LABOR LAW REVIEW

LECTURE FOR JULY 2, 4 & 9, 2019

Part Two (2)

Article 232 (formerly 226) – Bureau of Labor Relations

The Bureau of Labor Relations and the Labor Relations Divisions in

the regional offices of the Department of Labor shall have original and
exclusive authority to act, at their own initiative or upon request of
either or both parties, on all inter-union and intra-union conflicts, and
all disputes, grievances or problems arising from or affecting labor-
management relations in all workplaces, whether agricultural or non-
agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the
subject of grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases
before it, subject to extension by agreement of the parties.

The Rulings of the Supreme Court

The BLR has the original and exclusive jurisdiction on all inter-
union and intra-union conflicts. We said that since Article 226 (now
Article 232) of the Labor Code has declared that the BLR shall
have original and exclusive authority to act on all inter-union and
intra-union conflicts, there should be no more doubt as to its
jurisdiction. As defined, an intra-union conflict would refer to a
conflict within or inside a labor union, while an inter-union
controversy or dispute is one occurring or carried on between or
among unions. (Emilio E. Diokno, et al. vs. Hans Leo J. Cacdac, et
al. G.R. No. 168475, July 4, 2007)

Section 226 (now Article 232) of the Labor Code clearly provides
that the BLR and the Regional Directors of DOLE have concurrent
jurisdiction over inter-union and intra-union disputes. Such
disputes include the conduct or nullification of election of union
and workers' association officers. There is, thus, no doubt as to the
BLR's jurisdiction over the instant dispute involving member-
unions of a federation arising from disagreement over the

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 provisions of the federation's constitution and by-laws. (Allan S.
Montaño vs. Ernesto C. Verceles, G.R. No. 168583, July 26, 2010)

Article 233 (formerly 227) – Compromise Agreements

Any compromise settlement, including those involving labor standard

laws, voluntarily agreed upon by the parties with the assistance of the
Bureau or the regional office of the Department of Labor, shall be final
and binding upon the parties. The National Labor Relations
Commission or any court, shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if there is
prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.

Jurisprudential References

It is settled that parties may enter into a compromise agreement

without the intervention of their lawyer. This precedes from the
equally settled rule that a client has an undoubted right to settle a
suit without the intervention of his lawyer for he is generally
conceded to have the exclusive control over the subject-matter of
the litigation and may, at any time before judgment, if acting in
good faith, compromise, settle, and adjust his cause of action out of
court without his attorney's intervention, knowledge, or consent,
even though he has agreed with his attorney not to do so. Hence, the
absence of a counsel's knowledge or consent does not invalidate a
compromise agreement.

Neither can a final judgment preclude a client from entering into a

compromise. Rights may be waived through a compromise
agreement, notwithstanding a final judgment that has already settled
the rights of the contracting parties provided the compromise is
shown to have been voluntarily, freely and intelligently executed by
the parties, who had full knowledge of the judgment. Additionally,
it must not be contrary to law, morals, good customs and public
policy. (Atty. Emmanuel D. Agustin et al. v. Alejandro Cruz –
Herrera, G.R. No. 174564, February 12, 2014.)

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 Not all waivers and quitclaims are invalid as against public policy.
If the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction, But where it is shown that the person
making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a
valid and binding undertaking. (Corazon Periquet vs. NLRC, G.R.
No. 91298, June 22, 1990)

While not all waivers and quitclaims are invalid as against public
policy, one made under circumstances of dire need and with a gross
disparity between the actual claim and the amount of the settlement
cannot be countenanced by this court. (B. Sta Rita And Co., Inc., vs.
NLRC, G.R. No. 119617, August 14, 1995)

A compromise agreement is valid as long as the consideration is

reasonable and the employee signed the waiver voluntarily, with a
full understanding of what he was entering into. All that is required
for the compromise to be deemed voluntarily entered into is
personal and specific individual consent. Thus, contrary to
respondent's contention, the employee's counsel need not be present
at the time of the signing of the compromise agreement. (J-Phil
Marine, Inc., et al. vs. NLRC, et al., G.R. No. 175366, August 11, 2008)

Articles 234 (formerly 228) Mandatory Conciliation and Endorsement

of Cases

(a) Except as provided in Title VII-A, Book V of this Code, as amended,

or as may be excepted by the Secretary of Labor and Employment,
all issues arising from labor and employment shall be subject to
mandatory conciliation-mediation. The labor arbiter or the
appropriate DOLE agency or office that has jurisdiction over the
dispute shall entertain only endorsed or referred cases by the duly
authorized officer.

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 (b) Any or both parties involved in the dispute may pre-terminate the
conciliation-mediation proceedings and request referral or
endorsement to the appropriate DOLE agency or office which has
jurisdiction over the dispute, or if both parties so agree, refer the
unresolved issues to voluntary arbitration.

Article 235 (formerly 229) Issuance of Subpoenas

The Bureau shall have the power to require the appearance of any
person or the production of any paper, document or matter relevant to a
labor dispute under its jurisdiction, either at the request of any
interested party or at its own initiative.
Article 236 (formerly 230) Appointment of Bureau Personnel.
The Secretary of Labor and Employment may appoint, in addition to the
present personnel of the Bureau and the Industrial Relations Divisions,
such number of examiners and other assistants as may be necessary to
carry out the purpose of the Code.

Article 237 (formerly 231) Registry of Unions and File of Collective

Bargaining Agreements
The Bureau shall keep a registry of legitimate labor organizations.
The Bureau shall also maintain a file of all collective bargaining
agreements and other related agreements and records of settlement of
labor disputes and copies of orders and decisions of voluntary
arbitrators or panel of voluntary arbitrators. The file shall be open and
accessible to interested parties under conditions prescribed by the
Secretary of Labor and Employment, provided that no specific
information submitted in confidence shall be disclosed unless
authorized by the Secretary, or when it is at issue in any judicial
litigation, or when public interest or national security so requires.
Within thirty (30) days from the execution of a Collective Bargaining
Agreement, the parties shall submit copies of the same directly to the
Bureau or the Regional Offices of the Department of Labor and
Employment for registration accompanied with verified proofs of its
posting in two conspicuous places in the place of work and ratification
by the majority of all the workers in the bargaining unit. The Bureau or
Regional Offices shall act upon the application for registration of such

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Collective Bargaining Agreement within five (5) calendar days from
receipt thereof. The Regional Offices shall furnish the Bureau with a
copy of the Collective Bargaining Agreement within five (5) days from
its submission.
The Bureau or Regional Office shall assess the employer for every
Collective Bargaining Agreement a registration fee of not less than one
thousand pesos (P 1,000.00) or in any other amount as may be deemed
appropriate and necessary by the Secretary of Labor and Employment
for the effective and efficient administration of the Voluntary
Arbitration Program. Any amount collected under this provision shall
accrue to the Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or assist in
the publication of all final decisions, orders and awards of the Secretary
of Labor and Employment, Regional Directors and the Commission.

Article 238 (formerly 232) – Prohibition on Certification Election

The Bureau shall not entertain any petition for certification election or
any other action which may disturb the administration of duly
registered existing collective bargaining agreements affecting the
parties except under Articles 253, 253-A and 256 of this Code.

Article 239 (formerly 233) – Privileged Communication

Information and statements made at conciliation proceedings shall be

treated as privileged communication and shall not be used as evidence
in the Commission. Conciliators and similar officials shall not testify in
any court or body regarding any matters taken up at conciliation
proceedings conducted by them.

Article 240 (formerly 234) – Requirements of Registration

A federation, national union or industry or trade union center or an

independent union shall acquire legal personality and shall be entitled
to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on
the following requirements:

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(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of
the labor organization, the minutes of the organizational meetings and
the list of the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the employees
in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.

The Jurisprudential References

It does not appear in Article 234 (now Article 240) (b) of the Labor
Code that the attendees in the organizational meeting must
comprise 20% of the employees in the bargaining unit. In fact, even
the Implementing Rules and Regulations of the Labor Code does
not so provide. It is only under Article 234 (now Article 240) (c)
that requires the names of all its members comprising at least
twenty percent (20%) of all the employees in the bargaining unit
where it seeks to operate. Clearly, the 20% minimum requirement
pertains to the employees' membership in the union and not to the
list of workers who participated in the organizational meeting.
Indeed, Article 234 (now Article 240) (b) and (c) provide for
separate requirements, which must be submitted for the union's
registration, and which respondent did submit.

Paragraph (c) states:

“In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate.”
(Takata (Philippines) Corporation v. Bureau of Labor Relations ,
G.R. No. 196276, June 4, 2014.)

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 Article 234 (now Article 240) of the Labor Code merely requires a
20% minimum membership during the application for union
registration. It does not mandate that a union must maintain the
20% minimum membership requirement all throughout its
existence. However, this does not prevent another union within the
same company from challenging the status of the union as the
legitimate labor organization authorized to represent the interests of
the employees with the management. (Mariwasa Siam Ceramics,
Inc. vs. DOLE Secretary, et al., G.R. No. 183317, December 21,
2009)

Article 241 (formerly 234 – A) Chartering and Creation of a Local

Chapter
A duly registered federation or national union may directly create a
local chapter by issuing a charter certificate indicating the
establishment of the local chapter. The chapter shall acquire legal
personality only for purposes of filing a petition for certification
election from the date it was issued a charter certificate.
The chapter shall be entitled to all other rights and privileges of a
legitimate labor organization only upon the submission of the following
documents in addition to its charter certificate:
(a) The names of the chapter's officers, their addresses, and the
principal office of the chapter; and
(b) The chapter's constitution and by-laws: Provided, That where the
chapter's constitution and by-laws are the same as that of the federation
or the national union, this fact shall be indicated accordingly.
The additional supporting requirements shall be certified under oath by
the secretary or treasurer of the chapter and attested by its president.

The Jurisprudence
The issuance of the certificate of registration by the Bureau or
Regional Office is not the operative act that vests legal personality
upon a local/chapter under Department Order No. 9. Such legal
personality is acquired from the filing of the complete documentary
requirements enumerated in Section 1, Rule VI. (San Miguel Corp.
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 vs. Mandaue Packing Products Plants, G.R. No. 152356, August
16, 2005)

A local or chapter need not be independently registered to acquire

legal personality. The task of determining whether the local or
chapter has submitted the complete documentary requirements is
lodged with the Regional Office or the BLR, as the case may be.
The pronouncement of the Labor Relations Division Chief, that the
respondent union acquired a legal personality with the submission
of the complete documentary requirement, cannot be challenged in
a petition for certification election. The Supreme Court is not the
proper venue to consider the factual issue as to whether the union is
a legitimate labor organization or not as it is not a trier of facts.
(Laguna Autoparts Manufacturing Corporation vs. Office of the
Secretary, DOLE and Laguna Autoparts Manufacturing
Corporation Obrero Pilipino-Lamcor Chapter)

Article 242 (formerly 235) – Action on Application

The Bureau shall act on all applications for registration within thirty
(30) days from filing.
All requisite documents and papers shall be certified under oath by the
secretary or the treasurer of the organization, as the case may be, and
attested to by its president.

Article 243 (formerly 236) Denial of Registration; Appeal

The decision of the Labor Relations Division in the regional office
denying registration may be appealed by the applicant union to the
Bureau within ten (10) days from receipt of notice thereof.

Article 244 (formerly 237) – Additional Requirements for Federations or

National Unions

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 Subject to Article 238, if the applicant for registration is a federation or
a national union, it shall, in addition to the requirements of the
preceding Articles, submit the following:
Proof of the affiliation of at least ten (10) locals or chapters, each of
which must be a duly recognized collective bargaining agent in the
establishment or industry in which it operates, supporting the
registration of such applicant federation or national union; and
The names and addresses of the companies where the locals or chapters
operate and the list of all the members in each company involved.

Note that the law is silent on whether the affiliates should have the
collective bargaining agreements (CBA) with the establishments or industries
where they operate.

Article 245 (formerly 238) – Cancellation of Registration

The certificate of registration of any legitimate labor organization,

whether national or local, may be cancelled by the Bureau, after due
hearing, only on the grounds specified in Article 239 (246) hereof.

Article 246 (formerly 238 - A) – Effect of a Petition for Cancellation of

Registration

A petition for cancellation of union registration shall not suspend the

proceedings for certification election nor shall it prevent the filing of a
petition for certification election.
In case of cancellation, nothing herein shall restrict the right of the
union to seek just and equitable remedies in the appropriate courts.

Indeed, where the company seeks the cancellation of a union's registration

during the pendency of a petition for certification election, the same grounds
invoked to cancel should not be used to bar the certification election. A
certification election is the most expeditious and fairest mode of ascertaining the
will of a collective bargaining unit as to its choice of its exclusive representative.
It is the fairest and most effective way of determining which labor organization
can truly represent the working force. It is a fundamental postulate that the will
of the majority, if given expression in an honest election with freedom on the
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part of the voters to make their choice, is controlling. (Eagle Ridge Golf and
Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010)

Article 247 (formerly 239) – Grounds for Cancellation of Union Registration

The following may constitute grounds for cancellation of union

registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took
part in the ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of
voters;
(c) Voluntary dissolution by the members.

Article 234 of the Labor Code merely requires a 20% minimum

membership during the application for union registration. It does
not mandate that a union must maintain the 20% minimum
membership requirement all throughout its existence. However, this
does not prevent another union within the same company from
challenging the status of the union as the legitimate labor
organization authorized to represent the interests of the employees
with the management. (Mariwasa Siam Ceramics, Inc. vs. DOLE
Secretary, et al., G.R. No. 183317, December 21, 2009)

The right to form, join, or assist a union is specifically protected by

Art. XIII, Section 3 of the Constitution and such right, according to
Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code,
shall not be abridged. Once registered with the DOLE, a union is
considered a legitimate labor organization endowed with the right
and privileges granted by law to such organization. While a
certificate of registration confers a union with legitimacy with the
concomitant right to participate in or ask for certification election in
a bargaining unit, the registration may be canceled or the union may
be decertified as the bargaining unit, in which case the union is
divested of the status of a legitimate labor organization. Among the

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 grounds for cancellation is the commission of any of the acts
enumerated in Art. 239 (a) (now 247) of the Labor Code, such as
fraud and misrepresentation in connection with the adoption or
ratification of the union's constitution and like documents. The
Court, has in previous cases, said that to decertify a union, it is not
enough to show that the union includes ineligible employees in its
membership. It must also be shown that there was
misrepresentation, false statement, or fraud in connection with the
application for registration and the supporting documents, such as
the adoption or ratification of the constitution and by-laws or
amendments thereto and the minutes of ratification of the
constitution or by-laws, among other documents.
It cannot be over-emphasized that the registration or the recognition
of a labor union after it has submitted the corresponding papers is
not ministerial on the part of the BLR. Far from it. After a labor
organization has filed the necessary registration documents, it
becomes mandatory for the BLR to check if the requirements under
Art. 234 (now Article 240) of the Labor Code have been sedulously
complied with. If the union's application is infected by falsification
and like serious irregularities, especially those appearing on the
face of the application and its attachments, a union should be
denied recognition as a legitimate labor organization. The
cancellation of a union's registration doubtless has an impairing
dimension on the right of labor to self-organization. Accordingly,
we can accord concurrence to the following apt observation of the
BLR: "For fraud and misrepresentation to be grounds for
cancellation of union registration under Article 239 (now Article
247) of the Labor Code, the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate
the consent of a majority of union members." (S.S. Ventures
International, Inc. vs. S.S. Ventures Labor Union, et al., G.R. No.
161690, July 23, 2008)

Article 248 (formerly 239 – A) Voluntary Cancellation of Registration

The registration of a legitimate labor organization may be cancelled by
the organization itself: Provided, That at least two-thirds of its general
membership votes, in a meeting duly called for that purpose to dissolve
the organization: Provided, further, That an application to cancel

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 registration is thereafter submitted by the board of the organization,
attested to by the president thereof.

Article 249 (formerly 240) Equity of the Incumbent

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

THE HERITAGE HOTEL MANILA, ACTING THROUGH ITS OWNER, GRAND

PLAZA HOTEL CORPORATION, petitioner, vs. SECRETARY OF LABOR AND
EMPLOYMENT; MED-ARBITER TOMAS F. FALCONITIN; and NATIONAL
UNION OF WORKERS IN THE HOTEL, RESTAURANT and ALLIED
INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER
(NUWHRAIN-HHMSC), respondents.

Basic in the realm of labor union rights is that the certification

election is the sole concern of the workers, and the employer is deemed an
intruder as far as the certification election is concerned. Thus, the petitioner
lacked the legal personality to assail the proceedings for the certification
election, and should stand aside as a mere bystander who could not oppose
the petition, or even appeal the Med-Arbiter's orders relative to the conduct
of the certification election. As the Court has explained in Republic v.
Kawashima Textile Mfg., Philippines, Inc. (Kawashima):
Except when it is requested to bargain collectively, an employer is a mere
bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer. The choice of their representative is the exclusive concern of
the employees; the employer cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an
appeal from it; not even a mere allegation that some employees participating in a
petition for certification election are actually managerial employees will lend an
employer legal personality to block the certification election. The employer's only
right in the proceeding is to be notified or informed thereof.

The petitioner's meddling in the conduct of the certification election among

its employees unduly gave rise to the suspicion that it intended to establish a
company union. For that reason, the challenges it posed against the
certification election proceedings were rightly denied.
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Presently, then, the mixed membership does not result in the illegitimacy of
the registered labor union unless the same was done through
misrepresentation, false statement or fraud according to Article 239 of the
Labor Code. In Air Philippines Corporation v. Bureau of Labor Relations,
we categorically explained that —
Clearly, then, for the purpose of de-certifying a union, it is not enough to
establish that the rank-and-file union includes ineligible employees in its
membership. Pursuant to Article 239 (a) and (c) of the Labor Code, it must be
shown that there was misrepresentation, false statement or fraud in connection
with the adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, or in connection with the election of officers,
minutes of the election of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected-appointed officers and their
postal addresses to the BLR.

Worth reiterating is that the actual functions of an employee, not his job
designation, determined whether the employee occupied a managerial,
supervisory or rank-and-file position. As to confidential employees who
were excluded from the right to self-organization, they must (1) assist or act
in a confidential capacity, in regard (2) to persons who formulated,
determined, and effectuated management policies in the field of labor
relations. In that regard, mere allegations sans substance would not be
enough, most especially because the constitutional right of workers to self-
organization would be compromised.

Article 250 (formerly 241) – Rights and Conditions of Membership in a

Labor Organization

The following are the rights and conditions of membership in a labor

organization:
(a) No arbitrary or excessive initiation fees shall be required of the
members of a legitimate labor organization nor shall arbitrary,
excessive or oppressive fine and forfeiture be imposed;
(b) The members shall be entitled to full and detailed reports from their
officers and representatives of all financial transactions as provided for
in the constitution and by-laws of the organization;
(c) The members shall directly elect their officers in the local union, as
well as their national officers in the national union or federation to
which they or their local union is affiliated, by secret ballot at intervals

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of five (5) years. No qualification requirement for candidacy to any
position shall be imposed other than membership in good standing in
subject labor organization. The secretary or any other responsible union
officer shall furnish the Secretary of Labor and Employment with a list
of the newly-elected officers, together with the appointive officers or
agents who are entrusted with the handling of funds within thirty (30)
calendar days after the election of officers or from the occurrence of
any change in the list of officers of the labor organization;
(d) The members shall determine by secret ballot, after due deliberation,
any question of major policy affecting the entire membership of the
organization, unless the nature of the organization or force majeure
renders such secret ballot impractical, in which case, the board of
directors of the organization may make the decision in behalf of the
general membership;
(e) No labor organization shall knowingly admit as members or
continue in membership any individual who belongs to a subversive
organization or who is engaged directly or indirectly in any subversive
activity;
(f) No person who has been convicted of a crime involving moral
turpitude shall be eligible for election as a union officer or for
appointment to any position in the union;
(g) No officer, agent or member of a labor organization shall collect any
fees, dues, or other contributions in its behalf or make any
disbursement of its money or funds unless he is duly authorized
pursuant to its constitution and by-laws;
(h)Every payment of fees, dues or other contributions by a member
shall be evidenced by a receipt signed by the officer or agent making the
collection and entered into the record of the organization to be kept and
maintained for the purpose;
(i) The funds of the organization shall not be applied for any purpose or
object other than those expressly provided by its constitution and by-
laws or those expressly authorized by written resolution adopted by the
majority of the members at a general meeting duly called for the
purpose;

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(j) Every income or revenue of the organization shall be evidenced by a
record showing its source, and every expenditure of its funds shall be
evidenced by a receipt from the person to whom the payment is made,
which shall state the date, place and purpose of such payment. Such
record or receipt shall form part of the financial records of the
organization.
Any action involving the funds of the organization shall prescribe
after three (3) years from the date of submission of the annual financial
report to the Department of Labor and Employment or from the date the
same should have been submitted as required by law, whichever comes
earlier: Provided, That this provision shall apply only to a legitimate
labor organization which has submitted the financial report
requirements under this Code: Provided, further, That failure of any
labor organization to comply with the periodic financial reports
required by law and such rules and regulations promulgated thereunder
six (6) months after the effectivity of this Act shall automatically result
in the cancellation of union registration of such labor organization;
(k) The officers of any labor organization shall not be paid any
compensation other than the salaries and expenses due to their
positions as specifically provided for in its constitution and by-laws, or
in a written resolution duly authorized by a majority of all the members
at a general membership meeting duly called for the purpose. The
minutes of the meeting and the list of participants and ballots cast shall
be subject to inspection by the Secretary of Labor or his duly authorized
representatives. Any irregularities in the approval of the resolutions
shall be a ground for impeachment or expulsion from the organization;
(l) The treasurer of any labor organization and every officer thereof
who is responsible for the account of such organization or for the
collection, management, disbursement, custody or control of the funds,
moneys and other properties of the organization, shall render to the
organization and to its members a true and correct account of all
moneys received and paid by him since he assumed office or since the
last day on which he rendered such account, and of all bonds, securities
and other properties of the organization entrusted to his custody or
under his control. The rendering of such account shall be made:
(1) At least once a year within thirty (30) days after the close of its fiscal
year;

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(2) At such other times as may be required by a resolution of the
majority of the members of the organization; and
(3) Upon vacating his office.
The account shall be duly audited and verified by affidavit and a
copy thereof shall be furnished the Secretary of Labor.
(m) The books of accounts and other records of the financial
activities of any labor organization shall be open to inspection by any
officer or member thereof during office hours;
(n)No special assessment or other extraordinary fees may be levied
upon the members of a labor organization unless authorized by a
written resolution of a majority of all the members in a general
membership meeting duly called for the purpose. The secretary of the
organization shall record the minutes of the meeting including the list
of all members present, the votes cast, the purpose of the special
assessment or fees and the recipient of such assessment or fees. The
record shall be attested to by the president.
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary
fees may be checked off from any amount due to an employee without
an individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and
beneficiary of the deduction; and
(p) It shall be the duty of any labor organization and its officers to
inform its members on the provisions of its constitution and by-laws,
collective bargaining agreement, the prevailing labor relations system
and all their rights and obligations under existing labor laws.
For this purpose, registered labor organizations may assess reasonable
dues to finance labor relations seminars and other labor education
activities.
Any violation of the above rights and conditions of membership shall be
a ground for cancellation of union registration or expulsion of officers
from office, whichever is appropriate. At least thirty percent (30%) of
the members of a union or any member or members specially concerned
may report such violation to the Bureau. The Bureau shall have the

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power to hear and decide any reported violation to mete the appropriate
penalty.
Criminal and civil liabilities arising from violations of above rights and
conditions of membership shall continue to be under the jurisdiction of
ordinary courts.
The use of the permissive "may" in the provision at once negates
the notion that the assent of 30% of all the members is mandatory.
More decisive is the fact that the provision expressly declares that
the report may be made, alternatively by "any member or members
specially concerned." And further confirmation that the assent of
30% of the union members is not a factor in the acquisition of
jurisdiction by the Bureau of Labor Relations is furnished by
Article 226 (now Article 232) of the same Labor Code, which
grants original and exclusive jurisdiction to the Bureau, and the
Labor Relations Division in the Regional Offices of the Department
of Labor, over "all inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from or affecting labor
management relations," making no reference whatsoever to any
such 30% - support requirement. Indeed, the officials mentioned are
given the power to act "on all inter-union and intra-union conflicts
(1) "upon request of either or both parties" as well as (2) "at their
own initiative." (Verceles vs. BLR, G.R. No. 152322, February 15,
2005)

The Corporation Code does not mandate the absorption of the

employees of the non-surviving corporation by the surviving
corporation in the case of a merger. The rule is that unless
expressly assumed, labor contracts such as employment contracts
and collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus
binding only between the parties. A labor contract merely creates
an action in personam and does not create any real right which
should be respected by third parties. This conclusion draws its
force from the right of an employer to select his employees and to
decide when to engage them as protected under our Constitution,
and the same can only be restricted by law through the exercise of
the police power. (BPI vs. BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010,

17
citing Sundowner Development Corp. v. Drilon, G.R. No. 82341, December
6, 1989)

It is very clear from the above-quoted provision that attorney's fees

may not be deducted or checked off from any amount due to an
employee without his written consent except for mandatory
activities under the Code. A mandatory activity has been defined as
a judicial process of settling dispute laid down by the law. (Carlos
P. Galvadores vs. Cresenciano B. Trajano, G.R. No. L-70067,
September 15, 1986)

Paragraph (n) refers to "levy" while paragraph (o) refers to "check-

off" of a special assessment. Both provisions must be complied
with. Under paragraph (n), the Union must submit to the Company
a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. In addition, the
secretary of the organization must record the minutes of the
meeting which, in turn, must include, among others, the list of all
the members present as well as the votes cast.

Paragraph (o) on the other hand requires an individual written

authorization duly signed by every employee in order that a special
assessment may be validly checked-off. Even assuming that the
special assessment was validly levied pursuant to paragraph (n),
and granting that individual written authorizations were obtained by
the Union, nevertheless there can be no valid check-off considering
that the majority of the union members had already withdrawn their
individual authorizations. A withdrawal of individual authorizations
is equivalent to no authorization at all. (Carmelito L. Palacol vs.
Pura Ferrer-Calleja, G.R. No. 85333, February 26, 1990)

Unlike the NLRC which is explicitly vested with the jurisdiction

over claims for actual, moral, exemplary and other forms of
damages, the BLR is not specifically empowered to adjudicate
claims of such nature arising from intra – union or inter – union
disputes. In fact, Art. 241 of the Labor Code ordains the separate
institution before the regular courts of criminal and civil liabilities
arising from violations of the rights and conditions of union
membership. The Court has consistently held that where no
employer – employee exists between the parties and no issue is

18
 involved which may be resolved by reference to the Labor Code,
other labor statutes, or any collective bargaining agreement, it is the
regional trial court that has jurisdiction. (Mariño vs. Gamilla, G.R.
No. 400, January 31, 2005)

Article 251 (formerly 242) – Rights of Legitimate Labor Organizations

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

Article 252 (formerly 242 - A) – Reportorial Requirements

19
 The following are documents required to be submitted to the Bureau by
the legitimate labor organization concerned:
(a) Its constitution and by-laws, or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification of
the constitution and by-laws within thirty (30) days from adoption or
ratification of the constitution and by-laws or amendments thereto;
(b) Its list of officers, minutes of the election of officers, and list of
voters within thirty (30) days from election;
(c) Its annual financial report within thirty (30) days after the close of
every fiscal year; and
(d) Its list of members at least once a year or whenever required by the
Bureau.
Failure to comply with the above requirements shall not be a ground for
cancellation of union registration but shall subject the erring officers or
members to suspension, expulsion from membership, or any appropriate
penalty.

Article 253 (formerly 243) – Coverage and Employees' Right to Self –

organization

All persons employed in commercial, industrial and agricultural

enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the right to
self-organization and to form, join, or assist labor organizations of their
own choosing for purposes of collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural workers
and those without any definite employers may form labor organizations
for their mutual aid and protection.

The Jurisprudence

The protection of workers' right to self-organization in no way

interfere with employer's freedom to enforce such rules and orders

20
as are necessary to proper conduct of his businesses, so long as
employer's supervision is not for the purpose of intimidating or
coercing his employees with respect to their self-organization and
representation. It is the functions of the court to see that the rights
of self-organization and collective bargaining guaranteed by the Act
are amply secured to the employee, but in its effort to prevent the
prescribed unfair labor practice, the court must be mindful of the
welfare of the honest employer. (Lakas Ng Manggagawang
Makabayan vs. Marcelo Enterprises, G.R. No. L-38258, November
19, 1982)

In the case of Insular Life Assurance Co., Ltd. Employees

Association — NATU v. Insular Life Assurance Co. Ltd., this
Court had occasion to lay down the test of whether an employer has
interfered with and coerced employees in the exercise of their right
to self-organization, that is, whether the employer has engaged in
conduct which, it may reasonably be said, tends to interfere with the
free exercise of employees' rights; and that it is not necessary that
there be direct evidence that any employee was in fact intimidated
or coerced by statements of threats of the employer if there is a
reasonable inference that anti-union conduct of the employer does
have an adverse effect on self-organization and collective
bargaining.

The questioned acts of petitioners, namely: 1) sponsoring a field

trip to Zambales for its employees, to the exclusion of union
members, before the scheduled certification election; 2) the active
campaign by the sales officer of petitioners against the union
prevailing as a bargaining agent during the field trip; 3) escorting its
employees after the field trip to the polling center; 4) the continuous
hiring of subcontractors performing respondents' functions; 5)
assigning union members to the Cabangan site to work as grass
cutters; and 6) the enforcement of work on a rotational basis for
union members, all reek of interference on the part of petitioners.

Indubitably, the various acts of petitioners, taken together,

reasonably support an inference that, indeed, such were all
orchestrated to restrict respondents' free exercise of their right to
self-organization. The Court is of the considered view that
petitioners' undisputed actions prior and immediately before the

21
scheduled certification election, while seemingly innocuous, unduly
meddled in the affairs of its employees in selecting their exclusive
bargaining representative. In Holy Child Catholic School v. Hon.
Patricia Sto. Tomas, the Court ruled that a certification election was
the sole concern of the workers, save when the employer itself had
to file the petition, but even after such filing, its role in the
certification process ceased and became merely a bystander. Thus,
petitioners had no business persuading and/or assisting its
employees in their legally protected independent process of
selecting their exclusive bargaining representative. The fact and
peculiar timing of the field trip sponsored by petitioners for its
employees not affiliated with THS-GQ Union, although a positive
enticement, was undoubtedly extraneous influence designed to
impede respondents in their quest to be certified. This cannot be
countenanced. (T & H Shopfitters Corporation/ GIN Queen
Corporation v. T & H Shopfitters Corporation/Gin Queen Workers
Union, G.R. No. 191714, February 26, 2014.)

The State guarantees the right of all workers to self-organization,

collective bargaining and negotiations, as well as peaceful
concerted activities, including the right to strike, in accordance with
law. The right to strike, however, is not absolute. It has heretofore
been held that a "no strike, no lock-out" provision in the Collective
Bargaining Agreement ("CBA") is a valid stipulation although the
clause may be invoked by an employer only when the strike is
economic in nature or one which is conducted to force wage or
other concessions from the employer that are not mandated to be
granted by the law itself. It would be inapplicable to prevent a
strike which is grounded on unfair labor practice. In this situation, it
is not essential that the unfair labor practice act has, in fact, been
committed; it suffices that the striking workers are shown to have
acted honestly on an impression that the company has committed
such unfair labor practice and the surrounding circumstances could
warrant such a belief in good faith. (Panay Electric Company, Inc.
vs. NLRC, G.R. No. 102672, October 4, 1995)

The protection of workers' right to self-organization in no way

interfere with employer's freedom to enforce such rules and orders
as are necessary to proper conduct of his businesses, so long as
employer's supervision is not for the purpose of intimidating or
22
 coercing his employees with respect to their self-organization and
representation. It is the functions of the court to see that the rights
of self-organization and collective bargaining guaranteed by the Act
are amply secured to the employee, but in its effort to prevent the
prescribed unfair labor practice, the court must be mindful of the
welfare of the honest employer. (Lakas Ng Manggagawang
Makabayan vs. Marcelo Enterprises, G.R. No. L-38258, November
19, 1982)

Article 254 (formerly 244) – Right of Employees in the Public Service

Employees of government corporations established under the

Corporation Code shall have the right to organize and to bargain
collectively with their respective employers. All other employees in the
civil service shall have the right to form associations for purposes not
contrary to law.

With respect to other civil servants, that is, employees of all branches,
subdivisions, instrumentalities and agencies of the government including
government-owned or controlled corporations with original charters and
who are, therefore, covered by the civil service laws, the guidelines for the
exercise of their right to organize is provided for under Executive Order No.
180. Chapter IV thereof, consisting of Sections 9 to 12, regulates the
determination of the "sole and exclusive employees' representative." (Trade
Unions of the Philippines and Allied Services vs. National Housing
Corporation, G.R. No. 49677, May 4, 1989)
Government employees may, therefore, through their unions or
associations, either petition the Congress for the betterment of the terms and
conditions of employment which are within the ambit of legislation or
negotiate with the appropriate government agencies for the improvement of
those which are not fixed by law. (Social Security System Employees
Association vs. Court of Appeals, G.R. No. 85279, July 28, 1989)

Article 255 (formerly 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

23
 membership in the collective bargaining unit of the rank-and-file
employees but may join, assist or form separate collective bargaining
units and/or legitimate labor organizations of their own. The rank and
file union and the supervisors' union operating within the same
establishment may join the same federation or national union.

Discussion Based on Jurisprudential References

The compromise agreement entered between the union and the

employer applies only to the members of the bargaining unit who
agreed to the termination of their employment based on redundancy
and received redundancy pay. It cannot bind an employee who is
not a member of the bargaining unit and who did not receive any
redundancy pay or any monetary benefits under the agreement or
executed any deed or waiver in favor of the company. (Dusit Hotel
Nikko vs. National Union of Workers, G.R. No. 160391, August 9,
2005)

The test of "supervisory" or "managerial status" depends on

whether a person possesses authority to act in the interest of his
employer and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent judgment.
(Clientlogic Phil., Inc., et al. vs. Benedict Castro, G.R. No. 186070,
April 11, 2011)

While above-quoted Article 245 (now Article 255) expressly

prohibits supervisory employees from joining a rank-and-file union,
it does not provide what would be the effect if a rank-and-file union
counts supervisory employees among its members, or vice-versa.
(Tagaytay Highlands International Golf Club Incorporated vs.
Tagaytay Highlands Employees Union-PGTWO, G.R. No. 142000,
January 22, 2003)

Article 256 (formerly 245 - A) – Effect of Inclusion as Members of

Employees Outside the Bargaining Unit

The inclusion as union members of employees outside the bargaining

unit shall not be a ground for the cancellation of the registration of the

24
 union. Said employees are automatically deemed removed from the list
of membership of said union.

Article 257 (formerly 246) – Non – abridgment of Right to Self-

organization

It shall be unlawful for any person to restrain, coerce, discriminate

against or unduly interfere with employees and workers in their
exercise of the right to self-organization. Such right shall include the
right to form, join, or assist labor organizations for the purpose of
collective bargaining through representatives of their own choosing
and to engage in lawful concerted activities for the same purpose or for
their mutual aid and protection, subject to the provisions of Article 264
of this Code.

Article 258 (formerly 247) – Concept of Unfair Labor Practice and

Procedure for Prosecution Thereof

Unfair labor practices violate the constitutional right of workers and

employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.
Consequently, unfair labor practices are not only violations of the civil
rights of both labor and management but are also criminal offenses
against the State which shall be subject to prosecution and punishment
as herein provided.
Subject to the exercise by the President or by the Secretary of Labor and
Employment of the powers vested in them by Articles 263 and 264 of
this Code, the civil aspects of all cases involving unfair labor practices,
which may include claims for actual, moral, exemplary and other forms
of damages, attorney's fees and other affirmative relief, shall be under
the jurisdiction of the Labor Arbiters. The Labor Arbiters shall give
utmost priority to the hearing and resolution of all cases involving
unfair labor practices. They shall resolve such cases within thirty (30)
calendar days from the time they are submitted for decision.

25
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. During the
pendency of such administrative proceeding, the running of the period
of prescription of the criminal offense herein penalized shall be
considered interrupted: Provided, however, That the final judgment in
the administrative proceedings shall not be binding in the criminal case
nor be considered as evidence of guilt but merely as proof of compliance
of the requirements therein set forth.

The prohibited acts considered as ULP relate to the workers' right

to self – organization and to the observance of a CBA. It refers to
"acts that violate the workers' right to organize." Without that
element, the acts, even if unfair, are not ULP. Thus, an employer
may only be held liable for unfair labor practice if it can be shown
that his acts affect in whatever manner the right of his employees to
self-organize. (Bankard, Inc. vs. NLRC-First Division, et al., G.R.
No. 171664, March 6, 2013)

A finding of an unfair labor practice is not to be taken lightly for

the Labor Code has again criminalized these practices. (Magnolia
Corporation vs. NLRC, G.R. No. 116813, November 24, 1995)

By the very nature of an unfair labor practice, it is not only a

violation of the civil rights of both labor and management but is
also a criminal offense against the State which is subject to
prosecution and punishment. (Hongkong and Shanghai Banking
Corp. vs. NLRC, G.R. No. 125038, November 6, 1997)

What it settled law, dating from the case of Standard Cigarette

Workers' Union v. Court of Industrial Relations, decided in 1957, is
that if it were a labor organization objecting to the participation in a
certification election of a company – dominated union, as a result of
which a complaint for an unfair labor practice case against the
employer was filed, the status of the latter union must be first
cleared in such a proceeding before such voting could take place.

26
 (Juan S. Barrera vs. Court of Industrial Relations, G.R. No. L-
32853, September 25, 1981)

Quitclaims and/or complete releases executed by the employees do

not estop them from pursuing their claims arising from unfair labor
practices of the employer. The basic reason for this is that such
quitclaims and/or complete releases are against public policy and,
therefore, null and void. The acceptance of termination does not
divest a laborer of the right to prosecute his employer for unfair
labor practice acts. (Lourdes G. Marcos vs. NLRC, G.R. No.
111744, September 8, 1995)

The employer had an existing CBA with a union, which agreement

must be respected in any move affecting the security of tenure of
affected employees; otherwise, it ran the risk of committing unfair
labor practice — both a criminal and an administrative offense.
(Farley Fulache, et al. vs. ABS-CBN Broadcasting Corp., G.R. No.
183810, January 21, 2010)

Article 259 (formerly 248) – Unfair Labor Practices of Employers

It shall be unlawful for an employer to commit any of the following

unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
(b) To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from one
to which he belongs;
(c) To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce employees in
the exercise of their right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation
or administration of any labor organization, including the giving of
financial or other support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and other terms
and conditions of employment in order to encourage or discourage

27
 membership in any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring membership in a
recognized collective bargaining agent as a condition for employment,
except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.
Employees of an appropriate bargaining unit who are not members of
the recognized collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of the
recognized collective bargaining agent, if such non-union members
accept the benefits under the collective bargaining agreement:
Provided, That the individual authorization required under Article 242,
paragraph (o) of this Code 204 shall not apply to the non-members of
the recognized collective bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against
an employee for having given or being about to give testimony under
this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h)To pay negotiation or attorney's fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or
any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who
have actually participated in, authorized or ratified unfair labor
practices shall be held criminally liable.

Article 260 (formerly 249) – Unfair Labor Practices of Labor

Organizations

It shall be unfair labor practice for a labor organization, its officers,

agents or representatives:
(a) To restrain or coerce employees in the exercise of their right to self-
organization. However, a labor organization shall have the right to
prescribe its own rules with respect to the acquisition or retention of
membership;

28
(b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect to
whom membership in such organization has been denied or to
terminate an employee on any ground other than the usual terms and
conditions under which membership or continuation of membership is
made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree
to pay or deliver any money or other things of value, in the nature of
an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorney's fees from employers
as part of the settlement of any issue in collective bargaining or any
other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the
officers, members of governing boards, representatives or agents or
members of labor associations or organizations who have actually
participated in, authorized or ratified unfair labor practices shall be
held criminally liable.

Contracting out of services in the exercise of management

prerogative is not Unfair Labor Practice

Contracting out of services is an exercise of business judgment or

management prerogative. Absent any proof that management acted
in a malicious or arbitrary manner, the Court will not interfere with
the exercise of judgment by an employer. Furthermore, bear in
mind that ULP is punishable with both civil and/or criminal
sanctions. As such, the party so alleging must necessarily prove it
by substantial evidence. The Union, as earlier noted, failed to do
this. Bankard merely validly exercised its management prerogative.
Not shown to have acted maliciously or arbitrarily, no act of ULP
can be imputed against it.

29
The employer's right to conduct the affairs of its business,
according to its own discretion and judgment, is well – recognized.
Management has a wide latitude to conduct its own affairs in
accordance with the necessities of its business. As the Court once
said:

The Court has always respected a company's exercise of its

prerogative to devise means to improve its operations. Thus, we
have held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including
hiring, work assignments, supervision and transfer of employees,
working methods, time, place and manner of work.

This is so because the law on unfair labor practices is not

intended to deprive employers of their fundamental right to
prescribe and enforce such rules as they honestly believe to be
necessary to the proper, productive and profitable operation of
their business.

Contracting out of services is an exercise of business judgment

or management prerogative. Absent any proof that management
acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.
Furthermore, bear in mind that ULP is punishable with both
civil and/or criminal sanctions. As such, the party so alleging
must necessarily prove it by substantial evidence. The Union, as
earlier noted, failed to do this. Bankard merely validly
exercised its management prerogative. Not shown to have acted
maliciously or arbitrarily, no act of ULP can be imputed against
it.

The employer's right to conduct the affairs of its business,

according to its own discretion and judgment, is well –
recognized. Management has a wide latitude to conduct its own
affairs in accordance with the necessities of its business. As the
Court once said:

The Court has always respected a company's exercise of its

prerogative to devise means to improve its operations. Thus, we
have held that management is free to regulate, according to its own

30
 discretion and judgment, all aspects of employment, including
hiring, work assignments, supervision and transfer of employees,
working methods, time, place and manner of work.

This is so because the law on unfair labor practices is not intended

to deprive employers of their fundamental right to prescribe and
enforce such rules as they honestly believe to be necessary to the
proper, productive and profitable operation of their business.
(Bankard, Inc. vs. NLRC-First Division, et al., G.R. No. 171664,
March 6, 2013)

All employees in the bargaining unit covered by a Union Shop

Clause in their CBA with management are subject to its terms.
However, under law and jurisprudence, the following kinds of
employees are exempted from its coverage, namely, employees
who at the time the union shop agreement takes effect are bona
fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds;
employees already in the service and already members of a
union other than the majority at the time the union shop
agreement took effect; confidential employees who are
excluded from the rank and file bargaining unit; and employees
excluded from the union shop by express terms of the
agreement.

A closed shop agreement is an agreement whereby an employer

binds himself to hire only members of the contracting union
who must continue to remain members in good standing to keep
their jobs. It is "the most prized achievement of unionism." It
adds membership and compulsory dues. By holding out to loyal
members a promise of employment in the closed shop, it wields
group solidarity. (BPI vs. BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank, G.R. No. 164301, August 10,
2010)

In terminating the employment of an employee by enforcing the

union security clause, the employer needs to determine and
prove that: (1) the union security clause is applicable; (2) the
union is requesting for the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence to
31
 support the decision of the union to expel the employee from
the union. These requisites constitute just cause for terminating
an employee based on the union security provision of the CBA.
(PICOP Resources, Inc. vs. Anacleto L. Tañeca, et al., G.R. No. 160828,
August 9, 2010)

It is State policy to promote unionism to enable workers to

negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law
has allowed stipulations for "union shop" and "closed shop" as
means of encouraging workers to join and support the union of
their choice in the protection of their rights and interest vis-à-
vis the employer. (General Milling Corp. vs. Ernesto Casio, et al.,
G.R. No. 149552, March 10, 2010)

Article 261 (formerly 250) – Procedure in Collective Bargaining

The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a
written notice upon the other party with a statement of its proposals.
The other party shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice;
(b) Should differences arise on the basis of such notice and reply, either
party may request for a conference which shall begin not later than ten
(10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of
either or both parties or at its own initiative and immediately call the
parties to conciliation meetings. The Board shall have the power to
issue subpoenas requiring the attendance of the parties to such
meetings. It shall be the duty of the parties to participate fully and
promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are
prohibited from doing any act which may disrupt or impede the early
settlement of the disputes; and
(e) The Board shall exert all efforts to settle disputes amicably and
encourage the parties to submit their case to a voluntary arbitrator.

32
 The employer has no legal duty to initiate contract
negotiation

While it is a mutual obligation of the parties to bargain, the

employer, however, is not under any legal duty to initiate contract
negotiation. The mechanics of collective bargaining is set in motion
only when the following jurisdictional preconditions are present,
namely, (1) possession of the status of majority representation of
the employees' representative in accordance with any of the means
of selection or designation provided for by the Labor Code; (2)
proof of majority representation; and (3) a demand to bargain under
Article 251 (now Article 2620, par. (a) of the New Labor Code.
(Kiok Loy vs. National Labor Relations Commission, G.R. No. L-
54334, January 22, 1986)

Article 262 (formerly 251) – Duty to Bargain Collectively in the

Absence of Collective Bargaining Agreement

In the absence of an agreement or other voluntary arrangement

providing for a more expeditious manner of collective bargaining, it
shall be the duty of employer and the representatives of the employees to
bargain collectively in accordance with the provisions of this Code.

Article 263 (formerly 252) – Meaning of Duty to Bargain Collectively

The duty to bargain collectively means the performance of a mutual

obligation to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with respect to wages,
hours of work and all other terms and conditions of employment
including proposals for adjusting any grievances or questions arising
under such agreement and executing a contract incorporating such
agreements if requested by either party but such duty does not compel
any party to agree to a proposal or to make any concession.
A collective bargaining agreement, as used in Article 252 (now
Article 262) of the Labor Code, is a contract executed at the request
of either the employer or the employees' exclusive bargaining
representative with respect to wages, hours of work and all other

33
terms and conditions of employment, including proposals for
adjusting any grievances or questions under such agreement.
Jurisprudence settles that a CBA is the law between the contracting
parties who are obliged under the law to comply with its provisions.
As a contract and the governing law between the parties, the
general rules of statutory construction apply in the interpretation of
its provisions. Thus, if the terms of the CBA are plain, clear and
leave no doubt on the intention of the contracting parties, the literal
meaning of its stipulations, as they appear on the face of the
contract, shall prevail. Only when the words used are ambiguous
and doubtful or leading to several interpretations of the parties'
agreement that a resort to interpretation and construction is called
for. (National Union of Workers in Hotel Restaurant and Allied
Industries (NUWHRAIN – APL – IUF), Philippine Plaza Chapter v.
Philippine Plaza holdings, Inc., G.R. No. 177524, July 23, 2014)
It is essential to the right of a putative bargaining agent to represent
the employees that it be the delegate of a majority of the employees
and, conversely, an employer is under duty to bargain collectively
only when the bargaining agent is representative of the majority of
the employees. A natural consequences of these principles is that
the employer has the right to demand of the asserted bargaining
agent proof of its representation of its employees. Having the right
to demonstration of this fact, it is not an unfair labor practice for an
employer to refuse to negotiate until the asserted bargaining agent
has presented reasonable proof of majority representation. It is
necessary however that such demand be made in good faith and not
merely as a pretext or device for delay or evasion. The employer's
right is however to reasonable proof. Although an employer has the
undoubted right to bargain with a bargaining agent whose authority
has been established, without the requirement that the bargaining
agent be officially certified by the National Labor Relations Board
as such, if the informally presented evidence leaves a real doubt as
to the issue, the employer has a right to demand a certification and
to refuse to negotiate until such official certification is presented.
(Lakas Ng Manggagawang Makabayan vs. Marcelo Enterprises,
G.R. No. L-38258, November 19, 1982)

In the bargaining process, the workers and employer shall be

represented by their exclusive bargaining representatives. The labor
34
 organization designated or selected by the majority of employees in
an appropriate collective bargaining unit, shall be the exclusive
representative of the employees in such unit for the purpose of
collective bargaining. (Balmar Farms, Inc. vs. National Labor
Relations Commission, G.R. No. 73504, October 15, 1991; UFE-
DFA-KMU vs. Nestlé Phil. Inc., G.R. Nos. 158930-31 & 158944-
45, March 3, 2008)

Article 264 (formerly 253) – Duty to Bargain Collectively When There

Exists a Collective Bargaining Agreement

When there is a collective bargaining agreement, the duty to bargain

collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a
written notice to terminate or modify the agreement at least sixty (60) days
prior to its expiration date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions
of the existing agreement during the 60 – day period and/or until a new
agreement is reached by the parties.

Until a new CBA is executed by and between the parties, they are
duty-bound to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement. The law
does not provide for any exception nor qualification on which
economic provisions of the existing agreement are to retain its force
and effect. Therefore, it must be understood as encompassing all the
terms and conditions in the said agreement. (FAMIT vs. Court of
Appeals, et al., G.R. No. 164060, June 15, 2007)

Article 265 (formerly 253 - A) – Terms of a Collective Bargaining

Agreement

Any Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a term of
five (5) years. No petition questioning the majority status of the
incumbent bargaining agent shall be entertained and no certification
election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date
of expiry of such five-year term of the Collective Bargaining

35
Agreement. All other provisions of the Collective Bargaining Agreement
shall be renegotiated not later than three (3) years after its execution.
Any agreement on such other provisions of the Collective Bargaining
Agreement entered into within six (6) months from the date of expiry of
the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If
any such agreement is entered into beyond six months, the parties shall
agree on the duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the Collective Bargaining Agreement, the parties
may exercise their rights under this Code.

The filing of a petition for certification election during the 60-day

freedom period gives rise to a representation case that must be
resolved even though a new CBA has been entered into within that
period. This is clearly provided for in the afore – quoted Section 4,
Rule V, Book V of the Omnibus Rules Implementing the Labor
Code. The reason behind this rule is obvious. A petition for
certification election is not necessary where the employees are one
in their choice of a representative in the bargaining process.
Moreover, said provision of the Omnibus Rules manifests the intent
of the legislative authority to allow, if not encourage, the
contending unions in a bargaining unit to hold a certification
election during the freedom period. (Oriental Tin Can Labor Union
vs. Secretary of Labor, G.R. Nos. 116751 & 116779, August 28,
1998)

The agreement prematurely signed by the union and the company

during the freedom period does not affect the petition for
certification election filed by another union. (Warren
Manufacturing Workers Union vs. Bureau of Labor Relations, G.R.
No. L-76185, March 30, 1988)

A bargaining unit is "a group of employees of a given

employer, comprised of all or less than all of the entire body of
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."
The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such
36
 as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual
Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status. 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.
(International School Alliance of Educators vs. Leonardo A.
Quisumbing, G.R. No. 128845, June 1, 2000)

An appropriate bargaining unit is defined as a group of

employees of a given employer, comprised of all or less than all
of the entire body of employees, which the collective interest of
all the employees, consistent with equity to the employer,
indicate to be best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions
of the law.

The test of grouping is community or mutuality of interest. 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. (San Miguel Foods,
Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No.
146206, August 1, 2011, citing National Association of Free Trade
Unions v. Mainit Lumber Development Company Workers Union-
United Lumber and General Workers of the Phils., G.R. No. 79526,
December 21, 1990)

Article 266 (formerly 254) – Injunction Prohibited

No temporary or permanent injunction or restraining order in any case

involving or growing out of labor disputes shall be issued by any court
or other entity, except as otherwise provided in Articles 218 and 264 of
this Code.

Article 267 (formerly 255) – Exclusive Bargaining Representation and

Workers Participation in Policy and Decision-making

The labor organization designated or selected by the majority of the

employees in an appropriate collective bargaining unit shall be the
37
 exclusive representative of the employees in such unit for the purpose of
collective bargaining. However, an individual employee or group of
employees shall have the right at any time to present grievances to their
employer.
Any provision of law to the contrary notwithstanding, workers shall
have the right, subject to such rules and regulations as the Secretary of
Labor and Employment may promulgate, to participate in policy and
decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights,
benefits and welfare. For this purpose, workers and employers may
form labor – management councils: Provided, That the representatives
of the workers in such labor-management councils shall be elected by at
least the majority of all employees in said establishment.

With or without collective bargaining agreement, the workers have the

right to participate in policy and decision – making processes of the
establishment if the same will directly affect their rights and welfare. For this
reason, the majority of the employees, representing the majority, shall elect their
representatives in the labor – management council that maybe formed by the
employer and workers.

The designation or selection of the bargaining representative

without, however, going through the process set out by law for the
conduct of a certification election applies only when representation
is not in issue. There is no problem if a union is unanimously
chosen by a majority of the employees as their bargaining
representative, but a question of representation arising from the
presence of more than one union in a bargaining unit aspiring to be
the employees' representative, can only be resolved by holding a
certification election under the supervision of the proper
government authority. (Oriental Tin Can Labor Union vs.
Secretary of Labor, G.R. Nos. 116751 & 116779, August 28, 1998)

Basic in the realm of labor union rights is that the certification

election is the sole concern of the workers, and the employer is
deemed an intruder as far as the certification election is concerned.
Thus, the petitioner lacked the legal personality to assail the
proceedings for the certification election, and should stand aside as
a mere bystander who could not oppose the petition, or even appeal
38
the Med-Arbiter's orders relative to the conduct of the certification
election. As the Court has explained in Republic v. Kawashima
Textile Mfg., Philippines, Inc. (Kawashima):
Except when it is requested to bargain collectively, an employer is a mere
bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer. The choice of their representative is the exclusive concern
of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to
dismiss or an appeal from it; not even a mere allegation that some employees
participating in a petition for certification election are actually managerial
employees will lend an employer legal personality to block the certification
election. The employer's only right in the proceeding is to be notified or
informed thereof.

The petitioner's meddling in the conduct of the certification election

among its employees unduly gave rise to the suspicion that it
intended to establish a company union. For that reason, the
challenges it posed against the certification election proceedings
were rightly denied.
Presently, then, the mixed membership does not result in the
illegitimacy of the registered labor union unless the same was done
through misrepresentation, false statement or fraud according to
Article 239 of the Labor Code. In Air Philippines Corporation v.
Bureau of Labor Relations, we categorically explained that —
Clearly, then, for the purpose of de-certifying a union, it is not enough to
establish that the rank-and-file union includes ineligible employees in its
membership. Pursuant to Article 239 (a) and (c) of the Labor Code, it must be
shown that there was misrepresentation, false statement or fraud in connection
with the adoption or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification, or in connection with the
election of officers, minutes of the election of officers, the list of voters, or
failure to submit these documents together with the list of the newly elected-
appointed officers and their postal addresses to the BLR.

Worth reiterating is that the actual functions of an employee, not his

job designation, determined whether the employee occupied a
managerial, supervisory or rank-and-file position. As to confidential
employees who were excluded from the right to self-organization,
they must (1) assist or act in a confidential capacity, in regard (2) to
persons who formulated, determined, and effectuated management
39
 policies in the field of labor relations. In that regard, mere
allegations sans substance would not be enough, most especially
because the constitutional right of workers to self-organization
would be compromised. (The Heritage Hotel Manila, acting
through its Owner, Grand Plaza Hotel Corporation v. Secretary of
Labor and Employment et al., respondents)
The right of any employee or group of employees to, at any time,
present grievances to the employer does not imply the right to
submit the same to voluntary arbitration. (Juanito Tabigue, et al.
vs. INTERCO, G.R. No. 183335, December 23, 2009)

Article 268 (formerly 256) – Representation Issue in Organized

Establishments

The labor organization designated or selected by the majority of the

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

The purpose of certification election is to give the employees true

representation in their collective bargaining with an employer because
certification election is the most democratic and expeditious method
by which the laborers can freely determine the union that shall act as
their representative in their dealing with the establishment where they
are working. It is the most effective way of determining which labor
organization can truly represent the working force. (Balmar Farms,

40
Inc. vs. National Labor Relations Commission, G.R. No. 73504
October 15, 1991)

It bears stressing that a certification election is the sole concern of the

workers; hence, an employer lacks the personality to dispute the same.
The general rule is that an employer has no standing to question the
process of certification election, since this is the sole concern of the
workers. Law and policy demand that employers take a strict, hands-
off stance in certification elections. The bargaining representative of
employees should be chosen free from any extraneous influence of
management. A labor bargaining representative, to be effective, must
owe its loyalty to the employees alone and to no other. The only
exception is where the employer itself has to file the petition pursuant
to Article 258 (now Article 270) of the Labor Code because of a
request to bargain collectively. (San Miguel Foods, Inc. vs. San
Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206,
August 1, 2011)

41