, in recognition that ultimately the individual employee will be benefited
labor organization to require as a condition of employment membership by that policy. In the hierarchy of constitutional values, this Court has repeatedly held
therein, if such labor organization is the representative of the that the right to abstain from joining a labor organization is subordinate to the policy of
employees." By virtue, therefore, of a closed shop agreement, before the encouraging unionism as an instrument of social justice.
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 Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire
employee not to join the labor union is curtailed and consequences to the former FEBTC employees who refuse to join the union is the
withdrawn.[43] (Emphases supplied.) forfeiture of their retirement benefits. This is clearly not the case precisely because BPI
expressly recognized under the merger the length of service of the absorbed employees
with FEBTC. Should some refuse to become members of the union, they may still opt to
If Juat exemplified an exception to the rule that a person has the right not to join a retire if they are qualified under the law, the applicable retirement plan, or the CBA, based
union, Victoriano merely created an exception to the exception on the ground of religious on their combined length of service with FEBTC and BPI. Certainly, there is nothing in
freedom. 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
Reyes, on the other hand, did not involve the interpretation of any union security case may be.
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 In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause
of association included the right not to associate or join a union in resolving the issue of the CBA covers the former FEBTC employees who were hired/employed by BPI
whether or not the votes of members of the INK sect who were part of the bargaining unit during the effectivity of the CBA in a manner which petitioner describes as absorption. A
could be excluded in the results of a certification election, simply because they were not contrary appreciation of the facts of this case would, undoubtedly, lead to an inequitable
members of the two contesting unions and were expected to have voted for NO UNION and very volatile labor situation which this Court has consistently ruled against.
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 In the case of former FEBTC employees who initially joined the union but later
not be compelled to join a union on the ground of religious freedom and even withdrew their membership, there is even greater reason for the union to request their
without Victoriano every employee has the right to vote no union in a certification dismissal from the employer since the CBA also contained a Maintenance of Membership
election as part of his freedom of association. However, Reyes is not authority for Justice Clause.
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 A final point in relation to procedural due process, the Court is not unmindful that the
permanent status but simply prefers not to join a union. 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
The other cases cited in Justice Carpios dissent on this point are likewise FEBTC employees were not covered by said clause. In the interest of fairness, we believe
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros the former FEBTC employees should be given a fresh thirty (30) days from notice of
Trabajadores de Filipinas,[44] Anucension v. National Labor Union,[45] and Gonzales v. finality of this decision to join the union before the union demands BPI to terminate their
Central Azucarera de Tarlac Labor Union [46] all involved members of the INK. In line employment under the Union Shop Clause, assuming said clause has been carried over in
with Victoriano, these cases upheld the INK members claimed exemption from the union the present CBA and there has been no material change in the situation of the parties.
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 WHEREFORE, the petition is hereby DENIED, and the Decision dated September
for Philips Industrial Development, Inc. v. National Labor Relations 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice
Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the employees who requirement imposed herein. Former FEBTC employees who opt not to become union
were exempted from joining the respondent union or who were excluded from members but who qualify for retirement shall receive their retirement benefits in
participating in the certification election were found to be not members of the accordance with law, the applicable retirement plan, or the CBA, as the case may be.
 Notwithstanding our affirmation of the applicability of the Union Shop Clause to
SO ORDERED. former FEBTC employees, for reasons already extensively discussed in the August 10,
2010 Decision, even now BPI continues to protest the inclusion of said employees in the
Union Shop Clause.
BANK OF THE PHILIPPINE ISLANDS, G.R. No. 164301
Petitioner, In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the
parties to the CBA clearly intended to limit the application of the Union Shop Clause only
Present:
to new employees who were hired as non-regular employees but later attained regular
status at some point after hiring. FEBTC employees cannot be considered new
CORONA, C.J.,
employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a
CARPIO,
consequence [5]
VELASCO, JR., of the merger.
LEONARDO-DE CASTRO,
BRION,Petitioner likewise relies heavily on the dissenting opinions of our respected
colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both
PERALTA,
dissenting
BERSAMIN, * opinions, petitioner derives its contention that the situation of absorbed
**
DEL employees
CASTILLO, can be likened to old employees of BPI, insofar as their full tenure with FEBTC
was recognized by BPI and their salaries were maintained and safeguarded from
ABAD,
VILLARAMA,
diminutionJR.,
but such absorbed employees cannot and should not be treated in exactly
**
PEREZ,
the same way as old BPI employees for there are substantial differences between
BPI EMPLOYEES UNION-DAVAO CHAPTER- MENDOZA,
them.[6] Although petitioner admits that there are similarities between absorbed and
FEDERATION OF UNIONS IN BPI UNIBANK, SERENO,
new***employees, they insist there are marked differences between them as well. Thus,
Respondent REYES, andJustice Brions stance, petitioner contends that the absorbed FEBTC employees
adopting
PERLAS-BERNABE,
should be consideredJJ. a sui generis group of employees whose classification will not be
duplicated until BPI has another merger where it would be the surviving
corporation.[7] Apparently borrowing from Justice Carpio, petitioner propounds that the
Promulgated:
Union Shop Clause should be strictly construed since it purportedly curtails the right of
the absorbed employees to abstain from joining labor organizations.[8]
Pursuant to our directive, the Union filed its Comment[9] on the Motion for
Reconsideration.
October 19, 2011 In opposition to petitioners arguments, the Union, in turn, adverts to
our discussion in the August 10, 2010 Decision regarding the voluntary nature of the
merger between BPI and FEBTC, the lack of an express stipulation in the Articles of
LEONARDO-DE CASTRO, J.: Merger regarding the transfer of employment contracts to the surviving corporation,
and the consensual nature of employment contracts as valid bases for the conclusion
that former FEBTC employees should be deemed new employees.[10] The Union argues
In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for that the creation of employment relations between former FEBTC employees and BPI
reconsideration[1] of our Decision dated August 10, 2010, holding that former employees (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their
of the Far East Bank and Trust Company (FEBTC) absorbed by BPI pursuant to the two wages, power of dismissal and of control over the employees conduct) occurred after
banks merger in 2000 were covered by the Union Shop Clause in the then existing the merger, or to be more precise, after the Securities and Exchange Commissions (SEC)
[11]
collective bargaining agreement (CBA)[2] of BPI with respondent BPI Employees Union- approval of the merger. The Union likewise points out that BPI failed to offer any
Davao Chapter-Federation of Unions in BPI Unibank (the Union). counterargument to the Courts reasoning that:

To recall, the Union Shop Clause involved in this long standing controversy provided,
thus:
ARTICLE II
xxxx
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.[3] (Emphases supplied.)
The rationale for upholding the validity of union shop clauses in a CBA,
even if they impinge upon the individual employee's right or freedom of
association, is not to protect the union for the union's sake. Laws and
jurisprudence promote unionism and afford certain protections to the
certified bargaining agent in a unionized company because a strong and
effective union presumably benefits all employees in the bargaining unit
since such a union would be in a better position to demand improved
benefits and conditions of work from the employer. x x x.
x x x 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.[12]

The bone of contention between the parties was whether or not the absorbed FEBTC
employees fell within the definition of new employees under the Union Shop Clause,
such that they may be required to join respondent union and if they fail to do so, the
Union may request BPI to terminate their employment, as the Union in fact did in the
present case. Needless to state, BPI refused to accede to the Unions request. Although
BPI won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by
the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the
Union Shop Clause was at war with the spirit and rationale why the Labor Code allows
the existence of such provision. On review with this Court, we upheld the appellate
courts ruling and disposed of the case as follows:
WHEREFORE, the petition is hereby DENIED, and the Decision dated
September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the
thirty (30) day notice requirement imposed herein. Former FEBTC employees
who opt not to become union members but who qualify for retirement shall
receive their retirement benefits in accordance with law, the applicable
retirement plan, or the CBA, as the case may be.[4]
While most of the arguments offered by BPI have already been thoroughly addressed
in the August 10, 2010 Decision, we find that a qualification of our ruling is in order only
with respect to the interpretation of the provisions of the Articles of Merger and its
implications on the former FEBTC employees security of tenure.
Taking a second look on this point, we have come to agree with Justice Brions view
that it is more in keeping with the dictates of social justice and the State policy of
according full protection to labor to deem employment contracts as automatically
assumed by the surviving corporation in a merger, even in the absence of an express
stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice
Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the
constitutionally declared policies on work, labor and employment, and the
specific FEBTC-BPI situation i.e., a merger with complete "body and soul"
transfer of all that FEBTC embodied and possessed and where both
participating banks were willing (albeit by deed, not by their written
agreement) to provide for the affected human resources by recognizing
continuity of employment should point this Court to a declaration that in a
complete merger situation where there is total takeover by one corporation issued, they shall hold each other blameless for the non-consummation of the
over another and there is silence in the merger agreement on what the fate merger.[16] We likewise previously noted that BPI made its assignments of the former
of the human resource complement shall be, the latter should not be left in FEBTC employees effective on April 10, 2000, or after the SEC approved the merger.[17] In
legal limbo and should be properly provided for, by compelling the surviving other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC
entity to absorb these employees. This is what Section 80 of the Corporation employees and its right of discipline and control over them only arose with the
Code commands, as the surviving corporation has the legal obligation to effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to
assume all the obligations and liabilities of the merged constituent render service to BPI and their right to receive benefits from the latter also arose upon
corporation. the effectivity of the merger. What is material is that all of these legal consequences of
Not to be forgotten is that the affected employees managed, operated and the merger took place during the life of an existing and valid CBA between BPI and the
worked on the transferred assets and properties as their means of livelihood; Union wherein they have mutually consented to include a Union Shop Clause.
they constituted a basic component of their corporation during its existence.
In a merger and consolidation situation, they cannot be treated without From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers
consideration of the applicable constitutional declarations and directives, or, employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of
worse, be simply disregarded. If they are so treated, it is up to this Court to the bargaining unit (defined in the CBA as comprised of BPIs rank and file employees);
read and interpret the law so that they are treated in accordance with the and (c) become regular employees without distinguishing as to the manner they acquire
legal requirements of mergers and consolidation, read in light of the social their regular status. Consequently, the number of such employees may adversely affect
justice, economic and social provisions of our Constitution. Hence, there is a the majority status of the Union and even its existence itself, as already amply explained
need for the surviving corporation to take responsibility for the affected in the Decision.
employees and to absorb them into its workforce where no appropriate
provision for the merged corporation's human resources component is made Indeed, there are differences between (a) new employees who are hired as
in the Merger Plan.[13] probationary or temporary but later regularized, and (b) new employees who, by virtue
of a merger, are absorbed from another company as regular and permanent from the
beginning of their employment with the surviving corporation. It bears reiterating here
By upholding the automatic assumption of the non-surviving corporations existing that these differences are too insubstantial to warrant the exclusion of the absorbed
employment contracts by the surviving corporation in a merger, the Court strengthens employees from the application of the Union Shop Clause.In the Decision, we noted
judicial protection of the right to security of tenure of employees affected by a merger that:
and avoids confusion regarding the status of their various benefits which were among
the chief objections of our dissenting colleagues. However, nothing in this Resolution Verily, we agree with the Court of Appeals that there are no substantial
shall impair the right of an employer to terminate the employment of the absorbed differences between a newly hired non-regular employee who was
employees for a lawful or authorized cause or the right of such an employee to resign, regularized weeks or months after his hiring and a new employee who was
retire or otherwise sever his employment, whether before or after the merger, absorbed from another bank as a regular employee pursuant to a merger, for
subject to existing contractual obligations. In this manner, Justice Brions theory of purposes of applying the Union Shop Clause. Both employees were
automatic assumption may be reconciled with the majoritys concerns with the successor hired/employed only after the CBA was signed. At the time they are being
employers prerogative to choose its employees and the prohibition against involuntary required to join the Union, they are both already regular rank and file
servitude. employees of BPI. They belong to the same bargaining unit being
represented by the Union. They both enjoy benefits that the Union was able
Notwithstanding this concession, we find no reason to reverse our previous to secure for them under the CBA. When they both entered the employ of
pronouncement that the absorbed FEBTC employees are covered by the Union Shop BPI, the CBA and the Union Shop Clause therein were already in effect and
Clause. 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
Even in our August 10, 2010 Decision, we already observed that the legal fiction in the applied equally to these two types of new employees, for they are
law on mergers (that the surviving corporation continues the corporate existence of the undeniably similarly situated.[18]
non-surviving corporation) is mainly a tool to adjudicate the rights and obligations
between and among the merged corporations and the persons that deal with
them.[14] Such a legal fiction cannot be unduly extended to an interpretation of a Union Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop
Shop Clause so as to defeat its purpose under labor law. Hence, we stated in the Decision Clause would dilute its efficacy and put the certified union that is supposedly being
that: protected thereby at the mercy of management. For if the former FEBTC employees had
no say in the merger of its former employer with another bank, as petitioner BPI
In any event, it is of no moment that the former FEBTC employees retained repeatedly decries on their behalf, the Union likewise could not prevent BPI from
the regular status that they possessed while working for their former proceeding with the merger which undisputedly affected the number of employees in
employer upon their absorption by petitioner. This fact would not remove the bargaining unit that the Union represents and may negatively impact on the Unions
them from the scope of the phrase "new employees" as contemplated in the majority status. In this instance, we should be guided by the principle that courts must
Union Shop Clause of the CBA, contrary to petitioner's insistence that the place a practical and realistic construction upon a CBA, giving due consideration to the
term "new employees" only refers to those who are initially hired as non- context in which it is negotiated and purpose which it is intended to serve.[19]
regular employees for possible regular employment.
We now come to the question: Does our affirmance of our ruling that former FEBTC
The Union Shop Clause in the CBA simply states that "new employees" who employees absorbed by BPI are covered by the Union Shop Clause violate their right to
during the effectivity of the CBA "may be regularly employed" by the Bank security of tenure which we expressly upheld in this Resolution? We answer in the
must join the union within thirty (30) days from their regularization. There is negative.
nothing in the said clause that limits its application to only new employees
who possess non-regular status, meaning probationary status, at the start of In Rance v. National Labor Relations Commission,[20] we held that:
their employment. Petitioner likewise failed to point to any provision in the
CBA expressly excluding from the Union Shop Clause new employees who It is the policy of the state to assure the right of workers to "security of
are "absorbed" as regular employees from the beginning of their tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the
employment. What is indubitable from the Union Shop Clause is that upon 1973 Constitution). The guarantee is an act of social justice. When a person
the effectivity of the CBA, petitioner's new regular employees (regardless of has no property, his job may possibly be his only possession or means of
the manner by which they became employees of BPI) are required to join the livelihood. Therefore, he should be protected against any arbitrary
Union as a condition of their continued employment.[15] deprivation of his job. Article 280 of the Labor Code has construed security
of tenure as meaning that "the employer shall not terminate the services
of an employee except for a just cause or when authorized by" the Code. x
Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor x x (Emphasis supplied.)
employer as if the former had been the employer of the latters employees from the
beginning it must be emphasized that, in reality, the legal consequences of the merger
only occur at a specific date, i.e., upon its effectivity which is the date of approval of the We have also previously held that the fundamental guarantee of security of tenure
merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in and due process dictates that no worker shall be dismissed except for a just and
the Articles of Merger that they will both continue their respective business operations authorized cause provided by law and after due process is observed.[21] Even as we now
until the SEC issues the certificate of merger and in the event no such certificate is recognize the right to continuous, unbroken employment of workers who are absorbed
into a new company pursuant to a merger, it is but logical that their employment may
be terminated for any causes provided for under the law or in jurisprudence without (b) Aside from the thirty (30) days, counted from notice of finality of the August 10,
violating their right to security of tenure. As Justice Carpio discussed in his dissenting 2010 Decision, given to former FEBTC employees to join the respondent, said employees
opinion, it is well-settled that termination of employment by virtue of a union security shall be accorded full procedural due process before their employment may be
clause embodied in a CBA is recognized in our jurisdiction.[22] In Del Monte terminated.
Philippines, Inc. v. Saldivar,[23] we explained the rationale for this policy in this wise:
Article 279 of the Labor Code ordains that "in cases of regular employment, SO ORDERED.
the employer shall not terminate the services of an employee except for a
just cause or when authorized by [Title I, Book Six of the Labor
Code]." Admittedly, the enforcement of a closed-shop or union security GENERAL MILLING G.R. No. 149552
provision in the CBA as a ground for termination finds no extension within CORPORATION,
any of the provisions under Title I, Book Six of the Labor Code. Yet Petitioner,
jurisprudence has consistently recognized, thus: "It is State policy to Present:
promote unionism to enable workers to negotiate with management on an - versus -
even playing field and with more persuasiveness than if they were to PUNO, C.J.,
individually and separately bargain with the employer. For this reason, the Chairperson,
ERNESTO CASIO, ROLANDO CARPIO MORALES,
law has allowed stipulations for 'union shop' and 'closed shop' as means of
IGOT, MARIO FAMADOR, NELSON LEONARDO-DE CASTRO,
encouraging workers to join and support the union of their choice in the
LIM, FELICISIMO BOOC, BERSAMIN, and
protection of their rights and interests vis-a-vis the employer."[24] (Emphasis PROCOPIO OBREGON, JR., and
supplied.) VILLARAMA, JR., JJ.
ANTONIO ANINIPOK,
Respondents,

Although it is accepted that non-compliance with a union security clause is a valid
ground for an employees dismissal, jurisprudence dictates that such a dismissal must
still be done in accordance with due process. This much we decreed in General Milling
Corporation v. Casio,[25] to wit:
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M.
Greenfield v. Ramos 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.
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 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 employer's decision to
dismiss him. This procedure is mandatory and its absence taints the dismissal
with illegality.
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. x x x[26] (Emphases supplied.)
In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty
(30)-day period from notice of finality of the Decision given to the affected FEBTC
employees to join the Union before the latter can request petitioner to terminate the
formers employment, petitioner must still accord said employees the twin requirements
of notice and hearing on the possibility that they may have other justifications for not
joining the Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling
presupposes there has been no material change in the situation of the parties in the
interim.
WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August
10, 2010 is AFFIRMED, subject to the qualifications that:
(a) Petitioner is deemed to have assumed the employment contracts of the Far East
Bank and Trust Company (FEBTC) employees upon effectivity of the
merger without break in the continuity of their employment, even without express Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75
stipulation in the Articles of Merger; and to P201.50, and length of service varying from eight to 25 years.[7] Casio was elected
and
VIRGILIO PINO, PAULINO
CABREROS, MA. LUNA P.
JUMAOAS, DOMINADOR BOOC,
FIDEL VALLE, BARTOLOME
AUMAN, REMEGIO CABANTAN, Promulgated:
LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO PANILAG,
Respondents. March 10, 2010
x---------------------------------------------------x
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 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 Lapu-
Lapu 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 CBA contained the following union security provisions:
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 and all
liabilities, pecuniary or otherwise, and responsibilities to any employee or
worker who is dismissed or terminated in pursuant thereof.[6]
IBM-Local 31 President for a three-year term in June 1991, while his co-respondents Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary arbitration,
were union shop stewards. the Labor Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to
the NCMB-RO. Prior to undergoing voluntary arbitration before the NCMB-RO, however,
In a letter[8] dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional the parties agreed to first submit the case to the grievance machinery of IBM-Local
Director for Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits 31. On September 7, 1994, Casio, et al. filed their Complaint with Pino, the Acting
of GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with acts inimical President of IBM-Local 31. Pino acknowledged receipt of the Complaint and assured
to the interest of the union. Through the same letter, Gabiana gave Casio, et al. three Casio, et al. that they would be seasonably notified of whatever decision and/or action
days from receipt thereof within which to file their answers or counter- the Board may have in the instant case.[14] When the IBM-Local 31 Board failed to hold
affidavits. However, Casio, et al. refused to acknowledge receipt of Gabianas letter. grievance proceedings on the Complaint of Casio, et al., NCMB Voluntary Arbitrator
Canonoy-Morada assumed jurisdiction over the same. The Complaint was docketed as
Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM- VA Case No. AC 389-01-01-95.
Local 31, issued a Resolution[9] expelling Casio, et al. from the union. Pertinent portions
of the Resolution are reproduced below: Based on the Position Papers and other documents submitted by the
parties,[15] Voluntary Arbitrator Canonoy-Morada rendered on August 16, 1995 a
Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Voluntary Arbitration Award dismissing the Complaint in VA Case No. AC 389-01-01-95
Aninipok, Mario Famador, Nelson Lim and Ernesto Casio, through Ernesto for lack of merit, but granting separation pay and attorneys fees to Casio, et al. The
Casio have refused to acknowledge receipt of the letter-complaint dated Voluntary Arbitration Award presented the following findings: (1) the termination by
February 24, 1992, requiring them to file their answer[s] or counter-affidavits GMC of the employment of Casio, et al. was in valid compliance with the closed shop
as against the charge of acts inimical to the interest of the union and that in provision in the CBA; (2) GMC had no competence to determine the good standing of a
view of such refusal to acknowledge receipt, a copy of said letter complaint union member; (3) Casio, et al. waived their right to due process when they refused to
was dropped or left in front of E. Casio; 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,
Whereas, the three (3)[-]day period given to file their answer or counter- 1992 expelling Casio, et al. as union members, also automatically ousted them as union
affidavit have already lapsed prompting the union Board to investigate the officers.[16] The dispositive portion of the Voluntary Arbitration Award reads:
charge ex parte;
WHEREFORE, above premises considered, this case filed by [Casio, et al.] is
Whereas, after such ex parte investigation the said charge has been more hereby ordered DISMISSED for lack of merit.
than adequately substantiated by the affidavits/witnesses and documentary
exhibits presented. Since the dismissal is not for a cause detrimental to the interest of the
company, respondent General Milling Corporation is, nonetheless, ordered
NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that Ernesto Casio, to pay separation pay to all [Casio, et al.] within seven (7) calendar days upon
Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, receipt of this order at the rate of one-half month per year of service
Mario Famador and Nelson Lim be expelled as union member[s] of good reckoned from the time of their employment until the date of their
standing effectively immediately. separation on March 24, 1992, thus:

RESOLVED FURTHER, to furnish copy of this Resolution to the GMC Employee Date Hired Rate/Month Service Total
Management for their information and guidance with the recommendation (1/2 mo/yr
as it is hereby recommended to dismiss the above-named employees from of service)
work.
Casio April 24/74 P2,636.29 x 18 years = P47,453.22
Igot May 1980 P2,472.75 x 12 years = P29,673.00
Gabiana then wrote a letter[10] dated March 10, 1992, addressed to Eduardo Cabahug Famador Feb. 1977 P2,498.92 x 15 years = P37,483.80
(Cabahug), GMC Vice-President for Engineering and Plant Administration, informing the Lim Aug. 1975 P2,466.21 x 17 years = P41,925.57
company of the expulsion of Casio, et al. from the union pursuant to the Resolution Booc Aug. 1978 P2,498.92 x 14 years = P34,984.88
dated February 29, 1992 of IBM-Local 31 officers and board members. Gabiana likewise Obregon May 1984 P2,273.23 x 08 years = P18,185.84
requested that Casio, et al. be immediately dismissed from their work for the interest of Aninipok Sept. 1967 P2,616.01 x 25 years = P65,400.25
industrial peace in the plant.
Gabiana followed-up with another letter[11] dated March 19, 1992, inquiring from The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of
Cabahug why Casio, et al. were still employed with GMC despite the request of IBM- the total amount due them; and shall be shared proportionately by all of the
Local 31 that Casio, et al. be immediately dismissed from service pursuant to the closed same [Casio, et al.].
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 All other claims are hereby denied.[17]
gross violation of the existing CBA and constrain the union to file a case for unfair labor
practice against GMC.
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
Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to said Award set aside.
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. The Court of Appeals granted the writ of certiorari and set aside the Voluntary
effective April 24, 1992 and placing the latter under preventive suspension for the Arbitration Award. The appellate court ruled that while the dismissal of Casio, et al., was
meantime. 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
On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike from the time of their dismissal up to the time of their reinstatement. Nevertheless, the
with the NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the Court of Appeals did not hold GMC liable to Casio, et al. for moral and exemplary
strike the illegal dismissal of union officers and members, discrimination, coercion, and damages and attorneys fees, there being no showing that their dismissal was attended
union busting. The NCMB-RO held conciliation proceedings, but no settlement was by bad faith or malice, or that the dismissal was effected in a wanton, oppressive, or
reached among the parties.[12] 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
Casio, et al. next sought recourse from the National Labor Relations Commission exemplary damages and attorneys fees, since it was on the basis of the imputations and
(NLRC) Regional Arbitration Branch VII by filing on August 3, 1992 a Complaint against actuations of Pino, et al. that Casio, et al. were illegally dismissed from employment. The
GMC and Pino, et al. for unfair labor practice, particularly, the termination of legitimate Court of Appeals thus decreed:
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] 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 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]
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.

The Motion for Reconsideration of GMC was denied by the Court of Appeals in the There are two aspects which characterize the concept of due process under the Labor
Resolution dated July 18, 2001. 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
Hence, GMC filed the instant Petition for Review, arguing that: is procedural the manner in which the dismissal was effected.[21]

I 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
THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF cause and the observance of procedural due process.
DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT
SET ASIDE THE AWARD OF THE VOLUNTARY ARBITRATOR, AND IN In Alabang Country Club, Inc. v. National Labor Relations Commission,[22] the Court laid
AWARDING REINSTATEMENT AND FULL BACKWAGES TO [Casio, et al.]. down the grounds for which an employee may be validly terminated, thus:

II Under the Labor Code, an employee may be validly terminated on the

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.].
III
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.
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.)

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF Union security is a generic term, which is applied to and comprehends closed
DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT shop, union shop, maintenance of membership, or any other form of agreement which
DID NOT ABSOLVE PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED imposes upon employees the obligation to acquire or retain union membership as a
THAT IT WAS SOLIDARILY LIABLE WITH THE UNION OFFICERS FOR THE condition affecting employment. There is union shop when all new regular employees
PAYMENT OF FULL BACKWAGES TO [Casio, et al.]. 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
At this point, we take note that Pino, et al. did not appeal from the decision of the members, must maintain union membership as a condition for continued employment
Court of Appeals. 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,
GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, by agreement between the employer and his employees or their representatives, no
the Court of Appeals departed from the principle of conclusiveness of the trial judges person may be employed in any or certain agreed departments of the enterprise unless
findings. GMC also claims that the findings of the Voluntary Arbitrator as to the legality he or she is, becomes, and, for the duration of the agreement, remains a member in
of the termination from employment of Casio, et al. are well supported by good standing of a union entirely comprised of or of which the employees in interest are
evidence. GMC further insists that before IBP-Local 31 expelled Casio, et al. from the a part.[23]
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 Union security clauses are recognized and explicitly allowed under Article 248(e) of
that Casio, et al. refused to avail themselves of such opportunity. GMC additionally the Labor Code, which provides that:
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, Art. 248. Unfair Labor Practices of Employers. x x x
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 xxxx
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 (e) To discriminate in regard to wages, hours of work, and other terms and
union, and not GMC, should be held liable for the reinstatement of and payment of full conditions of employment in order to encourage or discourage membership
backwages to Casio, et al. for the company had acted in good faith and merely complied in any labor organization. Nothing in this Code or in any other law shall stop
with the closed shop provision in the CBA. the parties from requiring membership in a recognized collective
bargaining agent as a condition for employment, except those employees
On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces who are already members of another union at the time of the signing of the
of evidence supporting the findings of the Voluntary Arbitrator. Casio, et al. contends collective bargaining agreement. (Emphasis supplied.)
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 It is State policy to promote unionism to enable workers to negotiate with
would constitute an intrusion by the company into the internal affairs of the union. The management on an even playing field and with more persuasiveness than if they were
claim of GMC that it had acted in good faith when it dismissed Casio, et al. from service to individually and separately bargain with the employer. For this reason, the law has
in accordance with the closed shop provision of the CBA is inconsistent with the failure allowed stipulations for union shop and closed shop as means of encouraging workers
of the company to accord the dismissed employees their right to due process. to join and support the union of their choice in the protection of their rights and
interest vis--vis the employer.[24]
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 Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal
not the proper venue to consider a factual issue as it is not a trier of facts. A departure import as the statutory provisions on dismissal under the Labor Code, since a CBA is the
from the general rule may be warranted where the findings of fact of the Court of law between the company and the union and compliance therewith is mandated by the
Appeals are contrary to the findings and conclusions of the trial court [or quasi-judicial express policy to give protection to labor.[25]
agency, as the case may be], or when the same is unsupported by the evidence on
record.[20] 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
Whether Casio, et al. were illegally dismissed without any valid reason is a question of applicable; (2) the union is requesting for the enforcement of the union security
fact better left to quasi-judicial agencies to determine. In this case, the Voluntary provision in the CBA; and (3) there is sufficient evidence to support the decision of the
Arbitrator was convinced that Casio, et al. were legally dismissed; while the Court of
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 Casio, et al. relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling
standing as a union member.
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional closed shop clause in the CBA; and the threat of being sued by IBM-Local 31 for unfair
Director for Visayas and Mindanao, twice requested GMC, in the letters dated March 10 labor practice. The letter made no mention at all of the evidence supporting the decision
and 19, 1992, to terminate the employment of Casio, et al. as a necessary consequence of IBM-Local 31 to expel Casio, et al. from the union. GMC never alleged nor attempted
of their expulsion from the union.
It is the third requisite that there is sufficient evidence to support the decision of IBM- such a determination, GMC cannot claim that it had terminated the employment of
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.
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.
It is apparent from the aforequoted letter that GMC terminated the employment of
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
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
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 non-
observance 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 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 IBM-Local 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 counter-affidavits, 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 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 complying with the demand of IBP-Local 31 to dismiss the expelled union members from
labor. x x x. service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal
of Casio, et al.

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. In Malayang Samahan ng mga Manggagawa sa M. Greenfield,[37] the Court held that
Ramos[33] that: notwithstanding the fact that the dismissal was at the instance of the federation and
that the federation undertook to hold the company free from any liability resulting from
While respondent company may validly dismiss the employees expelled by the dismissal of several employees, the company may still be held liable if it was remiss
the union for disloyalty under the union security clause of the collective in its duty to accord the would-be dismissed employees their right to be heard on the
bargaining agreement upon the recommendation by the union, this dismissal matter.
should not be done hastily and summarily thereby eroding the employees
right to due process, self-organization and security of tenure. The An employee who is illegally dismissed is entitled to the twin reliefs of full backwages
enforcement of union security clauses is authorized by law provided such and reinstatement. If reinstatement is not viable, separation pay is awarded to the
enforcement is not characterized by arbitrariness, and always with due employee. In awarding separation pay to an illegally dismissed employee, in lieu of
process. Even on the assumption that the federation had valid grounds to reinstatement, the amount to be awarded shall be equivalent to one month salary for
expel the union officers, due process requires that these union officers be every year of service. Under Republic Act No. 6715, employees who are illegally
accorded a separate hearing by respondent company. (Emphases supplied.) 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
The twin requirements of notice and hearing constitute the essential elements of no longer possible, the backwages shall be computed from the time of their illegal
procedural due process. The law requires the employer to furnish the employee sought termination up to the finality of the decision. Thus, Casio, et al. are entitled to
to be dismissed with two written notices before termination of employment can be backwages and separation pay considering that reinstatement is no longer possible
legally effected: (1) a written notice apprising the employee of the particular acts or because the positions they previously occupied are no longer existing, as declared by
omissions for which his dismissal is sought in order to afford him an opportunity to be GMC.[38]
heard and to defend himself with the assistance of counsel, if he desires, and (2) a Casio, et al., having been compelled to litigate in order to seek redress for their illegal
subsequent notice informing the employee of the employers decision to dismiss him. dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total
This procedure is mandatory and its absence taints the dismissal with illegality.[34] monetary award.[39]

Irrefragably, GMC cannot dispense with the requirements of notice and hearing WHEREFORE, the instant petition is hereby DENIED. The assailed decision of the
before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop Court of Appeals dated March 30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.
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 SO ORDERED.
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 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 IBP-Local 31, law and jurisprudence imposes upon GMC
the obligation to accord Casio, et al. substantive and procedural due process before
 6.2 Any employee who may hereinafter be employed to occupy a position
PICOP RESOURCES, INCORPORATED covered by the bargaining unit shall be advised by the COMPANY that they
(PRI), are required to file an application for membership with the UNION within
Petitioner, thirty (30) days from the date his appointment shall have been made regular.

- versus
ANACLETO L. TAECA, GEREMIAS S.
TATO, JAIME N. CAMPOS, MARTINIANO
A. MAGAYON, JOSEPH B. BALGOA,
MANUEL G. ABUCAY, MOISES M.
ALBARAN, MARGARITO
ALICANTE, JERRY ROMEO T. AVILA,
LORENZO D. CANON, RAUL P. DUERO,
DANILO Y. ILAN, MANUEL M. MATURAN,
JR., LUISITO R. POPERA, CLEMENTINO C.
QUIMAN, ROBERTO Q. SILOT, CHARLITO
D. SINDAY, REMBERT B. SUZONALLAN J.
TRIMIDAL, and NAMAPRI-SPFL,
Respondents
6.3 The COMPANY, upon the written request of the UNION and after
compliance with the requirements of the New Labor Code, shall give notice
of termination of services of any employee who shall fail to fulfill the
condition provided in Section 6.1 and 6.2 of this Article, but it assumes no
obligation to discharge any employee if it has reasonable grounds to believe
either that membership in the UNION was not available to the employee on
G. the same terms and conditions generally applicable to other members, or that
membership was denied or terminated for reasons other than voluntary
resignation or non-payment of regular union dues. Separation under the
Section is understood to be for cause, consequently, the dismissed employee
is not entitled to separation benefits provided under the New Labor Code and
in this AGREEMENT.[7]
On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the
management of PRI demanding the termination of employees who allegedly campaigned
for, supported and signed the Petition for Certification Election of the Federation of Free
Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered
said act of campaigning for and signing the petition for certification election of FFW as
an act of disloyalty and a valid basis for termination for a cause in accordance with its
Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article
II, Sections 6.1 and 6.2 on Union Security Clause.

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

PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking
the reversal of the Decision[1] dated July 25, 2003 and Resolution[2] dated October 23,
2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions employees to Atty. Fuentes for evaluation and final disposition in accordance with the
dated October 8, 2001[3] and April 29, 2002[4] of the National Labor Relations CBA.
Commission in NLRC CA No. M-006309-2001 and reinstating the Decision[5] dated
March 16, 2001 of the Labor Arbiter.
The facts, as culled from the records, are as follows:
Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero
A. Boniel issued a memorandum addressed to the concerned employees to explain in
writing within 72 hours why their employment should not be terminated due to acts of
disloyalty as alleged by their Union.
Within the period from May 26 to June 2, 2000, a number of employees who were
served explanation memorandum submitted their explanation, while some did not.
In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management
of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated
the demand for termination, but only of 46 member-employees, including respondents.

On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa,
Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14)
others filed a Complaint for unfair labor practice, illegal dismissal and money claims
against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his
capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his
capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor
(SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio
Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP
Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.[6] (in his
capacity as National President of SPFL).
On October 16, 2000, PRI served notices of termination for causes to the 31 out of the
46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of
disloyalty committed against it when respondents allegedly supported and signed the
Petition for Certification Election of FFW before the freedom period during the effectivity
of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor
and Employment Office (DOLE), Caraga Region.
Respondents then accused PRI of Unfair Labor Practice punishable under Article 248
(a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and
Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents were regular rank-and-file employees of PRI and bona fide members Respondents alleged that none of them ever withdrew their membership from
of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor NAMAPRI-SPFL or submitted to PRI any union dues and check-off disauthorizations
(NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona
employees of petitioner PRI. fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones
disloyalty would have been the explicit resignation or withdrawal of membership
PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period from the Union accompanied by an advice to management to discontinue union dues and
of five (5) years from May 22, 1995 until May 22, 2000. check-off deductions. They insisted that mere affixation of signature on such
authorization to file a petition for certification election was not per se an act of disloyalty.
The CBA contained the following union security provisions: They claimed that while it may be true that they signed the said authorization before the
start of the freedom period, the petition of FFW was only filed with the DOLE on May
Article II- Union Security and Check-Off 18, 2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying support
Section 6. Maintenance of membership. to the filing of a Petition for Certification Election of FFW was merely prompted by their
desire to have a certification election among the rank-and-file employees of PRI with
6.1 All employees within the appropriate bargaining unit who are hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-
members of the UNION at the time of the signing of this AGREEMENT SPFL.
shall, as a condition of continued employment by the COMPANY, maintain
their membership in the UNION in good standing during the effectivity of Furthermore, respondents contended that there was lack of procedural due process.
this AGREEMENT. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May
23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed
that NAMAPRI-SPFL merely requested PRI to investigate union members who
supported the Petition for Certification Election of FFW. Respondents claimed that they of the hierarchy of courts.[12]Moreover, it is already settled that under Section 9 of Batas
should have been summoned individually, confronted with the accusation and Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the
investigated accordingly and from where the Union may base its findings of disloyalty Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas
and, thereafter, recommend to management the termination for causes. Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the
Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions
Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their for Certiorari is specifically given the power to pass upon the evidence, if and when
termination, it was no longer the bargaining representative of the rank-and-file workers necessary, to resolve factual issues. [13]
of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no We now come to the main issue of whether there was just cause to terminate the
justification in PRIs act of dismissing respondents due to acts of disloyalty. employment of respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed to have
Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving acted in good faith at the instance of the incumbent union pursuant to the Union Security
in to the wishes of the Union in discharging them on the ground of disloyalty to the Union Clause of the CBA.
amounted to interference with, restraint or coercion of respondents exercise of their right Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they
to self-organization. The act indirectly required petitioners to support and maintain their are enjoined to keep the status quo and continue in full force and effect the terms and
membership with NAMAPRI-SPFL as a condition for their continued employment. The conditions of the existing CBA during the 60-day period and/or until a new agreement is
acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and reached by the parties.
coercion of the petitioners in the exercise of their rights to self-organization and Petitioner's argument is untenable.
constituted acts of unfair labor practice.
Union security" is a generic term, which is applied to and comprehends "closed shop,"
In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents union shop," "maintenance of membership," or any other form of agreement which
dismissal to be illegal and ordered PRI to reinstate respondents to their former or imposes upon employees the obligation to acquire or retain union membership as a
equivalent positions without loss of seniority rights and to jointly and solidarily pay their condition affecting employment. There is union shop when all new regular employees are
backwages. The dispositive portion of which reads: 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,
WHEREFORE, premises considered, judgment is hereby entered: 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
1. Declaring complainants dismissal illegal; and 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
2. Ordering respondents Picop Resources Inc. (PRI) and employed in any or certain agreed departments of the enterprise unless he or she is,
NAMAPRI-SPFL to reinstate complainants to their former or equivalent becomes, and, for the duration of the agreement, remains a member in good standing of
positions without loss of seniority rights and to jointly and solidarily pay their a union entirely comprised of or of which the employees in interest are a part. [15]
backwages in the total amount of P420,339.30 as shown in the said Annex A
plus damages in the amount of P10,000.00 each, or a total of P210,000.00 However, in terminating the employment of an employee by enforcing the union
and attorneys fees equivalent to 10% of the total monetary award. security clause, the employer needs to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union security
SO ORDERED.[9] provision in the CBA; and (3) there is sufficient evidence to support the decision of the
union to expel the employee from the union. These requisites constitute just cause for
terminating an employee based on the union security provision of the CBA.[16]
PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission
(NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal As to the first requisite, there is no question that the CBA between PRI and respondents
of respondents from employment as legal. included a union security clause, specifically, a maintenance of membership as stipulated
in Sections 6 of Article II, Union Security and Check-Off. Following the same provision,
Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for PRI, upon written request from the Union, can indeed terminate the employment of the
lack of merit. employee who failed to maintain its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions
Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the
of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, employment of respondents due to their acts of disloyalty to the Union.
2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the
Resolution dated April 29, 2002, which denied respondents motion for reconsideration. However, as to the third requisite, we find that there is no sufficient evidence to support
the decision of PRI to terminate the employment of the respondents.
On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions
of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter. PRI alleged that respondents were terminated from employment based on the alleged
acts of disloyalty they committed when they signed an authorization for the Federation of
Thus, before this Court, PRI, as petitioner, raised the following issues: Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file
employees of PRI. It contends that the acts of respondents are a violation of the Union
Security Clause, as provided in their Collective Bargaining Agreement.
I
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING We are unconvinced.
AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT We are in consonance with the Court of Appeals when it held that the mere signing of
IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION the authorization in support of the Petition for Certification Election of FFW on March
SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO 19, 20 and 21, or before the freedom period, is not sufficient ground to terminate the
NEW CBA HAS YET BEEN ENTERED INTO. employment of respondents inasmuch as the petition itself was actually filed during the
II freedom period. Nothing in the records would show that respondents failed to maintain
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION their membership in good standing in the Union. Respondents did not resign or withdraw
AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE their membership from the Union to which they belong. Respondents continued to pay
EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, their union dues and never joined the FFW.
REVISED RULES OF COURT.[10]
Significantly, petitioner's act of dismissing respondents stemmed from the latter's act
We will first delve on the technical issue raised. of signing an authorization letter to file a petition for certification election as they signed
PRI perceived a patent error in the mode of appeal elected by respondents for the it outside the freedom period. However, we are constrained to believe that an
purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC authorization letter to file a petition for certification election is different from an actual
erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of Petition for Certification Election. Likewise, as per records, it was clear that the actual
discretion falling within the ambit of Rule 65. Petition for Certification Election of FFW was filed only on May 18, 2000. [17] Thus, it
was within the ambit of the freedom period which commenced from March 21, 2000 until
Petitioner is mistaken. May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for
certification election outside the 60-day freedom period.[18] This is not the situation in this
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition case. If at all, the signing of the authorization to file a certification election was merely
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. preparatory to the filing of the petition for certification election, or an exercise of
National Labor Relations Commission.[11] This Court held that the proper vehicle for such respondents right to self-organization.
review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and Moreover, PRI anchored their decision to terminate respondents employment on
that this action should be filed in the Court of Appeals in strict observance of the doctrine Article 253 of the Labor Code which states that it shall be the duty of both parties to keep
the status quo and to continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period and/or until a new agreement is reached
by the parties. It claimed that they are still bound by the Union Security Clause of the
CBA even after the expiration of the CBA; hence, the need to terminate the employment
of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening. It reads:
Article 256. Representation issue in organized establishments. - In
organized establishments, when a verified petition questioning the majority
status of the incumbent bargaining agent is filed before the Department of
Labor and Employment within the sixty-day period before the expiration of a
collective bargaining agreement, the Med-Arbiter shall automatically order an
election by secret ballot when the verified petition is supported by the written
consent of at least twenty-five percent (25%) of all the employees in the
bargaining unit to ascertain the will of the employees in the appropriate
bargaining unit. To have a valid election, at least a majority of all eligible
voters in the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining
agent of all the workers in the unit. When an election which provides for three
or more choices results in no choice receiving a majority of the valid votes
cast, a run-off election shall be conducted between the labor unions receiving
the two highest number of votes: Provided, That the total number of votes for
all contending unions is at least fifty per cent (50%) of the number of votes
cast.
At the expiration of the freedom period, the employer shall continue to
recognize the majority status of the incumbent bargaining agent where no
petition for certification election is filed.[19]
Applying the same provision, it can be said that while it is incumbent for the employer
to continue to recognize the majority status of the incumbent bargaining agent even after
the expiration of the freedom period, they could only do so when no petition for
certification election was filed. The reason is, with a pending petition for certification,
any such agreement entered into by management with a labor organization is fraught with
the risk that such a labor union may not be chosen thereafter as the collective bargaining
representative.[20] The provision for status quo is conditioned on the fact that no
certification election was filed during the freedom period. Any other view would render
nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor organization
would represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a
petition for certification election was already ordered by the Med-Arbiter of DOLE
Caraga Region on August 23, 2000.[22] Therefore, following Article 256, at the expiration
of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent
bargaining agent does not hold true when petitions for certification election were filed,
as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal
pertains only to the economic provisions of the CBA, and does not include
representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing
of a petition for certification election. When there is a representational issue,
the status quo provision in so far as the need to await the creation of a new agreement
will not apply. Otherwise, it will create an absurd situation where the union members will
be forced to maintain membership by virtue of the union security clause existing under
the CBA and, thereafter, support another union when filing a petition for certification
election. If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a certification election
is a statutory policy that should not be circumvented,[23] or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the welfare
of the workers. Their freedom to choose who should be their bargaining representative is
of paramount importance. The fact that there already exists a bargaining representative
in the unit concerned is of no moment as long as the petition for certification election was
filed within the freedom period. What is imperative is that by such a petition for
certification election the employees are given the opportunity to make known of who
shall have the right to represent them thereafter. Not only some, but all of them should
have the right to do so. What is equally important is that everyone be given a democratic
space in the bargaining unit concerned.[24]
We will emphasize anew that the power to dismiss is a normal prerogative of the
employer. This, however, is not without limitations. The employer is bound to exercise
caution in terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals
must not be arbitrary and capricious. Due process must be observed in dismissing an
employee, because it affects not only his position but also his means of livelihood.
Employers should, therefore, respect and protect the rights of their employees, which
include the right to labor.[25]
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages
and reinstatement. If reinstatement is not viable, separation pay is awarded to the
employee. In awarding separation pay to an illegally dismissed employee, in lieu of
reinstatement, the amount to be awarded shall be equivalent to one month salary for every
year of service. Under Republic Act No. 6715, employees who are illegally dismissed are
entitled to full backwages, inclusive of allowances and other benefits, or their monetary
equivalent, computed from the time their actual compensation was withheld from them
up to the time of their actual reinstatement. But if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to the finality
of the decision. Moreover, respondents, having been compelled to litigate in order to seek
redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to
10% of the total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and
the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No.
71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of
the National Labor Relations Commission in NLRC CA No. M -006309-2001,
are AFFIRMED accordingly. Respondents are hereby awarded full backwages and
other allowances, without qualifications and diminutions, computed from the time
they were illegally dismissed up to the time they are actually reinstated. Let this case
be remanded to the Labor Arbiter for proper computation of the full backwages due
respondents, in accordance with Article 279 of the Labor Code, as expeditiously as
possible.
SO ORDERED.
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY,
INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-
appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of the Court
of First Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
Benjamin Victoriano (hereinafter referred to as Appellee), a member of the
religious sect known as the "Iglesia ni Cristo", had been in the employ of the
Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958. As
such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective
bargaining agreement containing a closed shop provision which reads as follows:
Membership in the Union shall be required as a condition of employment for all
permanent employees workers covered by this Agreement.
The collective bargaining agreement expired on March 3, 1964 but was
renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not precluded "from
making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative
of the employees." On June 18, 1961, however, Republic Act No. 3350 was
enacted, introducing an amendment to — paragraph (4) subsection (a) of section
4 of Republic Act No. 875, as follows: ... "but such agreement shall not cover
members of any religious sects which prohibit affiliation of their members in any
such labor organization".
Being a member of a religious sect that prohibits the affiliation of its members
with any labor organization, Appellee presented his resignation to appellant
Union in 1962, and when no action was taken thereon, he reiterated his
resignation on September 3, 1974. Thereupon, the Union wrote a formal letter to
the Company asking the latter to separate Appellee from the service in view of
the fact that he was resigning from the Union as a member. The management of
the Company in turn notified Appellee and his counsel that unless the Appellee
could achieve a satisfactory arrangement with the Union, the Company would be
constrained to dismiss him from the service. This prompted Appellee to file an
action for injunction, docketed as Civil Case No. 58894 in the Court of First
Instance of Manila to enjoin the Company and the Union from dismissing
Appellee.1 In its answer, the Union invoked the "union security clause" of the
collective bargaining agreement; assailed the constitutionality of Republic Act No.
3350; and contended that the Court had no jurisdiction over the case, pursuant
to Republic Act No. 875, Sections 24 and 9 (d) and (e). 2 Upon the facts agreed
upon by the parties during the pre-trial conference, the Court a quo rendered its
decision on August 26, 1965, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant
Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present
employment and sentencing the defendant Elizalde Rope Workers' Union to pay
the plaintiff P500 for attorney's fees and the costs of this action.3
From this decision, the Union appealed directly to this Court on purely
questions of law, assigning the following errors:
I. That the lower court erred when it did not rule that Republic Act No. 3350 is
unconstitutional.
II. That the lower court erred when it sentenced appellant herein to pay plaintiff
the sum of P500 as attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350, the Union
contented, firstly, that the Act infringes on the fundamental right to form lawful
associations; that "the very phraseology of said Republic Act 3350, that
membership in a labor organization is banned to all those belonging to such
religious sect prohibiting affiliation with any labor organization"4 , "prohibits all the
members of a given religious sect from joining any labor union if such sect
prohibits affiliations of their members thereto"5 ; and, consequently, deprives said
members of their constitutional right to form or join lawful associations or
organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to
Article III, Section 1 (6) of the 1935 Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is unconstitutional
for impairing the obligation of contracts in that, while the Union is obliged to
comply with its collective bargaining agreement containing a "closed shop
provision," the Act relieves the employer from its reciprocal obligation of
cooperating in the maintenance of union membership as a condition of
employment; and that said Act, furthermore, impairs the Union's rights as it
deprives the union of dues from members who, under the Act, are relieved from
the obligation to continue as such members.7
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors
those religious sects which ban their members from joining labor unions, in
violation of Article Ill, Section 1 (7) of the 1935 Constitution; and while said Act
unduly protects certain religious sects, it leaves no rights or protection to labor
organizations.8
Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional
provision that "no religious test shall be required for the exercise of a civil right,"
in that the laborer's exercise of his civil right to join associations for purposes not
contrary to law has to be determined under the Act by his affiliation with a religious
sect; that conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able to join a labor
organization, said Act would violate religious freedom.9
Fifthly, the Union contended that Republic Act No. 3350, violates the "equal
protection of laws" clause of the Constitution, it being a discriminately legislation,
inasmuch as by exempting from the operation of closed shop agreement the
members of the "Iglesia ni Cristo", it has granted said members undue
advantages over their fellow workers, for while the Act exempts them from union
obligation and liability, it nevertheless entitles them at the same time to the
enjoyment of all concessions, benefits and other emoluments that the union might
secure from the employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed shop provision" in a
collective bargaining agreement cannot be considered violative of religious
freedom, as to call for the amendment introduced by Republic Act No. 3350; 12and
that unless Republic Act No. 3350 is declared unconstitutional, trade unionism in
this country would be wiped out as employers would prefer to hire or employ
members of the Iglesia ni Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act No.
3350 does not violate the right to form lawful associations, for the right to join
associations includes the right not to join or to resign from a labor organization, if
one's conscience does not allow his membership therein, and the Act has given
substance to such right by prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of contracts for said
law formed part of, and was incorporated into, the terms of the closed shop
agreement; 15 that the Act does not violate the establishment of religion clause or
separation of Church and State, for Congress, in enacting said law, merely
accommodated the religious needs of those workers whose religion prohibits its
members from joining labor unions, and balanced the collective rights of
organized labor with the constitutional right of an individual to freely exercise his
chosen religion; that the constitutional right to the free exercise of one's religion
has primacy and preference over union security measures which are merely
contractual 16; that said Act does not violate the constitutional provision of equal
protection, for the classification of workers under the Act depending on their
religious tenets is based on substantial distinction, is germane to the purpose of
the law, and applies to all the members of a given class; 17 that said Act, finally,
does not violate the social justice policy of the Constitution, for said Act was
enacted precisely to equalize employment opportunities for all citizens in the
midst of the diversities of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is necessary
to premise that there are some thoroughly established principles which must be
followed in all cases where questions of constitutionality as obtains in the instant
case are involved. All presumptions are indulged in favor of constitutionality; one
who attacks a statute, alleging unconstitutionality must prove its invalidity beyond
a reasonable doubt, that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which supports
the statute, it will be upheld, and the challenger must negate all possible bases;
that the courts are not concerned with the wisdom, justice, policy, or expediency
of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans
the members of such religious sects that forbid affiliation of their members with
labor unions from joining labor unions appears nowhere in the wording of
Republic Act No. 3350; neither can the same be deduced by necessary
implication therefrom. It is not surprising, therefore, that appellant, having thus
misread the Act, committed the error of contending that said Act is obnoxious to
the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as well as
Section 7 of Article IV of the Constitution of 1973, provide that the right to form
associations or societies for purposes not contrary to law shall not be abridged.
Section 3 of Republic Act No. 875 provides that employees shall have the right
to self-organization and to form, join of assist labor organizations of their own
choosing for the purpose of collective bargaining and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or
protection. What the Constitution and the Industrial Peace Act recognize and
guarantee is the "right" to form or join associations. Notwithstanding the different
theories propounded by the different schools of jurisprudence regarding the
nature and contents of a "right", it can be safely said that whatever theory one
subscribes to, a right comprehends at least two broad notions, namely: first,
liberty or freedom, i.e., the absence of legal restraint, whereby an employee may
act for himself without being prevented by law; and second, power, whereby an
employee may, as he pleases, join or refrain from Joining an association. It is,
therefore, the employee who should decide for himself whether he should join or
not an association; and should he choose to join, he himself makes up his mind
as to which association he would join; and even after he has joined, he still retains
the liberty and the power to leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union. 21 Inasmuch as what both the
Constitution and the Industrial Peace Act have recognized, and guaranteed to the
employee, is the "right" to join associations of his choice, it would be absurd to
say that the law also imposes, in the same breath, upon the employee the duty
to join associations. The law does not enjoin an employee to sign up with any
association.
The right to refrain from joining labor organizations recognized by Section 3 of
the Industrial Peace Act is, however, limited. The legal protection granted to such
right to refrain from joining is withdrawn by operation of law, where a labor union
and an employer have agreed on a closed shop, by virtue of which the employer
may employ only member of the collective bargaining union, and the employees
must continue to be members of the union for the duration of the contract in order
to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an
unfair labor practice for an employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded
"from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative
of the employees". By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right of said employee not
to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act
No. 3350 introduced an exception, when it added to Section 4 (a) (4) of the
Industrial Peace Act the following proviso: "but such agreement shall not cover
members of any religious sects which prohibit affiliation of their members in any
such labor organization". Republic Act No. 3350 merely excludes ipso jure from
the application and coverage of the closed shop agreement the employees
belonging to any religious sects which prohibit affiliation of their members with
any labor organization. What the exception provides, therefore, is that members
of said religious sects cannot be compelled or coerced to join labor unions even
when said unions have closed shop agreements with the employers; that in spite
of any closed shop agreement, members of said religious sects cannot be refused
employment or dismissed from their jobs on the sole ground that they are not
members of the collective bargaining union. It is clear, therefore, that the assailed
Act, far from infringing the constitutional provision on freedom of association,
upholds and reinforces it. It does not prohibit the members of said religious sects
from affiliating with labor unions. It still leaves to said members the liberty and the
power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their
religious beliefs, the members of said religious sects prefer to sign up with the
labor union, they can do so. If in deference and fealty to their religious faith, they
refuse to sign up, they can do so; the law does not coerce them to join; neither
does the law prohibit them from joining; and neither may the employer or labor
union compel them to join. Republic Act No. 3350, therefore, does not violate the
constitutional provision on freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for impairing
the obligation of its contract, specifically, the "union security clause" embodied in
its Collective Bargaining Agreement with the Company, by virtue of which
"membership in the union was required as a condition for employment for all
permanent employees workers". This agreement was already in existence at the
time Republic Act No. 3350 was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been incorporated into the agreement. But by
reason of this amendment, Appellee, as well as others similarly situated, could
no longer be dismissed from his job even if he should cease to be a member, or
disaffiliate from the Union, and the Company could continue employing him
notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a
change into the express terms of the union security clause; the Company was
partly absolved by law from the contractual obligation it had with the Union of
employing only Union members in permanent positions, It cannot be denied,
therefore, that there was indeed an impairment of said union security clause.
According to Black, any statute which introduces a change into the express
terms of the contract, or its legal construction, or its validity, or its discharge, or
the remedy for its enforcement, impairs the contract. The extent of the change is
not material. It is not a question of degree or manner or cause, but of encroaching
in any respect on its obligation or dispensing with any part of its force. There is
an impairment of the contract if either party is absolved by law from its
performance. 22 Impairment has also been predicated on laws which, without
destroying contracts, derogate from substantial contractual rights. 23
It should not be overlooked, however, that the prohibition to impair the
obligation of contracts is not absolute and unqualified. The prohibition is general,
affording a broad outline and requiring construction to fill in the details. The
prohibition is not to be read with literal exactness like a mathematical formula, for
it prohibits unreasonable impairment only. 24 In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the vital
interests of its people. Legislation appropriate to safeguarding said interests may
modify or abrogate contracts already in effect. 25 For not only are existing laws
read into contracts in order to fix the obligations as between the parties, but the
reservation of essential attributes of sovereign power is also read into contracts
as a postulate of the legal order. All contracts made with reference to any matter
that is subject to regulation under the police power must be understood as made
in reference to the possible exercise of that power. 26 Otherwise, important and
valuable reforms may be precluded by the simple device of entering into contracts
for the purpose of doing that which otherwise may be prohibited. The policy of
protecting contracts against impairment presupposes the maintenance of a
government by virtue of which contractual relations are worthwhile a government
which retains adequate authority to secure the peace and good order of society.
The contract clause of the Constitution must, therefore, be not only in harmony
with, but also in subordination to, in appropriate instances, the reserved power of
the state to safeguard the vital interests of the people. It follows that not all
legislations, which have the effect of impairing a contract, are obnoxious to the
constitutional prohibition as to impairment, and a statute passed in the legitimate
exercise of police power, although it incidentally destroys existing contract rights,
must be upheld by the courts. This has special application to contracts regulating
relations between capital and labor which are not merely contractual, and said
labor contracts, for being impressed with public interest, must yield to the
common good. 27
In several occasions this Court declared that the prohibition against impairing
the obligations of contracts has no application to statutes relating to public
subjects within the domain of the general legislative powers of the state involving
public welfare. 28 Thus, this Court also held that the Blue Sunday Law was not an
infringement of the obligation of a contract that required the employer to furnish
work on Sundays to his employees, the law having been enacted to secure the
well-being and happiness of the laboring class, and being, furthermore, a
legitimate exercise of the police power. 29
In order to determine whether legislation unconstitutionally impairs contract
obligations, no unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may be measured or
determined, has been fashioned, but every case must be determined upon its
own circumstances. Legislation impairing the obligation of contracts can be
sustained when it is enacted for the promotion of the general good of the people,
and when the means adopted to secure that end are reasonable. Both the end
sought and the means adopted must be legitimate, i.e., within the scope of the
reserved power of the state construed in harmony with the constitutional limitation
of that power. 30
What then was the purpose sought to be achieved by Republic Act No. 3350?
Its purpose was to insure freedom of belief and religion, and to promote the
general welfare by preventing discrimination against those members of religious
sects which prohibit their members from joining labor unions, confirming thereby
their natural, statutory and constitutional right to work, the fruits of which work are
usually the only means whereby they can maintain their own life and the life of
their dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said religious sects
against two aggregates of group strength from which the individual needs
protection. The individual employee, at various times in his working life, is
confronted by two aggregates of power — collective labor, directed by a union,
and collective capital, directed by management. The union, an institution
developed to organize labor into a collective force and thus protect the individual
employee from the power of collective capital, is, paradoxically, both the
champion of employee rights, and a new source of their frustration. Moreover,
when the Union interacts with management, it produces yet a third aggregate of
group strength from which the individual also needs protection — the collective
bargaining relationship. 31
The aforementioned purpose of the amendatory law is clearly seen in the
Explanatory Note to House Bill No. 5859, which later became Republic Act No.
3350, as follows:
It would be unthinkable indeed to refuse employing a person who, on account
of his religious beliefs and convictions, cannot accept membership in a labor
organization although he possesses all the qualifications for the job. This is
tantamount to punishing such person for believing in a doctrine he has a right
under the law to believe in. The law would not allow discrimination to flourish to
the detriment of those whose religion discards membership in any labor
organization. Likewise, the law would not commend the deprivation of their right
to work and pursue a modest means of livelihood, without in any manner violating
their religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to achieve
that purpose — exempting the members of said religious sects from coverage of
union security agreements — is reasonable.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict, the latter
must, therefore, yield to the former. The Supreme Court of the United States has
also declared on several occasions that the rights in the First Amendment, which
include freedom of religion, enjoy a preferred position in the constitutional
system. 33 Religious freedom, although not unlimited, is a fundamental personal
right and liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is only where
unavoidably necessary to prevent an immediate and grave danger to the security
and welfare of the community that infringement of religious freedom may be
justified, and only to the smallest extent necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is
unconstitutional, appellant Union averred that said Act discriminates in favor of
members of said religious sects in violation of Section 1 (7) of Article Ill of the
1935 Constitution, and which is now Section 8 of Article IV of the 1973
Constitution, which provides:
No law shall be made respecting an establishment of religion, or prohibiting the
free exercise thereof, and the free exercise and enjoyment of religious profession
and worship, without discrimination and preference, shall forever be allowed. No
religious test shall be required for the exercise of civil or political rights.
The constitutional provision into only prohibits legislation for the support of any
religious tenets or the modes of worship of any sect, thus forestalling compulsion
by law of the acceptance of any creed or the practice of any form of worship, 35 but
also assures the free exercise of one's chosen form of religion within limits of
utmost amplitude. It has been said that the religion clauses of the Constitution
are all designed to protect the broadest possible liberty of conscience, to allow
each man to believe as his conscience directs, to profess his beliefs, and to live
as he believes he ought to live, consistent with the liberty of others and with the
common good. 36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between the
religions, is invalid, even though the burden may be characterized as being only
indirect. 37 But if the stage regulates conduct by enacting, within its power, a
general law which has for its purpose and effect to advance the state's secular
goals, the statute is valid despite its indirect burden on religious observance,
unless the state can accomplish its purpose without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the government
should not be precluded from pursuing valid objectives secular in character even
if the incidental result would be favorable to a religion or sect. It has likewise been
held that the statute, in order to withstand the strictures of constitutional
prohibition, must have a secular legislative purpose and a primary effect that
neither advances nor inhibits religion. 40 Assessed by these criteria, Republic Act
No. 3350 cannot be said to violate the constitutional inhibition of the "no-
establishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not
spiritual or religious or holy and eternal. It was intended to serve the secular
purpose of advancing the constitutional right to the free exercise of religion, by
averting that certain persons be refused work, or be dismissed from work, or be
dispossessed of their right to work and of being impeded to pursue a modest
means of livelihood, by reason of union security agreements. To help its citizens
to find gainful employment whereby they can make a living to support themselves
and their families is a valid objective of the state. In fact, the state is enjoined, in
the 1935 Constitution, to afford protection to labor, and regulate the relations
between labor and capital and industry. 41 More so now in the 1973 Constitution
where it is mandated that "the State shall afford protection to labor, promote full
employment and equality in employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the relation between workers and
employers. 42
The primary effects of the exemption from closed shop agreements in favor of
members of religious sects that prohibit their members from affiliating with a labor
organization, is the protection of said employees against the aggregate force of
the collective bargaining agreement, and relieving certain citizens of a burden on
their religious beliefs; and by eliminating to a certain extent economic insecurity
due to unemployment, which is a serious menace to the health, morals, and
welfare of the people of the State, the Act also promotes the well-being of society.
It is our view that the exemption from the effects of closed shop agreement does
not directly advance, or diminish, the interests of any particular religion. Although
the exemption may benefit those who are members of religious sects that prohibit
their members from joining labor unions, the benefit upon the religious sects is
merely incidental and indirect. The "establishment clause" (of religion) does not
ban regulation on conduct whose reason or effect merely happens to coincide or
harmonize with the tenets of some or all religions. 43 The free exercise clause of
the Constitution has been interpreted to require that religious exercise be
preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted consistently
with the spirit of the constitutional provision. It acted merely to relieve the exercise
of religion, by certain persons, of a burden that is imposed by union security
agreements. It was Congress itself that imposed that burden when it enacted the
Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems
advisable, could take away the same burden. It is certain that not every
conscience can be accommodated by all the laws of the land; but when general
laws conflict with scrupples of conscience, exemptions ought to be granted unless
some "compelling state interest" intervenes. 45 In the instant case, We see no
such compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of certain
religious sects, it leaves no right to, and is silent as to the protection of, labor
organizations. The purpose of Republic Act No. 3350 was not to grant rights to
labor unions. The rights of labor unions are amply provided for in Republic Act
No. 875 and the new Labor Code. As to the lamented silence of the Act regarding
the rights and protection of labor unions, suffice it to say, first, that the validity of
a statute is determined by its provisions, not by its silence 46 ; and, second, the
fact that the law may work hardship does not render it unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel persons to
join and remain members of a union to keep their jobs in violation of their religious
scrupples, would hurt, rather than help, labor unions, Congress has seen it fit to
exempt religious objectors lest their resistance spread to other workers, for
religious objections have contagious potentialities more than political and
philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty even to the country,
and a fortiori to a labor — union assuming that such unity and loyalty can be
attained through coercion — is not a goal that is constitutionally obtainable at the
expense of religious liberty. 48 A desirable end cannot be promoted by prohibited
means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates the
constitutional prohibition against requiring a religious test for the exercise of a
civil right or a political right, is not well taken. The Act does not require as a
qualification, or condition, for joining any lawful association membership in any
particular religion or in any religious sect; neither does the Act require affiliation
with a religious sect that prohibits its members from joining a labor union as a
condition or qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act No. 3350
only exempts members with such religious affiliation from the coverage of closed
shop agreements. So, under this Act, a religious objector is not required to do a
positive act — to exercise the right to join or to resign from the union. He is
exempted ipso jure without need of any positive act on his part. A conscientious
religious objector need not perform a positive act or exercise the right of resigning
from the labor union — he is exempted from the coverage of any closed shop
agreement that a labor union may have entered into. How then can there be a
religious test required for the exercise of a right when no right need be exercised?
We have said that it was within the police power of the State to enact Republic
Act No. 3350, and that its purpose was legal and in consonance with the
Constitution. It is never an illegal evasion of a constitutional provision or
prohibition to accomplish a desired result, which is lawful in itself, by discovering
or following a legal way to do it. 49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of certain
religious sects undue advantages over other workers, thus violating Section 1 of
Article III of the 1935 Constitution which forbids the denial to any person of the
equal protection of the laws. 50
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the state. It is not, therefore, a
requirement, in order to avoid the constitutional prohibition against inequality, that
every man, woman and child should be affected alike by a statute. Equality of
operation of statutes does not mean indiscriminate operation on persons merely
as such, but on persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not require that
things which are different in fact be treated in law as though they were the same.
The equal protection clause does not forbid discrimination as to things that are
different. 51 It does not prohibit legislation which is limited either in the object to
which it is directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another
in certain particulars. A law is not invalid because of simple inequality. 52 The very
idea of classification is that of inequality, so that it goes without saying that the
mere fact of inequality in no manner determines the matter of
constitutionality. 53 All that is required of a valid classification is that it be
reasonable, which means that the classification should be based on substantial
distinctions which make for real differences; that it must be germane to the
purpose of the law; that it must not be limited to existing conditions only; and that
it must apply equally to each member of the class. 54 This Court has held that the
standard is satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of enacting
laws over matters within its jurisdiction, the state is recognized as enjoying a wide
range of discretion. 56 It is not necessary that the classification be based on
scientific or marked differences of things or in their relation. 57 Neither is it
necessary that the classification be made with mathematical nicety. 58 Hence
legislative classification may in many cases properly rest on narrow
distinctions, 59 for the equal protection guaranty does not preclude the legislature
from recognizing degrees of evil or harm, and legislation is addressed to evils as
they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the effect and
coverage of union shop security agreements, into those who by reason of their
religious beliefs and convictions cannot sign up with a labor union, and those
whose religion does not prohibit membership in labor unions. Tile classification
rests on real or substantial, not merely imaginary or whimsical, distinctions. There
is such real distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different religions differ
in their dogmas and cannons. Religious beliefs, manifestations and practices,
though they are found in all places, and in all times, take so many varied forms
as to be almost beyond imagination. There are many views that comprise the
broad spectrum of religious beliefs among the people. There are diverse manners
in which beliefs, equally paramount in the lives of their possessors, may be
articulated. Today the country is far more heterogenous in religion than before,
differences in religion do exist, and these differences are important and should
not be ignored.
Even from the phychological point of view, the classification is based on real
and important differences. Religious beliefs are not mere beliefs, mere ideas
existing only in the mind, for they carry with them practical consequences and are
the motives of certain rules. of human conduct and the justification of certain
acts. 60 Religious sentiment makes a man view things and events in their relation
to his God. It gives to human life its distinctive character, its tone, its happiness
or unhappiness its enjoyment or irksomeness. Usually, a strong and passionate
desire is involved in a religious belief. To certain persons, no single factor of their
experience is more important to them than their religion, or their not having any
religion. Because of differences in religious belief and sentiments, a very poor
person may consider himself better than the rich, and the man who even lacks
the necessities of life may be more cheerful than the one who has all possible
luxuries. Due to their religious beliefs people, like the martyrs, became resigned
to the inevitable and accepted cheerfully even the most painful and excruciating
pains. Because of differences in religious beliefs, the world has witnessed turmoil,
civil strife, persecution, hatred, bloodshed and war, generated to a large extent
by members of sects who were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350, therefore, rests on
substantial distinctions.
The classification introduced by said Act is also germane to its purpose. The
purpose of the law is precisely to avoid those who cannot, because of their
religious belief, join labor unions, from being deprived of their right to work and
from being dismissed from their work because of union shop security
agreements.
Republic Act No. 3350, furthermore, is not limited in its application to conditions
existing at the time of its enactment. The law does not provide that it is to be
effective for a certain period of time only. It is intended to apply for all times as
long as the conditions to which the law is applicable exist. As long as there are
closed shop agreements between an employer and a labor union, and there are
employees who are prohibited by their religion from affiliating with labor unions,
their exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this is
evident from its provision. The fact that the law grants a privilege to members of
said religious sects cannot by itself render the Act unconstitutional, for as We
have adverted to, the Act only restores to them their freedom of association which
closed shop agreements have taken away, and puts them in the same plane as
the other workers who are not prohibited by their religion from joining labor
unions. The circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law
unconstitutional, for every classification allowed by the Constitution by its nature
involves inequality.
The mere fact that the legislative classification may result in actual inequality is
not violative of the right to equal protection, for every classification of persons or
things for regulation by law produces inequality in some degree, but the law is not
thereby rendered invalid. A classification otherwise reasonable does not offend
the constitution simply because in practice it results in some inequality. 61 Anent
this matter, it has been said that whenever it is apparent from the scope of the
law that its object is for the benefit of the public and the means by which the
benefit is to be obtained are of public character, the law will be upheld even
though incidental advantage may occur to individuals beyond those enjoyed by
the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates the
constitutional provision on social justice is also baseless. Social justice is
intended to promote the welfare of all the people. 63 Republic Act No. 3350
promotes that welfare insofar as it looks after the welfare of those who, because
of their religious belief, cannot join labor unions; the Act prevents their being
deprived of work and of the means of livelihood. In determining whether any
particular measure is for public advantage, it is not necessary that the entire state
be directly benefited — it is sufficient that a portion of the state be benefited
thereby.
Social justice also means the adoption by the Government of measures
calculated to insure economic stability of all component elements of society,
through the maintenance of a proper economic and social equilibrium in the inter-
relations of the members of the community. 64 Republic Act No. 3350 insures
economic stability to the members of a religious sect, like the Iglesia ni Cristo,
who are also component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having a closed
shop agreement with the employer. The Act also advances the proper economic
and social equilibrium between labor unions and employees who cannot join labor
unions, for it exempts the latter from the compelling necessity of joining labor
unions that have closed shop agreements and equalizes, in so far as opportunity
to work is concerned, those whose religion prohibits membership in labor unions
with those whose religion does not prohibit said membership. Social justice does
not imply social equality, because social inequality will always exist as long as
social relations depend on personal or subjective proclivities. Social justice does
not require legal equality because legal equality, being a relative term, is
necessarily premised on differentiations based on personal or natural
conditions. 65 Social justice guarantees equality of opportunity 66 , and this is
precisely what Republic Act No. 3350 proposes to accomplish — it gives laborers,
irrespective of their religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the amendment introduced by
Republic Act No. 3350 is not called for — in other words, the Act is not proper,
necessary or desirable. Anent this matter, it has been held that a statute which is
not necessary is not, for that reason, unconstitutional; that in determining the
constitutional validity of legislation, the courts are unconcerned with issues as to
the necessity for the enactment of the legislation in question. 67 Courts do inquire
into the wisdom of laws. 68 Moreover, legislatures, being chosen by the people,
are presumed to understand and correctly appreciate the needs of the people,
and it may change the laws accordingly. 69 The fear is entertained by appellant
that unless the Act is declared unconstitutional, employers will prefer employing
members of religious sects that prohibit their members from joining labor unions,
and thus be a fatal blow to unionism. We do not agree. The threat to unionism
will depend on the number of employees who are members of the religious sects
that control the demands of the labor market. But there is really no occasion now
to go further and anticipate problems We cannot judge with the material now
before Us. At any rate, the validity of a statute is to be determined from its general
purpose and its efficacy to accomplish the end desired, not from its effects on a
particular case. 70 The essential basis for the exercise of power, and not a mere
incidental result arising from its exertion, is the criterion by which the validity of a
statute is to be measured. 71
II. We now pass on the second assignment of error, in support of which the
Union argued that the decision of the trial court ordering the Union to pay P500
for attorney's fees directly contravenes Section 24 of Republic Act No. 875, for
the instant action involves an industrial dispute wherein the Union was a party,
and said Union merely acted in the exercise of its rights under the union shop
provision of its existing collective bargaining contract with the Company; that said
order also contravenes Article 2208 of the Civil Code; that, furthermore, Appellee
was never actually dismissed by the defendant Company and did not therefore
suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the instant
case there was really no industrial dispute involved in the attempt to compel
Appellee to maintain its membership in the union under pain of dismissal, and
that the Union, by its act, inflicted intentional harm on Appellee; that since
Appellee was compelled to institute an action to protect his right to work, appellant
could legally be ordered to pay attorney's fees under Articles 1704 and 2208 of
the Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is relied
upon by appellant provides that:
No suit, action or other proceedings shall be maintainable in any court against
a labor organization or any officer or member thereof for any act done by or on
behalf of such organization in furtherance of an industrial dispute to which it is a
party, on the ground only that such act induces some other person to break a
contract of employment or that it is in restraint of trade or interferes with the trade,
business or employment of some other person or with the right of some other
person to dispose of his capital or labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot be disputed for
appellant sought the discharge of respondent by virtue of the closed shop
agreement and under Section 2 (j) of Republic Act No. 875 a question involving
tenure of employment is included in the term "labor dispute". 74 The discharge or
the act of seeking it is the labor dispute itself. It being the labor dispute itself, that
very same act of the Union in asking the employer to dismiss Appellee cannot be
"an act done ... in furtherance of an industrial dispute". The mere fact that
appellant is a labor union does not necessarily mean that all its acts are in
furtherance of an industrial dispute. 75 Appellant Union, therefore, cannot invoke
in its favor Section 24 of Republic Act No. 875. This case is not intertwined with
any unfair labor practice case existing at the time when Appellee filed his
complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its
shield. The article provides that attorney's fees and expenses of litigation may be
awarded "when the defendant's act or omission has compelled the plaintiff ... to
incur expenses to protect his interest"; and "in any other case where the court
deems it just and equitable that attorney's fees and expenses of litigation should
be recovered". In the instant case, it cannot be gainsaid that appellant Union's
act in demanding Appellee's dismissal caused Appellee to incur expenses to
prevent his being dismissed from his job. Costs according to Section 1, Rule 142,
of the Rules of Court, shall be allowed as a matter of course to the prevailing
party.
WHEREFORE, the instant appeal is dismissed, and the decision, dated August
26, 1965, of the Court of First Instance of Manila, in its Civil Case No. 58894,
appealed from is affirmed, with costs against appellant Union. It is so ordered.
FERNANDO, J, concurring:
The decision arrived at unanimously by this Court that Republic Act No. 3350
is free from the constitutional infirmities imputed to it was demonstrated in a
manner wellnigh conclusive in the learned, scholarly, and comprehensive opinion
so typical of the efforts of the ponente, Justice Zaldivar. Like the rest of my
brethren, I concur fully. Considering moreover, the detailed attention paid to each
and every objection raised as to its validity and the clarity and persuasiveness
with which it was shown to be devoid of support in authoritative doctrines, it would
appear that the last word has been written on this particular subject. Nonetheless,
I deem it proper to submit this brief expression of my views on the transcendent
character of religious freedom 1 and its primacy even as against the claims of
protection to labor,2 also one of the fundamental principles of the Constitution.
1. Religious freedom is identified with the liberty every individual possesses to
worship or not a Supreme Being, and if a devotee of any sect, to act in
accordance with its creed. Thus is constitutionally safeguarded, according to
Justice Laurel, that "profession of faith to an active power that binds and elevates
man to his Creator ...."3 The choice of what a man wishes to believe in is his and
his alone. That is a domain left untouched, where intrusion is not allowed, a
citadel to which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he pays fealty
may for some be unsupported by evidence, devoid of rational foundation. No
matter. There is no requirement as to its conformity to what has found
acceptance. It suffices that for him such a concept holds undisputed sway. That
is a recognition of man's freedom. That for him is one of the ways of self-
realization. It would be to disregard the dignity that attaches to every human being
to deprive him of such an attribute. The "fixed star on our constitutional
constellation," to borrow the felicitous phrase of Justice Jackson, is that no official,
not excluding the highest, has it in his power to prescribe what shall be orthodox
in matters of conscience — or to mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of
its ponente, Justice Montemayor: "The realm of belief and creed is infinite and
limitless bounded only by one's imagination and thought. So is the freedom of
belief, including religious belief, limitless and without bounds. One may believe in
most anything, however strange, bizarre and unreasonable the same may appear
to others, even heretical when weighed in the scales of orthodoxy or doctrinal
standards."5 There was this qualification though: "But between the freedom of
belief and the exercise of said belief, there is quite a stretch of road to travel. If
the exercise of said religious belief clashes with the established institutions of
society and with the law, then the former must yield and give way to the latter.
The Government steps in and either restrains said exercise or even prosecutes
the one exercising it."6 It was on that basis that the daily compulsory flag
ceremony in accordance with a statute7 was found free from the constitutional
objection on the part of a religious sect, the Jehovah's Witnesses, whose
members alleged that their participation would be offensive to their religious
beliefs. In a case not dissimilar, West Virginia State Board of Education v.
Barnette,8 the American Supreme Court reached a contrary conclusion. Justice
Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The case
is made difficult not because the principles of its decision are obscure but
because the flag involved is our own. Nevertheless, we apply the limitations of
the Constitution with no fear that freedom to be intellectually and spiritually
diverse or even contrary will disintegrate the social organization. To believe that
patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous
instead of a compulsory routine is to make an unflattering estimate of the appeal
of our institutions to free minds. We can have intellectual individualism and the
rich cultural diversities that we owe to exceptional minds only at the price of
occasional eccentricity and abnormal attitudes. When they are so harmless to
others or to the State as those we deal with here, the price is not too great. But
freedom to differ is not limited to things that do not matter much. That would be a
mere shadow of freedom. The test of its substance is the right to differ as to things
that touch the heart of the existing order."9
There is moreover this ringing affirmation by Chief Justice Hughes of the
primacy of religious freedom in the forum of conscience even as against the
command of the State itself: "Much has been said of the paramount duty to the
state, a duty to be recognized, it is urged, even though it conflicts with convictions
of duty to God. Undoubtedly that duty to the state exists within the domain of
power, for government may enforce obedience to laws regardless of scruples.
When one's belief collides with the power of the state, the latter is supreme within
its sphere and submission or punishment follows. But, in the forum of conscience,
duty to a moral power higher than the state has always been maintained. The
reservation of that supreme obligation, as a matter of principle, would
unquestionably be made by many of our conscientious and law-abiding citizens.
The essence of religion is belief in a relation to God involving duties superior to
those arising from any human relation." 10 The American Chief Justice spoke in
dissent, it is true, but with him in agreement were three of the foremost jurists
who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.
 2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth
earlier, is wholehearted and entire. With such a cardinal postulate as the basis of
our polity, it has a message that cannot be misread. Thus is intoned with a
reverberating clang, to paraphrase Cardozo, a fundamental principle that drowns
all weaker sounds. The labored effort to cast doubt on the validity of the statutory
provision in question is far from persuasive. It is attended by futility. It is not for
this Court, as I conceive of the judicial function, to restrict the scope of a preferred
freedom.
3. There is, however, the question of whether such an exception possesses an
implication that lessens the effectiveness of state efforts to protect labor, likewise,
as noted, constitutionally ordained. Such a view, on the surface, may not be
lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought
must be given to the freedom of association, likewise an aspect of intellectual
liberty. For the late Professor Howe a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory of
pluralistic sovereignty. So great is the respect for the autonomy accorded
voluntary societies. 11 Such a right implies at the very least that one can
determine for himself whether or not he should join or refrain from joining a labor
organization, an institutional device for promoting the welfare of the working man.
A closed shop, on the other hand, is inherently coercive. That is why, as is
unmistakably reflected in our decisions, the latest of which is Guijarno v. Court of
Industrial Relations, 12 it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the dictates of
sound public policy.
The exhaustive and well-researched opinion of Justice Zaldivar thus is in the
mainstream of constitutional tradition. That, for me, is the channel to follow.
KAPATIRAN SA MEAT AND CANNING DIVISION (TUPAS Local Chapter No.
1027), petitioner,
vs.
THE HONORABLE BLR DIRECTOR PURA FERRER CALLEJA, MEAT AND
CANNING DIVISION UNIVERSAL ROBINA CORPORATION and MEAT AND
CANNING DIVISION NEW EMPLOYEES AND WORKERS UNITED LABOR
ORGANIZATION, respondents.
Alar, Comia, Manalo and Associates for petitioner.
Danilo Bolos for respondent Robina Corporation.
RESOLUTION
TUPAS' motion for reconsideration (Annex E) was denied on March 17, 1988
(Annex F). On April 30, 1988, it filed this petition alleging that the public
respondent acted in excess of her jurisdiction and with grave abuse of discretion
in affirming the Med-Arbiter's order for a certification election.
After deliberating on the petition and the documents annexed thereto, We find
no merit in the Petition. The public respondent did not err in dismissing the
petitioner's appeal in BLR Case No. A-12-389-87. This Court's decision
in Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54, upholding the right
of members of the IGLESIA NI KRISTO sect not to join a labor union for being
contrary to their religious beliefs, does not bar the members of that sect from
forming their own union. The public respondent correctly observed that the
"recognition of the tenets of the sect ... should not infringe on the basic right of
self-organization granted by the constitution to workers, regardless of religious
affiliation."
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the
60-day freedom period of the existing CBA, does not foreclose the right of the
rival union, NEW ULO, to challenge TUPAS' claim to majority status, by filing a
timely petition for certification election on October 13, 1987 before TUPAS' old
CBA expired on November 15, 1987 and before it signed a new CBA with the
company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a
"certification election is the best forum in ascertaining the majority status of the
contending unions wherein the workers themselves can freely choose their
bargaining representative thru secret ballot." Since it has not been shown that
this order is tainted with unfairness, this Court will not thwart the holding of a
certification election (Associated Trade Unions [ATU] vs. Noriel, 88 SCRA 96).
WHEREFORE, the petition for certiorari is denied, with costs against the
petitioner.
SO ORDERED.

GRIÑO-AQUINO, J.:
The petitioner, Kapatiran sa Meat and Canning Division TUPAS Local Chapter
No. 1027) hereinafter referred to as "TUPAS," seeks a review of the resolution
dated January 27, 1988 (Annex D) of public respondent Pura Ferrer-Calleja,
Director of the Bureau of Labor Relations, dismissing its appeal from the Order
dated November 17, 1987 (Annex C) of the Med-Arbiter Rasidali C. Abdullah
ordering a certification election to be conducted among the regular daily paid rank
and file employees/workers of Universal Robina Corporation-Meat and Canning
Division to determine which of the contending unions:
a) Kapatiran sa Meat and Canning Division TUPAS Local Chapter No. 1027 (or
"TUPAS" for brevity);
b) Meat and Canning Division New Employees and Workers United Labor
Organization (or "NEW ULO" for brevity);
c) No union.
shall be the bargaining unit of the daily wage rank and file employees in the
Meat and Canning Division of the company.
From 1984 to 1987 TUPAS was the sole and exclusive collective bargaining
representative of the workers in the Meat and Canning Division of the Universal
Robina Corporation, with a 3-year collective bargaining agreement (CBA) which
was to expire on November 15, 1987.
Within the freedom period of 60 days prior to the expiration of its CBA, TUPAS
filed an amended notice of strike on September 28, 1987 as a means of
pressuring the company to extend, renew, or negotiate a new CBA with it.
On October 8, 1987, the NEW ULO, composed mostly of workers belonging to
the IGLESIA NI KRISTO sect, registered as a labor union.
On October 12, 1987, the TUPAS staged a strike. ROBINA obtained an
injunction against the strike, resulting in an agreement to return to work and for
the parties to negotiate a new CBA.
The next day, October 13, 1987, NEW ULO, claiming that it has "the majority
of the daily wage rank and file employees numbering 191," filed a petition for a
certification election at the Bureau of Labor Relations (Annex A).
TUPAS moved to dismiss the petition for being defective in form and that the
members of the NEW ULO were mostly members of the Iglesia ni Kristo sect
which three (3) years previous refused to affiliate with any labor union. It also
accused the company of using the NEW ULO to defeat TUPAS' bargaining rights
(Annex B).
On November 17, 1987, the Med-Arbiter ordered the holding of a certification
election within 20 days (Annex C).
TUPAS appealed to the Bureau of Labor Relations BLR. In the meantime, it
was able to negotiate a new 3-year CBA with ROBINA, which was signed on
December 3, 1987 and to expire on November 15, 1990.
On January 27, 1988, respondent BLR Director Calleja dismissed the appeal
(Annex D).