Page 1 of 141
LABOR RELATIONS | COVERAGE OF THE RIGHTS TO SELF ORGANIZATION |
ART. 253-257
G.R. No. 80882 April 24, 1989
SOUTHERN PHILIPPINES FEDERATION OF LABOR
(SPFL), petitioner,
vs.
HONORABLE PURA FERRER CALLEJA, Director, Bureau of Labor
Relations, Department of Labor and Employment, public
respondent. MINDANAO MINERS EMPLOYEE UNION SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN), forced intervenor-private
respondent. APEX MINING COMPANY, INC., employer-private
respondent.
Proculo P. Fuentes, Jr. for petitioner.
Valeriano F. Pasquil and Ruben V. Abarquez for respondent Apex Mining
Co., Inc.
Raul C. Nengasca and Antonio G. Jolejole for respondent Sandigan.
GUTIERREZ, JR., J.:
This petition for certiorari seeks to annul and set aside the Order issued
by public respondent Director Pura Ferrer Calleja of the Bureau of Labor
Relations dated June 23, 1987 which certified the respondent union,
Mindanao Miners Employees Union-Sandigan ng Manggagawang
Pilipino (MMEU-Sandigan), as the sole and exclusive bargaining
representative of the rank-and-file employees of respondent Apex Mining
Company (Apex) after the said public respondent denied the motion of
herein petitioner to exclude one hundred ninety-seven (197) employees
from voting in the certification election. The denial is based on the ground
that they are rank-and-file employees.
As summarized by the Solicitor General in his Comment, the facts are as
follows:
On December 29, 1986, petitioner Southern Philippines
Federation of Labor filed a petition for certification election
among the rank-and-file employees of private respondent
Apex Mining Company, Incorporated with the Department
of Labor in Region XI, Davao City.
On February 6, 1987, Med-Arbiter Conrado 0. Macasa,
Sr. issued an Order calling for the holding of the
certification election on February 23, 1987 among the
rank-and-file employees of APEX with the following
choices:
l. Southern Philippines Federation of Labor (SPFL)
2. Mindanao Miners Employees Union-Sandigan ng
Manggagawang Pilipino (MMEU-Sandigan) and
3. No union.
On February 9, 1987, a pre-election conference was
conducted among the petitioner Union; private
respondent Union, MMEU-Sandigan; and APEX to settle
details in the conduct of the election such as the venue of
the election and the list of employees qualified to vote in
the election.
During the pre-election conference, the parties agreed to
delete from the list of workers prepared and submitted by
APEX numbering One Thousand Seven Hundred Sixteen
(1,716), the names of nineteen (1 9) managerial
employees and seventy-three probationary employees
who were statutorily disqualified from voting. Petitioner
Union objected to the inclusion in said list of the following:
(1) employees occupying the positions of Supervisor I, II,
and III; (2) employees under confidential/special payrolls;
and (3) employees who were not paying Union dues. The
petitioner Union contends that the aforementioned
employees were disqualified from participating in the
certification election since the Supervisors were
managerial employees while the last two were disqualified
by virtue of their non-membership in the Union and their

exclusion from the benefits of the collective bargaining
agreement.
In view of the lack of agreement among the parties on the
list of qualified voters, Med-Arbiter Macasa issued an
Order on February 20, 1987, the dispositive portion of
which reads:
"Wherefore, premises considered it is
hereby declared that the following groups
of workers be not included in the list of
employees qualified to vote in the consent
election on February 23, 1987, as follows:
1 Nineteen (19) managerial employees;
2 Seventy-three (73) probationary
employees; and
3 Nineteen (19) Supervisors 1;
All other workers except the foregoing will
be allowed to vote."
On February 23, 1987, the day of the certification
election, petitioner Union filed a Motion for
Reconsideration of Macasa's Order dated February 20,
1987. The certification election was nonetheless
conducted, with the result as follows:
l. Southern Philippines Federation of Labor............. 614
2. Mindanao Miners
Employees union
(MMEU-
Sandigan)..........................
......................... 528
3. No Union.........................................................................
9 "Wherefore, the interest of industrial
Page 2 of 141
4. Challenged
Ballots......................................................197
5.
Spoiled............................................................................25
TOTAL VOTES
CAST............................................................1,373
On the basis of the foregoing results, respondent Union
filed an Urgent Motion to Open the Challenged Ballots,
with the prayer, to wit:
"Wherefore, premises considered, it is
most respectfully prayed of this Honorable
office that this instant motion be given due
course and that an order be issued to
open and count the challenged ballots in
order to determine, once and for all, the
winner in the certification and/or consent
election and thereafter certify the sole and
exclusive collective bargaining
representative of all rank-and-file
employees and workers of Apex Mining
Company, Incorporated."
xxx xxx xxx
On March 11, 1987, APEX filed a Manifestation and
Motion manifesting its interest in the speedy resolution of
the case and primary concern for "the restoration of
normalcy and the preservation of industrial peace in the
already explosive situation in the mining area."
xxx xxx xxx
On March 19, 1987, Med-Arbiter Macasa issued an
Order, the dispositive portion of which reads:
peace considered, it is hereby directed

that the challenged ballots be opened and
inventoried on 26 March 1987 at 3:00
p.m., before the entire records of the case
be indorsed to the BLR for review."
xxx xxx xxx
Petitioner Union appealed Macasa's Order dated March
19, 1987 to the Bureau of Labor Relations. On April 14,
1987, BLR Director Pura Ferrer-Calleja issued an Order,
the dispositive portion of which reads:
"WHEREFORE, the Appeal of petitioner
Southern Philippines Federation of Labor
(SPFL) is hereby dismissed for lack of
merit and the Med- Arbiter's Order dated
19 March 1987 is affirmed with
modification that the 197 ballots should be
opened and canvassed by Labor Regional
Office XI, Davao City. Let, therefore, the
records of this case be immediately
remanded to the said office, for the
immediate implementation of this
Resolution."
Petitioner Union moved for a reconsideration of the
resolution dated April 14, 1987. Meanwhile, on May 21,
1987, Med-Arbiter Macasa opened and canvassed the
197 challenged ballots with the result as follows:
SPFL 12 votes
SANDIGAN 178 votes
No Union 2 votes
Spoiled 4 votes
Envelop with
no ballots 1 vote
__________
TOTAL 197 votes
Page 3 of 141
As a consequence of the opening and canvass of the
challenged ballots, the outcome of the certification
election became:
SPFL 626 votes
SANDIGAN 706 votes
No Union 11 votes
___________
TOTAL 1,343 votes
Based on the aforementioned results, respondent Union
filed a Manifestation with the BLR with prayer for the
issuance of Certification Order certifying it as the sole and
exclusive bargaining representative of the rank-and-file
employees of APEX. On June 23, 1987, Director Calleja
issued an Order, the dispositive portion of which reads:
"WHEREFORE, the Motion for
reconsideration of Petitioner SPFL is
hereby denied for lack of merit.
Meanwhile, intervenor Mindanao
Employees Union-Sandigan Ng
Manggagawang Pilipino (MMEU-
SANDIGAN) is hereby certified as the sole
and exclusive bargaining representative of
the rank-and-file employees of respondent
Apex Mining Company, Inc. Accordingly,
the management of Apex Mining
Company, Inc., is directed to negotiate
with (MMEU-SANDIGAN) for the
conclusion of a collective bargaining
agreement (CBA)."
Hence, this petition.
The issue raised in this petition is whether or not the public respondent
committed grave abuse of discretion in allowing the 197 employees to
vote in the certification election when, as alleged by the petitioner, they
are disqualified by express provision of law or under the existing
collective bargaining agreement.

It is maintained by the petitioner that under the Labor Code, managerial
employees are excluded from forming or joining a collective bargaining
unit; and under the collective bargaining agreement executed between
Apex and respondent union, among those who are excluded from the
bargaining unit are: a) managerial employees as defined in paragraph K,
Article 212 of the Labor Code; b) those performing supervisory functions;
and c) those holding confidential positions as determined by the
company. Therefore, the employees holding the positions of Supervisors
II and III and those in the confidential payrolls should be excluded from
joining the bargaining unit and from voting in the certification election.
Likewise, those employees who are not paying union dues should be
excluded from the same since the existing CBA contains a Union shop
provision.
The contentions have no merit.
Although we have upheld the validity of the CBA as the law among the
parties, (see Planters Products, Inc. v. NLRC, et al., G.R. No. 78524,
January 20, 1989), its provisions cannot override what is expressly
provided by law that only managerial employees are ineligible to join,
assist or form any labor organization (See Art. 247, Labor Code).
Therefore, regardless of the challenged employees' designations,
whether they are employed as Supervisors or in the confidential payrolls,
if the nature of their job does not fall under the definition of "managerial"
as defined in the Labor Code, they are eligible to be members of the
bargaining unit and to vote in the certification election. Their right to self-
organization must be upheld in the absence of an express provision of
law to the contrary. It cannot be curtailed by a collective bargaining
agreement.
Hence, it is important to determine whether the positions of Supervisors II
and III are considered "managerial" under the law.
As defined in the Labor Code and as we have held in the case of Franklin
Baker Company of the Phils. v. Trajano, (1 57 SCRA 416, 421-423,
[1988]):
A managerial employee is defined as one who is vested
with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees,
Page 4 of 141
or to effectively recommend such managerial actions.
(Reynolds Phil. Corp. v. Eslava, 137 SCRA [1985], citing
Section 212 (K), Labor Code.)
xxxxxxxxx
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 the
company, the same, although present, are not effective
and not an exercise of independent judgment as required
by law (National Warehousing Corp. v. CIR, 7 SCRA 602-
603 [1963]).
Furthermore, in line with the ruling of this Court, 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 (National Waterworks and Sewerage Authority v.
NWSA Consolidated, L-18938, 11 SCRA 766 [1964]).
The petitioner's motion for reconsideration before the public respondent
outlined the job description of Supervisors. In the category of Supervisory
II, the "General Summary" provides:
GENERAL SUMMARY:
Assists the Foreman in the effective
dispatching/distribution of manpower and equipment to
carry out approved work. (p. 30, Rollo)
while the first duty enumerated in the position of Supervisor III states:
 Page 5 of 141

1. Executes and coordinates work plans emanating from

his supervisors. (p. 32, Rollo)

Thus, it is clear from the above provisions that the functions of the
questioned positions are not managerial in nature because they only
execute approved and established policies leaving little or no discretion
at all whether to implement the said policies or not. The respondent
Director, therefore, did not commit grave abuse of discretion in dismissing
the petitioner's appeal from the Med-Arbiter's Order to open and count
the challenged ballots in denying the petitioner's motion for
reconsideration and in certifying the respondent Union as the sole and
exclusive bargaining representative of the rank-and-file employees of
respondent Apex .

As regards the employees in the confidential payroll, the petitioner has

not shown that the nature of their jobs is classified as managerial except
for its allegation that they are considered by management as occupying
managerial positions and highly confidential. Neither can payment or
non-payment of union dues be the determining factor of whether the
challenged employees should be excluded from the bargaining unit since
the union shop provision in the CBA applies only to newly hired
employees but not to members of the bargaining unit who were not
members of the union at the time of the signing of the CBA. It is,
therefore, not impossible for employees to be members of the bargaining
unit even though they are non-union members or not paying union dues.

WHEREFORE, the petition is hereby DISMISSED for LACK OF MERIT.

Costs against the petitioner.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.


G.R. No. 77231 May 31, 1989
SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC.
(SAJELCO), petitioner,
vs.
MINISTRY OF LABOR AND EMPLOYMENT and MAGKAISA-
ADLO, respondents.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court.
Petitioner San Jose City Electric Service Cooperative, Inc. (SAJELCO, for
brevity) seeks the reversal of the Order (pp. 38-40, Rollo) of Pura Ferrer-
Calleja, Director of Bureau of Labor Relations in BLR Case No. A-10-
259-86 which affirmed the Order of Med-Arbiter Antonio R. Cortez to
conduct a certification election among the rank-and-file employees of
SAJELCO.
The antecedent facts of the instant case are as follows:
On July 29, 1986, private respondent Manggagawang Nagkakaisa ng
SAJELCO-Association of Democratic Labor Organization (MAGKAISA-
ADLO) filed a petition (pp. 16-18, Rollo) for direct certification election
with the Regional Office No. 111 of the Department of Labor and
Employment in San Fernando, Pampanga. The petition alleged that
MAGKAISA-ADLO is a legitimate labor organization duly registered with
the Ministry of Labor and Employment; that there are more or less fifty-
four (54) rank and file employees in SAJELCO; that almost 62% of the
employees sought to be represented have supported the filing of the
petition; that there has been no valid certification election held in
SAJELCO during the twelve (12) month period prior to the filing of the
petition and that there is no other union in the bargaining unit.
In its answer (pp. 19-21, Rollo), SAJELCO opposed the petition for direct
certification election contending, inter alia, that the employees who
sought to be represented by private respondent are members-consumers
of the Cooperative itself and at the same time composed the General
Assembly which, pursuant to the By-laws is also the final arbiter of any
dispute arising in the Cooperative. Thus:
xxx
Page 6 of 141
5. That some, if not most, of the employees who sought to
be represented by the petitioner, are member-consumers,
and as such are members of the General or Special
Assembly which is the final arbiter on any dispute which a
member and/or the Board, or the Cooperative may have,
and that such "some"of said alleged supporters, in their
capacity as member-consumers, enjoy two personalities
in that as employees and/or members of the General
Assembly, and therefore cannot fairly and prudently
represent such opposing personalities that merge into
one juridical or natural person, and these special and
unique status or personalities of the supposed supporters
cannot qualify to be represented by the petitioner, without
doing injustice, in equity and unfair status or advantage to
those member-consumers who have not that destiny or
status of becoming employees;
6 No valid and lawful representation can be obtained by
petitioner in behalf of the supposed supporters, who are
also member-consumer, that are bound by the Article of
Incorporation, By-laws of the respondent Cooperative and
pertinent Decrees and laws, to support and defend the
basic policies of the Government on Electric
Cooperatives;
7. There is no possible legal way by which to dismantle
the personalities of some of the supporters of the
petitioner, as employees, from their status as consumer-
members, who are, under the By-laws, part and parcels of
the General or Special Assembly that finally decides any
dispute, and no reasonable or valid scale of justice could
be invoked to divide a person who, in conscience, is also
the other fellow against whom a remedy is sought for in
allowing this to happen is tantamount to slaughtering a
man to his own ends;
xxx
On September 5, 1986, the Med-Arbiter who was assigned to the case
issued an Order (pp. 24-26, Rollo) granting the petition for direct
certification election on the basis of the pleadings filed. The Order said

that while some of the members of petitioner union are members of the
cooperative, it cannot be denied that they are also employees within the
contemplation of the Labor Code and are therefore entitled to enjoy all
the benefits of employees, including the right to self-organization (pp.
25, Rollo). This Order was appealed by SAJELCO to the Bureau of Labor
Relations.
In its appeal, (pp. 27-36, Rollo) SAJELCO reiterated its position that:
. . . upon the principle that in electric cooperative — as in
the case of respondent, there is a merger of the
consumer-members that composed of the assembly and
that of the rank-and-file members of the petitioners-into
one person or juridical status thus rendering the proposed
collective bargaining agent ineffective and/or uncalled for
— considering that a grievance machinery for employees
and/or member-consumers of the cooperative-has been
provided for by the By-laws as a built-in over-all arbiter
involving disputes affecting said cooperative;
Respondent Director of the Bureau of Labor Relations dismissed the
appeal and sustained the ruling of the Med-Arbiter in an order dated
January 5, 1987.
On February 19, 1987, SAJELCO filed the instant petition
for certiorari praying that the order of respondent Director be set aside
and another one rendered denying the holding or conduct of a
certification election among the rank and file employees of SAJELCO.
In a letter dated June 20, 1987, Atty. Ricardo Soto, Jr., counsel for
private respondent union, manifested that a direct certification election
was conducted in SAJELCO, there being no restraining order from this
Court enjoining the holding thereof Likewise, Atty. Soto was of the
opinion that in view of the direct certification election conducted, the
petition brought before this Court by SAJELCO has become moot and
academic (p. 48, Rollo). Attached to his letter is a copy of the minutes of
the certification election held on April 13, 1987 showing that of forty three
(43) employees who voted, thirty (30) voted for respondent union and
thirteen (13) voted for "no union."
Page 7 of 141
In the resolution of this court (First Division) dated September 29, 1987,
respondents were required to comment on the petition. The Solicitor
General filed its comment dated October 30, 1987 wherein it took a stand
contrary to that of respondent Director. To support its stand, the Solicitor
General argued firstly, that the union members who seek to be
represented by the union are the very members of the cooperative,
thereby resulting in a fusion of two personalities. Thus, it will be
inconsistent for the union members to bargain with themselves.
Secondly, he said that article 243 of the Labor Code; requires that before
one can form, join or assist a labor union, he must first be employed and
to be an employee one must be under hire and must have no
involvement in the ownership of the firm. A labor union is formed for
purposes of collective bargaining. The duty to bargain exists only
between employer and employees and not between an employer and his
co-owners. Thirdly, he also said that under the National Electrification
Decree (P.D. No. 269, August 6, 1973) members of an electric
cooperative such as petitioner, besides contributing financially to its
establishments and maintenance, participate in its management. In the
latter aspect, they possess the powers and prerogatives of managerial
employees who are not eligible to join, assist or form any labor
organization (pp. 4-6 of Comment; pp 43-45, Rollo).
On November 25, 1987, We required Atty. Soto, Jr. to comment on the
comment of the Solicitor General (p. 47, Rollo). However, the notices
sent to him were returned and stamped "moved to an unknown address."
But respondent Director of the Bureau of Labor Relations filed a
comment on the aforesaid comment of the Solicitor General reiterating
his stand that members of private respondent union fall under the general
provision of Article 244 of the Code on who are qualified to form, join or
assist in the formation of unions as they are neither managerial
employees nor persons belonging to subversive organizations. Thus, on
May 25, 1988, we gave due course to the petition (p. 79, Rollo).
The only issue presented for resolution in this petition is whether or not
the employees-members of an electric cooperative can organize
themselves for purposes of collective bargaining.
This Court had the occasion to rule on this issue in the consolidated
cases of Batangas I-Electric Cooperative Labor Union vs. Romeo Young,
et al., G.R. No. 62386, Bulacan II- Electric Cooperative, Inc., vs. Hon.
Eliseo A. Penaflor, et al., G.R. No. 70880 and Albay Electric Cooperative
vs. Crescencio B. Trajano et. al., G.R. No. 74560 (November 9, 1988),

citing the case of Cooperative Rural Bank of Davao City, Inc. vs. Pura
Ferrer-Calleja, G.R. No. 77951, September 26,1988, where it was held
that:
A cooperative, therefore, is by its nature different from an
ordinary business concern being run either, by persons,
partnerships or corporations. Its owners and/or members
are the ones who run and operate the business while the
others are its employees. As above stated, irrespective of
the name of shares owned by its members they are
entitled to cast one vote each in deciding upon the affair
of the cooperative. Their share capital earn limited
interests, They enjoy special privileges as — exemption
from income tax and sales taxes, preferential right to
supply their products to State agencies and even
exemption from minimum wage laws.
An employee therefore of such a cooperative who is a
member and co-owner thereof cannot invoke the right to
collective bargaining for certainly an owner cannot
bargain with himself or his co-owners. In the opinion of
August 14, 1981 of the Solicitor General, he corectly
opined that employees of cooperatives who are
themselves members of the cooperative have no right to
form or join labor organizations for purposes of collective
bargaining for being themselves co-owners of the
cooperative.
However, in so far as it involves cooperatives with
employees who are not members or co-owners thereof,
certainly such employees are entitled to exercise the
rights of all workers to organization, collective bargaining,
negotiations and others as are enshrined in the
Constitution and existing laws of the country.
In this petition, San Jose City Electric Service Cooperative, Inc.
(SAJELCO) claims that its employees are also members of the
cooperative. It cited Section 17(18) of its By-laws which declares that:
The Board shall also create positions for subordinate
employees and fix their duties and remunerations. Only
Page 8 of 141
member-consumers or members of their immediate family
shall be employed by the cooperative (Emphasis
supplied).
The above-cited provision, however, mentions two types of employees,
namely: the members-consumers and the members of their immediate
families. As regards employees of SAJELCO who are members-
consumers, the rule is settled that they are not qualified to form, join or
assist labor organizations for purposes of collective bargaining. The
reason for withholding from employees of a cooperative who are
members-co-owners the right to collective bargaining is clear: an owner
cannot bargain with himself. However, employees who are not members-
consumers may form, join or assist labor organizations for purposes of
collective bargaining notwithstanding the fact that employees of
SAJELCO who are not members-consumers were employed ONLY
because they are members of the immediate family of members-
consumers. The fact remains that they are not themselves members-
consumers, and as such, they are entitled to exercise the rights of all
workers to organization, collective bargaining, negotiations and others as
are enshrined in Section 8, Article III and Section 3, Article XIII of the
1987 Constitution, Labor Code of the Philippines and other related laws
(Cooperative Rural Bank of Davao City, Inc., supra, p. 10).
ACCORDINGLY, the petition is GRANTED. The assailed Order of
respondent Pura Ferrer-Calleja, Director of the Bureau of Labor Relations
is hereby MODIFIED to the effect that only the rank-and-file employees of
petitioner who are not its members-consumers are entitled to self-
organization, collective bargaining, and negotiations, while other
employees who are members-consumers thereof cannot enjoy such right.
The direct certification election conducted on April 13, 1987 is hereby set
aside. The Regional Office III of the Department of Labor and
Employment in San Fernando, Pampanga is hereby directed: (a) to
determine the number of rank and file employees of SAJELCO who are
not themselves members-consumers; (b) to resolve whether or not there
is compliance with the requirements set forth in Article 257 of the Labor
Code; and (c) in the affirmative, to immediately conduct a direct
certification election among the rank and file employees of SAJELCO
who are not members-consumers.
SO ORDERED.
 Page 9 of 141

G.R. No. 85750 September 28, 1990 As an aftermath of the Vietnam War, the plight of Vietnamese refugees
fleeing from South Vietnam's communist rule confronted the international
INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner community.
vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE In response to this crisis, on 23 February 1981, an Agreement was
BUREAU OF LABOR RELATIONS AND TRADE UNIONS OF THE forged between the Philippine Government and the United Nations High
PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU respondents. Commissioner for Refugees whereby an operating center for processing
Indo-Chinese refugees for eventual resettlement to other countries was
G.R. No. 89331 September 28, 1990 to be established in Bataan (Annex "A", Rollo, pp. 22-32).

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED ICMC was one of those accredited by the Philippine Government to
LABOR ASSOCIATION IN LINE INDUSTRIES AND operate the refugee processing center in Morong, Bataan. It was
AGRICULTURE, petitioner, incorporated in New York, USA, at the request of the Holy See, as a non-
vs profit agency involved in international humanitarian and voluntary work. It
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL is duly registered with the United Nations Economic and Social Council
RICE RESEARCH INSTITUTE, INC., respondents. (ECOSOC) and enjoys Consultative Status, Category II. As an
international organization rendering voluntary and humanitarian services
Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750. in the Philippines, its activities are parallel to those of the International
Committee for Migration (ICM) and the International Committee of the
Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v.
Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No.
Calleja, Vol. 1].
89331.
On 14 July 1986, Trade Unions of the Philippines and Allied Services
Jimenez & Associates for IRRI.
(TUPAS) filed with the then Ministry of Labor and Employment a Petition
for Certification Election among the rank and file members employed by
Alfredo L. Bentulan for private respondent in 85750. ICMC The latter opposed the petition on the ground that it is an
international organization registered with the United Nations and, hence,
enjoys diplomatic immunity.

MELENCIO-HERRERA, J.: On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC

and dismissed the petition for lack of jurisdiction.
Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by
the International Catholic Migration Commission (ICMC) and the International Rice Research Institute,
Inc. (IRRI) from the application of Philippine labor laws. On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor
Relations (BLR), reversed the Med-Arbiter's Decision and ordered the
I immediate conduct of a certification election. At that time, ICMC's request
for recognition as a specialized agency was still pending with the
Facts and Issues Department of Foreign Affairs (DEFORAF).

A. G.R. No. 85750 — the International Catholic Migration Subsequently, however, on 15 July 1988, the Philippine Government,
Commission (ICMC) Case. through the DEFORAF, granted ICMC the status of a specialized agency
with corresponding diplomatic privileges and immunities, as evidenced by

a Memorandum of Agreement between the Government and ICMC
(Annex "E", Petition, Rollo, pp. 41-43), infra.
ICMC then sought the immediate dismissal of the TUPAS Petition for
Certification Election invoking the immunity expressly granted but the
same was denied by respondent BLR Director who, again, ordered the
immediate conduct of a pre-election conference. ICMC's two Motions for
Reconsideration were denied despite an opinion rendered by DEFORAF
on 17 October 1988 that said BLR Order violated ICMC's diplomatic
immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for
Certiorari with Preliminary Injunction assailing the BLR Order.
On 28 November 1988, the Court issued a Temporary Restraining Order
enjoining the holding of the certification election.
On 10 January 1989, the DEFORAF, through its Legal Adviser, retired
Justice Jorge C. Coquia of the Court of Appeals, filed a Motion for
Intervention alleging that, as the highest executive department with the
competence and authority to act on matters involving diplomatic immunity
and privileges, and tasked with the conduct of Philippine diplomatic and
consular relations with foreign governments and UN organizations, it has
a legal interest in the outcome of this case.
Over the opposition of the Solicitor General, the Court allowed DEFORAF
intervention.
On 12 July 1989, the Second Division gave due course to the ICMC
Petition and required the submittal of memoranda by the parties, which
has been complied with.
As initially stated, the issue is whether or not the grant of diplomatic
privileges and immunites to ICMC extends to immunity from the
application of Philippine labor laws.
ICMC sustains the affirmative of the proposition citing (1) its
Memorandum of Agreement with the Philippine Government giving it the
status of a specialized agency, (infra); (2) the Convention on the
Privileges and Immunities of Specialized Agencies, adopted by the UN
General Assembly on 21 November 1947 and concurred in by the
Page 10 of 141
Philippine Senate through Resolution No. 91 on 17 May 1949 (the
Philippine Instrument of Ratification was signed by the President on 30
August 1949 and deposited with the UN on 20 March 1950) infra; and (3)
Article II, Section 2 of the 1987 Constitution, which declares that the
Philippines adopts the generally accepted principles of international law
as part of the law of the land.
Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and
seeks an affirmance of the DEFORAF determination that the BLR Order
for a certification election among the ICMC employees is violative of the
diplomatic immunity of said organization.
Respondent BLR Director, on the other hand, with whom the Solicitor
General agrees, cites State policy and Philippine labor laws to justify its
assailed Order, particularly, Article II, Section 18 and Article III, Section 8
of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor
Code, as amended, ibid. In addition, she contends that a certification
election is not a litigation but a mere investigation of a non-adversary,
fact-finding character. It is not a suit against ICMC its property, funds or
assets, but is the sole concern of the workers themselves.
B. G.R. No. 89331 — (The International Rice Research Institute [IRRI]
Case).
Before a Decision could be rendered in the ICMC Case, the Third
Division, on 11 December 1989, resolved to consolidate G.R. No. 89331
pending before it with G.R. No. 85750, the lower-numbered case pending
with the Second Division, upon manifestation by the Solicitor General that
both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine Government
and the Ford and Rockefeller Foundations signed a Memorandum of
Understanding establishing the International Rice Research Institute
(IRRI) at Los Baños, Laguna. It was intended to be an autonomous,
philanthropic, tax-free, non-profit, non-stock organization designed to
carry out the principal objective of conducting "basic research on the rice
plant, on all phases of rice production, management, distribution and
utilization with a view to attaining nutritive and economic advantage or
benefit for the people of Asia and other major rice-growing areas through
improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and
Exchange Commission as a private corporation subject to all laws and
regulations. However, by virtue of Pres. Decree No. 1620, promulgated
on 19 April 1979, IRRI was granted the status, prerogatives, privileges
and immunities of an international organization.
The Organized Labor Association in Line Industries and Agriculture
(OLALIA), is a legitimate labor organization with an existing local union,
the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short) in
respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct Certification
Election with Region IV, Regional Office of the Department of Labor and
Employment (DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620 conferring
upon it the status of an international organization and granting it immunity
from all civil, criminal and administrative proceedings under Philippine
laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition
on the basis of Pres. Decree No. 1620 and dismissed the Petition for
Direct Certification.
On appeal, the BLR Director, who is the public respondent in the ICMC
Case, set aside the Med-Arbiter's Order and authorized the calling of a
certification election among the rank-and-file employees of IRRI. Said
Director relied on Article 243 of the Labor Code, as amended, infra and
Article XIII, Section 3 of the 1987 Constitution, 1 and held that "the
immunities and privileges granted to IRRI do not include exemption from
coverage of our Labor Laws." Reconsideration sought by IRRI was
denied.
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set
aside the BLR Director's Order, dismissed the Petition for Certification
Election, and held that the grant of specialized agency status by the
Philippine Government to the IRRI bars DOLE from assuming and
exercising jurisdiction over IRRI Said Resolution reads in part as follows:
Presidential Decree No. 1620 which grants to the IRRI the
status, prerogatives, privileges and immunities of an
Page 11 of 141
international organization is clear and explicit. It provides
in categorical terms that:
Art. 3 — The Institute shall enjoy immunity from any
penal, civil and administrative proceedings, except insofar
as immunity has been expressly waived by the Director-
General of the Institution or his authorized representative.
Verily, unless and until the Institute expressly waives its
immunity, no summons, subpoena, orders, decisions or
proceedings ordered by any court or administrative
or quasi-judicial agency are enforceable as against the
Institute. In the case at bar there was no such waiver
made by the Director-General of the Institute. Indeed, the
Institute, at the very first opportunity already vehemently
questioned the jurisdiction of this Department by filing an
ex-parte motion to dismiss the case.
Hence, the present Petition for Certiorari filed by Kapisanan alleging
grave abuse of discretion by respondent Secretary of Labor in upholding
IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned, required
the respondents to comment on the petition. In a Manifestation filed on 4
August 1990, the Secretary of Labor declared that it was "not adopting as
his own" the decision of the BLR Director in the ICMC Case as well as
the Comment of the Solicitor General sustaining said Director. The last
pleading was filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation and
Motion praying that he be excused from filing a comment "it appearing
that in the earlier case of International Catholic Migration Commission v.
Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General
had sustained the stand of Director Calleja on the very same issue now
before it, which position has been superseded by respondent Secretary
of Labor in G.R. No. 89331," the present case. The Court acceded to the
Solicitor General's prayer.
The Court is now asked to rule upon whether or not the Secretary of
Labor committed grave abuse of discretion in dismissing the Petition for
Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting
IRRI the status, privileges, prerogatives and immunities of an
international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the purpose
of collective bargaining as enshrined in the 1987 Constitution.
A procedural issue is also raised. Kapisanan faults respondent Secretary
of Labor for entertaining IRRI'S appeal from the Order of the Director of
the Bureau of Labor Relations directing the holding of a certification
election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of
Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order
of the BLR Director had become final and unappeable and that,
therefore, the Secretary of Labor had no more jurisdiction over the said
appeal.
On the other hand, in entertaining the appeal, the Secretary of Labor
relied on Section 25 of Rep. Act. No. 6715, which took effect on 21 March
1989, providing for the direct filing of appeal from the Med-Arbiter to the
Office of the Secretary of Labor and Employment instead of to the
Director of the Bureau of Labor Relations in cases involving certification
election orders.
III
Findings in Both Cases.
There can be no question that diplomatic immunity has, in fact, been
granted ICMC and IRRI.
Article II of the Memorandum of Agreement between the Philippine
Government and ICMC provides that ICMC shall have a status "similar to
that of a specialized agency." Article III, Sections 4 and 5 of the
Convention on the Privileges and Immunities of Specialized Agencies,
adopted by the UN General Assembly on 21 November 1947 and
concurred in by the Philippine Senate through Resolution No. 19 on 17
May 1949, explicitly provides:
Art. III, Section 4. The specialized agencies, their property
and assets, wherever located and by whomsoever held,
shall enjoy immunity from every form of legal
Page 12 of 141
process except insofar as in any particular case they have
expressly waived their immunity. It is, however,
understood that no waiver of immunity shall extend to any
measure of execution.
Sec. 5. — The premises of the specialized agencies shall
be inviolable. The property and assets of the specialized
agencies, wherever located and by whomsoever held
shall be immune from search, requisition, confiscation,
expropriation and any other form of interference, whether
by executive, administrative, judicial or legislative action.
(Emphasis supplied).
IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its
grant of immunity, thus:
Art. 3. Immunity from Legal Process. — The Institute shall
enjoy immunity from any penal, civil and administrative
proceedings, except insofar as that immunity has been
expressly waived by the Director-General of the Institute
or his authorized representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained
ICMC'S invocation of immunity when in a Memorandum, dated 17
October 1988, it expressed the view that "the Order of the Director of the
Bureau of Labor Relations dated 21 September 1988 for the conduct of
Certification Election within ICMC violates the diplomatic immunity of the
organization." Similarly, in respect of IRRI, the DEFORAF speaking
through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a
letter, dated 17 June 1987, to the Secretary of Labor, maintained that
"IRRI enjoys immunity from the jurisdiction of DOLE in this particular
instance."
The foregoing opinions constitute a categorical recognition by the
Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which determination
has been held to be a political question conclusive upon the Courts in
order not to embarrass a political department of Government.
It is a recognized principle of international law and under
our system of separation of powers that diplomatic

immunity is essentially a political question and courts
should refuse to look beyond a determination by the
executive branch of the government, and where the plea
of diplomatic immunity is recognized and affirmed by the
executive branch of the government as in the case at bar,
it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal
law officer of the government . . . or other officer acting
under his direction. Hence, in adherence to the settled
principle that courts may not so exercise their jurisdiction .
. . as to embarrass the executive arm of the government
in conducting foreign relations, it is accepted doctrine that
in such cases the judicial department of (this) government
follows the action of the political branch and will not
embarrass the latter by assuming an antagonistic
jurisdiction. 3
A brief look into the nature of international organizations and specialized
agencies is in order. The term "international organization" is generally
used to describe an organization set up by agreement between two or
more states. 4Under contemporary international law, such organizations
are endowed with some degree of international legal personality 5 such
that they are capable of exercising specific rights, duties and
powers. 6 They are organized mainly as a means for conducting general
international business in which the member states have an interest. 7 The
United Nations, for instance, is an international organization dedicated to
the propagation of world peace.
"Specialized agencies" are international organizations having functions in
particular fields. The term appears in Articles 57 8 and 63 9 of the Charter
of the United Nations:
The Charter, while it invests the United Nations with the
general task of promoting progress and international
cooperation in economic, social, health, cultural,
educational and related matters, contemplates that these
tasks will be mainly fulfilled not by organs of the United
Nations itself but by autonomous international
organizations established by inter-governmental
agreements outside the United Nations. There are now
many such international agencies having functions in
many different fields, e.g. in posts, telecommunications,
Page 13 of 141
railways, canals, rivers, sea transport, civil aviation,
meteorology, atomic energy, finance, trade, education
and culture, health and refugees. Some are virtually
world-wide in their membership, some are regional or
otherwise limited in their membership. The Charter
provides that those agencies which have "wide
international responsibilities" are to be brought into
relationship with the United Nations by agreements
entered into between them and the Economic and Social
Council, are then to be known as "specialized
agencies." 10
The rapid growth of international organizations under contemporary
international law has paved the way for the development of the concept
of international immunities.
It is now usual for the constitutions of international
organizations to contain provisions conferring certain
immunities on the organizations themselves,
representatives of their member states and persons
acting on behalf of the organizations. A series of
conventions, agreements and protocols defining the
immunities of various international organizations in
relation to their members generally are now widely in
force; . . . 11
There are basically three propositions underlying the grant of
international immunities to international organizations. These principles,
contained in the ILO Memorandum are stated thus: 1) international
institutions should have a status which protects them against control or
interference by any one government in the performance of functions for
the effective discharge of which they are responsible to democratically
constituted international bodies in which all the nations concerned are
represented; 2) no country should derive any national financial advantage
by levying fiscal charges on common international funds; and 3) the
international organization should, as a collectivity of States members, be
accorded the facilities for the conduct of its official business customarily
extended to each other by its individual member States. 12 The theory
behind all three propositions is said to be essentially institutional in
character. "It is not concerned with the status, dignity or privileges of
individuals, but with the elements of functional independence necessary
to free international institutions from national control and to enable them

to discharge their responsibilities impartially on behalf of all their
members. 13 The raison d'etre for these immunities is the assurance of
unimpeded performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly
necessitated by their international character and respective purposes.
The objective is to avoid the danger of partiality and interference by the
host country in their internal workings. The exercise of jurisdiction by the
Department of Labor in these instances would defeat the very purpose of
immunity, which is to shield the affairs of international organizations, in
accordance with international practice, from political pressure or control
by the host country to the prejudice of member States of the organization,
and to ensure the unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means deprives
labor of its basic rights, which are guaranteed by Article II, Section
18, 14 Article III, Section 8, 15 and Article XIII, Section 3 (supra), of the
1987 Constitution; and implemented by Articles 243 and 246 of the Labor
Code, 16 relied on by the BLR Director and by Kapisanan.
For, ICMC employees are not without recourse whenever there are
disputes to be settled. Section 31 of the Convention on the Privileges and
Immunities of the Specialized Agencies of the United Nations 17 provides
that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other
disputes of private character to which the specialized agency is a party."
Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC the the Philippine Government, whenever there is any
abuse of privilege by ICMC, the Government is free to withdraw the
privileges and immunities accorded. Thus:
Art. IV. Cooperation with Government Authorities. — 1.
The Commission shall cooperate at all times with the
appropriate authorities of the Government to ensure the
observance of Philippine laws, rules and regulations,
facilitate the proper administration of justice and prevent
the occurrences of any abuse of the privileges and
immunities granted its officials and alien employees in
Article III of this Agreement to the Commission.
Page 14 of 141
2. In the event that the Government determines that there
has been an abuse of the privileges and immunities
granted under this Agreement, consultations shall be held
between the Government and the Commission to
determine whether any such abuse has occurred and, if
so, the Government shall withdraw the privileges and
immunities granted the Commission and its officials.
Neither are the employees of IRRI without remedy in case of dispute with
management as, in fact, there had been organized a forum for better
management-employee relationship as evidenced by the formation of the
Council of IRRI Employees and Management (CIEM) wherein "both
management and employees were and still are represented for purposes
of maintaining mutual and beneficial cooperation between IRRI and its
employees." The existence of this Union factually and tellingly belies the
argument that Pres. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization, deprives its
employees of the right to self-organization.
The immunity granted being "from every form of legal process except in
so far as in any particular case they have expressly waived their
immunity," it is inaccurate to state that a certification election is beyond
the scope of that immunity for the reason that it is not a suit against
ICMC. A certification election cannot be viewed as an independent or
isolated process. It could tugger off a series of events in the collective
bargaining process together with related incidents and/or concerted
activities, which could inevitably involve ICMC in the "legal process,"
which includes "any penal, civil and administrative proceedings." The
eventuality of Court litigation is neither remote and from which
international organizations are precisely shielded to safeguard them from
the disruption of their functions. Clauses on jurisdictional immunity are
said to be standard provisions in the constitutions of international
Organizations. "The immunity covers the organization concerned, its
property and its assets. It is equally applicable to proceedings in
personam and proceedings in rem." 18
We take note of a Manifestation, dated 28 September 1989, in the ICMC
Case (p. 161, Rollo), wherein TUPAS calls attention to the case
entitled "International Catholic Migration Commission v. NLRC, et als.,
(G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that,
having taken cognizance of that dispute (on the issue of payment of
salary for the unexpired portion of a six-month probationary employment),
 Page 15 of 141

the Court is now estopped from passing upon the question of DOLE election is SET ASIDE, and the Temporary Restraining Order earlier
jurisdiction petition over ICMC. issued is made PERMANENT.

We find no merit to said submission. Not only did the facts of said
controversy occur between 1983-1985, or before the grant to ICMC on 15
July 1988 of the status of a specialized agency with corresponding
immunities, but also because ICMC in that case did not invoke its
immunity and, therefore, may be deemed to have waived it, assuming
that during that period (1983-1985) it was tacitly recognized as enjoying
such immunity.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave
abuse of discretion having been committed by the Secretary of Labor and
Employment in dismissing the Petition for Certification Election.
No pronouncement as to costs.
SO ORDERED.

Anent the procedural issue raised in the IRRI Case, suffice it to state that Padilla, Sarmiento and Regalado, JJ., concur.
the Decision of the BLR Director, dated 15 February 1989, had not
become final because of a Motion for Reconsideration filed by IRRI Said
Paras, J., is on leave.
Motion was acted upon only on 30 March 1989 when Rep. Act No. 6715,
which provides for direct appeals from the Orders of the Med-Arbiter to
the Secretary of Labor in certification election cases either from the order
or the results of the election itself, was already in effect, specifically since
21 March 1989. Hence, no grave abuse of discretion may be imputed to
respondent Secretary of Labor in his assumption of appellate jurisdiction,
contrary to Kapisanan's allegations. The pertinent portion of that law
provides:

Art. 259. — 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 15 calendar
days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic

positions assumed by two departments of the executive branch of
government have been rectified and the resultant embarrassment to the
Philippine Government in the eyes of the international community now,
hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is

GRANTED, the Order of the Bureau of Labor Relations for certification

G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of the Court of First Instance of
Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
Benjamin Victoriano (hereinafter referred to as Appellee), a member of
the religious sect known as the "Iglesia ni Cristo", had been in the employ
of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company)
since 1958. As such employee, he was a member of the Elizalde Rope
Workers' Union (hereinafter referred to as Union) which had with the
Company a collective bargaining agreement containing a closed shop
provision which reads as follows:
Membership in the Union shall be required as a condition
of employment for all permanent employees workers
covered by this Agreement.
The collective bargaining agreement expired on March 3, 1964 but was
renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not precluded
"from making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor organization
is the representative of the employees." On June 18, 1961, however,
Page 16 of 141
Republic Act No. 3350 was enacted, introducing an amendment to —
paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as
follows: ... "but such agreement shall not cover members of any religious
sects which prohibit affiliation of their members in any such labor
organization".
Being a member of a religious sect that prohibits the affiliation of its
members with any labor organization, Appellee presented his resignation
to appellant Union in 1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974. Thereupon, the Union
wrote a formal letter to the Company asking the latter to separate
Appellee from the service in view of the fact that he was resigning from
the Union as a member. The management of the Company in turn
notified Appellee and his counsel that unless the Appellee could achieve
a satisfactory arrangement with the Union, the Company would be
constrained to dismiss him from the service. This prompted Appellee to
file an action for injunction, docketed as Civil Case No. 58894 in the
Court of First Instance of Manila to enjoin the Company and the Union
from dismissing Appellee.1 In its answer, the Union invoked the "union
security clause" of the collective bargaining agreement; assailed the
constitutionality of Republic Act No. 3350; and contended that the Court
had no jurisdiction over the case, pursuant to Republic Act No. 875,
Sections 24 and 9 (d) and (e).2 Upon the facts agreed upon by the parties
during the pre-trial conference, the Court a quo rendered its decision on
August 26, 1965, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered
enjoining the defendant Elizalde Rope Factory, Inc. from
dismissing the plaintiff from his present employment and
sentencing the defendant Elizalde Rope Workers' Union
to pay the plaintiff P500 for attorney's fees and the costs
of this action.3
From this decision, the Union appealed directly to this Court on purely
questions of law, assigning the following errors:
I. That the lower court erred when it did not rule that
Republic Act No. 3350 is unconstitutional.

II. That the lower court erred when it sentenced appellant
herein to pay plaintiff the sum of P500 as attorney's fees
and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350, the
Union contented, firstly, that the Act infringes on the fundamental right to
form lawful associations; that "the very phraseology of said Republic Act
3350, that membership in a labor organization is banned to all those
belonging to such religious sect prohibiting affiliation with any labor
organization"4 , "prohibits all the members of a given religious sect from
joining any labor union if such sect prohibits affiliations of their members
thereto"5 ; and, consequently, deprives said members of their
constitutional right to form or join lawful associations or organizations
guaranteed by the Bill of Rights, and thus becomes obnoxious to Article
III, Section 1 (6) of the 1935 Constitution. 6
Secondly, the Union contended that Republic Act No. 3350 is
unconstitutional for impairing the obligation of contracts in that, while the
Union is obliged to comply with its collective bargaining agreement
containing a "closed shop provision," the Act relieves the employer from
its reciprocal obligation of cooperating in the maintenance of union
membership as a condition of employment; and that said Act,
furthermore, impairs the Union's rights as it deprives the union of dues
from members who, under the Act, are relieved from the obligation to
continue as such members.7
Thirdly, the Union contended that Republic Act No. 3350 discriminatorily
favors those religious sects which ban their members from joining labor
unions, in violation of Article Ill, Section 1 (7) of the 1935 Constitution;
and while said Act unduly protects certain religious sects, it leaves no
rights or protection to labor organizations.8
Fourthly, Republic Act No. 3350, asserted the Union, violates the
constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right to
join associations for purposes not contrary to law has to be determined
under the Act by his affiliation with a religious sect; that conversely, if a
worker has to sever his religious connection with a sect that prohibits
membership in a labor organization in order to be able to join a labor
organization, said Act would violate religious freedom.9
Page 17 of 141
Fifthly, the Union contended that Republic Act No. 3350, violates the
"equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the operation
of closed shop agreement the members of the "Iglesia ni Cristo", it has
granted said members undue advantages over their fellow workers, for
while the Act exempts them from union obligation and liability, it
nevertheless entitles them at the same time to the enjoyment of all
concessions, benefits and other emoluments that the union might secure
from the employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed shop provision" in a
collective bargaining agreement cannot be considered violative of
religious freedom, as to call for the amendment introduced by Republic
Act No. 3350; 12and that unless Republic Act No. 3350 is declared
unconstitutional, trade unionism in this country would be wiped out as
employers would prefer to hire or employ members of the Iglesia ni Cristo
in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic Act
No. 3350 does not violate the right to form lawful associations, for the
right to join associations includes the right not to join or to resign from a
labor organization, if one's conscience does not allow his membership
therein, and the Act has given substance to such right by prohibiting the
compulsion of workers to join labor organizations; 14 that said Act does not
impair the obligation of contracts for said law formed part of, and was
incorporated into, the terms of the closed shop agreement; 15 that the Act
does not violate the establishment of religion clause or separation of
Church and State, for Congress, in enacting said law, merely
accommodated the religious needs of those workers whose religion
prohibits its members from joining labor unions, and balanced the
collective rights of organized labor with the constitutional right of an
individual to freely exercise his chosen religion; that the constitutional
right to the free exercise of one's religion has primacy and preference
over union security measures which are merely contractual 16; that said
Act does not violate the constitutional provision of equal protection, for
the classification of workers under the Act depending on their religious
tenets is based on substantial distinction, is germane to the purpose of
the law, and applies to all the members of a given class; 17 that said Act,
finally, does not violate the social justice policy of the Constitution, for

said Act was enacted precisely to equalize employment opportunities for
all citizens in the midst of the diversities of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is
necessary to premise that there are some thoroughly established
principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality; one who attacks a
statute, alleging unconstitutionality must prove its invalidity beyond a
reasonable doubt, that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld, and the challenger must negate all
possible bases; that the courts are not concerned with the wisdom,
justice, policy, or expediency of a statute; and that a liberal interpretation
of the constitution in favor of the constitutionality of legislation should be
adopted. 19
1. Appellant Union's contention that Republic Act No. 3350 prohibits and
bans the members of such religious sects that forbid affiliation of their
members with labor unions from joining labor unions appears nowhere in
the wording of Republic Act No. 3350; neither can the same be deduced
by necessary implication therefrom. It is not surprising, therefore, that
appellant, having thus misread the Act, committed the error of contending
that said Act is obnoxious to the constitutional provision on freedom of
association.
Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as well
as Section 7 of Article IV of the Constitution of 1973, provide that the right
to form associations or societies for purposes not contrary to law shall not
be abridged. Section 3 of Republic Act No. 875 provides that employees
shall have the right to self-organization and to form, join of assist labor
organizations of their own choosing for the purpose of collective
bargaining and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. What the
Constitution and the Industrial Peace Act recognize and guarantee is the
"right" to form or join associations. Notwithstanding the different theories
propounded by the different schools of jurisprudence regarding the
nature and contents of a "right", it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions,
namely: first, liberty or freedom, i.e., the absence of legal restraint,
whereby an employee may act for himself without being prevented by
Page 18 of 141
law; and second, power, whereby an employee may, as he pleases, join
or refrain from Joining an association. It is, therefore, the employee who
should decide for himself whether he should join or not an association;
and should he choose to join, he himself makes up his mind as to which
association he would join; and even after he has joined, he still retains
the liberty and the power to leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that the right to join a
union includes the right to abstain from joining any union. 21 Inasmuch as
what both the Constitution and the Industrial Peace Act have recognized,
and guaranteed to the employee, is the "right" to join associations of his
choice, it would be absurd to say that the law also imposes, in the same
breath, upon the employee the duty to join associations. The law does
not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section
3 of the Industrial Peace Act is, however, limited. The legal protection
granted to such right to refrain from joining is withdrawn by operation of
law, where a labor union and an employer have agreed on a closed shop,
by virtue of which the employer may employ only member of the
collective bargaining union, and the employees must continue to be
members of the union for the duration of the contract in order to keep
their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be
an unfair labor practice for an employer "to discriminate in regard to hire
or tenure of employment or any term or condition of employment to
encourage or discourage membership in any labor organization" the
employer is, however, not precluded "from making an agreement with a
labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees".
By virtue, therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person, regardless of his religious beliefs,
wishes to be employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right of said
employee not to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement,
Republic Act No. 3350 introduced an exception, when it added to Section
4 (a) (4) of the Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious sects which prohibit
affiliation of their members in any such labor organization". Republic Act
No. 3350 merely excludes ipso jure from the application and coverage of
the closed shop agreement the employees belonging to any religious

sects which prohibit affiliation of their members with any labor
organization. What the exception provides, therefore, is that members of
said religious sects cannot be compelled or coerced to join labor unions
even when said unions have closed shop agreements with the
employers; that in spite of any closed shop agreement, members of said
religious sects cannot be refused employment or dismissed from their
jobs on the sole ground that they are not members of the collective
bargaining union. It is clear, therefore, that the assailed Act, far from
infringing the constitutional provision on freedom of association, upholds
and reinforces it. It does not prohibit the members of said religious sects
from affiliating with labor unions. It still leaves to said members the liberty
and the power to affiliate, or not to affiliate, with labor unions. If,
notwithstanding their religious beliefs, the members of said religious
sects prefer to sign up with the labor union, they can do so. If in
deference and fealty to their religious faith, they refuse to sign up, they
can do so; the law does not coerce them to join; neither does the law
prohibit them from joining; and neither may the employer or labor union
compel them to join. Republic Act No. 3350, therefore, does not violate
the constitutional provision on freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for
impairing the obligation of its contract, specifically, the "union security
clause" embodied in its Collective Bargaining Agreement with the
Company, by virtue of which "membership in the union was required as a
condition for employment for all permanent employees workers". This
agreement was already in existence at the time Republic Act No. 3350
was enacted on June 18, 1961, and it cannot, therefore, be deemed to
have been incorporated into the agreement. But by reason of this
amendment, Appellee, as well as others similarly situated, could no
longer be dismissed from his job even if he should cease to be a
member, or disaffiliate from the Union, and the Company could continue
employing him notwithstanding his disaffiliation from the Union. The Act,
therefore, introduced a change into the express terms of the union
security clause; the Company was partly absolved by law from the
contractual obligation it had with the Union of employing only Union
members in permanent positions, It cannot be denied, therefore, that
there was indeed an impairment of said union security clause.
According to Black, any statute which introduces a change into the
express terms of the contract, or its legal construction, or its validity, or its
discharge, or the remedy for its enforcement, impairs the contract. The
extent of the change is not material. It is not a question of degree or
Page 19 of 141
manner or cause, but of encroaching in any respect on its obligation or
dispensing with any part of its force. There is an impairment of the
contract if either party is absolved by law from its
performance. 22 Impairment has also been predicated on laws which,
without destroying contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the prohibition to impair the
obligation of contracts is not absolute and unqualified. The prohibition is
general, affording a broad outline and requiring construction to fill in the
details. The prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable impairment only. 24 In
spite of the constitutional prohibition, the State continues to possess
authority to safeguard the vital interests of its people. Legislation
appropriate to safeguarding said interests may modify or abrogate
contracts already in effect. 25 For not only are existing laws read into
contracts in order to fix the obligations as between the parties, but the
reservation of essential attributes of sovereign power is also read into
contracts as a postulate of the legal order. All contracts made with
reference to any matter that is subject to regulation under the police
power must be understood as made in reference to the possible exercise
of that power. 26 Otherwise, important and valuable reforms may be
precluded by the simple device of entering into contracts for the purpose
of doing that which otherwise may be prohibited. The policy of protecting
contracts against impairment presupposes the maintenance of a
government by virtue of which contractual relations are worthwhile a
government which retains adequate authority to secure the peace and
good order of society. The contract clause of the Constitution must,
therefore, be not only in harmony with, but also in subordination to, in
appropriate instances, the reserved power of the state to safeguard the
vital interests of the people. It follows that not all legislations, which have
the effect of impairing a contract, are obnoxious to the constitutional
prohibition as to impairment, and a statute passed in the legitimate
exercise of police power, although it incidentally destroys existing
contract rights, must be upheld by the courts. This has special application
to contracts regulating relations between capital and labor which are not
merely contractual, and said labor contracts, for being impressed with
public interest, must yield to the common good. 27
In several occasions this Court declared that the prohibition against
impairing the obligations of contracts has no application to statutes
relating to public subjects within the domain of the general legislative

powers of the state involving public welfare. 28 Thus, this Court also held
that the Blue Sunday Law was not an infringement of the obligation of a
contract that required the employer to furnish work on Sundays to his
employees, the law having been enacted to secure the well-being and
happiness of the laboring class, and being, furthermore, a legitimate
exercise of the police power. 29
In order to determine whether legislation unconstitutionally impairs
contract obligations, no unchanging yardstick, applicable at all times and
under all circumstances, by which the validity of each statute may be
measured or determined, has been fashioned, but every case must be
determined upon its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when the means
adopted to secure that end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the scope of the reserved
power of the state construed in harmony with the constitutional limitation
of that power. 30
What then was the purpose sought to be achieved by Republic Act No.
3350? Its purpose was to insure freedom of belief and religion, and to
promote the general welfare by preventing discrimination against those
members of religious sects which prohibit their members from joining
labor unions, confirming thereby their natural, statutory and constitutional
right to work, the fruits of which work are usually the only means whereby
they can maintain their own life and the life of their dependents. It cannot
be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said religious
sects against two aggregates of group strength from which the individual
needs protection. The individual employee, at various times in his
working life, is confronted by two aggregates of power — collective labor,
directed by a union, and collective capital, directed by management. The
union, an institution developed to organize labor into a collective force
and thus protect the individual employee from the power of collective
capital, is, paradoxically, both the champion of employee rights, and a
new source of their frustration. Moreover, when the Union interacts with
management, it produces yet a third aggregate of group strength from
which the individual also needs protection — the collective bargaining
relationship. 31
Page 20 of 141
The aforementioned purpose of the amendatory law is clearly seen in the
Explanatory Note to House Bill No. 5859, which later became Republic
Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a
person who, on account of his religious beliefs and
convictions, cannot accept membership in a labor
organization although he possesses all the qualifications
for the job. This is tantamount to punishing such person
for believing in a doctrine he has a right under the law to
believe in. The law would not allow discrimination to
flourish to the detriment of those whose religion discards
membership in any labor organization. Likewise, the law
would not commend the deprivation of their right to work
and pursue a modest means of livelihood, without in any
manner violating their religious faith and/or belief. 32
It cannot be denied, furthermore, that the means adopted by the Act to
achieve that purpose — exempting the members of said religious sects
from coverage of union security agreements — is reasonable.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict, the
latter must, therefore, yield to the former. The Supreme Court of the
United States has also declared on several occasions that the rights in
the First Amendment, which include freedom of religion, enjoy a preferred
position in the constitutional system. 33 Religious freedom, although not
unlimited, is a fundamental personal right and liberty, 34 and has a
preferred position in the hierarchy of values. Contractual rights, therefore,
must yield to freedom of religion. It is only where unavoidably necessary
to prevent an immediate and grave danger to the security and welfare of
the community that infringement of religious freedom may be justified,
and only to the smallest extent necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is
unconstitutional, appellant Union averred that said Act discriminates in
favor of members of said religious sects in violation of Section 1 (7) of
Article Ill of the 1935 Constitution, and which is now Section 8 of Article
IV of the 1973 Constitution, which provides:

No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof, and the
free exercise and enjoyment of religious profession and
worship, without discrimination and preference, shall
forever be allowed. No religious test shall be required for
the exercise of civil or political rights.
The constitutional provision into only prohibits legislation for the support
of any religious tenets or the modes of worship of any sect, thus
forestalling compulsion by law of the acceptance of any creed or the
practice of any form of worship, 35 but also assures the free exercise of
one's chosen form of religion within limits of utmost amplitude. It has
been said that the religion clauses of the Constitution are all designed to
protect the broadest possible liberty of conscience, to allow each man to
believe as his conscience directs, to profess his beliefs, and to live as he
believes he ought to live, consistent with the liberty of others and with the
common good. 36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between
the religions, is invalid, even though the burden may be characterized as
being only indirect. 37 But if the stage regulates conduct by enacting,
within its power, a general law which has for its purpose and effect to
advance the state's secular goals, the statute is valid despite its indirect
burden on religious observance, unless the state can accomplish its
purpose without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the government
should not be precluded from pursuing valid objectives secular in
character even if the incidental result would be favorable to a religion or
sect. It has likewise been held that the statute, in order to withstand the
strictures of constitutional prohibition, must have a secular legislative
purpose and a primary effect that neither advances nor inhibits
religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be
said to violate the constitutional inhibition of the "no-establishment" (of
religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and temporal,
not spiritual or religious or holy and eternal. It was intended to serve the
secular purpose of advancing the constitutional right to the free exercise
of religion, by averting that certain persons be refused work, or be
dismissed from work, or be dispossessed of their right to work and of
being impeded to pursue a modest means of livelihood, by reason of
union security agreements. To help its citizens to find gainful employment
Page 21 of 141
whereby they can make a living to support themselves and their families
is a valid objective of the state. In fact, the state is enjoined, in the 1935
Constitution, to afford protection to labor, and regulate the relations
between labor and capital and industry. 41 More so now in the 1973
Constitution where it is mandated that "the State shall afford protection to
labor, promote full employment and equality in employment, ensure equal
work opportunities regardless of sex, race or creed and regulate the
relation between workers and employers. 42
The primary effects of the exemption from closed shop agreements in
favor of members of religious sects that prohibit their members from
affiliating with a labor organization, is the protection of said employees
against the aggregate force of the collective bargaining agreement, and
relieving certain citizens of a burden on their religious beliefs; and by
eliminating to a certain extent economic insecurity due to unemployment,
which is a serious menace to the health, morals, and welfare of the
people of the State, the Act also promotes the well-being of society. It is
our view that the exemption from the effects of closed shop agreement
does not directly advance, or diminish, the interests of any particular
religion. Although the exemption may benefit those who are members of
religious sects that prohibit their members from joining labor unions, the
benefit upon the religious sects is merely incidental and indirect. The
"establishment clause" (of religion) does not ban regulation on conduct
whose reason or effect merely happens to coincide or harmonize with the
tenets of some or all religions. 43 The free exercise clause of the
Constitution has been interpreted to require that religious exercise be
preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted
consistently with the spirit of the constitutional provision. It acted merely
to relieve the exercise of religion, by certain persons, of a burden that is
imposed by union security agreements. It was Congress itself that
imposed that burden when it enacted the Industrial Peace Act (Republic
Act 875), and, certainly, Congress, if it so deems advisable, could take
away the same burden. It is certain that not every conscience can be
accommodated by all the laws of the land; but when general laws conflict
with scrupples of conscience, exemptions ought to be granted unless
some "compelling state interest" intervenes. 45 In the instant case, We see
no such compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members of
certain religious sects, it leaves no right to, and is silent as to the

protection of, labor organizations. The purpose of Republic Act No. 3350
was not to grant rights to labor unions. The rights of labor unions are
amply provided for in Republic Act No. 875 and the new Labor Code. As
to the lamented silence of the Act regarding the rights and protection of
labor unions, suffice it to say, first, that the validity of a statute is
determined by its provisions, not by its silence 46 ; and, second, the fact
that the law may work hardship does not render it unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel
persons to join and remain members of a union to keep their jobs in
violation of their religious scrupples, would hurt, rather than help, labor
unions, Congress has seen it fit to exempt religious objectors lest their
resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty even to the
country, and a fortiori to a labor — union assuming that such unity and
loyalty can be attained through coercion — is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates the
constitutional prohibition against requiring a religious test for the exercise
of a civil right or a political right, is not well taken. The Act does not
require as a qualification, or condition, for joining any lawful association
membership in any particular religion or in any religious sect; neither
does the Act require affiliation with a religious sect that prohibits its
members from joining a labor union as a condition or qualification for
withdrawing from a labor union. Joining or withdrawing from a labor union
requires a positive act. Republic Act No. 3350 only exempts members
with such religious affiliation from the coverage of closed shop
agreements. So, under this Act, a religious objector is not required to do
a positive act — to exercise the right to join or to resign from the union.
He is exempted ipso jure without need of any positive act on his part. A
conscientious religious objector need not perform a positive act or
exercise the right of resigning from the labor union — he is exempted
from the coverage of any closed shop agreement that a labor union may
have entered into. How then can there be a religious test required for the
exercise of a right when no right need be exercised?
Page 22 of 141
We have said that it was within the police power of the State to enact
Republic Act No. 3350, and that its purpose was legal and in consonance
with the Constitution. It is never an illegal evasion of a constitutional
provision or prohibition to accomplish a desired result, which is lawful in
itself, by discovering or following a legal way to do it. 49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of certain
religious sects undue advantages over other workers, thus violating
Section 1 of Article III of the 1935 Constitution which forbids the denial to
any person of the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a guaranty of equality
in the application of the laws upon all citizens of the state. It is not,
therefore, a requirement, in order to avoid the constitutional prohibition
against inequality, that every man, woman and child should be affected
alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons
according to the circumstances surrounding them. It guarantees equality,
not identity of rights. The Constitution does not require that things which
are different in fact be treated in law as though they were the same. The
equal protection clause does not forbid discrimination as to things that
are different. 51 It does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not
invalid because of simple inequality. 52 The very idea of classification is
that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. 53 All
that is required of a valid classification is that it be reasonable, which
means that the classification should be based on substantial distinctions
which make for real differences; that it must be germane to the purpose
of the law; that it must not be limited to existing conditions only; and that
it must apply equally to each member of the class. 54 This Court has held
that the standard is satisfied if the classification or distinction is based on
a reasonable foundation or rational basis and is not palpably arbitrary. 55

In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is recognized
as enjoying a wide range of discretion. 56 It is not necessary that the
classification be based on scientific or marked differences of things or in
their relation. 57 Neither is it necessary that the classification be made with
mathematical nicety. 58 Hence legislative classification may in many cases
properly rest on narrow distinctions, 59 for the equal protection guaranty
does not preclude the legislature from recognizing degrees of evil or
harm, and legislation is addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the effect
and coverage of union shop security agreements, into those who by
reason of their religious beliefs and convictions cannot sign up with a
labor union, and those whose religion does not prohibit membership in
labor unions. Tile classification rests on real or substantial, not merely
imaginary or whimsical, distinctions. There is such real distinction in the
beliefs, feelings and sentiments of employees. Employees do not believe
in the same religious faith and different religions differ in their dogmas
and cannons. Religious beliefs, manifestations and practices, though
they are found in all places, and in all times, take so many varied forms
as to be almost beyond imagination. There are many views that comprise
the broad spectrum of religious beliefs among the people. There are
diverse manners in which beliefs, equally paramount in the lives of their
possessors, may be articulated. Today the country is far more
heterogenous in religion than before, differences in religion do exist, and
these differences are important and should not be ignored.
Even from the phychological point of view, the classification is based on
real and important differences. Religious beliefs are not mere beliefs,
mere ideas existing only in the mind, for they carry with them practical
consequences and are the motives of certain rules. of human conduct
and the justification of certain acts. 60 Religious sentiment makes a man
view things and events in their relation to his God. It gives to human life
its distinctive character, its tone, its happiness or unhappiness its
enjoyment or irksomeness. Usually, a strong and passionate desire is
involved in a religious belief. To certain persons, no single factor of their
experience is more important to them than their religion, or their not
having any religion. Because of differences in religious belief and
sentiments, a very poor person may consider himself better than the rich,
and the man who even lacks the necessities of life may be more cheerful
than the one who has all possible luxuries. Due to their religious beliefs
Page 23 of 141
people, like the martyrs, became resigned to the inevitable and accepted
cheerfully even the most painful and excruciating pains. Because of
differences in religious beliefs, the world has witnessed turmoil, civil strife,
persecution, hatred, bloodshed and war, generated to a large extent by
members of sects who were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350, therefore, rests on
substantial distinctions.
The classification introduced by said Act is also germane to its purpose.
The purpose of the law is precisely to avoid those who cannot, because
of their religious belief, join labor unions, from being deprived of their right
to work and from being dismissed from their work because of union shop
security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to
conditions existing at the time of its enactment. The law does not provide
that it is to be effective for a certain period of time only. It is intended to
apply for all times as long as the conditions to which the law is applicable
exist. As long as there are closed shop agreements between an
employer and a labor union, and there are employees who are prohibited
by their religion from affiliating with labor unions, their exemption from the
coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects; this
is evident from its provision. The fact that the law grants a privilege to
members of said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act only restores to
them their freedom of association which closed shop agreements have
taken away, and puts them in the same plane as the other workers who
are not prohibited by their religion from joining labor unions. The
circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law
unconstitutional, for every classification allowed by the Constitution by its
nature involves inequality.
The mere fact that the legislative classification may result in actual
inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid. A
classification otherwise reasonable does not offend the constitution
simply because in practice it results in some inequality. 61 Anent this

matter, it has been said that whenever it is apparent from the scope of
the law that its object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character, the law will be
upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates the
constitutional provision on social justice is also baseless. Social justice is
intended to promote the welfare of all the people. 63 Republic Act No.
3350 promotes that welfare insofar as it looks after the welfare of those
who, because of their religious belief, cannot join labor unions; the Act
prevents their being deprived of work and of the means of livelihood. In
determining whether any particular measure is for public advantage, it is
not necessary that the entire state be directly benefited — it is sufficient
that a portion of the state be benefited thereby.
Social justice also means the adoption by the Government of measures
calculated to insure economic stability of all component elements of
society, through the maintenance of a proper economic and social
equilibrium in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic stability to the
members of a religious sect, like the Iglesia ni Cristo, who are also
component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having a
closed shop agreement with the employer. The Act also advances the
proper economic and social equilibrium between labor unions and
employees who cannot join labor unions, for it exempts the latter from the
compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is concerned,
those whose religion prohibits membership in labor unions with those
whose religion does not prohibit said membership. Social justice does not
imply social equality, because social inequality will always exist as long
as social relations depend on personal or subjective proclivities. Social
justice does not require legal equality because legal equality, being a
relative term, is necessarily premised on differentiations based on
personal or natural conditions. 65 Social justice guarantees equality of
opportunity 66 , and this is precisely what Republic Act No. 3350 proposes
to accomplish — it gives laborers, irrespective of their religious scrupples,
equal opportunity for work.
7. As its last ground, appellant contends that the amendment introduced
by Republic Act No. 3350 is not called for — in other words, the Act is not
Page 24 of 141
proper, necessary or desirable. Anent this matter, it has been held that a
statute which is not necessary is not, for that reason, unconstitutional;
that in determining the constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the enactment of the
legislation in question. 67 Courts do inquire into the wisdom of
laws. 68 Moreover, legislatures, being chosen by the people, are
presumed to understand and correctly appreciate the needs of the
people, and it may change the laws accordingly. 69 The fear is entertained
by appellant that unless the Act is declared unconstitutional, employers
will prefer employing members of religious sects that prohibit their
members from joining labor unions, and thus be a fatal blow to unionism.
We do not agree. The threat to unionism will depend on the number of
employees who are members of the religious sects that control the
demands of the labor market. But there is really no occasion now to go
further and anticipate problems We cannot judge with the material now
before Us. At any rate, the validity of a statute is to be determined from its
general purpose and its efficacy to accomplish the end desired, not from
its effects on a particular case. 70 The essential basis for the exercise of
power, and not a mere incidental result arising from its exertion, is the
criterion by which the validity of a statute is to be measured. 71
II. We now pass on the second assignment of error, in support of which
the Union argued that the decision of the trial court ordering the Union to
pay P500 for attorney's fees directly contravenes Section 24 of Republic
Act No. 875, for the instant action involves an industrial dispute wherein
the Union was a party, and said Union merely acted in the exercise of its
rights under the union shop provision of its existing collective bargaining
contract with the Company; that said order also contravenes Article 2208
of the Civil Code; that, furthermore, Appellee was never actually
dismissed by the defendant Company and did not therefore suffer any
damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the
instant case there was really no industrial dispute involved in the attempt
to compel Appellee to maintain its membership in the union under pain of
dismissal, and that the Union, by its act, inflicted intentional harm on
Appellee; that since Appellee was compelled to institute an action to
protect his right to work, appellant could legally be ordered to pay
attorney's fees under Articles 1704 and 2208 of the Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is
relied upon by appellant provides that:
 Page 25 of 141

No suit, action or other proceedings shall be maintainable Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio,
in any court against a labor organization or any officer or Esguerra, Muñoz Palma and Aquino, JJ., concur.
member thereof for any act done by or on behalf of such
organization in furtherance of an industrial dispute to
which it is a party, on the ground only that such act
induces some other person to break a contract of Note: Separate opinions not included
employment or that it is in restraint of trade or interferes
with the trade, business or employment of some other
person or with the right of some other person to dispose
of his capital or labor. (Emphasis supplied)

That there was a labor dispute in the instant case cannot be disputed for
appellant sought the discharge of respondent by virtue of the closed shop
agreement and under Section 2 (j) of Republic Act No. 875 a question
involving tenure of employment is included in the term "labor
dispute". 74 The discharge or the act of seeking it is the labor dispute itself.
It being the labor dispute itself, that very same act of the Union in asking
the employer to dismiss Appellee cannot be "an act done ... in
furtherance of an industrial dispute". The mere fact that appellant is a
labor union does not necessarily mean that all its acts are in furtherance
of an industrial dispute. 75 Appellant Union, therefore, cannot invoke in its
favor Section 24 of Republic Act No. 875. This case is not intertwined
with any unfair labor practice case existing at the time when Appellee
filed his complaint before the lower court.

Neither does Article 2208 of the Civil Code, invoked by the Union, serve
as its shield. The article provides that attorney's fees and expenses of
litigation may be awarded "when the defendant's act or omission has
compelled the plaintiff ... to incur expenses to protect his interest"; and "in
any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered". In the instant case,
it cannot be gainsaid that appellant Union's act in demanding Appellee's
dismissal caused Appellee to incur expenses to prevent his being
dismissed from his job. Costs according to Section 1, Rule 142, of the
Rules of Court, shall be allowed as a matter of course to the prevailing
party.

WHEREFORE, the instant appeal is dismissed, and the decision, dated

August 26, 1965, of the Court of First Instance of Manila, in its Civil Case
No. 58894, appealed from is affirmed, with costs against appellant Union.
It is so ordered.

G.R. Nos. 43633-34 September 14, 1990
PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN, and
FELINO BULANDUS, petitioners,
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE
PHILIPPINES, respondents.
Januario T. Seno for petitioners.
NARVASA, J.:
Under the Industrial Peace Act, 1 government-owned or controlled corporations had the duty to bargain
collectively and were otherwise subject to the obligations and duties of employers in the private
sector.2 The Act also prohibited supervisors to become, or continue to be, members of labor
organizations composed of rank-and-file employees, 3 and prescribed criminal sanctions for breach of
the prohibition. 4
It was under the regime of said Industrial Peace Act that the Government
Service Insurance System (GSIS, for short) became bound by a
collective bargaining agreement executed between it and the labor
organization representing the majority of its employees, the GSIS
Employees Association. The agreement contained a "maintenance-of-
membership" clause, 5 i.e., that all employees who, at the time of the
execution of said agreement, were members of the union or became
members thereafter, were obliged to maintain their union membership in
good standing for the duration of the agreement as a condition for their
continued employment in the GSIS.
There appears to be no dispute that at that time, the petitioners occupied
supervisory positions in the GSIS. Pablo Arizala and Sergio Maribao
were, respectively, the Chief of the Accounting Division, and the Chief of
the Billing Section of said Division, in the Central Visayas Regional Office
of the GSIS. Leonardo Joven and Felino Bulandus were, respectively, the
Assistant Chief of the Accounting Division (sometimes Acting Chief in the
absence of the Chief) and the Assistant Chief of the Field Service and
Non-Life Insurance Division (and Acting Division Chief in the absence of
the Chief), of the same Central Visayas Regional Office of the GSIS.
Demands were made on all four of them to resign from the GSIS
Employees Association, in view of their supervisory positions. They
Page 26 of 141
refused to do so. Consequently, two (2) criminal cases for violation of the
Industrial Peace Act were lodged against them in the City Court of Cebu:
one involving Arizala and Maribao 6 and the other, Joven and Bulandus. 7
Both criminal actions resulted in the conviction of the accused in separate
decisions. 8 They were each sentenced "to pay a fine of P 500.00 or to
suffer subsidiary imprisonment in case of insolvency." They appealed to
the Court of Appeals.9 Arizala's and Maribao's appeal was docketed as
CA-G.R. No. 14724-CR; that of Joven and Bulandus, as CA-G.R. No.
14856-CR.
The appeals were consolidated on motion of the appellants, and
eventuated in a judgment promulgated on January 29, 1976 affirming the
convictions of all four appellants. The appellants moved for
reconsideration. They argued that when the so called "1973 Constitution"
took effect on January 17, 1973 pursuant to Proclamation No. 1104, the
case of Arizala and Maribao was still pending in the Court of Appeals and
that of Joven and Bulandus, pending decision in the City Court of Cebu;
that since the provisions of that constitution and of the Labor Code
subsequently promulgated (eff., November 1, 1974), repealing the
Industrial Peace Act-placed employees of all categories in government-
owned or controlled corporations without distinction within the Civil
Service, and provided that the terms and conditions of their employment
were to be "governed by the Civil Service Law, rules and regulations" and
hence, no longer subject of collective bargaining, the appellants ceased
to fall within the coverage of the Industrial Peace Act and should thus no
longer continue to be prosecuted and exposed to punishment for a
violation thereof. They pointed out further that the criminal sanction in the
Industrial Peace Act no longer appeared in the Labor Code. The
Appellate Court denied their plea for reconsideration.
Hence, the present petition for review on certiorari.
The crucial issue obviously is whether or not the petitioners' criminal
liability for a violation of the Industrial Peace Act may be deemed to have
been obliterated in virtue of subsequent legislation and the provisions of
the 1973 and 1987 Constitutions.
The petitioners' contention that their liability had been erased is made to
rest upon the following premises:

1. Section 1, Article XII-B of the 1973 Constitution does indeed provide
that the "Civil Service embraces every branch, agency, subdivision and
instrumentality of the government, including government-owned or
controlled corporations, .. administered by an independent Civil Service
Commission.
2. Article 292 of the Labor Code repealed such parts and provisions of
the Industrial Peace Act as were "not adopted as part" of said Code
"either directly or by reference." The Code did not adopt the provision of
the Industrial Peace Act conferring on employees of government-owned
or controlled corporations the right of self-organization and collective
bargaining; in fact it made known that the "terms and conditions of
employment of all government employees, including employees of
government-owned and controlled corporations," would thenceforth no
longer be fixed by collective bargaining but "be governed by the Civil
Service Law, rules and regulations." 10
3. The specific penalty for violation of the prohibition on supervisors being
members in a labor organization of employees under their supervision
has disappeared.
4. The Code also modified the concept of unfair labor practice, decreeing
that thenceforth, "it shall be considered merely as an administrative
offense rather than a criminal offense (and that) (u)nfair labor practice
complaints shall x x be processed like any ordinary labor disputes."11
On the other hand, in justification of the Appellate Tribunal's affirmance of
the petitioners' convictions of violations of the Industrial Peace Act, the
People-
1) advert to the fact that said Labor Code also states that "all actions or
claims accruing prior to ... (its) effectivity ... shall be determined in
accordance with the laws in force at the time of their accrual;" and
2) argue that the legislature cannot generally intervene and vacate the
judgment of the courts, either directly or indirectly, by the repeal of the
statute under which said judgment has been rendered.
The legal principles governing the rights of self-organization and
collective bargaining of rank-and-file employees in the government-
Page 27 of 141
particularly as regards supervisory, and high level or managerial
employees have undergone alterations through the years.
Republic Act No. 875
As already intimated, under RA 875 (the Industry Peace Act), 12 persons
"employed in proprietary functions of the Government, including but not
limited to governmental corporations," had the right of self-organization
and collective bargaining, including the right to engage in concerted
activities to attain their objectives, e.g. strikes.
But those "employed in governmental functions" were forbidden to "strike
for the purpose of securing changes or modification in their terms and
conditions of employment" or join labor organizations which imposed on
their members the duty to strike. The reason obviously was that the terms
and conditions of their employment were "governed by law" and hence
could not be fixed, altered or otherwise modified by collective bargaining.
Supervisory employees were forbidden to join labor organizations
composed of employees under them, but could form their own unions.
Considered "supervisors' were those 'having authority in the interest of an
employer to hire, transfer, suspend, lay-off, recall, discharge, assign,
recommend, or discipline other employees, or responsibly to direct them,
and to adjust their grievance or effectively to recommend such acts if, in
connection with the foregoing, the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent
judgment." 13
Republic Act No. 2260
Similar provisions were found in R.A. No. 2260, the Civil Service Act of
1959. This Act declared that the "Philippine Civil Service ... (embraced)
all branches, subdivisions and instrumentalities of the
government including government-owned and controlled corporations." 14
It prohibited such civil service employees who were "employed in
governmental functions" to belong to any labor organization which
imposed on their members "the obligation to strike or to join strikes." And
one of the first issuances of the President after the proclamation of
martial law in September, 1972, was General Order No. 5

which inter alia banned strikes in vital industries," as well as 'all rallies,
demonstrations and other forms of group actions." 15
Not so prohibited, however, were those "employed in proprietary
functions of the Government including, but not limited to, governmental
corporations."16 The Act also penalized any person who "violates, refuses
or neglects to comply with any ... provisions (of the Act) or rules
(thereunder promulgated) ... by a fine not exceeding one thousand pesos
or by imprisonment not exceeding six months or both such fine and
imprisonment in the discretion of the court." 17
The 1973 Constitution
The 1973 Constitution laid down the broad principle that "(t)he State shall
assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work," 18 and
directed that the "National Assembly shall provide for the standardization
of compensation of government officials and employees, including those
in government-owned or controlled corporations, taking into account the
nature of the responsibilities pertaining to, and the qualifications required
for, the positions concerned." 19
PD 442, The Labor Code
The Labor Code of the Philippines, Presidential Decree No. 442, enacted
within a year from effectivity of the 1973 Constitution, 20 incorporated the
proposition that the "terms and conditions of employment of all
government employees, including employees of government-owned and
controlled corporations ... (are) governed by the Civil Service Law, rules
and regulations." 21 It incorporated, too, the constitutional mandate that
the salaries of said employees "shall be standardized by the National
Assembly."
The Labor Code, 22 however "exempted" government employees from the
right to self-organization for purposes of collective bargaining. While the
Code contained provisions acknowledging the right of "all persons
employed in commercial, industrial and agricultural enterprises, including
religious, medical or educational institutions operating for profit" to "self-
organization and to form, join or assist labor organizations for purposes
of collective bargaining," they "exempted from the foregoing provisions:
Page 28 of 141
a) security guards;
b) government employees, including employees of government
government-owned and/ or controlled corporations;
c) managerial employees; and
d) employees of religious, charitable, medical and educational institutions
not operating for profit, provided the latter do not have existing collective
agreements or recognized unions at the time of the effectivity of the code
or have voluntarily waived their exemption."23
The reason for denying to government employees the right to "self-
organization and to form, join or assist labor organizations for purposes
of collective bargaining" is presumably the same as that under the
Industrial Peace Act, i.e., that the terms and conditions of government
employment are fixed by law and not by collective bargaining.
Some inconsistency appears to have arisen between the Labor Code and
the Civil Service Act of 1959. Under the Civil Service Act, persons
"employed in proprietary functions of the government including, but not
limited to, governmental corporations'-not being within "the policy of the
Government that the employees therein shall not strike for the purpose of
securing changes in their terms and conditions of employment"-could
legitimately bargain with their respective employers through their labor
organizations, and corollarily engage in strikes and other concerted
activities in an attempt to bring about changes in the conditions of their
work. They could not however do so under the Labor Code and its
Implementing Rules and Regulations; these provided that "government
employees, including employees of government-owned and/or controlled
corporations," without distinction as to function, were "exempted"
(excluded is the better term) from "the right to self-organization and to
form, join or assist labor organizations for purposes of collective
bargaining," and by implication, excluded as well from the right to engage
in concerted activities, such as strikes, as coercive measures against
their employers.
Members of supervisory unions who were not managerial employees,
were declared by the Labor Code to be "eligible to join or assist the rank
and file labor organization, and if none exists, to form or assist in the
forming of such rank and file organization " 24 Managerial employees, on

the other hand, were pronounced as 'not eligible to join, assist or form
any labor organization." 25 A "managerial employee" was defined as one
vested with power or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign
or discipline employees, or to effectively recommend such managerial
actions." 26
Presidential Decree No. 807
Clarification of the matter seems to have been very shortly attempted by
the Civil Service Decree of the Philippines, Presidential Decree No. 807
(eff., Oct. 6,1975) which superseded the Civil Service Law of 1959 (RA
2260) 27 and repealed or modified "all laws, rules and regulations or parts
thereof inconsistent with the provisions" thereof. The Decree categorically
described the scope and coverage of the "Civil Service" as embracing 44
every branch, agency, subdivision, and instrumentality of the
government, including every government owned or controlled corporation
whether performing governmental or propriety function. 28 The effect was
seemingly to prohibit government employees (including those "employed
in proprietary functions of the Government") to "strike for the purpose of
securing changes of their terms and conditions of
employment," 29 something which, as aforestated, they were allowed to do
under the Civil Service Act of 1959.30
Be this as it may it seems clear that PD 807 (the Civil Service Decree) did
not modify the declared ineligibility of "managerial employees" from
joining, assisting or forming any labor organization.
Executive Order No. 111
Executive Order No. 111, issued by President Corazon C. Aquino on
December 24, 1986 in the exercise of legislative powers under the
Freedom Constitution, modified the general disqualification above
mentioned of 'government employees, including employees of
government-owned and/or controlled corporations" from "the right to self-
organization and to form, join or assist labor organizations for purposes
of collective bargaining.' It granted to employees "of government
corporations established under the Corporation Code x x the right to
organize and to bargain collectively with their respective employers." 31 To
all 'other employees in the civil service, ... (it granted merely) the right to
Page 29 of 141
form associations for purposes not contrary to law," 32 not for "purposes of
collective bargaining."
The 1987 Constitution
The provisions of the present Constitution on the matter appear to be
somewhat more extensive. They declare that the "right to self
organization shall not be denied to government employees;"33 that the
State "shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law;" and that
said workers "shall be entitled to security of tenure, humane conditions of
work, and a living wage, ... (and) also participate in policy and decision-
making processes affecting their rights and benefits as may be provided
by law. 34
CSC Memorandum Circular No. 6
Memorandum Circular No. 6 of the Civil Service Commission, issued on
April 21, 1987 enjoined strikes by government officials and employees, to
wit: 35
... Prior to the enactment by Congress of applicable laws
concerning strike by government employees, and
considering that there are existing laws which prohibit
government officials and employees from resorting to
strike, the Commission enjoins, under pain of
administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass
leaves, walk-outs and other forms of mass action which
will result in temporary stoppage or disruption of public
services. To allow otherwise is to undermine or prejudice
the government system.
Executive Order No. 180
The scope of the constitutional right to self-organization of "government
employees" above mentioned, was defined and delineated in Executive
Order No. 180 (eff. June 1, 1987). According to this Executive Order, the
right of self-organization does indeed pertain to all "employees of all
branches, subdivisions, instrumentalities and agencies of the

Government, including government-owned or controlled corporations with
original charters;" 36 such employees "shall not be discriminated against in
respect of their employment by reason of their membership in employees'
organizations or participation in the normal activities of their organization
x x (and their) employment shall not be subject to the condition that they
shall not join or shall relinquish their membership in the employees'
organizations. 37
However, the concept of the government employees' right of self-
organization differs significantly from that of employees in the private
sector. The latter's right of self-organization, i.e., "to form, join or assist
labor organizationsfor purposes of collective bargaining," admittedly
includes the right to deal and negotiate with their respective employers in
order to fix the terms and conditions of employment and also, to engage
in concerted activities for the attainment of their objectives, such as
strikes, picketing, boycotts. But the right of government employees to
"form, join or assist employees organizations of their own choosing"
under Executive Order No. 180 is not regarded as existing or available
for "purposes of collective bargaining," but simply "for the furtherance and
protection of their interests." 38
In other words, the right of Government employees to deal and negotiate
with their respective employers is not quite as extensive as that of private
employees. Excluded from negotiation by government employees are the
"terms and conditions of employment ... that are fixed by law," it being
only those terms and conditions not otherwise fixed by law that "may be
subject of negotiation between the duly recognized employees'
organizations and appropriate government authorities," 39 And while EO
No. 180 concedes to government employees, like their counterparts in
the private sector, the right to engage in concerted activities, including
the right to strike, the executive order is quick to add that those activities
must be exercised in accordance with law, i.e. are subject both to "Civil
Service Law and rules" and "any legislation that may be enacted by
Congress," 40 that "the resolution of complaints, grievances and cases
involving government employees" is not ordinarily left to collective
bargaining or other related concerted activities, but to "Civil Service Law
and labor laws and procedures whenever applicable;" and that in case
"any dispute remains unresolved after exhausting all available remedies
under existing laws and procedures, the parties may jointly refer the
dispute to the (Public Sector Labor-Management) Council for appropriate
action."41 What is more, the Rules and Regulations implementing
Executive Order No. 180 explicitly provide that since the "terms and
Page 30 of 141
conditions of employment in the government, including any political
subdivision or instrumentality thereof and government-owned and
controlled corporations with original charters are governed by law, the
employees therein shall not strike for the purpose of securing changes
thereof. 42
On the matter of limitations on membership in labor unions of
government employees, Executive Order No. 180 declares that "high
level employees whose functions are normally considered as policy
making or managerial, or whose duties are of a highly confidential nature
shall not be eligible to join the organization of rank-and-file government
employees. 43 A "high level employee" is one "whose functions are
normally considered policy determining, managerial or one whose duties
are highly confidential in nature. A managerial function refers to the
exercise of powers such as: 1. To effectively recommend such
managerial actions; 2. To formulate or execute management policies and
decisions; or 3. To hire, transfer, suspend, lay off, recall, dismiss, assign
or discipline employees. 44
Republic Act No. 6715
The rule regarding membership in labor organizations of managerial and
supervisory employees just adverted to, was clarified and refined by
Republic Act No. 6715, effective on March 21, 1989, further amending
the Labor Code.
Under RA 6715 labor unions are regarded as organized either (a) "for
purposes of negotiation," or (b) "for furtherance and protection"of the
members' rights. Membership in unions organized "for purposes of
negotiation" is open only to rank-and-file employees. "Supervisory
employees" are ineligible "for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor
organizations of their own," i.e., one organized "for furtherance and
protection" of their rights and interests. However, according to the Rules
implementing RA 6715, "supervisory employees who are included in an
existing rank-and- file bargaining unit, upon the effectivity of Republic Act
No. 6715 shall remain in that unit ..." Supervisory employees are "those
who, in the interest of the employer, effectively recommend such
managerial actions 45 if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent
judgment. 46

Membership in employees' organizations formed for purposes of
negotiation are open to rank-and-file employees only, as above
mentioned, and not to high level employees. 47 Indeed, "managerial
employees" or "high level employees" are, to repeat, "not eligible to join,
assist or form any labor organization" at all. 48 A managerialemployee is
defined as "one who is vested with powers or prerogatives to lay down
and execute, management policies and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees."49
This is how the law now stands, particularly with respect to supervisory
employees vis a vis labor organizations of employees under them.
Now, the GSIS performs proprietary functions. It is a non-stock
corporation, managed by a Board of Trustees exercising the "usual
corporate powers."50 In other words, it exercises all the powers of a
corporation under the Corporation Law in so far as they are not otherwise
inconsistent with other applicable law. 51 It is engaged essentially in
insurance, a business that "is not inherently or exclusively a
governmental function, ... (but) is on the contrary, in essence and
practice, of a private nature and interest." 52
1. The petitioners contend that the right of self-organization and
collectivebargaining had been withdrawn by the Labor Code from
government employees including those in government-owned and
controlled corporations- chiefly for the reason that the terms and
conditions of government employment, all embraced in civil service, may
not be modified by collective bargaining because set by law. It is
therefore immaterial, they say, whether supervisors are members of rank-
and-file unions or not; after all, the possibility of the employer's control of
the members of the union thru supervisors thus rendering collective
bargaining illusory, which is the main reason for the prohibition, is no
longer of any consequence.
This was true, for a time. As already discussed, both under the Labor
Code and PD 807, government employees, including those in
government-owned or controlled corporations, were indeed precluded
from bargaining as regards terms and conditions of employment because
these were set by law and hence could not possibly be altered by
negotiation.
Page 31 of 141
But EO 111 restored the right to organize and to negotiate and bargain of
employees of "government corporations established under the
Corporation Code." And EO 180, and apparently RA 6715, too, granted
to all government employees the right of collective bargaining or
negotiation except as regards those terms of their employment which
were fixed by law; and as to said terms fixed by law, they were prohibited
to strike to obtain changes thereof.
2. The petitioners appear to be correct in their view of the disappearance
from the law of the prohibition on supervisors being members of labor
organizations composed of employees under their supervision. The
Labor Code (PD 442) allowed supervisors (if not managerial) to join rank-
and-file unions. And under the Implementing Rules of RA 6715,
supervisors who were members of existing labor organizations on the
effectivity of said RA 6715 were explicitly authorized to "remain therein."
3. The correctness of the petitioners' theory that unfair labor practices
ceased to be crimes and were deemed merely administrative offenses in
virtue of the Labor Code, cannot be gainsaid. Article 250 of the Labor
Code did provide as follows:
ART. 250. Concept of unfair labor practice.-The concept
of unfair labor practice is hereby modified. Henceforth, it
shall be considered merely as an administrative offense
rather than a criminal offense. Unfair labor practice
complaints shall, therefore, be processed like any
ordinary labor disputes.
But unfair labor practices were declared to be crimes again by later
amendments of the Labor Code effected by Batas Pambansa Blg. 70,
approved on May 1, 1980. As thus amended, the Code now pertinently
reads as follows:
ART. 248. Concept of unfair labor practice and procedure
for prosecution thereof. — Unfair labor practices violate
the right of workers and employees to self organization,
are inimical to the legitimate interests of both labor and
management including their right to bargain collectively
and otherwise deal with each other in an atmosphere of
freedom and mutual respect, and hinder the promotion of
healthy and stable labor management relations.

Consequently, unfair labor practices are not only
violations of the civil rights of both labor and management
but are also offenses against the State which shall be
subject to prosecution and punishment as herein
provided.
xxx xxx xxx
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
preceding paragraph. ...
The decisive consideration is that at present, supervisors who were
already members of a rank-and-file labor organization at the time of the
effectivity of R.A. No. 6715, are authorized to "remain therein." It seems
plain, in other words, that the maintenance by supervisors of membership
in a rank-and-file labor organization even after the enactment of a statute
imposing a prohibition on such membership, is not only not a crime, but is
explicitly allowed, under present law.
Now, in a case decided as early as 1935, People v. Tamayo, 53 where the
appellants had appealed from a judgment convicting them of a violation
of a municipal -ordinance, and while their appeal was pending, the
ordinance was repealed such that the act complained of ceased to be a
criminal act but became legal, this Court dismissed the criminal
proceedings, pronouncing the effects of the repeal to be as follows:
In the leading case of the United States vs. Cuna (12 Phil.
241), and Wing vs. United States (218 U.S. 272), the
doctrine was clearly established that in the Philippines
repeal of a criminal act by its reenactment, even without a
saving clause would not destroy criminal liability. But not
a single sentence in either derision indicates that there
was any desire to hold that a person could be prosecuted
convicted, and punished for acts no longer criminal.
Page 32 of 141
There is no question that at common law and in America
a much more favorable attitude towards the accused
exists relative to statutes that have been repealed than
has been adopted here. Our rule is more in conformity
with the Spanish doctrine, but even in Spain, where the
offense ceased to be criminal, petition cannot be had (1
Pacheco, Commentaries, 296).
The repeal here was absolute and not a reenactment and
repeal by implication. Nor was there any saving clause.
The legislative intent as shown by the action of the
municipal is that such conduct, formerly denounced, is no
longer deemed criminal, and it would be illogical for this
court to attempt to sentence appellant for the offense that
no longer exists.
We are therefore of the opinion that the proceedings
against appellant must be dismissed.
To the same effect and in even more unmistakable language is People v.
Almuete 54 where the defendants-appellees were charged under section
39 of Republic Act No. 1199, as amended (the Agricultural Land Tenancy
Law of 1954) which penalized pre-threshing by either agricultural tenant
or his landlord. They sought and secured a dismissal on the ground,
among others, that there was no law punishing the act charged-a
reference to the fact that Republic Act No. 1199 had already been
superseded by the Agricultural Land Reform Code of 1963 which
instituted the leasehold system and abolished share tenancy subject to
certain conditions. On appeal by the Government, this Court upheld the
dismissal, saying:
The legislative intent not to punish anymore the tenant's
act of pre-reaping and pre-threshing without notice to the
landlord is inferable from the fact that, as already noted,
the Code of Agrarian Reforms did not reenact section 39
of the Agricultural Tenancy Law and that it abolished
share tenancy which is the basis for penalizing
clandestine pre-reaping and pre-threshing.
xxx xxx xxx
 Page 33 of 141

As held in the Adillo case, 55 the act of pre-reaping and

pre-threshing without notice to the landlord, which is an
offense under the Agricultural Tenancy Law, had ceased
to be an offense under the subsequent law, the Code of
Agrarian Reforms. To prosecute it as an offense when the
Code of Agrarian Reforms is already in force would be
repugnant or abhorrent to the policy and spirit of that
Code and would subvert the manifest legislative intent not
to punish anymore pre-reaping and pre-threshing without
notice to the landholder.

xxx xxx xxx

The repeal of a penal law deprives the courts of

jurisdiction to punish persons charged with a violation of
the old penal law prior to its repeal (People vs. Tamayo,
61 Phil. 225; People vs. Sindiong and Pastor, 77 Phil.
1000; People vs. Binuya, 61 Phil. 208; U.S. vs. Reyes, 10
Phil. 423; U.S. vs. Academia, 10 Phil. 431. See dissent in
Lagrimas vs. Director of Prisons, 57 Phil. 247, 252, 254).

The foregoing precedents dictate absolution of the appellants of the

offenses imputed to them.

WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-CR

and CA-G.R. No. 14856-CR, subject of the appeal, as well as those in
Crim. Case No. 5275-R and Crim. Case No. 4130-R rendered by the Trial
Court, are REVERSED and the accused-appellants ACQUITTED of the
charges against them, with costs de officio.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.


G.R. No. 96189 July 14, 1992
UNIVERSITY OF THE PHILIPPINES, petitioner,
vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor
Relations, Department of Labor and Employment, and THE ALL U.P.
WORKERS' UNION, represented by its President, Rosario del
Rosario, respondent.
NARVASA, C.J.:
In this special civil action of certiorari the University of the Philippines
seeks the nullification of the Order dated October 30, 1990 of Director
Pura Ferrer-Calleja of the Bureau of Labor Relations holding that
"professors, associate professors and assistant professors (of the
University of the Philippines) are . . rank-and-file employees . . ;"
consequently, they should, together with the so-called non-academic,
non-teaching, and all other employees of the University, be represented
by only one labor organization. 1 The University is joined in this
undertaking by the Solicitor General who "has taken a position not
contrary to that of petitioner and, in fact, has manifested . . that he is not
opposing the petition . . ." 2
The case 3 was initiated in the Bureau of Labor Relations by a petition
filed on March 2, 1990 by a registered labor union, the "Organization of
Non-Academic Personnel of UP" (ONAPUP). 4 Claiming to have a
membership of 3,236 members — comprising more than 33% of the
9,617 persons constituting the non-academic personnel of UP-Diliman,
Los Baños, Manila, and Visayas, it sought the holding of a certification
election among all said non-academic employees of the University of
the Philippines. At a conference thereafter held on March 22, 1990 in the
Bureau, the University stated that it had no objection to the election.
On April 18, 1990, another registered labor union, the "All UP Workers'
Union," 5 filed a comment, as intervenor in the certification election
proceeding. Alleging that its membership covers both academic and non-
academic personnel, and that it aims to unite all UP rank-and-file
employees in one union, it declared its assent to the holding of the
election provided the appropriate organizational unit was first clearly
Page 34 of 141
defined. It observed in this connection that the Research, Extension and
Professional Staff (REPS), who are academic non-teaching personnel,
should not be deemed part of the organizational unit.
For its part, the University, through its General Counsel, 6 made of record
its view that there should be two (2) unions: one for academic, the other
for non-academic or administrative, personnel considering the dichotomy
of interests, conditions and rules governing these employee groups.
Director Calleja ruled on the matter on August 7, 1990. 7 She declared
that "the appropriate organizational unit . . should embrace all the regular
rank-and-file employees, teaching and non-teaching, of the University of
the Philippines, including all its branches" and that there was no sufficient
evidence "to justify the grouping of the non-academic or administrative
personnel into an organization unit apart and distinct from that of the
academic or teaching personnel." Director Calleja adverted to Section 9
of Executive Order No. 180, viz.:
Sec. 9. The appropriate organizational unit shall be the
employer unit consisting of rank-and-file employees,
unless circumstances otherwise require.
and Section 1, Rule IV of the Rules Implementing said EO 180
(as amended by SEC. 2, Resolution of Public Sector Labor
Management Council dated May 14, 1989, viz.:
xxx xxx xxx
For purposes of registration, an appropriate
organizational unit may refer to:
xxx xxx xxx
d. State universities or colleges, government-owned or
controlled corporations with original charters.
She went on to say that the general intent of EO 180 was "not to
fragmentize the employer unit, as "can be gleaned from the
definition of the term "accredited employees' organization," which
refers to:

. . a registered organization of the rank-and-file
employees as defined in these rules recognized to
negotiate for the employees in an organizational unit
headed by an officer with sufficient authority to bind the
agency, such as . . . . . . state colleges and universities.
The Director thus commanded that a certification election be "conducted
among rank-and-file employees, teaching and non-teaching" in all four
autonomous campuses of the UP, and that management appear and
bring copies of the corresponding payrolls for January, June, and July,
1990 at the "usual pre-election conference . . ."
At the pre-election conference held on March 22, 1990 at the Labor
Organizational Division of the DOLE, 8 the University sought further clarification of the
coverage of the term, "rank-and-file" personnel, asserting that not every employee could properly be
embraced within both teaching and non-teaching categories since there are those whose positions are
in truth managerial and policy-determining, and hence, excluded by law.
At a subsequent hearing (on October 4, 1990), the University filed a
Manifestation seeking the exclusion from the organizational unit of those
employees holding supervisory positions among non-academic
personnel, and those in teaching staff with the rank of Assistant
Professor or higher, submitting the following as grounds therefor:
1) Certain "high-level employees" with policy-making, managerial, or
confidential functions, are ineligible to join rank-and-file employee
organizations under Section 3, EO 180:
Sec. 3. High-level employees whose functions are
normally considered as policy-making or managerial or
whose duties are of a highly confidential nature shall not
be eligible to join the organization of rank-and file
government employees;
2) In the University hierarchy, not all teaching and non-teaching
personnel belong the rank-and file: just as there are those occupying
managerial positions within the non-teaching roster, there is also a
dichotomy between various levels of the teaching or academic staff;
3) Among the non-teaching employees composed of Administrative Staff
and Research personnel, only those holding positions below Grade 18
should be regarded as rank-and-file, considering that those holding
Page 35 of 141
higher grade positions, like Chiefs of Sections, perform supervisory
functions including that of effectively recommending termination of
appointments or initiating appointments and promotions; and
4) Not all teaching personnel may be deemed included in the term, "rank-
and-file;" only those holding appointments at the instructor level may be
so considered, because those holding appointments from Assistant
Professor to Associate Professor to full Professor take part, as members
of the University Council, a policy-making body, in the initiation of policies
and rules with respect to faculty tenure and promotion. 9
The ONAPUP quite categorically made of record its position; that it was
not opposing the University's proferred classification of rank-and file
employees. On the other hand, the "All UP Workers' Union" opposed the
University's view, in a Position Paper presented by it under date of
October 18, 1990.
Director Calleja subsequently promulgated an Order dated October 30,
1990, resolving the "sole issue" of "whether or not professors, associate
professors and assistant professors are included in the definition of high-
level employee(s)" in light of Rule I, Section (1) of the Implementing
Guidelines of Executive Order No. 180, defining "high level employee" as
follows:
1. High Level Employee — is one whose functions are
normally considered policy determining, managerial or
one whose duties are highly confidential in nature. A
managerial function refers to the exercise of powers such
as:
1. To effectively recommend such
managerial actions;
2. To formulate or execute management
policies and decisions; or
3. To hire, transfer, suspend, lay-off,
recall, dismiss, assign or discipline
employees.

The Director adjudged that said teachers are rank-and-file
employees "qualified to join unions and vote in certification
elections." According to her —
A careful perusal of the University Code . . shows that the
policy-making powers of the Council are limited to
academic matters, namely, prescribing courses of study
and rules of discipline, fixing student admission and
graduation requirements, recommending to the Board of
Regents the conferment of degrees, and disciplinary
power over students. The policy-determining functions
contemplated in the definition of a high-level employee
pertain to managerial, executive, or organization policies,
such as hiring, firing, and disciplining of employees,
salaries, teaching/working hours, other monetary and
non-monetary benefits, and other terms and conditions of
employment. They are the usual issues in collective
bargaining negotiations so that whoever wields these
powers would be placed in a situation of conflicting
interests if he were allowed to join the union of rank-and-
file employees.
The University seasonably moved for reconsideration, seeking to make
the following points, to wit:
1) UP professors do "wield the most potent managerial powers: the
power to rule on tenure, on the creation of new programs and new jobs,
and conversely, the abolition of old programs and the attendant re-
assignment of employees.
2) To say that the Council is "limited to (acting on) academic matters" is
error, since academic decisions "are the most important decisions made
in a University . . (being, as it were) the heart, the core of the University
as a workplace.
3) Considering that the law regards as a "high level" employee, one who
performs either policy-determining, managerial, or confidential functions,
the Director erred in applying only the "managerial functions" test,
ignoring the "policy-determining functions" test.
Page 36 of 141
4) The Director's interpretation of the law would lead to absurd results,
e.g.: "an administrative officer of the College of Law is a high level
employee, while a full Professor who has published several treatises and
who has distinguished himself in argument before the Supreme Court is a
mere rank-and-file employee. A dormitory manager is classified as a high
level employee, while a full Professor or Political Science with a Ph. D.
and several Honorary doctorates is classified as rank-and-file." 10
The motion for reconsideration was denied by Director Calleja, by Order
dated November 20, 1990.
The University would now have this Court declare void the Director's
Order of October 30, 1990 as well as that of November 20, 1990. 11 A
temporary restraining order was issued by the Court, by Resolution dated
December 5, 1990 conformably to the University's application therefor.
Two issues arise from these undisputed facts. One is whether or not
professors, associate professors and assistant professors are "high-level
employees" "whose functions are normally considered policy determining,
managerial or . . highly confidential in nature." The other is whether or
not, they, and other employees performing academic functions, 12 should
comprise a collective bargaining unit distinct and different from that
consisting of the non-academic employees of the
University, 13 considering the dichotomy of interests, conditions and rules
existing between them.
As regards the first issue, the Court is satisfied that it has been correctly
resolved by the respondent Director of Bureau Relations. In light of
Executive Order No. 180 and its implementing rules, as well as the
University's charter and relevant regulations, the professors, associate
professors and assistant professors (hereafter simply referred to as
professors) cannot be considered as exercising such managerial or
highly confidential functions as would justify their being
categorized as "high-level employees" of the institution.
The Academic Personnel Committees, through which the professors
supposedly exercise managerial functions, were constituted "in order to
foster greater involvement of the faculty and other academic personnel in
appointments, promotions, and other personnel matters that directly
affect them." 14 Academic Personnel Committees at the departmental and
college levels were organized "consistent with, and demonstrative of the

very idea of consulting the faculty and other academic personnel on
matters directly affecting them" and to allow "flexibility in the
determination of guidelines peculiar to a particular department or
college." 15
Personnel actions affecting the faculty and other academic personnel
should, however, "be considered under uniform guidelines and consistent
with the Resolution of the Board (of Regents) adopted during its 789th
Meeting (11-26-69) creating the University Academic Personnel
Board." 16 Thus, the Departmental Academic Personnel Committee is
given the function of "assist(ing) in the review of the recommendations
initiated by the Department Chairman with regard to recruitment,
selection, performance evaluation, tenure and staff development, in
accordance with the general guidelines formulated by the University
Academic Personnel Board and the implementing details laid down by
the College Academic Personnel Committee;" 17 while the College
Academic Personnel Committee is entrusted with the following
functions: 18
1. Assist the Dean in setting up the details for the
implementation of policies, rules, standards or general
guidelines as formulated by the University Academic
Personnel Board;
2. Review the recommendation submitted by the DAPCs
with regard to recruitment, selection, performance
evaluation, tenure, staff development, and promotion of
the faculty and other academic personnel of the College;
3. Establish departmental priorities in the allocation of
available funds for promotion;
4. Act on cases of disagreement between the Chairman
and the members of the DAPC particularly on personnel
matters covered by this Order;
5. Act on complaints and/or protests against personnel
actions made by the Department Chairman and/or the
DAPC.
Page 37 of 141
The University Academic Personnel Board, on the other hand, performs
the following functions: 19
1. Assist the Chancellor in the review of the
recommendations of the CAPC'S.
2. Act on cases of disagreement between the Dean and
the CAPC.
3. Formulate policies, rules, and standards with respect to
the selection, compensation, and promotion of members
of the academic staff.
4. Assist the Chancellor in the review of
recommendations on academic promotions and on other
matters affecting faculty status and welfare.
From the foregoing, it is evident that it is the University Academic
Personnel Committee, composed of deans, the assistant for academic
affairs and the chief of personnel, which formulates the policies, rules and
standards respecting selection, compensation and promotion of members
of the academic staff. The departmental and college academic personnel
committees' functions are purely recommendatory in nature, subject to
review and evaluation by the University Academic Personnel Board.
In Franklin Baker Company of the Philippines vs. Trajano, 20 this Court
reiterated the principle laid down in National Merchandising Corp. vs.
Court of Industrial Relations, 21 that the power to recommend, in order to
qualify an employee as a supervisor or managerial employee "must not
only be effective but the exercise of such authority should not be merely
of a routinary or clerical nature but should require the use of independent
judgment." 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 the company, the same, although
present, are not effective and not an exercise of independent judgment
as required by law.
Significantly, the personnel actions that may be recommended by the
departmental and college academic personnel committees must conform
with the general guidelines drawn up by the university personnel
academic committee. This being the case, the members of the
departmental and college academic personnel committees are not unlike

the chiefs of divisions and sections of the National Waterworks and
Sewerage Authority whom this Court considered as rank-and-file
employees in National Waterworks & Sewerage Authority vs. NWSA
Consolidated Unions, 22because "given ready policies to execute and
standard practices to observe for their execution, . . . they have little
freedom of action, as their main function is merely to carry out the
company's orders, plans and policies."
The power or prerogative pertaining to a high-level employee "to
effectively recommend such managerial actions, to formulate or execute
management policies or decisions and/or to hire, transfer, suspend, lay-
off, recall, dismiss, assign or discipline employees" 23 is exercised to a
certain degree by the university academic personnel board/committees
and ultimately by the Board of Regents in accordance with Section 6 of
the University
Charter, 24 thus:
(e) To appoint, on the recommendation of the President of
the University, professors, instructors, lecturers and other
employees of the University; to fix their compensation,
hours of service, and such other duties and conditions as
it may deem proper; to grant them in its discretion leave
of absence under such regulations as it may promulgate,
any other provision of law to the contrary notwithstanding,
and to remove them for cause after investigation and
hearing shall have been had.
Another factor that militates against petitioner's espousal of managerial
employment status for all its professors through membership in the
departmental and college academic personnel committees is that not all
professors are members thereof. Membership and the number of
members in the committees are provided as follows: 25
Sec. 2. Membership in Committees. — Membership in
committees may be made either through appointment,
election, or by some other means as may be determined
by the faculty and other academic personnel of a
particular department or college.
Sec. 3. Number of Members. — In addition to the
Chairman, in the case of a department, and the Dean in
Page 38 of 141
the case of a college, there shall be such number of
members representing the faculty and academic
personnel as will afford a fairly representative,
deliberative and manageable group that can handle
evaluation of personnel actions.
Neither can membership in the University Council elevate the professors
to the status of high-level employees. Section 6 (f) and 9 of the UP
Charter respectively provide: 26
Sec. 6. The Board of Regents shall have the following
powers and duties . . . ;
xxx xxx xxx
(f) To approve the courses of study and rules of discipline
drawn up by the University Council as hereinafter
provided; . . .
Sec. 9. There shall be a University Council consisting of
the President of the University and of all instructors in the
university holding the rank of professor, associate
professor, or assistant professor. The Council shall have
the power to prescribe the courses of study and rules of
discipline, subject to the approval of the Board of
Regents. It shall fix the requirements for admission to any
college of the university, as well as for graduation and the
receiving of a degree. The Council alone shall have the
power to recommend students or others to be recipients
of degrees. Through its president or committees, it shall
have disciplinary power over the students within the limits
prescribed by the rules of discipline approved by the
Board of Regents. The powers and duties of the
President of the University, in addition to those
specifically provided in this Act shall be those usually
pertaining to the office of president of a university.
It is readily apparent that the policy-determining functions of the
University Council are subject to review, evaluation and final approval by
the Board of Regents. The Council's power of discipline is likewise
circumscribed by the limits imposed by the Board of Regents. What has

been said about the recommendatory powers of the departmental and
college academic personnel committees applies with equal force to the
alleged policy-determining functions of the University Council.
Even assuming arguendo that UP professors discharge policy-
determining functions through the University Council, still such exercise
would not qualify them as high-level employees within the context of E.O.
180. As correctly observed by private respondent, "Executive Order No.
180 is a law concerning public sector unionism. It must therefore be
construed within that context. Within that context, the University of the
Philippines represents the government as an employer. 'Policy-
determining' refers to policy-determination in university mattes 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." 27
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.
Be that as it may, does it follow, as public respondent would propose,
that all rank-and-file employees of the university are to be organized into
a single collective bargaining unit?
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. 28
Our labor laws do not however provide the criteria for determining the
proper collective bargaining unit. Section 12 of the old law, Republic Act
Page 39 of 141
No. 875 otherwise known as the Industrial Peace Act, simply reads as
follows: 29
Sec. 12. Exclusive Collective Bargaining Representation
for Labor Organizations. — The labor organization
designated or selected for the purpose of collective
bargaining by the majority of the employees in an
appropriate collective bargaining unit shall be the
exclusive representative of all the employees in such unit
for the purpose of collective bargaining in respect to rates
of pay, wages, hours of employment, or other conditions
of employment; Provided, That any individual employee
or group of employees shall have the right at any time to
present grievances to their employer.
Although said Section 12 of the Industrial Peace Act was subsequently
incorporated into the Labor Code with minor changes, no guidelines were
included in said Code for determination of an appropriate bargaining unit
in a given case. 30 Thus, apart from the single descriptive word
"appropriate," no specific guide for determining the proper collective
bargaining unit can be found in the statutes.
Even Executive Order No. 180 already adverted to is not much help. All it
says, in its Section 9, is that "(t)he appropriate organizational unit shall be
the employer unit consisting of rank-and-file employees, unless
circumstances otherwise require." Case law fortunately furnishes some
guidelines.
When first confronted with the task of determining the proper collective
bargaining unit in a particular controversy, the Court had perforce to rely
on American jurisprudence. In Democratic Labor Association vs. Cebu
Stevedoring Company, Inc., decided on February 28, 1958, 31 the Court
observed that "the issue of how to determine the proper collective
bargaining unit and what unit would be appropriate to be the collective
bargaining
agency" . . . "is novel in this jurisdiction; however, American precedents
on the matter abound . . (to which resort may be had) considering that
our present Magna Carta has been patterned after the American law on
the subject." Said the Court:

. . . Under these precedents, there are various factors
which must be satisfied and considered in determining the
proper constituency of a bargaining unit. No one particular
factor is itself decisive of the determination. The weight
accorded to any particular factor varies in accordance
with the particular question or questions that may arise in
a given case. What are these factors? Rothenberg
mentions a good number, but the most pertinent to our
case are: (1) will of the employees (Globe Doctrine); (2)
affinity and unit of employees' interest, such as
substantial similarity of work and duties, or similarity of
compensation and working conditions; (3) prior collective
bargaining history; and (4) employment status, such as
temporary, seasonal probationary employees. . . .
xxx xxx xxx
An enlightening appraisal of the problem of defining an
appropriate bargaining unit is given in the 10th Annual
Report of the National Labor Relations Board wherein it is
emphasized that the factors which said board may
consider and weigh in fixing appropriate units are: the
history, extent and type of organization of employees; the
history of their collective bargaining; the history, extent
and type of organization of employees in other plants of
the same employer, or other employers in the same
industry; the skill, wages, work, and working conditions of
the employees; the desires of the employees; the
eligibility of the employees for membership in the union or
unions involved; and the relationship between the unit or
units proposed and the employer's organization,
management, and operation. . . .
. . In said report, it is likewise emphasized that 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 (citing Smith on Labor Laws, 316-
317; Francisco, Labor Laws, 162). . . .
Page 40 of 141
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' (Rothenberg on Labor
Relations, 490)." Hence, in that case, the Court upheld the trial court's
conclusion that two separate bargaining units should be formed, one
consisting of regular and permanent employees and another consisting of
casual laborers or stevedores.
Since then, the "community or mutuality of interests" test has provided
the standard in determining the proper constituency of a collective
bargaining unit. In Alhambra Cigar & Cigarette Manufacturing Company,
et al. vs. Alhambra Employees' Association (PAFLU), 107 Phil. 23, the
Court, noting that the employees in the administrative, sales and
dispensary departments of a cigar and cigarette manufacturing firm
perform work which have nothing to do with production and maintenance,
unlike those in the raw lead (malalasi), cigar, cigarette, packing
(precintera) and engineering and garage departments, authorized the
formation of the former set of employees into a separate collective
bargaining unit. The ruling in the Democratic Labor
Association case, supra, was reiterated in Philippine Land-Air-Sea Labor
Unit vs. Court of Industrial Relations, 110 Phil. 176, where casual
employees were barred from joining the union of the permanent and
regular employees.
Applying the same "community or mutuality of interests" test, but resulting
in the formation of only one collective bargaining units is the case
of National Association of Free Trade Unions vs. Mainit Lumber
Development Company Workers Union-United Lumber and General
Workers of the Phils., G.R. No. 79526, December 21, 1990, 192 SCRA
598. In said case, the Court ordered the formation of a single bargaining
unit consisting of the Sawmill Division in Butuan City and the Logging
Division in Zapanta Valley, Kitcharao, Agusan Norte of the Mainit Lumber
Development Company. The Court reasoned:
Certainly, there is a mutuality of interest among the
employees of the Sawmill Division and the Logging
Division. Their functions mesh with one another. One
group needs the other in the same way that the company
needs them both. There may be difference as to the
nature of their individual assignments but the distinctions
 Page 41 of 141

are not enough to warrant the formation of a separate professors, assistant professors, instructors, and the research, extension
bargaining unit. and professorial staff, who may, if so minded, organize themselves into a
separate collective bargaining unit; and that, therefore, only said non-
In the case at bar, the University employees may, as already suggested, academic rank-and-file personnel of the University of the Philippines in
quite easily be categorized into two general classes: one, the group Diliman, Manila, Los Baños and the Visayas are to participate in the
composed of employees whose functions are non-academic, i.e., janitors, certification election.
messengers, typists, clerks, receptionists, carpenters, electricians,
grounds-keepers, chauffeurs, mechanics, plumbers; 32 and two, the group SO ORDERED.
made up of those performing academic functions, i.e., full professors,
associate professors, assistant professors, instructors — who may be Padilla, Regalado and Nocon, JJ., concur.
judges or government executives — and research, extension and
professorial staff. 33 Not much reflection is needed to perceive that the Paras, J., Retired.
community or mutuality of interests which justifies the formation of a
single collective bargaining unit is wanting between the academic and
non-academic personnel of the university. It would seem obvious that
teachers would find very little in common with the University clerks and
other non-academic employees as regards responsibilities and functions,
working conditions, compensation rates, social life and interests, skills
and intellectual pursuits, cultural activities, etc. On the contrary, the
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 personnel 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 non-academic personnel, 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. These
special circumstances, i.e., the dichotomy of interests and concerns as
well as the dissimilarity in the nature and conditions of work, wages and
compensation between the academic and non-academic personnel, bring
the case at bar within the exception contemplated in Section 9 of
Executive Order No. 180. It was grave abuse of discretion on the part of
the Labor Relations Director to have ruled otherwise, ignoring plain and
patent realities.

WHEREFORE, the assailed Order of October 30, 1990 is hereby

AFFIRMED in so far as it declares the professors, associate professors
and assistant professors of the University of the Philippines as rank-and-
file employees. The Order of August 7, 1990 is MODIFIED in the sense
that the non-academic rank-and-file employees of the University of the
Philippines shall constitute a bargaining unit to the exclusion of the
academic employees of the institution — i.e., full professors, associate

EN BANC
G.R. No. 107590 February 21, 1995
PAMANTASAN NG LUNGSOD NG MAYNILA (PLM), petitioner,
vs.
CIVIL SERVICE COMMISSION (CSC), PAMANTASAN NG LUNGSOD
NG MAYNILA FACULTY ORGANIZATION (PLMFO), ROBERTO
AMORES, ROLANDO AUSTRIA, VICENTE BANAGALE, NEMENCIO
CABATUANDO, MANOLO HINA, ELEANOR JIMENEZ, ANITA
LEYSON, JONATHAN MANZANO, JOSE MEJIA, ESTELITA PINEDA,
LORDEO POQUIZ, ALFREDO RAZON, MA. ZELDA REYES,
SALVACION RODRIGUEZ, BELINDA SANTOS, and VIRGILIO
ZAMORA respondents.
VITUG, J.:
This petition stemmed from a complaint for illegal dismissal and unfair
labor practice filed with public respondent Civil Service Commission
("CSC") by private respondents, through Pamantasan Ng Lungsod Ng
Maynila Faculty Organization ("PLMFO"), against petitioner Pamantasan
Ng Lungsod Ng Maynila ("PLM") and its officers.
The sixteen (16) individual private respondents were full-time
instructors of PLM under "temporary contracts" of employment
renewable on a yearly basis. They, among other instructors, joined
the PLMFO.
Uniform notices of termination, all dated 24 April 1990, were individually
sent to private respondents informing them of "the expiration of their
temporary appointments at the close of office hours on 31 May 1990"
and the non-renewal of their appointments for the school year (SY) 1990-
1991. A series of letter-complaints addressed to the CSC by private
respondents evoked a letter-response from PLM, dated 16 May 1990,
traversing the complainants' right to compel a renewal of the
appointments. They were advised that their retention was not
recommended by their respective Deans.
Page 42 of 141
On 29 May 1990, private respondents, through PLMFO, filed with the
CSC a verified complaint for illegal dismissal and unfair labor
practice against petitioner and its officers.
In a letter-comment, dated 13 July 1990, petitioner denied having
committed any unfair labor practice or having illegally dismissed private
respondents. In its defense, PLM interposed (1) the temporary nature of
private respondents' contracts of employment and (2) reasons that
could justify the non- renewal of the contracts.
Public respondent CSC referred the case to the Public Sector Labor-
Management Council1 ("PSLMC"). The latter, through its deputized
hearing officer, Med-Arbiter Hope Ruiz-Valenzuela of the Bureau of
Labor Relations of the Department of Labor and Employment, after due
notice, heard the case (PSLMC Case No. 00-06-91). During the
proceedings, petitioner relied in main on the temporary nature of private
respondents' employment contracts.
In a Resolution,2 dated 16 December 1991, the PSLMC found petitioner
guilty of "Unfair Labor Practice" and held that private respondents "should
be reinstated." The dispositive portion of its Resolution read:
WHEREFORE, premises considered, the Council finds
that PLM Management committed Unfair Labor Practice
when it terminated the services of herein complainants,
and for which the latter should be reinstated.
Accordingly, let this Resolution be forwarded to the Civil
Service Commission for appropriate action.
SO ORDERED.3
Petitioner's request for reconsideration was denied in PSLMC's Order of
30 April 1992. Forthwith, the PSLMC transmitted the case to the CSC for
appropriate action.
On 15 May 1992, petitioner filed with this Court a petition
for certiorari, entitled "Pamantasan Ng Lungsod Ng Maynila vs. Public
Sector Labor-Management Council, et al.," docketed G.R. No. 105157,
that sought the annulment of the aforementioned PSLMC resolutions. In
a Minute Resolution, dated 27 May 1992, the Court dismissed the petition

for PLM's failure to submit the certification required under Circular 28-91
on forum-shopping. The motion for the reconsideration of this resolution
was dismissed with finality, no compelling reason having been shown to
reconsider the dismissal of the petition. On 30 July 1992, the resolution
became final and executory and, in due course, was recorded in the
Book of Entries of Judgment.
In the meantime, public respondent CSC, acting on the case forwarded to
it by the PSLMC, issued its Resolution No. 92-814, dated 25 June 1992,
sustaining the findings of the PSLMC. The CSC, accordingly, directed the
reinstatement, with back salaries, of private respondents; thus —
WHEREFORE, foregoing premises considered, the
Commission hereby resolves to rule that the termination
of the services of Estelita Pineda, Vicente Banagale,
Salvacion Rodriguez, Anita Leyson, Eleanor Jimenez,
Ma. Zelda Reyes, Belinda Santos, Lordeo Poquiz,
Rolando Austria, Jonathan Manzano, Manolo Hina,
Nemencio Cabatuando, Alfredo Razon, Virgilio Zamora,
Roberto Amores and Jose Mejia, all of the Pamantasan
ng Lungsod ng Maynila, is illegal.
The PLM Management is hereby directed to reinstate
these employees to their former or equivalent positions
and pay them back salaries and other benefits from the
time of their illegal termination until their actual
reinstatement.4
The request for the reconsideration of the order was denied by the CSC
in its Resolution No. 92-1573 of 20 October 1992. Respondent CSC, in
denying petitioner's motion, held, among other things, that the findings of
fact by the PSLMC deserved the respect of the Commission and that
there was no further need for it, to conduct a hearing of its own.
The PLM cites the following reasons for its instant petition
for certiorari (under Rule 65, not Rule 45 such as mistakenly referred to
by petitioner):
1. The Civil Service Commission acted with grave abuse
of discretion tantamount to lack of jurisdiction and denial
of due process when it adopted entirely, without
Page 43 of 141
according the petitioner the opportunity to be heard, the
findings of facts and resolutions of the Public Sector
Labor and Management Council, a body separate and
distinct and with different jurisdiction from that of the
Commission.
2. The Civil Service Commission acted with grave abuse
discretion in effectively denying the petitioner the
opportunity to present evidence to substantiate its
allegations in its defense against the charge of illegal
dismissal, to the prejudice of civil service and public
interest.
3. The Civil Service Commission committed a grave
abuse of discretion in directing reinstatement and
payment of backwages to private respondents whose
temporary contracts of employment had already expired.
On 11 May 1993, this Court, acting on petitioner's motion for the issuance
of a writ of preliminary injunction, issued, on 18 May 1993, a temporary
restraining order directing respondent CSC "to cease and desist from
executing (its) assailed Resolutions No. 92-814 and No. 92-1573.5
In our resolution, dated 17 August 1993, following the receipt of
respondents' comment, we gave due course to the petition and ordered
the parties to file their respective memoranda.
The Solicitor General took an adverse position to that of public
respondent and prayed that the petition be given due course, contending
that it was inappropriate for respondent CSC to rule on the aspect of
illegal dismissal, an act that involved an exercise of its original
jurisdiction, without affording anew petitioner an opportunity to be heard.
Public respondent CSC manifested its intention to file its own comment to
the instant petition; however, it failed to file any such comment within the
allotted period. The Court finally dispensed with the filing of the comment
and ordered CSC to instead file its memorandum in accordance with this
Court's resolution of 24 August 1993.6
On 20 January 1994, the Court dismissed the petition for failure to
prosecute on the part of petitioner, which likewise failed to file its

memorandum, as well as because of the "evident lack of interest of the
parties"7 to pursue the case. On petitioner's motion for reconsideration,
however, the Court resolved, on 24 February 1994, to reinstate the
petition.
Petitioner stresses that the CSC and the PSLMC both exercise quasi-
judicial functions but not on identical issues and subject matter; that the
PSLMC possesses jurisdiction only over the unfair labor practice aspect
of private respondents' complaint but that it is the CSC which alone can
take cognizance over the question of illegal dismissal; and that, therefore,
when the CSC has simply adopted the recommendations of the PSLMC
in the unfair labor practice case in resolving the issue of illegal dismissal
and ordering the reinstatement of private respondents without conducting
further proceedings of its own, it has effectively denied petitioner of its
right to due process.
PSLMC's jurisdiction over the unfair labor practice case filed by private
respondents against petitioner is not disputed. The PSLMC, in case No.
00-06-91, has conducted its proceedings in accordance with its legal
mandate.8The proceedings before Med-Arbiter Valenzuela, who had been
deputized to so act as the hearing officer, conform with the "Rules and
Regulations to Govern the Exercise of the Right of Government
Employees to Self Organization" —
Sec. 3. The Council may call on any officer or agency for
assistance. It may deputize officers to hear and
recommend action on complaints or grievances filed with
the council.
Sec. 4. The procedure in the Council shall be non-
adversarial in nature. The parties may be required to
submit their respective position papers, together with all
evidences available in support of their respective
positions within 15 days from receipt of notices.
Sec. 5. The decision of the Council shall be final.
The conclusion of the PSLMC regarding petitioner's alleged commission
of unfair labor practice against private respondents can no longer be
considered a proper issue either before the CSC or in this instance since
this particular matter has already been adjudged with finality in
Page 44 of 141
accordance with this Court's resolution in G.R. No. 105157 heretofore
mentioned.
The PSLMC, in part, said:
. . . Individual sixteen (16) complainants were part of the
original founders of the PLMFO and claim to be active
members thereof. Complainants Vicente Benagale,
Roberto Amores, and Anita Leyson were the President,
Treasurer and Secretary, respectively, of the PLMFO. At
the time of complainants separation, the union had just
secured its public sector union registration. All 16
complainants had temporary employment contracts that
were renewed on a yearly basis. Half of the complainants
had been with the PLM for a long time, ranging from four
(4) to six and one-half (6 1/2) years.
It appears that the Faculty had many long-standing issues
with the PLM Management, which complainants claim
motivated the organization of the PLMFO. As gathered
from the evidence, the following are some of the more
salient issues:
1. Failure to appoint a true faculty representative to the
Board of Regents as provided in the PLM Charter;
2 No faculty participation in areas where normally the
faculty input is sought. i.e.
a. revision of the student curriculum
b. the development of criteria/policies
regarding faculty development and
promotion
3. While PLM has identified the academic qualifications
and teaching experience required for each level of
hierarchy in the faculty, the actual mechanics of
promotion are vague. The faculty remains in the dark as
to whether they have already qualified and therefore can
apply for the next faculty rank as a matter of right. The

PLMFO maintains that this vagueness in the
procedure/policies for promotion is a deliberate scheme to
enable PLM management to establish the faculty
according to its whim;
4. On the matter of promotion scheme, the faculty is not
given the complete results of their performance
evaluation;
5. The faculty is kept guessing about the official salary
scale according to rank, so that the implementation of
such official salary scale can be arbitrary and
discriminatory . . .;
6. Management refuses to allow the concerned faculty to
participate in choosing the Chairperson in their respective
departments;
7. PLM's existing practice in the promotion of faculty
members either for permanent status or to the next higher
rank as undermined the university's standard of
excellence. Out of the 223, close to 30% of the faculty
had no previous teaching experience before joining PLM.
There are only 29 assistant professors and 6 with the
rank of professor. The teachers holding temporary
appointments comprise, almost half of the faculty.
After securing its union registration, PLMFO began
asserting its rights.
xxx xxx xxx
In its complaint, PLMFO alleged that their actions and
determination to see changes in the management of PLM
angered PLM which prompted its decision to terminate
the services of the complainants.
xxx xxx xxx
Ordinarily, there is merit to respondent's argument that
employees who hold temporary contracts of employment
Page 45 of 141
may not expect renewal of appointment as a matter of
right, the decision being a management prerogative.
However, when the exercise of this privilege is alleged to
be the means by which management hinders unionism or
outrightly bust unions and such allegation is supported by
evidence, the act needs to be examined and studied. It
then becomes incumbent upon Management to show that
its intentions are otherwise. Records of the case,
however, reveal that despite numerous opportunities to
do so, PLM makes little attempt to rebut the specific
charges and instead rests its defense largely on the
argument that since complainants possess only
temporary contracts of employment, PLM has the right
not to renew their contracts without any need for
justification.
There is sufficient evidence to show that the management
of PLM is not particularly enthusiastic about faculty
participation in the formulation of policies concerning the
University and the Faculty itself, as shown from the very
nature of the majority of the complaints of the faculty
against the administration and the response/reaction of
the management to earlier attempts by the faculty to bring
about changes. . . .
. . . . The facts on record show that management did not
respond to any of the faculty issues. One accurate
example is the matter of the teachers' performance
evaluation ratings which were the basis for "renewal of
appointment and recommendation for permanent status."
It was discussed in the dialogue that the over-all rating
score of the faculty would include the Peer's evaluation.
However, as can be seen from the ratings of the
complainants who were accused of having poor
performance, the Peer's evaluation was not included as
one of the factors for their evaluation.
xxx xxx xxx
. . . . In its position paper and other subsequent pleadings,
PLM has however, abandoned all efforts to pursue its line

of defense. It would appear therefore that the charges are
false and untenable. If this is so, why was PLM so bold as
to present them as grounds for the separation of
complainants in the first place? Perhaps, it was confident
that because complainants possessed temporary
contracts of employment, no serious attempt would be
made to examine PLMFO's complaint. Whatever other
reasons PLM may have, the circumstances obtaining in
the instant case show that these charges were created as
an attempt to confuse/mislead PLM's real motivations on
the matter.9
In agreeing with the PSLMC, the CSC, in its own resolution of 25 June
1992, stated:
In the arbitration proceedings, the PSLMC found that PLM
committed unfair labor practice when it terminated the
services of the complainants. It is undisputed that the
PLM Management did not renew the appointments of
these members of the faculty with temporary contracts but
those who were hired as replacements possess even
lesser qualifications than the 16 complainants. Further,
the PLM Management refused and still refuses to produce
the results of their evaluation of the performance of the
complainants which can be an indication that presentation
of such evidence would be detrimental to its case. Hence,
this issue before us.
Had complainants not been among those active officers
and/or members of the PLMFO, and had their
qualifications, training, experience and performance rating
not been impressive, the Commission would have agreed
that the termination or non-renewal of the contracts of
complainants does not constitute unfair labor practice. But
the records reveal otherwise. Hence, there is indeed no
reason for PLM Management to terminate the services of
these employees except to bust their organization. The
Commission finds no reason to disagree with the findings
of facts by the PSLMC that PLM Management committed
an unfair labor practice.
Page 46 of 141
xxx xxx xxx
Even temporary employees enjoy that basic right to form
organization or association for purposes not contrary to
law. PLMFO is that organization. Thus, its members
cannot be separated from the service for the simple
reason of membership in the said organization. And when
the appointment status of these members happens to be
temporary in nature, such becomes merely incidental and
the doctrine that temporary employees have no security
of tenure must yield or is not applicable. When the clear
intent therefore of PLM Management in terminating the
services of these employees is to abridge their
constitutional right to self-organization, the Commission
has the duty to give them protection and uphold their
basic right. This constitutional right of employees is
superior to the right of management not to renew the
temporary appointment of its employees. When the
exercise of discretion by the management is calculated to
bust the union as what PLM Management had done, the
Commission has no choice but to declare it as a grave
abuse of discretion. 10
Petitioner insists that when CSC has ruled on the matter of illegal
dismissal without conducting any further hearing of its own, relying,
instead, on PSLMC's finding of unfair labor practice on the part of
petitioner, the latter has thereby been denied due process. Unfortunately
for petitioner, however, the two supposed independent issues, i.e., the
unfair labor practice charge and the complaint for illegal dismissal both
filed by private respondents, are, in fact, here unavoidably interlinked.
The non-renewal of an employment contract with a term, it is true, is
ordinarily a valid mode of removal at the end of each
period. 11 This rule, however, must yield to the superior constitutional right
of employees, permanent or temporary, to self-organization. While, a
temporary employment may be ended with or without cause, it certainly
may not, however, be terminated for an illegal cause.
Petitioner claims that it was denied "due process." It itself admitted,
however, that "it manifested (before the PSLMC) its intention to submit
evidence (that it had other valid grounds for not renewing private
respondents' temporary contracts of employment) which, inadvertently or
otherwise, it failed to present . . . 12 This supposed evidence, if true and

being material to substantiate its defense against the unfair labor charge,
should have been duly presented, but it did not. Petitioner should not now
be heard to complain that it was denied due process. We ruled, time and
again, that "due process" was designed to afford an opportunity to be
heard,13 not that an actual hearing should always and indispensably be
held.
In any case, in its reply to public respondents' comment, PLM
enumerates the alleged causes for the non-renewal of the contracts, to
wit:
Name Cause
1. Zamora, Virgilio Failure to finish MA after 2 years
2. Benagale, Vicente Poor over-all performance
3. Mejia, Jose Worked with DAR while with PLM
4. Amores, Roberto Failure to complete MA
5. Reyes, Zelda Poor Performance
6. Santos, Belinda Tardiness in class, says negative
comments during faculty meeting
7. Poquiz, Lorredo Seldom returns test papers, taught in another
university
8. Austria, Rolando Taught in another school for 2nd Semester of 1989-
1990
9. Manzano, Jonathan Taught in another university
10. Hina, Manalo Poor class performance
11. Cabatuando, Nemensio Poor class performance, taught in another
university
Page 47 of 141
12. Rodriguez, Salvacion none given
13. Razon, Alfredo none given
14. Jimenez, Eleanor Tardiness during 2nd sem. in school
15. Leyson, Anita Enrolled in another law school
16. Pineda, Estelita Unbecoming conduct, tardiness 14
The PSLMC has noted, however, that the charges are either false
or untenable; hence, its following findings:
. . . In the case of complainants Zelda Reyes, Hina
Manalo and Nemencio Cabatuando, PLM alleged that
they scored poorly in their performance evaluation
ratings. However, check with their actual performance
scores (see pp. 252-264, records) shows that their grades
are near perfect. PLMFO's President Vicente Benagale
was accused of having poor class performance scores.
His evaluation forms were, however, not available for
scrutiny.
On two occasions, PLM was directed to produce the
evaluation results of the 16 complainants, the first,
through an Order of Director Salvador Fernandez dated
May 28, 1990 (see p. 148 records) and the second, in the
conference of January 24, 1990 (see p. 278, records).
PLM failed to comply on both occasions. This Council can
only deduce that the presentation of such evidence would
be detrimental to its case.
Roberto Amores and Virgilio Zamora were separated on
the ground that they failed to complete their MA degrees.
A glance at their number of years of service makes PLM's
charge spurious. In the case of Roberto Amores, records
show that he has been with PLM for 6 1/2 years and was
still on a temporary appointment basis. Under Board
Resolution 1025, he should be considered as a
permanent employee, his contract of employment having
been renewed after the interim period. If PLM were

sincere in applying the rule that all permanent faculty
must have a Masters Degree, it should have disqualified
Mr. Amores after his interim period of appointment. It
therefore appears that PLM sought to enforce this rule
only after Mr. Amores was elected union treasurer. On the
other hand, PLM's objection as regards Virgilio Zamora is
premature. Mr. Zamora was only in his 4th year at the
university. Based on the concept of interim
appointment, he is given up to the fifth year to complete
his Masters.
The cause for termination of Leyson's services was her
enrollment in another school without allegedly asking
permission from PLM management. On record (p. 507,
records) is a letter dated January 7, 1989 of Anita Leyson
to the University, asking permission to continue her
studies at the Arellano Law School for the 2nd semester
of 1989. PLM challenges complainant to show proof that
her request had been granted. Even if complainant,
however, cannot produce any document showing that she
was granted permission, in like manner, neither can PLM
present any document expressly prohibiting her to enroll
at the Arellano University. PLM's non-response, if this is
indeed the case, must be construed as consent.
Complainant's request was for continuance of her studies.
If this act was truly objectionable, PLM should have
questioned about her previous enrollment at the Arellano
University.
Moreover, this Council cannot help but comment that as
part of every person's basic human right, there is nothing
to prevent nor prohibit Ms. Leyson to enroll in the law
school of her choice. As borne out by her excellent
performance ratings, complainant has rendered an
exemplary service. Penalizing complainant for seeking to
further improve herself is bordering on oppression.
In the same conference of January 24, 1991, PLM was
directed to further substantiate the validity of its charges
against complainants. In its position paper and other
subsequent pleadings, PLM has however, abandoned all
efforts to pursue its line of defense. It would appear
Page 48 of 141
therefore that the charges are false and untenable. If this
is so, why was PLM so bold as to present them as
grounds for the separation of complainants in the first
place? Perhaps, it was confident that because
complainants possessed, temporary contracts of
employment, no serious attempt would be made to
examine PLMFO's complaint. Whatever other reasons
PLM may have, the circumstances obtaining in the instant
case show that these charges were created as an attempt
to confuse/mislead PLM's real motivations on the matter.15
The finding of the PSLMC that the non-renewal by petitioner of the
questioned contracts of employment had been motivated by private
respondents' union activities is conclusive on the parties. Indeed, this
Court's resolution in G.R. No. 105157 (PLM vs. PSLMC et al.) which has
long become final and executory should now render that matter a fait
accompli.
When the case was thus referred to the CSC by the PSLMC to take
"appropriate action" it understandably meant that the CSC should take
the necessary steps of reinstating the illegally dismissed employees.
WHEREFORE, the petition for certiorari is DISMISSED and the appealed
resolutions of the Civil Service Commission are AFFIRMED. The
temporary restraining order issued by this Court on 18 May 1993, is
LIFTED. No costs.
SO ORDERED.
Narvasa, Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero,
Bellosillo, Melo, Quiason, Puno, Kapunan, Mendoza and Francisco, JJ.,
concur.
 Page 49 of 141

EN BANC Two question are presented by the petition: (1) whether the route managers at
Pepsi-Cola Products Philippines, Inc. are managerial employees and (2)
[G.R. No. 122226. March 25, 1998] Whether Art. 245, insofar as it prohibits managerial employees from forming,
joining or assisting labor unions, violates Art. III, 8 of the Constitution.
UNITED PEPSI-COLA SUPERVISORY UNION
In resolving these issues it would be useful to begin by defining who are
(UPSU), petitioner, vs. HON. BIENVENIDO E. LAGUESMA managerial employees and considering the types of managerial employees.
and PEPSI-COLA PRODUCTS, PHILIPPINES,
INC. respondents.
Types of Managerial Employees
DECISION
MENDOZA, J.:
The term manager generally refers to anyone who is responsible for
subordinates and other organization resources.[1] As a class, managers constitute
Petitioner is a union of supervisory employees. It appears that on March 20, three levels of a pyramid:
1995 the union filed a petition for certification election on behalf of the route
managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied
by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the Top Management
ground that the route managers are managerial employees and, therefore, ineligible
for union membership under the first sentence of Art. 245 of the Labor Code, which _________________
provides:

Middle Management
Ineligibility of managerial employees to join any labor organization;
right of supervisory employees. Managerial employees are not eligible
to join, assist or form any labor organization. Supervisory employees _________________
shall not be eligible for membership in a labor organization of the rank-
and-file employees but may join, assist or form separate labor First Line
organizations of their own.
Management
Petitioner brought this suit challenging the validity of the order dated August 31,
1995, as reiterated in the order dated September 22, 1995, of the Secretary of Labor (also called Supervisor)
and Employment. Its petition was dismissed by the Third Division for lack of showing
that respondent committed grave abuse of discretion. But petitioner filed a motion for
reconsideration, pressing for resolution its contention that the first sentence of Art. ____________________
245 of the Labor Code, so far as it declares managerial employees to be ineligible to
form, assist or join unions, contravenes Art. III 8 of the Constitution which provides: ____________________

The right of the people, including those employed in the public and Operatives
private sectors, to form unions, associations, or societies for the purposes
not contrary to law shall not be abridged.
Or Operating Employees
For this reason, the petition was referred to the Court en banc.
FIRST-LINE MANAGERS The lowest level in an organization at which
individuals are responsible for the work of others is called first-line or first-
level management. First-line managers direct operating employees only;
The Issues in this Case
they do not supervise other managers. Example of first-line managers

are the foreman or production supervisor in a manufacturing plant, the
technical supervisor in a research department, and the clerical supervisor
in a large office. First-level managers are often called supervisors.
MIDDLE MANAGERS The term middle management can refer to more
than one level in an organization. Middle managers direct the activities of
other managers and sometimes also those of operating
employees. Middle managers principal responsibilities are to direct the
activities that implement their organizations policies and to balance the
demands of their superiors with the capacities of their subordinates. A
plant manager in an electronics firm is an example of a middle manager.
TOP MANAGERS Composed of a comparatively small group of
executives, top management is responsible for the overall management
of the organization. It establishes operating policies and guides the
organizations interactions with its environment. Typical titles of top
managers are chief executive officer, president, and senior vice-
president. Actual titles vary from one organization to another and are not
always a reliable guide to membership in the highest management
classification.[2]
As can be seen from this description, a distinction exist 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
polices 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.
Managerial employees may therefore be said to fall into two distinct categories:
the managers per se, who compose the former group described above, and the
supervisors who form the latter group. Whether they belong to the first or second
category, managers, vis--vis employers, are, likewise, employees.[3]
The first question is whether route managers are managers are managerial
employees or supervisors.
Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees
It appears that this question was the subject of two previous determinations by
the Secretary of Labor and Employment, in accordance with which this case was
decided by the med-arbiter.
Page 50 of 141
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade Union (WATU)
v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the
Secretary of Labor found:
We examined carefully the pertinent job description of the subject
employees and other documentary evidence on record vis--vis paragraph
(m), Article 212 of the Labor Code, as amended, and we find that only
those employees occupying the position of route manager and
accounting manager are managerial employees. The rest i.e. quality
control manager, yard/transport manager and warehouse operations
manager are supervisory employees.
To qualify as managerial employee, there must be a clear showing of the
exercise of managerial attributes under paragraph (m), Article 212 of the
Labor Code as amended. Designations or titles of positions are not
controlling. In the instant case, nothing on record will support the claim
that the quality control manager, yard/transport manager and warehouse
operations manager are vested with said attributes. The warehouse
operations manager, for example, merely assists the plant finance
manager in planning, organizing, directing and controlling all activities
relative to development and implementation of an effective management
control information system at the sale offices. The exercise of authority of
the quality control manager, on the other hand, needs the concurrence of
the manufacturing manager
As to the route managers and accounting manager, we are convinced
that they are managerial employees. Their job descriptions clearly reveal
so.
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled
In Re: Petition for Direct Certification and/or Certification Election-Route
Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:
The issue brought before us is not of first impression. At one time, we
had the occasion to rule upon the status of route manager in the same
company vis a vis the issue as to whether or not it is supervisory
employee or a managerial employee. In the case of Workers Alliance
Trade Unions (NATU) vs. Pepsi Cola Products, Phils., Inc. (OS-MA-A-10-
318-91), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law, and
hence, ineligible to join, form or assist a union. We have once more
passed upon the logic of our Decision aforecited in the light of the issues

raised in the instant appeal, as well as the available documentary
evidence on hand, and have come to the view that there is no cogent
reason to depart from our earlier holding. Route Managers are, by the
very nature of their functions and the authority they wield over their
subordinates, managerial employees. The prescription found in Art. 245
of the Labor Code, as amended therefore, clearly applies to them.[4]4
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations
Commission,[5]5 however, petitioner argues that these previous administrative
determinations do not have the effect ofres judicata in this case, because "labor
relations proceedings" are "non-litigious and summary in nature without regard to
legal technicalities."[6] Nasipit Lumber Co. involved a clearance to dismiss an
employee issued by the Department of Labor. The question was whether in a
subsequent proceeding for illegal dismissal, the clearance was res judicata. In holding
it was not, this Court made it clear that it was referring to labor relations proceedings
of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a creation
of the Department of labor to carry out the Labor Code provisions on
security of tenure and termination of employment. The proceeding
subsequent to the filing of an application for clearance to terminate
employment was outlined in Book V, Rule XIV of the Rules and
Regulations Implementing the Labor Code. The fact that said rule
allowed a procedure for the approval of the clearance with or without the
opposition of the employee concerned (Secs. 7 & 8), demonstrates the
non-litigious and summary nature of the proceeding. The clearance
requirement was therefore necessary only as an expeditious shield
against arbitrary dismissal without the knowledge and supervision of the
Department of Labor. Hence, a duly approved clearance implied that the
dismissal was legal or for cause (Sec. 2).[7]v. National Labor Relations
Commission, 177 SCRA 93, 100 (1989).7
But the doctrine of res judicata certainly applies to adversary
administrative proceedings. As early as 1956, in Brillantes v. Castro,[8]8 we
sustained the dismissal of an action by a trial court on the basis of a prior
administrative determination of the same case by the Wage Administration Service,
applying the principle of res judicata. Recently, in Abad v. NLRC[9]9 we applied the
related doctrine of stare decisis in holding that the prior determination that certain jobs
at the Atlantic Gulf and Pacific Co. were project employments was binding in another
case involving another group of employees of the same company. Indeed, in Nasipit
Lumber Co., this Court clarified toward the end of its opinion that "the doctrine of res
judicata applies . . . to judicial or quasi judicial proceedings and not to the
exercise of administrative powers."[10]v. National Labor Relations
Commission, supra note 7.10 Now proceedings for certification election, such as
those involved in Case No. OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are
Page 51 of 141
quasi judicial in nature and, therefore, decisions rendered in such proceedings can
attain finality.[11]v. B.F. Goodrich (Marikina Factory) Confidential and Salaries
Employees Union-NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view that the employees concerned are
managerial employees within the purview of Art. 212 which provides:
(m) "managerial employee" is one who is vested with 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 judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for
purposes of this Book.
At the very least, the principle of finality of administrative determination compels
respect for the finding of the Secretary of Labor that route managers are managerial
employees as defined by law in the absence of anything to show that such
determination is without substantial evidence to support it. Nonetheless, the Court,
concerned that employees who are otherwise supervisors may wittingly or unwittingly
be classified as managerial personnel and thus denied the right of self- organization,
has decided to review the record of this case.
DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record
The Court now finds that the job evaluation made by the Secretary of Labor is
indeed supported by substantial evidence. The nature of the job of route managers is
given in a four-page pamphlet, prepared by the company, called "Route Manager
Position Description," the pertinent parts of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan;
and you achieve this objective through the skillful
MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF
YOUR PEOPLE.

These then are your functions as Pepsi-Cola Route
Manager. Within these functions - managing your job and
managing your people - you are accountable to your District
Manager for the execution and completion of various tasks and
activities which will make it possible for you to achieve your
sales objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new account objectives.
1.1.3 Develop new business opportunities thru personal
contacts with dealers.
1.1.4 Inspect and ensure that all
merchandizing [sic] objectives are achieved in all
outlets.
1.1.5 maintain and improve productivity of all cooling
equipment and kiosks.
1.1.6 Execute and control all authorized promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested
retail pricing.
1.1.9 Study from time to time individual route coverage and
productivity for possible adjustments to maximize
utilization of resources.
Page 52 of 141
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before
check-out and the proper sorting of bottles before
check-in.
1.2.2 Ensure the upkeep of all route sales reports and all
other related reports and forms required on an
accurate and timely basis.
1.2.3 Ensure proper implementation of the various
company policies and procedures incl. but not
limited to shakedown; route shortage; progressive
discipline; sorting; spoilages; credit/collection;
accident; attendance.
1.2.4 Ensure collection of receivables and delinquent
accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all
assigned route salesmen and helpers at least 3
days a week, to be supported by required route
ride documents/reports & back check/spot check
at least 2 days a week to be supported by
required documents/reports.
2.1.2 Conduct sales meetings and morning huddles.
Training should focus on the enhancement of
effective sales and merchandizing [sic] techniques
of the salesmen and helpers. Conduct group
training at least 1 hour each week on a
designated day and of specific topic.
2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict
adherence to PCPPI's code of conduct and the
universal standards of unquestioned business
ethics.[12]12
Earlier in this opinion, reference was made to the distinction between
managers per se (top managers and middle managers) and supervisors (first-line
managers). That distinction is evident in the work of the route managers which sets
them apart from supervisors in general. Unlike supervisors who basically merely
direct operating employees in line with set tasks assigned to them, route
managers are responsible for the success of the company's main line of
business through management of their respective sales teams. Such
management necessarily involves the planning, direction, operation and evaluation of
their individual teams and areas which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors
because their work does not only involve, but goes far beyond, the simple direction or
supervision of operating employees to accomplish objectives set by those above
them. They are not mere functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the director of metro sales
operations of respondent company to one of the route managers. It reads:[13]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
Effective 01 April 1995, your basic monthly salary of P11,710
will be increased to P12,881 or an increase of 10%. This
represents the added managerial responsibilities you will assume
due to the recent restructuring and streamlining of Metro Sales
Operations brought about by the continuous losses for the last nine
(9) months.
Let me remind you that for our operations to be profitable, we have
to sustain the intensity and momentum that your group and yourself
have shown last March. You just have to deliver the desired
volume targets, better negotiated concessions, rationalized
sustaining deals, eliminate or reduced overdues, improved
collections, more cash accounts, controlled operating
Page 53 of 141
expenses, etc. Also, based on the agreed set targets, your monthly
performance will be closely monitored.
You have proven in the past that your capable of achieving your
targets thru better planning, managing your group as a fighting
team, and thru aggressive selling. I am looking forward to your
success and I expect that you just have to exert your doubly
best in turning around our operations from a losing to a
profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate opinion
of Justice Vitug, although entitled "RM's Job Description," is only a summary of
performance standards. It does not show whether route managers are managers per
se or supervisors. Obviously, these performance standards have to be related to the
specific tasks given to route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates the great latitude and discretion given to
route managers - from servicing and enhancing company goodwill to supervising and
auditing accounts, from trade (new business) development to the discipline, training
and monitoring of performance of their respective sales teams, and so forth, - if they
are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the interest of
the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment." Thus, their only power is to recommend. Certainly, the route
managers in this case more than merely recommend effective management
action. They perform operational, human resource, financial and marketing functions
for the company, all of which involve the laying down of operating policies for
themselves and their teams. For example, with respect to marketing, route managers,
in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job Description, are
charged, among other things, with expanding the dealership base of their respective
sales areas, maintaining the goodwill of current dealers, and distributing the
company's various promotional items as they see fit. It is difficult to see how
supervisors can be given such responsibility when this involves not just the routine
supervision of operating employees but the protection and expansion of the
company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people
(the evidence shows that they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is because this is a function of the
Human Resources or Personnel Department of the company. [14]14 And neither should
it be presumed that just because they are given set benchmarks to observe, they

are ipso facto supervisors. Adequate control methods (as embodied in such concepts
as "Management by Objectives [MBO]" and "performance appraisals") 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.
This brings us to the second question, whether the first sentence of Art. 245 of
the Labor Code, prohibiting managerial employees from forming, assisting or joining
any labor organization, is constitutional in light of Art. III, 8 of the Constitution which
provides:
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.
As already stated, whether they belong to the first category (managers per se)
or the second category (supervisors), managers are employees. Nonetheless, in the
United States, as Justice Puno's separate opinion notes, supervisors have no right to
form unions. They are excluded from the definition of the term "employee" in 2(3) of
the Labor-Management Relations Act of 1947.[15]v. Bell Aerospace Co., 416 U.S. 281,
n 11, 40 L.Ed.2d 134, 147, n. 11 (1974), thus:
Supervisors are management people. They have distinguished themselves in their work. They have
demonstrated their ability to take care of themselves without depending upon the pressure of collective
action. No one forced them to become supervisors. They abandoned the "collective security" of the rank and
file voluntarily, because they believed the opportunities thus opened to them to be more valuable to them than
such "security". It seems wrong, and it is wrong, to subject people of this kind, who have demonstrated their
initiative, their ambition and their ability to get ahead, to the leveling processes of seniority, uniformity and
standardization that the Supreme Court recognizes as being fundamental principles of unionism. (J.I. Case
Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64 S. Ct. 576 (1994). It is wrong for the
foremen, for it discourages the things in them that made them foremen in the first place. For the same reason,
that it discourages those best qualified to get ahead, it is wrong for industry, and particularly for the future
strength and productivity of our country.15 In the Philippines, the question whether managerial
employees have a right of self-organization has arisen with respect to first-level
managers or supervisors, as shown by a review of the course of labor legislation in
this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor relations
was governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor" as
follows:
SECTION 2. . . .
Page 54 of 141
(k) "Supervisor" means any person having authority in the interest of
an employer, to hire, transfer, suspend, lay-off, recall, discharge,
assign, recommend, or discipline other employees, or responsibly
to direct them, and to adjust their grievances, or effectively to
recommend such acts, if, in connection with the foregoing, the exercise of
such authority is not of a merely routinary or clerical nature but requires
the use of independent judgment.[16]16
The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. -- Employees shall have
the right to self-organization and to form, join or assist labor organizations
of their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid
and protection. Individuals employed as supervisors shall not be eligible
for membership in a labor organization of employees under their
supervision but may form separate organizations of their own.[17]
For its part, the Supreme Court upheld in several of its decisions the right of
supervisors to organize for purposes of labor relations. [18]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA 522 (1972); Kapisanan ng mga
Manggagawa sa Manila Railroad Co. v. CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the Industrial Peace Act did
not define the term "manager." But, using the commonly-understood concept of
"manager," as above stated, it is apparent that the law used the term "supervisors" to
refer to the sub-group of "managerial employees" known as front-line managers. The
other sub-group of "managerial employees," known as managers per se, was not
covered.
However, in Caltex Filipino Managers and Supervisors Association v. Court of
Industrial Relations,[19]J.)19 the right of all managerial employees to self-organization
was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point raised by
respondent Company - that of the alleged identity of interest between the
managerial staff and the employing firm. That should ordinarily be the
case, especially so where the dispute is between management and the
rank and file. It does not necessarily follow though that what binds the
managerial staff to the corporation forecloses the possibility of conflict
between them. There could be a real difference between what the
welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any
 Page 55 of 141

organization of their own. Nor is this to indulge in empty theorizing. The Supervisory Assistant
record of respondent Company, even the very case cited by it, is proof
enough of their uneasy and troubled relationship. Certainly the Jr. Supervisory Assistant
impression is difficult to erase that an alien firm failed to manifest
sympathy for the claims of its Filipino executives. To predicate under Credit Assistant
such circumstances that agreement inevitably marks their relationship,
ignoring that discord would not be unusual, is to fly in the face of reality.
Lab. Supvr. - Pandacan
. . . The basic question is whether the managerial personnel can
Jr. Sales Engineer B
organize. What respondent Company failed to take into account is that
the right to self-organization is not merely a statutory creation. It is
fortified by our Constitution. All are free to exercise such right unless their Operations Assistant B
purpose is contrary to law. Certainly it would be to attach unorthodoxy to,
not to say an emasculation of, the concept of law if managers as such Field Engineer
were precluded from organizing. Having done so and having been duly
registered, as did occur in this case, their union is entitled to all the rights Sr. Opers. Supvr. - MIA A/S
under Republic Act No. 875. Considering what is denominated as unfair
labor practice under Section 4 of such Act and the facts set forth in our Purchasing Assistant
decision, there can be only one answer to the objection raised that no
unfair labor practice could be committed by respondent Company insofar Jr. Construction Engineer
as managerial personnel is concerned. It is, as is quite obvious, in the
negative.[20]20 St. Sales Supervisor
Actually, the case involved front-line managers or supervisors only, as the
plantilla of employees, quoted in the main opinion,[21]J.) (emphasis added).21 clearly Deport Supervisor A
indicates:
Terminal Accountant B
CAFIMSA members holding the following Supervisory Payroll
Position Title are Recognized by the Company Merchandiser

Payroll Position Title Dist. Sales Prom. Supvr.

Assistant to Mgr. - National Acct. Sales Instr. - Merchandising

Jr. Sales Engineer Asst. Dist. Accountant B

Retail Development Asst. Sr. Opers. Supervisor

Staff Asst. - 0 Marketing Jr. Sales Engineer A

Sales Supervisor Asst. Bulk Ter. Supt.

 Page 56 of 141

Sr. Opers. Supvr. treating the terms "supervisor" and "manager" separately, the law lumped them
together and called them "managerial employees," as follows:
Credit Supervisor A
ART. 212. Definitions . . . .
Asst. Stores Supvr. A
(k) "Managerial Employee" is one who is vested with powers or
prerogatives to lay down and execute management policies and/or to
Ref. Supervisory Draftsman
hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial actions. All
Refinery Shift Supvr. B employees not falling within this definition are considered rank and file
employees for purposes of this Book.[22]22
Asst. Supvr. A - Operations (Refinery)
The definition shows that it is actually a combination of the commonly understood
Refinery Shift Supvr. B definitions of both groups of managerial employees, grammatically joined by the
phrase "and/or."
Asst. Lab. Supvr. A (Refinery) This general definition was perhaps legally necessary at that time for two
reasons. First, the 1974 Code denied supervisors their right to self-organize as
St. Process Engineer B (Refinery) theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the
dictum in the Caltex case on its head by prohibiting all types of managers from
forming unions. The explicit general prohibition was contained in the then Art. 246 of
Asst. Supvr. A - Maintenance (Refinery) the Labor Code.
The practical effect of this synthesis of legal concepts was made apparent in the
Asst. Supvr. B - Maintenance (Refinery) Omnibus Rules Implementing the Labor Code which the Department of Labor
promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided:
Supervisory Accountant (Refinery)
Supervisory unions and unions of security guards to cease operation. -
Communications Supervisor (Refinery) All existing supervisory unions and unions of security guards shall, upon
the effectivity of the Code, cease to operate as such and their registration
Finally, also deemed included are all other employees excluded from certificates shall be deemed automatically cancelled. However, existing
the rank and file unions but not classified as managerial or otherwise collective agreements with such unions, the life of which extends beyond
excludable by law or applicable judicial precedents. the date of effectivity of the Code, shall be respected until their expiry
date insofar as the economic benefits granted therein are concerned.

Right of Self-Organization of Managerial Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at least for the theoretical
unionization of top and middle managers by assimilating them with the supervisory
group under the broad phrase "managerial personnel," provided the lynchpin for later
laws denying the right of self-organization not only to top and middle management
employees but to front line managers or supervisors as well. Following the Caltex
case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction
between the first and second sub-groups of managerial employees. Instead of
Members of supervisory unions who do not fall within the definition of
managerial employees shall become eligible to join or assist the rank and
file labor organization, and if none exists, to form or assist in the forming
of such rank and file organization. The determination of who are
managerial employees and who are not shall be the subject of
negotiation between representatives of the supervisory union and the
employer. If no agreement is reached between the parties, either or both
of them may bring the issue to the nearest Regional Office for
determination.

The Department of Labor continued to use the term "supervisory unions" despite
the demise of the legal definition of "supervisor" apparently because these were the
unions of front line managers which were then allowed as a result of the statutory
grant of the right of self-organization under the Industrial Peace Act. Had the
Department of Labor seen fit to similarly ban unions of top and middle managers
which may have been formed following the dictum in Caltex, it obviously would have
done so. Yet it did not, apparently because no such unions of top and middle
managers really then existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the Constitutional
Commission considered the draft of Art. III, 8. Commissioner Lerum sought to amend
the draft of what was later to become Art. III, 8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to
insert between the words "people" and "to" the following: WHETHER
EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In other
words, the section will now read as follows: "The right of the people
WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for
purposes not contrary to law shall not be abridged."[23]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form associations
is granted to all persons whether or not they are employed in the
government. Under that provision, we allow unions in the government, in
government-owned and controlled corporations and in other industries in
the private sector, such as the Philippine Government Employees'
Association, unions in the GSIS, the SSS, the DBP and other
government-owned and controlled corporations. Also, we have unions of
supervisory employees and of security guards. But what is tragic about
this is that after the 1973 Constitution was approved and in spite of an
express recognition of the right to organize in P.D. No. 442, known as the
Labor Code, the right of government workers, supervisory employees
and security guards to form unions was abolished.
And we have been fighting against this abolition. In every tripartite
conference attended by the government, management and workers, we
have always been insisting on the return of these rights. However, both
Page 57 of 141
the government and employers opposed our proposal, so nothing came
out of this until this week when we approved a provision which states:
Notwithstanding any provision of this article, the right to self-organization
shall not be denied to government employees.
We are afraid that without any corresponding provision covering the
private sector, the security guards, the supervisory employees or majority
employees [sic] will still be excluded, and that is the purpose of this
amendment.
I will be very glad to accept any kind of wording as long as it will amount
to absolute recognition of private sector employees, without exception, to
organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but the point
raised by Commissioner Rodrigo is well-taken. Perhaps, we can lengthen
this a little bit more to read: "The right of the people WHETHER
UNEMPLOYED OR EMPLOYED BY STATE OR PRIVATE
ESTABLISHMENTS."
I want to avoid also the possibility of having this interpreted as applicable
only to the employed.
MR. DE LOS REYES. Will the proponent accept an amendment to the
amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the
employees in the private sector is recognized.[24]
Lerum thus anchored his proposal on the fact that (1) government employees,
supervisory employees, and security guards, who had the right to organize under the
Industrial Peace Act,had been denied this right by the Labor Code, and (2) there was
a need to reinstate the right of these employees. In consonance with his objective to
reinstate the right of government, security, and supervisory employees to organize,
Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several
Members of this Commission, my amendment will now read as

follows: "The right of the people INCLUDING THOSE EMPLOYED IN
THE PUBLIC AND PRIVATE SECTORS to form associations, unions, or
societies for purposes not contrary to law shall not be abridged. In
proposing that amendment I ask to make of record that I want the
following provisions of the Labor Code to be automatically abolished,
which read:
ART. 245. Security guards and other personnel employed for the
protection and security of the person, properties and premises of the
employers shall not be eligible for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form
any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee
say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has
accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment,
as amended, is approved.[25]
The question is what Commissioner Lerum meant in seeking to "automatically
abolish" the then Art. 246 of the Labor Code. Did he simply want "any kind of wording
as long as it will amount to absolute recognition of private sector employees, without
exception, to organize"?[26] Or, did he instead intend to have his words taken in the
context of the cause which moved him to propose the amendment in the first place,
namely, the denial of the right of supervisory employees to organize, because he
said, "We are afraid that without any corresponding provision covering the private
sector, security guards, supervisory employees or majority [of] employees will still be
excluded, and that is the purpose of this amendment"? [27]
It would seem that Commissioner Lerum simply meant to restore the right of
supervisory employees to organize. For even though he spoke of the need to
"abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial
employees" in general from forming unions, the fact was that in explaining his
proposal, he repeatedly referred to "supervisory employees" whose right under the
Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy
that Commissioner Lerum never referred to the then definition of "managerial
employees" in Art. 212(m) of the Labor Code which put together, under the broad
phrase "managerial employees," top and middle managers and supervisors. Instead,
Page 58 of 141
his repeated use of the term "supervisory employees," when such term then was no
longer in the statute books, suggests a frame of mind that remained grounded in the
language of the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all
managerial employees to organize, despite the fact that the Industrial Peace Act did
not expressly provide for the right of top and middle managers to organize. If Lerum
was aware of the Caltex dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex
statement sustaining the right to organize to top and middle managers, then the more
should his repeated use of the term "supervisory employees" be taken at face
value, as it had been defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his proposal to
refer solely to supervisors and not to other managerial employees is clear from the
following account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts, Commissioner
Eulogio R. Lerum explained that the modification included three
categories of workers: (1) government employees, (2) supervisory
employees, and (3) security guards. Lerum made of record the explicit
intent to repeal provisions of P.D. 442, the Labor Code. The provisions
referred to were:
ART. 245. Security guards and other personnel employed for the
protection and security of the person, properties and premises of the
employers shall not be eligible for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form
any labor organization.[28]28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by
including labor unions in the guarantee of organizational right should be taken in the
context of statements that his aim was the removal of the statutory ban against
security guards and supervisory employees joining labor organizations. The approval
by the Constitutional Commission of his proposal can only mean, therefore, that the
Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By
implication, no similar absolute constitutional right to organize for labor purposes
should be deemed to have been granted to top-level and middle managers. As to

them the right of self-organization may be regulated and even abridged conformably
to Art. III, 8.
Constitutionality of Art. 245
Finally, the question is whether the present ban against managerial employees,
as embodied in Art. 245 (which superseded Art. 246) of the Labor Code, is valid. This
provision reads:
ART. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. - Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of
the rank-and-file employees but may join, assist or form separate labor
organizations of their own.[29]29
This provision is the result of the amendment of the Labor Code in 1989 by R.A.
No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace
Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides
separate definitions of the terms "managerial" and "supervisory employees," as
follows:
ART. 212. Definitions. . . .
(m) "managerial employee" is one who is vested with 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 judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for
purposes of this Book.
Although the definition of "supervisory employees" seems to have been unduly
restricted to the last phrase of the definition in the Industrial Peace Act, the legal
significance given to the phrase "effectively recommends" remains the same. In fact,
the distinction between top and middle managers, who set management policy, and
front-line supervisors, who are merely responsible for ensuring that such policies are
carried out by the rank and file, is articulated in the present definition. [30]30 When read
in relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries
Page 59 of 141
out the intent of the Constitutional Commission in framing Art. III, 8 of the fundamental
law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban
against managerial employees forming a union. The right guaranteed in Art. III, 8 is
subject to the condition that its exercise should be for purposes "not contrary to
law." In the case of Art. 245, there is a rational basis for prohibiting managerial
employees from forming or joining labor organizations. As Justice Davide, Jr., himself
a constitutional commissioner, said in his ponencia in Philips Industrial Development,
Inc. v. NLRC:[31]31
In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential
employees. Their classification as such is not seriously disputed by PEO-
FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly
considered them as confidential employees. By the very nature of their
functions, they assist and act in a confidential capacity to, or have access
to confidential matters of, persons who exercise managerial functions in
the field of labor relations. As such, the rationale behind the ineligibility of
managerial employees to form, assist or joint a labor union equally
applies to them.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court
elaborated on this rationale, thus:
". . . The rationale for this inhibition has been stated to be, because if
these managerial employees would belong to or be affiliated with a
Union, the latter might not be assured of their loyalty to the Union in view
of evident conflict of interests. The Union can also become company-
dominated with the presence of managerial employees in Union
membership."[32]
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying them the right to
organize justifies even more the ban on managerial employees from forming
unions. After all, those who qualify as top or middle managers are executives who
receive from their employers information that not only is confidential but also is not
generally available to the public, or to their competitors, or to other employees. It is
hardly necessary to point out that to say that the first sentence of Art. 245 is
unconstitutional would be to contradict the decision in that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

Narvasa, C.J., Regalado, Romero, Bellosillo, Martinez, and Purisima,
JJ., concur.
Davide, Melo, Puno, Vitug, Kapunan, Panganiban, and Quisumbing, JJ., has
separate, concurring and dissenting opinion.
G.R. No. 78755 July 19, 1989
GOLDEN FARMS, INC., petitioner,
vs.
THE HONORABLE DIRECTOR PURA FERRER-CALLEJA, BUREAU
OF LABOR RELATIONS and NATIONAL FEDERATION OF
LABOR, respondents.
J. V. Yap Law Office for petitioner.
Beethoven L. Orcullo for private respondent.
PARAS, J.:
Petitioner Golden Farms, Inc., seeks a reversal of the resolution of public
respondent Department of Labor and Employment Director Pura Ferrer-
Calleja in BLR Case No. A-2-56-87 which affirmed on appeal the decision
of Labor Arbiter Conrado O. Macasa, Sr., in NLRC Case No. R-418-
ROXI-MED-UR-8886, issuing a directive as follows:
In view of the foregoing, the herein petition for certification
election filed by the National Federation of Labor (NFL) is
hereby DISMISSED; whereas, its resultant and relevant
consequence of its recognized representation of the
entire rank-and-file employees of the bargaining unit
should be given life and meaning, as it is hereby directed,
and Employer Golden Farms, Incorporated likewise
enjoined to negotiate for a supplementary collective
bargaining agreement, or for the inclusion of the herein
monthly paid rank-and- file employees at Luna, Kapalong,
Davao del Norte, and Lanang, Davao City in the still
existing negotiated contract, whichever the parties may
consider just and appropriate under the circumstances.
SO ORDERED. (p. 29, Rollo)
Page 60 of 141
The case originated as a Petition for Direct Certification Election or
Recognition filed by herein private respondent in behalf of certain office
employees and foremen before Regional Office No. XI, Davao City of the
Ministry of Labor and Employment. Petitioner herein opposed said
petition on the ground among others that a perusal of the names
allegedly supporting the said petition showed that said persons by the
nature of their jobs are performing managerial functions and/or occupying
confidential positions such that they cannot validly constitute a separate
or distinct group from the existing collective bargaining unit also
represented by private respondent.
Petitioner is a corporation engaged in the production of bananas for
export. Private respondent Union represents the employees/workers of
petitioner corporation, who were the same signatories to an earlier
Petition for Certification Election filed in 1984 before the Ministry of Labor
known as ROXI Case No. UR-70-84, which was dismissed by a
Resolution issued by Med-Arbiter Conchita Martinez when it was
established that a collective bargaining unit (NFL) between the
Corporation and the rank-and-file employees was and is in existence at
the time of the filing of the said petition for certification election until the
present filing. However, in the order of dismissal, it was stated:
After taking into consideration the functions exercised by
the foremen as contained in their joint affidavits (Annexes
"A-1", "A-2" & "A-3", Petitioner's Position Paper)
apparently, they fall within the classification of rank-and-
file employees. For, as consistently ruled in a long line of
decisions, mere supervisory designations in the position
titles, do not make the holders of such positions any less
rank and filers, without the convincing proof that such
supervisory designations are coupled with actual
performance of managerial functions. In the cases at bar,
what was submitted by the respondent companies are
only lists of employees holding the positions of foremen
and confidential positions and as such are not covered by
the bargaining unit. Such piece of evidence alone does
not constitute convincing proof for us to adapt
respondents' stance (Annexes "A", "B", "C", & "D").
Comment on Petition). (p. 13, Rollo)

Having had no opportunity to contest the abovementioned statement in
the order of dismissal, petitioner herein as private respondent therein,
filed a "Manifestation" stating among others:
2. That since the petitions were dismissed the herein
employees make clear for the record that said view would
run counter to the provision of the pertinent Collective
Bargaining Agreement whereby the foremen were already
acknowledged and agreed upon to be managerial
employees and accordingly excluded from the coverage
of the said CBA;
3. That with respect to those employees holding
confidential positions, it is a basic principle that they
cannot be included in any bargaining unit, the fact being
that having access to confidential informations, said
employees may be the source of undue advantage. Said
employees may act as spies for either parties to collective
bargaining agreement. This is especially true in this case
where the petitioning union is already the bargaining
agent of the rank-and-file employees in the establishment.
To allow confidential employees to join existing
bargaining unit will defeat the very purpose for which an
employee holding confidential position was in the first
place excluded. (p. 68, Rollo)
Private respondent herein as petitioner therein appealed the order of
dismissal which was accordingly opposed (Annex "L" p. 69, Rollo) by
Golden Farms, Inc., reiterating the grounds and arguments set forth in its
Manifestation filed earlier. The appeal was dismissed and subsequently
the National Federation of Labor Union refiled the Petition for Certification
in NLRC Case No. R-418- ROX-MED-UR-88-86 which was also
dismissed. Said order of dismissal is now the subject of this review for
containing directives not within the power of a Med-Arbiter to issue.
Petitioner Golden Farms, Inc., now poses the following questions:
I HAS A MED-ARBITER THE POWER OR
AUTHORITY TO DIRECT
MANAGEMENT TO ENTER INTO A
SUPPLEMENTAL COLLECTIVE
Page 61 of 141
BARGAINING AGREEMENT WITH A
CONTRACTING UNION.
II MAY SUPERVISORS, CASHIERS,
FOREMEN, AND EMPLOYEES
HOLDING
CONFIDENTIAL/MANAGERIAL
FUNCTION COMPEL MANAGEMENT TO
ENTER INTO A COLLECTIVE
BARGAINING AGREEMENT WITH
THEM. (p. 14, Rollo)
The petition merits Our consideration.
Respondents relied heavily on the alleged finding of Med-Arbiter Martinez
that the employees who were signatories to the petition for certification
election and represented by respondent Union are actually rank-and-file
workers not disqualified from entering into a collective bargaining
agreement with management. In said findings of fact, Med-Arbiter
Martinez singled out in her classification as rank-and-file employees the
foremen of Petitioner Corporation considered from their joint affidavits
and for lack of convincing proof that their supervisory designations are
coupled with the actual performance of managerial functions.
Whether or not such finding is supported by the evidence is beside the
point. Respondents herein do not dispute that the signatories (listed in
Annex "A", page 30, Rollo) to the Petition for certification election subject
of this case, were holding the positions of cashier, purchasers, personnel
officers, foremen and employees having access to confidential
information such as accounting personnel, radio and telegraph operators
and head of various sections. It is also a fact that respondent Union is the
exclusive bargaining Unit of the rank-and-file employees of petitioner
corporation and that an existing CBA between petitioner corporation and
the Union representing these rank-and-file employees was still enforced
at the time the Union filed a petition for certification election in behalf of
the aforementioned signatories. Under the terms of said CBA (Annex "E",
p. 40, Rollo) it is expressly provided that:
Section 1. The COMPANY and the UNION hereby agree
that the recognized bargaining unit for purposes of this
agreement shall consist of regular rank-and-file workers
 Page 62 of 141

employed by the COMPANY at the plantation presently
situated at Alejal, Carmen, Davao. Consequently, all
managerial personnel like, superintendents, supervisor,
foremen, administrative, professional and confidential
employees, and those temporary, casual, contractual, and
seasonal workers are excluded from the bargaining unit
and therefore, not covered by this agreement.
(p. 41, Rollo)
Respondents do not dispute the existence of said collective bargaining
agreement. We must therefore respect this CBA which was freely and
voluntarily entered into as the law between the parties for the duration of
the period agreed upon. Until then no one can be compelled to accept
changes in the terms of the collective bargaining agreement.
Furthermore, the signatories to the petition for certification election are
the very type of employees by the nature of their positions and functions
which We have decreed as disqualified from bargaining with
management in case of Bulletin Publishing Co. Inc. vs. Hon. Augusto
Sanchez, etc. (144 SCRA 628) reiterating herein the rationale for such
ruling as follows: if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their loyalty to
the Union in view of evident conflict of interests or that the Union can be
company- dominated with the presence of managerial employees in
Union membership. A managerial employee is defined under Art. 212 (k)
of the new Labor Code as "one who is vested with powers or
prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial actions. All
employees not falling within this definitions are considered rank-and-file
employees for purposes of this Book."
terms of the Collective Bargaining Agreement wherein this kind of
employees by the nature of their functions/positions are expressly
excluded.
As to the company foremen, while in the performance of supervisory
functions, they may be the extension or alter ego of the management.
Adversely, the foremen, by their actuation, may influence the workers
under their supervision to engage in slow down commercial activities or
similar activities detrimental to the policy, interest or business objectives
of the company or corporation, hence they also cannot join.
WHEREFORE, finding the assailed directive of Med-Arbiter Conrado O.
Macasa, Sr. which was affirmed by Director Pura Ferrer-Calleja
reiterating the directive of Med- Arbiter Conchita Martinez "to negotiate
for a supplementary collective bargaining agreement, or for the inclusion
of the herein monthly paid rank-and- file employees" to be erroneous as it
is in complete disregard of the terms of the collective bargaining
agreement, the same is hereby DECLARED to be without force and
effect.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ.,
concur.

This rationale holds true also for confidential employees such as

accounting personnel, radio and telegraph operators, who having access
to confidential information, may become the source of undue advantage.
Said employee(s) may act as a spy or spies of either party to a collective
bargaining agreement. This is specially true in the present case where
the petitioning Union is already the bargaining agent of the rank-and-file
employees in the establishment. To allow the confidential employees to
join the existing Union of the rank-and-file would be in violation of the

G.R. No. L-98050 March 17, 1994
PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, petitioner,
vs.
HON. RUBEN D. TORRES, Secretary of Labor and Employment,
HON. RODOLFO S. MILADO, Department of Labor and Employment
Mediator-Arbiter for Region VIII, Tacloban, City, and PHILPHOS
MOVEMENT FOR PROGRESS, INC. (PMPI), respondents.
Quiroz, Dumas & Henares Law Offices for petitioner.
Seno, Mendoza & Associates for private respondent Philphos Movement
for Progress, Inc.
BELLOSILLO, J.:
PHILIPPINE PHOSPHATE FERTILIZER CORPORATION (PHILPHOS)
assails the decision of the Secretary of Labor of 7 August 1990 affirming
the order of the Mediator-Arbiter of 28 March 1990 which directed the
immediate conduct of a certification election among the supervisory,
professional or technical, and confidential employees of petitioner
corporation.
On 7 July 1989, Philphos Movement for Progress, Inc. (PMPI for brevity),
filed with the Department of Labor and Employment a petition for
certification election among the supervisory employees of petitioner,
alleging that as a supervisory union duly registered with the Department
of Labor and Employment it was seeking to represent the supervisory
employees of Philippine Phosphate Fertilizer Corporation.
The petition for certification election filed by PMPI was not opposed by
PHILPHOS. In fact, on 11 August 1989, PHILPHOS submitted a position
paper with the Mediator-Arbiter stating that its management welcomed
the creation of a supervisory employees' union provided the necessary
Page 63 of 141
requisites of law were properly observed, but exempting from the union
its superintendents who were managerial and not supervisory
employees as they managed a division, subdivision or section, and were
vested with powers or prerogatives to lay down and execute
management policies. PHILPHOS also asserted that its professional or
technical employees were not within the definition of supervisory
employees under the Labor Code as they were immediately under the
direction and supervision of its superintendents and supervisors.
Moreover, the professional and technical employees did not have a staff
of workers under them. Consequently, petitioner prayed for the exclusion
of its superintendents andprofessional/technical employees from the
PMPI supervisory union.
On 13 October 1989, Mediator-Arbiter Rodolfo S. Milado issued an order
directing the holding of a certification election among the supervisory
employees of petitioner, excluding therefrom the superintendents and
theprofessional and technical employees. He also directed the parties to
attend the pre-election conference on 19 April 1990 for the determination
of the mechanics of the election process and the qualifications and
eligibility of those allowed to vote.
On 15 November 1989, PMPI filed an amended petition with the
Mediator-Arbiter wherein it sought to represent not only the supervisory
employees of petitioner but also
its professional/technical and confidential employees. The amended
petition was filed in view of the amendment of the PMPI Construction
which included in its membership
the professional/technical and confidential employees.
On 14 December 1989, the parties therein agreed to submit their
respective position papers and to consider the amended petition
submitted for decision on the basis thereof and related documents.
On 28 March 1990, Mediator-Arbiter Milado issued an order granting the
petition and directing the holding of a certification election among
the "supervisory, professional (engineers, analysts, mechanics,
accountants, nurses, midwives, etc.), technical, and confidential
employees" 1 to comprise the proposed bargaining unit.
On 16 April 1990, PHILPHOS appealed the order of 28 March 1990 to
the Secretary of Labor and Employment who on 7 August 1990 rendered

a decision through Undersecretary Bienvenido Laguesma dismissing the
appeal. PHILPHOS moved for reconsideration but the same was denied;
hence, the instant petition alleging grave abuse of discretion on the part
of public respondents in rendering the assailed rulings.
On 8 July 1991, this Court issued a temporary restraining order enjoining
respondents from holding the certification election among
petitioner's supervisory, professional/technical, and confidential
employees scheduled on 12 July 1991.
There are two (2) issues raised by petitioner: (1) whether it was denied
due process in the proceedings before respondent Mediator-Arbiter; and,
(2) whether its professional/technical and confidential employees may
validly join respondent PMPI union which is composed of supervisors.
PHILPHOS claims that it was denied due process when respondent
Mediator-Arbiter granted the amended petition of respondent PMPI
without according PHILPHOS a new opportunity to be heard.
We do not see it the way PHILPHOS does here. The essence of due
process is simply an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to explain one's side or an
opportunity to seek a reconsideration of the action or ruling complained
of.2 Where, as in the instant case, petitioner PHILPHOS agreed to file its
position paper with the Mediator-Arbiter and to consider the case
submitted for decision on the basis of the position papers filed by the
parties, there was sufficient compliance with the requirement of due
process, as petitioner was afforded reasonable opportunity to present its
side.3 Moreover, petitioner could have, if it so desired, insisted on a
hearing to confront and examine the witnesses of the other party. But it
did
not; 4 instead, it opted to submit its position paper with the Mediator-
Arbiter. Besides, petitioner had all the opportunity to ventilate its
arguments in its appeal to the Secretary of Labor.
As regards the second issue, we are with petitioner that being
a supervisory union, respondent PMPI cannot represent
the professional/technical and confidential employees of petitioner whose
positions we find to be more of the rank and file than supervisory.
Page 64 of 141
With the enactment in March 1989 of R.A. 6715, employees were
thereunder reclassified into three (3) groups, namely: (a) managerial
employees, (b) supervisory employees, and (c) rank and file employees.
The category of supervisory employees is once again recognized in the
present law.
Article 212, par. (m), of the Labor Code, as amended, provides, that
"(s)upervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use
of independent judgment." The definition of managerial employees is
limited to those having authority to hire and fire, while those who only
recommend effectively the hiring or firing or transfer of personnel; are
considered closer to rank and file employees. The exclusion therefore of
mid-level executives from the category of managers has brought about a
third classification, the supervisory employees. 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.5
In its position paper submitted to the Mediator-Arbiter, petitioner
described the positions and functions of itsprofessional/technical
employees, (engineers, analysts, mechanics, accountants, nurses, and
midwives). The guidelines, which were not refuted by respondent PMPI,
state:
. . . . Professional and Technical positions are those
whose primary duty consists of the performance of work
directly related to management programs; who
customarily, regularly and routinarily exercise judgment in
the application of concepts, methods, systems and
procedures in their respective fields of specialization; who
regularly and directly assist a managerial and/or
supervisory employee, execute under general
supervision, work along specialized or technical lines
requiring special training, experience or knowledge, or
execute under general supervision special assignments
and task . . . . They are immediately under the direction
and supervision of supervisors or superintendents. They
have no men under them but are regularly called upon by

their supervisors or superintendents on some technical
matters.6
Moreover, Herculano, A. Duhaylungsod, Personnel Officer of petitioner,
attested that there was no community of interests between
the supervisors of petitioner and the professional/technical employees;
that as of 25 July 1990, personnel records showed that there were
125 supervisors and 271 professional/technical employees; that of the
271 professional/technical employees, 150 were directly under and being
supervised by supervisors, while the rest were staff members of
superintendents.7
The certification of Personnel Officer Duhaylungsod that
its professional/technical employees occupy positions that are non-
supervisory is evidence that said employees belong to the rank and
file.8 Quite obviously, theseprofessional/technical employees cannot
effectively recommend managerial actions with the use of independent
judgment because they are under the supervision of superintendents and
supervisors. Because it is unrefuted that these professional/technical
employees are performing non-supervisory functions, hence considered
admitted, they should be classified, at least for purposes of this case,
as rank and file employees. Consequently, theseprofessional/technical
employees cannot be allowed to join a union composed of supervisors.
Conversely, supervisory employees cannot join a labor organization of
employees under their supervision but may validly form a separate
organization of their own.9 This is provided in Art. 245 of the Labor Code,
as amended by R.A. No. 6715, to wit:
. . . Managerial employees are not eligible to join, assist
or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor
organization of the rank and file employees but may join,
assist or form separate labor organizations of their own.
Respondent PMPI is supposed to be a union of 125 supervisors. If
the professional/technical employees are included as members, and
records show that they are 271 in all or much more than the supervisors,
then PMPI will turn out to be a rank and file union with the supervisors as
members.
Page 65 of 141
This is precisely the situation which the law prohibits. It would create an
obvious conflict of views among the members, or at least between two (2)
groups of members espousing opposing interests. The intent of the law is
to avoid a situation where supervisors would merge with the rank and file,
or where the supervisors' labor organization would represent conflicting
interests, especially where, as in the case at bar, the supervisors will be
commingling with those employees whom they directly supervise in their
own bargaining unit. Members of the supervisory union might refuse to
carry out disciplinary measures against their co-member rank and file
employees. 10
Supervisors have the right to form their own union or labor organization.
What the law prohibits is a union whose membership comprises
of supervisors merging with the rank and file employees because this is
where conflict of interests may arise in the areas of discipline, collective
bargaining and strikes. 11 The professional/technical employees of
petitioner therefore may join the existing rank and file union, or form a
union separate and distinct from the existing union organized by the rank
and file employees of the same company.
As to the confidential employees of the petitioner, the latter has not
shown any proof or compelling reason to exclude them from joining
respondent PMPI and from participating in the certification election,
unless these confidential employees are the same professional/technical
employees whom we find to be occupying rank and file positions.
WHEREFORE, the petition is GRANTED. The decision of respondent
Secretary of Labor of 7 August 1990, as well as the order of the
respondent Mediator-Arbiter of 28 March 1990, is SET ASIDE. The
professional/technical employees of petitioner Philippine Phosphate
Fertilizer Corporation (PHILPHOS) are declared disqualified from
affiliating with respondent Philphos Movement for Progress, Inc. (PMPI).
The Department of Labor is directed to order immediately the conduct of
certification election among the supervisory employees of petitioner,
particularly excluding therefrom its professional and technical employees.
SO ORDERED.
Cruz, Davide, Jr., Quiason and Kapunan, JJ., concur.

AFFILIATION AND DISAFFILIATION | ART. 240-249
G.R. No. L-35120 January 31, 1984
ADAMSON & ADAMSON, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and ADAMSON &
ADAMSON SUPERVISORY UNION (FFW), respondents.
Sycip, Salazar, Luna & Feliciano for petitioner.
Jaime D. Lauron for respondents.
GUTIERREZ, JR., J.:
Adamson and Adamson, Inc., filed this petition to set aside orders of the
respondent Court of Industrial Relations (CIR) holding that the Adamson
and Adamson, Inc. supervisory Union (FFW) can legally represent
supervisors of the petitioner corporation notwithstanding the affiliation of
the lank and file union of the same company with the same labor
federation, the Federation of Free Workers.
The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the
petitioner about its having organized on the same date that the Adamson
and Adamson, Inc. Salesmen Association (FFW) advised the petitioner
that the rank and file salesmen had formed their own union.
The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the
Matter of Representation of the Supervisory Employees of Adamson and
Adamson, Inc., Petitioner " thus prompting the filing of this petition for
review on certiorari.
Subsequently and during the pendency of the present petition, the rank
and file employees formed their own union, naming it Adamson and
Adamson Independent Workers (FFW).
The petitioner made a lone assignment of error, to wit:
Page 66 of 141
THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN
SUSTAINING THE ELIGIBILITY OF THE RESPONDENT UNION TO
REPRESENT THE PETITIONER'S SUPERVISORY EMPLOYEES NOT-
WITHSTANDING THE AFFILIATION OF THE SAID UNION WITH THE
SAME NATIONAL FEDERATION WITH WHICH THE UNIONS OF NON-
SUPERVISORS IN THE PETITIONER COMPANY ARE ALSO
AFFILIATED.
The petitioner argues that the affiliation of the respondent union of
supervisors, the salesmen's association, and the Adamson and Adamson
independent Workers Union of rank and file personnel with the same
national federation (FFW) violates Section 3 of the Industrial Peace Act,
as amended, because — (1) it results in the indirect affiliation Of
supervisors and rank-and-file employees with one labor organization; (2)
since respondent union and the unions of non-supervisors in the same
company are governed by the same constitution and by-laws of the
national federation, in practical effect, there is but one union; and (3) it
would result in the respondent union's losing its independence because it
becomes the alter ego of the federation.
The petitioner also submits that should affiliation be allowed, this would
violate the requirement of separateness of bar units under Section 12 of
the Act because only one union will in fact represent both supervisors
and rank-and-file employees of the petitioner.
The respondents on the other hand argue that the supervisory
employees of an employer may validly join an organization of the rank-
and-file employees so long as the said rank and file employees are not
under their supervision. They submit that Adamson and Adamson
Supervisory Union (FFW) is not composed of sales supervisors and,
therefore, the salesmen of the company are not under the supervision of
the supervisory employees forming the union. Respondents also argue
that even if the salesmen of the petitioner company are under the
supervision of the members of the supervisory union, the prohibition
would not apply because the salesmen and the supervisory employees of
the company have their separate and distinct labor organizations, and, as
a matter of fact, their respective unions sent separate proposal for
collective bargaining agreements. They contend that their respective
labor organizations, not the FFW, will represent their members in the
negotiations as well as in the signing of their respective contracts.
Respondents further argue that the Federation of Free Workers has, as
its affiliates, supervisory as well as rank-and-file employees, and should

both the supervisory and the rank-and-file employees of a certain
employer who have separate certificates of registration affiliate with the
same federation, the prohibition does not apply as the federation is not
the organization of the supervisory employees contemplated in the law.
The issue presented involves the correct interpretation of Section 3 of
Republic Act No. 875, the Industrial Peace Act, as amended, which
states:
Employees shall have the right to self-organization and to form join or
assist labor organizations of their own choosing for the purpose 6f
collective bargaining through representatives of their own and to engage
in concerted activities for the purpose of collective bargaining and other
mutual aid or protection. Individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their
supervision but may form separate organizations of their own.
The right of employees to self-organization and to form, join or assist
labor organizations of their own choosing for the purpose of collective
bargaining and to engage in concerted activities for mutual aid or
protection is a fundamental right of labor that derives its existence from
the Constitution. It is recognized and implemented through the
abovecited Section 3 of the Industrial Peace Act as amended.
In interpreting the protection to labor and social justice provisions of the
Constitution and the labor laws or rules and regulations implementing the
constitutional mandates, we have always adopted the liberal approach
which favors the exercise of labor rights.
In deciding this case, we start with the recognized rule that the right of
supervisory employees to organize under the Industrial Peace Act carries
certain restrictions but the right itself may not be denied or unduly
abridged. The supervisory employees of an employer cannot join any
labor organization of employees under their supervision but may validly
form a separate organization of their own. As stated in Caltex Filipino
Managers and Supervisors Association v. Court of Industrial
Relations (47 SCRA 112), it would be to attach unorthodoxy to, not to say
an emasculation of, the concept of law if managers as such were
precluded from organization. Thus, if Republic Act 875, in its Section 3,
recognizes the right of supervisors to form a separate organization of
their own, albeit they cannot be members of a labor organization of
Page 67 of 141
employees under their supervision, that authority of supervisors to form a
separate labor union carries with it the right to bargain collectively with
the employer. (Government Service Insurance System v. Government
Service Insurance System Supervisors' Union, 68 SCRA 418).
The specific issue before us is whether or not a supervisor's union may
affiliate with a federation with which unions of rank and-file employees of
the same employer are also affiliated. We find without merit the
contentions of petitioner that if affilation will be allowed, only one union
will in fact represent both supervisors and rank-and-file employees of the
petitioner; that there would be an indirect affiliation of supervisors and
rank-and-file employees with one labor organization; that there would be
emerging of two bargaining units ; and that the respondent union will
loose its independence because it becomes an alter ego of the
federation.
In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80 SCRA 681) and Liberty
Cotton Mills Workers Union v. Liberty Cotton Mills, Inc. (66 SCRA
512), we held :
xxx xxx xxx
... the court expressly cited and affirmed the basic
principle that '(T)he locals are separate and distinct units
primarily designed to secure and maintain the equality of
bargaining power between the employer and their
employee-member 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 (as
PAFLU) was in the furtherance of the same end. These
association are concensual 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
 Page 68 of 141

upon the terms laid down in the agreement which brought

it into existence.

We agree with the Court of Industrial Relations when it ruled that:

xxx xxx xxx

The confusion seems to have stemmed from the prefix of

FFW after the name of the local unions in the registration
of both. Nonetheless, the inclusion of FWW in the
registration is merely to stress that they are its affiliates at
the time of registrations. It does not mean that said local
unions cannot stand on their own Neither can it be
construed that their personalities are so merged with the
mother federation that for one difference or another they
cannot pursue their own ways, independently of the
federation. This is borne by the fact that FFW, like other
federation is a legitimate labor organization separate and
distinct from its locals and affiliates and to construe the
registration certificates of the aforecited unions, along the
line of the Company's argument. would tie up any
affiliates to the shoe string of the federation. ...

The Adamson and Adamson Supervisory Union and the Adamson and
Adamson, Inc., Salesmen Association (FFW), have their own respective
constitutions and by-laws. They are separately and independently
registered of each other. Both sent their separate proposals for collective
bar agreements with their employer. There could be no employer
influence on rank-and-file organizational activities nor their could be any
rank and file influence on the supervisory function of the supervisors
because of the representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED for lack of merit. The

questioned order and the resolution en bancof the respondent Court of
Industrial Relations are AFFIRMED.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana and Relova, JJ.,

concur.
 Page 69 of 141

INSULAR HOTEL EMPLOYEES G.R. Nos. 174040-41 Decision[2] dated October 11, 2005, and the Resolution[3]dated
UNION-NFL, July 13, 2006 of the Court of Appeals (CA) in consolidated labor
Petitioner, Present: cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No.
83657. Said Decision reversed the Decision[4] dated the April 5,
CARPIO, J., Chairperson,
2004 of the Accredited Voluntary Arbitrator Rosalina L. Montejo
- versus - VELASCO, JR., * (AVA Montejo).
PERALTA, The facts of the case, as culled from the records, are as follows:
BERSAMIN, ** and
ABAD, JJ.

On November 6, 2000, respondent Waterfront Insular Hotel

WATERFRONT INSULAR HOTEL DAVAO, Davao (respondent) sent the Department of Labor and
Employment (DOLE), Region XI, Davao City, a Notice of
Respondent. Promulgated:
Suspension of Operations[5] notifying the same that it will
suspend its operations for a period of six months due to severe
September 22, 2010 and serious business losses. In said notice, respondent assured
x------------------------------------------------------------------------------------ the DOLE that if the company could not resume its operations
-----x within the six-month period, the company would pay the
affected employees all the benefits legally due to them.
DECISION

During the period of the suspension, Domy R. Rojas (Rojas), the

PERALTA, J.:
Before this Court is a petition for review on certiorari,[1] under
Rule 45 of the Rules of Court, seeking to set aside the
President of Davao Insular Hotel Free Employees Union
(DIHFEU-NFL), the recognized labor organization in Waterfront
Davao, sent respondent a number of letters asking management
to reconsider its decision.

In a letter[6] dated November 8, 2000, Rojas intimated that the
members of the Union were determined to keep their jobs and
that they believed they too had to help respondent, thus:
xxxx
Sir, we are determined to keep our jobs and push
the Hotel up from sinking. We believe that we have
to help in this (sic) critical times. Initially, we intend
to suspend the re-negotiations of our CBA. We could
talk further on possible adjustments on economic
benefits, the details of which we are hoping to
discuss with you or any of your emissaries. x x x[7]
[8]
In another letter dated November 10, 2000, Rojas reiterated
the Union's desire to help respondent, to wit:
We would like to thank you for giving us the
opportunity to meet [with] your representatives in
order for us to air our sentiments and extend our
helping hands for a possible reconsideration of the
company's decision.
The talks have enabled us to initially come up with a
suggestion of solving the high cost on payroll.
Page 70 of 141
We propose that 25 years and above be paid their
due retirement benefits and put their length of
service to zero without loss of status of employment
with a minimum hiring rate.
Thru this scheme, the company would be able to
save a substantial amount and reduce greatly the
payroll costs without affecting the finance of the
families of the employees because they will still have
a job from where they could get their income.
Moreover, we are also open to a possible reduction
of some economic benefits as our gesture of sincere
desire to help.
We are looking forward to a more fruitful round of
talks in order to save the hotel.[9]
In another letter[10] dated November 20, 2000, Rojas sent
respondent more proposals as a form of the Union's gesture of
their intention to help the company, thus:
1) Suspension of [the] CBA for ten years, No
strike no lock-out shall be enforced.
2) Pay all the employees their benefits due, and
put the length of service to zero with a minimum
 Page 71 of 141

hiring rate. Payment of benefits may be on a 11) The union in its desire to be of utmost service
staggered basis or as available. would adopt multi-tasking for the hotel to be more
competitive.
3) Night premium and holiday pays shall be
according to law. Overtime hours rendered shall be
offsetted as practiced.
4) Reduce the sick leaves and vacation leaves to
15 days/15days.
5) Emergency leave and birthday off are hereby
waived. It is understood that with the suspension of the
CBA renegotiations, the same existing CBA shall be
6) Duty meal allowance is fixed at P30.00 only.
adopted and that all provisions therein shall remain
No more midnight snacks and double meal
enforced except for those mentioned in this
allowance. The cook drinks be stopped as practiced.
proposal.
7) We will shoulder 50% of the group health
insurance and family medical allowance be reduced
to 1,500.00 instead of 3,000.00. These proposals shall automatically supersede the
affected provisions of the CBA.[11]
8) The practice of bringing home our uniforms
for laundry be continued.
9) Fixed manning shall be implemented, the rest In a handwritten letter[12] dated November 25, 2000, Rojas once
of manpower requirements maybe sourced thru again appealed to respondent for it to consider their proposals
WAP and casual hiring. Manpower for fixed and to re-open the hotel. In said letter, Rojasstated that
manning shall be 145 rank-and-file union members.
manpower for fixed manning shall be one hundred (100) rank-
10) Union will cooperate fully on strict and-file Union members instead of the one hundred forty-five
implementation of house rules in order to attain (145) originally proposed.
desired productivity and discipline. The union will
not tolerate problem members.
 Page 72 of 141

Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, City. In said Notice, it was stated that the Union involved was
submitted to respondent a Manifesto[13] concretizing their DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of
earlier proposals. Labor. The issue raised in said Notice was the Diminution of
wages and other benefits through unlawful Memorandum of
After series of negotiations, respondent and DIHFEU-NFL,
Agreement.
represented by its President, Rojas, and Vice-Presidents,
Exequiel J. Varela Jr. and Avelino C. Bation, Jr., signed a
Memorandum of Agreement[14] (MOA) wherein respondent
On August 29, 2002, the NCMB called Joves and respondent to a
agreed to re-open the hotel subject to certain concessions
conference to explore the possibility of settling the conflict. In
offered by DIHFEU-NFL in its Manifesto.
the said conference, respondent and petitioner Insular Hotel
Employees Union-NFL (IHEU-NFL), represented by Joves, signed
a Submission Agreement[17] wherein they chose AVA Alfredo C.
Accordingly, respondent downsized its manpower structure to
Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for
100 rank-and-file employees as set forth in the terms of the
the resolution of AVA Olvida was the determination of whether
MOA. Moreover, as agreed upon in the MOA, a new pay scale
or not there was a diminution of wages and other benefits
was also prepared by respondent.
through an unlawful MOA. In support of his authority to file the
complaint, Joves, assisted by Atty. Danilo Cullo (Cullo),
presented several Special Powers of Attorney (SPA) which were,
The retained employees individually signed a Reconfirmation of
however, undated and unnotarized.
Employment[15] which embodied the new terms and conditions
of their continued employment. Each employee was assisted by
Rojas who also signed the document.
On September 2, 2002, respondent filed with the NCMB a
Manifestation with Motion for a Second Preliminary
On June 15, 2001, respondent resumed its business operations. Conference,[18] raising the following grounds:

On August 22, 2002, Darius Joves (Joves) and Debbie

Planas, claiming to be local officers of the National Federation of 1) The persons who filed the instant complaint in
Labor (NFL), filed a Notice of Mediation[16]before the National the name of the Insular Hotel Employees Union-NFL
Conciliation and Mediation Board (NCMB), Region XI, Davao have no authority to represent the Union;

2) The individuals who executed the special
powers of attorney in favor of the person who filed
the instant complaint have no standing to cause the
filing of the instant complaint; and
3) The existence of an intra-union dispute renders
the filing of the instant case premature.[19]
On September 16, 2002, a second preliminary conference was
conducted in the NCMB, where Cullo denied any existence of an
intra-union dispute among the members of the union. Cullo,
however, confirmed that the case was filed not by the IHEU-NFL
but by the NFL. When asked to present his authority from NFL,
Cullo admitted that the case was, in fact, filed by individual
employees named in the SPAs. The hearing officer directed both
parties to elevate the aforementioned issues to AVA Olvida.[20]
The case was docketed as Case No. AC-220-RB-11-09-022-02
and referred to AVA Olvida. Respondent again raised its
objections, specifically arguing that the persons who signed the
complaint were not the authorized representatives of the Union
indicated in the Submission Agreement nor were they parties to
the MOA. AVA Olvida directed respondent to file a formal
motion to withdraw its submission to voluntary arbitration.
Page 73 of 141
On October 16, 2002, respondent filed its Motion to
Withdraw.[21] Cullo then filed an Opposition[22] where the same
was captioned:
NATIONAL FEDERATION OF LABOR
And 79 Individual Employees, Union Members,
Complainants,
-versus-
Waterfront Insular Hotel Davao,
Respondent.
In said Opposition, Cullo reiterated that the complainants were
not representing IHEU-NFL, to wit:
xxxx
2. Respondent must have been lost when it said that the individuals
who executed the SPA have no standing to represent the union nor
to assail the validity of Memorandum of Agreement (MOA). What
is correct is that the individual complainants are not representing
the union but filing the complaint through their appointed
attorneys-in-fact to assert their individual rights as workers who
are entitled to the benefits granted by law and stipulated in the
collective bargaining agreement.[23]
On November 11, 2002, AVA Olvida issued a
Resolution[24] denying respondent's Motion to Withdraw. On
 Page 74 of 141

December 16, 2002, respondent filed a Motion for

Reconsideration[25] where it stressed that the Submission
Agreement was void because the Union did not consent
thereto. Respondent pointed out that the Union had not issued
any resolution duly authorizing the individual employees or NFL
to file the notice of mediation with the NCMB.
On March 18, 2003, AVA Olvida issued a Resolution[28] denying
respondent's Motion for Reconsideration. He, however, ruled
that respondent was correct when it raised its objection to NFL
as proper party-complainant, thus:

Cullo filed a Comment/Opposition[26] to respondent's Motion for

Anent to the real complainant in this instant
Reconsideration. Again, Cullo admitted that the case was not
voluntary arbitration case, the respondent is correct
initiated by the IHEU-NFL, to wit:
when it raised objection to the National Federation
of Labor (NFL) and as proper party-complainants.
The case was initiated by complainants by filling up
Revised Form No. 1 of the NCMB duly furnishing
The proper party-complainant is INSULAR HOTEL
respondent, copy of which is hereto attached as
EMPLOYEES UNION-NFL, the recognized and
Annex A for reference and consideration of the
incumbent bargaining agent of the rank-and-file
Honorable Voluntary Arbitrator. There is no mention
employees of the respondent hotel. In the
there of Insular Hotel Employees Union, but only
submission agreement of the parties dated August
National Federation of Labor (NFL). The one
29, 2002, the party complainant written is INSULAR
appearing at the Submission Agreement was only a
HOTEL EMPLOYEES UNION-NFL and not the
matter of filling up the blanks particularly on the
NATIONAL FEDERATION OF LABOR and 79 other
question there of Union; which was filled up with
members.
Insular Hotel Employees Union-NFL. There is nothing
there that indicates that it is a complainant as the
case is initiated by the individual workers and
However, since the NFL is the mother federation of
National Federation of Labor, not by the local union.
the local union, and signatory to the existing CBA, it
The local union was not included as party-
can represent the union, the officers, the members
complainant considering that it was a party to the
or union and officers or members, as the case may
assailed MOA.[27]

be, in all stages of proceedings in courts or
administrative bodies provided that the issue of the
case will involve labor-management relationship like
in the case at bar.
The dispositive portion of the March 18, 2003 Resolution of AVA
Olvida reads:
WHEREFORE, premises considered, the motion for
reconsideration filed by respondent is DENIED. The
resolution dated November 11, 2002 is modified in
so far as the party-complainant is concerned; thus,
instead of National Federation of Labor and 79
individual employees, union members, shall be
Insular Hotel Employees Union-NFL et. al., as stated
in the joint submission agreement dated August 29,
2002. Respondent is directed to comply with the
decision of this Arbitrator dated November 11, 2002,
No further motion of the same nature shall be
entertained.[29]
Page 75 of 141
On May 9, 2003, respondent filed its Position Paper Ad
Cautelam,[30] where it declared, among others, that the same
was without prejudice to its earlier objections against the
jurisdiction of the NCMB and AVA Olvida and the standing of the
persons who filed the notice of mediation.
Cullo, now using the caption Insular Hotel Employees Union-
NFL, Complainant, filed a Comment[31] dated June 5, 2003. On
June 23, 2003, respondent filed its Reply.[32]
Later, respondent filed a Motion for Inhibition[33] alleging AVA
Olvida's bias and prejudice towards the cause of the employees.
In an Order[34] dated July 25, 2003, AVA Olvida voluntarily
inhibited himself out of delicadeza and ordered the remand of
the case to the NCMB.
On August 12, 2003, the NCMB issued a Notice requiring the
parties to appear before the conciliator for the selection of a
new voluntary arbitrator.
In a letter[35] dated August 19, 2003 addressed to the NCMB,
respondent reiterated its position that the individual union
members have no standing to file the notice of mediation before
the NCMB. Respondent stressed that the complaint should have
been filed by the Union.

On September 12, 2003, the NCMB sent both parties a
Notice[36] asking them to appear before it for the selection of the
new voluntary arbitrator. Respondent, however, maintained its
stand that the NCMB had no jurisdiction over the case.
Consequently, at the instance of Cullo, the NCMB approved ex
parte the selection of AVA Montejo as the new voluntary
arbitrator.
On April 5, 2004, AVA Montejo rendered a Decision[37] ruling in
favor of Cullo, the dispositive portion of which reads:
WHEREOF, in view of the all the foregoing, judgment
is hereby rendered:
1. Declaring the Memorandum of Agreement in
question as invalid as it is contrary to law and public
policy;
2. Declaring that there is a diminution of the
wages and other benefits of the Union members and
officers under the said invalid MOA.
3. Ordering respondent management to
immediately reinstate the workers wage rates and
other benefits that they were receiving and enjoying
before the signing of the invalid MOA;
4. Ordering the management respondent to pay
attorneys fees in an amount equivalent to ten
percent (10%) of whatever total amount that the
Page 76 of 141
workers union may receive representing individual
wage differentials.
As to the other claims of the Union regarding
diminution of other benefits, this accredited
voluntary arbitrator is of the opinion that she has no
authority to entertain, particularly as to the
computation thereof.
SO ORDERED.[38]
Both parties appealed the Decision of AVA Montejo to the
CA. Cullo only assailed the Decision in so far as it did not
categorically order respondent to pay the covered workers their
differentials in wages reckoned from the effectivity of the MOA
up to the actual reinstatement of the reduced wages and
benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831.
Respondent, for its part, questioned among others the
jurisdiction of the NCMB. Respondent maintained that the MOA
it had entered into with the officers of the Union was valid.
Respondent's petition was docketed as CA-G.R. SP No. 83657.
Both cases were consolidated by the CA.

On October 11, 2005, the CA rendered a Decision [39] ruling in
favor of respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, the petition for
review in CA-G.R. SP No. 83657 is hereby GRANTED,
while the petition in CA-G.R. SP No. 83831 is DENIED.
Consequently, the assailed Decision dated April 5,
2004 rendered by AVA Rosalina L. Montejo is hereby
REVERSED and a new one entered declaring the
Memorandum of Agreement dated May 8, 2001
VALID and ENFORCEABLE. Parties are DIRECTED to
comply with the terms and conditions thereof.
SO ORDERED.[40]
Aggrieved, Cullo filed a Motion for Reconsideration, which was,
however, denied by the CA in a Resolution[41] dated July 13,
2006.
Hence, herein petition, with Cullo raising the following issues for
this Court's resolution, to wit:
I.
Page 77 of 141
WITH DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED SERIOUS ERRORS IN FINDING
THAT THE ACCREDITED VOLUNTARY ARBITRATOR
HAS NO JURISDICTION OVER THE CASE SIMPLY
BECAUSE THE NOTICE OF MEDIATION DOES NOT
MENTION THE NAME OF THE LOCAL UNION BUT
ONLY THE AFFILIATE FEDERATION THEREBY
DISREGARDING THE SUBMISSION AGREEMENT DULY
SIGNED BY THE PARTIES AND THEIR LEGAL
COUNSELS THAT MENTIONS THE NAME OF THE
LOCAL UNION.
II.
WITH DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED SERIOUS ERROR BY
DISREGARDING THE PROVISIONS OF THE CBA
SIMPLY BECAUSE IT BELIEVED THE UNPROVEN
ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS
SUFFERING FROM FINANCIAL CRISIS.
III.
THE HONORABLE COURT OF APPEALS MUST HAVE
SERIOUSLY ERRED IN CONCLUDING THAT ARTICLE
100 OF THE LABOR CODE APPLIES ONLY TO BENEFITS
ENJOYED PRIOR TO THE ADOPTION OF THE LABOR
CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION
OF THE BENEFITS ENJOYED BY EMPLOYEES FROM ITS
ADOPTION HENCEFORTH.[42]

The petition is not meritorious.
Anent the first error raised, Cullo argues that the CA erred when
it overlooked the fact that before the case was submitted to
voluntary arbitration, the parties signed a Submission
Agreement which mentioned the name of the local union and
not only NFL. Cullo, thus, contends that the CA committed error
when it ruled that the voluntary arbitrator had no jurisdiction
over the case simply because the Notice of Mediation did not
state the name of the local union thereby disregarding the
Submission Agreement which states the names of local union as
Insular Hotel Employees Union-NFL.[43]
In its Memorandum,[44] respondent maintains its position that
the NCMB and Voluntary Arbitrators had no jurisdiction over the
complaint. Respondent, however, now also contends that IHEU-
NFL is a non-entity since it is DIHFEU-NFL which is considered by
the DOLE as the only registered union in Waterfront
Davao.[45] Respondent argues that the Submission Agreement
does not name the local union DIHFEU-NFL and that it had
timely withdrawn its consent to arbitrate by filing a motion to
withdraw.
Page 78 of 141
A review of the development of the case shows that there has
been much confusion as to the identity of the party which filed
the case against respondent. In the Notice of Mediation[46] filed
before the NCMB, it stated that the union involved was DARIUS
JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor. In
the Submission Agreement,[47] however, it stated that the union
involved was INSULAR HOTEL EMPLOYEES UNION-NFL.
Furthermore, a perusal of the records would reveal that after
signing the Submission Agreement, respondent persistently
questioned the authority and standing of the individual
employees to file the complaint. Cullo then clarified in
subsequent documents captioned as National Federation of
Labor and 79 Individual Employees, Union
Members, Complainants that the individual complainants are
not representing the union, but filing the complaint through
their appointed attorneys-in-fact.[48] AVA Olvida, however, in a
Resolution dated March 18, 2003, agreed with respondent that
the proper party-complainant should be INSULAR HOTEL
EMPLOYEES UNION-NFL, to wit:
x x x In the submission agreement of the parties
dated August 29, 2002, the party complainant
written is INSULAR HOTEL EMPLOYEES UNION-NFL

and not the NATIONAL FEDERATION OF LABOR and
79 other members.[49]
The dispositive portion of the Resolution dated March 18, 2003
of AVA Olvida reads:
WHEREFORE, premises considered, the motion for
reconsideration filed by respondent is DENIED. The
resolution dated November 11, 2002, is modified in
so far as the party complainant is concerned, thus,
instead of National Federation of Labor and 79
individual employees, union members, shall be
Insular Hotel Employees Union-NFL et. al., as stated
in the joint submission agreement dated August
29, 2002. Respondent is directed to comply with
the decision of this Arbitrator dated November 11,
2002.[50]
After the March 18, 2003 Resolution of AVA Olvida, Cullo
adopted Insular Hotel Employees Union-NFL et.
al., Complainant as the caption in all his subsequent pleadings.
Respondent, however, was still adamant that neither Cullo nor
the individual employees had authority to file the case in behalf
of the Union.
Page 79 of 141
While it is undisputed that a submission agreement was signed
by respondent and IHEU-NFL, then represented by Joves and
Cullo, this Court finds that there are two circumstances which
affect its validity: first, the Notice of Mediation was filed by a
party who had no authority to do so; second, that respondent
had persistently voiced out its objection questioning the
authority of Joves, Cullo and the individual members of the
Union to file the complaint before the NCMB.
Procedurally, the first step to submit a case for mediation is to
file a notice of preventive mediation with the NCMB. It is only
after this step that a submission agreement may be entered into
by the parties concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides
who may file a notice of preventive mediation, to wit:
Who may file a notice or declare a strike or lockout or
request preventive mediation. -
Any certified or duly recognized bargaining
representative may file a notice or declare a strike or
request for preventive mediation in cases of
bargaining deadlocks and unfair labor practices. The
employer may file a notice or declare a lockout or
request for preventive mediation in the same cases.
In the absence of a certified or duly recognized
bargaining representative, any legitimate labor

organization in the establishment may file a notice,
request preventive mediation or declare a strike, but
only on grounds of unfair labor practice.
From the foregoing, it is clear that only a certified or duly
recognized bargaining agent may file a notice or request for
preventive mediation. It is curious that even Cullo himself
admitted, in a number of pleadings, that the case was filed not
by the Union but by individual members thereof. Clearly,
therefore, the NCMB had no jurisdiction to entertain the notice
filed before it.
Even though respondent signed a Submission Agreement, it had,
however, immediately manifested its desire to withdraw from
the proceedings after it became apparent that the Union had no
part in the complaint. As a matter of fact, only four days had
lapsed after the signing of the Submission Agreement when
respondent called the attention of AVA Olvida in a
Manifestation with Motion for a Second Preliminary
Conference[51] that the persons who filed the instant complaint
in the name of Insular Hotel Employees Union-NFL had no
authority to represent the Union. Respondent cannot be
estopped in raising the jurisdictional issue, because it is
basic that the issue of jurisdiction may be raised at any stage of
Page 80 of 141
the proceedings, even on appeal, and is not lost by waiver or by
estoppel.
In Figueroa v. People,[52] this Court explained that estoppel is the
exception rather than the rule, to wit:
Applying the said doctrine to the instant case,
the petitioner is in no way estopped by laches in
assailing the jurisdiction of the RTC, considering that
he raised the lack thereof in his appeal before the
appellate court. At that time, no considerable period
had yet elapsed for laches to attach. True, delay
alone, though unreasonable, will not sustain the
defense of estoppel by laches unless it further
appears that the party, knowing his rights, has not
sought to enforce them until the condition of the
party pleading laches has in good faith become so
changed that he cannot be restored to his former
state, if the rights be then enforced, due to loss of
evidence, change of title, intervention of equities, and
other causes. In applying the principle of estoppel by
laches in the exceptional case of Sibonghanoy, the
Court therein considered the patent and revolting
inequity and unfairness of having the judgment
creditors go up their Calvary once more after more or
less 15 years.The same, however, does not obtain in
the instant case.

We note at this point that estoppel, being in the nature
of a forfeiture, is not favored by law. It is to be applied
rarelyonly from necessity, and only in extraordinary
circumstances. The doctrine must be applied with
great care and the equity must be strong
in its favor.When misapplied, the doctrine of estoppel
may be a most effective weapon for the
accomplishment of injustice. x x x (Italics supplied.)[53]
The question to be resolved then is, do the individual members of
the Union have the requisite standing to question the MOA
before the NCMB? On this note, Tabigue v. International Copra
Export Corporation (INTERCO)[54] is instructive:
Respecting petitioners thesis that unsettled grievances
should be referred to voluntary arbitration as called
for in the CBA, the same does not lie.The pertinent
portion of the CBA reads:
In case of any dispute arising from the
interpretation or implementation of this
Agreement or any matter affecting the
relations of Labor and Management,
the UNION and the COMPANY agree
to exhaust all possibilities of
conciliation through the grievance
machinery. The committee shall
resolve all problems submitted to it
within fifteen (15) days after the
problems ha[ve] been discussed by the
members. If the dispute or grievance
cannot be settled by the Committee, or
if the committee failed to act on the
matter within the period of fifteen (15)
Page 81 of 141
days herein stipulated, the UNION and
the COMPANY agree to submit the
issue to Voluntary Arbitration.
Selection of the arbitrator shall be
made within seven (7) days from the
date of notification by the aggrieved
party. The Arbitrator shall be selected
by lottery from four (4) qualified
individuals nominated by in equal
numbers by both parties taken from the
list of Arbitrators prepared by the
National Conciliation and Mediation
Board (NCMB). If the Company and
the Union representatives within ten
(10) days fail to agree on the
Arbitrator, the NCMB shall name the
Arbitrator. The decision of the
Arbitrator shall be final and binding
upon the parties. However, the
Arbitrator shall not have the authority
to change any provisions of the
Agreement.The cost of arbitration shall
be borne equally by the parties.
Petitioners have not, however, been duly authorized
to represent the union. Apropos is this Courts
pronouncement in Atlas Farms, Inc. v. National
Labor Relations Commission, viz:
x x x Pursuant to Article 260 of the
Labor Code, the parties to a CBA shall
name or designate their respective
representatives to the grievance
machinery and if the grievance is
unsettled in that level, it shall

automatically be referred to the
voluntary arbitrators designated in
advance by parties to a CBA.
Consequently, only disputes involving
the union and the company shall be
referred to the grievance machinery
or voluntary arbitrators. (Emphasis
and underscoring supplied.)[55]
If the individual members of the Union have no authority to file
the case, does the federation to which the local union is affiliated
have the standing to do so? On this note, Coastal Subic Bay
Terminal, Inc. v. Department of Labor and Employment[56] is
enlightening, thus:
x x x A local union does not owe its existence to the
federation with which it is affiliated. It is a separate
and distinct voluntary association owing its creation
to the will of its members. Mere affiliation does not
divest the local union of its own personality,
neither does it give the mother federation the
license to act independently of the local union. It
only gives rise to a contract of agency, where the
former acts in representation of the latter. Hence,
local unions are considered principals while the
federation is deemed to be merely their agent. x x
x[57]
Page 82 of 141
Based on the foregoing, this Court agrees with approval with the
disquisition of the CA when it ruled that NFL had no authority to
file the complaint in behalf of the individual employees, to wit:
Anent the first issue, We hold that the voluntary
arbitrator had no jurisdiction over the case.
Waterfront contents that the Notice of Mediation
does not mention the name of the Union but merely
referred to the National Federation of Labor (NFL)
with which the Union is affiliated. In the subsequent
pleadings, NFL's legal counsel even confirmed that the
case was not filed by the union but by NFL and the
individual employees named in the SPAs which were
not even dated nor notarized.
Even granting that petitioner Union was affiliated
with NFL, still the relationship between that of the
local union and the labor federation or national union
with which the former was affiliated is generally
understood to be that of agency, where the local is
the principal and the federation the agency. Being
merely an agent of the local union, NFL should have
presented its authority to file the Notice of
Mediation. While We commend NFL's zealousness in
protecting the rights of lowly workers, We cannot,
however, allow it to go beyond what it is empowered
to do.

As provided under the NCMB Manual of Procedures,
only a certified or duly recognized bargaining
representative and an employer may file a notice of
mediation, declare a strike or lockout or request
preventive mediation. The Collective Bargaining
Agreement (CBA), on the other, recognizes that
DIHFEU-NFL is the exclusive bargaining representative
of all permanent employees. The inclusion of the
word NFL after the name of the local union merely
stresses that the local union is NFL's affiliate. It does
not, however, mean that the local union cannot stand
on its own. The local union owes its creation and
continued existence to the will of its members and
not to the federation to which it belongs. The spring
cannot rise higher than its source, so to speak.[58]
In its Memorandum, respondent contends that IHEU-NFL is a
non-entity and that DIHFEU-NFL is the only recognized
bargaining unit in their establishment. While the resolution of
the said argument is already moot and academic given the
discussion above, this Court shall address the same
nevertheless.
While the November 16, 2006 Certification[59] of the DOLE
clearly states that IHEU-NFL is not a registered labor
organization, this Court finds that respondent is estopped from
questioning the same as it did not raise the said issue in the
proceedings before the NCMB and the Voluntary Arbitrators. A
Page 83 of 141
perusal of the records reveals that the main theory posed by
respondent was whether or not the individual employees had
the authority to file the complaint notwithstanding the apparent
non-participation of the union. Respondent never put in issue
the fact that DIHFEU-NFL was not the same as IHEU-NFL.
Consequently, it is already too late in the day to assert the same.
Anent the second issue raised by Cullo, the same is again
without merit.
Cullo contends that respondent was not really suffering from
serious losses as found by the CA. Cullo anchors his position on
the denial by the Wage Board of respondent's petition for
exemption from Wage Order No. RTWPB-X1-08 on the ground
that it is a distressed establishment.[60] In said denial, the Board
ruled:
A careful analysis of applicant's audited financial
statements showed that during the period ending
December 31, 1999, it registered retained earnings
amounting to P8,661,260.00. Applicant's interim
financial statements for the quarter ending June 30,
2000 cannot be considered, as the same was not
audited. Accordingly, this Board finds that applicant is
not qualified for exemption as a distressed
establishment pursuant to the aforecited criteria.[61]

In its Decision, the CA held that upholding the validity of the
MOA would mean the continuance of the hotel's operation and
financial viability, to wit:
x x x We cannot close Our eyes to the impending
financial distress that an employer may suffer should
the terms of employment under the said CBA
continue.
If indeed We are to tilt the balance of justice to labor,
then We would be inclined to favor for the nonce
petitioner Waterfront. To uphold the validity of the
MOA would mean the continuance of the hotel's
operation and financial viability. Otherwise, the
eventual permanent closure of the hotel would only
result to prejudice of the employees, as a
consequence thereof, will necessarily lose their
jobs.[62]
In its petition before the CA, respondent submitted its audited
financial statements[63] which show that for the years 1998,
1999, until September 30, 2000, its total operating losses
amounted to P48,409,385.00. Based on the foregoing, the CA
was not without basis when it declared that respondent was
suffering from impending financial distress. While the Wage
Page 84 of 141
Board denied respondent's petition for exemption, this Court
notes that the denial was partly due to the fact that the June
2000 financial statements then submitted by respondent were
not audited. Cullo did not question nor discredit the accuracy
and authenticity of respondent's audited financial statements.
This Court, therefore, has no reason to question the veracity of
the contents thereof. Moreover, it bears to point out that
respondent's audited financial statements covering the years
2001 to 2005 show that it still continues to suffer losses.[64]
Finally, anent the last issue raised by Cullo, the same is without
merit.
Cullo argues that the CA must have erred in concluding that
Article 100 of the Labor Code applies only to benefits already
enjoyed at the time of the promulgation of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION
OF BENEFITS- Nothing in this Book shall be construed
to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of
the promulgation of this Code.

On this note, Apex Mining Company, Inc. v. NLRC[65] is
instructive, to wit:
Clearly, the prohibition against elimination or
diminution of benefits set out in Article 100 of the
Labor Code is specifically concerned with benefits
already enjoyed at the time of the promulgation of
the Labor Code. Article 100 does not, in other words,
purport to apply to situations arising after the
promulgation date of the Labor Code x x x.[66]
Even assuming arguendo that Article 100 applies to the case at
bar, this Court agrees with respondent that the same does not
prohibit a union from offering and agreeing to reduce wages
and benefits of the employees. In Rivera v. Espiritu,[67] this Court
ruled that the right to free collective bargaining, after all,
includes the right to suspend it, thus:
A CBA is a contract executed upon request of either
the employer or the exclusive bargaining
representative incorporating the agreement reached
after negotiations 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
Page 85 of 141
agreement. The primary purpose of a CBA is the
stabilization of labor-management relations in order
to create a climate of a sound and stable industrial
peace. In construing a CBA, the courts must be
practical and realistic and give due consideration to
the context in which it is negotiated and the purpose
which it is intended to serve.
The assailed PAL-PALEA agreement was the
result of voluntary collective bargaining
negotiations undertaken in the light of the severe
financial situation faced by the employer, with the
peculiar and unique intention of not merely
promoting industrial peace at PAL, but
preventing the latters closure. We find no conflict
between said agreement and Article 253-A of the
Labor Code. Article 253-A has a two-fold purpose.
One is to promote industrial stability and
predictability. Inasmuch as the agreement sought to
promote industrial peace at PAL during its
rehabilitation, said agreement satisfies the first
purpose of Article 253-A. The other is to assign
specific timetables wherein negotiations become a
matter of right and requirement. Nothing in Article
253-A, prohibits the parties from waiving or
suspending the mandatory timetables and agreeing on
the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive
bargaining agent of PALs ground employees, that
voluntarily entered into the CBA with PAL. It was
also PALEA that voluntarily opted for the 10-year
suspension of the CBA. Either case was the unions
exercise of its right to collective bargaining. The

right to free collective bargaining, after all,
includes the right to suspend it.[68]
Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's
Constitution and By-Laws specifically provides that the results of
the collective bargaining negotiations shall be subject to
ratification and approval by majority vote of the Union members
at a meeting convened, or by plebiscite held for such special
purpose.[69] Accordingly, it is undisputed that the MOA was not
subject to ratification by the general membership of the
Union. The question to be resolved then is, does the non-
ratification of the MOA in accordance with the Union's
constitution prove fatal to the validity thereof?
It must be remembered that after the MOA was signed, the
members of the Union individually signed contracts
denominated as Reconfirmation of Employment.[70] Cullo did not
dispute the fact that of the 87 members of the Union, who
signed and accepted the Reconfirmation of Employment, 71 are
the respondent employees in the case at bar. Moreover, it bears
to stress that all the employees were assisted by Rojas, DIHFEU-
NFL's president, who even co-signed each contract.
Stipulated in each Reconfirmation of Employment were
the new salary and benefits scheme. In addition, it bears to
Page 86 of 141
stress that specific provisions of the new contract also made
reference to the MOA. Thus, the individual members of the
union cannot feign knowledge of the execution of the MOA.
Each contract was freely entered into and there is no indication
that the same was attended by fraud, misrepresentation or
duress. To this Court's mind, the signing of the individual
Reconfirmation of Employment should, therefore, be deemed
an implied ratification by the Union members of the MOA.
In Planters Products, Inc. v. NLRC,[71] this Court refrained from
declaring a CBA invalid notwithstanding that the same was not
ratified in view of the fact that the employees had enjoyed
benefits under it, thus:
Under Article 231 of the Labor Code and Sec. 1, Rule
IX, Book V of the Implementing Rules, the parties to a
collective [bargaining] agreement are required to
furnish copies of the appropriate Regional Office with
accompanying proof of ratification by the majority of
all the workers in a bargaining unit. This was not done
in the case at bar. But we do not declare the 1984-
1987 CBA invalid or void considering that the
employees have enjoyed benefits from it. They
cannot receive benefits under provisions favorable to
them and later insist that the CBA is void simply
because other provisions turn out not to the liking of
certain employees. x x x. Moreover, the two CBAs
 Page 87 of 141

prior to the 1984-1987 CBA were not also formally
ratified, yet the employees are basing their present
claims on these CBAs. It is iniquitous to receive
benefits from a CBA and later on disclaim its
validity.[72]
Applied to the case at bar, while the terms of the MOA
undoubtedly reduced the salaries and certain benefits
previously enjoyed by the members of the Union, it cannot
escape this Court's attention that it was the execution of the
MOA which paved the way for the re-opening of the hotel,
notwithstanding its financial distress. More importantly, the
execution of the MOA allowed respondents to keep their jobs. It
would certainly be iniquitous for the members of the Union to
sign new contracts prompting the re-opening of the hotel only
to later on renege on their agreement on the fact of the non-
ratification of the MOA.
In addition, it bears to point out that Rojas did not act
unilaterally when he negotiated with respondent's
management. The Constitution and By-Laws of DIHFEU-NFL
clearly provide that the president is authorized to represent the
union on all occasions and in all matters in which representation
of the union may be agreed or required.[73] Furthermore, Rojas
was properly authorized under a Board of Directors
Resolution[74] to negotiate with respondent, the pertinent
portions of which read:
SECRETARY's CERTIFICATE
I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby
certify that, at a meeting of the Board of Directors of
the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly
constituted, the following resolutions were
unanimously approved:
RESOLVED, as it is hereby resolved that
the Manifesto dated 25 Feb. 2001 be
approved ratified and adopted;
RESOLVED, FURTHER, that Mr. Domy
R. Rojas, the president of the DIHFEU-
NFL, be hereby authorized to
negotiate with Waterfront Insular
Hotel Davao and to work for the
latter's acceptance of the proposals
contained in DIHFEU-NFL Manifesto;
and
 Page 88 of 141

RESOLVED, FINALLY, that Mr. Domy R.

Rojas is hereby authorized to sign any
and all documents to implement, and
carry into effect, his foregoing
authority.[75]

Withal, while the scales of justice usually tilt in favor of labor,

the peculiar circumstances herein prevent this Court from
applying the same in the instant petition. Even if our laws
endeavor to give life to the constitutional policy on social justice
and on the protection of labor, it does not mean that every
labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair
play.[76]

WHEREFORE, premises considered, the petition is DENIED. The

Decision dated October 11, 2005, and the Resolution dated July
13, 2006 of the Court of Appeals in consolidated labor cases
docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657,
are AFFIRMED.

SO ORDERED.

G.R. No. L-45824 June 19, 1985
VOLKSCHEL LABOR UNION, petitioner,
vs.
BUREAU OF LABOR RELATIONS, ASSOCIATED LABOR UNION
FOR METAL, WORKERS, DMG, INC., PEOPLE'S CAR, INC.,
KARBAYAN INC., and RTC TRADING, INC., respondents.
Ignacio P. Lacsina for petitioner.
William D. Dichoso for respondent DMG, Inc.
Abraham B. Drapiza for private respondent.
CUEVAS, J.:
Petition for certiorari to review the Resolutions dated January 25, 1977
and March 14, 1977 of the Bureau of Labor Relations.
On April 25. 1977, however, a Supplemental Petition was filed seeking
the issuance of —
(1) A preliminary mandatory injunction commanding
respondents to return to petitioner the union dues
amounting to about P55,000.00 lawfully pertaining to it
but illegally levied upon, collected and handed over by
respondent Bureau, acting through the NLRC sheriff, to
respondent Associated Labor Union for Metal workers,
with the collusion of respondents DMG, Inc., Karbayan,
Inc. and RTC Machineries, Inc.;
(2) A preliminary restraining order prohibiting respondents
from making further delivery to respondent Associated
Labor Union for Metal workers of Union dues collected or
to be collected through check-off from the wages of
petitioner's members by respondents, DMG, Inc.,
Karbayan, Inc., RTC Machineries, Inc., and People's Car,
Page 89 of 141
Inc., under or by virtue of the questioned writ of execution
issued by respondent Bureau, dated April 4, 1977.
Petitioner was once affiliated with the Associated Labor Union for Metal
Workers (ALUMETAL for short). On August 1, 1975, both unions, using
the name Volkschel Labor Union Associated Labor Union for Metal
Workers, jointly entered into a collective bargaining agreement with
respondent companies. One of the subjects dealt with is the payment of
union dues which is provided for in Section 3, Article 1, of the CBA, which
reads:
Section 3. CHECK-OFF. — The COMPANY agrees to
make payroll deductions not softener than twice a month
of UNION membership dues and such special
assessments fees or fines as may be duly authorized by
the UNION, provided that the same is covered by the
individual check-off authorization of the UNION members.
All said deductions shall be promptly transmitted within
five (5) days by the COMPANY to the UNION Treasurer.
The COMPANY shall prepare two (2) checks. One (1)
check will be under the name of the local union as their
local fund including local special assessment funds and
the other check will be for the ALU Regional Office
regarding the remittance of the UNION dues deduction.
On March 10, 1976, a majority of petitioner's members decided to
disaffiliate from respondent federation in order to operate on its own as
an independent labor group pursuant to Article 241 (formerly Article 240)
of the Labor Code of the Philippines, the pertinent portion of which reads:
Incumbent affiliates of existing federations or national
unions may disaffiliate only for the purpose of joining a
federation or national union in the industry or region in
which it properly belongs or for the purpose of operating
as an independent labor group.
Accordingly, a resolution was adopted and signed by petitioner's
members revoking their check-off authorization in favor of ALUMETAL
and notices thereof were served on ALUMETAL and respondent
companies.

Confronted with the predicament of whether or not to continue deducting
from employees' wages and remitting union dues to respondent,
ALUMETAL which wrote respondent companies advising them to
continue deducting union dues and remitting them to said federation,
respondent companies sought the legal opinion of the respondent Bureau
as regards the controversy between the two unions. On November 11,
1976, Med-Arbiter George A. Eduvalla of respondent Bureau rendered a
Resolution which in effect found the disaffiliation legal but at the same
time gave the opinion that, petitioner's members should continue paying
their dues to ALUMETAL in the concept of agency fees. 1
From the said Resolution, of the Med-Arbiter both petitioner and
respondent ALUMETAL appealed to the Director of respondent Bureau.
Petitioner' contended that the Med-Arbiter's opinion to the effect that
petitioner's members remained obligated to pay dues to respondent
ALUMETAL was inconsistent with the dispositive finding that petitioner's
disaffiliation from ALUMETAL was valid. ALUMETAL, on the other hand,
assailed the Resolution in question asserting that the disaffiliation should
have been declared contrary to law.
On January 25, 1977, respondent Bureau, through its Acting Director,
Francisco L. Estrella, REVERSED the Med-Arbiter's Resolution., and
declared that the Bureau recognized "the continued affiliation of
Volkschel Labor Union with the Associated Labor Union for Metal
Workers." 2
Petitioner appealed the Acting Director's Resolution to the Secretary of
Labor know Minister of Labor and Employment) who, treating the appeal
as a Motion for Reconsideration referred the same back to respondent
Bureau On March 14, 1977, the Bureau denied the appeal for lack of
merit.
Hence, the instant petition.
Meanwhile, on April 4, 1977, on motion of ALUMETAL, the then Acting
Secretary of Labor, Amado Gat Inciong, issued a of execution
commanding the Sheriff of the National Labor Relations Commission to
enforce and execute the order of January 25, 1977, which has become
final and executory. 3 Pursuant thereto, the NLRC Sheriff enforced and
implemented the Order of January 25, 1977, as a result of which
respondent companies turned over and handed to respondent federation
Page 90 of 141
the union dues and other assessments in accordance with the check-off
provision of the CBA,
From the pleadings filed and arguments of counsel, the following issues
present themselves for this Court's resolution.
I
Is petitioner union's disaffiliation from respondent
federation valid?
II
Do respondent companies have the right to effect union
dues collections despite revocation by the employees of
the check-off authorization? and
III
Is respondent federation entitled to union dues payments
from petitioner union's members notwithstanding their
disaffiliation from said federation?
We resolve the first issue in the affirmative.
The right of a local union to disaffiliate from its mother union is well-
settled. In previous cases, it has been repeatedly held that 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. 4 This right is consistent with the Constitutional guarantee of
freedom of association (Article IV, Section 7, Philippine Constitution).
Petitioner contends that the disaffiliation was not due to any opportunists
motives on its part. Rather it was prompted by the federation's deliberate
and habitual dereliction of duties as mother federation towards petitioner
union. Employees' grievances were allegedly left unattended to by
respondent federation to the detriment of the employees' rights and
interests.
 Page 91 of 141

In reversing the Med-Arbiter's resolution, respondent Bureau declared:
the Department of Labor is set on a task to restructure the labor
movement to the end that the workers will unite themselves along
industry lines. Carried to its complete fruition, only one union for every
industry will remain to bargain collectively for the workers. The clear
policy therefore even now is to conjoin workers and worker groups, not to
dismember them. 5 This policy is commendable. However, we must not
lose sight of the constitutional mandate of protecting labor and the
workers' right to self-organization. In the implementation and
interpretation of the provisions of the Labor Code and its implementing
regulations, the workingman's welfare should be the primordial and
paramount consideration. In the case at bar, it would go against the spirit
of the labor law to restrict petitioner's right to self-organization due to the
existence of the CBA. We agree with the Med-Arbiter's opinion that "A
disaffiliation does not disturb the enforceability and administration of a
collective agreement; it does not occasion a change of administrators of
the contract nor even an amendment of the provisions thereof." 6 But
nowhere in the record does it appear that the contract entered into by the
petitioner and ALUMETAL prohibits the withdrawal of the former from the
latter.
federation is not entitled to union dues payments from petitioner's
members. "A local union which has validly withdrawn from its affiliation
with the parent association and which continues to represent the
employees of an employer is entitled to the check-off dues under a
collective bargaining contract." 9
WHEREFORE, the Resolutions of the Bureau of Labor Relations of
January 25, 1977 and March 14, 1977 are REVERSED and SET ASIDE.
Respondent ALUMETAL is ordered to return to petitioner union all the
union dues enforced and collected through the NLRC Sheriff by virtue of
the writ of execution dated April 4, 1977 issued by respondent Bureau.
No costs.
SO ORDERED.
Makasiar, Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ.,
concur.

This now brings us to the second issue. Under Section 3, Article I, of the
CBA, the obligation of the respondent companies to deduct and remit
dues to ALUMETAL is conditioned on the individual check-off
authorization of petitioner's members, In other words, ALUMETAL is
entitled to receive the dues from respondent companies as long as
petitioner union is affiliated with it and respondent companies are
authorized by their employees (members of petitioner union) to deduct
union dues. Without said affiliation, the employer has no link to the
mother union. The obligation of an employee to pay union dues is
coterminous with his affiliation or membership. "The employees' check-off
authorization, even if declared irrevocable, is good only as long as they
remain members of the union concerned." 7 A contract between an
employer and the parent organization as bargaining agent for the
employees is terminated by the disaffiliation of the local of which the
employees are members. 8 Respondent companies therefore were wrong
in continuing the check-off in favor of respondent federation since they
were duly notified of the disaffiliation and of petitioner's members having
already rescinded their check-off authorization.

With the view we take on those two issues, we find no necessity in

dwelling further on the last issue. Suffice it to state that respondent
 Page 92 of 141

[G.R. No. 127374. January 31, 2002] This is a petition for certiorari seeking to set aside the 31
[1]

July 1996 Decision of the National Labor Relations

[2]

Commission affirming the 30 June 1995 Decision of the Labor

Arbiter holding petitioners Philippine Skylanders, Inc., Mariles
PHILIPPINE SKYLANDERS, INC., MARILES C.
C. Romulo and Francisco Dakila as well as the elected
[3]

ROMULO and FRANCISCO DAKILA, petitioners, officers of the Philippine Skylanders Employees and Workers
vs. NATIONAL LABOR RELATIONS Association-PAFLU guilty of unfair labor practice and
[4]

COMMISSION, LABOR ARBITER EMERSON ordering them to pay private respondent Philippine
TUMANON, PHILIPPINE ASSOCIATION OF FREE Association of Free Labor Union (PAFLU)
LABOR UNIONS (PAFLU) SEPTEMBER (now September P150,000.00 as damages. Petitioners likewise
[5]

UNIFIED PAFLU) and SERAFIN seek the reversal of the 31 October 1996 Resolution of the
AYROSO, respondents. NLRC denying their Motion for Reconsideration.
In November 1993 the Philippine Skylanders Employees
Association (PSEA), a local labor union affiliated with the
[G.R. No. 127431. January 31, 2002] Philippine Association of Free Labor Unions (PAFLU)
September (PAFLU), won in the certification election
conducted among the rank and file employees of Philippine
PHILIPPINE SKYLANDERS AND WORKERS Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
ASSOCIATION-NCW, MACARIO Employees Association-WATU (PSEA-WATU) immediately
protested the result of the election before the Secretary of
CABANIAS, PEPITO RODILLAS, SHARON
Labor.
CASTILLO, DANILO CARBONEL, MANUEL EDA,
ROLANDO FELIX, JOCELYN FRONDA, RICARDO Several months later, pending settlement of the
LUMBA, JOSEPH MARISOL, NERISA MORTEL, controversy, PSEA sent PAFLU a notice of disaffiliation citing
TEOFILOQUIRONG, LEONARDO REYES, as reason PAFLU's supposed deliberate and habitual
MANUEL CADIENTE and HERMINIA dereliction of duty toward its members. Attached to the notice
RIOSA, petitioners, vs. PHILIPPINE was a copy of the resolution adopted and signed by the
ASSOCIATION OF FREE LABOR UNIONS officers and members of PSEA authorizing their local union to
(PAFLU) SEPTEMBER (now UNIFIED PAFLU) and disaffiliate from its mother federation.
NATIONAL LABOR RELATIONS COMMISSION, PSEA subsequently affiliated itself with the National
SECOND DIVISION, respondents. Congress of Workers (NCW), changed its name to Philippine
Skylanders Employees Association - National Congress of
DECISION Workers (PSEA-NCW), and to maintain continuity within the
BELLOSILLO, J.: organization, allowed the former officers of PSEA-PAFLU to
 Page 93 of 141

continue occupying their positions as elected officers in the
newly-forged PSEA-NCW.
On 17 March 1994 PSEA-NCW entered into a collective
bargaining agreement with PSI which was immediately
registered with the Department of Labor and Employment.
Meanwhile, apparently oblivious to PSEA's shift of
allegiance, PAFLU Secretary General Serafin Ayroso wrote
Mariles C. Romulo requesting a copy of PSI's audited
financial statement.Ayroso explained that with the dismissal
On 1 February 1995 PAFLU amended its complaint by
including the elected officers of PSEA-PAFLU as additional
party respondents. PAFLU averred that the local officers of
PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas,
Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix,
Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa
Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente,
and Herminia Riosa, were equally guilty of unfair labor
practice since they brazenly allowed themselves to be
manipulated and influenced by petitioner Francisco Dakila. [8]

of PSEA-WATUs election protest the time was ripe for the

parties to enter into a collective bargaining agreement.
On 30 July 1994 PSI through its personnel manager
Francisco Dakila denied the request citing as reason PSEA's
disaffiliation from PAFLU and its subsequent affiliation with
NCW.
Agitated by PSI's recognition of PSEA-NCW, PAFLU
through Serafin Ayroso filed a complaint for unfair labor
practice against PSI, its president Mariles Romulo and
personnel manager Francisco Dakila. PAFLU alleged that
aside from PSIs refusal to bargain collectively with its
workers, the company through its president and personnel
PSI, its president Mariles C. Romulo, and its personnel
manager Dakila moved for the dismissal of the complaint on
the ground that the issue of disaffiliation was an inter-union
conflict which lay beyond the jurisdiction of the Labor
Arbiter. On the other hand, PSEA-NCW took the cudgels for
its officers who were being sued in their capacities as former
officers of PSEA-PAFLU and asserted that since PSEA was
no longer affiliated with PAFLU, Ayroso or PAFLU for that
matter had no personality to file the instant complaint. In
support of this assertion, PSEA-NCW submitted in evidence
a Katunayan signed by 111 out of 120 rank and file
employees of PSI disauthorizing Ayroso or PAFLU from
instituting any action in their behalf.
[9]

manager, was also liable for interfering with its employees'

union activities.
[6]
In a Decision rendered on 30 June 1995 the Labor Arbiter
declared PSEA's disaffiliation from PAFLU invalid and held
Two (2) days later or on 6 October 1994 Ayroso filed
PSI, PSEA-PAFLU and their respective officers guilty of
another complaint in behalf of PAFLU for unfair labor practice
unfair labor practice. The Decision explained that despite
against Francisco Dakila. Through Ayroso PAFLU claimed
PSEA-PAFLU's status as the sole and exclusive bargaining
that Dakila was present in PSEA's organizational meeting
agent of PSI's rank and file employees, the company
thereby confirming his illicit participation in union
knowingly sanctioned and confederated with Dakila in actively
activities. Ayroso added that the members of the local union
assisting a rival union. This, according to the Labor Arbiter,
had unwittingly fallen into the manipulative machinations of
was a classic case of interference for which PSI could be held
PSI and were lured into endorsing a collective bargaining
responsible. As PSEA-NCW's personality was not accorded
agreement which was detrimental to their interests. The two
[7]

recognition, its collective bargaining agreement with PSI was

(2) complaints were thereafter consolidated.

struck down for being invalid. Ayroso's legal personality to file
the complaint was sustained on the ratiocination that under
the Labor Code no petition questioning the majority status of
the incumbent bargaining agent shall be entertained outside
of the sixty (60)-day period immediately before the expiry
date of such five (5)-year term of the collective bargaining
agreement that the parties may enter into. Accordingly,
judgment was rendered ordering PSI, PSEA-PAFLU and their
officers to pay PAFLU P150,000.00 in damages. [10]
PSI, PSEA and their respective officers appealed to the
National Labor Relations Commission (NLRC). But the NLRC
upheld the Decision of the Labor Arbiter and conjectured that
since an election protest questioning PSEA-PAFLU's
certification as the sole and exclusive bargaining agent was
pending resolution before the Secretary of Labor, PSEA could
not validly separate from PAFLU, join another national
federation and subsequently enter into a collective bargaining
agreement with its employer-company. [11]
Petitioners separately moved for reconsideration but both
motions were denied. Hence, these petitions for certiorari
filed by PSI and PSEA-NCW together with their respective
officers pleading for a reversal of the NLRC's Decision which
they claimed to have been rendered in excess of
jurisdiction. In due time, both petitions were consolidated.
In these petitions, petitioner PSEA together with its
officers argued that by virtue of their disaffiliation PAFLU as a
mere agent had no authority to represent them before any
proceedings. They further asserted that being an independent
labor union PSEA may freely serve the interest of all its
members and readily disaffiliate from its mother federation
when circumstances so warrant. This right, they averred, was
consistent with the constitutional guarantee of freedom of
association.[12]
Page 94 of 141
For their part, petitioners PSI, Romulo and Dakila alleged
that their decision to bargain collectively with PSEA-NCW
was actuated, to a large extent, by PAFLU's behavior. Having
heard no objections or protestations from PAFLU relative to
PSEA's disaffiliation, they reckoned that PSEA's subsequent
association with NSW was done bona fide. [13]
The Solicitor General filed a Manifestation in Lieu of
Comment recommending that both petitions be granted. In
his Manifestation, the Solicitor General argued against the
Labor Arbiter's assumption of jurisdiction citing the following
as reasons: first, there was no employer-employee
relationship between complainant Ayroso and PSI over which
the Labor Arbiter could rightfully assert his
jurisdiction; second, since the case involved a dispute
between PAFLU as mother federation and PSEA as local
union, the controversy fell within the jurisdiction of the Bureau
of Labor Relations; and lastly, the relationship of principal-
agent between PAFLU and PSEA had been severed by the
local union through the lawful exercise of its right of
disaffiliation.
[14]
Stripped of non-essentials, the fundamental issue tapers
down to the legitimacy of PSEA's disaffiliation. To be more
precise, may PSEA, which is an independent and separate
local union, validly disaffiliate from PAFLU pending the
settlement of an election protest questioning its status as the
sole and exclusive bargaining agent of PSI's rank and file
employees?
At the outset, let it be noted that the issue of disaffiliation
is an inter-union conflict the jurisdiction of which properly lies
with the Bureau of Labor Relations (BLR) and not with the
Labor Arbiter. Nonetheless, with due recognition of this fact,
[15]
we deem it proper to settle the controversy at this instance
since to remand the case to the BLR would only mean
intolerable delay for the parties.

The right of a local union to disaffiliate from its mother
federation is not a novel thesis unillumined by case law. In
the landmark case of Liberty Cotton Mills Workers Union vs.
Liberty Cotton Mills, Inc. we upheld the right of local unions
[16]
to separate from their mother federation on the ground that as
separate and voluntary associations, local unions do not owe
their creation and existence to the national federation to
which they are affiliated but, instead, to the will of their
members. The sole essence of affiliation is to increase, by
collective action, the common bargaining power of local
unions for the effective enhancement and protection of their
interests. Admittedly, there are times when without succor
and support local unions may find it hard, unaided by other
support groups, to secure justice for themselves.
Yet the local unions remain the basic units of association,
free to serve their own interests subject to the restraints
imposed by the constitution and by-laws of the national
federation, and free also to renounce the affiliation upon the
terms laid down in the agreement which brought such
affiliation into existence.
Such dictum has been punctiliously followed since then. [17]
Upon an application of the aforecited principle to the
issue at hand, the impropriety of the questioned Decisions
becomes clearly apparent. There is nothing shown in the
records nor is it claimed by PAFLU that the local union was
expressly forbidden to disaffiliate from the federation nor were
there any conditions imposed for a valid breakaway. As such,
the pendency of an election protest involving both the mother
federation and the local union did not constitute a bar to a
valid disaffiliation. Neither was it disputed by PAFLU that 111
signatories out of the 120 members of the local union, or an
equivalent of 92.5% of the total union membership supported
the claim of disaffiliation and had in fact disauthorized PAFLU
from instituting any complaint in their behalf. Surely, this is
Page 95 of 141
not a case where one (1) or two (2) members of the local
union decided to disaffiliate from the mother federation, but it
is a case where almost all local union members decided to
disaffiliate.
It was entirely reasonable then for PSI to enter into a
collective bargaining agreement with PSEA-NCW. As PSEA
had validly severed itself from PAFLU, there would be no
restrictions which could validly hinder it from subsequently
affiliating with NCW and entering into a collective bargaining
agreement in behalf of its members.
There is a further consideration that likewise argues for
the granting of the petitions. It stands unchallenged that
PAFLU instituted the complaint for unfair labor practice
against the wishes of workers whose interests it was
supposedly protecting. The mere act of disaffiliation did not
divest PSEA of its own personality; neither did it give PAFLU
the license to act independently of the local union. Recreant
to its mission, PAFLU cannot simply ignore the demands of
the local chapter and decide for its welfare. PAFLU might
have forgotten that as an agent it could only act in
representation of and in accordance with the interests of the
local union. The complaint then for unfair labor practice
lodged by PAFLU against PSI, PSEA and their respective
officers, having been filed by a party which has no legal
personality to institute the complaint, should have been
dismissed at the first instance for failure to state a cause of
action.
Policy considerations dictate that in weighing the claims
of a local union as against those of a national federation,
those of the former must be preferred. Parenthetically though,
the desires of the mother federation to protect its locals are
not altogether to be shunned. It will however be to err greatly
against the Constitution if the desires of the federation would
be favored over those of its members. That, at any rate, is the

policy of the law. For if it were otherwise, instead of
protection, there would be disregard and neglect of the lowly
workingmen.
WHEREFORE, the petitions of Philippine Skylanders, Inc.
and of Philippine Skylanders and Workers Association-NCW,
together with their respective officers,
GRANTED. TheDecision of the National Labor Relations
Commission of 31 July 1996 affirming the Decision of the
Labor Arbiter of 30 June 1995 holding petitioners Philippine
Skylanders and Workers Association-NCW, Philippine
Skylanders, Inc. and their respective officers, guilty of unfair
labor practice and ordering them to pay damages to private
respondent Philippine Association of Free Labor Unions
(PAFLU) September (now UNIFIED PAFLU) as well as the
Resolution of 31 October 1996 denying reconsideration is
REVERSED and SET ASIDE. No costs.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr.,
JJ., concur.
Page 96 of 141
[G.R. No. 113907. February 28, 2000]
MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M.
GREENFIELD (MSMG-UWP), ITS PRESIDENT BEDA
MAGDALENA VILLANUEVA, MARIO DAGANIO, DONATO
GUERRERO BELLA P. SANCHEZ, ELENA TOBIS, RHODA
are
TAMAYO,
xxx
DECISION
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised
Rules of Court to annul the decision of the National Labor
Relations Commission in an unfair labor practice case
instituted by a local union against its employer company and
the officers of its national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa
M. Greenfield, Inc., (B) (MSMG), hereinafter referred to as the
"local union", is an affiliate of the private respondent, United
Lumber and General Workers of the Philippines (ULGWP),
referred to as the "federation". The collective bargaining
agreement between MSMG and M. Greenfield, Inc. names
the parties as follows:
"This agreement made and entered into by and
between:
M. GREENFIELD, INC. (B) a corporation
duly organized in accordance with the
laws of the Republic of the Philippines
with office address at Km. 14, Merville

Road, Paraaque, Metro Manila,
represented in this act by its General
manager, Mr. Carlos T. Javelosa,
hereinafter referred to as the Company;
-and-
MALAYANG SAMAHAN NG MGA
MANGGAGAWA SA M. GREENFIELD
(B) (MSMG)/UNITED LUMBER AND
GENERAL WORKERS OF THE
PHILIPPINES (ULGWP), a legitimate
labor organization with address at Suite
404, Trinity Building, T.M. Kalaw Street,
Manila, represented in this act by a
Negotiating Committee headed by its
National President, Mr. Godofredo
Paceno, Sr., referred to in this Agreement
as the UNION." [1]
The CBA includes, among others, the following pertinent
provisions:
Article II-Union Security
Section 1. Coverage and Scope. All employees
who are covered by this Agreement and
presently members of the UNION shall remain
members of the UNION for the duration of this
Agreement as a condition precedent to
continued employment with the COMPANY.
xxxxxx
xxxxxx
Page 97 of 141
Section 4. Dismissal. Any such employee
mentioned in Section 2 hereof, who fails to
maintain his membership in the UNION for non-
payment of UNION dues, for resignation and for
violation of UNIONs Constitution and By-Laws
and any new employee as defined in Section 2
of this Article shall upon written notice of such
failure to join or to maintain membership in the
UNION and upon written recommendation to the
COMPANY by the UNION, be dismissed from
the employment by the COMPANY; provided,
however, that the UNION shall hold the
COMPANY free and blameless from any and all
liabilities that may arise should the dismissed
employee question, in any manner, his
dismissal; provided, further that the matter of the
employees dismissal under this Article may be
submitted as a grievance under Article XIII and,
provided, finally, that no such written
recommendation shall be made upon the
COMPANY nor shall COMPANY be compelled
to act upon any such recommendation within the
period of sixty (60) days prior to the expiry date
of this Agreement conformably to law."
Article IX
Section 4. Program Fund - The Company shall
provide the amount of P10, 000.00 a month for a
continuing labor education program which shall
be remitted to the Federation x x x."[2]
On September 12, 1986, a local union election was held
under the auspices of the ULGWP wherein the herein
petitioner, Beda Magdalena Villanueva, and the other union

officers were proclaimed as winners. Minutes of the said
election were duly filed with the Bureau of Labor Relations on
September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with
the national federation ULGWP by the defeated candidates in
the aforementioned election.
On June 16, 1987, the federation conducted an audit of the
local union funds. The investigation did not yield any
unfavorable result and the local union officers were cleared of
the charges of anomaly in the custody, handling and
disposition of the union funds.
The 14 defeated candidates filed a Petition for
Impeachment/Expulsion of the local union officers with the
DOLE NCR on November 5, 1987, docketed as NCR-OD-M-
11-780-87. However, the same was dismissed on March 2,
1988, by Med-Arbiter Renato Parungo for failure to
substantiate the charges and to present evidence in support
of the allegations.
On April 17, 1988, the local union held a general membership
meeting at the Caruncho Complex in Pasig. Several union
members failed to attend the meeting, prompting the
Executive Board to create a committee tasked to investigate
the non-attendance of several union members in the said
assembly, pursuant to Sections 4 and 5, Article V of the
Constitution and By-Laws of the union, which read:
"Seksyon 4. Ang mga kinukusang hindi pagdalo
o hindi paglahok sa lahat ng hakbangin ng
unyon ng sinumang kasapi o pinuno ay
maaaring maging sanhi ng pagtitiwalag o
Page 98 of 141
pagpapataw ng multa ng hindi hihigit sa P50.00
sa bawat araw na nagkulang.
Seksyon 5. Ang sinumang dadalo na aalis ng
hindi pa natatapos ang pulong ay ituturing na
pagliban at maparusahan ito ng alinsunod sa
Article V, Seksyong 4 ng Saligang Batas na ito.
Sino mang kasapi o pisyales na mahuli and
dating sa takdang oras ng di lalampas sa isang
oras ay magmumulta ng P25.00 at babawasin
sa sahod sa pamamagitan ng salary deduction
at higit sa isang oras ng pagdating ng huli ay
ituturing na pagliban. [3]
On June 27, 1988, the local union wrote respondent company
a letter requesting it to deduct the union fines from the
wages/salaries of those union members who failed to attend
the general membership meeting. A portion of the said letter
stated:
"xxx xxx xxx
In connection with Section 4 Article II of our
existing Collective Bargaining Agreement,
please deduct the amount of P50.00 from each
of the union members named in said annexes
on the payroll of July 2-8, 1988 as fine for their
failure to attend said general membership
meeting." [4]
In a Memorandum dated July 3, 1988, the Secretary General
of the national federation, Godofredo Paceo, Jr. disapproved
the resolution of the local union imposing the P50.00 fine.
The union officers protested such action by the Federation in
a Reply dated July 4, 1988.

On July 11, 1988, the Federation wrote respondent company
a letter advising the latter not to deduct the fifty-peso fine
from the salaries of the union members requesting that:
" x x x any and all future representations by
MSMG affecting a number of members be first
cleared from the federation before
corresponding action by the Company." [5]
The following day, respondent company sent a reply to
petitioner unions request in a letter, stating that it cannot
deduct fines from the employees salary without going against
certain laws. The company suggested that the union refer the
matter to the proper government office for resolution in order
to avoid placing the company in the middle of the issue.
The imposition of P50.00 fine became the subject of bitter
disagreement between the Federation and the local union
culminating in the latters declaration of general autonomy
from the former through Resolution No. 10 passed by the
local executive board and ratified by the general membership
on July 16, 1988.
In retaliation, the national federation asked respondent
company to stop the remittance of the local unions share in
the education funds effective August 1988. This was objected
to by the local union which demanded that the education fund
be remitted to it in full.
The company was thus constrained to file a Complaint for
Interpleader with a Petition for Declaratory Relief with the
Med-Arbitration Branch of the Department of Labor and
Employment, docketed as Case No. OD-M-8-435-88. This
was resolved on October 28, 1988, by Med-Arbiter Anastacio
Bactin in an Order, disposing thus:
Page 99 of 141
"WHEREFORE, premises considered, it is
hereby ordered:
1. That the United Lumber and General Workers
of the Philippines (ULGWP) through its local
union officers shall administer the collective
bargaining agreement (CBA).
2. That petitioner company shall remit the
P10,000.00 monthly labor education program
fund to the ULGWP subject to the condition that
it shall use the said amount for its intended
purpose.
3. That the Treasurer of the MSMG shall be
authorized to collect from the 356 union
members the amount of P50.00 as penalty for
their failure to attend the general membership
assembly on April 17, 1988.
However, if the MSMG Officers could present
the individual written authorizations of the 356
union members, then the company is obliged to
deduct from the salaries of the 356 union
members the P50.00 fine." [6]
On appeal, Director Pura-Ferrer Calleja issued a Resolution
dated February 7, 1989, which modified in part the earlier
disposition, to wit:
"WHEREFORE, premises considered, the
appealed portion is hereby modified to the
extent that the company should remit the
amount of five thousand pesos (P5,000.00) of
the P10,000.00 monthly labor education

program fund to ULGWP and the other
P5,000.00 to MSMG, both unions to use the
same for its intended purpose." [7]
Meanwhile, on September 2, 1988, several local unions (Top
Form, M. Greenfield, Grosby, Triumph International, General
Milling, and Vander Hons chapters) filed a Petition for Audit
and Examination of the federation and education funds of
ULGWP which was granted by Med-Arbiter Rasidali Abdullah
on December 25, 1988 in an Order which directed the audit
and examination of the books of account of ULGWP.
On September 30, 1988, the officials of ULGWP called a
Special National Executive Board Meeting at Nasipit, Agusan
del Norte where a Resolution was passed placing the MSMG
under trusteeship and appointing respondent Cesar Clarete
as administrator.
On October 27, 1988, the said administrator wrote the
respondent company informing the latter of its designation of
a certain Alfredo Kalingking as local union president and
"disauthorizing" the incumbent union officers from
representing the employees. This action by the national
federation was protested by the petitioners in a letter to
respondent company dated November 11, 1988.
On November 13, 1988, the petitioner union officers received
identical letters from the administrator requiring them to
explain within 72 hours why they should not be removed from
their office and expelled from union membership.
On November 26, 1988, petitioners replied:
Page 100 of 141
(a) Questioning the validity of the alleged
National Executive Board Resolution placing
their union under trusteeship;
(b) Justifying the action of their union in
declaring a general autonomy from ULGWP due
to the latters inability to give proper educational,
organizational and legal services to its affiliates
and the pendency of the audit of the federation
funds;
(c) Advising that their union did not commit any
act of disloyalty as it has remained an affiliate of
ULGWP;
(d) Giving ULGWP a period of five (5) days to
cease and desist from further committing acts of
coercion, intimidation and harrassment. [8]
However, as early as November 21, 1988, the officers were
expelled from the ULGWP. The termination letter read:
"Effective today, November 21, 1988, you are
hereby expelled from UNITED LUMBER AND
GENERAL WORKERS OF THE PHILIPPINES
(ULGWP) for committing acts of disloyalty
and/or acts inimical to the interest and violative
to the Constitution and by-laws of your
federation.
You failed and/or refused to offer an explanation
inspite of the time granted to you.
Since you are no longer a member of good
standing, ULGWP is constrained to recommend

for your termination from your employment, and
provided in Article II Section 4, known as UNION
SECURITY, in the Collective Bargaining
agreement." [9]
On the same day, the federation advised respondent
company of the expulsion of the 30 union officers and
demanded their separation from employment pursuant to the
Union Security Clause in their collective bargaining
agreement. This demand was reiterated twice, through letters
dated February 21 and March 4, 1989, respectively, to
respondent company.
Thereafter, the Federation filed a Notice of Strike with the
National Conciliation and Mediation Board to compel the
company to effect the immediate termination of the expelled
union officers.
On March 7, 1989, under the pressure of a threatened strike,
respondent company terminated the 30 union officers from
employment, serving them identical copies of the termination
letter reproduced below:
We received a demand letter dated 21
November 1988 from the United Lumber and
General Workers of the Philippines (ULGWP)
demanding for your dismissal from employment
pursuant to the provisions of Article II, Section 4
of the existing Collective Bargaining Agreement
(CBA). In the said demand letter, ULGWP
informed us that as of November 21, 1988, you
were expelled from the said federation "for
committing acts of disloyalty and/or acts inimical
to the interest of ULGWP and violative to its
Page 101 of 141
Constitution and By-laws particularly Article V,
Section 6, 9, and 12, Article XIII, Section 8."
In subsequent letters dated 21 February and 4
March 1989, the ULGWP reiterated its demand
for your dismissal, pointing out that
notwithstanding your expulsion from the
federation, you have continued in your
employment with the company in violation of
Sec. 1 and 4 of Article II of our CBA, and of
existing provisions of law.
In view thereof, we are left with no alternative
but to comply with the provisions of the Union
Security Clause of our CBA. Accordingly, we
hereby serve notice upon you that we are
dismissing you from your employment with M.
Greenfield, Inc., pursuant to Sections 1 and 4,
Article II of the CBA effective immediately."[10]
On that same day, the expelled union officers assigned in the
first shift were physically or bodily brought out of the company
premises by the companys security guards. Likewise, those
assigned to the second shift were not allowed to report for
work. This provoked some of the members of the local union
to demonstrate their protest for the dismissal of the said union
officers. Some union members left their work posts and
walked out of the company premises.
On the other hand, the Federation, having achieved its
objective, withdrew the Notice of Strike filed with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with
the NCMB, DOLE, Manila, docketed as Case No. NCMB-

NCR-NS-03-216-89, alleging the following grounds for the
strike:
(a) Discrimination
(b) Interference in union activities
(c) Mass dismissal of union officers and shop
stewards
(d) Threats, coercion and intimidation
(e) Union busting
The following day, March 9, 1989, a strike vote referendum
was conducted and out of 2, 103 union members who cast
their votes, 2,086 members voted to declare a strike.
On March 10, 1989, the thirty (30) dismissed union officers
filed an urgent petition, docketed as Case No. NCMB-NCR-
NS-03-216-89, with the Offfice of the Secretary of the
Department of Labor and Employment praying for the
suspension of the effects of their termination from
employment. However, the petition was dismissed by then
Secretary Franklin Drilon on April 11, 1989, the pertinent
portion of which stated as follows:
"At this point in time, it is clear that the dispute at
M. Greenfield is purely an intra-union matter. No
mass lay-off is evident as the terminations have
been limited to those allegedly leading the
secessionist group leaving MSMG-ULGWP to
form a union under the KMU. xxx
xxx xxx xxx
Page 102 of 141
WHEREFORE, finding no sufficient jurisdiction
to warrant the exercise of our extraordinary
authority under Article 277 (b) of the Labor
Code, as amended, the instant Petition is hereby
DISMISSED for lack of merit.
SO ORDERED." [11]
On March 13 and 14, 1989, a total of 78 union shop stewards
were placed under preventive suspension by respondent
company. This prompted the union members to again stage a
walk-out and resulted in the official declaration of strike at
around 3:30 in the afternoon of March 14, 1989. The strike
was attended with violence, force and intimidation on both
sides resulting to physical injuries to several employees, both
striking and non-striking, and damage to company properties.
The employees who participated in the strike and allegedly
figured in the violent incident were placed under preventive
suspension by respondent company. The company also sent
return-to-work notices to the home addresses of the striking
employees thrice successively, on March 27, April 8 and April
31, 1989, respectively. However, respondent company
admitted that only 261 employees were eventually accepted
back to work. Those who did not respond to the return-to-
work notice were sent termination letters dated May 17, 1989,
reproduced below:
M. Greenfield Inc., (B)
Km. 14, Merville Rd., Paraaque, M.M.
May 17, 1989
xxx

On March 14, 1989, without justifiable cause
and without due notice, you left your work
assignment at the prejudice of the Companys
operations. On March 27, April 11, and April 21,
1989, we sent you notices to report to the
Company. Inspite of your receipt of said notices,
we have not heard from you up to this date.
Accordingly, for your failure to report, it is
construed that you have effectively abandoned
your employment and the Company is,
therefore, constrained to dismiss you for said
cause.
Very truly yours,
M. GREENFIELD, INC., (B)
By:
WENZEL STEPHEN LIGOT
Asst. HRD Manager" [12]
On August 7, 1989, the petitioners filed a verified complaint
with the Arbitration Branch, National Capital Region, DOLE,
Manila, docketed as Case No. NCR-00-09-04199-89,
charging private respondents of unfair labor practice which
consists of union busting, illegal dismissal, illegal suspension,
interference in union activities, discrimination, threats,
intimidation, coercion, violence, and oppresion.
After the filing of the complaint, the lease contracts on the
respondent companys office and factory at Merville
Subdivision, Paraaque expired and were not renewed. Upon
Page 103 of 141
demand of the owners of the premises, the company was
compelled to vacate its office and factory.
Thereafter, the company transferred its administration and
account/client servicing department at AFP-RSBS Industrial
Park in Taguig, Metro Manila. For failure to find a suitable
place in Metro Manila for relocation of its factory and
manufacturing operations, the company was constrained to
move the said departments to Tacloban, Leyte. Hence, on
April 16, 1990, respondent company accordingly notified its
employees of a temporary shutdown. in operations.
Employees who were interested in relocating to Tacloban
were advised to enlist on or before April 23, 1990.
The complaint for unfair labor practice was assigned to Labor
Arbiter Manuel Asuncion but was thereafter reassigned to
Labor Arbiter Cresencio Ramos when respondents moved to
inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in
compliance with the union security clause of the collective
bargaining agreement, Labor Arbiter Cresencio Ramos
dismissed the complaint.
Petitioners then appealed to the NLRC. During its pendency,
Commissioner Romeo Putong retired from the service,
leaving only two commissioners, Commissioner Vicente
Veloso III and Hon. Chairman Bartolome Carale in the First
Division. When Commissioner Veloso inhibited himself from
the case, Commissioner Joaquin Tanodra of the Third
Division was temporarily designated to sit in the First Division
for the proper disposition of the case.
The First Division affirmed the Labor Arbiters disposition.
With the denial of their motion for reconsideration on January

28, 1994, petitioners elevated the case to this Court,
attributing grave abuse of discretion to public respondent
NLRC in:
I. UPHOLDING THE DISMISSAL OF THE
UNION OFFICERS BY RESPONDENT
COMPANY AS VALID;
II. HOLDING THAT THE STRIKE STAGED
BYTHE PETITIONERS AS ILLEGAL;
III. HOLDING THAT THE PETITIONER
EMPLOYEES WERE DEEMED TO HAVE
ABANDONED THEIR WORK AND HENCE,
VALIDLY DISMISSED BY RESPONDENT
COMPANY; AND
IV. NOT FINDING RESPONDENT COMPANY
AND RESPONDENT FEDERATION OFFICERS
GUILTY OF ACTS OF UNFAIR LABOR
PRACTICE.
Notwithstanding the several issues raised by the petitioners
and respondents in the voluminous pleadings presented
before the NLRC and this Court, they revolve around and
proceed from the issue of whether or not respondent
company was justified in dismissing petitioner employees
merely upon the labor federations demand for the
enforcement of the union security clause embodied in their
collective bargaining agreement.
Before delving into the main issue, the procedural flaw
pointed out by the petitioners should first be resolved.
Page 104 of 141
Petitioners contend that the decision rendered by the First
Division of the NLRC is not valid because Commissioner
Tanodra, who is from the Third Division, did not have any
lawful authority to sit, much less write the ponencia, on a
case pending before the First Division. It is claimed that a
commissioner from one division of the NLRC cannot be
assigned or temporarily designated to another division
because each division is assigned a particular territorial
jurisdiction. Thus, the decision rendered did not have any
legal effect at all for being irregularly issued.
Petitioners argument is misplaced. Article 213 of the Labor
Code in enumerating the powers of the Chairman of the
National Labor Relations Commission provides that:
"The concurrence of two (2) Commissioners of a
division shall be necessary for the
pronouncement of a judgment or resolution.
Whenever the required membership in a division
is not complete and the concurrence of two (2)
commissioners to arrive at a judgment or
resolution cannot be obtained, the Chairman
shall designate such number of additional
Commissioners from the other divisions as may
be necessary."
It must be remembered that during the pendency of the case
in the First Division of the NLRC, one of the three
commissioners, Commissioner Romeo Putong, retired,
leaving Chairman Bartolome Carale and Commissioner
Vicente Veloso III. Subsequently, Commissioner Veloso
inhibited himself from the case because the counsel for the
petitioners was his former classmate in law school. The First
Division was thus left with only one commissioner. Since the
law requires the concurrence of two commisioners to arrive at

a judgment or resolution, the Commission was constrained to
temporarily designate a commissioner from another division
to complete the First Division. There is nothing irregular at all
in such a temporary designation for the law empowers the
Chairman to make temporary assignments whenever the
required concurrence is not met. The law does not say that a
commissioner from the first division cannot be temporarily
assigned to the second or third division to fill the gap or vice
versa. The territorial divisions do not confer exclusive
jurisdiction to each division and are merely designed for
administrative efficiency.
Going into the merits of the case, the court finds that the
Complaint for unfair labor practice filed by the petitioners
against respondent company which charges union busting,
illegal dismissal, illegal suspension, interference in union
activities, discrimination, threats, intimidation, coercion,
violence, and oppression actually proceeds from one main
issue which is the termination of several employees by
respondent company upon the demand of the labor
federation pursuant to the union security clause embodied in
their collective bargaining agreement.
Petitioners contend that their dismissal from work was
effected in an arbitrary, hasty, capricious and illegal manner
because it was undertaken by the respondent company
without any prior administrative investigation; that, had
respondent company conducted prior independent
investigation it would have found that their expulsion from the
union was unlawful similarly for lack of prior administrative
investigation; that the federation cannot recommend the
dismissal of the union officers because it was not a principal
party to the collective bargaining agreement between the
company and the union; that public respondents acted with
grave abuse of discretion when they declared petitioners
Page 105 of 141
dismissals as valid and the union strike as illegal and in not
declaring that respondents were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the
thirty dismissed employees who were former officers of the
federation have no cause of action against the company, the
termination of their employment having been made upon the
demand of the federation pursuant to the union security
clause of the CBA; the expelled officers of the local union
were accorded due process of law prior to their expulsion
from their federation; that the strike conducted by the
petitioners was illegal for noncompliance with the
requirements; that the employees who participated in the
illegal strike and in the commission of violence thereof were
validly terminated from work; that petitioners were deemed to
have abandoned their employment when they did not
respond to the three return to work notices sent to them; that
petitioner labor union has no legal personality to file and
prosecute the case for and on behalf of the individual
employees as the right to do so is personal to the latter; and
that, the officers of respondent company cannot be liable
because as mere corporate officers, they acted within the
scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the
dismissed union officers were validly and legally terminated
because the dismissal was effected in compliance with the
union security clause of the CBA which is the law between
the parties. And this was affimed by the Commission on
appeal. Moreover, the Labor Arbiter declared that
notwithstanding the lack of a prior administrative investigation
by respondent company, under the union security clause
provision in the CBA, the company cannot look into the
legality or illegality of the recommendation to dismiss by the

union nd the obligation to dismiss is ministerial on the part of
the company. [13]
This ruling of the NLRC is erroneous. Although this Court has
ruled that union security clauses embodied in the collective
bargaining agreement may be validly enforced and that
dismissals pursuant thereto may likewise be valid, this does
not erode the fundamental requirement of due process. The
reason behind the enforcement of union security clauses
which is the sanctity and inviolability of contracts cannot
[14]
override ones right to due process.
In the case of Cario vs. National Labor Relations
Commission, this Court pronounced that while the company,
[15]
under a maintenance of membership provision of the
collective bargaining agreement, is bound to dismiss any
employee expelled by the union for disloyalty upon its written
request, this undertaking should not be done hastily and
summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing.
"The power to dismiss is a normal prerogative of
the employer. However, this is not without
limitation. The employer is bound to exercise
caution in terminating the services of his
employees especially so when it is made upon
the request of a labor union pursuant to the
Collective Bargaining Agreement, xxx.
Dismissals must not be arbitrary and capricious.
Due process must be observed in dismissing an
employee because it affects not only his position
but also his means of livelihood. Employers
should respect and protect the rights of their
employees, which include the right to labor."
Page 106 of 141
In the case under scrutiny, petitioner union officers were
expelled by the federation for allegedly commiting acts of
disloyalty and/or inimical to the interest of ULGWP and in
violation of its Constitution and By-laws. Upon demand of the
federation, the company terminated the petitioners without
conducting a separate and independent investigation.
Respondent company did not inquire into the cause of the
expulsion and whether or not the federation had sufficient
grounds to effect the same. Relying merely upon the
federations allegations, respondent company terminated
petitioners from employment when a separate inquiry could
have revealed if the federation had acted arbitrarily and
capriciously in expelling the union officers. Respondent
companys allegation that petitioners were accorded due
process is belied by the termination letters received by the
petitioners which state that the dismissal shall
be immediately effective.
As held in the aforecited case of Cario, "the right of an
employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy
with either the company or his own union is not wiped away
by a union security clause or a union shop clause in a
collective bargaining agreement. An employee is entitled to
be protected not only from a company which disregards his
rights but also from his own union the leadership of which
could yield to the temptation of swift and arbitrary expulsion
from membership and mere dismissal from his job."
While respondent company may validly dismiss the
employees expelled by the union for disloyalty under the
union security clause of the collective bargaining agreement
upon the recommendation by the union, this dismissal should
not be done hastily and summarily thereby eroding the
employees right to due process, self-organization and

security of tenure. The enforcement of union security clauses
is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due
process. Even on the assumption that the federation had
[16]
valid grounds to expell the union officers, due process
requires that these union officers be accorded a separate
hearing by respondent company.
In its decision, public respondent also declared that if
complainants (herein petitioners) have any recourse in law,
their right of action is against the federation and not against
the company or its officers, relying on the findings of the
Labor Secretary that the issue of expulsion of petitioner union
officers by the federation is a purely intra-union matter.
Again, such a contention is untenable. While it is true that the
issue of expulsion of the local union officers is originally
between the local union and the federation, hence, intra-
union in character, the issue was later on converted into a
termination dispute when the company dismissed the
petitioners from work without the benefit of a separate notice
and hearing. As a matter of fact, the records reveal that the
the termination was effective on the same day that the the
termination notice was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty
Cotton Mills, Inc. , the Court held the company liable for the
[17]
payment of backwages for having acted in bad faith in
effecting the dismissal of the employees.
"xxx Bad faith on the part of the respondent
company may be gleaned from the fact that the
petitioner workers were dismissed hastily and
summarily. At best, it was guilty of a tortious act,
for which it must assume solidary liability, since
Page 107 of 141
it apparently chose to summarily dismiss the
workers at the unions instance secure in the
unions contractual undertaking that the union
would hold it free from any liability arising from
such dismissal."
Thus, notwithstanding the fact that the dismissal was at the
instance of the federation and that it undertook to hold the
company free from any liability resulting from such a
dismissal, the company may still be held liable if it was remiss
in its duty to accord the would-be dismissed employees their
right to be heard on the matter.
Anent petitioners contention that the federation was not a
principal party to the collective bargaining agreement
between the company and the union, suffice it to say that the
matter was already ruled upon in the Interpleader case filed
by respondent company. Med-Arbiter Anastacio Bactin thus
ruled:
After a careful examination of the facts and
evidences presented by the parties, this Officer
hereby renders its decision as follows:
1.) It appears on record that in the Collective
Bargaining Agreement (CBA) which took effect
on July 1, 1986, the contracting parties are M.
Greenfield, Inc. (B) and Malayang Samahan ng
Mga Manggagawa sa M. Greenfield, Inc. (B)
(MSMG)/United Lumber and General Workers of
the Philippines (ULGWP). However, MSMG was
not yet a registered labor organization at the
time of the signing of the CBA. Hence, the union
referred to in the CBA is the ULGWP." [18]

Likewise on appeal, Director Pura Ferrer-Calleja put the issue
to rest as follows:
It is undisputed that ULGWP is the certified sole
and exclusive collective bargaining agent of all
the regular rank-and-file workers of the
company, M. Greenfield, Inc. (pages 31-32 of
the records).
It has been established also that the company
and ULGWP signed a 3-year collective
bargaining agreement effective July 1, 1986 up
to June 30, 1989. [19]
Although the issue of whether or not the federation had
reasonable grounds to expel the petitioner union officers is
properly within the original and exclusive jurisdiction of the
Bureau of Labor Relations, being an intra-union conflict, this
Court deems it justifiable that such issue be nonetheless
ruled upon, as the Labor Arbiter did, for to remand the same
to the Bureau of Labor Relations would be to intolerably delay
the case.
The Labor Arbiter found that petitioner union officers were
justifiably expelled from the federation for committing acts of
disloyalty when it "undertook to disaffiliate from the federation
by charging ULGWP with failure to provide any legal,
educational or organizational support to the local. x x x and
declared autonomy, wherein they prohibit the federation from
interfering in any internal and external affairs of the local
union."[20]
It is well-settled that findings of facts of the NLRC are entitled
to great respect and are generally binding on this Court, but it
is equally well-settled that the Court will not uphold erroneous
Page 108 of 141
conclusions of the NLRC as when the Court finds insufficient
or insubstantial evidence on record to support those factual
findings. The same holds true when it is perceived that far too
much is concluded, inferred or deduced from the bare or
incomplete facts appearing of record. [21]
In its decision, the Labor Arbiter declared that the act of
disaffiliation and declaration of autonomy by the local union
was part of its "plan to take over the respondent federation."
This is purely conjecture and speculation on the part of public
respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union
or declare its autonomy. A local union, being a separate and
voluntary association, is free to serve the interests of all its
members including the freedom to disaffiliate or declare its
autonomy from the federation to which it belongs when
circumstances warrant, in accordance with the constitutional
guarantee of freedom of association. [22]
The purpose of affiliation by a local union with a mother union
or a federation
"xxx is to increase by collective action the
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." [23]

Thus, a local union which has affiliated itself with a federation
is free to sever such affiliation anytime and such disaffiliation
cannot be considered disloyalty. In the absence of specific
provisions in the federations constitution prohibiting
disaffiliation or the declaration of autonomy of a local union, a
local may dissociate with its parent union. [24]
The evidence on hand does not show that there is such a
provision in ULGWPs constitution. Respondents reliance
upon Article V, Section 6, of the federations constitution is not
right because said section, in fact, bolsters the petitioner
unions claim of its right to declare autonomy:
Section 6. The autonomy of a local union
affiliated with ULGWP shall be respected insofar
as it pertains to its internal affairs, except as
provided elsewhere in this Constitution.
There is no disloyalty to speak of, neither is there any
violation of the federations constitution because there is
nothing in the said constitution which specifically prohibits
disaffiliation or declaration of autonomy. Hence, there cannot
be any valid dismissal because Article II, Section 4 of the
union security clause in the CBA limits the dismissal to only
three (3) grounds, to wit: failure to maintain membership in
the union (1) for non-payment of union dues, (2) for
resignation; and (3) for violation of the unions Constitution
and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave
weight to the fact that on February 26, 1989, the petitioners
declared as vacant all the responsible positions of ULGWP,
filled these vacancies through an election and filed a petition
for the registration of UWP as a national federation. It should
be pointed out, however, that these occurred after the
Page 109 of 141
federation had already expelled the union officers. The
expulsion was effective November 21, 1988. Therefore, the
act of establishing a different federation, entirely separate
from the federation which expelled them, is but a normal
retaliatory reaction to their expulsion.
With regard to the issue of the legality or illegality of the
strike, the Labor Arbiter held that the strike was illegal for the
following reasons: (1) it was based on an intra-union dispute
which cannot properly be the subject of a strike, the right to
strike being limited to cases of bargaining deadlocks and
unfair labor practice (2) it was made in violation of the "no
strike, no lock-out" clause in the CBA, and (3) it was attended
with violence, force and intimidation upon the persons of the
company officials, other employees reporting for work and
third persons having legitimate business with the company,
resulting to serious physical injuries to several employees
and damage to company property.
On the submission that the strike was illegal for being
grounded on a non-strikeable issue, that is, the intra-union
conflict between the federation and the local union, it bears
reiterating that when respondent company dismissed the
union officers, the issue was transformed into a termination
dispute and brought respondent company into the picture.
Petitioners believed in good faith that in dismissing them
upon request by the federation, respondent company was
guilty of unfair labor pratice in that it violated the petitioners
right to self-organization. The strike was staged to protest
respondent companys act of dismissing the union officers.
Even if the allegations of unfair labor practice are
subsequently found out to be untrue, the presumption of
legality of the strike prevails.
[25]

Another reason why the Labor Arbiter declared the strike
illegal is due to the existence of a no strike no lockout
provision in the CBA. Again, such a ruling is erroneous. A no
strike, no lock out provision can only be invoked when the
strike is economic in nature, i.e. to force wage or other
concessions from the employer which he is not required by
law to grant. Such a provision cannot be used to assail the
[26]
legality of a strike which is grounded on unfair labor practice,
as was the honest belief of herein petitioners. Again, whether
or not there was indeed unfair labor practice does not affect
the strike.
On the allegation of violence committed in the course of the
strike, it must be remembered that the Labor Arbiter and the
Commission found that "the parties are agreed that there
were violent incidents x x x resulting to injuries to both sides,
the union and management." The evidence on record show
[27]
that the violence cannot be attributed to the striking
employees alone for the company itself employed hired men
to pacify the strikers. With violence committed on both sides,
the management and the employees, such violence cannot
be a ground for declaring the strike as illegal.
With respect to the dismissal of individual petitioners, the
Labor Arbiter declared that their refusal to heed respondents
recall to work notice is a clear indication that they were no
longer interested in continuing their employment and is
deemed abandonment. It is admitted that three return to work
notices were sent by respondent company to the striking
employees on March 27, April 11, and April 21, 1989 and that
261 employees who responded to the notice were admittted
back to work.
However, jurisprudence holds that for abandonment of work
to exist, it is essential (1) that the employee must have failed
Page 110 of 141
to report for work or must have been absent without valid or
justifiable reason; and (2) that there must have been a clear
intention to sever the employer-employee relationship
manifested by some overt acts. Deliberate and unjustified
[28]
refusal on the part of the employee to go back to his work
post amd resume his employment must be established.
Absence must be accompanied by overt acts unerringly
pointing to the fact that the employee simply does not want to
work anymore. And the burden of proof to show that there
[29]
was unjustified refusal to go back to work rests on the
employer.
In the present case, respondents failed to prove that there
was a clear intention on the part of the striking employees to
sever their employer-employee relationship. Although
admittedly the company sent three return to work notices to
them, it has not been substantially proven that these notices
were actually sent and received by the employees. As a
matter of fact, some employees deny that they ever received
such notices. Others alleged that they were refused entry to
the company premises by the security guards and were
advised to secure a clearance from ULGWP and to sign a
waiver. Some employees who responded to the notice were
allegedly told to wait for further notice from respondent
company as there was lack of work.
Furthermore, this Court has ruled that an employee who took
steps to protest his lay-off cannot be said to have abandoned
his work. The filing of a complaint for illegal dismissal is
[30]
inconsistent with the allegation of abandonment. In the case
under consideration, the petitioners did, in fact, file a
complaint when they were refused reinstatement by
respondent company.

Anent public respondents finding that there was no unfair
labor practice on the part of respondent company and
federation officers, the Court sustains the same. As earlier
discussed, union security clauses in collective bargaining
agreements, if freely and voluntarily entered into, are valid
and binding. Corrolarily, dismissals pursuant to union security
clauses are valid and legal subject only to the requirement of
due process, that is, notice and hearing prior to dismissal.
Thus, the dismissal of an employee by the company pursuant
to a labor unions demand in accordance with a union security
agreement does not constitute unfair labor practice. [31]
However, the dismissal was invalidated in this case because
of respondent companys failure to accord petitioners with due
process, that is, notice and hearing prior to their termination.
Also, said dismissal was invalidated because the reason
relied upon by respondent Federation was not valid.
Nonetheless, the dismissal still does not constitute unfair
labor practice.
Lastly, the Court is of the opinion, and so holds, that
respondent company officials cannot be held personally liable
for damages on account of the employees dismissal because
the employer corporation has a personality separate and
distinct from its officers who merely acted as its agents.
It has come to the attention of this Court that the 30-day prior
notice requirement for the dismissal of employees has been
repeatedly violated and the sanction imposed for such
violation enunciated in Wenphil Corporation vs. NLRC has [32]
become an ineffective deterrent. Thus, the Court recently
promulgated a decision to reinforce and make more effective
the requirement of notice and hearing, a procedure that must
be observed before termination of employment can be legally
effected.
Page 111 of 141
In Ruben Serrano vs. NLRC and Isetann Department
Store (G.R. No. 117040, January 27, 2000), the Court ruled
that an employee who is dismissed, whether or not for just or
authorized cause but without prior notice of his termination, is
entitled to full backwages from the time he was terminated
until the decision in his case becomes final, when the
dismissal was for cause; and in case the dismissal was
without just or valid cause, the backwages shall be computed
from the time of his dismissal until his actual reinstatement. In
the case at bar, where the requirement of notice and hearing
was not complied with, the aforecited doctrine laid down in
the Serrano case applies.
WHEREFORE, the Petition is GRANTED; the decision of the
National Labor Relations Commission in case No. NCR-00-
09-04199-89 is REVERSED and SET ASIDE; and the
respondent company is hereby ordered to immediately
reinstate the petitioners to their respective positions. Should
reinstatement be not feasible, respondent company shall pay
separation pay of one month salary for every year of service.
Since petitioners were terminated without the requisite written
notice at least 30 days prior to their termination, following the
recent ruling in the case of Ruben Serrano vs. National Labor
Relations Commission and Isetann Department Store, the
respondent company is hereby ordered to pay full backwages
to petitioner-employees while the Federation is also ordered
to pay full backwages to petitioner-union officers who were
dismissed upon its instigation. Since the dismissal of
petitioners was without cause, backwages shall be computed
from the time the herein petitioner employees and union
officers were dismissed until their actual reinstatement.
Should reinstatement be not feasible, their backwages shall
be computed from the time petitioners were terminated until
the finality of this decision. Costs against the respondent
company.

G.R. No. L-43495-99 January 20, 1990
TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE ENCINAS, JOSE
LUIS TRIBINO, FELIPE DURAN, MANUEL MANGYAO, MAMERTO
CAHUCOM, NEMESIO BARRO, TEODULFO CAPAGNGAN,
VICTORINO ABORRO, VIDAL MANTOS, DALMACIO DALDE, LUCIO
PIASAN, CANUTO LABADAN, TERESO ROMERDE, CONRADO
ENGALAN, SALVADOR NERVA, BERNARDO ENGALAN,
BONIFACIO CAGATIN, BENEDICTO VALDEZ, EUSEBIO SUPILANAS,
ALFREDO HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO,
ZACARIAS DAMING, PRUDENCIO LADION, FULGENCIO
BERSALUNA, ALBERTO PERALES, ROMEO MAGRAMO,
GODOFREDO CAMINOS, GILDARDO DUMAS, JORGE SALDIVAR,
GENARO MADRIO, SEGUNDINO KUIZON, LUIS SANDOVAL,
NESTOR JAPAY, ROGELIO CUIZON, RENATO ANTIPADO,
GREGORIO CUEVO, MARTIN BALAZUELA, CONSTANCIO CHU,
CRISPIN TUBLE, FLORENCIO CHIU, FABIAN CAHUCOM, EMILIANO
VILLAMOR, RESTITUTO HANDAYAN, VICTORINO ESPEDILLA,
NOEL CHUA, ARMANDO ALCORANO, ELEUTERIO TAGUIK,
SAMSON CRUDA, DANILO CASTRO, CENON VALLENAS, DANILO
CAWALING, SIMPLICIO GALLEROS, PERFECTO CUIZON,
PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES,
REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO CAGATIN,
TEODORO ORENCIO, ARMANDO LUAYON, JAIME NERVA,
NARCISO CUIZON, ALFREDO DEL ROSARIO, EDUARDO LORENZO,
PEDRO ARANGO, VICENTE SUPANGAN, JACINTO BANAL AND
BONIFACIO PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE, ARTURO
DILAG, MARCELINO LONTOK JR., NATIONAL ASSOCIATION OF
TRADE UNIONS (NATU), NATIONAL LABOR RELATIONS
COMMISSION (NLRC), HON. DIEGO P. ATIENZA, GERONIMO Q.
QUADRA, FEDERICO C. BORROMEO, AND HON. BLAS F.
OPLE, respondents.
Pacifico C. Rosal for petitioners.
Marcelino Lontok, Jr. for private respondents.
Dizon, Vitug & Fajardo Law Office for Tropical Hut Food Market, Inc. and
Que.
Page 112 of 141
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 seeking to set aside the
decisions of the public respondents Secretary of Labor and National
Labor Relations Commission which reversed the Arbitrators rulings in
favor of petitioners herein.
The following factual background of this case appears from the record:
On January 2, 1968, the rank and file workers of the Tropical Hut Food
Market Incorporated, referred to herein as respondent company,
organized a local union called the Tropical Hut Employees Union, known
for short as the THEU, elected their officers, adopted their constitution
and by-laws and immediately sought affiliation with the National
Association of Trade Unions (NATU). On January 3, 1968, the NATU
accepted the THEU application for affiliation. Following such affiliation
with NATU, Registration Certificate No. 5544-IP was issued by the
Department of Labor in the name of the Tropical Hut Employees Union —
NATU. It appears, however, that NATU itself as a labor federation, was
not registered with the Department of Labor.
After several negotiations were conducted between THEU-NATU,
represented by its local president and the national officers of the NATU,
particularly Ignacio Lacsina, President, Pacifico Rosal, Executive Vice-
President and Marcelino Lontok, Jr., Vice President, and respondent
Tropical Hut Food Market, Incorporated, thru its President and General
Manager, Cesar Azcona, Sr., a Collective Bargaining Agreement was
concluded between the parties on April 1, 1968, the term of which
expired on March 31, 1971. Said agreement' contained these clear and
unequivocal terms:
This Agreement made and entered into this __________ day of
___________, 1968, by and between:
The Tropical Hut Food Market, Inc., a corporation duly organized
and existing under and by virtue of the laws of the Republic of the
Philippines, with principal office at Quezon City, represented in

this Act by its President, Cesar B. Azcona (hereinafter referred to
as the Company)
—and—
The Tropical Hut Employees Union — NATU, a legitimate labor
organization duly organized and existing in accordance with the
laws of the Republic of the Philippines, and affiliated with the
National Association of Trade Unions, with offices at San Luis
Terraces, Ermita, Manila, and represented in this Act by its
undersigned officers (hereinafter referred to as the UNION)
Witnesseth:
xxx xxx xxx
Article I
Coverage and Effectivity
Sec. 1. The COMPANY recognizes the UNION as the sole and
exclusive collective bargaining agent for all its workers and
employees in all matters concerning wages, hours of work, and
other terms and conditions of employment.
xxx xxx xxx
Article III
Union Membership and Union Check-off
Sec. 1 —. . . Employees who are already members of the UNION
at the time of the signing of this Agreement or who become so
thereafter shall be required to maintain their membership therein
as a condition of continued employment.
xxx xxx xxx
Sec. 3—Any employee who is expelled from the UNION for
joining another federation or forming another union, or who fails
Page 113 of 141
or refuses to maintain his membership therein as required, . . .
shall, upon written request of the UNION be discharged by the
COMPANY. (Rollo, pp. 667-670)
And attached to the Agreement as Appendix "A" is a check-off
Authorization Form, the terms of which are as follows:
We, the undersigned, hereby designate the NATIONAL
Association of Trade Unions, of which the TROPICAL HUT
EMPLOYEES UNION is an affiliate as sole collective bargaining
agent in all matters relating to salary rates, hours of work and
other terms and conditions of employment in the Tropical Hut
Food Market, Inc. and we hereby authorize the said company to
deduct the amount of Four (P 4.00) Pesos each every month as
our monthly dues and to deliver the amount to the Treasurer of
the Union or his duly authorized representatives. (Rollo, pp. 680-
684)
On May 21, 1971, respondent company and THEU-NATU entered into a
new Collective Bargaining Agreement which ended on March 31, 1974.
This new CBA incorporated the previous union-shop security clause and
the attached check-off authorization form.
Sometime in July, 1973, Arturo Dilag, incumbent President of THEU-
NATU, was appointed by the respondent company as Assistant Unit
Manager. On July 24, 1973, he wrote the general membership of his
union that for reason of his present position, he was resigning as
President of the THEU-NATU effective that date. As a consequence
thereof, his Vice-President, Jose Encinas, assumed and discharged the
duties of the presidency of the THEU-NATU.
On December 19,1973, NATU received a letter dated December 15,
1973, jointly signed by the incumbent officers of the local union informing
the NATU that THEU was disaffiliating from the NATU federation. On
December 20, 1973, the Secretary of the THEU, Nemesio Barro, made
an announcement in an open letter to the general membership of the
THEU, concerning the latter's disaffiliation from the NATU and its
affiliation with the Confederation of General Workers (CGW). The letter
was passed around among the members of the THEU-NATU, to which
around one hundred and thirty-seven (137) signatures appeared as

having given their consent to and acknowledgment of the decision to
disaffiliate the THEU from the NATU.
On January 1, 1974, the general membership of the so-called THEU-
CGW held its annual election of officers, with Jose Encinas elected as
President. On January 3, 1974, Encinas, in his capacity as THEU-CGW
President, informed the respondent company of the result of the
elections. On January 9, 1974, Pacifico Rosal, President of the
Confederation of General Workers (CGW), wrote a letter in behalf of
complainant THEU-CGW to the respondent company demanding the
remittance of the union dues collected by the Tropical Hut Food Mart,
Incorporated to the THEU-CGW, but this was refused by the respondent
company.
On January 11, 1974, the NATU thru its Vice-President Marcelino Lontok,
Jr., wrote Vidal Mantos, requiring the latter to assume immediately the
position of President of the THEU-NATU in place of Jose Encinas, but
the position was declined by Mantos. On the same day, Lontok, Jr.,
informed Encinas in a letter, concerning the request made by the NATU
federation to the respondent company to dismiss him (Encinas) in view of
his violation of Section 3 of Article III of the Collective Bargaining
Agreement. Encinas was also advised in the letter that NATU was
returning the letter of disaffiliation on the ground that:
1. Under the restructuring program NOT of the Bureau of Labor
but of the Philippine National Trade Union Center in conjunction
with the NATU and other established national labor centers, retail
clerks and employees such as our members in the Tropical Hut
pertain to Industry II which by consensus, has been assigned
already to the jurisdiction of the NATU;
2. The right to disaffiliate belongs to the union membership who
— on the basis of verified reports received by — have not even
been consulted by you regarding the matter;
3. Assuming that the disaffiliation decision was properly reached;
your letter nevertheless is unacceptable in view of Article V,
Section 1, of the NATU Constitution which provides that
"withdrawal from the organization shall he valid provided three (3)
months notice of intention to withdraw is served upon the National
Executive Council." (p. 281, Rollo)
Page 114 of 141
In view of NATU's request, the respondent company, on the same day,
which was January 11, 1974, suspended Encinas pending the application
for clearance with the Department of Labor to dismiss him. On January
12, 1974, members of the THEU-CGW passed a resolution protesting the
suspension of Encinas and reiterated their ratification and approval of
their union's disaffiliation from NATU and their affiliation with the
Confederation of General Workers (CGW). It was Encinas' suspension
that caused the filing of NLRC Case No. LR-2511 on January 11, 1974
against private respondents herein, charging them of unfair labor
practice.
On January 15,1974, upon the request of NATU, respondent company
applied for clearance with the Secretary of Labor to dismiss the other
officers and members of THEU-CGW. The company also suspended
them effective that day. NLRC Case No. LR-2521 was filed by THEU-
CGW and individual complainants against private respondents for unfair
labor practices.
On January 19, 1974, Lontok, acting as temporary chairman, presided
over the election of officers of the remaining THEU-NATU in an
emergency meeting pending the holding of a special election to be called
at a later date. In the alleged election, Arturo Dilag was elected acting
THEU-NATU President together with the other union officers. On
February 14, 1974, these temporary officers were considered as having
been elected as regular officers for the year 1974.
On January 30, 1974, petitioner THEU-CGW wrote a letter to Juan Ponce
Enrile, Secretary of National Defense, complaining of the unfair labor
practices committed by respondent company against its members and
requesting assistance on the matter. The aforementioned letter contained
the signatures of one hundred forty-three (143) members.
On February 24,1974, the secretary of THEU-NATU, notified the entire
rank and file employees of the company that they will be given forty-eight
(48) hours upon receipt of the notice within which to answer and affirm
their membership with THEU-NATU. When the petitioner employees
failed to reply, Arturo Dilag advised them thru letters dated February 26,
March 2 and 5, 1974, that the THEU-NATU shall enforce the union
security clause set forth in the CBA, and that he had requested
respondent company to dismiss them.

Respondent company, thereafter, wrote the petitioner employees
demanding the latter's comment on Dilag's charges before action was
taken thereon. However, no comment or reply was received from
petitioners. In view of this, Estelita Que, President/General Manager of
respondent company, upon Dilag's request, suspended twenty four (24)
workers on March 5, 1974, another thirty seven (37) on March 8, 1974
and two (2) more on March 11, 1974, pending approval by the Secretary
of Labor of the application for their dismissal.
As a consequence thereof, NLRC Case Nos. LR-2971, LR-3015 and an
unnumbered case were filed by petitioners against Tropical Hut Food
Market, Incorporated, Estelita Que, Hernando Sarmiento and Arturo
Dilag.
It is significant to note that the joint letter petition signed by sixty-seven
(67) employees was filed with the Secretary of Labor, the NLRC
Chairman and Director of Labor Relations to cancel the words NATU
after the name of Tropical Hut Employee Union under Registration
Certificate No. 5544 IP. Another letter signed by one hundred forty-six
(146) members of THEU-CGW was sent to the President of the
Philippines informing him of the unfair labor practices committed by
private respondents against THEU-CGW members.
After hearing the parties in NLRC Cases Nos. 2511 and 2521 jointly filed
with the Labor Arbiter, Arbitrator Daniel Lucas issued an order dated
March 21, 1974, holding that the issues raised by the parties became
moot and academic with the issuance of NLRC Order dated February 25,
1974 in NLRC Case No. LR-2670, which directed the holding of a
certification election among the rank and file workers of the respondent
company between the THEU-NATU and THEU-CGW. He also ordered:
a) the reinstatement of all complainants; b) for the respondent company
to cease and desist from committing further acts of dismissals without
previous order from the NLRC and for the complainant Tropical Hut
Employees UNION-CGW to file representation cases on a case to case
basis during the freedom period provided for by the existing CBA
between the parties (pp. 91-93, Rollo).
With regard to NLRC Case Nos. LR-2971, LR-3015, and the unnumbered
case, Arbitrator Cleto T. Villatuya rendered a decision dated October 14,
1974, the dispositive portion of which states:
Page 115 of 141
Premises considered, a DECISION is hereby rendered ordering
respondent company to reinstate immediately the sixty three (63)
complainants to their former positions with back wages from the
time they were illegally suspended up to their actual
reinstatement without loss of seniority and other employment
rights and privileges, and ordering the respondents to desist from
further committing acts of unfair labor practice. The respondent
company's application for clearance filed with the Secretary of
Labor to terminate the subject complainants' services effective
March 20 and 23, 1974, should be denied.
SO ORDERED. (pp. 147-148, Rollo)
From the orders rendered above by Abitrator Daniel Lucas in NLRC
Cases No. LR-2511 and LR-2521 and by Arbitrator Cleto Villatuya in
NLRC Cases Nos. LR-2971, LR-3015, and the unnumbered case, all
parties thereto, namely, petitioners herein, respondent company, NATU
and Dilag appealed to the National Labor Relations Commission.
In a decision rendered on August 1, 1975, the National Labor Relations
Commission found the private respondents' appeals meritorious, and
stated, inter alia:
WHEREFORE, in view of the foregoing premises, the Order of
Arbitrator Lucas in NLRC CASE NOS. LR-2511, 2521 and the
decision of Arbitrator Villatuya in NLRC CASE NOS. LR-2971,
3015 and the unnumbered Case are hereby REVERSED.
Accordingly, the individual complainants are deemed to have lost
their status as employees of the respondent company. However,
considering that the individual complainants are not presumed to
be familiar with nor to have anticipated the legal mesh they would
find themselves in, after their "disaffiliation" from National
Association of Trade Unions and the THEU-NATU, much less the
legal consequences of the said action which we presume they
have taken in all good faith; considering, further, that the thrust of
the new orientation in labor relations is not towards the
punishment of acts violative of contractual relations but rather
towards fair adjustments of the resulting complications; and
considering, finally, the consequent economic hardships that
would be visited on the individual complainants, if the law were to
be strictly enforced against them, this Commission is constrained

to be magnanimous in this instant, notwithstanding its obligation
to give full force and effect to the majesty of the law, and hereby
orders the respondent company, under pain of being cited for
contempt for failure to do so, to give the individual complainants a
second chance by reemploying them upon their voluntary
reaffirmation of membership and loyalty to the Tropical Hut
Employees Union-NATU and the National Association of Trade
Unions in the event it hires additional personnel.
SO ORDERED. (pp. 312-313, Rollo)
The petitioner employees appealed the decision of the respondent
National Labor Relations Commission to the Secretary of Labor. On
February 23, 1976, the Secretary of Labor rendered a decision affirming
the findings of the Commission, which provided inter alia:
We find, after a careful review of the record, no sufficient
justification to alter the decision appealed from except that portion
of the dispositive part which states:
. . . this Commission . . . hereby orders respondent
company under pain of being cited for contempt for failure
to do so, to give the individual complainants a second
chance by reemploying them upon their voluntary
reaffirmation of membership and loyalty to the Tropical
Hut Employees UNION-NATU and the National
Association of Trade Union in the event it hires additional
personnel.
Compliance by respondent of the above undertaking is not
immediately feasible considering that the same is based on an
uncertain event, i.e., reemployment of individual complainants "in
the event that management hires additional personnel," after they
shall have reaffirmed their loyalty to THEU-NATU, which is
unlikely.
In lieu of the foregoing, and to give complainants positive relief
pursuant to Section 9, Implementing Instruction No. 1. dated
November 9, 1972, respondent is hereby ordered to grant to all
the individual complainants financial assistance equivalent to one
(1) month salary for every year of service.
Page 116 of 141
WHEREFORE, with the modification as above indicated, the
Decision of the National Labor Relations Commission is hereby
affirmed.
SO ORDERED.(pp. 317-318, Rollo)
From the various pleadings filed and arguments adduced by petitioners
and respondents, the following issues appear to be those presented for
resolution in this petition to wit: 1) whether or not the petitioners failed to
exhaust administrative remedies when they immediately elevated the
case to this Court without an appeal having been made to the Office of
the President; 2) whether or not the disaffiliation of the local union from
the national federation was valid; and 3) whether or not the dismissal of
petitioner employees resulting from their unions disaffiliation for the
mother federation was illegal and constituted unfair labor practice on the
part of respondent company and federation.
We find the petition highly meritorious.
The applicable law then is the Labor Code, PD 442, as amended by PD
643 on January 21, 1975, which states:
Art. 222. Appeal — . . .
xxx xxx xxx
Decisions of the Secretary of Labor may be appealed to the
President of the Philippines subject to such conditions or
limitations as the President may direct. (Emphasis ours)
The remedy of appeal from the Secretary of Labor to the Office of the
President is not a mandatory requirement before resort to courts can be
had, but an optional relief provided by law to parties seeking expeditious
disposition of their labor disputes. Failure to avail of such relief shall not
in any way served as an impediment to judicial intervention. And where
the issue is lack of power or arbitrary or improvident exercise thereof,
decisions of the Secretary of Labor may be questioned in
a certiorari proceeding without prior appeal to the President (Arrastre
Security Association —TUPAS v. Ople, No. L-45344, February 20, 1984,
127 SCRA 580). Since the instant petition raises the same issue of grave
abuse of discretion of the Secretary of Labor amounting to lack of or in

excess of jurisdiction in deciding the controversy, this Court can properly
take cognizance of and resolve the issues raised herein.
This brings Us to the question of the legality of the dismissal meted to
petitioner employees. In the celebrated case of Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, L-33187, September 4, 1975, 66
SCRA 512, We held that the validity of the dismissals pursuant to the
union security clause in the collective bargaining agreement hinges on
the validity of the disaffiliation of the local union from the federation.
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 (Volkschel Labor
Union v. Bureau of Labor Relations, No. L-45824, June 19, 1985, 137
SCRA 42).
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 right 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.
Relevant on this point is the basic principle We have repeatedly in
affirmed in many rulings:
. . . 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 member. 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
Page 117 of 141
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. (Adamson
& Adamson, Inc. v. CIR, No. L-35120, January 31, 1984, 127
SCRA 268; Elisco-Elirol Labor Union (NAFLU) v. Noriel, No. L-
41955, December 29, 1977, 80 SCRA 681; Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, Inc., supra).
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 NATU's 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 federation's constitution
preventing disaffiliation of a local union a local may sever its relationship
with its parent (People's Industrial and Commercial Employees and
Workers Organization (FFW) v. People's Industrial and Commercial
Corporation, No. 37687, March 15, 1982, 112 SCRA 440).
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 (pp. 62, 281, Rollo), The alleged non-compliance 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.

Respondent Secretary of Labor, in affirming the decision of the
respondent Commission, concluded that the supposed decision to
disaffiliate was not the subject of a free and open discussion and decision
on the part of the THEU-NATU general membership (p. 305, Rollo). This,
however, is contradicted by the evidence on record. Moreover, We are
inclined to believe Arbitrator Villatuya's findings to the contrary, as
follows:
. . . . However, the complainants refute this allegation by
submitting the following: a) Letter dated December 20, 1.973
signed by 142 members (Exhs. "B to B-5") resolution dated
January 12, 1974, signed by 140 members (Exhs. "H to H-6")
letter dated February 26, 1974 to the Department of Labor signed
by 165 members (Exhs. "I to I-10"); d) letter dated January 30,
1974 to the Secretary of the National Defense signed by 144
members (Exhs. "0 to 0-5") and; e) letter dated March 6, 1974
signed by 146 members addressed to the President of the
Philippines (Exhs. "HH to HH-5"), to show that in several
instances, the members of the THEU-NATU have acknowledged
their disaffiliation from NATU. The letters of the complainants also
indicate that an overwhelming majority have freely and voluntarily
signed their union's disaffiliation from NATU, otherwise, if there
was really deception employed in securing their signatures as
claimed by NATU/ Dilag, it could not be possible to get their
signatures in five different documents. (p. 144, Rollo)
We are aware of the time-honored doctrine that the findings of the NLRC
and the Secretary of Labor are binding on this Court if supported by
substantial evidence. However, in the same way that the findings of facts
unsupported by substantial and credible evidence do not bind this Court,
neither will We uphold erroneous conclusions of the NLRC and the
Secretary of Labor when We find that the latter committed grave abuse of
discretion in reversing the decision of the labor arbiter (San Miguel
Corporation v. NLRC, L-50321, March 13, 1984, 128 SCRA 180). In the
instant case, the factual findings of the arbitrator were correct against that
of public respondents.
Further, there is no merit in the contention of the respondents that the act
of disaffiliation violated the union security clause of the CBA and that
their dismissal as a consequence thereof is valid. A perusal of the
collective bargaining agreements shows that the THEU-NATU, and not
the NATU federation, was recognized as the sole and exclusive collective
Page 118 of 141
bargaining agent for all its workers and employees in all matters
concerning wages, hours of work and other terms and conditions of
employment (pp. 667-706, Rollo). Although NATU was designated as the
sole bargaining agent in the check-off authorization form attached to the
CBA, this simply means it was acting only for and in behalf of its affiliate.
The NATU possessed the status of an agent while the local union
remained the basic principal union which entered into contract with the
respondent company. When the THEU disaffiliated from its mother
federation, the former did not lose its legal personality as the bargaining
union under the CBA. Moreover, the union security clause embodied in
the agreements cannot be used to justify the dismissals meted to
petitioners since it is not applicable to the circumstances obtaining in this
case. The CBA imposes dismissal only in case an employee is expelled
from the union for joining another federation or for forming another union
or who fails or refuses to maintain membership therein. The case at bar
does not involve the withdrawal of merely some employees from the
union but of the whole THEU itself from its federation. Clearly, since there
is no violation of the union security provision in the CBA, there was no
sufficient ground to terminate the employment of petitioners.
Public respondents considered the existence of Arturo Dilag's group as
the remaining true and valid union. We, however, are inclined to agree
instead with the Arbitrator's findings when he declared:
. . . . Much more, the so-called THEU-NATU under Dilag's group
which assumes to be the original THEU-NATU has a very
doubtful and questionable existence not to mention that the
alleged president is performing supervisory functions and not
qualified to be a bona fide member of the rank and file union. (p.
146, Rollo)
Records show that Arturo Dilag had resigned in the past as President of
THEU-NATU because of his promotion to a managerial or supervisory
position as Assistant Unit Manager of respondent Company. Petitioner
Jose Encinas replaced Dilag as President and continued to hold such
position at the time of the disaffiliation of the union from the federation. It
is therefore improper and contrary to law for Dilag to reassume the
leadership of the remaining group which was alleged to be the true union
since he belonged to the managerial personnel who could not be
expected to work for the betterment of the rank and file employees.
Besides, managers and supervisors are prohibited from joining a rank
and file union (Binalbagan Isabela Sugar Co., Inc. (BISCOM) v.

Philippine Association of Free Labor Unions (PAFLU), et al., L-18782,
August 29, 1963, 8 SCRA 700). Correspondingly, if a manager or
supervisor organizes or joins a rank and file union, he will be required to
resign therefrom (Magalit, et al. v. Court of Industrial Relations, et al., L-
20448, May 25, 1965,14 SCRA 72).
Public respondents further submit that several employees who disaffiliate
their union from the NATU subsequently retracted and reaffirmed their
membership with the THEU-NATU. In the decision which was affirmed by
respondent Secretary of Labor, the respondent Commission stated that:
. . . out of the alleged one hundred and seventy-one (171)
members of the THEU-CGW whose signatures appeared in the
"Analysis of Various Documents Signed by Majority Members of
the THEU-CGW, (Annex "T", Complainants), which incidentally
was relied upon by Arbitrator Villatuya in holding that complainant
THEU-CGW commanded the majority of employees in
respondent company, ninety-three (93) of the alleged signatories
reaffirmed their membership with the THEU-NATU and
renounced whatever connection they may have had with other
labor unions, (meaning the complainant THEU-CGW) either
through resolution or membership application forms they have
unwittingly signed." (p. 306, Rollo)
Granting arguendo, that the fact of retraction is true, the evidence on
record shows that the letters of retraction were executed on various dates
beginning January 11, 1974 to March 8, 1974 (pp. 278-280, Rollo). This
shows that the retractions were made more or less after the suspension
pending dismissal on January 11, 1974 of Jose Encinas, formerly THEU-
NATU President, who became THEU-CGW President, and the
suspension pending their dismissal of the other elected officers and
members of the THEU-CGW on January 15, 1974. It is also clear that
some of the retractions occurred after the suspension of the first set of
workers numbering about twenty-four (24) on March 5, 1974. There is no
use in saying that the retractions obliterated the act of disaffiliation as
there are doubts that they were freely and voluntarily done especially
during such time when their own union officers and co-workers were
already suspended pending their dismissal.
Finally, with regard to the process by which the workers were suspended
or dismissed, this Court finds that it was hastily and summarily done
Page 119 of 141
without the necessary due process. The respondent company sent a
letter to petitioners herein, advising them of NATU/Dilag's
recommendation of their dismissal and at the same time giving them
forty-eight (48) hours within which to comment (p. 637, Rollo). When
petitioners failed to do so, respondent company immediately suspended
them and thereafter effected their dismissal. This is certainly not in
fulfillment of the mandate of due process, which is to afford the employee
to be dismissed an opportunity to be heard.
The prerogative of the employer to dismiss or lay-off an employee should
be done without abuse of discretion or arbitrainess, for what is at stake is
not only the employee's name or position but also his means of
livelihood. Thus, the discharge of an employee from his employment is
null and void where the employee was not formally investigated and
given the opportunity to refute the alleged findings made by the company
(De Leon v. NLRC, L-52056, October 30, 1980, 100 SCRA 691).
Likewise, an employer can be adjudged guilty of unfair labor practice for
having dismissed its employees in line with a closed shop provision if
they were not given a proper hearing (Binalbagan-Isabela Sugar Co.,
Inc.,(BISCOM) v. Philippine Association of Free Labor Unions (PAFLU) et
al., L-18782, August 29, 1963, 8 SCRA 700).
In view of the fact that the dispute revolved around the mother federation
and its local, with the company suspending and dismissing the workers at
the instance of the mother federation then, the company's liability should
be limited to the immediate reinstatement of the workers. And since their
dismissals were effected without previous hearing and at the instance of
NATU, this federation should be held liable to the petitioners for the
payment of their backwages, as what We have ruled in the Liberty Cotton
Mills Case (supra).
ACCORDINGLY, the petition is hereby GRANTED and the assailed
decision of respondent Secretary of Labor is REVERSED and SET
ASIDE, and the respondent company is hereby ordered to immediately
reinstate all the petitioner employees within thirty (30) days from notice of
this decision. If reinstatement is no longer feasible, the respondent
company is ordered to pay petitioners separation pay equivalent to one
(1) month pay for every year of service. The respondent NATU federation
is directed to pay petitioners the amount of three (3) years backwages
without deduction or qualification. This decision shall be immediately
executory upon promulgation and notice to the parties. SO ORDERED.
 Page 120 of 141

G.R. No. 87266-69 July 30, 1990 Harbor, Port Area, Manila, filed a Notice of Strike against respondent
Metro Port Service, Inc. ("Metro"), the then arrastre contractor in the
ASSOCIATED WORKERS UNION-PTGWO, petitioner, South Harbor, on the issues, among others, of unfilled vacancies and
vs. union busting. This was docketed as NLRC Case No. NCR-NS-10-288-
THE NATIONAL LABOR RELATIONS COMMISION (EN BANC), 84.
METRO PORT SERVICE, INC., MARINA PORT SERVICES, INC.,
ADRIANO S. YUMUL and 10 OTHER INDIVIDUAL RESPONDENTS On 3 April 1985, the abovementioned case was certified in an Order by
REPRESENTED BY ATTY. EPIFANIO JACOSALEM, respondents. the then Minister of Labor and Employment to the NLRC for compulsory
arbitration; the Order also forbade the holding of strikes or lock-
G.R. Nos. 91223-26 JULY 30, 1990 outs. 1 The case was docketed as Certified NLRC Case No. 0403-85. In
the latter case, one of the demands raised by AWU was that Metro
MANILA PORT SERVICES, INC., petitioner, terminate the employment of respondents Adriano Yumul and ten (10)
vs. others (individual respondents), for having organized, on 26 October
HON. ARTHUR G. AMANSEC AND ADRIANO YUMUL, PABLITO 1984, the Associated Workers Union in Metroport ("AWUM") among the
REANDELAR, MACARIO DE LUNA, JR., ADAN MENDOAZA, SMITH rank-and-file employees of Metro, ostensibly as a local or chapter of
CARLOTA, EMERECIANO VERGARA, ROMEO ABACAN, AWU. AWU had earlier expelled individual respondents from membership
LEONARDO ROMULO, ELINO JOSE, and CATINDIANO CALAUAG in AUW for disloyalty and, pursuant to the closed-shop provision of the
(COLLECTIVELY CALLED AWUM), respondents. existing AWU-Metro collective bargaining agreement ("CBA"), sought the
termination of their employment.
D.T. Dagum, Jr. and P.T. De Quiroz for petitioner in G.R. Nos. 87266-69.
Metro initially resisted AWU's request to terminate the employment of
individual respondents, contending that the termination would be
Ramon N. Nalipay, Jr. for petitioner in G.R. Nos. 91223-26.
premature as individual respondents had not been afforded due process,
and that the termination would be violative of the status quo agreement in
Cruz, Durian, Agabin, Atienza, Alday & Tuason for respondent MPSI. NLRC Case No. NCR-NS-10-288-84. 2 Metro, however, eventually
relented and suspended individual respondents after AWU—despite the
Udarbe & Jacosalem for private respondents in G.R. Nos. 91223-26. express prohibition in the Order dated 3 April 1985—staged a strike
against it. On 18 April 1985, Metro executed a Compromise Agreement
("Agreement") with AWU to end the strike, item No. 2 of which stipulated:

FELICIANO, J.: At the instance of the union, [Metro] agrees to

preventively suspend [individual respondents] effective
These cases have been usually difficult for the Court, not because the issues posed are in themselves immediately. 3
intellectually demanding, but because of problems generated by the procedure adopted by the parties
in coming before this Court. The incidents subject of these cases spawned multiple cases and petitions
before the National Labor Relations Commission ("NLRC"). After the NLRC rendered a consolidated The Agreement was attested to by then Deputy Labor Minister Carmelo
decision, the parties, in turn, filed multiple separate certioraripetitions to the Court — on a staggered
and piecemeal basis. This situation resulted in a number of discrete discussions of issues actually
Noriel.
inter-related, since the Court, at any one time, could only see a small part of the whole picture and
decide only on the basis of what it could see. In what follows, we have tried to put the whole picture
together and to render comprehensive and substantial justice to all the parties.
As a result of Metro's implementation of the Agreement, individual
respondents on 30 April 1985 filed a complaint against Metro, docketed
as NLRC Case No. NCR-4-1372-85. Metro in that case filed in turn a
On 26 October 1984, petitioner Associated Workers Union ("AWU")—
third-party complaint against AWU and its officers.
PTGWO, the then bargaining representative of the dockworkers at South

Metro in April 1985 also filed a complaint for illegal strike with damages
against AWU and its officers, docketed as NLRC Case No. NCR-4-1341-
85. On 21 June 1985, Labor Arbiter Ceferina Diosana in an Order
directed Metro provisionally to reinstate individual respondents pending
resolution of the issues raised therein, with which Order Metro complied.
On 15 July 1985, AWU filed a petition for injunction against Metro,
docketed as NLRC Injunction Case No. 993, praying for issuance of a
temporary restraining order stopping the implementation of the Order of
provisional reinstatement, and for Metro's compliance with the Agreement
providing for the suspension of individual respondents. On 1 August
1985, the NLRC in an En Banc Resolution directed Metro to comply with
the Agreement, and Metro complied and re-suspended individual
respondents. Individual respondents' petition before the NLRC for
preliminary mandatory injunction on 30 August 1985, praying "that
pursuant to the Implementing Rules of Batas Pambansa Blg. 130, [Metro]
be ordered to pay their salaries and allowances from and after their initial
preventive suspension of thirty (30) days and until their actual
reinstatement," was not acted upon.
All the above-mentioned cases, to wit: (a) Certified NLRC Case No.
0403-85 (NCR No. NS-10-288-84); (b) NLRC Case No. NCR-4-1341-85;
(c) NLRC Case No. NCR-4-1372-85; and (d) NLRC Injunction Case No.
993, were ordered consolidated before the NLRC en banc.
On 4 September 1986, the NLRC rendered a consolidated Decision. In
Certified NLRC Case No. 0403-85, the NLRC ruled that: (a) respondent
Metro cannot be compelled to fill up vacancies with AWU's
recommendees; (b) respondent Metro cannot be held liable for union
busting, the issue of the medically impaired workers having become moot
and academic; and (c) the compulsory retirement of AWUs members who
have reached the age of 60 years is a valid exercise of management
prerogative.
In NLRC Case No. NCR-4-1372-85, the NLRC, finding that AWU was a
national union, and that individual respondents have the right to organize
themselves into a local chapter thereof, the formation of which was a
protected activity and could not be considered as disloyalty, held the
suspension or dismissal of individual respondents as illegal and, in
relation to NLRC Injuction Case No. 993, ordered their reinstatement with
backwages, to be paid solidarily by AWU and respondent Metro.
Page 121 of 141
In NLRC Case No. NCR-4-1341-85, the NLRC found the strike staged by
AWU not illegal, holding that AWU was of the belief, although
erroneously, that it could validly stage a strike during the pendency of its
motion for reconsideration of the Minister's Order dated 3 April 1985
enjoining a strike or lockout.
Both AWU and Metro filed separate motions for reconsideration of the
consolidated Decision.
Meanwhile, on 21 July 1986, petitioner Marina Port Services, Inc.
("Marina"), by virtue of a Special Permit issued by the Philippine Ports
Authority, started operations as the arrastre operator at the Manila South
Harbor vice Metro. On November 1986, individual respondents in a
Motion/Manifestation prayed that Marina be included as party-
respondent.
On 27 July 1987, the NLRC in a Resolution denied AWU's and Metro's
motions for reconsideration of the consolidated Decision dated 4
September 1986, but (acting on individual respondents'
Motion/Manifestation) with the modification limiting Metro's liability for
backwages to wages accruing up to July 20, 1986 and ordering Marina to
reinstate individual respondents with backwages and allowances starting
from 21 July 1986. Marina complied with the Resolution by reinstating
individual respondents through its payroll retroactive to 21 July 1986.
AWU thereafter in G.R. Nos. 87266-69 filed with the Court a Petition
for certiorari on 14 March 1989 praying for the reversal of the decision of
the NLRC in NLRC Case No. NCR-NS-10-288-84 and NLRC Injunction
Case No. 993 (praying principally for reversal of the order holding that
respondent Metro could not be compelled to fill up vacancies with AWUs
recommendees) and in NLRC Case No. NCR-4-1372-85 (praying chiefly
for reversal of the order reinstating the eleven [11] private respondents to
their former positions with backwages payable solidarily by AWU and
respondent Metro). These cases (G.R. Nos. 87266-69) were assigned to
the Third Division of the Court.
Marina, meantime, had gone to the Court on certiorari on 14 June 1988
in G.R. Nos. 81256-59 entitled "Marina Port Services, Inc. v. National
Labor Relations Commission, Metro Port Service, Inc, Associated
Workers Union ["AWU"-PTGWO], and Associated Workers Union in
Metro Port [AWUM]" protesting, on grounds of alleged denial of due

process, its inclusion by the NLRC as a party in NLRC Case No. NCR-4-
1372-85 and its being required to reinstate individual respondents with
backwages. In dismissing these cases (G.R. Nos. 81256-59) on 3 August
1988, the Court held that:
. . . [t]he decision to include Marina in the questioned
[NLRC Resolution dated 17 July 1987] is based on Par.
"7" of the Special Permit granted to Marina which states
that "Labor and personnel of previous operator, except
those positions of trust and confidence, shall be absorbed
by the grantee." Besides, the petitioner was able to file
not only a Motion for Reconsideration of the Questioned
Resolution but also a Motion to Set Aside
Motion/Manifestation and Remarks on the Comment of
Metro Port. The lack of due process at the beginning, if
any, was cured by the above motions that the petitioner
was able to file.4
On 13 April 1988, Metro in G.R. No. 82705 (entitled "Metro Port Services,
Inc. v. National Labor Relations Commission, Associated Workers Union-
PTGWO, Marina Port Services, Inc., and Adriano Yumul [and 10 others]")
went to this court again and assailed the NLRC ruling in NLRC Case No.
NCR-4-1372-85 and NLRC Injunction Case No. 993. Metro claimed that it
should not have been held solidary liable with AWU because it had
merely suspended individual respondents pursuant to the Agreement
dated 18 April 1985 it had executed with AWU and, later, had merely
obeyed the Resolution of the NLRC dated 1 August 1985 ordering Metro
to re-suspend individual respondents. In similarly dismissing Metro's
petition, the Court in G.R. No. 82705, held:
. . . Considering that the petitioner was a party to the
compromise agreement with AWU which provided that "at
the instance of the union, the company agrees to
preventively suspend Adriano S. Yumul and eleven
associates effective immediately" and accordingly
suspended the private respondents despite the
suspension being contrary to law, the petitioner should be
made solidarity liable with AWU for the backwages and
allowances that the private respondents may have been
entitled to during their suspension. The petitioner's
liability, however, should not extend to the time that
Page 122 of 141
respondent NLRC ordered it to re-suspend the private
respondents. 5 (Emphasis supplied)
Judgment was entered in G.R. Nos. 81256-59 and G.R. No. 82705 on 23
September 1988 and 4 July 1989, respectively, and the cases were
remanded to the Labor Arbiter of origin for execution.
On 18 September 1989, the Labor Arbiter issued a writ of execution
against Marina to reinstate individual respondents and to pay them the
amount of P154,357.00 representing salary adjustments. Marina moved
to quash the writ of execution questioning the award of P154,357.00, but
without success. Marina thereafter appealed to the NLRC assailing the
Labor Arbiter's refusal to quash the writ of execution.
On 23 November 1989, Marina received an Order from the Executive
Labor Arbiter dated 15 November 1989, requiring the release of any
garnished deposit from its bank, holding that no seasonable appeal from
the 7 November 1989 Order denying Marina's motion to quash had been
taken. Marina filed a Manifestation dated 23 November 1989, arguing
that it had filed an appeal with the NLRC within the 10-day reglementary
period.
On 6 December 1989, the Executive Labor Arbiter issued a writ of
execution requiring Marina: (a) to reinstate individual respondents and to
pay them the amount of P154,357.00 representing salary adjustments;
and (b) to implement and honor the legality of the organization and
registration of AWUM as the local chapter of AWU. Marina then once
more went to the Court in G.R. Nos. 91223-26 and filed a Petition
for certiorari to invalidate the writ of execution, pleading that: (a)
execution had been ordered without due regard for its right of appeal
from the Labor Arbiter's Order; and (b) execution would result in its being
made to pay more than what is called for by the ruling of the Court in
G.R. No. 82705, where the Court affirmed the NLRC ruling that Marina
"should be made solidarily liable with AWU for the backwages and
allowances that the private respondents may have been entitled to during
their suspension [although liability] should not extend to the time that
respondent NLRC ordered it to re-suspend the private respondents."
These cases (G.R. Nos. 91223-26) were assigned to the First Division of
the Court. On 20 December 1989, a temporary restraining order was
issued by the First Division of the Court to enjoin the implementation of
the Executive Labor Arbiter's Order of 6 December 1989.

On 16 April 1990, G.R. Nos. 91223-26 were consolidated with G.R. Nos.
87266-69.
I is evident that individual respondents had failed to muster the
1. Deliberating on the instant Petition for Certiorari, the Court in G.R. Nos.
87266-69 considers that petitioner AWU has failed to show grave abuse
of discretion or any act without or in excess of jurisdiction on the part of
the NLRC in Certified NLRC Case No. 0403-85 (NCR No. NS-10-288-
84). The NLRC was correct there in holding that respondent Metro
cannot be compelled to fill up vacancies with AWU's recommendees, as
the CBA between AWU and respondent Metro granted the latter the right
to "fill or not to fill-up vacancies"; that the issue of the medically impaired
employees had already been raised in another Notice of Strike filed by
AWU against respondent Metro on 16 September 1985, and both parties
had agreed to abide by the recommendation and decision of an
examining physician selected by them; and that the existing CBA grants
respondent Metro the right to compulsorily retire any member of AWU
who had reached 60 years of age, which right has been exercised by
Metro.
2. The NLRC, however, misappreciated the relevant facts in NLRC Case
No. NCR-4-1372-85 and NLRC Injunction Case No. 993. While it is true
that AWUM as a local union, being an entity separate and distinct from
AWU, is free to serve the interest of all its members and enjoys the
freedom to disaffiliate, such right to disaffiliate may be exercised, and is
thus considered a protected labor activity, only when warranted by
circumstances. Generally, a labor union may disaffiliate from the mother
union to form a local or independent union only during the 60-day
freedom period immediately preceding the expiration of the CBA.6 Even
before the onset of the freedom period (and despite the closed-shop
provision in the CBA between the mother union and management)
disaffiliation may still be carried out, but such disaffiliation must be
effected by a majority of the members in the bargaining unit. 7 This
happens when there is a substantial shift in allegiance on the part of the
majority of the members of the union. In such a case, however, the CBA
continues to bind the members of the new or disaffiliated and
independent union up to the CBA's expiration date.8
The record does not show that individual respondents had disaffiliated
during the freedom period. The record does, however, show that only
Page 123 of 141
eleven (11) members of AWU (individual respondents) had decided to
disaffiliate from AWU and form AWUM. Respondent Metro had about
4,000 employees, and around 2,000 of these were members of AWU 9 It
necessary majority in order to justify their disaffiliation. (In fact, it
was only on 5 December 1985 that individual respondents were
finally able to register an independent union called Metroport
Workers Union [MWU]. 10 Even then, in the absence of allegation by
AWUM [MWU] of the exact number of its members, the Court
presumes that only twenty percent [20%] of the employees of Metro
had joined MWU) 11 Thus, in the referendum held on 7 January 1985
at the PTGWO compound (where representatives of the Ministry of
Labor and Employment were present) to determine whether
individual respondents should be expelled from AWU, 1,229
members (out of 1,695 members present) voted for expulsion of
individual respondents. 12
The individual respondents here have failed to present proof of their
allegation that the 1,695 members of AWU were not employees of
respondent Metro alone; the Court therefore presumes that those who
voted for their expulsion were bona fide employees of respondent Metro.
Moreover, individual respondents failed to allege that their expulsion for
disloyalty violated AWU's constitution and by-laws. 13 In sum, the
attempted disaffiliation of the eleven (11) private respondents from the
petitioner mother union and the effort to organize either a new local of the
mother union or an entirely new and separate union, did not, under the
circumstances of this case, constitute protected activities of the eleven
(11) individual respondents.
II
In view of the conclusion reached above in G.R. Nos. 87266-69, i.e., that
AWU was justified in expelling from its membership the eleven (11)
individual respondents, the question now arises: how and to what extent
does such conclusion affect the liability of Metro, and Marina (as
successor-employer)? It will be recalled that the Resolutions of this Court
in G.R. Nos. 81256-59 and 82705 dismissing the Petitions for certiorari of
both Metro and Marina assailing the NLRC consolidated Decision of 4
September 1986 insofar as their (Metro's and Marina's) liability for
reinstatement and backwages of the individual respondents thereunder is
concerned, became final and judgment entered therein, sometime ago.

1. So far as concerns AWU's liability under the NLRC consolidated
Decision, it should in the first place be pointed out that the Court did not
make any pronouncement either in G.R. Nos. 81256-59 or in G.R. No.
82705 concerning AWU's liability. In G.R. No. 82705, the Court merely
acted on the issue raised by petitioner Metro: that Metro should not be
liable at all for reinstatement and backwages considering that Metro was
only pressed into suspending individual respondents because of AWUs
threat to strike. In dismissing Metro's Petition, the Court in G.R. No.
82705 in effect merely held that Metro, whatever the liability of AWU
might be in respect of the expulsion of individual respondents, could not
escape liability by throwing all responsibility upon AWU; and that Metro
could not validly plead that it was under duress when it executed the
Agreement with AWU providing for, among other things, the preventive
suspension of individual respondents.
The Court is, of course, aware that AWU was a party-respondent in both
G.R. Nos. 81256-59 and 82705, and that AWU had in fact filed a
Comment in both G.R. Nos. 81256-59 and 82705. Nonetheless, the
Court did not either in G.R. Nos. 82156-59 or in G.R. No. 82705 in fact
make a determination of the legality of AWU's expulsion of individual
respondents from its membership. The Court in G.R. No. 82705 held only
that the liability of Metro was solidary in nature, i.e., solidary with AWU,
whatever AWU's liability might be; and it may be well to recall
that solidary liability is different from secondary liability. In G.R. Nos.
81256-59, the Court simply held that Marina was properly impleaded in
the underlying cases and could not be absolved from responsibility for
reinstatement and backwages upon the ground of denial of due process.
2. Thus, so far as concerns the liability of Metro and Marina for
reinstatement with backwages of individual respondents under the
consolidated NLRC Decision, the pre-eminent fact is that the Court's
Resolutions in G.R. Nos. 81256-59 and 82705 dismissing their Petitions
are already final. The liabilities of Metro and Marina for reinstatement and
backwages under the consolidated NLRC Decision have become fixed
and definite, with the modification decreed by the Court in G.R. No.
82705 in so far as backwages were concerned. Thus, the conclusion we
today have reached in G.R. Nos. 87266-69 cannot benefit Metro and
Marina and will not dissolve their already fixed and definite liabilities.
3. Turning to the question of the backwages due to the eleven (11)
individual respondents, three (3) different time periods are relevant here
and must be distinguished from one another:
Page 124 of 141
First Period: From 18 April 1985 to 21 June 1985: the
Compromise Agreement between Metro and AWU to end
the strike, in which Metro agreed to preventively suspend
the eleven (11) individual respondents, was effected on
18 April 1985 and implemented immediately. The Labor
Arbiter on 21 June 1985 ordered Metro to reinstate
provisionally the eleven (11) individual respondents and
Metro complied.
Second Period: From 1 August 1985 up to 27 July 1987:
the NLRC, pursuant to the urging of AWU, ordered Metro
to re-suspend the individual respondents on 1 August
1985 and Metro again complied with this Order.
Approximately two (2) years later, on 27 July 1987, NLRC
ordered Metro/Marina to reinstate the individual
respondents and Marina complied by reinstating the
individual respondents on the payroll, i.e., paying their
salaries although they were not allowed to work on their
jobs.
Third Period: From 28 July 1987 to 18 September 1989:
on 18 September 1989, the Labor Arbiter issued the
questioned writ of execution ordering, among other
things, Marina to reinstate formally the individual
respondents.
Under the consolidated NLRC Decision, Metro/Marina are liable for the
backwages accruing during the First and Third Periods above indicated.
In respect of the Second Period, however, the Court in G.R. No. 82705,
as already pointed out earlier, held that Metro/Marina should not be held
liable for backwages accruing during that period. Strictly speaking, in
view of our conclusion above that AWU was justified in expelling
individual respondents from its membership, neither AWU nor
Metro/Marina would be liable to individual respondents for the backwages
accruing during this Second Period.
4. In the interest of substantial and expeditious justice, however, we
believe that the backwages accruing during the Second Period should be
paid and shared by AWU and by Metro Marina, on a 50-50 basis. We
here establish this equitable allocation of ultimate responsibility in order
to forestall further litigation between AWU and Metro/Marina and

individual respondents in respect of claims and countering claims for
payment or reimbursement or contribution and to put a definite end to this
prolonged and costly confrontation among the several parties.
The equitable considerations which impel us to hold AWU liable for one-
half (½) of the backwages during the Second Period include:
(a) the fact that Metro had been reluctant to comply with
the demand of AWU to terminate the services of
individual respondents and had wanted to give the latter
procedural due process, but gave in to the demands of
AWU;
(b) that AWU had pressed Metro very hard and indeed
went on strike against Metro when Metro refused simply
to terminate the services of the individual respondents;
(c) that AWU, instead of waiting for final judicial
determination of the legality of its expulsion of individual
respondents, chose to importune the NLRC to issue the
order requiring the re-suspension of the individual
respondents on 1 August 1985, with which order Metro
eventually complied.
5. Turning to Metro/Marina we note that, apart from the finality of the
Court's Resolutions in G.R. Nos. 81256-59 and 82705, there is
independent basis for holding Metro/Marina responsible for reinstatement
with backwages accruing throughout the three (3) periods above
indicated. The equitable considerations which lead us to hold
Metro/Marina responsible for one-half (½) of the backwages accruing
during the above Second Period relate to the failure of Metro to accord
individual respondents procedural due process by giving them
reasonable opportunity to explain their side before suspending or
dismissing them. Such dismissal was accordingly in violation of the Labor
Code.14Notwithstanding AWU's closed-shop clause in the CBA, Metro
was bound to conduct its own inquiry to determine the existence of
substantial basis for terminating the employment of individual
respondents. 15 That AWU, disregarding the Minister of Labor and
Employment's express order, had threatened to go on strike, and indeed
actually went on strike, if Metro had continued with the services of
Page 125 of 141
individual respondents, did not relieve Metro from the duty to accord
procedural due process to individual respondents. 16
6. The portion of the Writ of Execution issued by the Executive Labor
Arbiter requiring Marina to pay salary differentials in the total amount of
P154,357.00 accruing during the period from 20 July 1986 up to October
1989, should be modified to conform with the above legal and equitable
allocation of liability for the backwages which had accrued during the
three (3) Periods above mentioned during which the individual
respondents were suspended. The salary differentials, as we
understands it, refer to increases in the prevailing wages accruing partly
during the Second Period and partly during the Third Period as above
indicated. In other words, the salary differentials accruing from 20 July
1986 up to 27 July 1987 should be borne on a 50-50 basis by AWU on
the one hand and Metro/Marina on the other. The salary differentials
accruing from 28 July 1987 up to 18 September 1989 shall be borne
exclusively by Marina.
7. The portion of the Writ of Execution issued by the Executive Labor
Arbiter which requires Marina to recognize the legality of the organization
and registration of AWUM (now MWU) as a local chapter of AWU, is
inconsistent with the conclusions we have set forth in Part I above, and
must be deleted. What was in fact eventually established by individual
respondents was a separate, independent union called Metro Port
Workers Union (MWU) which was not entitled, during the time periods
here relevant, to recognition as the bargaining unit in CBA negotiations.
ACCORDINGLY, the Court Resolved:
In G.R. Nos. 87266-69:
(a) to DISMISS the Petition for Certiorari in respect of
Certified NLRC Case No. 0403-855 (NCR-NS-10-288-84)
for lack of merit; and
(b) to GRANT partially the Petition for Certiorari in respect
of NLRC Case No. NCR-4-1372-85 and NLRC Injunction
Case No. 993. The consolidated Decision of the NLRC
dated 4 September 1986 ordering AWU and Marina to
pay solidarily the backwages of individual respondents, as
well as the NLRC Resolution of 27 July 1987 denying
 Page 126 of 141

AWUs and Metro's Motions for Reconsideration, are

hereby MODIFIED so as to require AWU and
Metro/Marina to pay, on a 50-50 basis, to individual
respondents the backwages which accrued during the
Second Period, i.e., from 1 August 1985 up to 27 July
1987.

In G.R. Nos. 91223-26:

to GRANT partially the Petition. The Order of the

Executive Labor Arbiter dated 6 December 1989 is
hereby MODIFIED so as (a) to require AWU and
Metro/Marina on a 50-50 basis to pay the salary
differentials accruing during the period from 20 July 1986
up to 27 July 1987, and Marina alone to pay the salary
differentials accruing from 28 July 1987 up to 31 October
1989, and so as (b) to delete the portion requiring Marina
to recognize AWU. (MWU) as the local chapter of AWU.
The Temporary Restraining Order issued by the Court on
20 December 1989 is hereby LIFTED so as to permit
enforcement of the Order of the Executive Labor Arbiter
as herein modified.

No pronouncement as to costs.

SO ORDERED.

G.R. No. L-50283-84 April 20, 1983
DOLORES VILLAR, ROMEO PEQUITO, DIONISIO RAMOS, BENIGNO
MAMARALDO, ORLANDO ACOSTA, RECITACION BERNUS,
ANSELMA ANDAN, ROLANDO DE GUZMAN and RITA
LLAGAS, petitioners,
vs.
THE HON. AMADO G. INCIONG, as Deputy Minister of the Ministry of
Labor, AMIGO MANUFACTURING INCORPORATED and PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS (PAFLU), respondents.
Aniceto Haber for petitioners.
Roberto T. Neri for respondents.
GUERRERO, J.:
Petition for review by certiorari to set aside the Order dated February 15,
1979 of respondent Deputy Minister Amado G. Inciong affirming the
Decision of the OIC of Regional Office No. 4 dated October 14, 1978
which jointly resolved RO4-Case No. T-IV-3549-T and RO4-Case No. RD
4-4088-77-T.
The facts are as follows:
Petitioners were members of the Amigo Employees Union-PAFLU, a duly
registered labor organization which, at the time of the present dispute,
was the existing bargaining agent of the employees in private respondent
Amigo Manufacturing, Inc. (hereinafter referred to as Company). The
Company and the Amigo Employees Union-PAFLU had a collective
bargaining agreement governing their labor relations, which agreement
was then about to expire on February 28, 1977. Within the last sixty (60)
days of the CBA, events transpired giving rise to the present dispute.
On January 5, 1977, upon written authority of at least 30% of the
employees in the company, including the petitioners, the Federation of
Unions of Rizal (hereinafter referred to as FUR) filed a petition for
certification election with the Med-Arbiter's Office, Regional Office No. 4
Page 127 of 141
of the Ministry of Labor and Employment. The petition was, however,
opposed by the Philippine Association of Free Labor Unions (hereinafter
referred to as PAFLU) with whom, as stated earlier, the Amigo
Employees Union was at that time affiliated. PAFLU's opposition cited the
"Code of Ethics" governing inter-federation disputes among and between
members of the Trade Unions Congress of the Philippines (hereinafter
referred to as TUCP). Consequently, the Med-Arbiter indorsed the case
to TUCP for appropriate action but before any such action could be taken
thereon, the petitioners disauthorized FUR from continuing the petition for
certification election for which reason FUR withdrew the petition.
On February 7, 1977, the same employees who had signed the petition
filed by FUR signed a joint resolution reading in toto as follows:
Sama-Samang Kapasiyahan
1. TUMIWALAG bilang kasaping Unyon ng Philippine
Association of Free Labor Unions (PAFLU) at kaalinsabay
nito, inaalisan namin ang PAFLU ng kapangyarihan na
katawanin kami sa anumang pakikipagkasundo (CBA) sa
Pangasiwaan ng aming pinapasukan at kung sila man ay
nagkasundo o magkakasundo sa kabila ng pagtitiwalag
na ito, ang nasabing kasunduan ay hindi namin
pinagtitibay at tahasang aming itinatakwil/tinatanggihan;
2. BINABAWI namin ang aming pahintulot sa Federation
of Unions of Rizal (FUR) na katawanin kami sa Petition
for Certification Election (RO4-MED Case No. 743-77)
at/o sa sama-samang pakikipagkasundo sa aming
patrons;
3. PANATILIHIN na nagsasarili (independent) ang aming
samahan, AMIGO EMPLOYEES' UNION, alinsunod sa
Artikulo 240 ng Labor Code;
4. MAGHAIN KAAGAD ang aming Unyong nagsasarili, sa
pamumuno ng aming pangsamantalang Opisyal na
kinatawan, si Ginang DOLORES VILLAR, ng Petition for
Certification Election sa Department of Labor, para
kilalanin ang aming Unyong nagsasarili bilang Tanging

kinatawan ng mga manggagawa sa sama-samang
pakikipagkasundo (CBA);
5. BIGYAN ng kopya nito ang bawa't kinauukulan at ang
mga kapasiyahang ito ay magkakabisa sa oras na
matanggap ng mga kinauukulan ang kani-kanilang sipi
nito.1
Immediately thereafter or on February 9, 1977, petitioner Dolores Villar,
representing herself to be the authorized representative of the Amigo
Employees Union, filed a petition for certification election in the Company
before Regional Office No. 4, with the Amigo Employees Union as the
petitioner. The Amigo Employees Union-PAFLU intervened and moved
for the dismissal of the petition for certification election filed by Dolores
Villar, citing as grounds therefor, viz: (a) the petition lacked the
mandatory requisite of at least 30% of the employees in the bargaining
unit; (2) Dolores Villar had no legal personality to sign the petition since
she was not an officer of the union nor is there factual or legal basis for
her claim that she was the authorized representative of the local union;
(3) there was a pending case for the same subject matter filed by the
same individuals; (4) the petition was barred by the new CBA concluded
on February 15, 1977; (5) there was no valid disaffiliation from PAFLU;
and (6) the supporting signatures were procured through false pretenses.
Finding that the petition involved the same parties and causes of action
as the case previously indorsed to the TUCP, the Med-Arbiter dismiss the
petition filed by herein petitioner Villar, which dismissal is still pending
appeal before the Bureau of Labor Relations.
In the meantime, on February 14, 1977, the Amigo Employees Union-
PAFLU called a special meeting of its general membership. A Resolution
was thereby unanimously approved which called for the investigation by
the PAFLU national president, pursuant to the constitution and by-laws of
the Federation, of all of the petitioners and one Felipe Manlapao, for
"continuously maligning, libelling and slandering not only the incumbent
officers but even the union itself and the federation;" spreading 'false
propaganda' that the union officers were 'merely appointees of the
management', and for causing divisiveness in the union.
Pursuant to the Resolution approved by the Amigo Employees Union-
PAFLU, the PAFLU, through its national President, formed a Trial
Page 128 of 141
Committee to investigate the local union's charges against the petitioners
for acts of disloyalty inimical to the interest of the local union, as well as
directing the Trial Committee to subpoena the complainants (Amigo
Employees Union-PAFLU) and the respondents (herein petitioners) for
investigation, to conduct the said investigation and to submit its findings
and recommendations for appropriate action.
And on the same date of February 15, 1977, the Amigo Employees
Union- PAFLU and the Company concluded a new CBA which, besides
granting additional benefits to the workers, also reincorporated the same
provisions of the existing CBA, including the union security clause
reading, to wit:
ARTICLE III
UNION SECURITY WITH RESPECT TO PRESENT
MEMBERS
All members of the UNION as of the signing of this
Agreement shall remain members thereof in good
standing. Therefore, any members who shall resign, be
expelled, or shall in any manner cease to be a member of
the UNION, shall be dismissed from his employment upon
written request of the UNION to the Company. 2
Subsequently, petitioners were summoned to appear
before the PAFLU Trial Committee for the aforestated
investigation of the charges filed against them by the
Amigo Employees Union-PAFLU. Petitioners, however,
did not attend but requested for a "Bill of Particulars" of
the charges, which charges were stated by the Chairman
of the committee as follows:
1. Disaffiliating from PAFLU and affiliating with the
Federation of Unions of Rizal (FUR).
2. Filling petition for certification election with the Bureau
of Labor Relations and docketed as Case No. R04-MED-
830-77 and authorizing a certain Dolores Villar as your
authorized representative without the official sanction of
the mother Federation- PAFLU.

3. Maligning, libelling and slandering the incumbent
officers of the union as well as of the PAFLU Federation.
4. By spreading false propaganda among members of the
Amigo Employees Union-PAFLU that the incumbent
union officers are 'merely appointees' of the management.
5. By sowing divisiveness instead of togetherness among
members of the Amigo Employees Union-PAFLU.
6. By conduct unbecoming as members of the Amigo
Employees Union- PAFLU which is highly prejudicial to
the union as well as to the PAFLU Federation.
All these charges were formalized in a resolution of the
incumbent officers of the Amigo Employees Union-PAFLU
dated February 14, 1977. 3
Not recognizing PAFLU's jurisdiction over their case, petitioners again
refused to participate in the investigation rescheduled and conducted on
March 9, 1979. Instead, petitioners merely appeared to file their Answer
to the charges and moved for a dismissal.
Petitioners contend in their Answer that neither the disaffiliation of the
Amigo Employees Union from PAFLU nor the act of filing the petition for
certification election constitute disloyalty as these are in the exercise of
their constitutional right to self-organization. They further contended that
PAFLU was without jurisdiction to investigate their case since the
charges, being intra-union problems within the Amigo Employees Union-
PAFLU, should be conducted pursuant to the provisions of Article XI,
Sections 2, 3, 4 and 5 of the local union's constitution and by-laws.
The complainants, all of whom were the then incumbent officers of the
Amigo Employees Union-PAFLU, however, appeared and adduced their
evidence supporting the charges against herein petitioners.
Based on the findings and recommendations of the PAFLU trial
committee, the PAFLU President, on March 15, 1977, rendered a
decision finding the petitioners guilty of the charges and disposing in the
last paragraph thereof, to wit,
Page 129 of 141
Excepting Felipe Manlapao, the expulsion from the
AMIGO EMPLOYEES UNION of all the other nine (9)
respondents, Dionisio Ramos, Recitation Bernus, Dolores
Villar, Romeo Dequito, Rolando de Guzman, Anselma
Andan, Rita Llagas, Benigno Mamaradlo and Orlando
Acosta is hereby ordered, and as a consequence the
Management of the employer, AMIGO
MANUFACTURING, INC. is hereby requested to
terminate them from their employment in conformity with
the security clause in the collective bargaining agreement.
Further, the Trial Committee is directed to investigate
Felipe Manlapao when he shall have reported back for
duty. 4
Petitioners appealed the Decision to the PAFLU, citing the same grounds
as before, and in addition thereto, argued that the PAFLU decision
cannot legally invoke a CBA which was unratified, not certified, and
entered into without authority from the union general membership, in
asking the Company to terminate them from their employment. The
appeal was, likewise, denied by PAFLU in a Resolution dated March 28,
1977.
After denying petitioner's appeal, PAFLU on March 28, 1977 sent a letter
to the Company stating, to wit,
We are furnishing you a copy of our Resolution on the
Appeal of the respondent in Administrative Case No. 2,
Series of 1977, Amigo Employees Union-PAFLU vs.
Dionisio Ramos, et al.
In view of the denial of their appeal and the Decision of
March 15, 1977 having become final and executory we
would appreciate full cooperation on your part by
implementing the provision of our CBA on security clause
by terminating the respondents concerned from their
employment.5
This was followed by another letter from PAFLU to the Company dated
April 25, 1977, reiterating the demand to terminate the employment of the
petitioners pursuant to the security clause of the CBA, with a statement

absolving the Company from any liability or damage that may arise from
petitioner's termination.
Acting on PAFLU's demand, the Company informed PAFLU that it will
first secure the necessary clearances to terminate petitioners. By letter
dated April 28, 1977, PAFLU requested the Company to put petitioners
under preventive suspension pending the application for said clearances
to terminate the petitioners, upon a declaration that petitioners' continued
stay within the work premises will "result in the threat to the life and limb
of the other employees of the company."6
Hence, on April 29, 1977, the Company filed the request for clearance to
terminate the petitioners before the Department of Labor, Regional Office
No. 4. The application, docketed as RO4-Case No. 7-IV-3549-T, stated
as cause therefor, "Demand by the Union Pursuant to the Union Security
Clause," and further, as effectivity date, "Termination-upon issuance of
clearance; Suspension-upon receipt of notice of workers
concerned." 7 Petitioners were then informed by memorandum dated April
29, 1977 that the Company has applied for clearance to terminate them
upon demand of PAFLU, and that each of them were placed under
preventive suspension pending the resolution of the said applications.
The security guard was, likewise, notified to refuse petitioners entry into
the work premises. 8
In an earlier development, on April 25, 1977, or five days before
petitioners were placed under preventive suspension, they filed a
complaint with application for preliminary injunction before the same
Regional Office No. 4, docketed as RO4-Case No. RD-4-4088-77-T,
praying that after due notice and hearing, "(1) A preliminary injunction be
issued forthwith to restrain the respondents from doing the act herein
complained of, namely: the dismissal of the individual complainants from
their employment; (2) After due hearing on the merits of the case, an
Order be entered denying and/or setting aside the Decision dated March
15, 1977 and the Resolution dated March 28, 1977, issued by
respondent Onofre P. Guevara, National President of respondent
PAFLU; (3) The Appeal of the individual complainants to the General
Membership of the complainant AMIGO EMPLOYEES UNION, dated
March 22, 1977, pursuant to Sections 2, 3, 4 & 5, Article XI in relation of
Section 1, Article XII of the Union Constitution and By-Laws, be given
due course; and (4) Thereafter, the said preliminary injunction be made
permanent, with costs, and with such further orders/reliefs that are just
and equitable in the premises."9
Page 130 of 141
In these two cases filed before the Regional Office No. 4, the parties
adopted their previous positions when they were still arguing before the
PAFLU trial committee.
On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of
Regional Office No. 4, rendered a decision jointly resolving said two
cases, the dispositive portion of which states, to wit,
IN VIEW OF THE FOREGOING, judgment is hereby
rendered granting the application of the Amigo
Manufacturing, Inc., for clearance to terminate the
employment of Dolores D. Villar, Dionisio Ramos,
Benigno Mamaraldo, Orlando Acosta, Recitacion Bernus,
Anselma Andan, Rolando de Guzman, and Rita Llagas.
The application of oppositors, under RO4-Case No. RD-4-
4088-77, for a preliminary injunction to restrain the Amigo
Manufacturing, Inc. from terminating their employment
and from placing them under preventive suspension, is
hereby DISMISSED. 10
Not satisfied with the decision, petitioners appealed to the Office of the
Secretary of Labor. By Order dated February 15, 1979, the respondent
Amado G. Inciong, Deputy Minister of Labor, dismissed their appeal for
lack of merit. 11
Hence, the instant petition for review, raising the following issues:
A. Is it not error in both constitutional and statutory law by
the respondent Minister when he affirmed the decision of
the RO4-Officer-in-Charge allowing the preventive
suspension and subsequent dismissal of petitioners by
reason of the exercise of their right to freedom of
association?
B. Is it not error in law by the respondent Minister when
he upheld the decision of the RO4 OIC which sustained
the availment of the respondent PAFLU's constitution
over that of the local union constitution in the settlement
of intra-union dispute?

C. Is it not error in law amounting to grave abuse of
discretion by the Minister in affirming the conclusion made
by the RO4 OIC, upholding the legal applicability of the
security clause of a CBA over alleged offenses committed
earlier than its conclusion, and within the 60-day freedom
period of an old CBA? 12
The main thrust of the petition is the alleged illegality of the dismiss of the
petitioners by private respondent Company upon demand of PAFLU
which invoked the security clause of the collective bargaining agreement
between the Company and the local union, Amigo Employees Union-
PAFLU. Petitioners contend that the respondent Deputy Minister acted in
grave abuse of discretion when he affirmed the decision granting the
clearance to terminate the petitioners and dismissed petitioners'
complaint, and in support thereof, allege that their constitutional right to
self-organization had been impaired. Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not open to legal
objection. It is implicit in the freedom of association ordained by the
Constitution. 13 But this Court has laid down the ruling that a closed shop
is a valid form of union security, and such provision in a collective
bargaining agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution. 14
In the case at bar, it appears as an undisputed fact that on February 15,
1977, the Company and the Amigo Employees Union-PAFLU entered
into a Collective Bargaining Agreement with a union security clause
provided for in Article XII thereof which is a reiteration of the same clause
in the old CBA. The quoted stipulation for closed-shop is clear and
unequivocal and it leaves no room for doubt that the employer is bound,
under the collective bargaining agreement, to dismiss the employees,
herein petitioners, for non- union membership. Petitioners became non-
union members upon their expulsion from the general membership of the
Amigo Employees Union-PAFLU on March 15, 1977 pursuant to the
Decision of the PAFLU national president.
We reject petitioners' theory that their expulsion was not valid upon the
grounds adverted to earlier in this Decision. That PAFLU had the
authority to investigate petitioners on the charges filed by their co-
employees in the local union and after finding them guilty as charged, to
expel them from the roll of membership of the Amigo Employees Union-
Page 131 of 141
PAFLU is clear under the constitution of the PAFLU to which the local
union was affiliated. And pursuant to the security clause of the new CBA,
reiterating the same clause in the old CBA, PAFLU was justified in
applying said security clause. We find no abuse of discretion on the part
of the OIC of Regional Office No. 4 in upholding the validity of the
expulsion and on the part of the respondent Deputy Minister of Labor in
sustaining the same. We agree with the OIC's decision, pertinent portion
of which reads:
Stripped of non-essentials, the basic and fundamental
issue in this case tapers down to the determination of
WHETHER OR NOT PAFLU HAD THE AUTHORITY TO
INVESTIGATE OPPOSITORS AND, THEREAFTER,
EXPEL THEM FROM THE ROLL OF MEMBERSHIP OF
THE AMIGO EMPLOYEES UNION-PAFLU.
Recognized and salutary is the principle that when a labor
union affiliates with a mother union, it becomes bound by
the laws and regulations of the parent organization. Thus,
the Honorable Secretary of Labor, in the case of Amador
Bolivar, et al. vs. PAFLU, et al., NLRC Case No. LR-133
& MC-476, promulgated on December 3, 1973, declared-
When a labor union affiliates with a parent organization or
mother union, or accepts a charter from a superior body,
it becomes subject to the laws of the superior body under
whose authority the local union functions. The
constitution, by-laws and rules of the parent body,
together with the charter it issues pursuant thereto to the
subordinate union, constitute an enforceable contract
between the parent body and the subordinate union, and
between the members of the subordinate union inter se.
(Citing Labor Unions, Dangel and Shriber, pp. 279-280).
It is undisputable that oppositors were members of the
Amigo Employees Union at the time that said union
affiliated with PAFLU; hence, under the afore-quoted
principle, oppositors are bound by the laws and
regulations of PAFLU.

Likewise, it is undeniable that in the investigation of the
charges against them, oppositors were accorded 'due
process', because in this jurisdiction, the doctrine is
deeply entrenched that the term 'due process' simply
means that the parties were given the opportunity to be
heard. In the instant case, ample and unmistakable
evidence exists to show that the oppositors were afforded
the opportunity to present their evidence, but they
themselves disdained or spurned the said opportunity
given to them.
PAFLU, therefore, correctly and legally acted when,
pursuant to its Constitution and By-Laws, it conducted
and proceeded with the investigation of the charges
against the oppositors and found them guilty of acts
prejudicial and inimical to the interests of the Amigo
Employees Union- PAFLU, to wit: that of falsely and
maliciously slandering the officers of the union; spreading
false propaganda among the members of the Amigo
Employees Union-PAFLU; calling the incumbent officers
as mere appointees and robots of management; calling
the union company-dominated or assisted union;
committing acts unbecoming of the members of the union
and destructive of the union and its members.
Inherent in every labor union, or any organization for that
matter, is the right of self-preservation. When members of
a labor union, therefore, sow the seeds of dissension and
strife within the union; when they seek the disintegration
and destruction of the very union to which they belong,
they thereby forfeit their rights to remain as members of
the union which they seek to destroy. Prudence and
equity, as well as the dictates of law and justice,
therefore, compelling mandate the adoption by the labor
union of such corrective and remedial measures in
keeping with its laws and regulations, for its preservation
and continued existence; lest by its folly and inaction, the
labor union crumble and fall.
Correctly and legally, therefore, the PAFLU acted when,
after proper investigation and finding of guilt, it decided to
remove the oppositors from the list of members of the
Page 132 of 141
Amigo Employees Union-PAFLU, and thereafter,
recommended to the Amigo Manufacturing, Inc.; the
termination of the employment of the oppositors. 15
We see no reason to disturb the same.
The contention of petitioners that the charges against them being intra-
union problems, should have been investigated in accordance with the
constitution and by-laws of the Amigo Employees Union-PAFLU and not
of the PAFLU, is not impressed with merit. It is true that under the
Implementing Rules and Regulations of the Labor Code, in case of intra-
union disputes, redress must first be sought within the organization itself
in accordance with its constitution and by-laws. However, it has been
held that this requirement is not absolute but yields to exception under
varying circumstances. Thus, in Kapisanan ng mga Manggagawa sa
MRR vs. Hernandez, 20 SCRA 109, We held:
In the case at bar, noteworthy is the fact that the
complaint was filed against the union and its incumbent
officers, some of whom were members of the board of
directors. The constitution and by-laws of the union
provide that charges for any violations thereof shall be
filed before the said board. But as explained by the lower
court, if the complainants had done so the board of
directors would in effect be acting as respondent
investigator and judge at the same time. To follow the
procedure indicated would be a farce under the
circumstances, where exhaustion of remedies within the
union itself would practically amount to a denial of justice
or would be illusory or vain, it will not be insisted upon,
particularly where property rights of the members are
involved, as a condition to the right to invoke the aid of a
court.
The facts of the instant petition stand on all fours with the aforecited case
that the principle therein enunciated applies here as well. In the case at
bar, the petitioners were charged by the officers of the Amigo Employees
Union- PAFLU themselves who were also members of the Board of
Directors of the Amigo Employees Union-PAFLU. Thus, were the
petitioners to be charged and investigated according to the local union's
constitution, they would have been tried by a trial committee of three (3)

elected from among the members of the Board who are themselves the
accusers. (Section 2, Article 11, Constitution of the Local Union).
Petitioners would be in a far worse position had this procedure been
followed. Nonetheless, petitioners admit in their petition that two (2) of the
six (6) charges, i.e. disaffiliation and filing a petition for certification
election, are not intra-union matters and, therefore, are cognizable by
PAFLU.
Petitioners insist that their disaffiliation from PAFLU and filing a petition
for certification election are not acts of disloyalty but an exercise of their
right to self-organization. They contend that these acts were done within
the 60-day freedom period when questions of representation may freely
be raised. Under the peculiar facts of the case, We find petitioners'
insistence untenable.
In the first place, had petitioners merely disaffiliated from the. Amigo
Employees Union-PAFLU, there could be no legal objections thereto for it
was their right to do so. But what petitioners did by the very clear terms of
their "Sama-Samang Kapasiyahan" was to disaffiliate the Amigo
Employees Union-PAFLU from PAFLU, an act which they could not have
done with any effective consequence because they constituted the
minority in the Amigo Employees Union-PAFLU.
Extant from the records is the fact that petitioners numbering ten (10),
were among the ninety-six (96) who signed the "Sama-Samang
Kapasiyahan" whereas there are two hundred thirty four (234) union
members in the Amigo Employees Union-PAFLU. Hence, petitioners
constituted a small minority for which reason they could not have
successfully disaffiliated the local union from PAFLU. Since only 96
wanted disaffiliation, it can be inferred that the majority wanted the union
to remain an affiliate of PAFLU and this is not denied or disputed by
petitioners. The action of the majority must, therefore, prevail over that of
the minority members. 16
Neither is there merit to petitioners' contention that they had the right to
present representation issues within the 60-day freedom period. It is true,
as contended by petitioners, that under Article 257 of the Labor Code and
Section 3, Rule 2, Book 2 of its Implementing Rules, questions of
exclusive bargaining representation are entertainable within the sixty (60)
days prior to the expiry date of an existing CBA, and that they did file a
petition for certification election within that period. But the petition was
Page 133 of 141
filed in the name of the Amigo Employees Union which had not
disaffiliated from PAFLU, the mother union. Petitioners being a mere
minority of the local union may not bind the majority members of the local
union.
Moreover, the Amigo Employees Union, as an independent union, is not
duly registered as such with the Bureau of Labor Relations. The
appealed decision of OIC Leogardo of Regional Office No. 4 states as a
fact that there is no record in the Bureau of Labor Relations that the
Amigo Employees Union (Independent) is registered, and this is not
disputed by petitioners, notwithstanding their allegation that the Amigo
Employees Union is a duly registered labor organization bearing Ministry
of Labor Registration Certification No. 5290-IP dated March 27, 1967. But
the independent union organized after the "Sama-Samang Kapasiyahan"
executed February 7, 1977 could not have been registered earlier, much
less March 27, 1967 under Registration Certificate No. 5290-IP. As such
unregistered union, it acquires no legal personality and is not entitled to
the rights and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration. Article 234 of the New
Labor Code specifically provides:
Art. 234. Requirements of Registration.—Any applicant
labor organization, association, or group of unions or
workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the
certificate of registration. ....
In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40,
We had occasion to interpret Section 23 of R.A. No. 875 (Industrial
Peace Act) requiring of labor unions registration by the Department of
Labor in order to qualify as "legitimate labor organization," and We said:
The theory to the effect that Section 23 of Republic Act
No. 875 unduly curtails the freedom of assembly and
association guaranteed in the Bill of Rights is devoid of
factual basis. The registration prescribed in paragraph (b)
of said section 17 is not a limitation to the right of assembly
or association, which may be exercised with or without
said registration. The latter is merely a condition sine qua
non for the acquisition of legal personality by labor

organizations, associations or unions and the possession
of the 'rights and privileges granted by law to legitimate
labor organizations.' The Constitution does not guarantee
these rights and privileges, much less said personality,
which are mere statutory creations, for the possession
and exercise of which registration is required to protect
both labor and the public against abuses, fraud, or
impostors who pose as organizers, although not truly
accredited agents of the union they purport to represent.
Such requirement is a valid exercise of the police power,
because the activities in which labor organizations,
associations and union or workers are engaged affect
public interest, which should be protected.
Simply put, the Amigo Employees Union (Independent) Which petitioners
claim to represent, not being a legitimate labor organization, may not
validly present representation issues. Therefore, the act of petitioners
cannot be considered a legitimate exercise of their right to self-
organization. Hence, We affirm and reiterate the rationale explained
in Phil Association of Free Labor Unions vs. Sec. of Labor case, supra, in
order to protect legitimate labor and at the same time maintain discipline
and responsibility within its ranks.
The contention of petitioners that the new CBA concluded between
Amigo Employees Union-PAFLU and the Company on February 15, 1977
containing the union security clause cannot be invoked as against the
petitioners for offenses committed earlier than its conclusion, deserves
scant consideration. We find it to be the fact that the union security
clause provided in the new CBA merely reproduced the union security
clause provided in the old CBA about to expire. And since petitioners
were expelled from Amigo Employees Union-PAFLU on March 28, 1982
upon denial of their Motion for Reconsideration of the decision expelling
them, the CBA of February 15, 1977 was already applicable to their case.
The "closed-shop provision" in the CBA provides:
All members of the UNION as of the signing of this
Agreement shall remain members thereof in good
standing. Therefore, any members who shall resign, be
expelled, or shall in any manner cease to be a member of
the UNION, shall be dismissed from his employment upon
written request of the UNION to the Company. (Art. III)
Page 134 of 141
A closed-shop is a valid form of union security, and a provision therefor in
a collective bargaining agreement is not a restriction of the right of
freedom of association guaranteed by the Constitution. (Manalang, et al.
vs. Artex Development Co., Inc., et al., L-20432, October 30, 1967, 21
SCRA 561). Where in a closed-shop agreement it is stipulated that union
members who cease to be in good standing shall immediately be
dismissed, such dismissal does not constitute an unfair labor practice
exclusively cognizable by the Court of Industrial Relations. (Seno vs.
Mendoza, 21 SCRA 1124).
Finally, We reject petitioners' contention that respondent Minister
committed error in law amounting to grave abuse of discretion when he
affirmed the conclusion made by the RO4 OIC, upholding the legal
applicability of the security clause of a CBA over alleged offenses
committed earlier than its conclusion and within the 60-day freedom
period of an old CBA. In the first place, as We stated earlier, the security
clause of the new CBA is a reproduction or reiteration of the same clause
in the old CBA. While petitioners were charged for alleged commission of
acts of disloyalty inimical to the interests of the Amigo Employees Union-
PAFLU in the Resolution of February 14, 1977 of the Amigo Employees
Union- PAFLU and on February 15, 1977 PAFLU and the Company
entered into and concluded a new collective bargaining agreement,
petitioners may not escape the effects of the security clause under either
the old CBA or the new CBA by claiming that the old CBA had expired
and that the new CBA cannot be given retroactive enforcement. To do so
would be to create a gap during which no agreement would govern, from
the time the old contract expired to the time a new agreement shall have
been entered into with the union. As this Court said in Seno vs. Mendoza,
21 SCRA 1124, "without any agreement to govern the relations between
labor and management in the interim, the situation would well be
productive of confusion and result in breaches of the law by either party. "
The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously
needs further citation of the facts and the opinion of the Court, speaking
through Justice Makalintal who later became Chief Justice, and We
quote:
It appears that petitioners other than Januario T. Seno
who is their counsel, were members of the United
Seamen's Union of the Philippines. Pursuant to a letter-
request of the Union stating that they 'had ceased to be
members in good standing' and citing a closed shop
 Page 135 of 141

clause in its bargaining agreement with respondent

Carlos A. Go Thong & Co., the latter dismissed said
petitioners. Through counsel, petitioners requested that
they be reinstated to their former positions and paid their
backwages, otherwise they would picket respondents'
offices and vessels. The request was denied on the
ground that the dismissal was unavoidable under the
terms of the collective bargaining agreement. ...

We, therefore, hold and rule that petitioners, although entitled to

disaffiliate from their union and form a new organization of their own,
must, however, suffer the consequences of their separation from the
union under the security clause of the CBA.

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order appealed

from affirming the joint decision of the OIC of Regional Office No. 4 in
RO4-Case No. T-IV-3549-T and RO4 Case No. RD-4-4088-77-T granting
clearance to terminate petitioners as well as dismissing their complaint
with application for preliminary injunction, is hereby AFFIRMED. No
costs.

SO ORDERED.

G.R. No. L-24189 August 30, 1968
ITOGON-SUYOC MINES, INC., petitioner,
vs.
SANGILO-ITOGON WORKERS' UNION in behalf of BARTOLOME
MAYO, BERNARDO AQUINO, ET AL.,respondents.
Reyes and Cabato for petitioner.
Benjamin C. Rillera for respondents.
SANCHEZ, J.:
Petitioner's appeal seeks reversal of the judgment of the Court of
Industrial Relations (CIR) directing reinstatement of the fifteen individual
respondents "to their former positions or substantially equivalent
employment in the company, with full back wages from the time of their
dismissal to their actual reinstatement, without loss of seniority and other
privileges."
The controversy arose because prior to May 28, 1958, Itogon-Suyoc
Mines, Inc., through its general superintendent Claude Fertig, had been
dismissing from its employ members of respondent Sañgilo-Itogon
Workers' Union (Sañgilo, for short). Fifty-four members of Sañgilo were
already fired when Department of Labor conciliators conferred with
petitioner's representative to explore the possibility of their reinstatement.
Petitioner refused reinstatement, alleged that dismissal of the 54 was for
cause.
On May 28, 1958, sensing that its members were being eased out of
employment one by one, Sañgilo called a strike, accompanied by
picketing carried out at or near petitioner's mine premises in Itogon. Work
was paralyzed. On the fourth or fifth day of the strike, company
policemen drove the strikers out of petitioner's premises. The strike
lasted until about June 2, 1958.
On that day, June 2, 1958, petitioner filed an injunction suit against some
strikers in the Court of First Instance of Baguio (Civil Case No. 774).
Nothing clear appears of record as to the present status of this suit.
On the same day, too, petitioner's officials conferred with the officers of
the other labor union in the company, the Itogon Labor Union. They
Page 136 of 141
hammered out an agreement whereby all strikers were given fifteen (15)
days from said date to return to work. Thru a public address system,
strikers were then urged to go back to their jobs. Notices addressed to
the strikers which read — "All of you are required to report immediately to
your respective work otherwise you will be considered AWOL [absent
without leave] and will be dropped from the rolls"1 were posted on the
Itogon Labor Union bulletin board, the Itogon store, and at 1300
checkpoint — the main entrance to the company's mining premises.
These notices did rot contain the fifteen (15) days' grace period
aforesaid.
On November 18, 1958, a CIR prosecutor in behalf of Sañgilo charged
petitioner and Claude Fertig, its general superintendent, with unfair labor
practice for the dismissal of two company employees A. Manaois and
Jose Baldo on June 9, 1957 and March 5, 1958, respectively, allegedly
because of their affiliation with Sañgilo and for having testified against
petitioner in Certification Case No. 3-MC-Pang.2 The complaint prayed for
reinstatement and back wages. Petitioner asserted just cause in defense.
On October 5, 1960, CIR adjudged that the dismissal of A. Manaois was
just and legal, but that petitioner was guilty of unfair labor practice in
dismissing Jose Baldo. CIR thus ordered Baldo's reinstatement with back
wages. The CIR judgment for Jose Baldo was elevated by petitioner to
this Court.3 On December 24, 1964, we affirmed.
Meanwhile, on March 3, 1961, CIR's prosecutor — on Sañgilo's charge
filed with CIR on July 12, 1960, — lodged an unfair labor practice
complaint against herein petitioner, its general superintendent Claude
Fertig, and the Itogon Labor Union.4 Averment was there made of the
arbitrary dismissal of 107 of Sañgilo's members because of membership
and/or affiliation with said union and for having testified or about to testify
in Certification Case G.R. No. 3-MC-Pang.; that Sañgilo's president,
Bartolome Mayo, was dismissed also because of his refusal to dissolve
the union; and that said company and its general superintendent Claude
Fertig "had given aid and support to ... Itogon Labor Union, another labor
organization" existing in said company "by allowing the officers and
members thereof, to hold meetings inside the mine premises and the
theatre building owned" by the company and also allowing them to use
the company's light facilities — privileges which were denied Sañgilo.
The prayer was for judgment declaring respondents therein guilty of
unfair labor practice; enjoining them from further committing unfair labor
practice acts; ordering the dissolution of Itogon Labor Union, "it being a

company dominated union"; and directing reinstatement of the dismissed
107 employees mentioned in the complaint, with full back wages from the
time of dismissal up to actual reinstatement.
The mining company and Claude Fertig in their answer aver that the May
27, 1958 strike was illegal; that thereafter "many of respondent
company's workers left for their respective home towns, abandoning their
jobs, and never reported for work until the present; that some of the
persons listed in the complaint are still working; and some of them left
respondent company's employ even earlier than May 27, 1958 voluntarily
or were discharged for cause." The company's principal defense is that
the action for reinstatement with back wages is barred by laches.
Itogon Labor Union's defense is that the concessions it enjoyed were in
pursuance of a collective bargaining contract between said union and the
company.
Of the 107 dismissed employees, 10 manifested in writing that they had
never been members of Sañgilo, were actually working with the company
and not interested at all in the prosecution of the suit.5 One of the named
dismissed employees, Graciano Mejia, died on October 26, 1957.6 Of the
remaining individual complainants, only 15 appeared and testified in
court. They were amongst the strikers.
Came the CIR decision of May 20, 1964. Associate Judge Jose S.
Bautista there observed that "the picketing was conducted peacefully, as
the strikers did not commit acts of violence or cause injuries to persons or
damage to property" and that "the union members staged the strike for
the reason that their fellow members were being eased out of
employment little by little by respondent company." .
On the charge that the Itogon Labor Union was company dominated, CIR
declared that "the privilege of respondent union in holding meetings
inside the company's mine premises and theater building, and in using
the company's light facilities, is one of the concessions obtained by said
union in accordance with the collective bargaining agreement entered
into by the respondent Company and the Itogon Labor Union." .
CIR's judgment thus directed "respondent Itogon-Suyoc Mines, Inc. to
reinstate (1) Bartolome Mayo, (2) Bernardo Aquino, (3) Florentino
Ceralde, (4) Marcelo Datuin, (5) Antonio Deogracias, (6) Domingo Deray,
Page 137 of 141
(7) Pedro Espiritu, (8) Mariano Idos, (9) Antonio Laop, (10) Gregorio
Laureta, (11) Chayon Pogay, (12) Roman Quinto, (13) Jose Santos, (14)
Simplicio Tambaoan, and (15) Tomas Valerio, to their former positions or
substantially equivalent employment in the company, with full backwages
from the time of their dismissal to their actual reinstatement, without loss
of seniority and other privileges. The complaint with respect to the
remaining members of complainant Sañgilo-Itogon Workers' Union and
with respect to the company domination charge against respondent
Itogon Labor Union is hereby DISMISSED."
Its motion to reconsider having been denied by CIR en banc, petitioner
appealed to this Court.
1. Petitioner's brief 7 challenges Sañgilo's capacity to sue. Sañgilo, so
petitioner says, ceased to be a legitimate labor union on March 31, 1960
when the Department of Labor cancelled the former's registration permit
for failure to comply with statutory requirements. Contrariwise Sañgilo
avers that at the time the complaint below was filed it was a legitimate
labor organization, and continues to be so. 1äwphï1.ñët
Judicial inquiry was made by CIR on this issue. A subpoena duces
tecum was issued to the registrar of labor organizations of the
Department of Labor requiring him or his duly authorized representative
"[t]o bring with [him] the following: (1) the list of membership of the
Sañgilo-Itogon Workers' Union; (2) the revocation, if any, of the
registration permit of the Sañgilo-Itogon Workers' Union dated March 22,
1960; and (3) the cancellation proceedings of the Sañgilo-Itogon
Workers' Union which took place sometime in 1960."8
Atty. Narciso Fabella, the duly authorized representative, answered the
subpoena. With the record of the cancellation proceedings of Sañgilo
with him, he testified before the CIR hearing officer that on March 31,
1960, Sañgilo's registration permit [No. 2141-IP issued on May 21, 1957]
was cancelled by the Department of Labor under Cancellation
Proceedings 1722;9 that his office then received a motion for
reconsideration of said cancellation; that on April 27, 1960, an order was
issued advising Sañgilo to comply with the requirement it failed to satisfy
and which was the cause of the cancellation of Sañgilo's permit; that on
March 9, 1962, Sañgilo filed a manifestation and motion to lift resolution
with the request that it be given fifteen days within which to present
evidence of compliance; that on March 23, 1962, an order was issued

directing the union to submit, within fifteen days from notice, a copy of its
financial report for the period from May 12, 1957 to May 11, 1958, sworn
to by its treasurer, Ernesto Aragon, pursuant to Sangilo's constitution and
by-laws and Section 17(k) of Republic Act 875; and that no financial
report had been submitted to the Department of Labor.
And then, the witness testified as follows:
ATTY. RILLERA [Counsel for Sañgilo]:
Q Now, Mr. Fabella, per your records, do you have the final order
cancelling the permit of the complainant union, or is the
proceeding still going on?
WITNESS
A As far as the record is concerned, it seems that the proceeding
is still going on because there is no other order pertaining [to] the
non-submittal of the union of the financial report required within
fifteen (15) days.10
So it is, that there is no order final in character cancelling Sañgilo's
registration permit and dropping its name from the roster of legitimate
labor unions. Sangilo's status does not appear in the record to have
changed. Therefore, Sañgilo still enjoys all the rights accorded by law to
a legitimate labor union. One of those rights is the right to sue.1äw phï1.ñët
Even assuming that Sañgilo later lost its registration permit in the course
of the present proceedings, still Sañgilo may continue as a party without
need of substitution of parties, "subject however to the understanding that
whatever decision may be rendered therein will only be binding upon
those members of the union who have not signified their desire to
withdraw from the case before its trial and decision on the merits." 11
Really, we perceive of no reason why the judgment in favor of the fifteen
individual respondent laborers should be overturned simply because the
union of which they were members ceased to be a legitimate labor union.
It cannot be disputed that CIR's prosecutor brought this case not merely
for Sañgilo; it was also on behalf of the 107
employees enumerated therein. This accounts for the fact that CIR's
judgment for reinstatement and backpay was rendered in favor of the
Page 138 of 141
fifteen respondent laborers. To accept petitioner's argument as valid is to
shunt aside substance to give way to form. Error, if any, was harmless. It
does not affect the substantial rights of the parties in interest. It is no
ground for reversal. 12 At this stage this Court may even strike out
Sañgilo-Itogon Workers' Union and leave the fifteen individual
respondents alone. 13
2. Next to be considered is petitioner's claim that respondents were guilty
of splitting their cause of action.
Petitioner argues that the first unfair labor practice suit (CIR Case 50-
ULP- Pang.) heretofore mentioned covers the second unfair labor
practice suit - the case at hand. And this, because "[a]ll acts of unfair
labor practice allegedly committed by the herein petitioner [the company]
prior to November 18, 1958 [when CIR Case 50-ULP-Pang. was filed]
against the members of respondent union [Sañgilo] constituted one
single cause of action." Petitioner continues onto say that since CIR Case
50-ULP-Pang, has been finally decided by this Court in a decision
promulgated on December 24, 1964, said case is a bar to the present
action.
We do not go along with petitioner.
The rule against splitting of a cause of action applies only where the
actions are between the same parties. 14 Here, the parties in the two
cases aforecited are different. The first case involves only two (2)
laborers, namely, Jose Baldo and A. Manaois the second refers to the
claim of other laborers numbering 107 in all. These two cases, it is true,
were brought in the name of Sañgilo. However, the real parties in interest
in both cases are the dismissed employees. Sañgilo merely represented
its members before CIR. 15 CIR found that the members "are not situated
under similar circumstances", and that their alleged dismissal "took pace
on different dates". 16 Each one of these employees has a cause of action
arising from his particular dismissal. And the cause of action of one is
separate and distinct from the others. 17 Although, of course, they may be
joined and brought in the name of the union. Res judicata has not
attached.
3. Petitioner's averment that it gave out notices for a return to work would
not be of help to its cause. On this point, the court said: "The Court is
aware of the offer of the company to the strikers to return to work, but it is

even more cognizant of the fact that passions and emotions among the
striking employees were running high at the heat of the strike." 18 The
validity of this reasoning we do not find cause to dispute.
And then, evidence there is that the individual respondents were driven
out of and denied admission into the company's mine premises because
they staged a strike. They were turned out of the bunkhouses they rented
in the premises as living quarters. They were virtually locked out.
Evidence there is, too, that because of the strike the laborers were not
allowed to go back to their jobs. 19
4. Petitioner seeks to nullify individual respondents' right to reinstatement
and backpay upon the ground that they are guilty of laches. Really the
present case was started after the lapse of almost two years and two
months after the strike. 1äwphï1.ñët
Laches has been defined as "such delay in enforcing one's rights as
works disadvantage to another" and "in a general sense is the neglect,
for an unreasonable and unexplained length of time, under
circumstances permitting diligence, to do what in law should have been
done." 20 As we go into the core of this problem, we are reminded that for
the doctrine of stale demand to apply, four essential requisites must be
present, viz: "(1) conduct on the part of the defendant, or of one under
whom he claims, giving rise to the situation of which complaint is made
and for which the complaint seeks a remedy; (2) delay in asserting the
complainant's rights, the complainant having had knowledge or notice of
the defendant's conduct and having been afforded an opportunity to
institute a suit; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he bases
his suit; and (4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held barred." 21
With these as guideposts, let us look at the facts.
It is true that CIR declared Sañgilo and its members who did not come to
court and testify guilty of laches. 22 But as to the 15 individual
respondents, the question of laches was passed by — sub silentio.
Clearly implicit in this is that CIR is of the opinion that laches is not a bar
to reinstatement and recovery of back wages for these 15 individual
respondents who actually testified in court. For CIR, despite a categorical
finding of laches on the part of the union and some of its complaining
Page 139 of 141
members, proceeded to order reinstatement and back wages for the 15
respondents. By and large, appreciation of laches rests mainly with the
trial court. Absent a clear abuse, we are not to disturb its ruling thereon.
Indeed, these fifteen respondents showed sufficient interest in their case.
They went to court and supported their cause by their own testimony.
Delay in the filing of suit should not hamper their suit. We must not for a
moment forget that these fifteen laborers' belong to the lower economic
stratum of our society. They are not expected to possess the intelligence
or foresight of those who have been favored by high formal
education. 23 Individually, they may not be in a position to file suit; they
may not have the means. Thrown out of job, driven off, and refused
entrance to, the company's premises, each has to go his own way. They
had to return — as most of them did — to their families in the lowlands,
far from the mine site. And yet they were not remiss in their duty to report
the matter to their president. But the president, respondent Bartolome
Mayo, was then in the Baguio General Hospital. Mayo lost no time in
reporting the laborers' plight to the union counsel. The laborers had every
right to assume that their union was doing something for them. They had
done their part. They had to depend on the action taken by their union
leaders. A labor union certainly would not be of much use if it does not
act for the welfare of its members.
As to respondent Mayo himself, evidence appears on record that from
the time of his dismissal, he had personally and by telephone asked
Superintendent Fertig for his reinstatement. He was brushed off with the
reply: "Your union went on strike". 24 On one occasion after the strike,
when Mayo met Fertig in Baguio, the former repeated his request for
reinstatement, but received the same answer: "You are still on strike". 25
Laches, if any, we must say, is not solely to be laid at the door of
respondents. The company contributed too in the delay of the filing of the
present suit. And this because, as testified to by the union president in
court, such delay in filing the present ULP case was due to the fact that
the legality of their strike precisely was being litigated in the Court of First
Instance of Baguio in Injunction Case 774 filed on June 2, 1958 by the
very company itself against some of the strikers. Naturally, if the strike is
there declared illegal, the strikers including the herein fifteen respondents
would lose their right to reinstatement and backpay. But as said suit
became apparently dormant, the union, on behalf of respondents,
decided to lodge their present complaint with the CIR.
 Page 140 of 141

Thus it is, that the taint of laches cannot attach to individual respondents.
For the second element required for the defense of laches to prosper is
here absent.

5. The judgment below directs petitioner to pay individual respondents

back wages from the time of their dismissal to their actual reinstatement
without loss of seniority and privileges.

Since the dismissal of respondents in 1958, more than ten years had
elapsed. It would not seem out of place to restate the guidelines to be
observed in the ascertainment of the total back wages payable under the
judgment below. These are:. 1äwphï1.ñët

First. To be deducted from the back wages accruing to each of

the laborers to be reinstated is the total amount of earnings
obtained by him from other employment(s) from the date of
dismissal to the date of reinstatement. Should the laborer decide
that it is preferable not to return to work, the deduction should be
made up to the time judgment becomes final. And these, for the
reason that employees should not be permitted to enrich
themselves at the expense of their employer. 26 Besides, there is
the "law's abhorrence for double compensation." 27

Second. Likewise, in mitigation of the damages that the

dismissed respondents are entitled to, account should be taken of
whether in the exercise of due diligence respondents might have
obtained income from suitable remunerative employment. 28 We
are prompted to give out this last reminder because it is really
unjust that a discharged employee should, with folded arms,
remain inactive in the expectation that a windfall would come to
him. A contrary view would breed idleness; it is conducive to lack
of initiative on the part of a laborer. Both bear the stamp of
undesirability.

For the reasons given, the judgment under review is hereby affirmed.

Let the record of this case be returned to the Court of Industrial Relations
with instructions to forthwith ascertain the amount of back wages due
individual respondents in accordance with the guidelines herein set forth.
Costs against petitioner. So ordered. 1äwphï1.ñët
Page 141 of 141