LABOR LAW BAR REVIEW

ATTY. MARLON MANUEL

I. GENERAL PRINCIPLES
CONSTITUTION
Art. XIII, 3.The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to selforganizations, and peaceful concerted activities, including the right
to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.
Art. II, 18.The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their
welfare.
Art. III, 8. 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.
LABOR CODE
Art. 1. Name of Decree. This Decree shall be known as the
Labor Code of the Philippines.

Art. 2. Date of effectivity. This Code shall take effect six (6)
months after its promulgation. (P.D. 442 was made effective on
November 1, 1974)
Art. 3. Declaration of basic policy.
The State shall:
afford protection to labor,
promote full employment,
ensure equal work opportunities regardless of sex, race or
creed,
and regulate the relations between workers and employers.
The State shall assure the rights of workers to:
a) self-organization,
b) collective bargaining,
c) security of tenure, and
d) just and humane conditions of work.
Art. 4. Construction in favor of labor. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved
in favor of labor.
Art. 5. Rules and regulations. The Department of Labor and
Employment, and other government agencies charged with the
administration and enforcement of this Code or any of its parts
shall promulgate the necessary implementing rules and
regulations. Such rules and regulations shall become effective
fifteen (15) days after announcement of their adoption in
newspapers of general circulation.
Art. 6.
Applicability. All rights and benefits granted to
workers under this Code shall, except as may otherwise be
provided herein, apply alike to all workers, whether agricultural or
non-agricultural.
Art. 211. Declaration of policy.
A.

It is the policy of the State:

(a)

To promote and emphasize:

the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation
and conciliation,

as modes of settling labor or industrial disputes;

(b)

(c)

To promote:
free trade unionism
as an instrument for
the enhancement of democracy and
the promotion of social justice and development;

as practicable, be represented in decision and policy-making

bodies of the government.
(b)

The Secretary of Labor and Employment or his duly

authorized representatives may from time to time
-

To foster:
the free and voluntary organization
of a strong and united labor movement;

promote:
the enlightenment of workers
concerning their rights and obligations
as union members and as employees;

call a national, regional, or industrial tripartite

conference of representatives of government, workers
and employers
for the consideration and adoption of voluntary codes of
principles
designed to promote
industrial peace based on social justice
or to align labor movement relations with
established
priorities in economic and social
development.

(d)

To
-

(e)

To provide:
an adequate administrative machinery
for the expeditious settlement of labor or industrial
disputes;

In calling such conference, the Secretary of Labor and

Employment may consult with accredited representatives of
workers and employers.

(f)

To ensure:
a stable but dynamic and just industrial peace; and

CIVIL CODE

(g)

To
-

B.

To encourage
a truly democratic method of regulating the relations
between the employers and employees by means of
agreements freely entered into through collective
bargaining,
no court or administrative agency or official shall have
the power to set or fix
wages,
rates of pay,
hours of work
or other terms and conditions of employment,
except as otherwise provided under this Code.

Art. 1700. The relation between capital and labor are not merely
contractual. They are co impressed with public interest that labor
contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.

ensure:
the participation of workers
in decision and policy-making processes
affecting their rights, duties and welfare.

Art. 275.
(a)

Tripartism and tripartite conferences.

Tripartism in labor relations is hereby declared a State

policy. Towards this end, workers and employers shall, as far

Art. 1701. Neither capital nor labor shall act oppressively against
the other, or impair the interest or convenience of the public.
Art. 1702. In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living
for the laborer.
Art. 1703. No contract which practically amounts to involuntary
servitude, under any guise whatsoever, shall be valid.
CASES
Phil. Blooming Mills Employees Assoc. vs. PBM, 51 SCRA
189

PBMEO wanted to stage a mass demonstration at Malacanang,

against alleged police abuses. PBMEO informed the employer PBM,
and told PBM that PBMEO did not intend to prejudice PBM. PBM
disagreed saying it would prejudice operations, and said that at
least one shift should be present on the day of the rally. PBM
warned that should they fail to report, they would be dismissed
because of the no lockout-no strike clause in the CBA. PBMEO
went ahead with the rally and was thus charged with violation of
the CBA. The CIR ruled in favor of PBM.

the Code was arbitrarily implemented without prior notice and

discussion of such with the union. PAL posits that it has the
prerogative to prescribe rules and regulations regarding employees
conduct in carrying out their functions.

Held: The CIR as an agency of the State is under obligation at all

times to give meaning and substance to these constitutional
guarantees in favor of the working man; for otherwise these
constitutional safeguards would be merely a lot of meaningless
constitutional patter. Under the Industrial Peace Act, the CIR is
enjoined to effect the policy of the law. to eliminate the causes of
industrial unrest by encouraging and protecting the exercise by
employees of their right to self-organization for the purpose of
collective bargaining and for the promotion of their moral, social
and economic well-being.

Held: The exercise of managerial prerogatives is not unlimited. It

is circumscribed by limitations found in law, the CBA, or general
principles of fair play and justice. Al line must be drawn between
management prerogatives regarding business operations per se
and those which affect the rights of employees. In treating the
latter, mgt. should see to it that its employees are at least properly
informed of its decisions and modes of action.

The demonstration held by the employees was against

alleged abuses of some Pasig policemen, not against their
employer. Said demonstration was completely an exercise of their
freedom of expression in general and of their right of assembly
and petition for redress of grievances in particular before the
appropriate government agency. They exercised their civil and
political rights for their mutual aid and protection from what they
believed were police excesses. It was to the interest of the firm to
protect the employees to rally to the defense of and to take up the
cudgels for its employees so that they can report to work free from
harassment, vexation or peril and as a consequence perform more
efficiently their respective tasks to enhance its productivity as well
as profits.
The primacy of human rights-freedom of expression, of
peaceful assembly and of petition for redress of grievances-over
property rights, has been sustained.
Philippine Airlines vs. NLRC, 225 SCRA 301
In March 1985, PAL completely revised its Code of Discipline,
which was circulated, immediately implemented and caused the
imposition of disciplinary sanctions on some employees. PALEA
filed a complaint with the NLRC for unfair labor practice, because

Labor Arbiter ruled not guilty of ULP, but must provide all
employees with the new Code to discuss any objectionable items.
On appeal, NLRC said though adopting Rules of Conduct is a mgt.
prerogative, it can no longer exclude labor, and so must let them
participate in the review of the Code.

PAL says that by signing the CBA, PALEA in effect

recognized PALs exclusive right to make and enforce company
rules and regulations to carry out the functions of management
without having to discuss the same with PALEA, and much less,
the latters conformity thereto. Such provision in the CBA may not
be interpreted as a cession of employees rights to participate in
the deliberation of matters which may affect their right s and the
formulation of policies relative thereto. And one such matter is the
formulation of a Code of Discipline. Industrial peace cannot be
achieved if the employees are denied their just participation in the
discussion of matters affecting their rights. The attainment of a
harmonious labor-mgt relationship and the then already existing
state policy of enlightening workers concerning their rights as
employees demand no less than the observance of transparency in
managerial moves affecting employees rights.
Cebu Royal Plant vs. Deputy Minister of Labor, 153 SCRA 38
Ramon Pilones handled ingredients in the processing of soft drinks.
Later he was removed due to pulmonary tuberculosis minimal.
He filed for illegal dismissal. Regional Director found in favor of
employer. However on appeal, the Minister ordered reinstatement,
as it was found that he was a permanent employee, and that the
ailment was not certified as incurable within six months as to
justify separation. Also, the Minister said that the employer should

have first obtained a clearance for termination of employment, as

required by the regulations then in force.
Employer insists he was a probationary employee at the
time he was dismissed. It is also argued that the regional directors
findings should not be disturbed on appeal, since he had direct
access to the facts.
Held: Employee should be reinstated. It is shown that employee
continued working as usual way beyond the six-month period of
probation. Hence he was on permanent status at the time he was
dismissed. Also, the record does not contain the certification as
required by the Rules. The medical certificate offered by the
employer came from its own physician who was not a competent
public health authority, and merely stated the employees disease
without more.
We may surmise that if the required certification was not
presented, it was because the disease was not of such a nature or
seriousness that it could not be cured within a period of six months
even with proper treatment. The court reaffirms its concern for the
lowly worker who, often at the mercy of his employers, must look
up to the law for his protection.
LECTURE
The management and labor relationship is like a bicycle
with a third wheel. The third wheel is the government, which does
not convert the bicycle into a tricycle, because it does not
intervene in the management-labor relationship. The government
allows management and labor to negotiate and determine the
terms of the contractual relationship that is, the fixing of wages,
et.al. but government sets the minimum standards. This is the
only means by which the government intervenes.
However, the relationship between management and labor
is not merely contractual. Check the Civil Code Arts. 1700-1703.
This emphasizes that the relationship is so impressed with public
interest. As such, the third wheel only supports and assists the
relationship, not to change the relationship but only to balance a
relationship that is inherently imbalanced. An example is the
government fixes wage rates in order to avoid abuses against the
weaker party.

Although in some aspects of labor relations, the

government has no power of intervention at all. Check the
Constitutional provisions on voluntary modes of settling disputes.
In this case the governments policy of regulation is not equivalent
to policy of intervention. An example of this is drawing up the CBA
and modes of dispute resolution. In contrast, the government
intervenes through issuance of permits to strike, cease and desist
orders or return to work orders.
II. EMPLOYER-EMPLOYEE RELATIONSHIP
LABOR CODE
[You can skip these provisions as according to Atty. Manuel,
theyre stupid definitions, but in case you want to check it: Art. 97
(b, c, e); Art. 167 (f, g) Art. 212 (e, f) *]
*

Art. 97. Definitions.

(b) Employer includes any person acting directly or indirectly in the

interest of an employer in relation to an employee and shall include
the
Government
and
all
its
branches,
subdivision
and
instrumentalities, all government-owned or controlled corporations
and institutions, or organizations.
(c) Employee includes any individual employed by an employer.
(e) Employ includes to suffer or permit to work.
Art. 167. Definition of terms.
(f)

Employer means any person, natural or juridical, employing the

services of the employee.

(g) Employee means any person compulsorily covered by the GSIS

under Commonwealth Act numbered one hundred eighty-six, as
amended, including members of the Armed Forces of the Philippines,
and any person employed as casual, emergency, temporary, substitute
or contractual; or any person compulsorily covered by SSS under
Republic Act numbered eleven hundred sixty-one as amended.
Art. 212. Definitions.
(e) Employer includes any person acting in the interest of an employer,
directly or indirectly. The term shall not include any labor organization
or any of its officers or agents except when acting as employer.
(f)

Employee includes any person in the employ of an employer. The

term shall not be limited to the employees of a particular employer,
unless this Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection with any current

Art. 106.
Contractor or sub-contractor. Whenever an
employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor
and of the latters sub-contractor, if any, shall be paid in
accordance with the provisions of this Code.

Art. 108. Posting of bond. An employer or indirect employer

may require the contractor or sub-contractor to furnish a bond
equal to the cost of labor under contract, on condition that the
bond will answer for the wages due the employees should the
contractor or sub-contractor, as the case may be, fail to pay the
same.

In the event that the contractor or sub-contractor fails to

pay the wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
sub-contractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.

Art. 109.
Solidary liability. - The provisions of existing
laws to the contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For
purposes of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.

The Secretary of Labor and Employment may, by

appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under this Code.
In so prohibiting or restricting, he may make appropriate
distinctions
between
labor-only
contracting
as
well
as
differentiations within these types of contracting, and determine
who among the parties involved shall be considered the employer
for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is labor-only contracting where the person
supplying workers to an employer does not have substantial capital
or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to
the principal business of such employer. In such cases, the person
or intermediary shall be considered merely as an agent of the
employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Art. 107.
Indirect employer. The provisions of the
immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the
performance of any work, task, job or project.

labor dispute or because of any unfair labor practice if he has not

obtained any other substantially equivalent and regular employment.

DEPARTMENT ORDER NO. 3, SERIES OF 2001

Revoked D.O. No. 10 Series of 1997 which liberalizes labor-only
contracting in certain situations.
CASES
Aurora Land Projects Corp. v. NLRC, 266 SCRA 48
Jurisprudence is firmly settled that whenever the existence of an
employer-employee relationship is in dispute, four elements
constitute the reliable yard stick: (a) selection and engagement of
the employee; (b) the payment of wages; (c) power of dismissal;
(d) the employers power of control over the employees conduct.
It is the so-called control test, that is whether the employer
controls or has reserved the right to control the employee, not
only as to the result of the work to be done, but the means and
methods by which the same is to be accomplished, that is the
most important index of the existence of the employer-employee
relationship.
Algon Engineering v. NLRC, 280 SCRA 188
Employer-Employee relationship question of fact. Liability for loss
of materials in employees custody and subsequent transfer is
indicative of employers power of control.
Filipinas Broadcasting v. NLRC, 287 SCRA 348
Power of control regulate or control employees activities or
input, subject to employers supervision.

Insular Life v. NLRC, 287 SCRA 476

It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in the
management contract and providing therein that the employee is
an independent contractor when the terms of the agreement
clearly shows otherwise.
Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA
401
(case where the SC uses Art. 280 to prove er-ee relationship)
Paid wages directly to employee, wielded power of dismissal, and
members of union did not possess substantial capital which belies
claim that they were independent contractors.
Maraguinot v. NLRC, 284 SCRA 539
It is settled that contracting out of labor is allowed only in case of
job-contracting. For a contactor to be job-contactor, must have
tools, equipment, machinery, work premises, and other materials
necessary to his business, or substantial capital or investment.
As labor-only contracting is prohibited, the law considers
the person or entity engaged in the same, a mere agent or
intermediary of the direct employer.
Coca-Cola v. NLRC, May 17, 1999
Although janitorial services may be deemed directly related to the
principal business of employer, as with every business, it is
deemed unnecessary in the conduct of the employers principal
business. But this rests on the presumption that the contractor is a
legitimate job-contractor such that the employer-employee
relationship between him and the employee cannot be doubted.
Corporal v. NLRC, Oct. 2, 2000; GR 129315
(again SC uses Art. 280 of Labor Code in determining er-ee
relationship) Control- required to report daily and observe definite
hours of work, not free to accept employment elsewhere.
No longer true that membership in SSS is predicated on
the existence of employer-employee relationship as the policy now
is to encourage even the self-employed to become members.
AFP Mutual Benefit v. NLRC, 267 SCRA 47
Not all that glitters is control.

In insurance, exclusivity is not indicative of control as the

Insurance Commission prohibits serving in more than one
insurance company.
Also, the mere fact that an employee is subject to
company rules is not indicative of control if it is not shown that it
relates to the means and methods of service rendered and not
merely to the end result. The significant factor in determining the
relationship of parties is the presence or absence of supervisory
authority to control the method and details of performance of the
service being rendered, and to the degree to which the principal
may intervene to exercise such control. Not every form of control
that a party reserves to himself over the conduct of the other party
in relation to the services being rendered may be accorded the
effect of establishing an ee-er relationship.
Neri v. NLRC, 224 SCRA 717
The law does not require both substantial capital and investment in
the form of tools, equipment, machineries, etc. This is clear from
the use of the conjunction or. If the intention was to require the
contractor to prove that he has both capital and the requisite
investment, then the conjunction and should have been used.
While these services (These services range from janitorial,
security and even technical or other specific services.) may be
considered directly related to the principal business of the
employer, nevertheless, they are not necessary in the conduct of
the principal business of the employer.
Phil. Fuji Xerox v. NLRC, 254 SCRA 294
It is wrong to say that if a task is not directly related to the
employers business, or it falls under what may be considered
housekeeping activities, the one performing the task is a job
contractor. The determination of the existence of an employeremployee relationship is defined by law according to the facts of
each case, regardless of the nature of the activities involved.
Not substantial capital or investment alone which makes
one a job contractor, but also presence of four-fold test in relation
to contractor and employee. Also the fact that the contractor was
providing specific special services (radio/telex operator and janitor)
to the employer.
Vinoya v. NLRC, Feb. 2, 2000, GR 126586

From the two aforementioned decisions, it may be inferred that it

is not enough to show substantial capitalization or investment in
the form of tools, equipment, machineries and work premises,
among others, to be considered as an independent contractor. In
fact, jurisprudential holdings are to the effect that in determining
the existence of an independent contractor relationship, several
factors might be considered such as, but not necessarily confined
to, whether the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and
duration of the relationship; the right to assign the performance of
specified pieces of work; the control and supervision of the
workers; the power of the employer with respect to the hiring,
firing and payment of the workers of the contractor; the control of
the premises; the duty to supply premises, tools, appliances,
materials and labor; and the mode, manner and terms of
payment.
Lapanday v. CA, Jan 31, 2000; GR 112139
It will be seen from the above provisions that the principal
(petitioner) and the contractor (respondent) are jointly and
severally liable to the employees for their wages. The joint and
several liability of the contractor and the principal is mandated by
the Labor Code to assure compliance with the provisions therein
including the minimum wage. The contractor is made liable by
virtue of his status as direct employer. The principal, on the other
hand, is made the indirect employer of the contractors employees
to secure payment of their wages should the contractor be unable
to pay them. Even in the absence of an employer-employee
relationship, the law itself establishes one between the principal
and the employees of the agency for a limited purpose i.e. in order
to ensure that the employees are paid the wages due them.
It is clear also from the foregoing that it is only when
contractor pays the increases mandated that it can claim an
adjustment from the principal to cover the increases payable to the
security guards. The conclusion that the right of the contractor (as
principal debtor) to recover from the principal as solidary codebtor) arises only if he has paid the amounts for which both of
them are jointly and severally liable.
Rosewood Processing v. NLRC, 290 SCRA 408
As to wages, the indirect employers liability to the contractors
employees extends only to the period during which they were

working for the petitioner, and the fact that they were reassigned
to another principal ends such responsibility. The same rule
applies to back wages and separation pay, with the added
qualification that to make the indirect employer liable, there must
be a finding of fault or conspiracy in the illegal dismissal.
LECTURE
It is important to determine the employer-employee
relationship in order to ascertain what rights and obligations of the
parties accrue in such a situation. The Labor Code attempts to
define who is an employer and an employee, but miserably fails to
do so! Thus, in determining existence of employer-employee
relationship the Code cannot be the basis! As such, jurisprudence
is essential and must be resorted to, in order to determine the
existence of such relationship.
Jurisprudence provides a FOUR-WAY or FOUR-FOLD TEST
to determine the existence of employer-employee relationship:
1) Hiring a written agreement is not necessary, and is not a
conclusive test because it can be avoided and confused by
the use of subcontracting agreements or other contracts
other than employment contracts.
2) Firing termination and disciplinary measures; however, it
is not conclusive because the question of employeremployee relationship may arise even before the firing
occurs. In cases other than an employment contract, such
as a managment contract, the fact that an employer has
not fired does not negate the existence of employeremployee relationship.
3) Wages as defined in Art. 97 (f) of the Labor Code, it
must be remuneration capable of being expressed in terms
of money, payable by an employer to an employee for
work or services to be done or rendered
4) Control The element of control pertains not only to the result of
the work to be done but also control over the manner or method to
be employed. There is no need for the employer to have actually
exercised control, as long as he had the opportunity to do so.
Consequently, proof must be given reflecting a manifestation of
control, such as monitoring the work, letting the employee work in

the employers premises, as long as the company or employer had

the ability or power to intervene in the work.
Control is the primary test. This is because hiring, firing,
wages may be done by an entity separate from the entity that
controls the employee. For example, hiring done by head hunters
or transfer of ownership of a company. Thus, although the other
factors may be absent, as long as there is control there is an
employer-employee relationship.
In the AFP case, the Court emphasized that not all that
glitters is control! This case was very good in qualifying the
principle that rules per se are not equivalent to control all the time,
for control should be over the means and conduct of the work, not
merely over the result. This case ruled that if the rules pertain only
to the end result, this is not tantamount to control.
It must be borne in mind however that there are some
situations, mutations if you could call it, where the control
principle is not applicable, for instance, in a taxi-operator and taxidriver relationship. However, the three other indicators may be
used to determine that there is an employer-employee rel.
Also, exclusivity of service is not conclusive in determining
control. That is, when the employee is prohibited to work, for
instance, insurance agents are required to maintain exclusive
company as required by law.
Must all 4 be passed? No. Not all elements need be
present. Hence, the best term to use is the FOUR INDICATORS,
because FOUR-FOLD TEST connotes the need for all four elements
to be present.
Now, Art. 280 of the Labor Code provides that an
employee is deemed regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer (UNOD in
UTOB). Remember that UNOD in UTOB cannot be used to
determine the existence of employer-employee relationship. It is
used only to determine whether an employee is regular or not, and
hence it necessarily presupposes that an employer-employee
relationship already exists.
There is also such a thing as economic condition test,
where the employee may successfully establish an employeremployee relationship by showing documents like the SSS list and
payroll.

Now let us go to contracting. Article 106 of the LC defines

Labor-only contracting. Labor-only contracting is illegal as
compared to job contracting which is allowed. How do we
determine whether contracting is labor only or job?
JOB CONTRACTING

LABOR ONLY CONTRACTING

- Has sufficient capital OR investment

in machinery or equipment (must be
substantial,
and
machinery/equipment
must
be
directly or intended to be related to
the job contracted )

- Has no substantial
investment

- Carries on an independent business

different from the employers

- Has no independent business

- Undertakes to perform the job under

its own account and responsibility,
free from the principals control
(principal intervenes only with the
end result)

- Performs activities directly related to

the main business of the principal

Must all three elements be present in order to be

considered a labor-only contractor? According to Court decisions,
the primary determination is if one is a Job contractor or not.
Hence, the test to determine whether one is a job or labor only
contractor is to look into the elements of a job contractor. If ALL
elements of a job contractor is present AND the contractor
qualifies as a job contractor then he is a job contractor. Otherwise
he is a labor-only contractor.
In many cases the Court looks into the control factor to
determine if one is a job contractor or not. For instance, if the first
two elements are present (sufficient capital and independent
business), but control is exercised by the principal, he is not
considered a legitimate job contractor and as such is considered
labor-only. Read the Vinoya case to elucidate the matter,
particularly p. 481, second paragraph.
[ 2nd paragraph of p. 481:
From the two aforementioned decisions (referring to the
Phil. Fuji Xerox and Neri cases), it may be inferred that it
is not enough to show substantial capitalization or
investment in the form of tools, equipment, machineries
and work premises, among others, to be considered as an

capital

AND

independent contractor. In fact, jurisprudential holdings

are to the effect that in determining the existence of an
independent contractor relationship, several factors might
be considered such as, but not necessarily confined to,
whether the contractor is carrying on an independent
business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the
right to assign the performance of specified pieces of
work; the control and supervision of the workers; the
power of the employer with respect to the hiring, firing
and payment of the workers of the contractor; the control
of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner
and terms of payment.]
What is the liability of the principal to the employee in
cases of illegal dismissal?
-

Joint and several with the employer, but with the right to
reimbursement from the employer contractor

Wage differentials only to the extent where the employee

performed the work under the principal

Separation pay and backwages, only when the principal

has some relation to the termination (such as when he
conspired to terminate)

The ruling in Rosewood Processing is an obiter and made

an unjustified interpretation of Art. 109 of the LC. Rosewood
held that monetary awards given in relation to illegal dismissal
is the direct liability of the contractor alone unless the principal
conspired with the contractor. However, Art. 109 makes the
principal liable in illegal dismissal whether or not there was
fault on his part.

III.

CLASSES OF EMPLOYEES

and regardless of the oral agreements of the parties, an

employment shall be deemed to be:
REGULAR where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer
except where the employment has been fixed for a specific
PROJECT or undertaking, the completion or termination of which
has been determined at the time of the engagement of the
employee
or where the work or service to be performed is SEASONAL
in nature and the employment is for the duration of the
season.
An employment shall be deemed to be CASUAL if it is not covered by
the preceding paragraph;
provided,
that any employee who has rendered at least one year of
service,
whether such service is continuous or broken,
shall be considered a REGULAR employee with respect to the
activity in which he is employed and his employment shall
continue while such activity exists.
Art. 281.

Probationary employment.

Probationary employment
shall not exceed six months from the date the employee
started working,
unless it is covered by an apprenticeship agreement
stipulating a longer period.
The services of an employee who has been engaged on a
probationary basis may be terminated
for a just cause or
when he fails to qualify as a regular employee
a) in accordance with reasonable standards
b) made known by the employer to the employee at the
time of his engagement.

LABOR CODE

An employee who is allowed to work after a probationary period

shall be considered a regular employee.

Art. 280.
Regular and casual employment. The
provisions of written agreement to the contrary notwithstanding

CASES
De Leon V. NLRC, 176 SCRA 615

De Leon was employed by La Tondena as a painter and on the

agreement that he is considered a casual employee. He was made
to clean and oil machines and other odd jobs when he had no
painting job. After more than a year of service, he requested to be
included in the payroll of regular workers. La Tondena responded
by dismissing him.
The Labor Arbiter found that de Leon was illegally
dismissed and, in light of the facts, is considered a regular
employee. NLRC reversed. Petition for review with the Supreme
Court.
Held: Petition granted, employer must reinstate De Leon as a
regular maintenance man.
Contrary agreements notwithstanding, an employment is
deemed regular when the activities performed by the employee
are usually necessary or desirable in the usual business or trade of
the employer. Not considered regular are the so-called project
employment the completion or termination of which is more or
less determinable at the time of employment, such as those
employed in connection with a particular construction project, and
seasonal employment which by its nature is only desirable for a
limited period of time. However, any employee who has rendered
at least one year of service, whether continuous or intermittent, is
deemed regular with respect to the activity he performed and
while such activity actually exists.
The primary standard, therefore, of determining a regular
employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual
business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of
the employer. The connection can be determined by considering
the nature of the work performed and its relation to the scheme of
the particular business or trade in its entirety.
Also, if the
employee has been performing the job for at least one year, even
if the performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that
activity to the business.
Hence, the employment is also
considered regular, but only with respect to such activity and while
such activity exists.

What determines whether a certain employment is regular

or casual is not the will and word of the employer, to which the
desperate worker often accedes, much less the procedure of hiring
the employee or the manner of paying his salary. It is the nature
of the activities performed in relation to the particular business or
trade considering all circumstances, and in some cases the length
of time of its performance and its continued existence.
Aurora Land vs. NLRC, 266 SCRA 48
Honorio Dagui was hired by Dona Aurora Suntay Tanjangco in
1953 to take charge of
the maintenance and repair of the
Tanjangco apartments and residential buildings.
He was to
perform carpentry, plumbing, electrical and masonry work. Upon
the death of Dona Aurora Tanjangco in 1982, her daughter,
petitioner Teresita Tanjangco Quazon, took over the administration
of all the Tanjangco properties. On June 8, 1991, his services was
terminated. He filed a complaint for illegal dismissal with the Labor
Arbiter.
Petitioners insist that Dagui had never been their
employee. Since the establishment of Aurora Plaza, Dagui served
therein only as a job contractor. Dagui had control and supervision
of whoever he would take to perform a contracted job. On
occasion, Dagui was hired only as a tubero or plumber as the
need arises in order to unclog sewerage pipes. Every time his
services were needed, he was paid accordingly. It was understood
that his job was limited to the specific undertaking of unclogging
the pipes. In effect, petitioners would like the Court to believe
that Dagui was an independent contractor, particularly a job
contractor, and not an employee of Aurora Plaza.
Held: An employer-employee relationship exists.
Section 8,
RuleVIII, Book III of the Implementing Rules and Regulations of
the Labor Code provide the essential requisites before one is
considered a job contractor. Honorio Dagui earns a measly sum of
P180.00 a day (latest salary). Ostensibly, and by no stretch of the
imagination can Dagui qualify as a job contractor.
Whenever the existence of an employment relationship is
in dispute, four elements constitute the reliable yardstick:

the selection and engagement of the employee (hiring);

the payment of wages (wages);

the power of dismissal (firing); and

10

the employers power to control the employees conduct

(control).

It is the so-called control test, whether the employer

controls or has reserved the right to control the employee not only
as to the result of the work to be done but also as to the means
and methods by which the same is to be accomplished, which
constitute the most important index of the existence of the
employer-employee
relationship.
An
employer-employee
relationship exists where the person for whom the services are
performed reserves the right to control not only the end to be
achieved but also the means to be used in reaching such end.
Brent School vs. Zamora, 181 SCRA 702
Brent School, Inc. (BS) employed Doroteo R. Alegre (DA) as
athletic director. The employment contract fixed a specific term for
its existence: 5 years (18 July 1971 to 17
July 1976). 3
subsequent subsidiary agreements reiterated the same terms and
conditions stipulated in the original contract.
20 April 1976. DA received copy of report filed by BS with
DOLE advising of the termination of his services effective 16
July1976. The ground: completion of contract, expiration of the
definite period of employment. DA protested, arguing that he had
acquired regular employment status and could not be removed
except for valid cause because his services were UNOD in UTOB
and his employment had lasted for 5 years.
DOLE Regional Director ruled in favor of DA. Secretary of
Labor sustained. Office of the President dismissed BS appeal and
affirmed SOL decision.
Held: Since the entire purpose behind the development of
legislation culminating in the present Art. 280 of the Labor Code
clearly appears to have been, as already observed, to prevent
circumvention of the employees right to be secure in his tenure,
the clause in said article indiscriminately and completely ruling out
all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to
refer to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed
period of employment was agreed upon knowingly and voluntarily
by the parties, without any force, duress or improper pressure
being brought to bear upon the employee and absent any

circumstances vitiating his consent, or where it satisfactorily

appears that the employer and employee dealt with each other on
more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its
purview, the law would be made to apply to purposes other than
those explicitly stated by its framers; it thus becomes pointless
and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
There was a valid fixed term employment contract. DAs
employment was terminated upon the expiration of his last
contract with BS on 16 July 1976 without necessity of any notice.
Concurring and dissenting opinion (J. Sarmiento): I cannot liken
employment contracts to ordinary civil contracts in which the
relationship is established by stipulations agreed upon.
International Catholic Migration Commission v. NLRC, 169
SCRA 606
Petitioner engaged the services of private respondent
Galang as a probationary cultural orientation teacher for a
probationary period of 6 months. Three months thereafter, she
was informed, orally and in writing , that her services were being
terminated for her failure to meet the prescribed standards of
petitioner as reflected in the performance evaluation of her
supervisors during the teacher evaluation program she underwent
along with other newly-hired personnel.
She subsequently filed a complaint for illegal dismissal,
unfair labor practice and unpaid wages against petitioner with the
then Ministry of Labor and Employment, praying for reinstatement
with backwages, exemplary and moral damages.
The labor arbiter dismissed the complaint, but awarded
payment for the unexpired portion of the agreed period. NLRC
affirmed. Petitioner questions the award.
Held:

For the petitioner.

A probationary employee, as understood under Art 281

of the Labor Code, is one who is on trial by an employer, during
which the employer determines whether or not he is qualified for
permanent employment. A probationary employment is made to
afford the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will
become a proper and efficient employee. The word probationary,

11

as used to describe the period of employment, implies the

PURPOSE of the term or period, but not its length.
Being in the nature of a trial period, the essence of a
probationary period of employment fundamentally lies in the
purpose or objective sought to be attained by both the employer
and the employee during said period. The length of time is
immaterial to determining correlative rights of both in dealing with
each other during said period. While the employer observes the
fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the
probationer, on the other, seeks to prove to the employer that he
has the qualifications to meet the reasonable standards for
permanent employment.
The employer has the right or is at liberty to choose who
will be hired and who will be denied employment. In that sense, it
is within the exercise of the right to select his employees that the
employer may set or fix a probationary period within which the
latter may test and observe the conduct of the former before hiring
him permanently.
Art 281 of the LC gives ample authority to the employer to
terminate a probationary employee for a just cause or when he
fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement. There is nothing under
Art 281 of the LC that would preclude the employer from extending
a regular or permanent appointment to an employee once the
employer finds that the employee is qualified for regular
employment even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither
attained nor attainable within the said period, Art 281 does not
likewise preclude the employer from terminating the probationary
employment on justifiable causes.
The dissatisfaction of the petitioner over the performance
of private respondent Galang is a legitimate exercise of its
prerogative to select whom to hire or refuse employment for the
success of its program or undertaking. More importantly, Galang
failed to show that there was unlawful discrimination in the
dismissal.
Mercado vs. NLRC, 201 SCRA 332

Petitioners are farm workers who are contending that they are
regular farm workers of Cruz and other respondents and thus, are
entitled to benefits like overtime pay, holiday pay, service incentive
leave, ECOLA, 13th month pay, etc.
They claim that they have been working for 12 hours a
day the whole year round for almost 19 years (others, for 30
years).
Respondents deny that petitioners are regular workers
since they are only hired to work for six months (during the
harvesting of sugar canes) a year and for the rest of the year,
petitioners are allowed to seek employment elsewhere.
Petitioners contend that the proviso in the second
paragraph of Art. 280 is applicable to their case, and that the
Labor Arbiter should have considered them regular by virtue of
said proviso.
Held:

They are seasonal workers.

The first paragraph of Art 280 answers the question of who

are regular employees. It states that regardless of any written or
oral agreement to the contrary, an employee is deemed regular
where he is engaged in necessary or desirable activities in the
usual business or trade of the employer, except for project
employees. A project employee has been defined to be one whose
employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the
time of the engagement of the employee, or where the work or
service to be performed is seasonal in nature and the employment
is for the duration of the season.
The second paragraph demarcates as casual employees,
all other employees who do not fall under the definition of the
preceding paragraph. Policy Instruction No 12 discloses that the
concept of regular and casual employees was designed to put an
end to casual employment in regular jobs, which has been abused
by many employers to prevent so-called casuals from enjoying the
benefits of regular employees or to prevent casuals from joining
unions. The same instructions show that the proviso in the second
paragraph was not designed to stifle small scale businesses nor to
oppress agricultural land owners to further the interests of
laborers, whether agricultural or industrial. What it seeks to
eliminate are abuses of employers against their employees and

12

not, as petitioners would have us believe, to prevent small scale

businesses from engaging in legitimate methods to realize profits.
Hence the proviso is applicable only to the employees who are
deemed casuals but not to the project employees nor the regular
employees treated in paragraph one of Art 280.
Labor Congress vs. NLRC, 290 SCRA 509
Three factors lead the Court to conclude that petitioners, although
piece-rate workers, were regular employees of respondent Empire
Foods Corp. First, as to the nature of petitioners tasks, their job
of repacking snack food was necessary or desirable in the usual
business of respondents, who were engaged in the manufacture
and selling of such food products; second, petitioners worked for
respondents throughout the year, their employment not having
been dependent on a specific project or season; and third, the
length of time that petitioners worked. Thus, while petitioners
mode of compensation was on a per piece basis, the status and
nature of their employment was that of regular employees. Not
only did petitioners labor under the control of the respondents as
their employer, likewise did petitioners toil throughout the year
with the fulfillment of their quota as supposed basis for
compensation.
Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA
401
Petitioner union has 92 members working as cargadores of
Corfarm. They are paid on a piece rate basis. They unload, load
and pile sacks of palay from the warehouse to the cargo trucks and
from the truck to the place delivered. Union filed a petition for
certification election, which Corfarm opposed on the ground that
there is no e-e relationship, and that there is only a contractual
relationship.
Held: The workers are regular employees. To determine the
existence of an e-e relation. The four fold test is to be applied: (1)
the power to hire, (2) payment of wages, (3) the power to dismiss,
(4) the power of controlthe last being the most important
element. Prior to his ruling on Corfarms motion for
reconsideration, Laguesma ruled as follows:
the existence of an independent contractor relationship is
generally established criteria: (1) whether the contractor is
carrying on an independent business; (2) the nature and
extent of the work; (3) the skill required; (4) the term and

duration of the relationship; (5) the right to assign the

performance of a specified piece of work; (6) the control and
supervision over the workers; (7) the payment of the
contractors workers; (8) the control of premises; (9) the duty
to supply the premises, tools and appliances, materials and
laborers, and the mode and manner and terms of payment.
Corfarm, failed to show by clear and convincing proof that
the union has the substantial capital or investment to qualify as an
independent contractor under the law. The premises, equipment,
and paraphernalia are all supplied by Corfarm. It is only the
manpower or labor force which the alleged contractor supplies,
suggesting the existence of a labor only contracting scheme,
which is prohibited by law.
The petitioners members worked as cargadores, which is
directly related, necessary and vital to the operations of Corfarm.
Their tasks were essential in the usual business of Corfarm. The
lack of control or the existence of waiting time (for the next batch
of sacks to load/unload) does not denigrate the regular
employment of these workers. The continuity of employment is not
the determining factor, but rather whether the work of the laborer
is part of the regular business or occupation of the employer.
Maraguinot vs. NLRC, 284 SCRA 539
VIVA insists that the petitioners, who are cameramen, are project
employees of associate producers who, in turn, act as independent
contractors. It is settled that the contracting out of labor is allowed
only in the case of job contracting. Assuming that the associate
producers are job contractors, they then must be engaged in the
business of making motion pictures. As such to be a job contractor
under the preceding description, associate producers must have
tools, equipment, machinery, work premises and other necessary
materials to make motion pictures. However the associate
producers have none of these.
The associate producers of VIVA cannot be considered
labor-only contractors as they did not supply, recruit nor hire the
workers.
The employer-employee relationship between petitioners
and VIVA can be further established by the control test i.e. the
employers power to control the employees conduct, the most
important element is the employers control of the employees
conduct, not only as the result of the work to be done, but also as
to the means and methods to accomplish the same. VIVAs control

13

is evident in its mandate that the end result must be quality

acceptable to the company. The means and methods to
accomplish the result are likewise controlled by VIVA.
International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213
Quinta was employed as Medical Director for the development of
the companys herbal medicine department. Their contract had a
period of one year. After the contract, she was allowed to continue
work until she was terminated.
Held: Quinta became a regular employee. The SC held that
although their contract was valid, the fact that after its expiration,
petitioner decided to continue her services, she is now entitled to
security of tenure.
Moreover the SC agreed with the labor arbiter that the fact
the employee was not required to report at a fixed hour or to keep
fixed hours of work does not detract from her status as a regular
employee. As petitioner itself, admits, Quinta was a managerial
employee and therefore not covered by the Labor Code provisions
on hours of work.
Whether ones employment is regular is not determined by
the number of hours one works, but by the nature of the work and
by the length of time one has been in that particular job.
Highway Copra Traders vs. NLRC, 293 SCRA 350
[A]n employment is deemed regular when the activities
performed by the employee are usually necessary or desirable in
the usual business or trade of the employer. The nature of his work
as a general utility man was definitely necessary and desirable to
petitioners business of trading copra and charcoal and regardless
of the length of time. The argument of the respondent was only
engaged for a specific task, the completion of which is resulted in
the cessation of his employment is untenable. By specific project
or undertaking, Article 280 of the Labor Code contemplates an
activity which is not commonly or habitually performed or such
type of work which is not done on a daily basis but only for a
specific duration of time or until completion in which case the
services of an employee are necessary and desirable in the
employers usual business only for the period of time it takes to
complete the project.

Philippine Federation of Credit Cooperatives vs. NLRC, Dec.

11, 1998
A probationary employee who is engaged to work beyond the
probationary period of 6 months or for any length of time set forth
by the employer, shall be considered a regular employee.
Villa vs. NLRC, 284 SCRA 105
By entering into such contract of project employment, an
employee is deemed to understand that his employment is
coterminous with the project. Project employment contracts are
not lopsided agreements in favor of one party. Thus, the fact that
workers work under different project employment contracts for
several years cannot be made a basis to consider them as regular
employees, for they remain project employees regardless of the
number of projects in which they have worked. Length of service
is not the controlling determinant of the employment tenure of a
project employee.
San Miguel Corporation vs. NLRC, 297 SCRA 277
An employment is deemed regular when the activities performed
by the employee are usually necessary or desirable in the usual
trade or business of the employer even if the parties enter into an
agreement stating otherwise. But considered not regular are the
project employment the termination of which is more or less
determinable at the time of employment, and seasonal
employment which by its nature is only for one season of the year
the employment is limited for the duration of the season.
Nevertheless, an exception to the exception is made: any
employee who has rendered at least one year of service whether
continuous or intermittent with respect to the activity he
performed and while such activity actually exists, must be deemed
regular.
It must be noted that the respondent was employed only
for seven months. First he was employed for repair and upgrading
of furnaces, upon completion of such , he was terminated. A few
days after, two other furnaces required draining/cooling down and
emergency repair. Thus he was hired again. Upon completion of
such second undertaking, he was likewise terminated. He was not
hired for a third time and his two engagements taken together did
not total one full year. Clearly, he was hired for a specific project
that was not within the regular business of the corporation.

14

Romares vs. NLRC, 294 SCRA 411

There are two kinds of regular employees: those who are engaged
to perform activities which are UNOD in UTOB, and those casual
employees who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which
they are employed.
The scheme of rehiring him for a two to three month
contract on a temporary job as a mason is a clear circumvention of
the employees right to security of tenure and to other benefits.
Despite the provisions of the contract of employment, as long as
the activities are UNOD in UTOB, such employee is already regular.
PAL vs. NLRC, 298 SCRA 430
The janitorial service agreement is not a labor-only contracting.
There is labor only contracting where the person supplying workers
to an employer does not have substantial capital or investment in
the form of tools, equipment, machinery, work premises, among
others and the workers recruited and placed by such persons are
performing activities that are directly related to the principal
business of such employer.
Stellar was not engaged in labor only contracting because
it has sufficient capital form of tools and equipment, like vacuum
cleaners, polishers, and substantial capitalization as proven by its
financial statements. STELLAR even has other clients like San
Miguel Corporation and etc. Thus PAL is not the employer of the
janitors.
Philippine Tobacco Flue-Curing Corp. vs. NLRC, 300 SCRA 37
They are entitled to separation pay. Seasonal workers who work
from time to time and are temporarily laid off during off-season
are not separated from service in said period, but are merely
considered on leave until re-employed.
Since they are repeatedly rehired, such is sufficient
evidence of the necessity and indispensability of services, and is
equated to a regular employee. On the contrary, when an
employee is rehired every year but may work with another, one is
not seasonal but a project employee and would naturally end upon
the completion of each project.
The doctrine in Mercado vs. NLRC is inapplicable to the
case at bar because in Mercado, the seasonal employees were not
in the employers regular employ. They performed different phases

of agricultural work in a given year, and during such periods they

could work for others, which they did. They were free to contract
with others even if they were presently working for the employer.
Rather, the case at bar is pretty much similar to the case
of Gaco vs. NLRC, where the Court likewise ruled that Gaco was a
regular employee, due to his repeated rehiring every season,
spanning over fifteen years.
Bernardo vs. NLRC, July 12, 1999
Those who have worked beyond worked beyond 6 months and
whose contracts have been renewed are already regularized.
The accommodation argument does not change the nature
of their employment. An employee is regular because of the nature
of work and the length of service, not because of the mode or
even the reason for hiring them. The character of employment is
determined not by stipulations in the contract but by the nature of
the work performed. Otherwise no employee can become regular
by the simple expedient of incorporating this condition in the
contract of employment. Where an employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business of the employer, such employee is deemed a
regular employee and is entitled to security of tenure
notwithstanding the contrary provisions of his contract of
employment.
Imbuido vs. NLRC, GR 114734, 329 SCRA 357
The principal test for determining whether an employee is a
project employee or a regular employee is whether the project
employee was assigned to carry out
a specific project or
undertaking, the duration and scope of which were specified at the
time the employee was engaged for that project. A project
employee is one whose employment has been fixed for a specific
project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee
or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.
In the recent case of Maraguinot, Jr. v. NLRC, we held that
[a] project employee or a member of a work pool may acquire the
status of a regular employee when the following concur: 1) There
is a continuous rehiring of project employees even after [the]
cessation of a project; and 2) The tasks performed by the alleged

15

project employee are vital, necessary and indispensable to the

usual business or trade of the emplyer.

Project employee:

LECTURE (PART ONE)

Those employed for a fixed project or specific task, the completion

of which has been determined and made known to the ee at the
time of engagement. Two kinds:

It is important to distinguish the classes in order to apply

the proper rules in labor standards, or apply the security of tenure
provisions (illegal termination). It is also important in labor
relations, because in a certification election, the definition of a
bargaining unit depends on the classes of employee agreed upon
by the parties allowed to join.
The general rule is that all employees are regular
employees. The standard test is that there must be a reasonable
connection between the job and the employers business.
Regular employee:
1.

Performs tasks which are UNOD in UTOB; and the word

usually is used because it does not mean they always have
to perform tasks which are necessary or desirable.

2.

It also refers to casual employees who have rendered at least

one year of service, whether continuous or broken, with
respect to the activity they are employed.

3.

Probationary or term employees are also considered regular

once they are allowed to work beyond the term or duration of
the project.

4.

Project employee who has been continuously rehired

(Maraguinot case) becomes regular for the specific job
continuously rehired for
a.

The employee is continuously rehired from project to

project even with gaps of time in between

b.

Task is UNOD in UTOB, or else the project ee is considered

only a casual ee

c.

Rehired for the same task or nature of task.

A project employee converted to regular employee is still

not paid for the period he does not work. But the employer is
required to hire him when the next project requires he
particular job he does, or else, the employer is guilty of illegal
termination.

1.

Tasks which are UNOD in UTOB

2.

Tasks which are not UNOD in UTOB

a.

The job must be distinct from the totality of the ers

business

b.

The project must be definite as to its completion

c.

Employment terminates with the project, regardless of the

period

A Workpool is not necessary in order to convert the project ee into

regular. But its existence may signify that the proj. ee has become
regular if there is continuous rehiring.
Fixed Term:
The job is assigned a specific date of expiration even if the job is
considered UNOD in UTOB. The important aspect is that the job is
time bound.
Brent School ruling: requirements for a valid FT employment:
a.

The parties dealt on equal footing (bargaining position)

b.

The contract is reasonable, not oppressive

c.

The employee entered into it voluntarily

d.

There is no intent to circumvent labor laws

e.

Usually apply to teachers; sadly, it is used in other types of

jobs and has been subject of abuse

Seasonal Employee:
Hired for a specific period of time during the year, and may be
UNOD in UTOB
-

Rehired whenever
farmworkers)

their

services

are

required

(e.g.

16

At the arrival of the season must be rehired, or else the er

is guilty of illegal termination

Allowed to seek work elsewhere while off-season (Mercado

case is clarified by the Phil Tobacco case).

Probationary Employee:
Hired for 6 months to determine qualification, or capacity as a
regular employee, though an ee can become regular right away
without going through probation
-

The employee is given the standards at the time of

engagement (employer must explain, not merely giving
document)
General rule is that it is limited to 6 months, except

a.

When the qualifications cannot be determined during the 6

months, as part of company policy

b.

When the ee is the one who asked for the extension

Casual Employee:
-

One who does not fall under the definition of a regular,

project, seasonal or fixed employee
The job is not UNOD in UTOB

Casual converted to regular after rendering more than a

year of service with respect to that activity employed,
whether continuous or broken

If broken but has served more than one year already,

during the intervals he does
not have work due to
temporary lay-off, he can look for another job, but not
during the times the er needs him.

- Any doubts must be resolved in favor of regular employment

(PFCCI case)
Lecture (Part Two)
Types of employment
Remember that the presumption is in favor of regular
employment. It may be shown that one is not a regular employee,
but proof must be given to show this.

How to determine regular employment? The nature of the

work is UNOD in UTOB of the employer, and if a casual is employed
for more than one year, he is considered an employee.
Probationary employment:
probe period is 6 months for the employer to determine the
eligibility of the employee. But the period may be shortened or
extended. Probe converts to regular after the period imposed has
lapsed, and the employee continues to work. It implies that the
employee has passed and is eligible for regular employment. Also,
if the terms and conditions of employment are not clearly provided
by the employer, the standards are not clear then the employee is
deemed a regular employee. This is because the employee has no
knowledge of what standards he or she must meet, and so this
should not work to his or her prejudice.
Project employment:
Project employee is one who works for a specific project or
undertaking which is separate and distinct from the main business
of the employer. E.g. the Ateneo Law School wants to computerize
its records. The employees hired to do such are project employees.
But remember the project or undertaking MAY be within the
regular business of the employer. That is, it may be necessary or
desirable to the main business. But it is considered a project
because it is distinguishable as separate from the main business.
There are three instances when the project employee is
converted into a regular employee.
1.

A project employee may be converted to regular status when

he was employed for a specific project, the completion of
which is determined, but despite the termination of the
project, he is still made to work. It negates the essence of
project employment. It shows the employees work is needed
not only in the specific project.

2.

Within the project itself, and before the completion of the

project, the employee is given tasks not related at all to the
project. Giving the employee additional work negates again the
essence of project employment. It shows again the need of his
services is not limited to the project. Even if the extra work is
not UNOD in UTOB to the main business, he is converted to a
regular employee.

17

3.

The case of Maraguinot. Under multiple succeeding projects,

can you have gaps between each project, and the employee
still be converted to regular status? YES. But only when the
project employee is rehired continuously, and for the same
nature of task. There is a pattern showing that UNOD in UTOB.

In this case, the employee becomes regular after one year,

that is, under the second undertaking. Hence he is deemed a
regular employee, and so he may demand to be rehired when
there is another available undertaking, even though the intervals
between jobs may stretch to months. During the second vacancy,
the employee is still considered a regular employee, but since
there is no job to do, the Court considers this a temporary lay-off
without pay. Hence he is still a regular employee who follows the
no work, no pay rule.

Remember that the one year rule in the Code applies only
to casual employment, not to project nor seasonal employees.
If a project employee is converted to a regular employee,
when can he reckon his conversion to regular employment? At the
start of the project? According to Sir, there is no clear answer to
that. Two possible options: One is to say that regular employment
starts from day one, because it can be analogous to the ground of
psychological incapacity under the Family Code. Theoretically it
should have existed from the very start, even if it manifests much
later. Hence, one theory is that from day one, the work done is
UNOD in UTOB, thus regular employee from day one.

The same principle temporary lay off applies to a project

and seasonal employee/employment, who acquires regular
employment. Such employee can demand that he be rehired for
the next casual work. If the company hires someone else, then it
is guilty of illegal termination illegally terminating the employee
converted to regular employee.
During the period that he is temporarily laid off, the worker
may seek work elsewhere. This will not negate his conversion to a
regular employee in the first company.

The second option is after showing a series of rehiring, a

pattern, only then will conversion occur. But it is hard to determine
what exact date the regular employment will be counted should
it be counted from the start of the third project? Or from the
second project? Etc. etc. Again, there is no clear-cut formula.

After the one year, the employee has the right to demand
that he be rehired for succeeding undertakings. Conversely,
management can demand and compel the employee to report for
work for the next undertaking. If the employee is working
elsewhere, then the employer can deem the employee as refusing
to work, a ground for disciplinary action and termination.

Casual Employment:

REMEMBER: A casual employee becomes regular after

completion of service of one year for the SAME task or nature of
tasks. He must complete the one year period for the SAME
tasks/nature of tasks. So lets say for the second undertaking he
was hired as a driver, but in the first undertaking he was hired as a
waiter, then there is no conversion. The Principle in project or
seasonal employment that once a project/seasonal employee is
made to do tasks other than or outside of the work for which he
was hired makes him a regular employee, DOES NOT apply to
casual employment.

A casual employee is one whose employment is not UNOD in

UTOB, but his term of employment is not made known at the time
of the employment, unlike a project ee. A casual converts to
regular ee if after one year of service, whether continuous or
broken, he still works for the employer. The length of time is an
indication that his job is UNOD in UTOB.
Now what if this scenario happens:
hired

hired again
6 months

vacancy

hired again
* The codal provisions are very important especially for bar
7 months
6 months

vacancy
regular

purposes. The cases are interpretations of the provisions. You

must know the provisions first before the cases.
Seasonal Employment:

18

In this case, conversion occurs similar to project

employees. When they are continuously rehired for the same
task/nature of task, they become regular employees. During offseason, they are temporarily laid off, without pay, but they are still
considered regular employees.
So during off-season, the relationship is still continuous.
Regular seasonal employees. Sir uses this term only because the
Court used it. But the correct term should be seasonal employees
converted to regular employees. Anyway, the hiring must be for
the same task/nature of task. If not, there is no pattern for UNOD
in UTOB. Except in cases where the employer hires an all around
person. Obviously, not the same nature of task. But there is still
that pattern showing his services are UNOD in UTOB. So he
becomes regular as well. In the Phil. Tobacco case, the workers
were hired season after season after season. So obviously they
were regular employees.
Remember our discussion awhile ago, regarding project
employees, as to when to reckon an employee to be regular once
there is conversion? The same two scenarios apply to seasonal
employees. There is also no clear-cut answer to seasonal
employees. But it is easier to defend the first scenario that from
day one they were regular, it became manifest only after some
time. Use the principle of resolving all doubts in favor of labor.
Otherwise it will be difficult to defend the time of conversion.
Remember that once an employee is converted to a
regular employee, he should enjoy or derive all benefits covered by
the CBA that is given to regular employees. Now, look at the codal
provision. In effect, it says that if one is not regular, he is
project/seasonal. If he is not project/seasonal, he is casual. But
there is another type of employment created by jurisprudential
rule:
Fixed Term employment:
Unlike project, where what is fixed is the term of
completion of the project, in Fixed Term, the PERIOD of
employment is fixed. The Court clarified that Fixed term is allowed
only if:

it was entered into by both parties negotiating on a more-orless equal bargaining position

the worker should not be coerced

the worker should not be deprived of his workers rights as an

employee

it must be a good faith agreement, not entered into by the

employer to circumvent the law on regular employment

This is the Brent ruling. The Court upheld this pursuant to

provisions on the Civil Code, that one must respect the terms of a
contract entered into by the parties. Is this correct? Partly yes,
essentially no. Yes the CC contains the provisions recognizing the
parties rights to fix the terms of a contract. But the CC itself says
that for employment relationship it is not the CC that applies but
rather the Labor Code. For a contract of employment is not an
ordinary contract-it is so vested with public interest that it should
be covered by special provisions. Even the CC points us back to
special laws.
Is the Brent doctrine applicable to any situation? No. It will
NOT apply to a factory and a factory worker. Remember that the
people involved in Brent were the school and an athletic director.
Similar to a probationary/project/seasonal employee being
made to work beyond the period/project/season, a fixed term
employee made to work beyond the fixed term should be
considered regular, because it negates the essence of fixed term
employment. Even if the parties bargained on equal footing.
Second, is repeatedly rehiring the fixed term employee through
fixed term employment contracts. The element of circumvention in
this case is clearly shown. It lacks one of the conditions under the
Brent doctrine that the fixed term employment must be done in
good faith. Hence in the second situation the employee should be
deemed regular as well.
Remember that it is not a general rule that you can fix the
term of employment. It is an exceptional case that must be applied
in exceptional circumstances. The general rule is one is a regular
employee. Remember the rule in statutory construction that
exceptions to the general rule must be construed strictly. So if you
are not sure whether the employee falls under one of the
exceptional circumstances, then he should be deemed regular. Is
there a problem with that? There is none because an employer can
hire an employee as regular starting from day one.

19

IV. RIGHT TO SELF-ORGANIZATION

A. CONCEPT AND SCOPE
LABOR CODE
Art. 243. Coverage and employees right to selforganization.
ALL persons employed in:
commercial, industrial, and agricultural enterprises,
and
in religious, charitable, medical or educational
institutions, whether operating for profit or not
shall have the right to
self organization and to
form, join, or assist labor organizations of their own
choosing
for purposes of collective bargaining.

form, join, or assist labor organization for the

purpose of collective bargaining through representatives
of their own choosing, and
to engage in lawful concerted activities for the same
purpose, or for their mutual aid and protection, subject
to the provisions of Art. 264 of this Code.

Art. 277(c). Miscellaneous provisions.

ANY employee,
whether employed for a definite period or not,
shall, beginning on his first day of service,
be considered an employee
for purposes of membership in any labor union.

Art. 212. Definitions.

(e) Employer includes
any person
acting in the interest of an employer,
directly or indirectly.
The term shall not include
any labor organization
or any of its officers or agents
EXCEPT when acting as employer.

Art. 246. Non-abridgement of right to selforganization.

IT shall be unlawful to
restrain,
coerce,
discriminate against or
unduly interfere
with employees and workers in their exercise of the right to
self-organization.
Such right shall include the right to

(f) Employee includes

any person
in the employ of an employer.
The term shall not be limited to the employees of a
particular employer, unless this Code so explicitly states.
It shall include
any individual whose work has ceased
as a result of or in connection with
any current labor dispute
or because of any unfair labor practice
IF he has not obtained any other substantially
equivalent and regular employment.

Ambulant, intermittent and itinerant workers,

Self-employed people,
Rural workers, and
Those without any definite employers
MAY form labor organizations for their mutual aid and
protection.

20

OMNIBUS RULES, BOOK V RULE I-RULE II, AS AMENDED

BY D.O. 40, SERIES OF 2003.
RULE I
Definition of Terms
SECTION 1. Definition of terms.
(r)

"Employees" includes any person in the employ of a

particular employer. The term shall not be limited to
the employees of a particular employer, unless the
Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection
with any current labor dispute or because of any unfair
labor practice if he has not obtained any other
substantially equivalent and regular employment.

(s)

"Employer" includes any person acting in the interest

of an employer, directly or indirectly. The term shall
not include any labor organization or any of its officers
or agents except when acting as employer.

RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote
the free and responsible exercise of the right to selforganization through the establishment of a simplified
mechanism for the speedy registration of labor unions and
workers associations, determination of representation status
and resolution of inter/intra-union and other related labor
relations disputes. Only legitimate or registered labor unions
shall have the right to represent their members for
collective bargaining and other purposes. Workers'
associations shall have the right to represent their members
for purposes other than collective bargaining.

Section 2. Who may join labor unions and workers'

associations. - All persons employed in commercial,
industrial and agricultural enterprises, including employees
of government owned or controlled corporations without
original charters established under the Corporation Code, as
well as employees of religious, charitable, medical or
educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or
assist labor unions for purposes of collective bargaining:
provided, however, that supervisory employees shall not be
eligible for membership in a labor union of the rank-and-file
employees but may form, join or assist separate labor
unions of their own. Managerial employees shall not be
eligible to form, join or assist any labor unions for purposes
of collective bargaining. Alien employees with valid working
permits issued by the Department may exercise the right to
self-organization and join or assist labor unions for purposes
of collective bargaining if they are nationals of a country
which grants the same or similar rights to Filipino workers,
as certified by the Department of Foreign Affairs.
For purposes of this section, any employee, whether
employed for a definite period or not, shall beginning on the
first day of his/her service, be eligible for membership in
any labor organization.
All other workers, including ambulant, intermittent and
other workers, the self-employed, rural workers and those
without
any
definite
employers
may
form
labor
organizations for their mutual aid and protection and other
legitimate purposes except collective bargaining.

B. SPECIAL GROUPS OF EMPLOYEES

LABOR CODE

21

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 rankand-file employees
but may join, assist or form separate labor
organizations of their own.
212. Definitions.
(m) Managerial employee is one who is vested with the
powers or prerogatives
- to lay down and execute management policies
- and/or to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees.
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 judgement.
All employees not falling within any of the above definitions
are considered rank-and-file employees for purposes of this
Book.

OMNIBUS RULES, BOOK V, RULE 1, SEC. 1 (hh), (nn),

(xx), AS AMENDED BY D.O. 40
RULE I
Definition of Terms
SECTION 1. Definition of terms.
(hh) "Managerial Employee" refers to an employee who is
vested with powers or prerogatives to lay down and

execute management policies or to hire, transfer,

suspend, layoff, recall, discharge, assign or discipline
employees.

(nn) "Rank-and-File Employee" refers to an employee whose

functions are neither managerial nor supervisory in
nature.
(xx) "Supervisory Employee" refers to an employee who, in
the interest of the employer, effectively recommends
managerial actions and the exercise of such authority
is not merely routinary or clerical but requires the use
of independent judgment.

CASES
MANAGERIAL AND SUPERVISORY EMPLOYEES:
Franklin Baker vs. Trajano, 157 SCRA 416 (1988)
A union representing 90 workers of the company filed for a
certification election. The company opposed saying that 76 of the
workers were managerial employees, citing instances wherein these
workers recommended the dismissal and hiring of several workers.
Held: The test of supervisory or managerial status depends on
whether a person possesses authority to act in the interest of his
employer in the matter specified in Article 212 (k) of the Labor Code
and Section 1 (m) of its Implementing Rules and whether such
authority is not merely routinary or clerical in nature, but requires the
use of independent judgment. Thus, where such recommendatory
powers as in the case at bar, are subject to evaluation, review and
final action by the department heads and other higher executives of

22

the company, the same, although present, are not effective and not an
exercise of independent judgment as required by law.
Subject employees are not managerial employees because as
borne by the records, they do not participate in policy making but are
given ready policies to execute and standard practices to observe,
thus having little freedom of action.

Pagkakaisa ng mga Mangagawa vs. Ferrer-Calleja, 181

SCRA 449
While the functions and the titles of the personnel sought to be
organized appear on paper to involve an apparent exercise of
managerial authority, the fact remains that none of them discharge
said functions.
Rules in determining rank-and-file employees:
1.) They do not have the power to lay down and execute
management policies;
2.) They do not have power to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees but only to
recommend such actions; and
3.) They do not have the power to recommend any managerial
actions as their recommendations have to pass through the
department manager for review.

United Pepsi-Cola Supervisory Union vs. Laguesma, 288

SCRA 15
The company opposed the inclusion of its route managers in the list
of members of the union claiming said employees are managerial
employees and should be excluded.
Held: A distinction exists between those who have the authority to
devise, implement and control strategic and operational policies (top
and middle managers) and those whose task is simply to ensure that
such policies are carried out by the rank-and-file employees of an
organization (first-level managers/supervisors). What distinguishes
them from the rank-and-file employees is that they act in the interest
of the employer in supervising such rank-and-file employees.

Designations or titles of positions are not controlling. And

neither should it be presumed that just because they are given set
benchmarks to observe, they are ipso facto supervisors. Adequate
control methods which require a delineation of the functions and
responsibilities of managers by means of ready reference cards as
here, have long been recognized in management as effective tools for
keeping businesses competitive.
University of the Philippines Corp. vs. Ferrer-Calleja, 211 SCRA
451
UP protested the inclusion of the academic staff in a labor union
composed of other non-academic rank and file, claiming that they are
high level-employees or at the least, should comprise a separate
collective bargaining unit.
Held: Even assuming arguendo that UP professors discharge policydetermining function through the University Council, still such
exercise would not qualify them as high-level employees within the
context of E.O. 180.
Policy-determining refers to policydetermination in university matters that affect those same matters
that may be the subject of negotiation between public sector
management and labor. The reason why policy-determining has
been laid down as a test in segregating rank-and-file from
management is to ensure that those who lay down policies in areas
that are still negotiable in public sector collective bargaining do not
themselves become part of those employees who seek to change
these policies for their collective welfare.
The policy-determining functions of the University Council
refer to academic matters, i.e., those governing the relationship
between the University and its students, and not the University as an
employer and the professors as employees. It is thus evident that no
conflict of interest results in the professors being members of the
University Council and being classified as rank-and-file employees.
The basic test in determining the appropriate bargaining unit
is that a unit, to be appropriate, must affect a grouping of employees
who have substantial, mutual interests in wages, hours, working
conditions and other subjects of collective bargaining. The test of
23

the grouping is community or mutuality of interests. And this is so

because the basic test of an asserted bargaining units acceptability is
whether or not it is fundamentally the combination which will best
assure to all employees the exercise of their collective bargaining
rights.
Toyota Motor Philippines Corp. vs. Toyota Motor Philippines
Labor Union, 268 SCRA 573
The company opposed the holding of a certification election because
the union has both rank and file employees and supervisory
employees.
Held: 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 possess 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.

The company opposed the petition for certification filed by the union
alleging that the union is not a legitimate labor organization as it
represents both supervisory and rank and file employees, and
submitting the names of 19 alleged supervisory employees.
Held: The record shows that the union is a legitimate labor
organization having been issued a certificate of registration. Under
prevailing rules, once a union acquires legitimate status as a labor
organization, it continues as such until its certificate of registration is
cancelled or revoked in an independent action for cancellation
Article 245 merely prescribes the requirements for eligibility
in joining a union and does not prescribe the grounds for the
cancellation of union registration. In the absence of any independent
petition for cancellation of registration filed against the respondent
labor union, it continues to be possessed with legal personality of a
legitimate labor organization.
(Note: The SPI and Toyota ruling are two irreconcilable decisions.
The case Tagaytay Highlands vs. Tagaytay Highlands Union,
January 22, 2003, which upholds the SPI Doctrine, reconciles the
conflict in the two cases.)

(The Court held that the union cannot, prior to purging itself
of its supervisory employee members, attain the status of a legitimate
labor organization. Not being one, it cannot possess the requisite
personality to file a petition for certification election.)

Atlas Lithographic Services vs. Laguesma, 205 SCRA 12

A local union comprised of supervisory employees filed a petition
for certification election which was opposed by the company because
such union was affiliated with a national federation which has as one
of its members the union of the companys rank-and-file employees.

Toyota Motor Philippines Labor Union vs. Toyota Motor

Philippines; GR 135806 August 8, 2002
In this case, it was held that if a labor organizations application for
registration is vitiated by falsification and serious irregularities, a
labor organization should be denied recognition as a legitimate labor
organization.

Held: 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. 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.

SPI Technologies vs. DOLE (Minute Resolution), March 8, 1999

A conflict of interest nay arise in the areas of discipline,

collective bargaining and strikes.

24

Members of the supervisory union might refuse to carry out

disciplinary measure 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 strikes the national federation
might influence the supervisors union to conduct a sympathy strike
on the sole basis of affiliation.
De La Salle University Medical Center vs. Laguesma, 294 SCRA
141
The company opposed the petition for certification election on the
ground that the federation representing the supervisors union also
represents its rank-and-file employees union.
Held: The reason for the segregation of supervisory and rank-andfile 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. These
consequences can obtain not only in cases where supervisory and
rank-and-file employees in the same company belong to a single
union but also where unions formed independently by supervisory
and rank-and-file employees of a company are allowed to affiliate
with the same national federation.
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. Second, the national
federation is actively involved in union activities in the company.
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.
CONFIDENTIAL EMPLOYEES:
National Association of Trade Unions (NATU) vs. NLRC, 239
SCRA 546
The petition for certification election of the union was opposed by
the company on the ground that some of the employees included in
the list of members were either managerial or confidential
employees.
Held: It is the nature of the employees functions, and not the
nomenclature or title given to his job, which determines whether he
has rank and file, supervisory, or managerial status.
The grave abuse of discretion committed by public
respondent is at once apparent. Art. 212, par. (m), of the Labor Code
is explicit. A managerial employee is (a) one who is vested with
powers or prerogatives to lay down and execute management
policies, or to hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees; or (b) one who is vested with both powers
or prerogatives. A supervisory employee is different from a
managerial employee in the sense that the supervisory employee, in
the interest of the employer, effectively recommends such managerial
actions, if the exercise of such managerial authority is not routinary
in nature but requires the use of independent judgment. It is the
nature of the employees functions, and not the nomenclature or title
given to his job, which determines whether he has rank and file,
supervisory, or managerial status.
A confidential employee is one entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection
of the employers property. While Art. 245 of the Labor Code
singles out managerial employees as ineligible to join, assist or form
any labor organization, under the doctrine of necessary implication,
confidential employees are similarly disqualified.

25

In the collective bargaining process, managerial employees

are supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interests are well protected.
The employer is not assured of such protection if these employees
themselves are union members. Collective bargaining in such a
situation can become one-sided. It is the same reason that impelled
this Court to consider the position of confidential employees as
included in the disqualification found in Art. 245 as if the
disqualification of confidential employees were written in the
provision. If confidential employees could unionize in order to
bargain for advantages for themselves, then they could be governed
by their own motives rather than the interest of the employers.
Moreover, unionization of confidential employees for the purpose of
collective bargaining would mean the extension of the law to persons
or individuals who are supposed to act in the interest of the
employers. It is not farfetched that in the course of collective
bargaining, they might jeopardize that interest which they are dutybound to protect.

between the Union and Metrolab. Such a scenario, thus, gives rise to
a potential conflict between personal interests and their duty as
confidential employees to act for and in behalf of Metrolab. They do
not have to be union members to affect or influence either side.

Metrolab Industries vs. Confesor, 254 SCRA 182

The company asked for the exclusion from the closed shop provision
and bargaining unit of the rank and file employees of the executive
secretaries of its managers since such secretaries are confidential
employees having access to vital labor information.

Held: Confidential employees are those who (1) assist or act in a

confidential capacity, (2) to persons who formulate, determine, and
effectuate management policies in the field of labor relations. The
two criteria are cumulative, and both must be met if an employee is
to be considered a confidential employee that is, the confidential
relationship must exist between the employee and his supervisor, and
the supervisor must handle the prescribed responsibilities relating to
labor relations.

Held: Although Article 245 of the Labor Code 20 limits the

ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or
nature of work are required to assist or act in a fiduciary manner to
managerial employees and hence, are likewise privy to sensitive and
highly confidential records.
The dangers sought to be prevented, particularly the threat of
conflict of interest and espionage, are not eliminated by nonmembership of Metrolabs executive secretaries or confidential
employees in the Union. Forming part of the bargaining unit, the
executive secretaries stand to benefit from any agreement executed

Finally, confidential employees cannot be classified as rank

and file. As previously discussed, the nature of employment of
confidential employees is quite distinct from the rank and file, thus,
warranting a separate category. Excluding confidential employees
from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
San Miguel Corp. Supervisors and Exempt Union vs. Laguesma,
277 SCRA 370
The company petitioned for the exclusion of several supervisors
from the bargaining unit on the ground that they were confidential
employees. These employees handle confidential information which
relate to product formulation, product standards and product
specifications.

An important element of the confidential employee rule is

the employees need to use labor relations information. Thus, in
determining the confidentiality of certain employees, a key question
frequently considered is the employees necessary access to
confidential labor relations information.
Granting arguendo that an employee has access to
confidential labor relations information but such is merely incidental
to his duties and knowledge thereof is not necessary in the
performance of such duties, said access does not render the employee

26

a confidential employee. If access to confidential labor relations

information is to be a factor in the determination of an employees
confidential status, such information must relate to the employers
labor relations policies. Thus, an employee of a labor union, or of a
management association, must have access to confidential labor
relations information with respect to his employer, the union, or the
association, to be regarded a confidential employee, and knowledge
of labor relations information pertaining to the companies with
which the union deals, or which the association represents, will not
cause an employee to be excluded from the bargaining unit
representing employees of the union or association. Access to
information which is regarded by the employer to be confidential
from the business standpoint, such as financial information or
technical trade secrets, will not render an employee a confidential
employee.
In the case at bar, the employees in question may not be
considered confidential employees merely because they handle
confidential data as such must first be strictly classified as
pertaining to labor relations for them to fall under said restrictions.
The information they handle are properly classifiable as technical
and internal business operations data which, to our mind, has no
relevance to negotiations and settlement of grievances wherein the
interests of a union and the management are invariably adversarial.
Since the employees are not classifiable under the confidential type,
this Court rules that they may appropriately form a bargaining unit
for purposes of collective bargaining. Furthermore, even assuming
that they are confidential employees, jurisprudence has established
that there is no legal prohibition against confidential employees who
are not performing managerial functions to form and join a union.
Sugbuanon Rural Bank vs. Laguesma, 324 SCRA 425
The company opposed the unions petition for certification election
on the ground that the members of the union were confidential
employees.
Held: Article 245 of the Labor Code does not directly prohibit
confidential employees from engaging in union activities. However,

under the doctrine of necessary implication, the disqualification of

managerial employees usually applies to confidential employees.
The confidential employee rule justifies exclusion of confidential
employees because in the normal course of their duties they become
aware of management policies relating to labor relations. It must be
stressed, however, that when the employee does not have access to
confidential labor relations information, there is no legal prohibition
against confidential employees from forming, assisting, or joining a
union.
SECURITY GUARDS:
Manila Electric Co. vs. Secretary of Labor and Employment, 197
SCRA 275
The issue in this case is whether security guards have the right to join
either the rank-and-file or supervisory union.
Held: Under the new rules, the security guards are not barred from
membership in a labor organization of the rank-and-file employees.
However, in dismissing the case, the SC also express its concern on
the consequence of this decision. Under the new rules, only the
supervisory employees are prohibited and not security guards (Art.
245). The possible consequence is divided loyalties in the faithful
performance of their duties. Thus, in the event of a strike declared
by their union, security personnel may neglect or abandon their
duties, such as protection of the properties of their employer, the
control of access to employers premises, and the maintenance of
order in the even of emergencies and untoward incidents.
MEMBERS OF COOPERATIVES:
Benguet Electric Cooperative vs. Ferrer-Calleja, 180 SCRA 740
The right to collective bargaining is not available to an employee of a
cooperative who at the same time is a member and co-owner thereof.
However, employees who are neither members nor co-owners of the
cooperative are entitiled to exercise the rights to self-organization,

27

collective bargaining and negotiations. The rationale is that as

cooperative members they are co-owners of cooperative even if they
dont exercise the actual management of cooperative.
TEACHERS:
Jacinto vs. CA, 281 SCRA 657
Several public school teachers incurred unauthorized absences when
they participated in mass actions. They were preventively suspended
and later on dismissed by the DECS Secretary. The teachers claimed
they were merely exercising their right to peaceful assembly and
petition for redress of grievances.
Held: As regards the right to strike, the Constitution itself qualifies
its exercise with the proviso in accordance with law. This is a clear
manifestation that the state may, by law, regulate the use of this right,
or even deny certain sectors such right. Executive Order 180 which
provides guidelines for the exercise of the right of government
workers to organize, for instance, implicitly endorsed an earlier CSC
circular which enjoins under pain of administrative sanctions, all
government officers and employees from staging strikes,
demonstrations, mass leaves, walkouts and other forms of mass
action which will result in temporary stoppage or disruption of
public service, by stating that the Civil Service law and rules
governing concerted activities and strikes in the government service
shall be observed.
It is also settled in jurisprudence that, in general, workers in
the public sector do not enjoy the right to strike.
Acosta vs. CA, 334 SCRA 486
Teachers from different public schools in Metro Manila were
administratively charged with grave misconduct and gross neglect of
duty when they did not report for work and instead, participated in
mass actions. They claimed that they never went on strike because
they never sought to secure changes or modification of the terms and
conditions of their employment.

Held: The character and legality of the mass actions which they
participated in have been passed upon by this Court as early as 1990
wherein it held that these mass actions were to all intents and
purposes a strike; they constituted a concerted and unauthorized
stoppage of, or absence from, work which it was the teachers sworn
duty to perform, undertaken for essentially economic reasons.
MEMBERS OF THE IGLESIA NI CRISTO:
Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54
It is clear that the right to join a union includes the right to abstain
from joining any union. 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 members 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.
It is clear, therefore, that the assailed Act, far from
infringing the constitutional provision on freedom of association,
upholds and reinforces it. It does 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.
It is the employee who should decide for himself whether to join
such union or not but the law does not prohibit anyone from joining
unions or it does not favor anuy religion.
Kapatiran sa Meat and Canning Division vs. Ferrer-Calleja, 162
SCRA 367

28

This Courts 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 MedArbiter 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.
EMPLOYEES OF INTERNATIONAL ORGANIZATIONS:
International Catholic Migration Commission vs. Calleja, 190
SCRA 130
ICMC employees applied for a certification of election which was
opposed by ICMC on the fround that the Dept. of Foreign Affairs
granted ICMC the status of a specialized agency with corresponding
diplomatic privileges and immunities, thus, the principle of nonsuability of states or diplomatic immunity. The SC held that
although the certificate of election is not a suit against ICMC, it
would nonetheless trigger a series of events in the collective
bargaining process which could inevitably lead to legal process
which includes any penal, civil and administrative proceedings.

LECTURE
Is the right to self organization a constitutional right? Can it
be taken away by statute? The right to self organization is a
constitutional right. And it cannot be taken away by statute. The right
to self organization per se is a right of ALL employees, not just rankand-file or supervisory but even managerial employees. It is the right
to organization for purposes of collective bargaining which is limited
by the Labor Code. Hence, only rank and file and supervisory
employees may join, assist, or form labor organizations for purposes
of collective bargaining. Art. 243 cannot be read in isolation. It must
be read in conjunction with Art. 245.
What is the right to self-organization? It does not only cover
the right to organize for purposes of collective bargaining and for
mutual aid and protection, but also pursuant to Art. 246. Look at Art.
246, it defines what is the right of self-organization.. It extends to the
employees right to assert peaceful, concerted means. Hence, to
picket peacefully is part of the right to self-organization through
peaceful, concerted means, and it is beyond the jurisdiction of the
regular courts.
Who are managerial employees? Look at Art. 82. If one is a
member of a managerial staff by virtue of Art. 82 you are a
managerial employee? Insofar as one is entitled to certain benefits,
one can be considered a managerial employee excluding him from
such benefits, and in this case, managerial employee as defined by
Art. 82. But insofar as the right to self-organization is concerned, he
may be considered NOT a managerial employee because of the other
definition of a managerial employee under Art. 245. Because the
definition of a managerial employee should be applied strictly.
Theres a prohibition against managerial employees joining
or assisting in union organizing activities, because it is considered
interference by management. Because they lay down policies. Now
as for supervisory employees, they are allowed to form or join labor
organizations because their power is recommendatory. However it
must be effective recommendation. What does that mean? Since all
recommendations of supervisors go up to the manager for a final
29

signature at the very least, it can be said it will always be subject to

review. So when can a recommendation be considered effective?
In the case of a disciplinary action, a supervisor conducted
an investigation, and he exercised discretion and recommended
termination after deciding the case, if the manager conducts another
investigation, and again evaluate the evidence submitted by the
supervisor, then the supervisors recommendation is not effective. He
should be considered rank-and- file. On the other hand, if the
manager merely reviews the supervisors findings and
recommendations, and determine if the supervisor exercised due
discretion, then the recommendation was effective recommendation.
The supervisor holds a supervisory position.
Now a supervisor cannot join the organization of rank-andfile employees, and vice versa. There is a prohibition on
commingling. Does it matter how many prohibited employees
happened to join the union? No. The legitimacy of the union is
invalidated by even a single employee who commingles with that
certain union. Such issue will come up in a petition for certification
election proceeding. Remember the case of Toyota. The Court said
the legitimacy of a union is nullified the moment there is
commingling. What is the legal basis for this ruling? Art. 245? But
Art. 245 does not mention the effect of nullification in case of
commingling.
Remember the Toyota case and Justice Kapunan . SPI
Technologies is a clarification of the Toyota case. It says that Art.
245 relates to the eligibility of the employees to join. It does not
relate to the issue of illegitimacy. In fact, the Labor Code does not
include as one of the grounds for cancellation of a unions
registration the commingling of employees in such union. Toyota
places a burden on labor unions to determine with exactness who are
supervisory or rank-and-file employees. Instead of Toyota, SPI is a
more reasonable interpretation of Art. 245. Art. 245 bars an
employee , and the effect of the violation is for the member to be
expelled. In the case of a petition for certification election, the
employee is excluded from voting through inclusion/exclusion

proceedings. We do not know how the Court will reconcile Toyota

and SPI. They are irreconcilable. I suggest for the bar purposes, cite
Toyota, then cite SPI. We will not know why the examiner asks the
question-if he is relying on Toyota or is testing if you know SPI. So I
suggest cite both Toyota then say that there is a recent contrary
decision in the case of SPI.
The Toyota doctrine says that commingling is a violation of
Art. 245, and results in the nullification of a unions registration. This
fatally affects a pending petition for certification election because it
can be filed only by a legitimate labor organization.
Now in the Atlas case, using Art. 245 of the Code, says that a
supervisory union cannot join the federation of the companys rankand-file union. Hence it extends the prohibition to the federation or
conglomerate level. Applying Toyota again, will this affect the
federations legitimacy? Yes. This is again not provided in Art. 245.
Go to the last paragraph of the decision, prior to the dispositive
portion. The company withdrew its opposition to the commingling in
the federation. There was no genuine issue left! That is how
doctrines in labor are made year in and year out.
Now in the succeeding case of De La Salle, the commingling
per se is not disallowed. It said the Atlas doctrine is applicable only
when:

The rank-and-file union members are directly under the

supervisors comprising the supervisory union

The federation is actively involved in the negotiations for

CBA (which is stupid because this is the primary purpose of
a federation)

It is possible that there are supervisors in the union who are

not supervising the rank-and-file members of the union in the same
federation. They are not really working with each other. For instance,
they belong to different departments. Or a union can be organized in
such a way where not all rank-and-file employees comprise only one
union. You can divide them into as many bargaining units as possible

30

depending on the rules in determining the appropriate bargaining

unit.

prohibits this, it is only usually an internal prohibition by the

religious group.

Confidential employees- are those who assist managerial

employees and by the doctrine of necessary implication are not
allowed to join or assist labor organizations. They are akin to
managerial employees. Three elements that must be applied strictly:

This is exemplified in the Kapatiran case. The workers were

allowed to form their own union if they wanted to, and even if it
would be against their religious belief, the State would still not
prohibit them from doing the same.

The confidential employees necessary or primary function

entails he must have access to vital confidential information
or matter related to labor relations.

C. ACQUISITION AND RETENTION OF MEMBERSHIP, UNION

SECURITY AGREEMENTS

He also must have fiduciary relationship of a confidential

nature with the management employee.

LABOR CODE

And the manager must have the power to lay down policies
relating to labor relations.

Art. 277 (c). Miscellaneous Provisions.

ANY employee,
- whether employed for a definite period or not,
shall, beginning his first day of service,
be considered an employee
for purposes of membership in any labor union.

Hence a Xerox operator cannot be considered a confidential

employee, because although he may photocopy vital labor relations
documents, he does not enjoy the fiduciary relation.
I suggest you try to know the rules on public sector
unionism. You can find that in any book. Im not sure if it is included
in the bar exams though.
A union security agreement is a valid compulsion as a
condition for employment. In compelling him to join a labor
organization you are working for his own good. It is done for
collective action for labor. It is good for labor. This is an exception to
the right to association, such as lawyers are compelled to join the
IBP.
But who cannot be compelled to be members of the labor
union? Those who are already members of another union. The
compulsion to join the union applies to those who are not yet
members of another union and are not religious objectors.
Religious Objectors applies to people who claim that it is
prohibited by their religious belief. They can maintain their
employment despite the union security clause. But religious
objectors are not prohibited from joining if they want to , nor are
they prohibited from forming their own union. No state policy or law

Art. 248 (e). Unfair Labor Practices of Employers.

To discriminate in regard to
a) wages,
b) hours of work,
c) and other terms and conditions of employment
in order to encourage or discourage membership in any
labor organization.
-

Nothing in this Code or in any other law

~ shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for
employment,
~ except of those employees who are already members
of another union at the time of the signing of the
collective bargaining agreement.

Employees of an appropriate collective bargaining

unit

31

a) who are not members of the recognized collective

bargaining agent
b) may be assessed a reasonable fee equivalent to the
dues and other fees paid by members of the
recognized collective bargaining agent,
c) if such non-union members accept the benefits under
the collective agreement:
d) Provided, That the individual authorization required
under Art. 242, paragraph (o), of this Code shall not
apply to the non-members of the recognized
collective bargaining agent.

CASES
Liberty Flour Mills Employees vs. Liberty Flou Mills, Inc.,
December 29, 1989
The petitioners, after organizing another union filed a certification
election among the rank-in-file employees, are terminated because o
a union shop clause1 in the CBA.
The SC affirmed the decision that such dismissal was valid
since the purpose of self-organization, collective bargaining,
negotiation, and peaceful assembly including the right to strike in
accordance with the law will not work if every worker were to
choose his own separate way instead of joining hi co-employees.
Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54
It is clear that the right to join a union includes the right to abstain
from joining any union. 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 members 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.

It is clear, therefore, that the assailed Act, far from

infringing the constitutional provision on freedom of association,
upholds and reinforces it. It does 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.
Santos-Juat vs. CIR, 15 SCRA 391
Petitioner charged respondent company of Unfair Labor Practice
because he was suspended after he refused to join a labor union. The
CBA contains a closed shop proviso. 2 He was suspended but later
ordered to report to work, however, he did not go to work. The main
contention of the petitioner is that he is an old employee of the
company even before the union was formed, thus, he is not included
in the requirement.
The SC held that it is an established doctrine that the CBA
entered into by the employer and a duly authorizewd labor union
applies also to old employees or workers who are non-0members of
any labor union at the time of the CBA. Thus, the basis for his
dismissal is valid.
Manila Cordage Co. vs. CIR, 78 SCRA 398
The respondent union declared a strike. However, the certificate of
strike was cancelled and a return to work order was given. The
pivotoal issue in this case is due representation of the Union in the
CBA in question.
The issue will be resolved if the question of whether or no
Juanito Tabuyan and he others who signed the agreements relied upo

A Union Shop Claus in CBA is a clause that requires union membership

in good standing as a requirement for continued employment.

Similar to a Union Shop Clause (see Liberty)

32

employers concerning
employment.

the petitioner as officers of respondent union. Thus, the case is

remanded to respondent court.
Kapatiran sa Meat and Canning Division vs. Ferrer-Calleja, 162
SCRA 367
This Courts 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 MedArbiter 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.
D. LABOR ORGANIZATIONS
LABOR CODE
Art. 212. Definitions.
(g)

Labor organization means any union or association

of employees which exists in whole or in part for the
purpose of collective bargaining or of dealing with

(h)

terms

and

conditions

of

Legitimate labor organization means any labor

organization duly registered with the Department of
Labor and Employment and includes any branch or
local thereof.

OMNIBUS RULES BOOK V

SEC. 1

AS

AMENDED

BY

D.O. 40, RULE I,

(a) "Affiliate" refers to an independent union affiliated with a

federation, national union or a chartered local which was
subsequently granted independent registration but did not
disaffiliate from its federation, reported to the Regional
Office and the Bureau in accordance with Rule III, Sections
6 and 7 of these Rules.
(h) "Certification Election" or "Consent Election" refers to
the process of determining through secret ballot the sole
and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective
bargaining or negotiation. A certification election is ordered
by the Department, while a consent election is voluntarily
agreed upon by the parties, with or without the intervention
by the Department.
(i) "Chartered Local" refers to a labor organization in the
private sector operating at the enterprise level that acquired
legal personality through the issuance of a charter
certificate by a duly registered federation or national union,
and reported to the Regional Office in accordance with Rule
III, Section 2-E of these Rules.
(j) "Collective Bargaining Agreement" or "CBA" refers to the
contract between a legitimate labor union and the employer

33

concerning wages, hours of work, and all other terms and

conditions of employment in a bargaining unit.

234 of the Labor Code and Rule III, Section 2-A of these
Rules.

(k) "Conciliator Mediator" refers to an officer of the Board

whose principal function is to assist in the settlement and
disposition
of
labor-management
disputes
through
conciliation and preventive mediation, including the
promotion and encouragement of voluntary approaches to
labor disputes prevention and settlement.

(cc) "Labor Organization" refers to any union or association

of employees in the private sector which exists in whole or
in part for the purpose of collective bargaining, mutual aid,
interest, cooperation, protection, or other lawful purposes.

(l) "Consolidation" refers to the creation or formation of a

new union arising from the unification of two or more
unions.
(m) "Deregistration of Agreement" refers to the legal
process leading to the revocation of CBA registration.
(n) "Department" refers to the Department of Labor and
Employment.
(o) "Election Officer" refers to an officer of the Bureau or
Labor Relations Division in the Regional Office authorized to
conduct certification elections, election of union officers and
other forms of elections and referenda in accordance with
Rule XII, Sections 2-5 of these Rules.
(p) "Election Proceedings" refer to the period during a
certification election, consent or run-off election and
election of union officers, starting from the opening to the
closing of the polls, including the counting, tabulation and
consolidation of votes, but excluding the period for the final
determination of the challenged votes and the canvass
thereof.
(w) "Independent Union" refers to a labor organization
operating at the enterprise level that acquired legal
personality through independent registration under Article

(ee) "Legitimate Labor Organization" refers to any labor

organization in the private sector registered or reported with
the Department in accordance with Rules III and IV of these
Rules.
(ff) "Legitimate Workers' Association" refers to an
association of workers organized for mutual aid and
protection of its members or for any legitimate purpose
other than collective bargaining registered with the
Department in accordance with Rule III, Sections 2-C and
2-D of these Rules.
(kk) "National Union" or "Federation" refers to a group of
legitimate labor unions in a private establishment organized
for collective bargaining or for dealing with employers
concerning terms and conditions of employment for their
member unions or for participating in the formulation of
social and employment policies, standards and programs,
registered with the Bureau in accordance with Rule III,
Section 2-B of these Rules.
(zz) "Union" refers to any labor organization in the private
sector organized for collective bargaining and for other
legitimate purposes.
(ccc) "Workers' Association" refers to an association of
workers organized for the mutual aid and protection of its
members or for any legitimate purpose other than collective
bargaining.

34

ART. 231. Registry of unions and file of collective

agreements.
The Bureau shall keep a registry of
legitimate labor organizations.
The Bureau shall also maintain a file of
all collective bargaining agreements
and other related agreements
and records of settlement of labor disputes,
and copies of orders, and decisions of voluntary
arbitrators.
The file shall be open and accessible
(a)
to interested parties
(b) under conditions prescribed by the Secretary of Labor
and Employment,
(c) provided that no specific information submitted in
confidence shall be disclosed unless:
- authorized by the Secretary,
- or when it is at issue in any judicial litigation
- -or when public interest or national security so
requires.
1.
(a)

Within thirty (30) days from the execution of a

collective bargaining agreement,
(b) the parties shall submit copies of the same directly to
the Bureau or the Regional Offices of the Department
of Labor and Employment for registration ,
(c) accompanied with
- verified proofs of its posting in two conspicuous
places in the place of work
- and ratification by the majority of all the workers in
the bargaining unit.
2. The Bureau or Regional Offices shall
(a) act upon the application for registration of such
collective bargaining agreement within five (5)
calendar days from receipt thereof.

(b) The Regional Offices shall furnish the Bureau with a copy
of the collective bargaining agreement within five (5)
days from its submission.
(c) The Bureau or Regional Office shall assess the employer
for every collective bargaining agreement
- a registration fee of not less than one thousand
pesos (P1,000.00) or
- in any other amount as may be deemed appropriate
and necessary by the Secretary of Labor and
Employment
- for the effective and efficient administration of the
voluntary arbitration program.
Any amount collected under this provision shall
accrue to the Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file, and shall
undertake or assist in the publication, of all final decisions,
orders and awards of the Secretary of Labor and
Employment, Regional Directors and the Commission.
ART. 234.
Requirements of registration. Any
applicant labor organization, association or group of unions
or workers
- shall acquire legal personality
- and shall be entitled to the rights and privileges granted
by law to legitimate labor organizations
- upon issuance of the certificate of registration
- based on the following requirements:
a. Fifty-pesos (P50.00) registration fee;
b. The names of its officers, their addresses, the
principal address of the labor organization, the
minutes of the organizational meetings and the list
of the workers who participated in such meetings;
c. The names of all its members comprising at least
twenty 20% percent of all the employees in the
bargaining unit where it seeks to operate;

35

d. If the applicant has been in existence for one or

more years, copies of its annual financial reports;
and
e. Four copies of the constitution and by-laws of the
applicant union, the minutes of its adoption or
ratification and the list of the members who
participated in it.

The certificate of registration of any legitimate labor

organization, whether national or local,
shall be cancelled by the Bureau
if it has reason to believe,
after due hearing,
that the said labor organization no longer meets one
or more of the requirements herein prescribed.

ART. 235.
Action on application.
The Bureau shall act on all applications for registration
within thirty (30) days from filing.
All requisite documents and papers shall be
certified under oath by the Secretary or the treasurer
of the organization, as the case may be,
and attested to by its president.
ART. 236.
Denial of registration; appeal. The
decision of the Labor Relations Division in the regional office
denying registration may be appealed by the applicant union
to the Bureau within ten days from receipt of notice thereof.

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 bylaws or amendments thereto,
the minutes of ratification,
and the list of members who took part in the
ratification;

ART. 237.
Additional requirements for federations
or national unions. Subject to Art. 238, if the applicant
for registration is a federation or a national union, it shall, in
addition to the requirements of the preceding Articles,
submit the following:
(a)

Proof of the affiliation of at least ten locals or

chapters, each of which must be a duly recognized
collective bargaining agent in the establishment or
industry in which it operates, supporting the
registration of such applicant federation or national
union;

(b)

The names and addresses of the companies where

the locals or chapters operate and the list of all the
members in each company involved.

ART. 238.

Cancellation of registration, appeal.

(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 statement or fraud in

connection with the
- election of officers,
- minutes of the election of officers
- and the list of voters,
or failure to
- submit these documents
- together
with
the
list
of
the
newly
elected/appointed
officers
and
their
postal
addresses
- within thirty (30) days from election;

(d)

Failure to submit the annual financial report to the

Bureau within thirty (30) days after the closing of

36

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 standard 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)

(j)

Failure to submit a list of individual members to the

Bureau once a year or whenever required by the
Bureau; and
Failure to comply with requirements under Articles 237
and 238.

ART. 240.
Equity of the incumbent.
All existing federations and national unions
which meet the qualifications of a legitimate labor
organization
and none of the grounds for cancellation
shall continue to maintain their existing affiliates regardless
of the nature of the industry and the location of the
affiliates.

OMNIBUS RULES BOOK V AS AMENDED BY D.O. 40

RULE III
REGISTRATION OF LABOR ORGANIZATIONS
Section 1. Where to file. - Applications for registration of
independent labor unions, chartered locals, workers'
associations shall be filed with the Regional Office where the
applicant principally operates. It shall be processed by the
Labor Relations Division at the Regional Office in accordance
with Sections 2-A, 2-C, and 2-E of this Rule.
Applications for registration of federations, national unions
or workers' associations operating in more than one region
shall be filed with the Bureau or the Regional Offices, but
shall be processed by the Bureau in accordance with
Sections 2-B and 2-D of this Rule.
Section 2. Requirements for application. - A. The
application for registration of an independent labor union
shall be accompanied by the following documents:
1) the name of the applicant labor union, its principal
address, the name of its officers and their respective
addresses, approximate number of employees in the
bargaining unit where it seeks to operate, with a statement
that it is not reported as a chartered local of any federation
or national union;
2) the minutes of the organizational meeting(s) and the list
of employees who participated in the said meeting(s);
3) the name of all its members comprising at least 20% of
the employees in the bargaining unit;
4) the annual financial reports if the applicant has been in
existence for one or more years, unless it has not collected

37

any amount from the members, in which case a statement

to this effect shall be included in the application;
5) the applicant's constitution and by-laws, minutes of its
adoption or ratification, and the list of the members who
participated in it. The list of ratifying members shall be
dispensed with where the constitution and by-laws was
ratified or adopted during the organizational meeting. In
such a case, the factual circumstances of the ratification
shall be recorded in the minutes of the organizational
meeting(s).
B. The application for registration of federations and
national unions shall be accompanied by the following
documents:
1) a statement indicating the name of the applicant labor
union, its principal address, the name of its officers and
their respective addresses;
2) the minutes of the organizational meeting(s) and the list
of employees who participated in the said meeting(s);
3) the annual financial reports if the applicant union has
been in existence for one or more years, unless it has not
collected any amount from the members, in which case a
statement to this effect shall be included in the application;
4) the applicant union's constitution and by-laws, minutes of
its adoption or ratification, and the list of the members who
participated in it. The list of ratifying members shall be
dispensed with where the constitution and by-laws was
ratified or adopted during the organizational meeting(s). In
such a case, the factual circumstances of the ratification
shall be recorded in the minutes of the organizational
meeting(s);

5) the resolution of affiliation of at least ten (10) legitimate

labor organizations, whether independent unions or
chartered locals, each of which must be a duly certified or
recognized bargaining agent in the establishment where it
seeks to operate; and
6) the name and addresses of the companies where the
affiliates operate and the list of all the members in each
company involved.
Labor organizations operating within an identified industry
may also apply for registration as a federation or national
union within the specified industry by submitting to the
Bureau the same set of documents.
C. The application for registration of a workers' association
shall be accompanied by the following documents:
1) the name of the applicant association, its principal
address, the name of its officers and their respective
addresses;
2) the minutes of the organizational meeting(s) and the list
of members who participated therein;
3) the financial reports of the applicant association if it has
been in existence for one or more years, unless it has not
collected any amount from the members, in which case a
statement to this effect shall be included in the application;
4) the applicant's constitution and by-laws to which must be
attached the names of ratifying members, the minutes of
adoption or ratification of the constitution and by-laws and
the date when ratification was made, unless ratification was
done in the organizational meeting(s), in which case such
fact shall be reflected in the minutes of the organizational
meeting(s).

38

D. Application for registration of a workers' association

operating in more than one region shall be accompanied, in
addition to the requirements in the preceding subsection, by
a resolution of membership of each member association,
duly approved by its board of directors.

Section 6. Report of Affiliation with federations or

national unions; Where to file. - The report of affiliation
of an independently registered labor union with a federation
or national union shall be filed with the Regional Office that
issued its certificate of registration.

E. The report of creation of a chartered local shall be

accompanied by a charter certificate issued by the
federation or national union indicating the creation or
establishment of the chartered local.

Section 7. Requirements of affiliation. - The report of

affiliation of independently registered labor unions with a
federation or national union shall be accompanied by the
following documents:

Section 3. Notice of change of name of labor

organizations; Where to file. - The notice for change of
name of a registered labor organization shall be filed with
the Bureau or the Regional Office where the concerned labor
organization's certificate of registration or certificate of
creation of a chartered local was issued.
Section 4. Requirements for notice of change of name.
- The notice for change of name of a labor organization shall
be accompanied by the following documents:

(a) resolution of the labor union's board of directors

approving the affiliation;
(b) minutes of the general membership meeting approving
the affiliation;
(c) the total number of members comprising the labor union
and the names of members who approved the affiliation;
(d) the certificate of affiliation issued by the federation in
favor of the independently registered labor union; and

(a) proof of approval or ratification of change of name; and

(b) the amended constitution and by-laws.

(e) written notice to the employer concerned if the affiliating

union is the incumbent bargaining agent.

Section 5. Certificate of Registration/Certificate of

Creation of Chartered Local for change of name. - The
certificate of registration and the certificate of creation of a
chartered local issued to the labor organization for change
of name shall bear the same registration number as the
original certificate issued in its favor and shall indicate the
following: (a) the new name of the labor organization; (b)
its former name; (c) its office or business address; and (d)
the date when the labor organization acquired legitimate
personality as stated in its original certificate of
registration/certificate of creation of chartered local.

Section 8. Notice of Merger/Consolidation of labor

organizations; Where to file. - Notice of merger or
consolidation of independent labor unions, chartered locals
and workers' associations shall be filed with and recorded by
the Regional Office that issued the certificate of
registration/certificate of creation of chartered local of either
the merging or consolidating labor organization. Notice of
merger or consolidation of federations or national unions
shall be filed with and recorded by the Bureau.

39

Section 9. Requirements of notice of merger. - The

notice of merger of labor organizations shall be
accompanied by the following documents:
(a) the minutes of merger convention or general
membership meeting(s) of all the merging labor
organizations, with the list of their respective members who
approved the same; and
(b) the amended constitution and by-laws and minutes of its
ratification, unless ratification transpired in the merger
convention, which fact shall be indicated accordingly.
Section 10. Certificate of Registration. - The certificate
of registration issued to merged labor organizations shall
bear the registration number of one of the merging labor
organizations as agreed upon by the parties to the merger.
The certificate of registration shall indicate the following: (a)
the new name of the merged labor organization; (b) the
fact that it is a merger of two or more labor organizations;
(c) the name of the labor organizations that were merged;
(d) its office or business address; and (e) the date when
each of the merging labor organizations acquired legitimate
personality as stated in their respective original certificate of
registration.

the same general membership meeting(s), which fact shall

be indicated accordingly.
Section 12. Certificate of Registration. - The certificate
of registration issued to a consolidated labor organization
shall bear the registration number of one of the
consolidating labor organizations as agreed upon by the
parties to the consolidation.
The certificate of registration shall indicate the following (a)
the new name of the consolidated labor organization; (b)
the fact that it is a consolidation of two or more labor
organizations; (c) the name of the labor organizations that
were consolidated; (d) its office or business address; and
(e) the date when each of the consolidating labor
organizations acquired legitimate personality as stated in
their respective original certificates of registration.
RULE IV
PROVISIONS COMMON TO THE REGISTRATION OF
LABOR
ORGANIZATIONS
AND
WORKERS
ASSOCIATION

Section 11. Requirements of notice of consolidation. The notice of consolidation of labor organizations shall be
accompanied by the following documents:

Section 1. Attestation requirements. - The application

for registration of labor unions and workers' associations,
notice for change of name, merger, consolidation and
affiliation including all the accompanying documents, shall
be certified under oath by its Secretary or Treasurer, as the
case may be, and attested to by its President.

(a) the minutes of consolidation convention of all the

consolidating labor organizations, with the list of their
respective members who approved the same; and

Section 2. Payment of registration fee. - A labor union

and workers' association shall be issued a certificate of
registration upon payment of the prescribed registration fee.

(b) the amended constitution and by-laws, minutes of its

ratification transpired in the consolidation convention or in

Section 3. Accompanying documents. - One (1) original

copy and two (2) duplicate copies of all documents

40

accompanying the application or notice shall be submitted

to the Regional Office or the Bureau.

ground of grave abuse of discretion or violation of these

Rules.

Section 4. Action on the application/notice. - The

Regional Office or the Bureau, as the case may be, shall act
on all applications for registration or notice of change of
name, affiliation, merger and consolidation within ten (10)
days from receipt either by: (a) approving the application
and issuing the certificate of registration/acknowledging the
notice/report; or (b) denying the application/notice for
failure of the applicant to comply with the requirements for
registration/notice.

Section 7. Procedure on appeal. - The memorandum of

appeal shall be filed with the Regional Office or the Bureau
that issued the denial/return of notice. The memorandum of
appeal together with the complete records of the application
for registration/notice of change of name, affiliation, merger
or consolidation, shall be transmitted by the Regional Office
to the Bureau or by the Bureau to the Office of the
Secretary, within twenty-four (24) hours from receipt of the
memorandum of appeal.

Section 5. Denial of Application/Return of Notice. Where the documents supporting the application for
registration/notice of change of name, affiliation, merger
and consolidation are incomplete or do not contain the
required certification and attestation, the Regional Office or
the Bureau shall, within five (5) days from receipt of the
application/notice, notify the applicant/labor organization
concerned in writing of the necessary requirements and
complete the same within thirty (30) days from receipt of
notice. Where the applicant/labor organization concerned
fails to complete the requirements within the time
prescribed, the application for registration shall be denied,
or the notice of change of name, affiliation, merger and
consolidation returned, without prejudice to filing a new
application or notice.

The Bureau or the Office of the Secretary shall decide the

appeal within twenty (20) days from receipt of the records
of the case.

Section 6. Form of Denial of Application/Return of

Notice; Appeal. - The notice of the Regional Office or the
Bureau denying the application for registration/returning the
notice of change of name, affiliation, merger or
consolidation shall be in writing stating in clear terms the
reasons for the denial or return. The denial may be
appealed to the Bureau if denial is made by the Regional
Office or to the Secretary if denial is made by the Bureau,
within ten (10) days from receipt of such notice, on the

Section 9. Effect of change of name. - The change of

name of a labor organization shall not affect its legal
personality. All the rights and obligations of a labor
organization under its old name shall continue to be
exercised by the labor organization under its new name.

Section 8. Effect of registration. - The labor union or

workers' association shall be deemed registered and vested
with legal personality on the date of issuance of its
certificate of registration or certificate of creation of
chartered local.
Such legal personality may be questioned only through an
independent petition for cancellation of union registration in
accordance with Rule XIV of these Rules, and not by way of
collateral attack in petition for certification election
proceedings under Rule VIII.

Section 10. Effect of merger or consolidation. - Where

there is a merger of labor organizations, the legal existence

41

of the absorbed labor organization(s) ceases, while the legal

existence of the absorbing labor organization subsists. All
the rights, interests and obligations of the absorbed labor
organizations are transferred to the absorbing organization.
Where there is consolidation, the legal existence of the
consolidating labor organizations shall cease and a new
labor organization is created. The newly created labor
organization shall acquire all the rights, interests and
obligations of the consolidating labor organizations.

(d) updated list of individual members of chartered locals,

independent unions and workers' associations within thirty
(30) days after the close of each fiscal year; and
(e) updated list of its chartered locals and affiliates or
member organizations, collective bargaining agreements
executed and their effectivity period, in the case of
federations or national unions, within thirty (30) days after
the close of each fiscal year, as well as the updated list of
their authorized representatives, agents or signatories in
the different regions of the country.

RULE V
REPORTING REQUIREMENTS OF
AND WORKERS ASSOCIATIONS

LABOR

UNIONS

Section 1. Reporting requirements. - It shall be the duty

of every legitimate labor unions and workers associations to
submit to the Regional Office or the Bureau which issued its
certificate of registration or certificate of creation of
chartered local, as the case may be, two (2) copies of each
of the following documents:

As understood in these Rules, the fiscal year of a labor

organization shall coincide with the calendar year, unless a
different period is prescribed in the constitution and bylaws.

CASES
Registration of Unions:

(b) annual financial reports within thirty (30) days after the
close of each fiscal year or calendar year;

Progressive Development Corp. v Secretary of Labor, 271 SCRA

593
1. The propriety of a labor organizations registration could be
assailed directly through cancellation proceedings in accordance
with Articles 238 ad 239 of the Labor Code, or indirectly by
challenging its petition for the issuance of an order for
certification election.

(c) updated list of newly-elected officers, together with the

appointive officers or agents who are entrusted with the
handling of funds, within thirty (30) days after each regular
or special election of officers, or from the occurrence of any
change in the officers of agents of the labor organization or
workers association;

2. The Med-Arbiter should look into the merits of the petition for
cancellation of a unions registration before issuing an order
calling for certification elections. Where the legal personality of
a union is seriously challenged, it would be more prudent for the
Med-Arbiter to grant the request for suspension of the
proceedings in the certification election case until the issue of
legality of the unions registration shall have been resolved.

(a) any amendment to its constitution and by-laws and the

minutes of adoption or ratification of such amendments,
within thirty (30) days from its adoption or ratification;

42

Protection Technology, Inc. vs. Sec., 242 SCRA 99

Non-submission of such books of account certified by and attested to
by the appropriate officer is a ground which the employer can invoke
legitimately to oppose a petition for certification election filed by the
local or chapter concerned.
Although the federation with which the Union is affiliated
submitted documents purporting to show that the latter had offered
books of account to support its (the Unions) application for
registration as a legitimate labor organization, what had been actually
submitted to the BLR by the Union was a mere financial
statement, a generous description considering the sheet of paper in
fact submitted by the Union.
Books of account are quite different in their essential nature
from financial statements. In generally accepted accounting practice,
the former consist of journals, ledgers and other accounting books
(which are registered with the Bureau of Internal Revenue)
containing a record of individual transactions wherein monies are
received and disbursed by an establishment or entity; entries are
made on such books on a day-to-day basis (or as close thereto as is
possible). Statements of accounts or financial reports, upon the other
hand, merely summarize such individual transactions as have been
set out in the books of account and are usually prepared at the end of
an accounting period, commonly corresponding to the fiscal year of
the establishment or entity concerned.
Statements of account and financial reports do not set out or
repeat the basic data (i.e., the individual transactions) on which they
are based and are, therefore, much less informative sources of cash
flow information. Books of account are kept and handled by
bookkeepers (employees) of the company or agency; financial
statements may be audited statements, i.e., prepared by external
independent auditors (certified public accountants).
It is immaterial that the Union, having been organized for
less than a year before its application for registration with the BLR,
would have had no real opportunity to levy and collect dues and fees
from its members which need to be recorded in the books of account.

Such accounting books can and must be submitted to the BLR, even
if they contain no detailed or extensive entries as yet. The point to be
stressed is that the applicant local or chapter must demonstrate to the
BLR that it is entitled to registered status because it has in place a
system for accounting for members contributions to its fund even
before it actually receives dues or fees from its members. The
controlling intention is to minimize the risk of fraud and diversion in
the course of the subsequent formation and growth of the Union
fund.
Pagpalain Haulers vs. Trajano, 310 SCRA 354
The Labor Code does not require the submission of books of account
on order for a labor organization to be registered as a legitimate
labor organization. This requirement is found only in the Omnibus
Rules (Book V) implementing the Labor Code, which subsequently
was amended by DO9. Department Order No. 9, Series of 1997,
reduced the requirements needed to be submitted, and has done away
with the submission of books of account as a requisite of registration.
But as provided by Arts. 241 (h) and (j), a labor organization must
still maintain books of account, but it need not submit them as a
requisite for registration.
Local Unions and Federations:

Pambansang Kapatiran vs. Secretary of Labor, 253 SCRA 96

It is further argued that the CBA has no binding force since it was
entered into by KAMAPI as a federation and not by the local union.
Perusal of the agreement proves the signatories for KAMAPI
consisted of its national president and of the duly elected officers of
the local union. Thus the fact that KAMAPI was particularly
mentioned as the bargaining party without specifying the local union
cannot strip it of its authority to participate in the bargaining process.
The local union maintains its separate personality despite affiliation
with a larger national federation.
The doctrine laid down in Progressive Development
Corporation 21 is a mere clarification of the principle enunciated in

43

Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc. 22

Both cases have provided that the mother union acting for and in
behalf of its affiliate ha(s) the status of an agent while the local union
remained the basic unit of the association free to serve the common
interest of all its members subject only to the restraints imposed by
the Constitution and By-Laws of the association.
Tropical Hut Employees Union vs. Tropical Hut, 181 SCRA 173
The right of a local union to disaffiliate from its mother federation is
well-settled. A local union, being a separate and voluntary
association, is free to serve the interest of all its members including
the freedom to disaffiliate when circumstances warrant. This right is
consistent with the constitutional guarantee of freedom of
association.
All employees enjoy the right to self-organization and to
form and join labor organizations of their own choosing for the
purpose of collective bargaining and to engage in concerted activities
for their mutual aid or protection. This is a fundamental light of labor
that derives its existence from the Constitution. In interpreting the
protection to labor and social justice provisions of the Constitution
and the labor laws or rules or regulations, We have always adopted
the liberal approach which favors the exercise of labor rights.
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 the locals into the national union (PAFLU) was 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, subject to the
restraints imposed by the Constitution and By Laws of the
Association, and free also to renounce the affiliation for mutual

welfare upon the terms laid down in the agreement which brought it
into existence.
The inclusion of the word NATU after the name of the local
union THEU in the registration with the Department of Labor is
merely to stress that the THEU is NATUs affiliate at the time of the
registration. It does not mean that the said local union cannot stand
on its own. Neither can it be interpreted to mean that it cannot pursue
its own interests independently of the federation. A local union owes
its creation and continued existence to the will of its members and
not to the federation to which it belongs.
When the local union withdrew from the old federation to
join a new federation, it was merely exercising its primary right to
labor organization for the effective enhancement and protection of
common interests. In the absence of enforceable provisions in the
federations constitution preventing disaffiliation of a local union, a
local may sever its relationship with its parent.
There is nothing in the constitution of the NATU or in the
constitution of the THEU-NATU that the THEU was expressly
forbidden to disaffiliate from the federation. The alleged noncompliance of the local union with the provision in the NATU
Constitution requiring the service of three months notice of intention
to withdraw did not produce the effect of nullifying the disaffiliation
for the following grounds: firstly, NATU was not even a legitimate
labor organization, it appearing that it was not registered at that time
with the Department of Labor, and therefore did not possess and
acquire, in the first place, the legal personality to enforce its
constitution and laws, much less the right and privilege under the
Labor Code to organize and affiliate chapters or locals within its
group, and secondly, the act of non-compliance with the procedure
on withdrawal is premised on purely technical grounds which cannot
rise above the fundamental right of self-organization.
Volkschel Labor Union vs. BLR, 137 SCRA 42 [1985]
Petitioner was affiliated with ALUMETAL. Both unions, using the
name Volkschel Labor Union-ALUMETAL, jointly entered into a
CBA with respondent companies. One of the subjects dealt with was
44

the payment of union dues (made through check-off). Later on, a

majority of petitioners members decided to disaffiliate from
respondent federation in order to operate on its own as an
independent labor group. Accordingly, a resolution was adopted and
signed by petitioners members revoking their check-off
authorization in favor of ALUMETAL and notices thereof were
served on ALUMETAL and respondent companies.
The Bureau, on the other hand, recognized the continued
affiliation of Volkschel with ALUMETAL and the NLRC Sheriff
enforced the implemented Order, as a result of which respondent
companies turned over and handed to respondent federation the
union dues and other assessments in accordance with the check-off
provisions of the CBA.
Issue: whether or not petitioners disaffiliation from the federation is
valid.
Held: YES. The right of a local union to disaffiliate from its mother
union is well-settled. A LOCAL UNION, BEING A SEPARATE
AND VOLUNTARY ASSOCIATION, IS FREE TO SERVE THE
INTEREST OF ALL ITS MEMBERS INCLUDING THE
FREEDOM TO DISAFFILIATE WHEN CIRCUMSTANCES
WARRANT. This right is consistent with the Constitution guarantee
of freedom of association. Petitioner contends that he disaffiliation
was prompted by the federations deliberate and habitual dereliction
of duties as mother federation. Employees grievances were allegedly
left unattended to by the federation. To the detriment of the
employees rights and interests.
NOTE: A disaffiliation does not disturb the enforceability and
administration of a collective agreement; it does not occasion a
change in administrators of the contract nor even an amendment to
the provisions thereof.
As regards the check-off dues, respondent is not entitled to union
dues payments from petitioners members. A local union which has

validly withdrawn from its affiliation with the parent association and
which continued to represent the employees of an employer is
entitled to the check-off dues under a CBA.
ANGLO-KMU vs. Samahan ng mga Manggagawa, 258 SCRA 371
ANGLOs local chapter disaffiliated from ANGLO on the ground
that the latter has committed acts inimical to the interests of the
chapter. ANGLO refused to honor the disaffiliation on the ground
that the CBA is still existing, and the freedom period had not yet set
in.
Held: Pursuant to the right to self-organization, the chapter may
disaffiliate any time from the mother union. This right may not be
defeated on the ground that there was noncompliance with the
procedural rules to disaffiliate. Also, it was clearly shown that
majority of the union members in the chapter supported such
decision. The charge that ANGLO is guilty of acts inimical to the
chapters interests is not rebutted.
MSMG-UWP vs. Ramos, GR 113907, February 28, 2000
An intra-union dispute arose out of disputes from the election of
union officers. Several officers were dismissed from the union for
acts of disloyalty and inimical to the interest and violative of the
constitution and by-laws of the union. Since the union has a closedshop agreement in the CBA, the company terminated the ousted
union members.
Held: While a company may validly dismiss employees expelled by
the union for disloyalty under the union security clause of the CBA,
the 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. There must always be a
separate hearing conducted by the company before the expelled
union members are dismissed by the company.

45

Phil. Skylanders vs. NLRC, GR 127374, 31 January 2002

CANCELLATION

OF

REGISTRATION
-

ART. 238.
Cancellation of registration, appeal.
The certificate of registration of any legitimate labor
organization, whether national or local,
shall be cancelled by the Bureau
if it has reason to believe,
after due hearing,
that the said labor organization no longer meets one
or more of the requirements herein prescribed.
ART. 239.
Grounds for cancellation of union
registration. The following shall constitute grounds for
cancellation of union registration:
(b) Misrepresentation,
false statement
or fraud in
connection with the
adoption or ratification of the constitution and bylaws or amendments thereto,
the minutes of ratification,
and the list of members who took part in the
ratification;
(b)

(c)

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;
Misrepresentation, false statement
connection with the
- election of officers,
- minutes of the election of officers
- and the list of voters,
or failure to
- submit these documents

or

fraud

in

together
with
the
list
of
the
elected/appointed
officers
and
their
addresses
within thirty (30) days from election;

newly
postal

(d)

Failure to submit the annual financial report to the

Bureau within thirty (30) days after the closing of
every fiscal year and misrepresentation, false entries
or fraud in the preparation of the financial report itself;

(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 standard 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 a list of individual members to the

Bureau once a year or whenever required by the
Bureau; and
(j) Failure to comply with requirements under Articles
237 and 238.

OMNIBUS RULES, as AMENDED BY D.O. 40

RULE XIV

46

CANCELLATION
OF
ORGANIZATIONS

REGISTRATION

OF

LABOR

Section 1. Where to file. - Subject to the requirements of

notice and due process, the registration of any legitimate
independent labor union, chartered local and workers'
association may be cancelled by the Regional Director, or in
the case of federations, national or industry unions and
trade union centers, by the Bureau Director, upon the filing
of an independent complaint or petition for cancellation.
Section 2. Who may file. - Any party-in-interest may
commence a petition for cancellation of registration, except
in actions involving violations of Article 241, which can only
be commenced by members of the labor organization
concerned.
Section 3. Grounds for cancellation. - The following shall
constitute grounds for cancellation of registration of labor
organizations:
(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, the list of members who took part in
the ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification, 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, failure to submit these
documents together with the list of the newly elected or
appointed officers and their postal address within thirty (30)
days from election;

(d) failure to submit the annual financial report to the

Bureau within thirty (30) days after the close of every fiscal
year and misrepresentation, false entries or fraud in the
preparation of the financial report;
(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 for terms and conditions of employment below
minimum standards established by law;
(g) commission of any of the acts enumerated under Article
241 of the Labor Code; provided that no petition for
cancellation based on this ground may be granted unless
supported by at least thirty (30%) percent of all the
members of the respondent labor organization;
(h) asking for or accepting attorney's fees or negotiation
fees from the employer;
(i) other than for mandatory activities under the Labor
Code, checking off special assessments or any other fees
without duly signed individual written authorizations of the
members;
(j) failure to submit list of individual members to the Bureau
once a year or whenever required by the Bureau;
(k) failure to comply with the requirements of registration
prescribed under Rules III and IV.
Section 4. Action on the petition. - The petition shall be
resolved by the Regional Director in accordance with Rule
XI, unless the petition is based on paragraphs (d) and (j) of
the foregoing section or non-compliance with the labor
organization's reportorial obligations, in which case the
petition shall be acted upon pursuant to the following Rule.
RULE XV
CANCELLATION
OF
REGISTRATION
OF
LABOR
ORGANIZATIONS DUE TO NON-COMPLIANCE WITH
THE REPORTORIAL REQUIREMENTS

47

Section 1. When proper. - Where a registered labor

organization in the private sector failed to submit the
reports required under Rule V for five (5) consecutive years
despite notices for compliance sent by the Labor Relations
Division or the Bureau, the latter may cause the institution
of the administrative process for cancellation of its
registration, upon its own initiative or upon complaint filed
by any party-in-interest.
Section 2. Procedure. - The Labor Relations Division of
the Regional Office shall make a report of the labor
organization's non-compliance and submit the same to the
Bureau for verification with its records. The Bureau shall
send by registered mail with return card to the labor
organization concerned, a notice for compliance indicating
the documents it failed to submit and the corresponding
period in which they were required, with notice to comply
with the said reportorial requirements and to submit proof
thereof to the Bureau within ten (10) days from receipt
thereof.
Where no response is received by the Bureau within thirty
(30) days from the release of the first notice, another notice
for compliance shall be made by the Bureau, with warning
that failure on its part to comply with the reportorial
requirements within the time specified shall cause the
continuation of the proceedings for the administrative
cancellation of its registration.
Section 3. Publication of notice of cancellation of
registration . - Where no response is again received by the
Bureau within thirty (30) days from release of the second
notice, the Bureau shall cause the publication of the notice
of cancellation of registration of the labor organization in
two (2) newspapers of general circulation. The Bureau may
conduct an investigation within the employer's premises and
at the labor organization's last known address to verify the
latter's existence.

Section 4. Cancellation of registration. - Where no

response is received by the Bureau within thirty (30) days
from date of publication, or where the Bureau has verified
the dissolution of the labor organization, it shall order the
cancellation of registration of the labor organization and
cause its de-listing from the roster of legitimate labor
organizations.
Section 5. Conditions for administrative cancellation
of certificate of registration. No registration of labor
organization shall be cancelled administratively by the
Bureau due to non-compliance with the reportorial
requirements unless:
(a) non-compliance is for a continuous period of five (5)
years;
(b) the procedures laid down in this Rule were complied
with; and
(c) the labor organization concerned has not responded to
any of the notices sent by the Bureau, or its notices were
returned unclaimed.

Cases:
Progressive Development Corp. v Secretary of Labor, 271 SCRA
593
3. The propriety of a labor organizations registration could be
assailed directly through cancellation proceedings in accordance
with Articles 238 ad 239 of the Labor Code, or indirectly by
challenging its petition for the issuance of an order for
certification election.
4. The Med-Arbiter should look into the merits of the petition for
cancellation of a unions registration before issuing an order
calling for certification elections. Where the legal personality of
a union is seriously challenged, it would be more prudent for the

48

Med-Arbiter to grant the request for suspension of the

proceedings in the certification election case until the issue of
legality of the unions registration shall have been resolved.
Rights of Labor Organization:
Art. 242. Rights of Legitimate Labor Organizations. A
legitimate labor organization shall have the right:
a)
to act as representative of its members for the
purpose of collective bargaining;
b)
to be certified as exclusive representative of all the
employees in an appropriate collective bargaining unit
for purposes of collective bargaining;
c)
to be furnished by the employer, upon written request,
with the annual audited financial statements, including
the balance sheet and the profit and loss statement,
within thirty (30) calendar days from the date of
receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and
exclusive bargaining representatives of the employees
in the bargaining unit, or within sixty (60) calendar
days before the expiration of the existing collective
bargaining agreement, or during the collective
bargaining negotiation;
d)
to own property, real or personal, for the use and
benefit or the labor organization and its members;
e)
to sue and be sued in its registered name;
f)
to undertake all other activities designed to benefit the
organization and its members including cooperative,
housing welfare and other projects not contrary to law.
Notwithstanding any provision of a general or special law
to the contrary, the income and properties of legitimate
labor organization, including grants, endowments, gifts,
donations and contributions they may receive from fraternal
and similar organizations, local or foreign, which are
actually, directly and exclusively used for their lawful
purposes, shall be free from taxes, duties and other
assessments. The exemptions provided herein may be

withdrawn only by a special law expressly repealing this

provision.
Art. 277. Miscellaneous Provisions.
(a) All unions are authorized to collect reasonable
membership fees, union dues, assessments and fines and
other contributions for labor education and research, mutual
death and hospitalization benefits, welfare fund, strike fund,
and credit and cooperative undertakings.

LECTURE
Labor Organizations:
Workers associations are a type of organization for the
purpose of self-organization but not for the purpose of collective
bargaining. Only for mutual aid and protection. So we have workers
association on the one hand, and labor organizations on the other
hand.
Now we concentrate on labor organizations. What are the different
types?
Plant level organizations:

Independent unions

Affiliates

Local/Chapters

Conglomerate of plant level organizations:

National Unions/Federations

Trade Union Centers

Industry Unions

49

How does one become a legitimate labor organization?

Under the law, Article 212 it is one which is registered with the
Department. Article 234 says that it acquires rights once it is issued a
certificate of registration. Now, an independent union becomes an
LLO and acquires legal personality once it is issued a certificate of
registration with the Bureau of Labor Relations. How about a local
or chapter? Under the Omnibus Rules, such acquires legal
personality upon issuance of a charter by the federation. It is the
federation who submits the documents to the Bureau. Hence, without
need of registration or issuance of a certificate by the Bureau, the
local or chapter becomes an LLO.
Does this violate the codal provisions Arts. 212 and 234?
No, but once the federation loses its legal personality, the local or
chapter loses its legal personality as well, because its legal
personality is hinged on the federations. There is no conflict
between the Code and Rules. A local or chapter is not covered by the
registration requirement. It does not violate the definition of a
legitimate labor organization, because a local does acquire legal
personality and does become an LLO through the issuance of a
charter.
So, when an independent labor organization becomes an
affiliate of a federation, and the federation loses its legal personality
(through cancellation of its registration), the independent labor
organization still retains its legal personality, because it acquired
such through registration with the Bureau. When an independent
union affiliates, it informs the Bureau of such through submission of
resolutions of affiliation and acceptance. A local or chapter may
independently register as an organization subsequent to its becoming
a local or chapter. This converts the chapter into an independent
union. The local or chapter is not barred from doing that, but a
federation may usually stipulate against that and would cause
revocation of the local/chapters charter.
However, remember the exception that when the federations
registration is cancelled, it does not affect the local or chapter if the
chapter has an existing CBA with the company. They are given the
chance to register as an independent union and if this is not done, as

long as the CBA exists, the chapters legitimacy exists. It expires

only upon expiration of the CBA. This is done to protect the
employees of the collective bargaining unit.
Now remember the Liberty case is one decided under very
peculiar circumstances. The Court ruled as such because of the
special circumstances. It does not apply as a general rule. Remember
the general rule that it is only upon issuance of a certificate when the
union acquires legal personality. The nunc pro tunc doctrine was
applied in the Liberty case because of the peculiarity of the case.
Only in this case did the Court rule that the union acquired legal
personality upon the submission of the required documents and so
the issuance of certificate of registration should retroact to the filing
of the petition of a certification election. This decision was crucial
because a petition for certification election can only be filed by an
LLO.
Noticeably the number of required documents to be
submitted by independent unions is much more than those required
by a chapter. Obviously, the State favors the creation of
locals/chapters. It encourages affiliations for more productivity or
greater protection in the workers action. And also, a chapter does not
have to repeat the process of submitting the required documents,
because the federation has already done so. If the DOLE erroneously
submits a certificate to an organization that has not submitted all the
required documents, a person in interest (such as management) can
file a petition for cancellation of the certificate. Management can
also oppose the petition for certification election because of the lack
of required documents.
Why is it required to submit all these documents? To protect
the workers from fly-by-night unions, or unions that are purely
moneymaking unions. Thats why all the documents must be attested
to by the Secretary and President and must be notarized. Remember,
what has to be submitted are Financial Statements, not Books of
Account. The two are different. Financial statements are prepared by
an accountant and embody detailed financial transactions. Books of
Account are the day to day expenses, journals, ledgers. Only in the
Rules are Books of Account required to be submitted. The Code does
50

- including those of the national union or federation,

trade center or any similar aggrupation to which
their union is affiliated,
- by secret ballot at intervals of five (5) years.

not require it. But by virtue of D.O. 9, Books of Account were not
required to be submitted anymore. But books of Account are still
subject to inspection by the Department when warranted.
Article 237 requires proof of affiliation of at least ten
chapters for a federation. Whats wrong with this? In the first place,
no federation can become a federation without locals or chapters.
The only way to interpret this provision is it refers to independently
registered unions who decide to form a federation as affiliates. You
cannot have locals/chapters that create a federation, you can only
have a federation creating a local/chapter. The only situation also
where a federation can be created by a local/chapter is when two
federations merge or form one federation.
E. CONDITIONS
MEMBERS

OF

MEMBERSHIP

AND

RIGHTS

No qualification requirement for candidacy to

any position shall be imposed other than membership
in good standing in subject labor organization.
The secretary or any other responsible union
officer shall furnish the Secretary of Labor and
Employment with a list of
- the newly-elected officers,
- together with the appointive officers or agents who
are entrusted with the handling of funds
- within thirty (30) calendar days after the election
of officers or from the occurrence of any change in
the list of officers of the labor organization.

OF

LABOR CODE
ART. 241.
Rights and conditions of membership in
a labor organization. The following are the rights and
conditions of membership in a labor organization:
(a) - No arbitrary or excessive initiation fees
shall be required of the members of a
legitimate labor organization nor
shall arbitrary, excessive or oppressive fine and
forfeiture be imposed;
(c) The members shall be entitled:
- to full and detailed reports
- from their officers and representatives
- of all financial transactions
- as provided for in the constitution and by-laws of the
organization;

(e) The members shall

- determine by secret ballot,
- after due deliberation,
- any question of major policy affecting the entire
membership of the organization,
- unless the nature of the organization or force
majeure renders such secret ballot impractical,
- in which case the board of directors of the
organization may make the decision in behalf of
the general membership.
(e)

No labor organization shall

- knowingly admit as member
- or continue in membership
any individual who:
- belongs to a subversive organization
- or who is engaged directly or indirectly in any
subversive activity;

(d) The members shall:

- directly elect their officers,

51

(d) No person who has been convicted of a crime involving

moral turpitude shall be eligible for
- election as a union officer or
- for appointment to any position in the union;

Any action involving the funds of the

organization shall prescribe after three (3) years from
the
- date of submission of the annual financial report to
the Department of Labor and Employment
- or from the date the same should have been
submitted as required by law, whichever comes
earlier:
- Provided, That this provision shall apply only to a
legitimate labor organization which has submitted
the financial report requirements under this Code:
- Provided, further, That failure of any labor
organization to comply with the periodic financial
reports required by law and such rules and
regulations promulgated thereunder six (6)
months after the effectivity of this Act shall
automatically result in the cancellation of union
registration of such labor organization.

(g) No officer, agent or member of a labor organization

shall
- collect any fees, dues, or other contributions in its
behalf or
- make any disbursement of its moneys or funds
- unless he is duly authorized pursuant to its
constitution and by-laws;
(h)

Every payment of fees, dues or other contributions by

a member shall be
- evidenced by a receipt
- signed by the officer or agent making the collection
and
- entered into the record of the organization to be kept
and maintained for the purpose;

(i)

The funds of the organization shall not be applied for

any purpose or object other than those:
- expressly provided by its constitution and by-laws or
- those expressly authorized by
- written resolution,
- adopted by the majority of the members,
- at a general meeting duly called for the
purpose;

(j)

Every income or revenue of the organization shall be

evidenced by a record showing its source, and every
expenditure of its funds shall be evidenced by a
receipt from the person to whom the payment is
made, which shall state the date, place and purpose of
such payment. Such record or receipt shall form part
of the financial records of the organization.

(k)

The officers of any labor organization shall not be paid

any compensation other than the salaries and
expenses due to their positions
- as specifically provided for in its constitution and
by-laws or
in a written resolution duly authorized by a
majority of all the members at a general
membership meeting duly called for the purpose.
The minutes of the meeting and the list of
participants and ballots cast shall be subject to
inspection by the Secretary of Labor and
Employment
or
his
duly
authorized
representatives. Any irregularities in the approval
of the resolutions shall be a ground for
impeachment or expulsion from the organization;

(l)

The treasurer of any labor organization and every

officer thereof who is responsible for the accounts of
such organization or for the collection, management,

52

disbursement, custody or control of the funds, moneys

and other properties of the organization, shall render
to the organization and to its members a true and
correct account of all moneys received and paid by
him since he assumed office or since the last date on
which he rendered such account and of the balance
remaining in his hands at the time of rendering such
account, and of all bonds, securities and other
properties of the organization entrusted to his custody
or under his control. The rendering of such account
shall be made:
(1)

At least once a year within thirty (30) days after

the close of its fiscal year;

(2)

At such other times as may be required by a

resolution of the majority of the members of the
organization; and

(3)

Upon vacating his office.

The account shall be duly audited and verified

by affidavit and a copy thereof shall be furnished the
Secretary of Labor and Employment;
(m) The books of accounts and other records of the
financial activities of any labor organization shall be
opened to inspection by any officer or member thereof
during office hours.
(n)

No special assessment or other extraordinary fees may

be levied upon the members of a labor organization
unless:
- authorized by a written resolution
- of a majority of all the members
- at a general membership meeting duly called for the
purpose.
- The secretary of the organization shall record the
minutes of the meeting including the list of all
members present, the votes cast, the purpose of

the special assessment or fees and the recipient of

such assessment or fees.
- The record shall be attested to by the president.
(o)

Other than for mandatory activities under the Code,

no special assessment, attorneys fees, negotiation
fees or any other extraordinary fees may be checked
off from any amount due an employee without an
individual written authorization duly signed by the
employee. The authorization should specifically state
the amount, purpose and beneficiary of the deduction.

(p)

It shall be the duty of any labor organization and its

officers to inform its members on the provisions of its
- constitution and by-laws,
- collective bargaining agreement,
- the prevailing labor relations system
- and all their rights and obligations under existing
labor laws.
For this purpose, registered labor organizations
may assess reasonable dues to finance labor relations
seminars and other labor education activities.
Any violation of the above rights and conditions
of membership shall be a ground for cancellation of
union registration or expulsion of an officer from
office, whichever is appropriate. At least thirty (30%)
per cent of all the members of a union or any member
or members specifically concerned may report such
violation to the Bureau. The Bureau shall have the
power to hear and decide any reported violation and to
mete appropriate penalty.

Art. 274.
Visitorial power. The Secretary of Labor
and Employment or his duly authorized representative is
hereby empowered
a)
to inquire into the financial activities of legitimate
labor organizations

53

- upon the filing of a complainant under oath

- and duly supported by the written consent of at least

twenty percent (20%) of the total membership of

the labor organization concerned and
b)

to examine their books of accounts and other records

to determine compliance or non-compliance with the
law
c)
to prosecute any violations of the law and the union
constitution and by-laws:
Provided, That such inquiry or examination shall not be
conducted during the
sixty (60) day freedom period
nor within thirty (30) days immediately preceding
the date of election of union officials.
Art. 222.
Appearances and fees.
(b) No attorneys fees, negotiation fees or similar charges
of any kind arising from any collective bargaining
negotiations or conclusion of the collective agreement
shall be imposed on any individual member of the
contracting union: Provided, however, That attorneys
fees may be charged against union funds in an amount
to be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the contrary
shall be null and void.

OMNIBUS RULES AS AMENDED BY D.O. 40:

RULE XI
INTER/INTRA-UNION
DISPUTES
AND
RELATED LABOR RELATIONS DISPUTES

OTHER

Section 1. Coverage. - Inter/intra-union disputes shall

include:
(a) cancellation of registration of a labor organization filed
by its members or by another labor organization;
(b) conduct of election of union and workers' association
officers/nullification of election of union and workers'

association
officers;
(c) audit/accounts examination of union or workers'
association
funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for
union
membership;
(g) validity/invalidity of impeachment/expulsion of union
and
workers
association
officers
and
members;
(h)
validity/invalidity
of
voluntary
recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a
union or workers' association constitution and by-laws;
(k) disagreements over chartering or registration of labor
organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or
workers'
association
membership;
(m) violations of the rights of legitimate labor organizations,
except interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to
self-organization,
union
membership
and
collective
bargaining (1) between and among legitimate labor organizations;
(2) between and among members of a union or workers'
association.
Section 2. Coverage. - Other related labor relations
disputes shall include any conflict between a labor union and
the employer or any individual, entity or group that is not a
labor organization or workers' association. This includes: (1)
cancellation of registration of unions and workers
associations; and (2) a petition for interpleader.
Section 3. Effects of the filing/pendency of
inter/intra-union and other related labor relations
disputes. - The rights, relationships and obligations of the
parties litigants against each other and other parties-ininterest prior to the institution of the petition shall continue

54

to remain during the pendency of the petition and until the

date of finality of the decision rendered therein. Thereafter,
the rights, relationships and obligations of the parties
litigants against each other and other parties-in-interest
shall be governed by the decision so ordered.
The filing or pendency of any inter/intra-union dispute and
other related labor relations dispute is not a prejudicial
question to any petition for certification election and shall
not be a ground for the dismissal of a petition for
certification election or suspension of proceedings for
certification election.
Section 4. Who may file. - Any legitimate labor
organization or member(s) thereof specially concerned may
file a complaint or petition involving disputes or issues
enumerated in Section 1 hereof. Any party-in-interest may
file a complaint or petition involving disputes or issues
enumerated in Section 2 hereof.
Where the issue involves the entire membership of the labor
organization, the complaint or petition shall be supported by
at least thirty percent (30%) of its members.
Section 5. Where to file. - Complaints or petitions
involving labor unions with independent registrations,
chartered locals, workers' associations, its officers or
members shall be filed with the Regional Office that issued
its certificate of registration or certificate of creation of
chartered local. Complaints involving federations, national
unions,
industry
unions,
its
officers
or
member
organizations shall be filed with the Bureau.
Petitions for cancellation of registration of labor unions with
independent registration, chartered locals and workers
association and petitions for deregistration of collective
bargaining agreements shall be resolved by the Regional
Director. He/She may appoint a Hearing Officer from the
Labor Relations Division.

Other inter/intra-union disputes and related labor relations

disputes shall be heard and resolved by the Med-Arbiter in
the Regional Office.
Complaints or petitions involving federations, national or
industry unions, trade union centers and their chartered
locals, affiliates or member organizations shall be filed
either with the Regional Office or the Bureau. The complaint
or petition shall be heard and resolved by the Bureau.
When two or more petitions involving the same parties and
the same causes of action are filed, the same shall be
automatically consolidated.
Section 6. Formal requirements of the complaint or
petition. - The complaint or petition shall be in writing,
verified under oath and shall, among others, contain the
following:
(a) name, address and other personal circumstances of the
complainant(s) or petitioner(s);
(b) name, address and other personal circumstances of the
respondent(s) or person(s) charged;
(c) nature of the complaint or petition;
(d) facts and circumstances surrounding the complaint or
petition;
(e) cause(s) of action or specific violation(s) committed;
(f) a statement that the administrative remedies provided
for in the constitution and by-laws have been exhausted or
such remedies are not readily available to the
complainant(s) or petitioner(s) through no fault of
his/her/their own, or compliance with such administrative
remedies does not apply to complainant(s) or petitioner(s);
(g) relief(s) prayed for;
(h) certificate of non-forum shopping; and
(i) other relevant matters.
Section 7. Raffle of the case. -Upon the filing of the
complaint or petition, the Regional Director or any of his/her
authorized representative in the Regional Office and the

55

Docket Section of the Bureau shall allow the party filing the
complaint or petition to determine the Med-Arbiter or
Hearing Officer assigned to the case by means of a raffle.
Where there is only one Med-Arbiter or Hearing Officer in
the region, the raffle shall be dispensed with and the
complaint or petition shall be assigned to him/her.

Where no amicable settlement is reached, the Med-Arbiter

or Hearing Officer, as the case may be, shall proceed with
the stipulation of facts, limitation or definition of the issues,
clarificatory questioning and submission of laws and
jurisprudence relied upon in support of each other's claims
and defenses.

Section 8. Notice of preliminary conference. Immediately after the raffle of the case or receipt of the
complaint or petition, the same shall be transmitted to the
Med-Arbiter or Hearing Officer, as the case may be, who
shall in the same instance prepare the notice for preliminary
conference and cause the service thereof upon the party
filing the petition. The preliminary conference shall be
scheduled within ten (10) days from receipt of the complaint
or petition.
Within three (3) days from receipt of the complaint or
petition, the Med-Arbiter or Hearing Officer, as the case may
be, shall cause the service of summons upon the
respondent(s) named therein, directing him/her to file
his/her answer/comment on the complaint or petition on or
before the scheduled preliminary conference and to appear
before the Med-Arbiter or Hearing Officer on the scheduled
preliminary conference.

Section 10. Conduct of Hearing(s). - The Med-Arbiter or

Hearing Officer, as the case may be, shall determine
whether to call further hearing(s) on the complaint or
petition.
Where the Med-Arbiter or Hearing Officer, as the case may
be, decides to conduct further hearing(s), he/she shall
require the parties to submit the affidavits of their witnesses
and such documentary evidence material to prove each
other's claims and defenses. The hearing(s) shall be limited
to clarificatory questions by the Med-Arbiter or Hearing
Officer and must be completed within twenty-five (25) days
from the date of preliminary conference.
The complaint or petition shall be considered submitted for
decision after the date of the last hearing or upon expiration
of twenty-five (25) days from date of preliminary
conference, whichever comes first.

Section 9. Conduct of preliminary conference. - The

Med-Arbiter or Hearing Officer, as the case may be, shall
conduct a preliminary conference and hearing within ten
(10) days from receipt of the complaint or petition. He/She
shall exert every effort to effect an amicable settlement of
the dispute.
Where the parties agree to settle amicably, their
agreements shall be specified in the minutes of the
conference and a decision based on compromise shall be
issued by the Med-Arbiter or the Regional Director, as the
case may be, within five (5) days from the date of the
mandatory conference.

Section 11. Affirmation of testimonial evidence. - Any

affidavit submitted by a party to prove his/her claims or
defenses shall be re-affirmed by the presentation of the
affiant before the Med-Arbiter or Hearing Officer, as the case
may be. Any affidavit submitted without the re-affirmation
of the affiant during a scheduled hearing shall not be
admitted in evidence, except when the party against whom
the affidavit is being offered admits all allegations therein
and waives the examination of the affiant.
Section 12. Filing of pleadings. - The parties may file
his/her pleadings, including their respective position papers,
within the twenty-five (25) day period prescribed for the
conduct of hearing(s). No other pleading shall be considered

56

or entertained after the case is considered submitted for

decision.

thereof together with the entire records of the case to the

Office of the Secretary or the Bureau, as the case may be.

Section 13. Hearing and resolution of the complaint or

petition in the Bureau. - The Bureau shall observe the
same process and have the same period within which to
hear and resolve the complaints or petitions filed before it.

Section 18. Finality of Decision. - Where no appeal is

filed within the ten-day period, the Bureau and Regional
Director or Med-Arbiter, as the case may be, shall enter the
finality of the decision in the records of the case and cause
the immediate implementation thereof.

Section 14. Decision. - The Bureau and the Med-Arbiter or

Regional Director, as the case may be, shall have twenty
(20) days from the date of the last hearing within which to
decide the complaint or petition. The decision shall state the
facts, findings, conclusion, and reliefs granted.
Section 15. Release of Decision. - The notice of decision
shall be signed by the Records Officer in the Bureau and by
the Med-Arbiter or Hearing Officer in the Regional Office.
Within twenty (20) days from date of last hearing, the
decision shall be released to the parties personally on a date
and time agreed upon during the last hearing.
Section 16. Appeal. - The decision of the Med-Arbiter and
Regional Director may be appealed to the Bureau by any of
the parties within ten (10) days from receipt thereof, copy
furnished the opposing party. The decision of the Bureau
Director in the exercise of his/her original jurisdiction may
be appealed to the Office of the Secretary by any party
within the same period, copy furnished the opposing party.
The appeal shall be verified under oath and shall consist of a
memorandum of appeal specifically stating the grounds
relied upon by the appellant, with supporting arguments
and evidence.
Section 17. Where to file appeal. - The memorandum of
appeal shall be filed in the Regional Office or Bureau where
the complaint or petition originated. Within twenty-four (24)
hours from receipt of the memorandum of appeal, the
Bureau or Regional Director shall cause the transmittal

Section 19. Period to reply. - A reply to the appeal may

be filed by any party to the complaint or petition within ten
(10) days from receipt of the memorandum of appeal. The
reply shall be filed directly with the Bureau or the Office of
the Secretary, as the case may be.
Section 20. Decision of the Bureau/Office of the
Secretary. - The Bureau Director or the Secretary, as the
case may be, shall have twenty (20) days from receipt of
the entire records of the case within which to decide the
appeal. The filing of the memorandum of appeal from the
decision of the Med-Arbiter or Regional Director and Bureau
Director stays the implementation of the assailed decision.
The Bureau or Office of the Secretary may call the parties to
a clarificatory hearing in aid of its appellate jurisdiction.
Section 21. Finality of Decision of Bureau/Office of
the Secretary. - The decision of the Bureau or the Office of
the Secretary shall become final and executory after ten
(10) days from receipt thereof by the parties, unless a
motion for its reconsideration is filed by any party therein
within the same period. Only one (1) motion for
reconsideration of the decision of the Bureau or the Office of
the Secretary in the exercise of their appellate jurisdiction
shall be allowed.
Section 22. Execution of decision. - The decision of the
Med-Arbiter and Regional Director shall automatically be
stayed pending appeal with the Bureau. The decision of the

57

Bureau in the exercise of its appellate jurisdiction shall be

immediately executory upon issuance of entry of final
judgment.
The decision of the Bureau in the exercise of its original
jurisdiction shall automatically be stayed pending appeal
with the Office of the Secretary. The decision of the Office of
the Secretary shall be immediately executory upon issuance
of entry of final judgment.
Section 23. Transmittal of records to the Regional
Office/Bureau. - Within forty-eight (48) hours from notice
of receipt of decision by the parties and finality of the
decision, the entire records of the case shall be remanded to
the Bureau or Regional Office of origin for implementation.
The implementation of the decision shall not be stayed
unless restrained by the appropriate court.
RULE XII
ELECTION OF OFFICERS OF LABOR UNIONS AND
WORKERS ASSOCIATIONS
Section 1. Conduct of election of union officers;
procedure in the absence of provisions in the
constitution and by-laws. - In the absence of any
agreement among the members or any provision in the
constitution and by-laws of a labor union or workers'
association, the following guidelines may be adopted in the
election of officers.
(a) within sixty (60) days before the expiration of the term
of the incumbent officers, the president of the labor
organization shall constitute a committee on election to be
composed of at least three (3) members who are not
running for any position in the election, provided that if
there are identifiable parties within the labor organization,
each party shall have equal representation in the
committee;

(b) upon constitution, the members shall elect the chairman

of the committee from among themselves, and case of
disagreement, the president shall designate the chairman;
(c) within ten (10) days from its constitution, the committee
shall, among others, exercise the following powers and
duties:
1) set the date, time and venue of the election;
2) prescribe the rules on the qualification and eligibility of
candidates
and
voters;
3) prepare and post the voters' list and the list of qualified
candidates;
4) accredit the authorized representatives of the contending
parties;
5) supervise the actual conduct of the election and canvass
the votes to ensure the sanctity of the ballot;
6)
keep
minutes
of
the
proceedings;
7) be the final arbiter of all election protests;
8)
proclaim
the
winners;
and
9) prescribe such other rules as may facilitate the orderly
conduct of election.
Section 2. Dispute over conduct of election of officers.
- Where the terms of the officers of a labor organization
have expired and its officers failed or neglected to do so call
for an election of new officers, or where the labor
organization's constitution and by-laws do not provide for
the manner by which the said election can be called or
conducted and the intervention of the Department is
necessary, at least thirty percent (30%) of the members of
the labor organization may file a petition for the conduct of
election of their officers with the Regional Office that issued
its certificate of registration or certificate of creation of
chartered local.
In the case of federations, national or industry unions and
trade union centers, the petition shall be filed with the
Bureau or the Regional Office but shall be heard and
resolved by the Bureau.

58

This rule shall also apply where a conduct of election of

officers is an alternative relief or necessary consequence of
a petition for nullification of election of officers,
impeachment/expulsion of officers, or such other petitions.
Section 3. Formal requirements and proceedings. The formal requirements, processes and periods of
disposition of this petition stated in Rule XI shall be followed
in the determination of the merits of the petition and
appeal.
Section 4. Pre-election conference and conduct of
election. - The appointment of an election officer and the
procedures and periods in the conduct of the pre-election
conference and election proceedings prescribed in Rule IX
shall also apply in the conduct of a pre-election conference
and election of officers in any labor organization.
Section 5. Applicability of the provisions of the labor
organization's constitution and by-laws. - Where the
conduct of election of officers is ordered by the Med-Arbiter,
the Bureau or Office of the Secretary, the rules and
regulations governing the filing of candidacies and conduct
of election under the constitution and by-laws of the labor
organization may be applied in the implementation of the
decision, or new and additional rules may be adopted as
agreed upon by the parties.
The entire proceedings shall be presided by the Election
Officer from the Labor Relations Division of the Regional
Office or the Bureau. He/She shall act as the COMELEC
referred to in the labor organization's constitution and bylaws and obligate himself/herself to comply with his/her
mandate under the decision to be implemented and the
constitution and by-laws.
RULE XIII
ADMINISTRATION OF TRADE UNION FUNDS AND
ACTIONS ARISING THEREFROM

Section 1. Right of union to collect dues and agency

fees. - The incumbent bargaining agent shall continue to be
entitled to check-off and collect dues and agency fees
despite the pendency of a representation case, other
inter/intra-union disputes or related labor relations disputes.
Section 2. Visitorial power under Article 274. - The
Regional or Bureau Director may inquire into the financial
activities of any legitimate labor organization and examine
their books of accounts and other records to determine
compliance with the law and the organization's constitution
and by-laws. Such examination shall be made upon the
filing of a request or complaint for the conduct of an
accounts examination by any member of the labor
organization, supported by the written consent of at least
twenty (20%) percent of its total membership.
Section 3. Where to file. - A request for examination of
books of accounts of independent labor unions, chartered
locals and workers associations pursuant to Article 274 shall
be filed with the Regional Office that issued its certificate of
registration or certificate of creation of chartered local.
A request for examination of books of accounts of
federations or national unions and trade union centers
pursuant to Article 274 shall be filed with the Bureau. Such
request or complaint, in the absence of allegations
pertaining to a violation of Article 241, shall not be treated
as an intra-union dispute and the appointment of an Audit
Examiner by the Regional or Bureau Director shall not be
appealable.
Section 4. Actions arising from Article 241. - Any
complaint or petition with allegations of mishandling,
misappropriation or non-accounting of funds in violation of
Article 241 shall be treated as an intra-union dispute. It

59

shall be heard and resolved by the Med-Arbiter pursuant to

the provisions of Rule XI.
Section 5. Prescription. - The complaint or petition for
audit or examination of funds and book of accounts shall
prescribe within three (3) years from the date of submission
of the annual financial report to the Department or from the
date the same should have been submitted as required by
law, whichever comes earlier.
Section 6. Decision. - A decision granting the conduct of
audit shall include the appointment of the Audit Examiner
and a directive upon him/her to submit his/her report and
recommendations within ten (10) days from termination of
audit. The decision granting the conduct of audit is
interlocutory and shall not be appealable. The decision
denying or dismissing the complaint or petition for audit
may be appealed within ten (10) days from receipt thereof
pursuant to the provisions prescribed in Rule XI.
Section 7. Pre-audit conference. - Within twenty-four
(24) hours from receipt of the decision granting the conduct
of audit, the Regional Director shall summon the parties to a
pre-audit conference conducted by the Audit Examiner to
determine and obtain the following:
(a) sources of funds covered by the audit;
(b) the banks and financial institutions where the labor
organization maintains its account;
(c) union books of accounts and financial statements;
(d) disbursement vouchers with supporting receipts,
invoices and other documents;
(e) income and revenue receipts;
(f) cash books;
(g) minutes of general membership meeting and board
meetings;
(h) other relevant matters and documents.

The first pre-audit conference shall be scheduled within ten

(10) days from receipt by the Audit Examiner of the decision
granting the conduct of an audit.
Section 8. Issuance of subpoena. - The Regional Director
may compel any party to appear or bring the required
financial documents in a conference or hearing through the
issuance of a subpoena ad testificandum or subpoena duces
tecum. He/She may also require the employer concerned to
issue certifications of union dues and other assessments
remitted to the union during the period of audit.
Section 9. Conduct of audit examination. - Where book
of accounts are submitted by the parties, the Audit
Examiner shall:
(a) examine the transactions reflected in the disbursement
vouchers;
(b) determine the validity of the supporting documents
attached to the vouchers consistent with the union's
constitution and by-laws, relevant resolutions of the union
and
the
Labor
Code;
(c) trace recording and posting in the disbursement book;
(d) record observations or findings of all financial
transactions.
Where no book of accounts are maintained by the officers of
the labor organization, the Audit Examiner shall:
(a) examine the transactions reflected in the disbursement
vouchers;
(b) determine the validity of the supporting documents
attached to the vouchers consistent with the labor
organization's constitution and by-laws, relevant board
resolutions,
and
the
Labor
Code;
(c)
prepare
working
papers
or
worksheet/s;
(d) record and post all financial transactions reflected in the
cash vouchers in the working papers or worksheet/s; and
(e) record observations or findings of all financial
transactions.

60

The Audit Examiner shall conduct an inventory of all

physical assets acquired by the labor organization, if any,
and on the basis of his/her findings prepare his/her audited
financial report or statement reflecting the true and correct
financial accounts and balances of the labor organization
with relevant annexes attached.
Section 10. Period of audit. - The Audit Examiner shall
have sixty (60) days from the date of first pre-audit
conference within which to complete the conduct of audit,
unless the volume of financial records, the period covered
by the audit and other circumstances warrant the extension
thereof. In such a case, the Audit Examiner shall notify the
Med-Arbiter or the Bureau Director, as the case may be, of
such fact at least ten (10) days before the expiration of the
sixty (60) day period.
Section 11. Audit Report. - The Audit Examiner shall
make a report of his/her findings to the parties involved and
the same shall include the following:
(a)
name
of
the
labor
organization;
(b) name of complainant(s) or petitioner(s) and
respondent(s);
(c) name of officers of the labor organization during the
period
covered
by
the
audit
report;
(d)
scope
of
the
audit;
(e)
list
of
documents
examined;
(f) audit methods and procedures adopted; and
(g) findings and recommendations.
Section 12. Completion of audit. - A copy of the audit
report shall be forwarded by the Audit Examiner to the MedArbiter or the Bureau Director, as the case may be, within
ten (10) days from termination of the audit, together with
the entire records of the case and all documents relative to
the conduct of the audit.

Section 13. Decision after audit. - The Med-Arbiter or

the Bureau Director shall render a decision within twenty
(20) days from receipt of the audit report. All issues raised
by the parties during the conduct of the audit shall be
resolved by the Med-Arbiter. The decision shall be released
in the same manner prescribed in Section 15, Rule XI.
When warranted, the Med-Arbiter or Bureau Director shall
order the restitution of union funds by the responsible
officer(s) in the same decision.
Section 14. Appeal. - Appeal from the decision of the
Med-Arbiter denying the conduct of audit and from the
results of the audit may be filed by any of the parties with
the Bureau. Decisions rendered by the Bureau after the
conduct of audit in the exercise of its original jurisdiction
may be appealed to the Office of the Secretary. Both shall
be resolved in accordance with the provisions of Section 16,
Rule XI.
Section 15. Period of inquiry or examination. - No
complaint for inquiry or examination of the financial and
book of accounts as well as other records of any legitimate
labor organization shall be entertained during the sixty (60)
day freedom period or within thirty (30) days immediately
preceding the date of election of union officers. Any
complaint or petition so filed shall be dismissed.
RULE XVIII
CENTRAL REGISTRY OF LABOR ORGANIZATIONS AND
COLLECTIVE BARGAINING AGREEMENTS
Section 1. Forms for registration. - Consistent with the
policy of the State to promote unionism, the Bureau shall
devise or prescribe such forms as are necessary to facilitate
the process of registration of labor organizations and
collective bargaining agreements or of compliance with all

61

documentary or reporting requirements prescribed in these

Rules.

may be conducted independently of or in cooperation with

the Department and other labor education institutions.

Section 2. Transmittal of records; central registry. The Labor Relations Division of the Regional Offices shall,
within forty-eight (48) hours from issuance of a certificate
of creation of chartered locals or certificate of registration of
labor organizations and collective bargaining, transmit to
the Bureau a copy of such certificates accompanied by a
copy of the documents supporting registration.
The Labor Relations Division of the Regional Office shall also
transmit to the Bureau a copy of every final decision
canceling or revoking the legitimate status of a labor
organization or collective bargaining agreement, indicating
therein the date when the decision became final.
In cases of chartering and affiliation or compliance with the
reporting requirements under Rule V, the Regional Office
shall transmit within two (2) days from receipt thereof the
original set of documents to the Bureau, retaining one set of
documents for its file.

Section 3. Special fund for labor education and

research. - Every legitimate labor organization shall, for
the above purpose, maintain a special fund for labor
education and research. Existing strike funds may, in whole
or in part, be transformed into labor education and research
funds. The labor organization may also periodically assess
and collect reasonable amounts from its members for such
funds.

RULE XX
LABOR EDUCATION AND RESEARCH
Section 1. Labor education of workers and employees.
- The Department shall develop, promote and implement
appropriate labor education and research programs on the
rights and responsibilities of workers and employers.
It shall be the duty of every legitimate labor organization to
implement a labor education program for its members on
their rights and obligations as unionists and as employees.
Section 2. Mandatory conduct of seminars. - Subject to
the provisions of Article 241, it shall be mandatory for every
legitimate labor organization to conduct seminars and
similar activities on existing labor laws, collective
agreements, company rules and regulations and other
relevant matters. The union seminars and similar activities

GOVERNING LAW
Oca vs. Trajano, 200 SCRA 399
It is a rule that the Constitution and By-laws of an organization serve
as a contract that binds its members. The presence of a quorum
during petitioner Oca's and respondent Dinglasan's respective Board
meetings is questionable. Moreover, petitioner Oca's Board Meeting
and subsequent Convention were tainted with invalidity. The call for
"a special Board meeting to fix the special convention" made by the
National Secretary, Johnny Oca, was anomalous since only the
National President of the Union was empowered to call a special
Board Meeting, "at his own initiative or upon petition of at least one
fourth (1/4) of the Board members." Considering the anomalous
"call" for a special meeting made by the National Secretary, matters
taken up during said special meeting, such as the calling of a national
convention, are likewise tainted.
RIGHTS AND OBLIGATIONS OF MEMBERS:
Ferrer vs. NLRC, 224 SCRA 410

62

Tancinco vs. Ferrer-Calleja, 157 SCRA 203

Submission of the employees names with the BLR as qualified
members of the union is not a condition sine qua non to enable said
members to vote in the election of unions officers. It finds no
support in fact and in law. Per public respondents findings, the April
24, 1986 list consists of 158 union members only wherein 51 of the
56 challenged voters names do not appear. Adopting however a
rough estimate of a total number of union members who cast their
votes of some 333 and excluding therefrom the 56 challenged votes,
if the list is to be the basis as to who the union members are then
public respondent should have also disqualified some 175 of the 333
voters.
It is true that under Article 242(c) of the Labor Code, as
amended, only members of the union can participate in the election
of union officers. The question however of eligibility to vote may be
determined through the use of the applicable payroll period and
employees status during the applicable payroll period. The payroll
of the month next preceding the labor dispute in case of regular
employees and the payroll period at or near the peak of operations in
case of employees in seasonal industries.
In the case before Us, considering that none of the parties
insisted on the use of the payroll period-list as voting list and
considering further that the 51 remaining employees were correctly
ruled to be qualified for membership, their act of joining the election
by casting their votes on May 26, 1986 after the May 10, 1986
agreement is a clear manifestation of their intention to join the union.
They must therefore be considered ipso facto members thereof
Halili vs. CIR, 136 SCRA 112
On August 20, 1958, the union filed with the Court of Industrial
Relations a petition docketed as Case No. 1099-V, which it
subsequently amended on December 9, 1958, charging violation by
Halili of Commonwealth Act No. 444 (the Eight-Hour Law) in that
he deducted from, and did not include in, the hours of work of the
drivers and conductors the time consumed for filling gas or for
taking the bus from the 'carbarn' and vice-versa, the time for trip

intervals when the bus is waiting for passengers, and the time
consumed on minor repairs of the engine and other parts of the bus.
It therefore prayed the court to fix the compensable hours of work of
the drivers and conductors, members of said union, according to the
provisions of Commonwealth Act No. 444, and to order Halili to pay
the drivers and conductors the compensable hours of work
previously rendered by them from October 1, 1956 up to the filing of
the petition.
The SC held that there can be no disagreement here that
what the members of the respondent union claim is the payment of
overtime wages for work rendered by them during the hours
deducted by the predecessor of herein petitioner from their daily
compensable working time in the company's payrolls, in violation of
the Eight-Hour Labor Law he deducted from the working hours of
the drivers and conductors, members of respondent union, the time
spent for taking the buses from the carbarn and filling it with gas, oil
or water; the interval for waiting for passengers; and the repair of the
engine and other parts of the bus in case of breakdown.
REMEDIES FOR VIOLATION OF RIGHTS
Litton Mills Employees vs. Ferrer-Calleja, 167 SCRA 804
As to the impeachment of a union officer, Section 2, Article XV of
the petitioner-union's Constitution and By-Laws provides the
procedures to be followed. It clearly appears that the procedure was
not followed by the petitioners when they impeached Umali. To be
sure, there was difficulty on the part of the petitioners in complying
with the required procedure for impeachment, considering that the
petition to impeach had to be addressed to the Chairman of the
Executive Board of the Union, and that the majority membership
which would decide on the impeachment had to be convened only
upon call of the Chairman of the Executive Board who, in the case at
bar, happened to be respondent Umali himself.
Nevertheless, despite the practical difficulties in complying with the
said procedure, petitioners should have shown substantial

63

compliance with said impeachment procedure, by giving Umali

ample opportunity to defend himself, as contrasted to an outright
impeachment, right after he failed to appear before the first and only
investigation scheduled on 27 August 1986 in the Litton Canteen.
The union-members themselves know what is best for them,
i.e., whether they still want respondent Umali as their Union
President, and whether they wish to affiliate their union with
GATCORD. And, the best and most appropriate means of
ascertaining the will of the union members is through a certification
election.
Villaor vs. Trajano, 144 SCRA 245
The May 4, 1984 special election in Cebu and Mactan is without
factual and legal justification. As aptly observed by the Solicitor
General, the same was resorted to only to accommodate the herein
other private respondents "There is absolutely no justification for
calling the said May 4, 1984 elections. Obviously, such move was
resorted by the PALEA Comelec to accommodate defeated
candidates for president and vice-president in the February 20, 1984
election, Mario and Carlos Bandalan (respondent herein), and enable
them to overcome the winning margin of winning candidates therein,
Villaor and Bautista (herein petitioners), who won by only 145 and
44 votes respectively.
Special election could be resorted to when some members of
a union are deprived of their right to vote. In this case, there is no
justification for special election because the union members were not
deprived of their right to vote.

LECTURE

Remember in terms and conditions of membership, the basic

rule is that internal matters should be resolved first by the internal
rules, the by-laws, before it can be resolved elsewhere (doctrine of
exhaustion). Under Art. 241, (n) and (o), special assessment can be
levied, following certain requirements, and collected following
certain requirements. Remember also that levy is different from
collection. There cannot be a valid collection without a valid levy.
Requirements of a valid levy: general membership
resolution, in a general meeting called for the purpose, approving the
special assessment. A levy is a special assessment, hence it cannot be
imposed without the required resolution. It cannot be imposed by the
officers, even if it is approved by management. Only after a valid
levy, then comes in the collection. Collection may be done in two
ways: direct collection from each member, but that is a tedious
process. The other way is by check-off. Managements cooperation is
needed here. The union submits a document to management,
reflecting the list of collection, the members of the union, and each
members authorization to collect. Mgt. will deduct such amounts
from each salary and remit the same to the union. You can levy only
upon resolution, and you can collect via check-off only upon
individual valid authorization from each member. Check-off is not a
matter of right. It is something that must be embodied in the CBA in
order to obligate management to cooperate.
F. UNFAIR LABOR PRACTICES
LABOR CODE
Art 247.
Concept of unfair labor practice and
procedure for prosecution thereof .
Unfair labor practices:
- violate the constitutional right of workers and employees
to self-organization,
- are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively

64

and otherwise deal with each other in an atmosphere of

freedom and mutual respect,
disrupt industrial peace
and hinder the promotion of healthy and stable labormanagement relations.

Consequently, unfair labor practices are not only

violations of the civil rights of both labor and management
but are also criminal offenses against the State which shall
be subject to prosecution and punishment as herein
provided.
-

Subject to the exercise by the President or by the

Secretary of Labor and Employment of the powers
vested in them by Articles 263 and 264 of this Code,
the civil aspects of all cases involving unfair labor
practices, which may include claims for actual, moral,
exemplary and other forms of damages, attorneys fees
and other affirmative relief,
shall be under the jurisdiction of the Labor Arbiters.
The Labor Arbiters shall give utmost priority to the
hearing and resolution of all cases involving unfair labor
practices. They shall resolve such cases within thirty
(30) calendar days from the time they are submitted for
decision.

Recovery of civil liability in the administrative

proceedings shall bar recovery under the Civil Code.
No criminal prosecution under this Title may be
instituted:
without a final judgment, finding that an unfair labor
practice was committed, having been first obtained in
the administrative proceeding referred to in the
preceding paragraph.
During the pendency of such administrative
proceeding, the running of the period of prescription of
the criminal offense herein penalized shall be considered
interrupted:
Provided, however, That the final judgment in the
administrative proceedings shall not be binding in the

criminal case nor be considered as evidence of guilt but

merely as proof of compliance with the requirements
herein set forth.
Art. 248.
Unfair labor practices of employers. It
shall be unlawful for an employer to commit any of the
following unfair labor practices:
(a)

To interfere with, restrain or coerce employees in the

exercise of their right to self-organization;

(b)

To require as a condition of employment that a person

or an employee shall not join a labor organization or
shall withdraw from one to which he belongs;

(c)

To contract out services or functions being performed

by union members when such will interfere with,
restrain or coerce employees in the exercise of their
right to self-organization;

(d)

To initiate, dominate, assist or otherwise interfere with

the formation or administration of any labor
organization, including the giving of financial or other
support to it or its organizers or officers;

(e)

To discriminate in regard to wages, hours of work, and

other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization.
Nothing in this Code or in any other law shall
stop the parties from requiring membership in a
recognized collective bargaining agent as a condition
for employment, except of those employees who are
already members of another union at the time of the
signing of the collective bargaining agreement.
Employees
of
an
appropriate
collective
bargaining unit who are not members of the
recognized collective bargaining agent:
- may be assessed a reasonable fee equivalent to the
dues and other fees paid by members of the
recognized collective bargaining agent,

65

- if such non-union members accept the benefits under

the collective agreement:

- Provided, That the individual authorization required
under Article 242, paragraph (o), of this Code shall
not apply to the non-members of the recognized
collective bargaining agent;
(f)

To dismiss, discharge or otherwise prejudice

or discriminate against an employee for having given
or being about to give testimony under this Code;

(g)

To violate the duty to bargain collectively as

prescribed by this Code;

(h)

To pay negotiation or attorneys fees to the

union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other
dispute; or

(i)

(c)

To violate the duty or refuse to bargain collectively

with the employer, provided that it is the
representative of the employees;

(d)

To cause or attempt to cause an employer to pay or

deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for
services which are not performed or not to be
performed, including the demand for a fee for union
negotiations;

(e)

To ask for or accept negotiation or attorneys fees from

employers as part of the settlement of any issue in
collective bargaining or any other dispute; or

(f)

To violate a collective bargaining agreement.

To violate a collective bargaining agreement.

The provisions of the

preceding paragraph
notwithstanding, only the officers and agents of
corporations, associations, or partnerships who have
actually participated in, authorized or ratified unfair labor
practices shall be held criminally liable.
Art. 249.
Unfair
labor
practices
of
labor
organizations. It shall be unfair labor practice for a
labor organization, its officers, agents, or representatives:
(a)

To restrain or coerce employees in the exercise of their

right
to
self-organization.
However,
a
labor
organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of
membership;

(b)

To cause or attempt to cause an employer to

discriminate
- against an employee,
- including discrimination against an employee with
respect to whom membership in such organization
has been denied,

or to terminate an employee on any ground other

than the usual terms and conditions under which
membership or continuation of membership is
made available to other members;

The provisions of the

preceding paragraph
notwithstanding, only the officers, members of governing
boards, representatives or agents or members of labor
associations or organizations who have actually participated
in, authorized or ratified unfair labor practices shall be held
criminally liable.
Art. 261.
Jurisdiction of voluntary arbitrators and
panel of voluntary arbitrators. The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide
all unresolved grievances
arising from the interpretation or implementation of
the Collective Bargaining Agreement
and those arising from the interpretation or
enforcement of company personnel policies referred to
in the immediately preceding Article.
Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character,

66

shall no longer be treated as unfair labor practice and

shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this Article,
gross violations of a Collective Bargaining Agreement
shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.

The test applied to determine whether the individual acts

constitute ULP was totality of conduct. Factors to be taken into
consideration are:
history of relations between employees and employer;
anti-union bias;
any other plan of coercion and interference.

The Commission, its Regional Offices and the

Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and
shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the
collective bargaining agreement.

Philippine Steam Navigation vs. Philippine Marine Officers Guild,

15 SCRA 174
The SC held that the subjection by the company of its employees to a
series of questioning regarding their membership in the union or
their union activities, in such a way as to hamper the exercise of free
choice on their part, constitutes unfair labor practice

CASES
Insular Life Assurance Co. Employees Association vs. Insular Life
Assurance Co., 37 SCRA 244
The company sent letters to each striker stating its recognition of the
employees right to strike, but should the latter wish to return to work,
they may do so. The letter listed benefits for those who wished to
work. Some were persuaded by the letter, but others continued with
the strike. There were also occasions where management personnel
tried to break through the picket lines. The company also offered free
coffee as bribe to abandon the strike. There was also discrimination
in selecting which employees were rehired.
The employers are guilty of ULP. The seemingly innocent
letters, when taken together with all the other acts clearly show the
intent to interfere with the right to collective bargaining. The
incentives in the letters as well as threats of reprisals upon failure to
comply cannot be read otherwise than union busting. Such acts
undermine all that the union wishes to do for the benefit of the
employees.

Visayan Bicyle Manufacturig Co. vs. National Labor Union, 14

SCRA 5
Two employees were dismissed for violation of a company rule
against fights in the premises or during working hours. It appears,
however, that said employees, who were union officers, were
provoked into a prearranged fight by two recently hired employees
pursuant to a strategy of the company designed to provide an
apparently lawful cause for their dismissal, and said dismissed
employees had not figured in similar incidents before or violated
company rules in their many years with the company. Thus, the
company is guilty of unfair labor practice.
Judric Canning Corp. vs. Inciong, 115 SCRA 887

Manila Hotel Co. vs. Pines Hotel Employees, 47 SCRA 88

67

Whether or not the Pines Hotel incurred losses is of no moment. The

fact that management granted Christmas bonus to its employees, the
same should have been divided equally as it has been done before.
Aside from the Christmas bonus of 50% that was allocated to the
Manila Hotel employees, some of them were granted year-end bonus
while the Pines Hotel employees did not receive any. This is a clear
case of discrimination it appearing that there is no union at the
Manila Hotel of Taal Vista Hotel and considering further that lately
respondents had always been beset with demands for better living
conditions from the complainant union as well as strikes being
staged by the union.
Circumstances showing unfair discrimination of union
members where a company contrary to previous practice of
dividing equally to all employees a certain percentage of its net
profits as Christmas bonus, allocated 50% only to its Manila Hotel
employees, while Pines Hotel employees, where there exists a labor
union, did not receive any year end bonus.
Wise and Co., Inc.
October 13, 1989

vs. Wise and Co., Inc. Employees Union,

Sime Darby Pilipinas Inc. vs. NLRC, 289 SCRA 86

The change effected by management with regard to working time is
made to apply to all factory employees engaged in the same line of
work whether or not they are members of a union. Hence, it cannot

be said that the new scheme adopted by management prejudices the

right of respondent to self-organization.
Management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of
work, processes to be followed, supervision, lay off of workers, and
discipline, dismissal and recall of workers. Further, management
retains the prerogative whenever exigencies of the service so require,
to change the working hours of its employees. So long as such
prerogative is exercised in good faith and for the advancement of the
employers interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or under
valid agreements, this Court will uphold such exercise.
Alhambra Industries vs. CIR, 35 SCRA 550
The petitioner is the successor-in-interest of the old company
Alhambra Cigar & Cigarette Manufacturing Co, that was found
guilty of ULP, and was ordered by the Court to reinstate the workers
and pay backwages. The petitioner refuses to comply with the said
order (which has never been executed) on the ground that it made
innovations in some of the working organizations formerly under the
Alhambra Cigar & Cigarette Manufacturing Co., which affected the
former positions by abolishing them for, legitimate business reasons
as explained in said pleading, Annex L hereof, and there are no
substantially equivalent positions for them to occupy, and praying
that the Honorable Court conduct hearings at which the petitioner
will introduce evidence in support of these allegations, and that after
such hearings, the petitioner be declared exempted from reinstating
and paying the back wages of the aforesaid employees.
Held: The basic theory of the Industrial Peace Act is to recognize the
right of self-organization to enable labor unions to bargain
collectively and to avoid unfair labor practices on the part of labor
and management in order to attain industrial democracy. The sooner
then an inquiry is made into alleged unfair labor practices and the
sooner it is stopped, the better for harmonious labor-management

68

relations. To discourage each party from committing such unfair

labor practices, sanctions are provided for. Here, management was at
fault, and petitioner, as the successor, can be compelled to reinstate
and to pay back wages. That has not been complied with. If we
reopen the case to allow petitioner to introduce evidence with
respondent Court to show why it has not complied with the order of
reinstatement, we shall in effect be rendering futile the rights of labor
and frustrating the policies of the Industrial Peace Act. Considering
the circumstances disclosed, we cannot and should not do so.

pressure, in the form of restraint, interference or coercion, against his

employees right to institute concerted action for better terms and
conditions of employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the employer
observed labor standards provisions of law when he might have not,
together with the act of terminating or coercing those who refuse to
cooperate with the employers scheme constitutes ULP. The first act
clearly preempts the right of the hotels workers to seek better terms
and conditions of employment through concerted action.

Balmar Farms vs. NLRC, 271 SCRA 670

UNFAIR LABOR PRACTICES

De Leon vs. NLRC, May 30, 2001

Mabeza vs. NLRC, 271 SCRA 670

A pivotal question in any case where ULP on the part of the
employer is alleged, is whether or not the employer has exerted

OF

LABOR ORGANIZATIONS:

Salunga v. CIR, 21 SCRA 216

It is well settled that such unions are not entitled to arbitrarily
exclude qualified applicants for membership, and a closed -shop
provision would not justify the employer in discharging, or a union
in insisting upon the discharge of; an employee whom the union thus
refuses to admit to membership, without any reasonable ground
therefor (31 Am. Jur. 432). Needless to say, if said unions may be
compelled to admit new members, who have the requisite
qualifications, with more reason may the law and the courts exercise
the coercive power when the employee involved is a long standing
union member who, owing to provocations of union officers, was
impelled to tender his resignation, which he forthwith withdrew or
revoked. Surely, he may at least, invoke the rights of those who seek
admission for the first time, and cannot arbitrarily be denied
readmission.
In the case at bar, the company was not guilty of unfair labor
practice. It was reluctant-if not unwilling-to discharge petitioner.
when the union first informed it of petitioner's resignation and urged
implementation of Section 3 of the bargaining contract, the company
advised petitioner of its provisions, thereby intimating that he had to
withdraw his resignation in order to keep his employment. Besides,
the company notified the union that it would not take any action on
the case and would consider petitioner still a member of the union.
When the latter, thereafter, insisted on petitioner's discharge, the
69

company still demurred and explained it was not taking sides and
that its stand was prompted merely by "humane" considerations,
springing from the belief that petitioner had resigned from the union
without realizing its effect upon his employment. And, as the union
reiterated its demand, the company notified petitioner that it had no
other alternative but to terminate his employment, and dismissed him
from the service, although with "regret". Under the circumstances,
the company was not "unfair" to petitioner.
United Restaurors Employees and Labor Union vs. Torres, 26
SCRA 435
When the Union struck and picketed on January 16, 1965, it
might have been true that the Union commanded a majority of Sulo's
employees. Without need of certification, it could, under such
circumstances, conclude a collective bargaining agreement with
Sulo. But it is not disputed that on, October 4, 1965, i.e., shortly after
this case was filed on September 18, 1965, a consent election was
held. Not controverted, too, is the fact that, in that consent election,
SELU defeated the Union, petitioner herein. Because of this SELU
was certified to the Sulo management as the "collective bargaining
representative of the employees . . . for collective bargaining
purposes as regards wages, hours of work, rates of pay and/or such
other terms and conditions of employment allowed them by law."
Under the circumstances, the issue as to the propriety of the
injunction issued to restrain picketing has become moot and
academic.
The SC held that the Union which has become a minority
union can no longer demand collective bargaining. Said right
properly belongs to SELU, which commands the majority. By law,
the right to be exclusive representative of all the employees in an
appropriate collective bargaining unit is vested in the labor union
"designated or selected" for such purpose "by the majority of the
employees" in the unit concerned. SELU has the right as well as the
obligation to hear, voice out and seek remedies for the grievances of
all Sulo employees, including employees who are members of

petitioner Union, regarding the rates of pay, wages, hours of

employment or other conditions of employment.

LECTURE
What is ULP? It is a violation of the right to selforganization. Item (a) of Art. 248 is an all-encompassing provision-to
interfere, restrain or coerce the right to self-organization. Does that
mean we can do away with subparagraphs (b) to (i)? Are all
discriminations ULP? How can discrimination refer to the right to
self-organization?
ULP may be done whether one is a union member or is not a
union member. But remember violation of a CBA is ULP only if it is
a gross violation of the economic provisions. For management to be
guilty of ULP it is not necessary that the interference, coercion or
restraint be a successful attempt. Remember the Insular case.
Management was not successful.
What is the test of ULP? Some acts may in fact be innocent
in nature. Like in the Insular case. Remember the doctrine
TOTALITY OF CONDUCT. Look at the acts and circumstances as a
whole, not just the single act. In order to show managements
intention, one must establish that there is a tendency to restrain,
coerce or interfere with the right to self-organization, in the absence
of any clear case of actual interference, restrain or coerce. That
management intended to R/I/C. By looking at the totality of the
situation and the circumstances, it may be shown that ULP is
committed.
So, in order to establish ULP, show the totality of the
situation and show the link between the act itself and the employees
right to self-organization. If the act has a tendency to R/I/C, then in
all probability, considering all the circumstances, management
wanted to R/I/C. The act is ULP.

70

It may seem that the test is quite subjective. This is because

ULP must be intended to R/I/C and is deliberate. So in many cases it
is difficult to prove that the act is intended by management to R/I/C.
So the Court has said that, applying the totality of conduct doctrine it
may be shown that mgt. is guilty of ULP even if the attempt was
unsuccessful.
But what if management was really in good faith in doing
such act? The good faith defense is available to mgt. and it is
incumbent upon management to establish this. Also, the good faith
defense is available whether or not the act created an adverse effect.
For example, there is a declaration of strike. Then management
announces an across the board wage increase to be released a day
before the strike. The act of releasing the bonus will produce an
evil effect many employees will not go to the strike. A happy
employee will not do such a thing! On the outset it seems that
management is guilty of ULP. But management may show that it is
in good faith. For instance, that the bonus was actually approved and
specific date for release was set in a Board Resolution a year ago,
and that it was coincidental that the intended date of release was the
day before the strike. Hence, the good faith or bad faith of the
employer should be considered.
Since ULP is illegal, no management employee will do it
blatantly, thats why it is usually subjective. Thats why we must
consider all possible aspects, and even go into managements mind to
determine whether ULP or not..
Now, if the closure of a company is questioned whether it is
done in good faith or bad faith, the issue is usually resolved in favor
of labor. For purposes of the bar, the theoretical principle of
resolving all doubts in favor of labor is a good theory to be applied,
even though the opposite is what happens in reality. But since the bar
is a theoretical exam, then apply the theory .
ULP is a violation of the right to self-organization. There is
no doubt about that. But looking at the subparagraphs of Art. 248,
specifically subpar. (f), can it apply to non-union members? Can it
apply when it is not related to union activity issues? The case of

Mabeza clarifies that. As the Court held there, even without any
union or union-organizing activity, the employer CAN commit ULP.
For instance, is when an employee is dismissed because he asserts
his rights. Art. 248 aims to cover any threat of preventing the start of
self-organizing activities, specifically when the employees are on the
start of a consciousness as to their rights and take initial steps to
assert these rights. The Court considered these ULP, because these
were acts of nipping the bud. The Mabeza case harmonizes/relates
Art. 248 (f) with 248 (a). Hence, (a) also encompasses (f) = ULP.
Now, Art 248 (f) applies only when the employee testifies
against the employer, unless he is dismissed for refusing to testify in
favor of management.
Is the enumeration under Art. 248 exclusive? Actually, it is
immaterial to say so. Because of the all-encompassing proviso of 248
(a). Can (a) then be left alone as a definition of ULP? Yes! The other
subparagraphs are illustrations of (a). However, the other
subparagraphs are good illustrations, to give us a basis for conclusion
that the specifically stated act is ULP, which is hard to determine
looking at (a) alone. (a) is too broad. So if the act does not fall under
(b) (i), but may still fall under (a), it is considered an act of ULP.

POST-MIDTERMS
REVIEW OF THE MIDTERMS QUESTIONS:
Last question
The CBA is not registered hence the legal personality of the
union is extinguished. But the CBA is effective even without the
exclusive bargaining agent. The legal personality of the unionexclusive bargaining agent has nothing to do with the effectivity of
the CBA. The provision in the Omnibus Rules must be followed
strictly. So, in this case, since there is no exclusive bargaining
agent/representative to act in behalf of the employees, the employees
must take into their own hands the necessary measures to enact the

71

CBA provisions. For instance, when they seek to file a ULP case
against the employer for nonobservance of the CBAs economic
provisions, they must do so through a class suit with each employee
in the bargaining unit made a party. They cannot use the employers
act as a ground for strike either, because only a legitimate labor
union may conduct a strike.
What can the local/chapter do once the mother union loses
its personality? They can register as an independent union to acquire
legitimate personality. But prior to issuance of the certificate of
registration, the union has no legitimate personality. Thats why the
Rules give that leeway period for the local/chapter to register as an
independent union when the mother union loses its legal personality.
Question 1
My intended answer is its not ULP. It is merely a correction
of an unjust situation. Can you take it to punish the employer for
that? The intention may have been clear that employer wanted to
avoid the formation of a union. From a business perspective, the
formation of a union is costly. The only question at this point is
should the employer be punished for the correction of a wrong
situation, even though the deepest intent was to avoid any possibility
of formation of a union.

By denying the employee the existence of the er-ee

relationship, the employer excludes them from the coverage of the
CBA on such pretext, that makes a case for ULP. So the labor-only
contracting issue will make a case for ULP. Thats Alhambra
Industries vs. CIR.
Even if the contractor exercises full control but it does not
have enough capital or equipment, there is still labor-only
contracting. The contractor is merely an agent of the principal, thus
the control of the contractor should be considered as exercising
control in behalf of the principal.
Is the question of labor-only contracting material to order
payment of wages in a case for illegal dismissal? No because the
principal is always liable for nonpayment of wages.
Question 4
The Vanessa case The contract is an ambiguous contract,
hence she should be considered a regular employee.
The project ee turned into an accounting clerk under a prob.
Contract There is no rehiring. She is not considered a regular
employee. The rehiring is not for another project but for a regular
position under a probationary contract. Maraguinot does not apply.

Essentially ULP is a factual question. The more defensible

position in this case is that the employers act was an act done in
good faith. It is not a clear interference of the right to selforganization. In Mabeza, the employer committed something wrong
against the employee. In this question, nothing wrong was done
against the employees. So I am not saying that Mabeza is not
applicable. Its an entirely different factual situation. What is looked
into is the act complained of as ULP, not the general business desire
not to have a union, which is most often the sentiment of any
employer. In this question, there is no clear cut case for ULP if what
is used is the act in question.
Question 3

72

V. RIGHT TO COLLECTIVE BARGAINING

A. DUTY TO BARGAIN COLLECTIVELY
LABOR CODE
ART. 250. Procedure in collective bargaining. The
following procedures shall be observed in collective
bargaining:
(a)

When a party desires to negotiate an agreement, it

shall serve a written notice upon the other party with
a statement of its proposals. The other party shall
make a reply thereto not later than ten (10) calendar
days from receipt of such notice;

(b)

Should differences arise on the basis of such notice

and reply, either party may request for a conference
which shall begin not later than ten (10) calendar days
from the date of request;

(c)

If the dispute is not settled, the Board shall intervene

upon request of either or both parties or at its own
initiative and immediately call the parties to
conciliation meetings. The Board shall have the power
to issue subpoenas requiring the attendance of the
parties to such meetings. It shall be the duty of the
parties to participate fully and promptly in the
conciliation meetings the Board may call;

(d)

(e)

During the conciliation proceedings in the Board, the

parties are prohibited from doing any act which may
disrupt or impede the early settlement of the disputes;
and
The Board shall exert all efforts to settle disputes
amicably and encourage the parties to submit their
case to a voluntary arbitrator.

ART. 251. Duty to bargain collectively in the absence

of collective bargaining agreements. In the absence

of an agreement or other voluntary arrangement providing

for a more expeditious manner of collective bargaining, it
shall be the duty of the employer and the representatives of
the employees to bargain collectively in accordance with the
provisions of this Code.
ART. 252. Meaning of duty to bargain collectively.
The duty to bargain collectively means:
the performance of a mutual obligation
to meet and convene promptly and expeditiously in good
faith
for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms
and conditions of employment
including proposals for adjusting any grievances or
questions arising under such agreement and executing a
contract incorporating such agreements if requested by
either party,

but such duty does not compel any party to agree to a

proposal or to make any concession.
ART. 253.
Duty to bargain collectively when there
exists a collective bargaining agreement. When
there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall
terminate or modify such agreement during its lifetime.
However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days
prior to its expiration date.
It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the term
and conditions of the existing agreement during the 60-day
period and/or until a new agreement is reached by the
parties.
ART. 253-A. Terms of a collective bargaining
agreement. Any collective bargaining agreement that
the parties may enter into shall, insofar as the

73

representation aspect is concerned, be for a term of five (5)

years. No petition questioning the majority status of the
incumbent bargaining agewhall agree on the duration of
retroactivity thereof.
In case of a deadlock in the renegotiation of the
collective bargaining agreement, the parties may exercise
their rights under this Code.
ART. 254.
Injunction prohibited. No temporary or
permanent injunction or restraining order in any case
involving or growing out of labor disputes shall be issued by
any court or other entity, except as otherwise provided in
Art.s 218 and 264 of this Code.

LABOR CODE
ART. 231.
Registry of unions and file of collective
agreements.
The Bureau shall keep a registry of
legitimate labor organizations.
The Bureau shall also maintain a file of
all collective bargaining agreements
and other related agreements
and records of settlement of labor disputes,
and copies of orders, and decisions of voluntary arbitrators.
The file shall be open and accessible
to interested parties
under conditions prescribed by the Secretary of Labor and
Employment,
provided that no specific information submitted in confidence
shall be disclosed unless:
- authorized by the Secretary,
- or when it is at issue in any judicial litigation
-or when public int\erest or national security so requires.

Within thirty (30) days from the execution of a collective bargaining

agreement,
the parties shall submit copies of the same directly to the Bureau
or the Regional Offices of the Department of Labor and
Employment for registration ,
accompanied with
- verified proofs of its posting in two conspicuous places in the
place of work
- and ratification by the majority of all the workers in the
bargaining unit.
The Bureau or Regional Offices shall
act upon the application for registration of such collective
bargaining agreement within five (5) calendar days from receipt
thereof.
The Regional Offices shall furnish the Bureau with a copy of the
collective bargaining agreement within five (5) days from its
submission.
The Bureau or Regional Office shall assess the employer for
every collective bargaining agreement a
- registration fee of not less than one thousand pesos
(P1,000.00)
- or in any other amount as may be deemed appropriate and
necessary by the Secretary of Labor and Employment
- for the effective and efficient administration of the voluntary
arbitration program.
- Any amount collected under this provision shall accrue to
the Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or
assist in the publication, of all final decisions, orders and awards of
the Secretary of Labor and Employment, Regional Directors and the
Commission.

74

OMNIBUS RULES, BOOK V AS AMENDED BY D.O. 40

bargaining unit, reported with the Regional Office in

accordance with Rule VII, Section 2 of these Rules.

RULE I
DEFINITION OF TERMS

CASES

Section 1. Definition of Terms.

Duty to Bargain Collectively:

(d) "Bargaining Unit" refers to a group of employees sharing

mutual interests within a given employer unit, comprised of
all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit.

Lakas ng Manggagawang Makabayan v Marcelo Enterprises, 118

SCRA 422
This case involves several issues:

(h) "Certification Election" or "Consent Election" refers to

the process of determining through secret ballot the sole
and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective
bargaining or negotiation. A certification election is ordered
by the Department, while a consent election is voluntarily
agreed upon by the parties, with or without the intervention
by the Department.
(j) "Collective Bargaining Agreement" or "CBA" refers to the
contract between a legitimate labor union and the employer
concerning wages, hours of work, and all other terms and
conditions of employment in a bargaining unit.
(t) "Exclusive Bargaining Representative" refers to a
legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all
the employees in a bargaining unit.
(bbb) "Voluntary Recognition" refers to the process by which
a legitimate labor union is recognized by the employer as
the exclusive bargaining representative or agent in a

When the CBA was about to reach its expiration date,

LAKAS requested for renegotiation with the company and submitted
its proposal. It turns out however that several unions were likewise
demanding for renegotiation. The company, instead of submitting a
counter proposal to LAKAS, informed the union of the existence of
the conflicting demands from the other unions and suggested that the
unions file the necessary complaint in court to finally determine who
is the authorized representative. LAKAS claims that management
refused to bargain with it when it did not submit a counter proposal.
Held: Management did not ignore the demand for collective
bargaining although it did not submit a counter proposal. There
exists in this case a real issue as to representation and managements
suggestion that the unions file the necessary complaint in view of the
fact that there are several unions claiming to represent the employees
does not constitute failure or refusal to bargain.
Because of the companys alleged refusal to bargain, LAKAS staged
a strike.
Held: Where there exists a legitimate issue as to which of several
unions is the legitimate representative of employees, it is ULP for
one of the contending unions to stage a strike and demand that the
employer sit down with it for collective bargaining.

75

The company asked the striking workers to fill up forms on when

they are available for work. The union says this is ULP. The
company says it merely wanted to know when the workers would
show up for work so it can come up with a reasonable working
schedule. It reasons that the two strikes staged by the employees
resulted in the complete paralysis of the companys business and it
cannot just readmit all returning workers in one big force or as each
demanded readmission.
Held: An employer may be justified in requiring a reasonable
scheduling of working hours of returning striking employees and
inquiring into their time availabilities. The Court took judicial
cognizance of the fact that companies whose businesses were
completely paralyzed by major strikes cannot resume full operation
at once.
Not all the striking workers were allowed to return to work.
Held: It should be noted that only those who refused to fill up the
questionnaire were not readmitted. All those who filled up their
respective forms were scheduled for work and were readmitted. The
stoppage of the employees work was not the direct consequence of
the companys act. Their economic loss should not be shifted to the
employer.
LAKAS brought this action in behalf of all employees who were not
allowed to return to work, whether or not they are members of
LAKAS.
Held: A labor union cannot bring an action I behalf of employees
who are members of another union even if said employees signed the
complaint. The proper remedy is to drop the union as party to the
action and place the individual names of the employees instead.
National Union of Restaurant Workers (PTUC) vs. CIR, 10 SCRA
843
On June 9, 1960, a complaint for unfair labor practice was lodged
against the owners of Tres Hermanas Restaurant, particularly Mrs.
Felisa Herrera, on the ground, among others, that respondents

refused to bargain collectively with the complaining union;

respondents made a counter-proposal in the sense that they would
bargain with said union and would accept its demands if the same
would become a company union, and one Martin Briones, and
employee, was separated from the service because he was found to
be the organizer and adviser of the complaining union.
Held: There was no refusal to bargain collectively. The letter sent
by the union to respondents contains certain marks, opposite each
demand, such as a check for those demands to which Mrs. Felisa
Herrera was agreeable, a cross signifying the disapproval of Mrs.
Herrera, and a circle regarding those demands which were left open
for discussion on some future occasion that the parties may deem
convenient. Such markings were made during the discussion of the
demands in the meeting called by respondents on May 3, 1960 at
their restaurant in Quezon City. The court a quo concluded that the
fact that respondent Herrera had agreed to some of the demands
shows that she did not refuse to bargain collectively with the
complaining union.
The inference that respondents did not refuse to bargain collectively
with the complaining union because they accepted some of the
demands while they refused the others even leaving open other
demands for future discussion is correct. The fact is that respondents
did not ignore the letter sent by the union so much so that they called
a meeting to discuss its demands, as already stated elsewhere.
Liberty Flour Mills Employees vs. Liberty Flou Mills, Inc.,
December 29, 1989
The petitioners, after organizing another union filed a certification
election among the rank-in-file employees, are terminated because o
a union shop clause3 in the CBA.
The SC affirmed the decision that such dismissal was valid
since the purpose of self-organization, collective bargaining,
negotiation, and peaceful assembly including the right to strike in
3

A Union Shop Claus in CBA is a clause that requires union membership

in good standing as a requirement for continued employment.

76

accordance with the law will not work if every worker were to
choose his own separate way instead of joining hi co-employees.
Colegio de San Juan de Letran vs. Associatio of Employees and
Faculty of Letran, 340 SCRA 587
Petitioner accused the union officers of bargaining in bad faith before
the National Labor Relations Commission (NLRC). The issue in this
case is whether petitioner is guilty of unfair labor practice by
refusing to bargain with the union when it unilaterally suspended the
ongoing negotiations for a new Collective Bargaining Agreement
(CBA) upon mere information that a petition for certification has
been filed by another legitimate labor organization.
Held: It is noteworthy in Art. 255, it is required that both parties of
the performance of the mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of
negotiating an agreement. Undoubtedly, respondent Association of
Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived
up to this requisite when it presented its proposals for the CBA to
petitioner. On the other hand, petitioner devised ways and means in
order to prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union is
obvious in its failure to make a timely reply to the proposals
presented by the latter. More than a month after the proposals were
submitted by the union, petitioner still had not made any counterproposals. This inaction on the part of petitioner prompted the union
to file its second notice of strike on March 13, 1996. Petitioner could
only offer a feeble explanation that the Board of Trustees had not yet
convened to discuss the matter as its excuse for failing to file its
reply. This is a clear violation of Article 250 of the Labor Code
governing the procedure in collective bargaining
San Miguel Corp. Employees Union-PTGWO v Confesor, 262
SCRA 81

SMC was restructured. Two of its divisions were turned into separate
distinct corporations. The union insists on uniting the employees of
the 2 new corporations into one bargaining unit. The Court ruled that
the employees from the new corporations constituted separate
bargaining units for the following reasons:
1. The workers are employed by two different employers as
a consequence of incorporation (separate juridical
personality)
2. The members of a bargaining unit must have mutual
interests. Considering the spin-off, the companies will
consequently have their respective and distinctive
concerns in terms of nature of work, wages, hours of
work and other conditions of employment.
MERALCO Cases
Facts: A CBA was entered into with a term of 5 years. Nearing its 3 rd
year of effectivity, the parties met to renegotiate. The remaining 2
years of the CBA, which is the subject of the renegotiation in this
case, was for the period 1 December 1995 to 30 November 1997.
MERALCO v Quisumbing, 302 SCRA 173
Nearing the 3rd year of the effectivity of the CBA, the parties met to
renegotiate. Unable to come to an agreement during the
renegotiation, and there existing the imminence of a strike, the
Secretary of Labor assumed jurisdiction over the labor dispute. The
Secretary resolved the issue through an order setting forth the
approved economic demands. The effective date of the Secretarys
order is in question.
Held: The date of effectivity shall be as agreed upon by the parties.
The law requires that a CBA be renegotiated within 3 years from its
execution. If there is no agreement reached within 6 months from the
expiry of the 3 years that follow the execution of the CBA, the law
expressly gives the parties, and not anybody else, the discretion to fix
the effectivity of the agreement. In the absence of a new CBA, the
parties must maintain the status quo and must continue in full force
77

and effect the terms and conditions of the existing agreement until a
new agreement is reached.
MERALCO v Quisumbing, 326 SCRA 172
This is a Motion for Reconsideration of the decision in the
immediately preceding case.
Held: CBA arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such time agreed upon by
both employer and the employees or their union. In the absence of
such agreement, the award shall retroact to the first day after the 6month period following the last day of the CBA, should there be one,
or, in the absence of a CBA, the Secretarys determination of the date
of retroactivity as part of his discretionary powers over arbitral
awards shall control.
MERALCO v Quisumbing, 326 SCRA 172
This is a Motion for Partial Modification of the decision in the
immediately preceding case.
Held: The arbitral award shall retroact to the first day after the 6month period following the expiration of the last day of the CBA.
The CBA in this case expired on 1 December 1997. The first day
after the 6-month period is 1 June 1996. The CBA shall be effective
from 1 June 1996 to 31 May 1998 (effective for 2 years).

Mindanao Terminal and Brokerage Service Inc. v RoldanConfesor, 272 SCRA 161
The signing of the agreement is not determinative of the question
whether the agreement was entered into within the 6 months from the
expiry of the previous agreement. The point of reckoning is the
meeting of the minds. (Marlon: prove meeting of the minds through
the minutes)
Samahang Manggagawa sa Top Form Manufacturing-UWP vs.
NLRC, 7 September 1998
The union claims the benefits of an agreement allegedly entered into
during the negotiation, as per the minutes, but was not incorporated
in the CBA as written.
Held: The union may not validly claim that the proposal embodied
in the minutes of the negotiation forms part of the CBA. The CBA is
the law between the parties and compliance therewith is mandated by
the law.
Note: The minutes is determinative only of the moment when there
was a meeting of the minds. As to what was particularly agreed
upon, it is the CBA as written which shall control.
Rivera vs. Espiritu, 374 SCRA 351

New Pacific Timber & Supply Co. Inc. v NLRC, 328 SCRA 404
Until a new CBA has been executed by and between the parties, they
are duty bound to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement. The
law does not provide for any exception or qualification as to which
of the economic provisions of the existing agreement are to retain
force and effect. Therefore, it must be understood as encompassing
all the terms and conditions in said agreement.
Further, when a CBA is entered into by a union representing the
employees and the employer, even non-member employees are
entitled to the benefits of the agreement.

B. Jurisdictional Requirements:

Kiok Loy vs. NLRC, 141 SCRA 179

78

While it is the mutual obligation of labor and management to bargain

collectively, the employer is not under any legal duty to initiate
negotiation. The mechanics of collective bargaining is set in motion
only when the following jurisdictional pre-conditions are present:

It is the mutual obligation both of the employer and

employee to:
-

meet and convene

promptly and expeditiously

in good faith

negotiate

2. Proof of majority representation; and

the TACOE/ grievance machinery

3. Demand to bargain.

execute a written document (CBA)

When these requisites are present and the company still

refuses to submit a counter-proposal, such refusal, if considered in
relation to the entire bargaining process, may indicate bad faith and
be regarded as ULP. In this case, the court found the company guilty
of ULP where it was shown that it refused to make a counter
proposal, stalled the negotiation by a series of postponements and
non-appearance at the hearings conducted, and unduly delayed the
submission of its financial statements.

respect the CBAnot to terminate or modify the CBA

during its lifetime; contract bar rule

1. Possession of status of majority representation of the

employees representative in accordance with any means of
selection or designation as provided in the Labor Code;

ALU vs. Ferrer-Calleja, 173 SCRA 178

Collective bargaining are set in motion only when the following
jurisdictional preconditions are present, namely:
(1) possession of the status of majority representation by the
employees' representative in accordance with any of the means of
selection and/or designation provided for by the Labor Code;
(2) proof of majority representation; and
(3) a demand to bargain under Article 251, paragraph (a), of the New
Labor Code.

It is an obligation because it is mandatory-it must be done,

otherwise, nonperformance will merit a sanction. A CBA made by
labor may be imposed on management even without negotiations.
Aside from that, management may be found guilty of ULP. Also, the
LLO may exercise its right to strike.
Meet and convene. What does that mean? Meet in person
and face-to-face. The bargaining representative has the primary
obligation to start the bargaining process. How is it started? The
bargaining representative submits a proposal, management submits a
counter-proposal, and then they meet and bargain at the bargaining
table. How does a proposal look like? It is in the form of a draft CBA
containing all the provisions labor wants in the CBA. Management
replies usually by giving a letter saying labors request cannot be
granted. That starts the bargaining process.

DUTY TO BARGAIN COLLECTIVELY

Each side is represented by a panel, one for the bargaining

agent, and for management, to bargain collectively. If they fail to
meet within ten days, is that a violation of the right? The law says to
meet promptly and expeditiously. If not, it will be a violation of the
duty. It depends on the circumstances for delay. If management failed
to submit a counter-proposal on time, or meet on time, and has no
good reason to do so, then it may be a violation.

You must know the elements of the duty to bargain

collectively by heart! What is the duty to bargain collectively?

Now, if they have met promptly and expeditiously, but not in

good faith, it may be a violation. For instance, it manifests bad faith

LECTURE

79

when the management sends as panel people who dont know

anything about bargaining, not the usual people who represent
management in collective bargaining. Thats why the union usually
asks for authorization from the management, that will ensure the
union that whatever the panel says will bind management.

protection, because it will ensure industrial peace for at least five

years.

Example of bad faith management comes to the bargaining

table and announces deadlock na tayo on the first day of
negotiations.

For example: CBA entered into on January 25, 2002. It will

be effective until January 24, 2007 (representation) and January 24,
2005 (non-representation provisions). However, the parties may
validly agree that the non-representation provisions be negotiated on
January 24, 2004. The law says the other provisions shall be
renegotiated not later than three years. Hence, they may negotiate on
the second year.

Convening promptly and expeditiously in good faith to

negotiate. On the first day, the union usually asks for the moon.
Management usually digs deep deep down. Then each panel adjusts
its demands and try to meet in the middle. Hopefully they end up
both happy, because they get into a position which is better than the
minimum demand they were willing to settle on. Sometimes they do,
oftentimes they dont-which leads to a deadlock. Thats how
negotiations happen. A lot has to do with psychological warfare.
Remember the Labor Code states that there is no compulsion
to agree to a proposal or submit to a concession. The obligation to
negotiate is merely an obligation to be flexible and not to give in
always to the demand of the other parties. The Code states the
negotiations must be as to the TACOE and grievance machinery.
These two factors are the coverage of the obligations. These are the
mandatory negotiable provisions. Matters over and above that is no
longer an obligation but the parties may negotiate on such matters if
they wish to do so, though it wouldnt be a violation of the duty if
not tackled.
Written agreement. Negotiations must end with a written
agreement which should be registered. Registration is necessary to
protect the local/chapters legal personality. Also, it is to protect the
status of the union as the sole and exclusive bargaining agent which
status cannot be challenged until after the lapse of 4 years and 300
days. It may be challenged only within the 60-day freedom period.
Otherwise, rival unions may file a petition for certification election
anytime. Actually, management itself may ask for registration for the
CBA. In fact, it is mgt. who pays the filing fees. It is also for mgt.s

What is the term of a CBA? Five years as to representation

and three years as to non-representation provisions are concerned.
The three-year period may be shortened by agreement of the parties.

*Keep in mind that the duty to renegotiate is different from

the effectivity of the economic provisions of the CBA. The law does
not limit its effectivity, unlike the representation status which the law
says it must be for a term of five years. So, the CBA may say the
economic provisions shall be valid for 5 years, or any number of
years, but the union has to demand renegotiation within the three
years, anytime within the three year period.
Now, as long as management can comply with the three-year
deadline, then they are not forced to negotiate earlier than three
years. What is the practical implication of that? If the union makes a
demand one year after CBAs effectivity, management can ignore
that and such act is not ULP. Management still has the remaining two
years to comply and mgt. can opt not to renegotiate at that point. It
would be reasonable however to demand renegotiation when nearing
the end of the third year. It is difficult to peg a cut-off point. It
depends on the circumstances and the possible reasons of
management. But if the parties choose to renegotiate one year after,
they may do so - there is no prohibition, but neither is it a duty.
There is no ULP at this point.
But can the parties renegotiate one year after the effectivity
of the CBA? Yes. There is no prohibition. Can they renegotiate every
year after that? Yes, there is no prohibition. Assuming they
renegotiated the non-representation CBA provisions on Jan. 24,

80

2003- the first year of the CBA. Will that be good until January 24,
2007? Since it is a renegotiation, it is a new agreement. It will be up
to the parties if they choose to make the new agreement subsist up to
January 24, 2007. It is entirely up to them to decide the term of
effectivity of the CBAs non-representation provisions. BUT despite
whatever term they agree upon, they have to renegotiate in by
January 25, 2006 within three years from the last renegotiation and
execution of the CBA.
The overlapping of the terms in representation and nonrepresentation is quite complicated. In the end of the fifth year, there
may be a new bargaining representative, but the non-representation
provisions may have been extended beyond the fifth year. The
overlapping according to jurisprudence is to promote industrial
peace. The new representative must respect the non-representation
provisions. So, from 1997 to 1998, it is considered the trial period,
an adjustment period. The new agent cannot demand negotiations
kasi may one year pa. Mgt. wont negotiate as well. But this scenario
does not promote industrial peace. The new agent of course is a rival
union and wont be happy with the CBA entered into between
management and the old agent who is a rival union. In fact the CBA
is always an issue in certification electionsPalpak naman ang
CBA na yan.
Thats why unions/bargaining agents seek to avoid this
scenario-sinasabay nila ang effectivity ng non-representation
provisions sa representation aspect ng CBA. Ginagawang parehong 5
years. In fact I have not seen a CBA that has extended its nonrepresentation aspects beyond five years. On managements side,
why will they agree to extend the term of the CBA beyond the
authority of the bargaining agent?
Now, the parties may agree that the modified provisions take
effect until 2009-even beyond the period of representation. Then the
bargaining agents status is challenged by a rival union. Such CBA
will still be effective, and if the rival union wins as the new
bargaining agent, they have to respect the CBA. The new agent can
demand renegotiation but it may take effect only after 2009.

The reckoning point for the three year period for

renegotiation is the last day of the last negotiations. That should be
the interpretiation of execution of the CBA. Because when you
renegotiate, you are executing new provisions.
My interpretation of renegotiation is that the parties have to
reopen negotiations within three years, not that they have to agree on
new provisions within three years. What is the reason for the three
year rule? Many economic developments can occur within three
years. That makes a need to revisit the positions of the parties, and to
fix the CBA to favor labor. I doubt the CBA can ever be adjusted to
something lower than what labor is already receiving. That would be
a violation of the non-diminution rule. Such benefits already enjoyed
can only be improved, not diminished in the CBA.
Many CBAs have annual wage increase plans. So for
instance, year 1=P100, year 2=P200, year 3=P300, year 4=P400 and
year 5=P500. By the third year, they entered into negotiations, they
can modify the agreement as to the fourth and fifth year since it has
not yet been given. For instance, the company was hit with the
economic recession, and so the parties agree year four and five=P100
and P200 instead of the original agreement. Its a valid agreement. It
does not go against the non-diminution of benefits rule because it has
not yet been given to the workers. It is something the workers do not
yet enjoy.
When the parties enter into a binding agreement to
renegotiate one year after, but both mutually agree to defer it to
another year, that would be a valid agreement. On the other hand, if
one of the parties refuse to meet one year later as originally agreed
upon, the other party may declare deadlock.
Now, when the parties renegotiate, then they agree not to
change anything, that is a valid renegotiation. The three years to next
renegotiate shall be reckoned from the execution of the CBA
agreeing not to change anything in the old CBA.
If there is no renegotiation within the three years, there is no
duty to negotiate anymore. The three year period lapses the union
loses the right to demand renegotiation. This is much like the rule in

81

Obligations and Contracts. As soon as one party demands, the other

incurs in delay. Hence if there is no demand, there is no delay.
Management is not incurring in delay if Labor does not demand.
there is no duty If it is not demanded, and the three year period
lapsed, there is no duty to negotiate anymore. And such act is not
ULP
Now for example January 24, 2002, expiration of the CBA.
The union/bargaining agent was not changed. Starting February 1,
negotiations started, and ended September 1, 2002. When is the
agreement of the parties reckoned? From the meeting of the minds,
not at the time of signing. Meeting of the minds is when the parties
come to an agreement. In the absence of formal signing, this is
proven by the very provisions of the CBA. Remember too that only
the written provisions of the CBA may be enforced. If the agreed
provisions (while at the negotiating table) are not in the written
CBA, sorry na lang!! So the panel must read the written CBA before
agreeing to be bound by it. But what usually happens is minamadali
ang signing para makuha agad ng union ang signing bonus.
Management takes advantage of that by removing some provisions in
the CBA formerly agreed upon.
When is the effectivity of the new CBA? Two scenarios:
1. If the meeting of the minds happened within 6 months from
expiration of the old CBA. So if they entered into the agreement
by July 24, 2002 the new CBA will take effect, will retroact to
January 25, 2002. This is automatically operative by law. No
agreement between the parties is needed.
2. If the meeting of the minds happened beyond 6 months, like the
above scenario, then the parties will determine when the new
CBA will take effect. There is no automatic retroactivity. Such
will happen only if the parties agree to it. Now, in the absence of
any agreement,
For instance, nag-deadlock. Nag-strike. The Sec. Of Labor
assumed jurisdiction and imposed a decision-a CBA, on the parties.
He did not state a date when the new CBA shall be effective. As
ruled in the three Meralco cases:

1. For example the decision became final June 12, 2002-within the
6 month period. In this case the law automatically operates so the
new CBA retroacts to the date of the old CBAs expiry.
2. If the decision became final beyond the six month period, it
retroacts automatically to the end of the six month period.
Generally, the Secretary of Labor can decree retroactivity. But
the Court said the retroactivity should only operate the day after
the six month period. So the Secretary can make it retroact only
starting July 25, 2002 or beyond such date. This ruling of the
Court misinterpreted Art. 253-A, thinking that when the law
talks of such date in the last phrase of the Code, refers to the
six month period. Erroneous! Such date refers to the date of
expiry of the old CBA. So I believe there is no reason for the
Court to limit the Secretarys power.
The first decision was the good decision-it was congruent
with the codal provision stating that only the parties can agree to
retroactivity, so the Secretary cannot decree retroactivity if the
parties do not as well. But this was reversed in the second Meralco
case. This case has no basis to say that the decision retroacts
automatically to the end of the six month period. The hard part is an
arbitral award can supplant the parties agreement insofar as
retroactivity is concerned. So the Secretary can decree retroactivity
but his freedom to choose the period when it retroacts is limited by
the decision.
C. BARGAINING UNIT
OMNIBUS RULES, BOOK V AS AMENDED BY D.O. 40
(d) "Bargaining Unit" refers to a group of employees sharing
mutual interests within a given employer unit, comprised of
all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit.

82

(t) "Exclusive Bargaining Representative" refers to a

legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all
the employees in a bargaining unit.

CASES
San Miguel Corporation v Laguesma, 236 SCRA 595
The regular sales personnel (55 in all) of Magnolia Dairy Products,
employed in different sales offices in the North Luzon Area, wish to
form one bargaining unit. The company insists that each of the sales
offices in should be considered as a separate bargaining unit so that
negotiations would be more expeditious.
Held: The Court allowed all the employees to be part of a single
bargaining unit saying that it is not the convenience of the employer
that constituted the determinative factor in forming an appropriate
bargaining unit (and 55 na nga lang sila).
The fundamental factors in determining the appropriate
collective bargaining unit are:
1. The will of the employees (Globe Doctrine)
2. Affinity and unity of the employees interest (Substantial
Mutual Interest Rule)
3. Prior collective bargaining history
4. Similarity of employment status
However, the court has ruled that prior collective
bargaining history is neither decisive nor conclusive in the
determination of what constitutes an appropriate bargaining unit.
The test of grouping is commonality or mutuality of interest.
University of the Philippines vs. Ferrer-Calleja, 211 SCRA 451
A "bargaining unit" has been defined as a group of employees of a
given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees,

consistent with equity to the employer, indicate to be the best suited

to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.
Our labor laws do not however provide the criteria for
determining the proper collective bargaining unit. Apart from the
single descriptive word "appropriate," in Section 12 of the Industrial
Peace Act which was subsequently incorporated into the Labor Code
with minor changes, no specific guide for determining the proper
collective bargaining unit can be found in the statutes. Case law
fortunately furnishes some guidelines.
The basic test in determining the appropriate bargaining unit
is that a unit, to be appropriate, must affect a grouping of employees
who have substantial, mutual interests in wages, hours, working
conditions and other subjects of collective bargaining. The Court
further explained that "(t)he test of the grouping is community or
mutuality of interests. And this is so because the basic test of an
asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights.
Golden Farms vs. Secretary, 234 SCRA 517
In the case at bench, the evidence established that the monthly paid
rank-and-file employees of petitioner primarily perform
administrative or clerical work. In contradistinction, the petitioner's
daily paid rank-and-file employees mainly work in the cultivation of
bananas in the fields. It is crystal clear the monthly paid rank-andfile employees of petitioner have very little in common with its daily
paid rank-and-file employees in terms of duties and obligations,
working conditions, salary rates, and skills. To be sure, the said
monthly paid rank-and-file employees have even been excluded from
the bargaining unit of the daily paid rank-and-file employees. This
dissimilarity of interests warrants the formation of a separate and
distinct bargaining unit for the monthly paid rank-and-file employees
of the petitioner. To rule otherwise would deny this distinct class of
employees the right to self-organization for purposes of collective
bargaining. Without the shield of an organization, it will also expose

83

them to the exploitations of management. So we held in University

of the Philippines vs. Ferrer-Calleja, where we sanctioned the
formation of two (2) separate bargaining units within the
establishment, viz: "[T]he dichotomy of interests, the dissimilarity in
the nature of the work and duties as well as in the compensation and
working conditions of the academic and non-academic personal
dictate the separation of these two categories of employees for
purposes of collective bargaining. The formation of two separate
bargaining units, the first consisting of the rank-and-file nonacademic employees, and the second, of the rank-and-file academic
employees, is the set-up that will best assure to all the employees the
exercise of their collective bargaining rights.
Mechanical Department Labor Union Sa PNR vs. CIR, 24 SCRA
925
Under the "Globe doctrine" (Globe Machine & Stamping Co., 3
NLRB 294) applied in Democratic Labor Union vs. Cebu
Stevedoring Co., L-10321, 28 February 1958, bargaining units may
be formed through separation of new units from existing ones
whenever plebiscites had shown the workers' desire to have their
own representatives. In the case at bar, the appeal of the Mechanical
Department Labor Union, questioning the applicability under the
circumstances of the Globe doctrine of considering the will of the
employees in determining what union should represent them, is
premature, since the result of the ordered plebiscite among the
workers of the Caloocan Shops (who desire to form a new bargaining
unit) may be adverse to the formation of a separate unit, in which
event, all questions raised in this case would be rendered moot and
academic.
Held: Appellant contends that the application of the "Globe
doctrine" is not warranted because the workers of the Caloocan
Shops (one of the four main divisions or units of the Mechanical
Department of the PNR) do not require different skills from the rest
of the workers in the Mechanical Department of the Railway
Company. This question is primarily one of fact. The Industrial Court
has found that there is a basic difference, in that those in the

Caloocan shops not only have a community of interest and working

conditions but perform major repairs of railway rolling stock, using
heavy equipment and machineries found in said ships, while the
others only perform minor repairs. It is easy to understand, therefore,
that the workers in the Caloocan shops require special skill in the use
of heavy equipment and machinery sufficient to set them apart from
the rest of the workers. In addition, the record shows that the
collective bargaining agreements negotiated by the appellant union
have been in existence for more than two (2) years; hence, such
agreements can not constitute a bar to the determination, by proper
elections, of a new bargaining representative.
Philippine Scout Veterans Security and Investigation Agency vs.
Secretary, 224 SCRA 682
Under the amendment of Art. 287 by R.A. 7641 on 7 January 1993,
respondent Federico appears to be entitled to retirement pay. But can
he avail himself of this provision considering that it took effect
subsequent to his filing of the complaint? This brings to mind the
principle reiterated in Allied that police power legislation intended to
promote public welfare applies to existing contracts and can
therefore be given retroactive effect. Actually, the case at bench no
longer presents a novel issue.
The issue that had to be resolved next was whether to grant
retirement benefits by applying retroactively Art. 287 as amended by
R.A. 7641. At this point we emphasized the circumstances, based on
Oro, that must concur before the law could be given retroactive
effect: (a) the claimant for retirement benefits was still the employee
of the employer at the time the statute took effect; and, (b) the
claimant was in compliance with the requirements for eligibility
under the statute for such retirement benefits. It was quite clear in
CJC, as held by the Labor Arbiter and the NLRC, that private
respondents had ceased to be employees of petitioner by reason of
their voluntary resignation before the statute went into effect.
Moreover, at the time they stopped working for petitioner, they had
not yet reached the age of sixty (60) years. The end result was that
they were neither entitled to retirement benefits. Nevertheless, the

84

Court stressed that there was nothing to prevent the employer from
voluntarily giving the employees some financial assistance on an ex
gratia basis. Returning to the present case, although the second
circumstance exists, respondent Federico severed his employment
relationship with petitioners when he tendered his "letter of
resignation" on 16 September 1991 or prior to the effectivity of R.A.
7641. In fact, the issue before public respondents was not the
existence of employee-employer relationship between the parties;
rather, considering the cessation of his service, whether he was
entitled to monetary awards. On the authority of CJC, private
respondent therefore cannot seek the beneficial provision of R.A.
7641 and must settle for the financial assistance of P10,000.00
offered by petitioners and directed to be released to him by the Labor
Arbiter.
International School Alliance of Educators v Quisumbing, 333
SCRA 13
The International School employs 2 kinds of teachers: foreign hires
and local hires. The foreign hires enjoy greater benefits than local
hires. The issue is whether local hires and foreign hires could be part
of a single bargaining unit.
Held: Foreign hires do not belong to the same bargaining unit as
local hires. It does not appear that foreign hires have indicated their
intention to be grouped with local hires. The collective bargaining
history of the school also shows that these groups were always
treated separately. Foreign hires have limited tenure; local hires have
security of tenure. Although foreign hires perform similar functions
under the same working conditions as the local hires, they are
accorded certain benefits not accorded to local hires. These benefits,
such as housing, transportation, shipping costs, taxes and home leave
travel allowance, are reasonably related to their status as foreign
hires, and justify their exclusion from the bargaining unit.
De La Salle University v De La Salle University Employees
Association, 330 SCRA 363

The employees of DLSU and the College of St. Benilde wish to form
one bargaining unit.
Held: DLSU and CSB, although affiliated, are two separate juridical
personalities. The employees of the two schools are effectively
employees of two different employers and thus cannot form one
bargaining unit. There is no evidence in this case to justify the
piercing of the veil of corporate fiction.
D. BARGAINING UNIT, BARGAINING
CERTIFICATION ELECTION PROCEEDINGS

AGENT

AND

LABOR CODE
ART. 255.
Exclusive bargaining representation and
workers participation in policy and decision-making.
The labor organization designated or selected by the
majority of the employees in an appropriate collective
bargaining unit shall be the exclusive representative of the
employee in such unit for the purpose of collective
bargaining. However, an individual employee or group of
employees shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary notwithstanding,
workers shall have the right, subject to such rules and
regulations as the Secretary of Labor and Employment may
promulgate, to participate in policy and decision-making
processes of the establishment where they are employed
insofar as said processes will directly affect their rights,
benefits and welfare.
For this purpose, workers and employers may form
labor-management
councils:
Provided,
That
the
representatives of the workers in such labor-management
councils shall be elected by at least the majority of all
employees in said establishment.

85

ART. 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:
1) the written consent
2) of at least twenty-five percent (25%)
3) of all the employees in the appropriate bargaining unit,
to ascertain the will of the employees in the
appropriate bargaining unit.
4) 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
1) which provides for three or more choices
2) results in no choice receiving a majority of the valid
votes cast,
3) a run-off election shall be conducted between the
labor unions receiving the two highest number of
votes:
4) Provided, That the total number of votes for all
contending unions is at least fifty percent (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 is filed.
ART. 257.
Petitions in unorganized establishments.
In any establishment where there is no certified
bargaining agent, a certification election shall automatically

be conducted by the Med-Arbiter upon the filing of a petition

by a legitimate labor organization.
ART. 258.
When an employer may file petition.
When requested to bargain collectively, an employer may
petition the Bureau for an election. If there is no existing
certified collective bargaining agreement in the unit, the
Bureau shall, after hearing, order a certification election.
All certification cases shall be decided within 20
working days.
The Bureau shall conduct a certification election within 20
days in accordance with the rules and regulations prescribed
by the Secretary of Labor and Employment.
ART. 259.
Appeal from certification election orders.
Any party to an election may appeal the order or results
of the election as determined by the Med-Arbiter directly to
the Secretary of Labor and Employment on the ground that
the rules and regulations or parts thereof established by the
Secretary of Labor and Employment for the conduct of the
election have been violated. Such appeal shall be decided
within fifteen (15) calendar days.

OMNIBUS RULES, BOOK V AS AMENDED BY D.O. 40

RULE 1
SEC. 1. Definition of Terms
(d) "Bargaining Unit" refers to a group of employees sharing
mutual interests within a given employer unit, comprised of
all or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit.
(h) "Certification Election" or "Consent Election" refers to
the process of determining through secret ballot the sole
and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective

86

bargaining or negotiation. A certification election is ordered

by the Department, while a consent election is voluntarily
agreed upon by the parties, with or without the intervention
by the Department.
(j) "Collective Bargaining Agreement" or "CBA" refers to the
contract between a legitimate labor union and the employer
concerning wages, hours of work, and all other terms and
conditions of employment in a bargaining unit.
(o) "Election Officer" refers to an officer of the Bureau or
Labor Relations Division in the Regional Office authorized to
conduct certification elections, election of union officers and
other forms of elections and referenda in accordance with
Rule XII, Sections 2-5 of these Rules.
(p) "Election Proceedings" refer to the period during a
certification election, consent or run-off election and
election of union officers, starting from the opening to the
closing of the polls, including the counting, tabulation and
consolidation of votes, but excluding the period for the final
determination of the challenged votes and the canvass
thereof.
(q) "Eligible Voter" refers to a voter belonging to the
appropriate bargaining unit that is the subject of a petition
for certification election.
(t) "Exclusive Bargaining Representative" refers to a
legitimate labor union duly recognized or certified as the
sole and exclusive bargaining representative or agent of all
the employees in a bargaining unit.
(ll) "Organized Establishment" refers to an enterprise where
there exists a recognized or certified sole and exclusive
bargaining agent.

(ss) "Run-off Election" refers to an election between the

labor unions receiving the two (2) highest number of votes
in a certification or consent election with three (3) or more
choices, where such a certified or consent results in none of
the three (3) or more choices receiving the majority of the
valid votes cast; provided that the total number of votes for
all contending unions is at least fifty percent (50%) of the
number of votes cast.
(bbb) "Voluntary Recognition" refers to the process by which
a legitimate labor union is recognized by the employer as
the exclusive bargaining representative or agent in a
bargaining unit, reported with the Regional Office in
accordance with Rule VII, Section 2 of these Rules.

RULE VI
DETERMINATION OF REPRESENTATION STATUS
Section 1. Policy. - It is the policy of the State to promote free trade
unionism through expeditious procedures governing the choice of an
exclusive bargaining agent. The determination of such exclusive
bargaining agent is a non-litigious proceeding and, as far as
practicable, shall be free from technicalities of law and procedure,
provided only that in every case, the exclusive bargaining agent
enjoys the majority support of all the employees in the bargaining
unit.
Section 2. Determination of representation status; modes. - The
determination of an exclusive bargaining agent shall be through
voluntary recognition in cases where there is only one legitimate
labor organization operating within the bargaining unit, or through
certification, run-off or consent election as provided in these Rules.

RULE VII

87

VOLUNTARY RECOGNITION
Section 1. When and where to file. - In unorganized
establishments with only one legitimate labor organization, the
employer may voluntarily recognize the representation status of such
a union. Within thirty (30) days from such recognition, the employer
and union shall submit a notice of voluntary recognition with the
Regional Office which issued the recognized labor union's certificate
of registration or certificate of creation of a chartered local.
Section 2. Requirements for voluntary recognition. - The notice
of voluntary recognition shall be accompanied by the original copy
and two (2) duplicate copies of the following documents:
(a) a joint statement under oath of voluntary recognition attesting to
the fact of voluntary recognition;
(b) certificate of posting of the joint statement of voluntary recognition
for fifteen (15) consecutive days in at least two (2) conspicuous
places in the establishment or bargaining unit where the union seeks
to operate;
(c) the approximate number of employees in the bargaining unit,
accompanied by the names of those who support the voluntary
recognition comprising at least a majority of the members of the
bargaining unit; and
(d) a statement that the labor union is the only legitimate labor
organization operating within the bargaining unit.
All accompanying documents of the notice for voluntary recognition
shall be certified under oath by the employer representative and
president of the recognized labor union.
Section 3. Action on the Notice. - Where the notice of voluntary
recognition is sufficient in form, number and substance and where
there is no other registered labor union operating within the
bargaining unit concerned, the Regional Office, through the Labor

Relations Division shall, within ten (10) days from receipt of the
notice, record the fact of voluntary recognition in its roster of
legitimate labor unions and notify the labor union concerned.
Where the notice of voluntary recognition is insufficient in form,
number and substance, the Regional Office shall, within the same
period, notify the labor union of its findings and advise it to comply
with the necessary requirements. Where neither the employer nor
the labor union failed to complete the requirements for voluntary
recognition under Section 2 of this Rule within thirty (30) days from
receipt of the advisory, the Regional Office shall return the notice for
voluntary recognition together with all its accompanying documents
without prejudice to its re-submission.
Section 4. Effect of recording of fact of voluntary recognition. From the time of recording of voluntary recognition, the recognized
labor union shall enjoy the rights, privileges and obligations of an
existing bargaining agent of all the employees in the bargaining unit.
Entry of voluntary recognition shall bar the filing of a petition for
certification election by any labor organization for a period of one (1)
year from the date of entry of voluntary recognition. Upon expiration
of this one-year period, any legitimate labor organization may file a
petition for certification election in the same bargaining unit
represented by the voluntarily recognized union, unless a collective
bargaining agreement between the employer and voluntarily
recognized labor union was executed and registered with the
Regional Office in accordance with Rule XVII of these Rules.

RULE VIII
CERTIFICATION ELECTION

Section 1. Who may file. -Any legitimate labor organization may file
a petition for certification election.

88

When requested to bargain collectively, an employer may file a

petition for certification election with the Regional Office. If there is no
existing registered collective bargaining agreement in the bargaining
unit, the Regional Office shall, after hearing, order the conduct of a
certification election.
Section 2. Where to file. - A petition for certification election shall be
filed with the Regional Office which issued the petitioning union's
certificate of registration/certificate of creation of chartered local.
The petition shall be heard and resolved by the Med-Arbiter.
Where two or more petitions involving the same bargaining unit are
filed in one Regional Office, the same shall be automatically
consolidated with the Med-Arbiter who first acquired jurisdiction.
Where the petitions are filed in different Regional Offices, the
Regional Office in which the petition was first filed shall exclude all
others; in which case, the latter shall indorse the petition to the
former for consolidation.
Section 3. When to file. - A petition for certification election may be
filed anytime, except:

arbitration or had become the subject of a valid notice of strike or

lockout;
(d) when a collective bargaining agreement between the employer
and a duly recognized or certified bargaining agent has been
registered in accordance with Article 231 of the Labor Code. Where
such collective bargaining agreement is registered, the petition may
be filed only within sixty (60) days prior to its expiry.
Section 4. Form and contents of petition. - The petition shall be in
writing, verified under oath by the president of petitioning labor
organization. Where the petition is filed by a federation or national
union, it shall verified under oath by the president or its duly
authorized representative. The petition shall contain the following:
(a) the name of petitioner, its address, and affiliation if appropriate,
the date and number of its certificate of registration. If the petition is
filed by a federation or national union, the date and number of the
certificate of registration or certificate of creation of chartered local;
(b) the name, address and nature of employer's business;
(c) the description of the bargaining unit;

(a) when a fact of voluntary recognition has been entered or a valid

certification, consent or run-off election has been conducted within
the bargaining unit within one (1) year prior to the filing of the petition
for certification election. Where an appeal has been filed from the
order of the Med-Arbiter certifying the results of the election, the
running of the one year period shall be suspended until the decision
on the appeal has become final and executory;
(b) when the duly certified union has commenced and sustained
negotiations in good faith with the employer in accordance with
Article 250 of the Labor Code within the one year period referred to
in the immediately preceding paragraph;

(d) the approximate number of employees in the bargaining unit;

(e) the names and addresses of other legitimate labor unions in the
bargaining unit;
(f) a statement indicating any of the following circumstances:
1) that the bargaining unit is unorganized or that
there is no registered collective bargaining
agreement covering the employees in the bargaining
unit;

(c) when a bargaining deadlock to which an incumbent or certified

bargaining agent is a party had been submitted to conciliation or

89

2) if there exists a duly registered collective

bargaining agreement, that the petition is filed within
the sixty-day freedom period of such agreement; or
3) if another union had been previously recognized
voluntarily or certified in a valid certification, consent
or run-off election, that the petition is filed outside
the one-year period from entry of voluntary
recognition or conduct of certification or run-off
election and no appeal is pending thereon.
(g) in an organized establishment, the signature of at least twentyfive percent (25%) of all employees in the appropriate bargaining unit
shall be attached to the petition at the time of its filing; and
(h) other relevant facts.
Section 5. Raffle of the case. - Upon the filing of the petition, the
Regional Director or any of his/her authorized representative shall
allow the party filing the petition to personally determine the MedArbiter assigned to the case by means of a raffle. Where there is only
one Med-Arbiter in the region, the raffle shall be dispensed with and
the petition shall be assigned to him/her.

shall automatically be one of the choices in the certification election

as forced intervenor.
Section 8. Motion for Intervention. - When a petition for
certification election was filed in an organized establishment, any
legitimate labor union other than the incumbent bargaining agent
operating within the bargaining unit may file a motion for intervention
with the Med-Arbiter during the freedom period of the collective
bargaining agreement. The form and contents of the motion shall be
the same as that of a petition for certification election.
In an unorganized establishment, the motion shall be filed at any
time prior to the decision of the Med-Arbiter. The form and contents
of the motion shall likewise be the same as that of a petition for
certification election. The motion for intervention shall be resolved in
the same decision issued in the petition for certification election.
Section 9. Preliminary Conference; Hearing. - The Med-Arbiter
shall conduct a preliminary conference and hearing within ten (10)
days from receipt of the petition to determine the following:
(a) the bargaining unit to be represented;
(b) contending labor unions;

Section 6. Notice of preliminary conference. - Immediately after

the raffle of the case or receipt of the petition, the same shall be
transmitted to the Med-Arbiter, who shall in the same instance
prepare and serve upon the petitioning party a notice for preliminary
conference. The first preliminary conference shall be scheduled
within
ten
(10) days
from
receipt
of
the
petition.
Within three (3) days from receipt of the petition, the Med-Arbiter
shall cause the service of notice for preliminary conference upon the
employer and incumbent bargaining agent in the subject bargaining
unit directing them to appear before him/her on a date, time and
place specified. A copy of the notice of preliminary conference and
petition for certification election shall be posted in at least two
conspicuous places in the establishment.
Section 7. Forced Intervenor. - The incumbent bargaining agent

(c) possibility of a consent election;

(d) existence of any of the bars to certification
election under Section 3 of this Rule; and
(e) such other matters as may be relevant for the
final disposition of the case.

Section 10. Consent Election; Agreement. - In case the

contending unions agree to a consent election, the Med-Arbiter shall
not issue a formal order calling for the conduct of certification
election, but shall enter the fact of the agreement in the minutes of
the hearing. The minutes of the hearing shall be signed by the
parties and attested to by the Med-Arbiter. The Med-Arbiter shall,

90

immediately thereafter, forward the records of the petition to the

Regional Director or his/her authorized representative for the
determination of the Election Officer by the contending unions
through raffle. The first pre-election conference shall be scheduled
within ten (10) days from the date of entry of agreement to conduct
consent election.
Section 11. Number of Hearings; Pleadings. - If the contending
unions fail to agree to a consent election during the preliminary
conference, the Med-Arbiter may conduct as many hearings as
he/she may deem necessary, but in no case shall the conduct
thereof exceed fifteen (15) days from the date of the scheduled
preliminary conference/hearing, after which time the petition shall be
considered submitted for decision. The Med-Arbiter shall have
control of the proceedings. Postponements or continuances shall be
discouraged.
Within the same 15-day period within which the petition is heard, the
contending labor unions may file such pleadings as they may deem
necessary for the immediate resolution of the petition. Extensions of
time shall not be entertained. All motions shall be resolved by the
Med-Arbiter in the same order or decision granting or denying the
petition.
Section 12. Failure to appear despite notice. - The failure of any
party to appear in the hearing(s) when notified or to file its pleadings
shall be deemed a waiver of its right to be heard. The Med-Arbiter,
however, when agreed upon by the parties for meritorious reasons
may allow the cancellation of scheduled hearing(s). The cancellation
of any scheduled hearing(s) shall not be used as a basis for
extending the 15-day period within which to terminate the same.
Section 13. Order/Decision on the petition. - Within ten (10) days
from the date of the last hearing, the Med-Arbiter shall issue a formal
order granting the petition or a decision denying the same. In
organized establishments, however, no order or decision shall be
issued by the Med-Arbiter during the freedom period.
The order granting the conduct of a certification election shall state
the following:
(a) the name of the employer or establishment;
(b) the description of the bargaining unit;

(c) a statement that none of the grounds for dismissal enumerated in

the succeeding paragraph exists;
(d) the names of contending labor unions which shall appear as
follows: petitioner union/s in the order in which their petitions were
filed, forced intervenor, and no union; and
(e) a directive upon the employer and the contending union(s) to
submit within ten (10) days from receipt of the order, the certified list
of employees in the bargaining unit, or where necessary, the payrolls
covering the members of the bargaining unit for the last three (3)
months prior to the issuance of the order.
Section 14. Denial of the petition; Grounds. - The Med-Arbiter
may dismiss the petition on any of the following grounds:
(a) the petitioner is not listed in the Department's registry of
legitimate labor unions or that its legal personality has been revoked
or cancelled with finality in accordance with Rule XIV of these Rules;
(b) the petition was filed before or after the freedom period of a duly
registered collective bargaining agreement; provided that the sixtyday period based on the original collective bargaining agreement
shall not be affected by any amendment, extension or renewal of the
collective bargaining agreement;
(c) the petition was filed within one (1) year from entry of voluntary
recognition or a valid certification, consent or run-off election and no
appeal on the results of the certification, consent or run-off election is
pending;
(d) a duly certified union has commenced and sustained negotiations
with the employer in accordance with Article 250 of the Labor Code
within the one-year period referred to in Section 14.c of this Rule, or
there exists a bargaining deadlock which had been submitted to
conciliation or arbitration or had become the subject of a valid notice
of strike or lockout to which an incumbent or certified bargaining
agent is a party;
(e) in case of an organized establishment, failure to submit the
twenty-five percent (25%) support requirement for the filing of the
petition for certification election.
Section 15. Prohibited grounds for the denial/suspension of the
petition. - All issues pertaining to the existence of employeremployee relationship, eligibility or mixture in union membership
raised before the Med-Arbiter during the hearing(s) and in the

91

pleadings shall be resolved in the same order or decision granting or

denying the petition for certification election. Any question pertaining
to the validity of petitioning union's certificate of registration or its
legal personality as a labor organization, validity of registration and
execution of collective bargaining agreements shall be heard and
resolved by the Regional Director in an independent petition for
cancellation of its registration and not by the Med-Arbiter in the
petition for certification election, unless the petitioning union is not
found in the Department's roster of legitimate labor organizations or
an existing collective bargaining agreement is unregistered with the
Department.
Section 16. Release of Order/Decision within ten (10) days from
the last hearing, - The Med-Arbiter shall release his/her order or
decision granting or denying the petition personally to the parties on
an agreed date and time.
Section 17. Appeal. - The order granting the conduct of a
certification election in an unorganized establishment shall not be
subject to appeal. Any issue arising therefrom may be raised by
means of protest on the conduct and results of the certification
election.
The order granting the conduct of a certification election in an
organized establishment and the decision dismissing or denying the
petition, whether in an organized or unorganized establishment, may
be appealed to the Office of the Secretary within ten (10) days from
receipt thereof.
The appeal shall be verified under oath and shall consist of a
memorandum of appeal, specifically stating the grounds relied upon
by the appellant with the supporting arguments and evidence.
Section 18. Where to file appeal. - The memorandum of appeal
shall be filed in the Regional Office where the petition originated,
copy furnished the contending unions and the employer, as the case
may be. Within twenty-four (24) hours from receipt of the appeal, the
Regional Director shall cause the transmittal thereof together with
the entire records of the case to the Office of the Secretary.
Section 19. Finality of Order/Decision. - Where no appeal is filed
within the ten-day period, the Med-Arbiter shall enter the finality of

the order/decision in the records of the case and cause the

transmittal of the records of the petition to the Regional Director.
Section 20. Period to Reply. - A reply to the appeal may be filed by
any party to the petition within ten (10) days from receipt of the
memorandum of appeal. The reply shall be filed directly with the
Office of the Secretary.
Section 21. Decision of the Secretary. - The Secretary shall have
fifteen (15) days from receipt of the entire records of the petition
within which to decide the appeal. The filing of the memorandum of
appeal from the order or decision of the Med-Arbiter stays the
holding of any certification election.
The decision of the Secretary shall become final and executory after
ten (10) days from receipt thereof by the parties. No motion for
reconsideration of the decision shall be entertained.
Section 22. Transmittal of records to the Regional Office. Within forty-eight (48) hours from notice of receipt of decision by the
parties and finality of the decision, the entire records of the case
shall be remanded to the Regional Office of origin for
implementation. Implementation of the decision shall not be stayed
unless restrained by the appropriate court.
Section 23. Effects of consent election. - Where a petition for
certification election had been filed, and upon the intercession of the
Med-Arbiter, the parties agree to hold a consent election, the results
thereof shall constitute a bar to the holding of a certification election
for one (1) year from the holding of such consent election. Where an
appeal has been filed from the results of the consent election, the
running of the one-year period shall be suspended until the decision
on appeal has become final and executory.
Where no petition for certification election was filed but the parties
themselves agreed to hold a consent election with the intercession of
the Regional Office, the results thereof shall constitute a bar to
another petition for certification election.
Section 24. Effects of early agreements. - The representation case
shall not be adversely affected by a collective bargaining agreement

92

registered before or during the last sixty (60) days of a subsisting

agreement or during the pendency of the representation case.

(d) name of watchers or representatives and their

alternates for each of the parties during election;

Section 25. Non-availability of Med-Arbiter. - Where there is no

Med-Arbiter available in the Regional Office by reason of vacancy,
prolonged absence, or excessive workload as determined by the
Regional Director, he/she shall transmit the entire records of the
case to the Bureau, which shall within forty-eight (48) hours from
receipt assign the case to any Med-Arbiter from any of the Regional
Offices or from the Bureau.

(e) mechanics and guidelines of the election.

RULE IX
CONDUCT OF CERTIFICATION ELECTION
Section 1. Raffle of the case. - Within twenty-four (24) hours from
receipt of the notice of entry of final judgment granting the conduct of
a certification election, the Regional Director shall cause the raffle of
the case to an Election Officer who shall have control of the preelection conference and election proceedings.
Section 2. Pre-election conference. - Within twenty-four (24) hours
from receipt of the assignment for the conduct of a certification
election, the Election Officer shall cause the issuance of notice of
pre-election conference upon the contending unions and the
employer, which shall be scheduled within ten (10) days from receipt
of the assignment.
The pre-election conference shall set the mechanics for the election
and shall determine, among others, the following:
(a) date, time and place of the election, which shall
not be later than forty-five (45) days from the date of
the first pre-election conference, and shall be on a
regular working day and within the employer's
premises, unless circumstances require otherwise;

Section 3. Waiver of right to be heard. - Failure of any party to

appear during the pre-election conference despite notice shall be
considered as a waiver to be present and to question or object to any
of the agreements reached in said pre-election conference. Nothing
herein, however, shall deprive the non-appearing party or the
employer of its right to be furnished notices of subsequent preelection conferences and to attend the same.
Section 4. Minutes of pre-election conference. - The Election
Officer shall keep the minutes of matters raised and agreed upon
during the pre-election conference. The parties shall acknowledge
the completeness and correctness of the entries in the minutes by
affixing their signatures thereon. Where any of the parties refuse to
sign the minutes, the Election Officer shall note such fact in the
minutes, including the reason for refusal to sign the same. In all
cases, the parties shall be furnished a copy of the minutes.
The pre-election conference shall be completed within thirty (30)
days from the date of the first hearing.
Section 5. Qualification of voters; inclusion-exclusion. - All
employees who are members of the appropriate bargaining unit
sought to be represented by the petitioner at the time of the issuance
of the order granting the conduct of a certification election shall be
eligible to vote. An employee who has been dismissed from work but
has contested the legality of the dismissal in a forum of appropriate
jurisdiction at the time of the issuance of the order for the conduct of
a certification election shall be considered a qualified voter, unless
his/her dismissal was declared valid in a final judgment at the time of
the
conduct
of
the
certification
election.

(b) list of eligible and challenged voters;

(c) number and location of polling places or booths
and the number of ballots to be prepared with
appropriate translations, if necessary;

In case of disagreement over the voters' list or over the eligibility of

voters, all contested voters shall be allowed to vote. But their votes
shall be segregated and sealed in individual envelopes in
accordance with Sections 10 and 11 of this Rule.

93

Section 6. Posting of Notices. - The Election Officer shall cause

the posting of notice of election at least ten (10) days before the
actual date of the election in two (2) most conspicuous places in the
company premises. The notice shall contain:
(a) the date and time of the election;
(b) names of all contending unions;
(c) the description of the bargaining unit and the list of eligible and
challenged voters.
The posting of the notice of election, the information required to be
included therein and the duration of posting cannot be waived by the
contending unions or the employer.
Section 7. Secrecy and sanctity of the ballot. - To ensure secrecy
of the ballot, the Election Officer, together with the authorized
representatives of the contending unions and the employer, shall
before the start of the actual voting, inspect the polling place, the
ballot boxes and the polling booths.
Section 8. Preparation of ballots. - The Election Officer shall
prepare the ballots in English and Filipino or the local dialect,
corresponding to the number of voters and a reasonable number of
extra ballots. All ballots shall be signed at the back by the Election
Officer and authorized representative of each of the contending
unions and employer. Failure or refusal to sign the ballots shall be
considered a waiver thereof and the Election Officer shall enter the
fact of such refusal or failure in the records of the case as well as the
reason for the refusal or failure to sign.
Section 9. Marking of votes. - The voter must put a cross ( x ) or
check ( ) mark in the square opposite the name of the union of his
choice or "No Union" if he/she does not want to be represented by
any union
If a ballot is torn, defaced or left unfilled in such a manner as to
create doubt or confusion or to identify the voter, it shall be
considered spoiled. If the voter inadvertently spoils a ballot, he/she
shall return it to the Election Officer who shall destroy it and give
him/her another ballot.
Section 10. Challenging of votes. - An authorized representative of

any of the contending unions and employer may challenge a vote

before it is deposited in the ballot box only on any of the following
grounds:
(a) that there is no employer-employee relationship between the
voter and the company;
(b) that the voter is not a member of the appropriate bargaining unit
which petitioner seeks to represent.
Section 11. Procedure in the challenge of votes. - When a vote is
properly challenged, the Election Officer shall place the ballot in an
envelope which shall be sealed in the presence of the voter and the
representatives of the contending unions and employer. The Election
Officer shall indicate on the envelope the voter's name, the union or
employer challenging the voter, and the ground for the challenge.
The sealed envelope shall then be signed by the Election Officer and
the representatives of the contending unions and employer. The
Election Officer shall note all challenges in the minutes of the
election and shall be responsible for consolidating all envelopes
containing the challenged votes. The envelopes shall be opened and
the question of eligibility shall be passed upon only if the number of
segregated voters will materially alter the results of the election.
Section 12. On-the-spot questions. - The Election Officer shall rule
on any question relating to and raised during the conduct of the
election. In no case, however, shall the election officer rule on any of
the grounds for challenge specified in the immediately preceding
section.
Section 13. Protest; when perfected. - Any party-in-interest may
file a protest based on the conduct or mechanics of the election.
Such protests shall be recorded in the minutes of the election
proceedings. Protests not so raised are deemed waived.
The protesting party must formalize its protest with the Med-Arbiter,
with specific grounds, arguments and evidence, within five (5) days
after the close of the election proceedings. If not recorded in the
minutes and formalized within the prescribed period, the protest shall
be deemed dropped.
Section 14. Canvassing of votes. - The votes shall be counted and
tabulated by the Election Officer in the presence of the

94

representatives of the contending unions. Upon completion of the

canvass, the Election Officer shall give each representative a copy of
the minutes of the election proceedings and results of the election.
The ballots and the tally sheets shall be sealed in an envelope and
signed by the Election Officer and the representatives of the
contending unions and transmitted to the Med-Arbiter, together with
the minutes and results of the election, within twenty-four (24) hours
from the completion of the canvass.
Where the election is conducted in more than one region,
consolidation of results shall be made within fifteen (15) days from
the conduct thereof.
Section 15. Conduct of election and canvass of votes. - The
election precincts shall open and close on the date and time agreed
upon during the pre-election conference. The opening and canvass
shall proceed immediately after the precincts have closed. Failure of
any party or the employer or his/her/their representative to appear
during the election proceedings shall be considered a waiver to be
present
and
to
question
the
conduct
thereof.
Section 16. Certification of Collective Bargaining Agent. - The
union which obtained a majority of the valid votes cast shall be
certified as the sole and exclusive bargaining agent of all the
employees in the appropriate bargaining unit within five (5) days from
the day of the election, provided no protest is recorded in the
minutes of the election.
Section 17. Failure of election. - Where the number of votes cast in
a certification or consent election is less than the majority of the
number of eligible voters and there are no material challenged votes,
the Election Officer shall declare a failure of election in the minutes of
the election proceedings.
Section 18. Effect of failure of election. - A failure of election shall
not bar the filing of a motion for the immediate holding of another
certification or consent election within six (6) months from date of
declaration of failure of election.

from receipt of the motion, the Election Officer shall immediately

schedule the conduct of another certification or consent election
within fifteen (15) days from receipt of the motion and cause the
posting of the notice of certification election at least ten (10) days
prior to the scheduled date of election in two (2) most conspicuous
places in the establishment. The same guidelines and list of voters
shall be used in the election.
Section 20. Proclamation and certification of the result of the
election. - Within twenty-four (24) hours from final canvass of votes,
there being a valid election, the Election Officer shall transmit the
records of the case to the Med-Arbiter who shall, within the same
period from receipt of the minutes and results of election, issue an
order proclaiming the results of the election and certifying the union
which obtained a majority of the valid votes cast as the sole and
exclusive bargaining agent in the subject bargaining unit, under any
of the following conditions:
(a) no protest was filed or, even if one was filed, the same was not
perfected within the five-day period for perfection of the protest;
(b) no challenge or eligibility issue was raised or, even if one was
raised, the resolution of the same will not materially change the
results of the elections.
The winning union shall have the rights, privileges and obligations of
a duly certified collective bargaining agent from the time the
certification is issued.
Where majority of the valid votes cast results in "No Union" obtaining
the majority, the Med-Arbiter shall declare such fact in the order.
RULE X
RUN-OFF ELECTIONS
Section 1. When proper. - When an election which provides for
three (3) or more choices results in none of the contending unions
receiving a majority of the valid votes cast, and there are no
objections or challenges which if sustained can materially alter the
results, the Election Officer shall motu propio conduct a run-off
election within ten (10) days from the close of the election
proceedings between the labor unions receiving the two highest
number of votes; provided, that the total number of votes for all

Section 19. Action on the motion. - Within twenty-four (24) hours

95

contending unions is at least fifty (50%) percent of the number of

votes cast.
"No Union" shall not be a choice in the run-off election.
Notice of run-off elections shall be posted by the Election Officer at
least five (5) days before the actual date of run-off election.
Section 2. Qualification of voters. - The same voters' list used in
the certification election shall be used in the run-off election. The
ballots in the run-off election shall provide as choices the unions
receiving the highest and second highest number of the votes cast.
The labor union receiving the greater number of valid votes cast shall
be certified as the winner, subject to Section 20, Rule IX.

CASES
Philippine Telegraph and Telephone Corp. v Laguesma, 223 SCRA
454
PT&Ts rank and file employees are already represented by a
certified bargaining agent. The supervisory employees seek to be
represented.
Held: Since no certified bargaining agent represents the supervisory
employees, PT&T is deemed an unorganized establishment with
respect to such supervisory employees even if the company is
already deemed and organized establishment with respect to ots rank
and file employees are already organized.
An employer has no standing to question a certification
election since it is the sole concern of the workers, unless the former
filed the certification election itself pursuant to Art. 258 of the Labor
Code.
Alu vs. Trajano, 172 SCRA 49
The sole issue is whether or not public respondent committed a grave
abuse of discretion amounting to lack of jurisdiction in ordering a

certification election considering that at the time the petition for

certification election was filed there was a bargaining deadlock
between company and the petitioner union, as a result of which
petitioner union filed a notice of strike.
Held: Undoubtedly, the petition for certification election was filed
during the 60-day freedom period. The fact that petitioner was able
to negotiate a new CBA with respondent company on December 4,
1986 within the freedom period of the existing CBA, does not
foreclose the right of a rival union, which in this instant case is the
respondent union, to challenge petitioner's claim to majority status,
by filing earlier on November 4, 1986, a timely petition for
certification election before the old CBA expired on December 31,
1986 and before petitioner signed a new CBA with respondent
company. There should be no obstacle to the right of the employees
to petition for a certification election at the proper time, that is,
within sixty (60) days prior to the expiration of the life of a certified
collective bargaining agreement, not even by a collective agreement
submitted during the pendency of a representation case.
Port Workers Union of the Philippines v Laguesma, 207 SCRA 329
Union 1 is the certified bargaining representative. During the
freedom period, Union 2 and Union 3 filed their respective petitions
for certification election. Union 2 submitted the consent signatures
(25% of the employees in the bargaining unit) 11 days after it filed
its petition. Union 3 submitted its consent signatures 35 days after it
filed its own petition. Union 1 filed a motion to dismiss both
petitions for failing to comply with the IRR which states that (t)he
25% requirement shall be satisfied upon the filing of the petition,
otherwise the petition shall be dismissed. Held: Motion denied. The
Labor Code does not require the consent signatures to be filed
simultaneously with the petition for certification election.
A new CBA was ratified before any certification election
was held. Union 1 claims that the overwhelming ratification of the
CBA is an affirmation of their membership (?) in the bargaining

96

agent, rendering the representation issue moot and academic and

conclusively barring the holding of a certification election.
Held: The IRR provides that the representation case shall not be
adversely affected by a collective agreement submitted before or
during the last 60 days of a subsisting agreement or during the
pendency of the representation case. As the new CBA was entered
into at the time when the representation case was still pending, it
follows that it cannot be recognized as the final agreement between
the employer and its employees.
NAFTU vs. BLR, 164 SCRA 12
This rule precisely called for the holding of a certification election
whenever there appeared to be a reasonable doubt as to whether or
not the union directly certified had really been chosen by the
majority of the workers as their exclusive bargaining representative.
Such was the situation in the case at bar. Moreover, a certification
election is a more acceptable method than direct certification, which
under the provisions of the aforementioned article, should be
resorted to only where there was no doubt that the union so certified
had the full or at least the majority support of the workers.
By virtue of Executive Order No. 111, which became
effective on March 4, 1987, the direct certification originally allowed
in this article has apparently been discontinued as a method of
selecting the exclusive bargaining agent of the workers. This
amendment affirms the superiority of the certification election over
the direct certification which, assuming it was validly made in favor
of the petitioner in 1986, is no longer available to it now under the
change in the said provision. The new rule as amended by the
executive order now reads as follows: "ART. 256. Representation
issues on organized establishments. In organized establishments,
when a petition questioning the majority status of the incumbent
bargaining agent is filed before the Ministry within the sixty-day
period before the expiration of the collective bargaining agreement,
the Med-Arbiter shall automatically order an election by secret ballot
to ascertain the will of the employees in the appropriate bargaining
unit. To have a valid election, at least a majority of all eligible voters

in the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election
which provides for three or more choices results in no choice
receiving a majority of the valid cast, a run-off election shall be
conducted between the choices receiving the two highest number of
votes."
Philippine Fruits and Vegetables Industries, Inc. v Torres, 211
SCRA 95
A certification election was conducted in the PFVII. Employees who
were already dismissed, albeit illegally, took part in the elections.
Held: Employees who have been improperly laid off but who have a
present, unabandoned rights to or expectation of re-employment, are
eligible to vote in the certification elections. Thus, if the dismissal is
under question, the employees concerned are still qualified to vote.
PVFII filed a protest with the Med-Arbiter. It is argued that the
protest was filed beyond the reglamentary. To determine the
timeliness of the filing of the protest, it must be determined when the
close of election proceedings occur.
Held: The close of election proceedings refers to that period from
the closing of the polls to the counting of the ballots and the
tabulation of the votes. It does not include the period for the final
determination of challenged votes and canvass thereof which could
take a very long period.
Samahang Manggagawa ng Permex v Secretary of Labor, 286
SCRA 692
An employer does not have the power to declare a union as the
exclusive representative of its workers for the purpose of collective
bargaining. Direct certification (by the employer) has been
discontinued as a method of selecting the exclusive bargaining
agents of workers.

97

Oriental Tin Can Labor Union v Secretary of Labor and

Employment, 294 SCRA 640
Union 1 is the certified bargaining representative. Union 2 filed a
petition for certification election during the freedom period. A protest
was filed by the employer alleging that some of the employees who
originally signed the petition had already withdrawn in writing their
membership from the union.
Held: Once the required percentage requirement is has been reached,
the employees withdrawal from union membership taking place
after the filing of the petition for certification election does not affect
the petition.
The protest was filed by the employer.
Held: Certification elections are exclusively the concern of
employees, hence, the employer lacks the legal personality to
challenge the same.
A new CBA was entered into between the employer and Union 1
during the freedom period and was registered 3 days after the
expiration of the old CBA.
Held: If a CBA has been registered, a petition for certification
election or a motion for intervention can only be entertained within
60 days prior to the expiry of the agreement. However, when the
CBA was prematurely signed during the freedom period and a
petition for certification election was filed during the aforesaid
freedom period, the petition gives rise to a representation case that
must be resolved even though a new CBA has been entered into.
Samahan ng mga Manggagawa sa Filsystems v Secretary of Labor
and Employment, 290 SCRA 680
SAMAFIL-NAFLU-KMU is a registered labor union It filed a
petition for certification election. Filsystems, the employer, filed a
protest questioning the status of SAMAFIL as a legitimate labor
organization for lack of proof of affiliation with NAFLU-KMU.
Held: The failure of an independently registered labor union to prove
its affiliation with a labor federation cannot affect its right to file a

petition for certification election as an independent union.

(independent nga e)
The petition for certification election was dismissed by the medarbiter and an appeal was filed. Meanwhile, FWU, another union in
the company, filed its own petition for certification election. The
petition was granted. FWU won and a CBA was entered into.
Filsystems now claims that the existence of a CBA bars the holding
of a certification election.
Held: An appeal seasonably filed stays the decision of the medarbiter, therefore the appeal filed by SAMAFIL stops the holding the
any certification election. Accordingly, there exists an unresolved
representation case (SAMAFILs petition which was pending appeal)
at the time the CBA was entered into between FWU and Filsystem.
Such CBA cannot and will not prejudice SAMAFILs pending
representation case or render it moot.
National Federation of Labor v Secretary of Labor (287 SCRA
599)
The company and 3 labor unions filed a protest against the results of
a certification election due to irregularities in the conduct of the
elections (no notice, flying voters, disfranchisement, etc. parang
national elections). The protests were dismissed for being filed more
5 days after the election was conducted.
Held: The complaint in this case was that a sufficient number of
employees were not able to vote because they were not properly
notified of the date of the elections. They could not therefore have
filed their protests within 5 days for the reason that they did know
that an election took place.
The company filed a protest.
Held: It is not improper for the employer to show interest in the
conduct of the election. The manner in which the election was held
could make the difference between industrial strife and industrial
harmony in the company. What the employer is prohibited from
doing is to interfere with the conduct of the certification election for
98

the purpose of influencing its outcome. But certainly, an employer

has an abiding interest in seeing to it that the election is clean,
peaceful, orderly and credible.
Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Corp.
Labor Union, 268 SCRA 573
Under Art. 245 of the Labor Code, 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
possess 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.

Negros Oriental Electric Cooperative vs. Secretary, May 9, 2001

Toyota Motor Phils. Labor Union vs. Toyota Motor Phils., GR

135806, August 8, 2002
The issue in this case is whether the petitioner is a legitimate labor
organization and was granted a certificate of registration, thereby
granting it authority to intervene in the petition for certification
election.
Held: NO. The earlier ruling sustained the factual findings of the
med-arbiter which divested legitimacy from the petitioner union, in
violation of Art. 245, a unin consisting of supervisory and rank-andfile employees. Therefore, following the earlier rulings, at the time
where motion of intervention was filed, the petitioner-union did not
have legitimate status.
Tagaytay Highlands vs. Tagaytay Highlands Employees UnionPTGWO, GR 142000, January 22, 2003

99

C. BARS TO CERTIFICATION ELECTION

LABOR CODE
ART. 232. PROHIBITION ON CERTIFICATION ELECTION.
The Bureau shall not entertain any petition for certification
election or any other action which may disturb the
administration of duly registered existing collective
bargaining agreements affecting the parties except under
aArticles 253, 253-A of this Code.

OMNIBUS RULES, BOOK V, AS AMENDED BY D.O. 40

RULE VIII
Section 14. Denial of the petition; Grounds. - The MedArbiter may dismiss the petition on any of the following
grounds:
(a) the petitioner is not listed in the Department's registry
of legitimate labor unions or that its legal personality has
been revoked or cancelled with finality in accordance with
Rule XIV of these Rules;
(b) the petition was filed before or after the freedom period
of a duly registered collective bargaining agreement;
provided that the sixty-day period based on the original
collective bargaining agreement shall not be affected by any
amendment, extension or renewal of the collective
bargaining agreement;
(c) the petition was filed within one (1) year from entry of
voluntary recognition or a valid certification, consent or runoff election and no appeal on the results of the certification,
consent or run-off election is pending;
(d) a duly certified union has commenced and sustained
negotiations with the employer in accordance with Article
250 of the Labor Code within the one-year period referred
to in Section 14.c of this Rule, or there exists a bargaining
deadlock which had been submitted to conciliation or
arbitration or had become the subject of a valid notice of

strike or lockout to which an incumbent or certified

bargaining agent is a party;
(e) in case of an organized establishment, failure to submit
the twenty-five percent (25%) support requirement for the
filing of the petition for certification election.
Section
15.
Prohibited
grounds
for
the
denial/suspension of the petition. - All issues pertaining
to the existence of employer-employee relationship,
eligibility or mixture in union membership raised before the
Med-Arbiter during the hearing(s) and in the pleadings shall
be resolved in the same order or decision granting or
denying the petition for certification election. Any question
pertaining to the validity of petitioning union's certificate of
registration or its legal personality as a labor organization,
validity of registration and execution of collective bargaining
agreements shall be heard and resolved by the Regional
Director in an independent petition for cancellation of its
registration and not by the Med-Arbiter in the petition for
certification election, unless the petitioning union is not
found in the Department's roster of legitimate labor
organizations or an existing collective bargaining agreement
is unregistered with the Department.
RULE XVII
REGISTRATION
OF
COLLECTIVE
BARGAINING
AGREEMENTS
Section 7. Term of representation status; contract bar
rule. - The representation status of the incumbent exclusive
bargaining agent which is a party to a duly registered
collective bargaining agreement shall be for a term of five
(5) years from the date of the effectivity of the collective
bargaining agreement. No petition questioning the majority
status of the incumbent exclusive bargaining agent or
petition for certification election filed outside of the sixtyday period immediately preceding the expiry date of such
five-year term shall be entertained by the Department.

100

The five-year representation status acquired by an

incumbent bargaining agent either through single enterprise
collective bargaining or multi-employer bargaining shall not
be affected by a subsequent collective bargaining
agreement executed between the same bargaining agent
and the employer during the same five-year period.

CASES
NACUSIP-TUCP vs. Trajano, 208 SCRA 18
The issue in this case is whether or not a petition for certification
election may be filed during the pendency of a bargining deadlock
submitted to arbitration or conciliation.
Held: NO. The law is clear on the matter. The DEADLOCK BAR
RULE simply provides that a petition for certification election can
only be entertained IF THERE IS NO PENDING BARGAINING
DEADLOCK
SUBMITTED
TO
CONCILIATION
OR
ARBITRATION OR HAD BECOME THE SUBJECT OF A VALID
NOTICE OR STRIKE OR LOCKOUT. The principal purpose is to
ensure stability in the relationship of workers and management. The
law demands that the petition for certification election should fail in
the presence of a then pending bargaining deadlock.
Capitol Medical Center Alliance of Concerned Employees v
Laguesma, 267 SCRA 503
In January 1993, Union 1 was the certified as the exclusive
bargaining agent of the rank and file employees of Capitol Medical
Center (CMC). CMC questioned the validity of Union 1s
certification through a series of petitions and a number of judicial
and administrative proceedings. This had the effect of delaying the
commencement of negotiations for a CBA. Due to the continued
refusal of CMC to negotiate, Union 1 filed a notice of strike and
subsequently staged a strike. Meanwhile, in March 1994, Union 2
filed a petition for certification election, claiming that Union 1 has
not commenced the negotiations for a CBA and 1 year has already
elapsed since the last certification election.

Held: Even if one year has already elapsed since the time of
declaration of a final certification result, no certification election
may be had where the delay in forging a CBA could not be attributed
to the fault of the union which won the earlier certification election.
The SC held that a situation where a CBA could not be concluded
due to the failure of one party to willingly perform its duty to bargain
collectively is similar in nature to a bargaining deadlock for which
no certification election could be held.
NACUSIP-TUCP vs. Ferrer-Calleja, 205 SCRA 478
The controversy boils down to the sole issue of whether or not a
petition for certification election may be filed after the 60-day
freedom period.
Held: The clear mandate of the rules state that the petition for
certification election filed by the petitioner NACUSIP-TUCP should
be dismissed outright, having been filed outside the 60-day freedom
period or a period of more than one (1 ) year after the CBA expired.
ALU v Ferrer-Calleja, 173 SCRA 178
The employer, upon the representation of Union 1 that it is the
exclusive bargaining agent, entered into negotiations with the said
union. Six days before a CBA was to be signed by Union 1 and the
employer, Union 2 staged a strike. The strike was staged after Union
2 failed to convince the employer to recognize it as the real exclusive
bargaining agent. Union 2 then filed a petition for certification
election. Union 1 opposed on the ground that there is an existing
CBA, hence the contract bar rule applies.
Held: Contract bar rule does not apply for the following reasons:
1. In the case at bar, the court found that the ratification of the CBA
was irregular for 2 reasons: (1) the failure to post the same in at
least 2 conspicuous places, and (2) the lack of any showing that
it was actually ratified by a majority of the employees in the
bargaining unit. For the contract based rule to apply, the CBA
must not only be registered but also validly ratified.
2. The prompt recognition by the employer of Union 1s standing
as the exclusive bargaining agent was misplaced and the failure
101

to properly determine with legal certainty whether the union

enjoyed majority representation may be a ground to nullify the
certification of that union as the sole bargaining agent. (I think
this is merely an obiter )
Firestone Tire & Rubber Co. Employees Union vs. Estrella, 81
SCRA 49
The three-year collective bargaining agreement between respondents
Associated Labor Unions (ALU) and Firestone Tire & Rubber Co. of
the Philippines (Firestone) was to expire on January 31, 1976; but
prior to its expiration, respondents entered in a "Supplemental
Agreement" extending its life for another year. The extension was
neither ratified by the covered employees nor submitted to the
Department of Labor for its certification. Within the sixty-day period
before the original expiry date of the agreement and upon request of
276 of the 400 employees of respondent Firestone who disaffiliated
from the ALU, a certificate of registration was issued by the Bureau
of Labor Relations in favor of petitioner. Petitioner then filed a
petition for direct certification or certification election on the tenth
day after the original expiration date of the agreement, with the
written consent of 77% of the 400-man bargaining unit. Respondent
ALU petitioned the Bureau of Labor Relations for the cancellation of
petitioner's certificate of registration on the grounds that its
collective bargaining agreement was not due to expire until the
following year constituted a bar to the holding of a certification
election.
Held: Basic to the CONTRACT BAR RULE is the proposition
that the delay of the right to select representatives can be justified
only where stability is deemed paramount. Excepted from the
contract bar rule are certain types of contracts which do not foster
industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts
must be subordinated to the employees' freedom of choice because it
does not establish the type of industrial peace contemplated by law.
Where, therefore, the fact of disaffiliation has been demonstrated

beyond doubt, a certification election is the most expeditious way of

determining which labor organization is to be the exclusive
bargaining representative.
Also, an amendment extending the life of a collective
bargaining agreement must be certified by the Bureau of Labor
Relations, otherwise, it may not bar the holding of a certification
election or the registration of other labor organizations.
Vassar Industries Employees Uniuon vs. Estrella, 82 SCRA 280
The petitioner disaffiliated with the old union and formed another
union. The issue in this case is whether certification of election
could be denied on the ground that there is already a registered
collectiuve bargaining agent in the company.
Held: Certification election should be granted. The fact that the
company already has a recognized bargaining agent does not operate
as a bar for new unions to be granted certification election.
United CMC Textile Workers Union v BLR, 128 SCRA 316
The Med-Arbiter granted a petition for certification election filed by
Union 2 despite the pendency of a ULP case filed against Union 1,
the certified bargaining agent, for being company-dominated.
Held: The pendency of a formal charge of company domination is a
prejudicial question that bars proceedings for a certification election.
National Union of Bank Employees v Minister of Labor, 110
SCRA 274
The med-arbiter granted Unions petition for certification election.
The employer filed a motion to suspend the holding of the
certification election on the ground that there is a pending
proceeding for the cancellation of the registration of the Union for
allegedly engaging in prohibited and unlawful activities in violation
of the Labor Code.
Held: Motion to suspend denied for the following reasons:
1. A certification election may be ordered despite the pendency of a
petition to cancel the unions registration certificate. (Doctrine:
Registration certificate valid until nullified)
102

2. The petition to cancel Unions registration certificate was

evidently intended to delay the holding of the certification
election. In this case, the petition was filed only after the MedArbiter has granted Unions petition for certification election.
Progressive Development Corp. v Secretary of Labor, 271 SCRA
593
5. The propriety of a labor organizations registration could be
assailed directly through cancellation proceedings in accordance
with Articles 238 ad 239 of the Labor Code, or indirectly by
challenging its petition for the issuance of an order for
certification election.
6. The Med-Arbiter should look into the merits of the petition for
cancellation of a unions registration before issuing an order
calling for certification elections. Where the legal personality of
a union is seriously challenged, it would be more prudent for the
Med-Arbiter to grant the request for suspension of the
proceedings in the certification election case until the issue of
legality of the unions registration shall have been resolved.
TUPAS-WFTU vs. Laguesma, 233 SCRA 565
In this case, there is doubt as to whether a particular union represents
the majority of the rank-and-file employees. During the pendency of
the case, the undersecretary Laguesma granted the certification of
election. The issue is whether Laguesma acted with grave abuse of
discretion in granting the certification election.
Held: No. Under the law, the Med-Arbiter shall automatically order
a certification election by secret ballot in an organized establishment
such as PDIC, provided the following requisites are met:
(1) that a petition questioning the majority status of the incumbent
bargaining agent is filed before the DOLE within the sixty-day
freedom period;
(2) that such petition is verified; and
(3) that the petition is supported by the written consent of at least
twenty-five (25%) per cent of all employees in the bargaining unit.

It is undisputed that all these requirements were met by

private respondent NAFLU in its petition. Also, It bears stressing
that no obstacle must be placed to the holding of certification
elections, for it is a statutory policy that should not be circumvented.
We have held that whenever there is doubt as to whether a particular
union represents the majority of the rank-and-file employees, in the
absence of a legal impediment, the holding of a certification election
is the most democratic method of determining the employees' choice
of their bargaining representative. It is the appropriate means
whereby controversies and disputes on representation may be laid to
rest, by the unequivocal vote of the employees themselves.
Samahang Manggagawa sa Permex v Secretary, 286 SCRA 692
An employer does not have the power to declare a union as the
exclusive bargaining agent of its workers for the purpose of
collective bargaining. Direct certification previously allowed under
the Labor Code had been discontinued as a method of selecting the
exclusive bargaining agent of workers. Certification election has
been found to be the most effective method for determining
representation in a bargaining unit for the reason that it is not enough
that a union has the support of majority of the employees. It is
equally important that everyone in the bargaining unit be given the
opportunity to express himself.
LECTURE
What is a bargaining unit and what is a bargaining agent?
You must know the difference. How should the proper bargaining
unit be determined? By mutuality of interests - thats the major
consideration to determine the appropriate unit. It is the set of
employees that can be served by bargaining negotiations and can be
covered by collective bargaining activities. The set of employees that
have mutual interest should be included in the same bargaining unit.
Who makes the initial determination as to who shall comprise the
bargaining unit, and when is that determination made? It is made by
the employees themselves at the time of organization of a labor

103

organization. You have to make the determination of the bargaining

unit that the union intends to represent in the future. If it is a big
company, in organizing the union, one has to determine first if for
purposes of collective bargaining, the bargaining unit wants to
represent a particular geographical unit, or a particular group of
employees belonging to the same geographical unit because it will be
needed in the registration procedure.
The Supreme Court in the case of International School vs.
Quisumbing said that giving foreign employees a salary rate higher
than or different from the basic salary rate of Filipino employees
doing the same job, having the same skills, having the same seniority
level, is discriminatory. After saying that, however, the Court said
they should belong to different bargaining units! Why is that odd?
After saying that it is discriminatory, the Court allowed the company
or the union to commit discriminatory acts by saying that the
foreigners should not be included in the same bargaining unit as the
Filipino employees, then management in effect is given the
permission to give a set of benefits to the foreign employees different
from the benefits given to the Filipino employees covered in the
bargaining unit.
Voluntary Recognition
How is the bargaining agent determined? Through
certification election and voluntary recognition. Is voluntary
recognition in the law? It is not found in the law. It is only provided
in the rules. It is of doubtful validity, to say the least. Why, because it
is akin to a direct certification made by the DOLE. We have cases
saying that direct certification cannot be done even if there is only
one union and there is no rival union asking for direct certification.
The Court said that it is not the democratic way of selecting the
representative for purposes of collective bargaining in the bargaining
unit. The most democratic way, according to the Court, is to select
the bargaining agent through secret ballot in a certification election
supervised by the DOLE. That is not the case in direct certification
where the decision is done not by the employees themselves but by
the DOLE. That decision on direct certification can be applied to
voluntary recognition mode now contained in the rules, as amended

in 1997. It was only in 1997 that that mode was introduced. Whats
the basic problem with that? Its very transparent insofar as the
decision of the employees are concerned. It is not done by secret
ballot. It is done by signature campaign, by openly asking employees
to sign the document of voluntary recognition which is initiated by
the union and the employer. So it is totally different from the
certification election provided in the law and rules. As far as Im
concerned, I will challenge the validity of that mode of selecting the
bargaining agent. But as far as the RULES are concerned, we have
two modes of selecting the sole and exclusive bargaining
representative.
Certification Election
1.

Petition for Certification Election

How is a certification election proceeding started? By filing

a petition for certification election with the Med-Arbiter, through the
Regional Office where the bargaining unit is located. Who can file
the petition? The legitimate labor organization. Also the employer,
when he is asked to bargain collectively, and the union is not the
exclusive bargaining agent. When the employer is not the petitioner,
he is merely a bystander to the certification election proceedings,
meaning that he cannot intervene in the proceedings. HE cannot
oppose the petition. He cannot participate in the conferences leading
to the decision of the Med-Arbiter. He can only intervene in the
inclusion/exclusion of voters, that such person is not a member of the
bargaining unit. But the principle that he is merely a bystander is
more theoretical than practical. His intervention is usually honored,
not only by the Med-Arbiter or by the Secretary of Labor but even by
the Supreme Court. You have read many cases where the Court
allowed the employer to question all sorts of things. And that is a
variation of the principle laid down by the SC itself against undue
intervention by the employer in certification election proceedings.
What is the reason for the rule or principle that the employer be
regarded as a mere bystander? Because the certification election is a
procedure for the employees alone and it is pursuant to the rule that
favors establishments to be unionized.

104

Procedure. When can a petition be filed? At any time if there

is no existing CBA. But if there is an existing CBA, it must be filed
within 60 days prior to the expiration of such CBA, called the
freedom period. Remember that the representation issue has a set
period pegged/fixed by law at 5 years. It cannot be advanced or
changed by the parties. Any attempt to do so will be a direct
violation of the Labor Code, which has a categorical provision that
the representation aspect shall be good for 5 years.

respect to its supervisory employees. Just because there is a union

that is a certified bargaining agent in that company then the company
is organized. Is it material to determine if the company is organized?
Yes, because of the difference in procedure and the treatment of
organized and unorganized establishments. From the moment of the
petition there is already a difference. An organized establishment
must respect the freedom period. In unorganized establishments,
there is no mention of the 25% signature support requirement.

What are the requirements for filing the petition? Names,

addresses of the union, its members, the 25% signature requirement,
description of the union, the number of members, description of the
bargaining unit which is done by stating the set of employees
(r&f/supervisory), statement of jurisdictional facts to show that the
petition is not barred by anything that will effectively bar a petition
for certification election. The 25% signature support is NOT
mandatory in the sense that the Med-Arbiter may hold the election
even without such, but the labor organization must submit it later.
This is according to jurisprudence. Does this have a basis in law?
The Labor Code in Art. 256 makes the role of the Med-Arbiter
merely ministerial when the petition is complete-he must grant the
petition. Meaning that when it is not complete such as when there is
no 25% signature, the Med-Arbiters role becomes discretionary-he
may choose to grant the petition or not.

After the petition is filed, the Med-Arbiter may either grant

or deny the petition. There cannot be a case where the Med-Arbiter
will not decide the petition, except in consent elections. Before, there
was a clear difference between a certification election and a consent
election. In one case the Court said (and this was asked in the bar
exams a few years ago) that in a certification election, what is being
decided is the issue of who among the contending unions will be the
sole and exclusive bargaining representative of the employees
covered in the bargaining unit while in the consent election the only
issue is majority representation-who has majority support. The rules
however now give us a confused definition of consent election. It
will call an election conducted because of the parties agreement to
the conduct of the election, a consent election. Which should not be
the case because that election will still be for the sole purpose of
determining the sole and exclusive bargaining representative, and
will be equivalent to a certification election. In short, the consent
election as per the rules call it should not be consent election,
following the distinction earlier made by the Court. The Rules will
now give us two types of consent election one with the supervision
of the DOLE and without the supervision of the DOLE. We dont
know how the SC will later on rule on this definition, again it is
another innovation of the 1997 Department Order.

Is there a conflict between the LC and the Rules? The Rules

make it mandatory to dismiss the petition lacking requirements. On
the surface the LC and the Rules do not seem conflicting. But the
tenor of the LC the law gives the Med-Arbiter the discretion to still
grant the petition despite the lack of requirement. The Rules do not
give the Med-Arbiter the discretion. So we follow the LC of course.
And the LC view is the one supported by jurisprudence. This is one
of the defects of the 1997 Department Order.
If there is a union in a company is the company
automatically organized? No because what makes a company
unorganized is the absence of a certified bargaining agent. Now a
company may be organized with respect to its rank-and-file
employees, for example, and at the same time be unorganized with

Who is an intervenor?
ORGANIZED

UNORGANIZED ESTABLISHMENTS

ESTABLISHMENTS

The incumbent bargaining Any LLO in the bargaining unit

agent or any other LLO in the

105

BU

going through the same vicious cycle over again. That happened in
one case I handled.

Motion for intervention must Anytime before finality of the

be filed within freedom period decision
(this only applies to other
LLOs, not to the incumbent
representative
who
is
considered a forced intervenor)

There are other possibilities of delaying the process before

the Med-Arbiter decides the case. And when the Med-Arbiter does,
counting the steps before the decision is final, will give you an idea
of how management can delay the proceedings. It may be appealed
to the Secretary, then up to the CA and then to the SC. Assuming that
each step takes one year, then it goes to the SC and is given to the
Med-Arbiter, there are at least 3 years before the decision is given
back to the Med-Arbiter before the election proceedings can start.

2.

Hearing and Conference

Certification election proceedings are not supposed to be

adversarial in nature. They are honesty proceedings, even in the
Rules, in order to determine the will of the bargaining unit. What
should be resolved in the pre-election proceedings? A
determination/stipulation of facts to determine who the parties are,
and if the Med-Arbiter could get the parties to agree to a consent
election, clarificatory questions and a final list of voters. But how is
a list of voters finalized? The Med-Arbiter shall order the employer
to get a list of voters and usually it is based on the payroll three
months prior to the order granting the certification election.
When there is a disagreement on the exclusion or inclusion
of voters, they will still be allowed to vote but their votes shall be
segregated. Each vote shall be placed in a separate envelope. Why is
there a need for them in a separate envelope? Because it may be
necessary to determine if each challenged voter, is eligible to vote.
And it cannot be done if all the segregated votes are placed in one
ballot box and are mixed or collected in only one box. It will be hard
to determine which vote was cast by which voter. This issue of
eligibility is one that will delay the case for years. In my experience
if there is an issue on the list of voters, the representation officer is
not a lawyer, and he would give the case back to the Med-Arbiter,
who will rule on the issue. And that decision can take years, and it
goes to the Secretary of Labor, then to the CA and the SC, and back
again to the Med-Arbiter. By that time you have a new set of
employees, and this would be used to attack the eligibility of voters,

Now as to the issue of inclusion/exclusion of voters, the procedure

provided by the law solves the problem only if management is in
good faith, but not if management is in bad faith. If management
questions the eligibility of a substantial number of employees, for
instance 80 employees, such votes which will be segregated may
materially alter the results of the election, but the issue of eligibility
will takes 3-5 years to be resolved by the M-A, Secretary, CA and
SC. The challenge of voters may be done in pre-election and even
during election day itself. If management challenges practically all
active union members votes, then management validly prevents the
finality of the elections.
Bars to Certification Election
A petition for certification election may be filed anytime
except when there exists the following:
1. Contract bar when a CBA has been registered in accordance
with Art. 231, a petition for certification election can be
entertained only within 60 days before expiration of such CBA.
2. One-Year bar a petition may not be filed within one year from
the date of a valid certification, consent or run-off election or
voluntary recognition. The one-year period shall be suspended
when an appeal has been filed with the Med-Arbiter regarding
the results of the election.

106

3. Deadlock bar when there occurs a bargaining deadlock wherein

the certified bargaining has become the subject of a strike or
lockout, or which has been submitted to conciliation or
arbitration.
4. Negotiation bar may not be filed if before such petition is filed,
negotiations have already commenced between the employer and
the duly registered/certified union in accordance with Art. 250)
A CBA is valid even if it is not registered with the DOLE.
But it is required to protect the union from a challenge. Unless the
CBA is registered with the DOLE, other rival unions are not barred
from challenging the bargaining agent-union anytime. Thus, the
existence of a CBA does not necessarily mean a bar unless such CBA
is registered.
Now, the right of an exclusive bargaining agent to file a
petition for certification election, that right is suspended by a third
party in a petition for cancellation. But what deprives it of its right
to file a petition for certification election is a final decision canceling
its registration not the filing, not the pendency of the petition for
cancellation. This goes against many Supreme Court decisions which
say that the union retains its legitimate personality unless there is a
final decision canceling its registration.
For instance, the election are conducted, a winner emerges.
But there is a protest. How is a protest made? If it pertains to the
conduct of the elections, it is placed in the minutes, and formalized
by filing a protest with the Med-Arbiter. So it is ascertained in the
minutes if a protest was filed. Under the Rules, if there are no
protests in the minutes, there is nothing that will prevent the
certification of the winner. The Rules authorize the representation
officer, the head of the election committee, before whom the preelection conference and election proceedings were conducted, to
immediately certify the winner as the sole and exclusive bargaining
representative. But in reality that is not done, instead binabalik sa
Med-Arbiter. They let the Med-Arbiter issue the certification. Kasi
daw baka may magprotesta. Eh wala ngang nagprotesta eh. Its so

frustrating to see the Department not following the very rules it

issues!!!
What is meant by termination of election proceedings? This
is important for purposes of protest, because it should be filed, it
should be formalized within five days from the termination of the
election. But before this may be done it must be in the minutes. What
is the reckoning point of termination? IT is the end of canvassing of
votes, which happens end of election day itself. Not the end of the
decision on the segregated votes that will alter the results of the
election. It does not include the time the challenged votes are
resolved.
When there is a challenge on the inclusion of a voter, the challenge is
merely formalized. I need not formalize the challenge in five days
it is not considered an election protest. In the nature of a challenge,
and in the nature of an election protest, the Rules do not say that the
challenge is in the nature of an election protest.
The periods given in the Rules for the Med-Arbiter to follow
when an issue is decided upon are hardly followed.
If a deadlock occurs but the union does not do anything,
does not act upon it, it cannot be a bar for a certification election.
You are not covered by the one-year bar to certification election,
because there is no CBA yet. A petition for certification election can
be filed if the union has not acted upon the deadlock, meaning
walang notice of strike submitted, or has not been submitted to
compulsory arbitration proceedings.
What are the other bars to a certification election? The
negotiation bar. This is a problematic provision. It says that as long
as negotiations started, then that bars a petition for certification
election. Basta nagsimula ang negotiations within the first year that
serves as a bar. What if negotiations are delayed? For instance, three
years have passed they are still negotiating. It still serves as a bar
because negotiations commenced on the first year. It is an absurd
situation.
Now the Certification Election Day itself. What are the
requirements?
107

1. Must be on a regular business day

2. Within company premises
*There is no prohibition to conducting a certification election during
a strike, outside the premises of the company and near a picket line.
Failure of election happens when the votes cast are less than
majority of the number of eligible voters in the bargaining unit. This
will not bar another petition for certification election. An election bar
presumes there was a valid election. A failure of election can prompt
a petition for another election. Does it go through the same process
of the original petition for certification election again? The Rules
state that they can ask an immediate holding of another election.
Immediate should be construed to mean a reasonable time.
Personally, I think this should not extend beyond six months. So all
they have to do is file a petition for immediate holding of another
election, which does not go through the steps followed in a petition
for certification election. And the Med-Arbiter does not have
discretion to deny the petition for immediate holding, since he
already previously ruled in favor of conducting an election.
The Rules does not say who should file the petition for
immediate holding, so that means even an intervenor can be the one
to file it. The problem is the Rules do not bar the filing of a petition
for certification election prior to filing of a petition for immediate
holding. To my mind, the petition for certification election should not
be entertained, because the first certification election has not yet
been resolved with finality. The second petition for certification
election should be considered as a motion for intervention which is
filed out of time.
Look at Rule 11 Section 17. The first sentence of Section 17
must be ignored!!! Its a totally erroneous statement!! The issue of
the validity of votes cast is NOT material in the failure of election.
Only the number of votes cast is material it does not matter whether
these are valid or not. For instance out of one hundred eligible
voters, 60 cast their votes but only 30 are valid, there is NO failure of
elections. It is a valid election.

Are there grounds to suspend a petition for certification

election? The Progressive Development case. That is if the legal
personality of a labor union is questioned, it is a prejudicial question
which warrants suspension of the election.
Run-Off Election
Now, when is there a run-off election?
1. There is a valid election meaning at least majority of the
eligible voters must have cast their votes
2. There are at least 2 contending unions the Rules state there
must be at least 3 choices, meaning one of the choices is no
union
3. No choice got majority of the valid votes cast hence no
winner emerged
4. The contending unions collectively got at least 50% of the total
votes cast
*Keep in mind, that in order to WIN the election, the union must get
MAJORITY OF THE VALID VOTES cast. Hence the basis is the votes
cast, minus the spoiled votes.
In order to have a RUN-OFF election on the other hand, the
basis is that the unions must collectively get AT LEAST 50% of
ALL VOTES CAST. Hence, include the spoiled votes in the tally.
For example: 100 eligible voters, 3 contending unions
SCENARIO 1:
Union A 5
Union B 20
Union C 35
No Union 0
spoiled - 40

Union C got majority of valid

votes cast, so C wins, no run-off
election

108

SCENARIO 2:
Union A 5
Union B 0
Union C 34
No Union 41
spoiled 20

SCENARIO 6
No union got majority of the
valid votes cast. No union wins.

SCENARIO 3:
Union A 4
Union B 1
Union C 35
No Union 40
Spoiled 20

A=15
B=15
C=10
No Union=40

Run-off election between A and B only.

According to Atty. Manuel, the objective is to
get the 2 highest unions, which in this case is A
and B.

*What if there are segregated votes? The determination of result may

be affected by the segregated votes, whether to have a run-off or not.
Not one of the choices won because none got
majority of the valid votes cast. No run-off because
100 votes were cast, and the unions got only 40.

*But in this scenario, there was a valid election! This is a valid

certification election which bars a petition for certification for one
year.

*The objective of the run-off election is to eliminate no union as a

choice, since it did not win anyway, and there is favored partiality
towards organization and having a bargaining agent.
*If there is failure of run-off election, get an immediate holding for
run-off again.
Take note of the Sanyo case. It explains Benguet substitutionality
doctrine.

** No choice is not tantamount to No Union. Keep that in

mind!!!
SCENARIO 4:
Union A 4
Union B 1
Union C 35
No Union 40
Spoiled 0

Total votes cast = 80 out of 100. No winner,

because no one got 41 votes. Run-off will
happen between A anc C because the total votes
for the union is at least 50% of the votes cast

SCENARIO 5:
A=20
B=10
C=10
No Union=40
Spoiled=0

Run-off will happen between A,

B and C.

109

D. ADMINISTRATION OF AGREEMENT; GRIEVANCE AND

VOLUNTARY ARBITRATION
LABOR CODE
Art. 212. Definitions.
(n) Voluntary Arbitrator means any person accredited by
the Board as such, or any person named or designated in
the Collective Bargaining Agreement by the parties to act as
their Voluntary Arbitrator or one chosen, with or without the
assistance of the National Conciliation and Mediation Board,
purauant to a selection procedure agreed upon in the
Collective Bargaining Agreement, or any official that may be
authorized by the Secretary of Labor and Employment to act
as Voluntary Arbitrator upon the written request and
agreement of the parties to a labor dispute.
TITLE VII-A
Grievance Machinery and Voluntary Arbitration
Art. 260.
Grievance
machinery
and
voluntary
arbitration. The parties to a collective bargaining
agreement shall include therein provisions that will ensure
the mutual observance of its terms and conditions. They
shall establish a machinery for the adjustment and
resolution of grievances arising from the interpretation or
implementation of their collective bargaining agreement and
those arising from the interpretation or enforcement of
company personnel policies.
All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days from
the date of its submission shall automatically be referred to
voluntary arbitration prescribed in the collective bargaining
agreement.
For this purpose, parties to a collective bargaining
agreement shall name and designate in advance a voluntary
arbitrator or panel of voluntary arbitrators, or include in the

agreement a procedure for the selection of such voluntary

arbitrator or panel of voluntary arbitrators, preferably from
the listing of qualified Voluntary Arbitrators duly accredited
by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary
Arbitrators, as may be necessary, pursuant to the selection
procedure agreed upon in the collective bargaining
agreement, which shall act with the same force and effect
as if the voluntary arbitrator or panel of voluntary
arbitrators have been selected by the parties as described
above. (As added by RA 6715)
Art. 261.
Jurisdiction of voluntary arbitrators and panel
of voluntary arbitrators. The Voluntary Arbitrator or panel
of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies
referred to in the immediately preceding Article.
Accordingly, violations of a Collective Bargaining Agreement,
except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For
purposes of this Article, gross violations of a Collective
Bargaining Agreement shall mean flagrant and/or malicious
refusal to comply with the economic provisions of such
agreement.
The Commission, its Regional Offices and the
Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and
shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the
collective bargaining agreement. (As added by RA 6715)

110

Art. 262.
Jurisdiction over other labor disputes. The
voluntary arbitrator or panel of voluntary arbitrators, upon
agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and
bargaining deadlocks. (As added by RA 6715)

labor-management cooperation programs at appropriate

levels of the enterprise baed on shared responsibility and
mutual respect in order to ensure industrial peace and
improvement in productively, working conditions and the
quality of working life.

Art. 262-B. Cost of Voluntary Arbitration and Voluntary

Arbitrators fee. The parties to a Collective Bargaining
Agreement shall provide therein a proportionate sharing
scheme on the cost of Voluntary Arbitration including the
Voluntary Arbitrators fee. The fixing of fee of Voluntary
Arbitrators or panel of Voluntary Arbitrators, whether
shouldered wholly by the parties or subsidized by the
Special Voluntary Arbitration Fund, shall take into account
the following factors:

(h) In establishments where no labor organization exists,

labor-management committees may be formed voluntarily
by workes and employers for the purpose of promoting
industrial peace. The Department of Labor and employment
shall endeavor to enlighten and educate the workers and
employers on their rights and responsibilities through labor
education with emphasis on the policiy thrusts of this Code.

(a)

Nature of the case;

(b)

Time consumed in hearing the case;

(c)

Professional standing of the voluntary arbitrator;

(d)

Capacity to pay of the parties; and

(e)

Fees provided for in the Revised Rules of Court. (As

added by RA 6715)

Art. 277. Miscellaneous Provisions.

(f) A special Voluntary Fund is hereby established in the
Board to so subsidize the cost of voluntary arbitration in
cases involving the interpretation and implementation of the
Collective Bargaining Agreement, including the Arbitrators
fees, and for such other related purposes to promote and
develop voluntary arbitration. The Board shall administer
the Special Voluntary Arbitration Fund in accordance with
the guidelines it may adopt upon the recommendation of
the Council, which guidelines shall be subject ti the approval
of the Secretary of Labor and Employment.
(g) The Ministry shall help promote and gradually develop,
with the agreement of labor organizations and employers,

OMNIBUS RULES, AS AMENED BY DO 40

RULE XIX
GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION
Section 1. Establishment of grievance machinery. - The parties to
a collective bargaining agreement shall establish a machinery for the
expeditious resolution of grievances arising from the interpretation or
implementation of the collective bargaining agreement and those
arising from the interpretation or enforcement of company personnel
policies. Unresolved grievances will be referred to voluntary
arbitration and for this purpose, parties to a collective bargaining
agreement shall name and designate in advance a voluntary
arbitrator or panel of voluntary arbitrators, or include in the
agreement a procedure for the selection of such voluntary arbitrator
or panel of voluntary arbitrators, preferably from the listing of
qualified voluntary arbitrators duly accredited by the Board.
In the absence of applicable provision in the collective bargaining
agreement, a grievance committee shall be created within ten (10)
days from signing of the collective bargaining agreement. The
committee shall be composed of at least two (2) representatives
each from the members of the bargaining unit and the employer,
unless otherwise agreed upon by the parties. The representatives

111

from among the members of the bargaining unit shall be designated

by the union.

thereafter commence arbitration proceedings in accordance with the

proceeding
paragraph.

Section 2. Procedure in handling grievances. - In the absence of

a specific provision in the collective bargaining agreement or existing
company practice prescribing for the procedures in handling
grievance,
the
following
shall
apply:

In instances where parties fail to select a voluntary arbitrator or panel

of voluntary arbitrators, the regional branch of the Board shall
designate the voluntary arbitrator or panel of voluntary arbitrators, as
may be necessary, which shall have the same force and effect as if
the parties have selected the arbitrator.

(a) An employee shall present this grievance or complaint orally or in

writing to the shop steward. Upon receipt thereof, the shop steward
shall verify the facts and determine whether or not the grievance is
valid.
(b) If the grievance is valid, the shop steward shall immediately bring
the complaint to the employee's immediate supervisor. The shop
steward, the employee and his immediate supervisor shall exert
efforts to settle the grievance at their level.
(c) If no settlement is reached, the grievance shall be referred to the
grievance committee which shall have ten (10) days to decide the
case.
Where the issue involves or arises from the interpretation or
implementation of a provision in the collective bargaining agreement,
or from any order, memorandum, circular or assignment issued by
the appropriate authority in the establishment, and such issue cannot
be resolved at the level of the shop steward or the supervisor, the
same may be referred immediately to the grievance committee.
Section 3. Submission to voluntary arbitration. - Where
grievance remains unresolved, either party may serve notice upon
the other of its decision to submit the issue to voluntary arbitration.
The notice shall state the issue or issues to be arbitrated, copy
thereof furnished the board or the voluntary arbitrator or panel of
voluntary arbitrators named or designated in the collective bargaining
agreement.
If the party upon whom the notice is served fails or refuses to
respond favorably within seven (7) days from receipt thereof, the
voluntary arbitrator or panel of voluntary arbitrators designated in the
collective bargaining agreement shall commence voluntary
arbitration proceedings. Where the collective bargaining agreement
does not so designate, the board shall call the parties and appoint a
voluntary arbitrator or panel of voluntary arbitrators, who shall

Section 4. Jurisdiction of voluntary arbitrator or panel of

voluntary arbitrators. - The voluntary arbitrator or panel of voluntary
arbitrators shall have exclusive and original jurisdiction to hear and
decide all grievances arising from the implementation or
interpretation of the collective bargaining agreements and those
arising from the interpretation or enforcement of company personnel
policies which remain unresolved after exhaustion of the grievance
procedure.
They shall also have exclusive and original jurisdiction, to hear and
decide wage distortion issues arising from the application of any
wage orders in organized establishments, as well as unresolved
grievances arising from the interpretation and implementation of the
productivity
incentive
programs
under
RA
6971.
The National Labor Relations Commission, its regional branches and
Regional Directors of the Department of Labor and Employment shall
not entertain disputes, grievances or matters under the exclusive and
original jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the
appropriate grievance machinery or voluntary arbitration provided in
the collective bargaining agreement.
Upon agreement of the parties, any other labor dispute may be
submitted to a voluntary arbitrator or panel of voluntary arbitrators.
Before or at any stage of the compulsory arbitration process, the
parties may opt to submit their dispute to voluntary arbitration.
Section 5. Powers of voluntary arbitrator or panel of voluntary
arbitrators. - The voluntary arbitrator or panel of voluntary arbitrators
shall have the power to hold hearings, receive evidence and take
whatever action is necessary to resolve the issue/s subject of the
dispute.

112

The voluntary arbitrator or panel of voluntary arbitrators may

conciliate or mediate to aid the parties in reaching a voluntary
settlement of the dispute.
Section 6. Procedure. - All parties to the dispute shall be entitled to
attend the arbitration proceedings. The attendance of any third party
or the exclusion of any witness from the proceedings shall be
determined by the voluntary arbitrator or panel of voluntary
arbitrators. Hearing may be adjourned for cause or upon agreement
by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
voluntary arbitrator or panel of voluntary arbitrators to render an
award or decision within twenty (20) calendar days from the date of
submission
for
resolution.
Failure on the part of the voluntary arbitrator to render a decision,
resolution, order or award within the prescribed period, shall upon
complaint of a party, be sufficient ground for the Board to discipline
said voluntary arbitrator, pursuant to the guidelines issued by the
Secretary. In cases that the recommended sanction is de-listing, it
shall be unlawful for the voluntary arbitrator to refuse or fail to turn
over to the board, for its further disposition, the records of the case
within ten (10) calendar days from demand thereof.
Section 7. Finality of Award/Decision. - The decision, order,
resolution or award of the voluntary arbitrator or panel of voluntary
arbitrators shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties and it
shall not be subject of a motion for reconsideration.
Section 8. Execution of Award/Decision. - Upon motion of any
interested party, the voluntary arbitrator or panel of voluntary
arbitrators or the Labor Arbiter in the region where the movant
resides, in case of the absence or incapacity for any reason of the
voluntary arbitrator or panel of voluntary arbitrators who issued the
award or decision, may issue a writ of execution requiring either the
Sheriff of the Commission or regular courts or any public official
whom the parties may designate in the submission agreement to
execute the final decision, order or award.

Section 9. Cost of voluntary arbitration and voluntary

arbitrator's fee. - The
parties to a collective bargaining agreement shall provide therein a
proportionate sharing scheme on the cost of voluntary arbitration
including the voluntary arbitrator's fee. The fixing of fee of voluntary
arbitrators or panel of voluntary arbitrators, whether shouldered
wholly by the parties or subsidized by the Special Voluntary
Arbitration Fund, shall take into account the following factors:
(a)
(b)
(c)
(d)
(e)

Nature
Time
consumed
Professional
standing
Capacity
to
pay
Fees provided for in

of
in
of

the
case;
hearing
the
case;
the
voluntary
arbitrator;
of
the
parties;
and
the Revised Rules of Court.

Unless the parties agree otherwise, the cost of voluntary arbitration

proceedings and voluntary arbitrator's fee shall be shared equally by
the
parties
Parties are encouraged to set aside funds to answer for the cost of
voluntary arbitration proceedings including voluntary arbitrator's fee.
In the event the said funds are not sufficient to cover such expenses,
an amount by way of subsidy taken out of the Special Voluntary
Arbitration fund may be availed of by either or both parties subject to
the guidelines on voluntary arbitration to be issued by the Secretary.
Section 10. Maintenance of case records by the Board. - The
Board shall maintain all records pertaining to a voluntary arbitration
case. In all cases, the Board shall be furnished a copy of all
pleadings and submitted to the voluntary arbitrator as well as the
orders, awards and decisions issued by the voluntary arbitrator.
The records of a case shall be turned over by the voluntary arbitrator
or panel of voluntary arbitrators to the concerned regional branch of
the Board within ten (10) days upon satisfaction of the final arbitral
award/order/decision.
RULE XXI
LABOR-MANAGEMENT AND OTHER COUNCILS

113

Section 1. Creation of labor-management and other councils. The Department shall promote the formation of labor-management
councils in organized and unorganized establishments to enable the
workers to participate in policy and decision-making processes in the
establishment, insofar as said processes will directly affect their
rights, benefits and welfare, except those which are covered by
collective bargaining agreements or are traditional areas of
bargaining.
The Department shall promote other labor-management cooperation
schemes and, upon its own initiative or upon the request of both
parties, may assist in the formulation and development of programs
and projects on productivity, occupational safety and health,
improvement of quality of work life, product quality improvement, and
other similar scheme.
In line with the foregoing, the Department shall render, among
others, the following services:
(a) Conduct awareness campaigns;
(b) Assist the parties in setting up labor-management structures,
functions and procedures;
(c) Provide process facilitators upon request of the parties; and
(d) Monitor the activities of labor-management structures as may be
necessary and conduct studies on best practices aimed at promoting
harmonious labor-management relations.
Section 2. Selection of representatives. - In organized
establishments, the workers' representatives to the council shall be
nominated by the exclusive bargaining representative. In
establishments where no legitimate labor organization exists, the
workers representative shall be elected directly by the employees at
large.

CASES
Mactan Workers Union vs. Aboitiz, 45 SCRA 577
The terms and conditions of a collective bargaining contract
constitute the law between the parties. Those who are entitled to its
benefits can invoke its provisions. In the event that an obligation

therein imposed is not fulfilled, the aggrieved party has the right to
go to court for redress.
It is a well-settled doctrine that the benefits of a collective
bargaining agreement extend to the laborers and employees in the
collective bargaining unit, including those who do not belong to the
chosen collective bargaining labor organization. Any other view
would be a discrimination on which the law frowns. If the benefits
of a collective bargaining agreement would not extend to the nonmembers of a chosen collective bargaining labor union, the highly
salutary purpose and objective of the collective bargaining scheme to
enable labor to secure better terms in employment condition as well
as rates of pay would be frustrated insofar as non-members are
concerned, deprived as they are of participation in whatever
advantages could thereby be gained. The labor union that gets the
majority vote as the exclusive bargaining representative does not act
for its members alone. It represents all the employees in such
bargaining unit. It is not to be indulged in any attempt on its part to
disregard the rights of non-members.
Benguet Consolodated v BCI Employees and Workers Union, 23
SCRA 465
Union 1 forged a CBA with the employer with a no-strike, nolockout clause. Subsequently, but during the effectivity of the CBA,
Union 2 was certified as the new bargaining agent. Union 2 filed a
notice of strike and did stage a strike. The employer invokes the nostrike clause in the CBA against Union 2.
Held: The clause does not bind Union 2 on the basis of the
substitutionary doctrine. Although the substitutionary doctrine
provides that the employees cannot revoke a validly executed CBA
by the simple expedient of changing their bargaining agent, this is
subject to certain exceptions, to wit:
1. To negotiate with management for the shortening of the
CBA
2. Personal undertakings

114

The undertaking of Union 1 not to strike is personal in nature

and does not bind any union other than Union 1. A new collective
bargaining agent does not automatically assume the personal
undertakings of the deposed union.
SUBSTITUTIONARY DOCTRINE
Where there occurs a shift in the employees union allegiance
after the execution of a CBA, the employees may change their
agent, but the CBA, which is still subsisting, continues to bind
the employees up to its expiration date

Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109 v

Cazinares, 211 SCRA 361
The CBA between Union and Sanyo contained a union security
clause. Subsequently, Union cancelled the membership of a number
of employees for various reasons. The union then submitted the
names these employees to the employer recommending their
dismissal, claiming that the said employees refused to submit
themselves to the unions grievance investigation committee. Sanyo
ordered the preventive suspension of the employees following this
recommendation. The company received no further information on
whether or not said employees appealed the cancellation of their
respective memberships. Hence it considered them dismissed. The
dismissed employees filed a complaint for illegal dismissal.
Held: There is illegal dismissal. The law authorizes the enforcement
of a union security clause in the CBA provided that such
enforcement is not characterized by arbitrariness and always with
due process. Sanyo failed in these two aspects.
The employees in this case filed the complaint for illegal dismissal
with the NLRC. Union claims that the NLRC has no jurisdiction
because the dispute relates to implementation of the CBA

(specifically the union security clause) and is subject to grievance

machinery and voluntary arbitration.
Held: NLRC has jurisdiction. The parties to the CBA are the union
and the company, hence, only disputes involving the union and the
company against each other shall be referred to the grievance
machinery or voluntary arbitrators. In this case, the union and the
employer are united as to the dismissal of the employees. There
exists no grievance between them that could be brought to a
grievance machinery.
PRINCIPLE OF HOLD OVER
In the absence of a new CBA, the parties must maintain the
status quo and must continue in full force and effect the terms
and conditions of the existing agreement until a new agreement
is reached.

Maneja vs. NLRC, 290 SCRA 603

The issue is whether illegal dismissal cases are within the
jurisdiction of labor arbiters.
Held: Article, 217 (c) should be read in conjunction with Article
261 of the Labor Code which grants to voluntary arbitrators original
and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies. Note
the phrase "unresolved grievances." In the case at bar, the
termination of petitioner is not an unresolved grievance. the
dismissal of petitioner does not fall within the phrase "grievances
arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or
enforcement of company personnel policies," the jurisdiction of
which pertains to the grievance machinery or thereafter, to a
voluntary arbitrator or panel of voluntary arbitrators. In the case at

115

bar, the union does not come into the picture, not having objected or
voiced any dissent to the dismissal of the herein petitioner.
Sime Darby Pilipinas vs. Magsalin, 180 SCRA 177
The award of a Voluntary Arbitrator is final and executory after ten
(10) calendar days from receipt of the award by the parties and the
decision can only be challenge based on the ground of grave abuse of
discretion only.
Imperial Textile Mills vs. Sampang, 219 SCRA 651
When the parties submitted their grievance to arbitration, they
expressly agreed that the decision of the Voluntary Arbitrator would
be final, executory and unappealable. In fact, even without this
stipulation, the first decision had already become so by virtue of
Article 263 of the Labor Code making voluntary arbitration awards
or decisions final and executory. The Voluntary Arbitrator lost
jurisdiction over the case submitted to him the moment he rendered
his decision. Therefore, he could no longer entertain a motion for
reconsideration of the decision for its reversal or modification.
It is true that the present rule makes the voluntary arbitration
award final and executory after ten calendar days from receipt of the
copy of the award or decision by the parties. Presumably, the
decision may still be reconsidered by the Voluntary Arbitrator on the
basis of a motion for reconsideration duly filed during that period.
Such a provision, being procedural, may be applied retroactively to
pending actions as we have held in a number of cases. However, it
cannot be applied to a case in which the decision had become final
before the new provision took effect, as in the case at bar. R.A. 6715,
which introduced amended Article 262-A of the Labor Code, became
effective on March 21, 1989. The first decision of the Voluntary
Arbitrator was rendered on July 12, 1988, when the law in force was
Article 263 of the Labor Code, which provided that: Voluntary
arbitration awards or decisions shall be final, unappealable, and
executory.
Continental Marble Corporation vs. NLRC, 161 SCRA 151

The Supreme Court can review the decisions of voluntary arbitrators

inspite of statutory provisions making 'final' the decisions of certain
administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse
of discretion, violation of due process, denial of substantial justice,
or erroneous interpretation of the law were brought to our attention.
A voluntary arbitrator by the nature of her functions acts in a quasijudicial capacity. There is no reason why her decisions involving
interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law
and yet we do not hesitate to pass upon their work where a question
of law is involved or where a showing of abuse of authority or
discretion in their official acts is properly raised in petitions for
certiorari.
Luzon Development Bank vs. Association of Luzon Development
Bank Employees, 249 SCRA 162
Arbitration may be classified as either compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute
are compelled by the government to forego their right to strike and
are compelled to accept the resolution of their dispute through
arbitration by a disinterested third party normally appointed by the
government, and whose decision is final and binding on the parties.
Under voluntary arbitration, on the other hand, referral of a dispute
by the parties is made, pursuant to a voluntary arbitration clause in
their collective agreement, to an impartial third person who is
mutually acceptable, for a final and binding resolution.
Article 261 of the Labor Code provides for exclusive
original jurisdiction of voluntary arbitrator or panel of arbitrators.
Article 262 authorizes them, but only upon agreement of the parties,
to exercise jurisdiction over other labor disputes. On the other hand,
a labor arbiter has jurisdiction on cases enumerated under Article 217
of the Labor Code. The jurisdiction conferred by law on a voluntary
arbitrator or a panel of such arbitrators is quite limited compared to
the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for

116

that matter. The state of our present law relating to voluntary

arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar
days from receipt of the copy of the award or decision by the
parties," while the "(d)ecision, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders." Hence, while there is an express mode
of appeal from the decision of a labor arbiter, Republic Act No. 6715
is silent with respect to an appeal from the decision of a voluntary
arbitrator. Yet, past practice shows that a decision or award of a
voluntary arbitrator is, more often than not, elevated to the Supreme
Court itself on a petition for certiorari, in effect equating the
voluntary arbitrator with the NLRC or the Court of Appeals. In the
view of the Court, this is illogical and imposes an unnecessary
burden upon it.

there is actually no CBA with respect to the transferee/new

employer.)

Sundowner Development Corp. v Drilon, 180 SCRA 14

Hotel Mabuhay, Inc., due to financial difficulties, sold all its assets
and personal properties to Sundowner. (blablabla, strike, complaint,
strike, dispute a lot of events immaterial to the issue) This case was
subsequently filed by the Union representing the rank and file
employees of Mabuhay. This case involves several issues, all of
which revolve about the singular issue of whether or not Sundowner
may be compelled to absorb the employees of Mabuhay.

Section 1. Creation of labor-management and other councils. The Department shall promote the formation of labor-management
councils in organized and unorganized establishments to enable the
workers to participate in policy and decision-making processes in the
establishment, insofar as said processes will directly affect their
rights, benefits and welfare, except those which are covered by
collective bargaining agreements or are traditional areas of
bargaining.
The Department shall promote other labor-management cooperation
schemes and, upon its own initiative or upon the request of both
parties, may assist in the formulation and development of programs
and projects on productivity, occupational safety and health,
improvement of quality of work life, product quality improvement, and
other similar scheme.
In line with the foregoing, the Department shall render, among
others, the following services:
(a) Conduct awareness campaigns;
(b) Assist the parties in setting up labor-management structures,
functions and procedures;
(c) Provide process facilitators upon request of the parties; and

Held: NO. As a general rule, there is no law requiring a bona fide

purchaser of assets of an ongoing concern to absorb in its employ the
employees of the latter. The rule is that, unless expressly assumed,
labor contracts such as employment contracts and CBAs are not
enforceable against the transferee of an enterprise, labor contracts
being in personam and thus binding only the parties thereto.
(Implied from the obiter in the last sentence that when there is a
bone fide transfer of interest over an enterprise the CBA entered into
with the transferor does not bind the transferee: there exists no
contract bar to the filing of a petition for certification election since

Art. 277
(h) In establishments where no legitimate labor
organization exists, labor-management committees may be
formed voluntarily by workers and employers for the
purpose of promoting industrial peace. The Department of
Labor and Employment shall endeavor to enlighten and
educate the workers and employers on their rights and
responsibilities through labor education with emphasis on
the policy thrusts of this Code.

OMNIBUS RULES, AS AMENED BY DO 40

RULE XXI
LABOR-MANAGEMENT AND OTHER COUNCILS

117

(d) Monitor the activities of labor-management structures as may be

necessary and conduct studies on best practices aimed at promoting
harmonious labor-management relations.
Section 2. Selection of representatives. - In organized
establishments, the workers' representatives to the council shall be
nominated by the exclusive bargaining representative. In
establishments where no legitimate labor organization exists, the
workers representative shall be elected directly by the employees at
large.

118