LABOR RELATIONS LAW CASE DOCTRINES

AMBA, QUELTON REY

BALDECASA, AILEEN
FRANCISCO, PERRY
MANAGUIT, GRACE
SUSVILLA, IAN

COLLECTIVE BARGAINING

Collective Bargaining; mechanics set in motion

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

Collective Bargaining unit; factors to be satisfied and considered in determining

proper constituency

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 and probationary employees . . . 2

RIGHT TO SELF-ORGANIZATION

Right to self-organization includes right to form a union, workers' association and

labor management councils; Right to self-organization connotes unionism. Workers,
however, can also form and join a workers' association as well as labor-management
1
Kiok Loy v. NLRC and Kilusan, G.R. No. L-54334 January 22, 1986
2
San Miguel Corporation Employees Union-Ptgwo v. Hon. Ma. Nieves D. Confesor, G.R. No. 111262.
September 19, 1996
councils (LMC). Expressed in the highest law of the land is the right of all workers to
self-organization. Section 3, Article XIII of the 1987 Constitution states, the State shall
afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all. It shall
guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law.3

Labor Organization; Definition; Rights;

A labor organization is any union or association of employees which exists in whole or
in part for the purpose of collective bargaining or of dealing with employers concerning
terms and conditions of employment." A labor organization has two broad rights: (1) to
bargain collectively and (2) to deal with the employer concerning terms and conditions
of employment. To bargain collectively is a right given to a union once it registers itself
with the DOLE. Dealing with the employer, on the other hand, is a generic description of
interaction between employer and employees concerning grievances, wages, work
hours and other terms and conditions of employment, even if the employees' group is
not registered with the DOLE.4

Difference between Union and Worker’s Association A union refers to any labor
organization in the private sector organized for collective bargaining and for other
legitimate purpose while a workers' association is an organization of workers formed for
the mutual aid and protection of its members or for any legitimate purpose other than
collective bargaining.5

Right to self-organization; subject to certain limitations

The right to self-organization, however, is subject to certain limitations as provided by

law. For instance, the Labor Code specifically disallows managerial employees from
joining, assisting or forming any labor union. Meanwhile, supervisory employees, while
eligible for membership in labor organizations, are proscribed from joining the collective
bargaining unit of the rank and file employees. Even government employees have the
right to self-organization. It is not, however, regarded as existing or available for
purposes of collective bargaining, but simply for the furtherance and protection of their
interests.6

3
Samahan Ng Manggagawa Sa Hanjin Shipyard Rep. v. Bureau Of Labor Relations, G.R. No. 211145,
October 14, 2015
4
Id
5
Id
6
Id
Coverage and employees' right to self-organization

Article 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. (As amended by Batas
Pambansa Bilang 70, May 1, 1980)7

Labor and Social Legislation; Labor Code; Labor Relations; One Company-One
Union Policy; Exception.

The suggested bias of the Labor Code in favor of the one company-one union policy,
anchored on the greater mutual benefits which the parties could derive, especially in the
case of employees whose bargaining strength could undeniably be enhanced by their
unity and solidarity but diminished by their disunity, division and dissension, is not
without exceptions. The present Article 245 of the Labor Code expressly allows
supervisory employees who are not performing managerial functions to join, assist or
form their separate union but bars them from membership in a labor organization of the
rank-and-file employees. Even Section 2(c), Rule V, Book V of the Implementing Rules
and Regulations of the Labor Code, which seeks to implement the policy, also
recognizes exceptions. The usual exception, of course, is where the employer unit has
to give way to the other units like the craft unit, plant unit, or a subdivision thereof, the
recognition of these exceptions takes into account the policy to assure employees of the
fullest freedom in exercising their rights. Otherwise stated, the one company-one union
policy must yield to the right of the employees to form unions or associations for
purposes not contrary to law, to self-organization and to enter into collective bargaining
negotiations, among others, which the Constitution guarantees. 8

Constitutional law; bill of rights; right to from union or associations; scope.

The right to form a union or association or to self-organization comprehends two (2)

broad notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which
guarantees that the employee may act for himself without being prevented by law, and
(b) the power, by virtue of which an employee may, as he pleases, join or refrain from
joining an association. (Victoriano v. Elizalde Rope Workers’ Union, 59 SCRA 54). 9

7
Id
8
Knitoy Manufacturing, Inc vs Ferrer-Calleja, GR No. 81883, September 23, 1992
9
Id
Labor and social legislation; labor code; labor relations; one company-one union
policy; not applicable where existing union covered only one class of employees;
case at bar.

In the bargaining history of KNITJOY, the CBA has been consistently limited to the
regular rank-and-file employees paid on a daily or piece-rate basis. On the other hand,
the rank-and-file employees paid on a monthly basis were never included within its
scope. Respondent KMEU’s membership is limited to the latter class of employees,
KMEU does not seek to dislodge CFW as the exclusive bargaining representative for
the former. The records further disclose that in the certification solicited by TUPAS and
during the elections which followed thereafter, resulting in the certification of CFW as
the exclusive bargaining representative, the monthly-paid employees were expressly
excluded. Thus, the negotiations between CFW and KNITJOY following such a
certification could only logically refer to the rank-and-file employees paid on a daily or
piece-rate basis. Clearly therefore, KNITJOY and CFW recognize that insofar as the
monthly-paid employees are concerned, the latter’s constituting a separate bargaining
unit with the appropriate union as sole bargaining representative, can neither be
prevented nor avoided without infringing on these employees’ rights to form a union and
to enter into collective bargaining negotiations. Stated differently, KNITJOY and CFW
recognize the fact that the existing bargaining unit in the former is not — and has never
been — the employer unit. Given this historical and factual setting, KMEU had the
unquestioned and undisputed right to seek certification as the exclusive bargaining
representative for the monthly-paid rank-and-file employees; both KNITJOY and CFW
cannot block the same on the basis of this Court’s declaration in Bulletin Publishing
Corp. v. Hon. Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor
Relations (155 SCRA 283 [1987]) regarding the one-company-one union concept. 10

Certification election; results thereof confined only to the group it represents; cba
entered does not bar holding of another certification election for the other group;
case at bar.

Considering that (a) the TUPAS solicited certification election was strictly confined to
the rank-and-file employees who are paid on a daily or piece-rate basis, (b) the results
of the election must also necessarily confine the certified union’s representation to the
group it represents and (c) the issue of the plight of the monthly-paid employees was
still pending, KNITJOY and CFW clearly acted with palpable bad faith and malice in
including within the scope of the new CBA these monthly-paid employees. Thus was
effected a conspiracy to defeat and suppress the right of the KMEU and its members to
bargain collectively and negotiate for themselves, to impose upon the latter a contract
the negotiation for which they were not even given notice of, consulted or allowed to

10
Id
participate in, and to oust from the BLR the pending appeal on the certification issue. In
the latter case, KNITJOY and CFW are guilty of contumacious conduct. It goes without
saying then that the new CBA cannot validly include in its scope or coverage the
monthly-paid rank-and-file employees of KNITJOY. It does not bar the holding of a
certification election to determine their sole bargaining agent, and the negotiation for
and the execution of a subsequent CBA between KNITJOY and the eventual winner in
said election (Section 4, Rule V, Book V of the Rules Implementing the Labor Code). 11

Mixing of supervisory and rank-and-file employees does not divest union of

legitimate labor organization status.

The Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union
of disqualified employees is not among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 239 of the Labor Code.

The Court held that after a labor organization has been registered, it may exercise all
the rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its legitimacy
for that is not among the grounds for cancellation of its registration, unless such
mingling was brought about by misrepresentation, false statement or fraud under Article
239 of the Labor Code.12

A labor union’s personality cannot be collaterally attacked in a certification

election proceeding

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. 13

11
Id
12
Republic v Kawashuma Textile MFG Philippines, Inc., G.R. No. 160352 July 23, 2008
13
Id
Collective bargaining unit; what constitutes

A proper bargaining unit maybe said to be a group of employees of a given employer,

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

This Court has already taken cognizance of the crucial issue of determining the proper
constituency of a collective bargaining unit.

Among the factors considered in Democratic Labor Association v. Cebu Stevedoring

Co. Inc. (103 Phil 1103 [1958]) are: "(1) will of employees (Glove Doctrine); (2) affinity
and unity of employee's 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 and probationary
employees".14

Exception to the General Rule: Certification election is the sole concern of the
workers.

As a general rule, a certification election is the sole concern of the workers. The only
exception is where the employer has to file a petition for certification election pursuant
to Art. 259 of the Labor Code because the latter was requested to bargain collectively.
But thereafter the role of the employer in the certification process ceases. The employer
becomes merely a bystander.15

Union shop and closed shop

Article 279 of the Labor Code ordains that "in cases of regular employment, the
employer shall not terminate the services of an employee except for a just cause or
when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the enforcement
of a closed-shop or union security provision in the CBA as a ground for termination finds
no extension within any of the provisions under Title I, Book Six of the Labor Code. Yet
jurisprudence has consistently recognized, thus: "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

14
Belyca Corporation v.Dir. Pura Ferrer Calleja, G.R. No. 77395 November 29, 1988
15
Id
shop' as means of encouraging workers to join and support the union of their choice in
the protection of their rights and interests vis-a-vis the employer."

Although it is accepted that non-compliance with a union security clause is a valid

ground for an employee’s dismissal, jurisprudence dictates that such a dismissal must
still be done in accordance with due process. 16

Notice and hearing constitute the essential elements of procedural due process

The twin requirements of notice and hearing constitute the essential elements of
procedural due process. The law requires the employer to furnish the employee sought
to be dismissed with two written notices before termination of employment can be
legally effected: (1) a written notice apprising the employee of the particular acts or
omissions for which his dismissal is sought in order to afford him an opportunity to be
heard and to defend himself with the assistance of counsel, if he desires, and (2) a
subsequent notice informing the employee of the employer's decision to dismiss him.
This procedure is mandatory and its absence taints the dismissal with illegality. The
rights of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own
union are not wiped away by a union security clause or a union shop clause in a
collective bargaining agreement. x x x.present his side in a controversy with either the
company or his own union are not wiped away by a union security clause or a union
shop clause in a collective bargaining agreement. x x x. 17

Right to self-organization includes the right not to join a union

The right to form or join a labor organization necessarily includes the right to refuse or
refrain from exercising the said right. It is self-evident that just as no one should be
denied the exercise of a right granted by law, so also, no one should be compelled to
exercise such a conferred right.

What the Constitution and 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 being prevented by law; 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; and even after he has joined, he still
16
Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank, G.R. No. 164301. October 19, 2011.
17
Id
retains the liberty and the power to leave and cancel his membership with said
organization at any time.18

Certification election; sole and exclusive bargaining agent of the employees in an

appropriate bargaining unit

In a certification election, all rank and file employees in the appropriate bargaining unit,
whether probationary or permanent are entitled to vote. This principle is clearly stated in
Art. 255 of the Labor Code which states that the "labor organization designated or
selected by the majority of the employees in an appropriate bargaining unit shall be the
exclusive representative of the employees in such unit for purposes of collective
bargaining." Collective bargaining covers all aspects of the employment relation and the
resultant CBA negotiated by the certified union binds all employees in the bargaining
unit. Hence, all rank and file employees, probationary or permanent, have a substantial
interest in the selection of the bargaining representative. The Code makes no distinction
as to their employment status as basis for eligibility in supporting the petition for
certification election. The law refers to "all" the employees in the bargaining unit. All they
need to be eligible to support the petition is to belong to the "bargaining unit .

A certification election is the process of determining the sole and exclusive bargaining
agent of the employees in an appropriate bargaining unit for purposes of collective
bargaining. Collective bargaining refers to the negotiated contract between a legitimate
labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. 19

Termination of Employee; Damage to employer inconsequential; Absence of

damage to employer does not mitigate nor negate the employee’s liability.

Whether respondent did not suffer any damage resulting from the transactions entered
into by petitioner, particularly that with Josefina, is immaterial. As Lopez v. National
Labor Relations Commission instructs: That the [employer] suffered no damage
resulting from the acts of [the employee] is inconsequential. xxx The lack of resulting
damage was unimportant, because "the heart of the charge is the crooked and anarchic
attitude of the employee towards his employer. Damage aggravates the charge but its
absence does not mitigate nor negate the employee’s liability." 20

18
Alexander Reyes, et.al. v. Cresenciano B. Trajano, G.R. No. 84433 June 2, 1992
19
National Union of Workers in Hotels, Restaurants and Allied Industries v. Secretary of Labor and
Employment, G.R. No. 181531 July 31, 2009
20
Milagros Panuncillo vs. CAP Philippines, Inc., G.R. No. 161305 February 9, 2007
Termination of Employee; Valid cause of employment termination; Deliberate
disregard or disobedience of company rules.

In Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng Wellcome-DFA

(NEW-DFA), we held that deliberate disregard or disobedience of company rules could
not be countenanced, and any justification that the disobedient employee might put forth
would be deemed inconsequential. xxx Whatever maybe the justification behind the
violations is immaterial at this point, because the fact still remains that an infraction of
the company rules has been committed. Under the Labor Code, the employer may
terminate an employment on the ground of serious misconduct or willful disobedience
by the employee of the lawful orders of his employer or representative in connection
with his work. Infractions of company rules and regulations have been declared to
belong to this category and thus are valid causes for termination of employment by the
employer.21

Termination of Employee; Due Process; Two written notices and opportunity to

be heard suffices.

Before terminating the services of an employee, the law requires two written notices: (1)
one to apprise him of the particular acts or omissions for which his dismissal is sought;
and (2) the other to inform him of his employer’s decision to dismiss him. As to the
requirement of a hearing, the essence of due process lies in an opportunity to be heard,
and not always and indispensably in an actual hearing. 22

Reinstatement; Reinstatement is simply incompatible with a finding of guilt.

The order to reinstate is incompatible with a finding that the dismissal is for a valid
cause. Thus this Court declared in Colgate Palmolive Philippines, Inc. v. Ople: The
order of the respondent Minister to reinstate the employees despite a clear finding of
guilt on their part is not in conformity with law. Reinstatement is simply incompatible with
a finding of guilt. xxx As stated by us in the case of San Miguel Brewery vs. National
Labor Union, "an employer cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of misfeasance or malfeasance
towards his employer, and whose continuance in the service of the latter is patently
inimical to his interest."23

Employee dismissal; Reinstatement and backwages pending appeal; NLRC‘s

order to reinstate and to pay wages not executory absent writ of execution.
21
Id
22
Id
23
Id
Since this Court is now affirming the challenged decision of the Court of Appeals finding
that petitioner was validly dismissed and accordingly reversing the NLRC Decision that
petitioner was illegally dismissed and should be reinstated, petitioner is not entitled to
collect any backwages from the time the NLRC decision became final and executory up
to the time the Court of Appeals reversed said decision.

It does not appear that a writ of execution was issued for the implementation of the
NLRC order for reinstatement. Had one been issued, respondent would have been
obliged to reinstate petitioner and pay her salary until the said order of the NLRC for her
reinstatement was reversed by the Court of Appeals, and following Roquero, petitioner
would not have been obliged to reimburse respondent for whatever salary she received
in the interim.24

Union Security Provision; Requisites to constitute just cause for terminating

employees; 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
support the decision of the union to expel the employee from the union.

However, 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 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. 25

Employment termination; Violation of Union Security Clause; Mere signing of the

authorization in support of the Petition for Certification Election xxx, before the
"freedom period," is not sufficient ground to terminate the employment of
respondents inasmuch as the petition itself was actually filed during the freedom
period.

We are in consonance with the Court of Appeals when it held that the mere signing of
the authorization in support of the Petition for Certification Election of FFW on March 19,
20 and 21, or before the "freedom period," is not sufficient ground to terminate the
employment of respondents inasmuch as the petition itself was actually filed during the

24
Id
25
Picop Resources, Incorporated (Pri) v. Anacleto L. Tañeca, Et. Al., G.R. No. 160828 August 9, 2010
freedom period. Nothing in the records would show that respondents failed to maintain
their membership in good standing in the Union. Respondents did not resign or
withdraw their membership from the Union to which they belong. Respondents
continued to pay their union dues and never joined the FFW. 26

Incumbent Bargaining Agent; Status after expiration of freedom period; At the

expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for
certification election is filed.

Applying the same provision, it can be said that while it is incumbent for the employer to
continue to recognize the majority status of the incumbent bargaining agent even after
the expiration of the freedom period, they could only do so when no petition for
certification election was filed. The reason is, with a pending petition for certification,
any such agreement entered into by management with a labor organization is fraught
with the risk that such a labor union may not be chosen thereafter as the collective
bargaining representative. The provision for status quo is conditioned on the fact that no
certification election was filed during the freedom period. Any other view would render
nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor organization
would represent them.27

Collective Bargaining Agreement; Automatic Renewal; Automatic renewal

pertains only to the economic provisions of the CBA, and does not include
representational aspect of the CBA.
Moreover, the last sentence of Article 253 which provides for automatic renewal
pertains only to the economic provisions of the CBA, and does not include
representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing
of a petition for certification election. When there is a representational issue, the status
quo provision in so far as the need to await the creation of a new agreement will not
apply. Otherwise, it will create an absurd situation where the union members will be
forced to maintain membership by virtue of the union security clause existing under the
CBA and, thereafter, support another union when filing a petition for certification
election. If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a certification election
is a statutory policy that should not be circumvented, or compromised. 28

26
Id
27
Id
28
Id
Charter certificate; Charter certificate need not be executed under oath by local
officers;

In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996),
the Court ruled that it was not necessary for the charter certificate to be certified and
attested by the local/chapter officers. Id. While this ruling was based on the
interpretation of the previous Implementing Rules provisions which were supplanted by
the 1997 amendments, we believe that the same doctrine obtains in this case.
Considering that the charter certificate is prepared and issued by the national union and
not the local/chapter, it does not make sense to have the local/chapter’s officers x x x
certify or attest to a document which they had no hand in the preparation of. 29

Legitimate labor organization; Requirements for validity of status;

In accordance with this ruling, petitioner union’s charter certificate need not be executed
under oath. Consequently, it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter certificate, (2) the names of its officers,
their addresses, and its principal office, and (3) its constitution and by-laws— the last
two requirements having been executed under oath by the proper union officials as
borne out by the records.30

Supervisory employees; Definition; Recommendatory managerial actions;

The job descriptions indicate that the aforesaid employees exercise recommendatory
managerial actions which are not merely routinary but require the use of independent
judgment, hence, falling within the definition of supervisory employees under Article
212(m) of the Labor Code.31

Labot Organizations; Co-mingling of supervisory and rank-and-file employees;

Legitimate status of labor organizations not affected by mixture of supervisory
and rank-and-file employees.

Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union

does not divest it of its status as a legitimate labor organization. The appellate court’s
reliance on Toyota is misplaced in view of this Court’s subsequent ruling in Republic v.
Kawashima Textile Mfg., Philippines, Inc.32

Certification election proceedings; Employer a mere bystander; Legal personality

cannot be collaterally attacked.
29
Smcc-Super, Et. Al. v. Charter Chemical And Coating Corporation, G.R. No. 169717 March 16, 2011
30
Id
31
Id
32
Id
Petitioner union correctly argues that its legal personality cannot be collaterally attacked
in the certification election proceedings. As we explained in 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. 33

Employee Dismissal; Legality of Dismissal; An employee may be terminated for

reasons involving measures taken by the employer due to business necessities
under Article 283 of Labor Code.

Under our laws, an employee may be terminated for reasons involving measures taken
by the employer due to business necessities. Article 283 of the Labor Code provides:

Art. 283. Closure of establishment and reduction of personnel. - The employer may also
terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Department of Labor and Employment at least one (1) month before the intended
date thereof. xxx34

Dismissal due to Redundancy; Requisites; An employer cannot simply declare

that it has become overmanned and dismiss its employees without producing
adequate proof to sustain its claim of redundancy.

However, an employer cannot simply declare that it has become overmanned and
dismiss its employees without producing adequate proof to sustain its claim of
redundancy. Among the requisites of a valid redundancy program are: (1) the good faith
of the employer in abolishing the redundant position; and (2) fair and reasonable criteria

33
Id
34
Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al., G.R. No. 165381 February 9,
2011
in ascertaining what positions are to be declared redundant, such as but not limited to:
preferred status, efficiency, and seniority.

This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the
newly created positions, job description and the approval by the management of the
restructuring.35

Unfair Labor Practice; Concept; 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.

In the past, we have ruled that "unfair labor practice refers to ‘acts that violate the
workers' right to organize.’ The prohibited acts are related to the workers' right to self-
organization and to the observance of a CBA."45 We have likewise declared that "there
should be no dispute that all the prohibited acts constituting unfair labor practice in
essence relate to the workers' right to self-organization."46 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. 36

Appropriate Bargaining Unit; Definition; Best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining provisions of the law.

Petitioner’s contentions are erroneous. In G.R. No. 110399, the Court explained that the
employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao,
San Fernando, and Otis constitute a single bargaining unit, which is not contrary to the
one-company, one-union policy. An appropriate bargaining unit is defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent with equity to
the employer, indicate to be best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of the law. 37

Bargaining Unit’s acceptability; Community or mutuality of interests test; The test

of grouping is community or mutuality of interest.

In National Association of Free Trade Unions v. Mainit Lumber Development Company

Workers Union – United Lumber and General Workers of the Phils, the Court, taking
35
Id
36
Id
37
San Miguel Foods, Inc. v. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206 August 1,
2011
into account the "community or mutuality of interests" test, ordered the formation of a
single bargaining unit consisting of the Sawmill Division in Butuan City and the Logging
Division in Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber
Development Company. It held that while the existence of a bargaining history is a
factor that may be reckoned with in determining the appropriate bargaining unit, the
same is not decisive or conclusive. Other factors must be considered. The test of
grouping is community or mutuality of interest. This is so because the basic test of an
asserted bargaining 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. Certainly, there is a mutuality of interest among the employees of the
Sawmill Division and the Logging Division. Their functions mesh with one another. One
group needs the other in the same way that the company needs them both. There may
be differences as to the nature of their individual assignments, but the distinctions are
not enough to warrant the formation of a separate bargaining unit. 38

Confidential employees; Definition; One entrusted with confidence on delicate, or

with the custody, handling or care and protection of the employer’s property.

A confidential employee is one entrusted with confidence on delicate, or with the

custody, handling or care and protection of the employer’s property. Confidential
employees, such as accounting personnel, should be excluded from the bargaining unit,
as their access to confidential information may become the source of undue advantage.
However, such fact does not apply to the position of Payroll Master and the whole
gamut of employees who, as perceived by petitioner, has access to salary and
compensation data. The CA correctly held that the position of Payroll Master does not
involve dealing with confidential labor relations information in the course of the
performance of his functions. Since the nature of his work does not pertain to company
rules and regulations and confidential labor relations, it follows that he cannot be
excluded from the subject bargaining unit. 39

Union; Obligation to pay attorney’s fees

We likewise ruled in Bank of the Philippine Islands Employees Union-Association Labor

Union (BPIEU-ALU) vs. NLRC,. the afore-cited provision (Article 222 (b) of the Labor
Code) as prohibiting the payment of attorney's fees only when it is effected through
forced contributions from workers from their own funds as distinguished from the union
funds. The purpose of the provision is to prevent imposition on the workers of the duty
to individually contribute their respective shares in the fee to be paid the attorney for his
services on behalf of the union in its negotiations with management. The obligation to
pay the attorney's fees belongs to the union and cannot be shunted to the workers as
38
Id
39
Id
their direct responsibility. Neither the lawyer nor the union itself may require the
individual worker to assume the obligation to pay attorney's fees from their own pockets.
So categorical is this intent that the law makes it clear that any agreement to the
contrary shall be null and void ab initio.

From all the foregoing, we are of the considered view that public respondent did not act
with grave abuse of discretion in ruling that the workers through their union should be
made to shoulder the expenses incurred for the services of a lawyer. And accordingly,
the reimbursement should be charged to the union's general fund or account. No
deduction can be made from the salaries of the concerned employees other than those
mandated by law.40

Confidential employees; two criteria

Confidential employees are defined as those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management policies
in the field of labor relations. The two (2) criteria are cumulative, and both must be met if
an employee is to be considered a confidential employee – that is, the confidential
relationship must exist between the employee and his supervisor, and the supervisor
must handle the prescribed responsibilities relating to labor relations. The exclusion
from bargaining units of employees who, in the normal course of their duties, become
aware of management policies relating to labor relations is a principal objective sought
to be accomplished by the "confidential employee rule." There is no showing in this
case that the secretaries/clerks and checkers assisted or acted in a confidential
capacity to managerial employees and obtained confidential information relating to labor
relations policies. And even assuming that they had exposure to internal business
operations of the company, respondent claimed, this is not per se ground for their
exclusion in the bargaining unit of the daily-paid rank-and-file employees.

Not being confidential employees, the secretaries/clerks and checkers are not
disqualified from membership in the Union of respondent’s rank-and-file employees.
Petitioner argues that respondent’s act of unilaterally stopping the deduction of union
dues from these employees constitutes unfair labor practice as it "restrained" the
workers’ exercise of their right to self-organization, as provided in Article 248 (a) of the
Labor Code.41

Unfair labor practice; when it is committed

40
Evangeline J. Gabriel, et. Al. v. The Honorable Secretary of Labor and Employment, G.R. No. 115949
March 16, 2000
41
Tunay Na Pagkakaisa Ng Manggagawa Sa Asia Brewery v. Asia Brewery, Inc., G.R. No. 162025
August 3, 2010
Unfair labor practice refers to "acts that violate the workers’ right to organize." The
prohibited acts are related to the workers’ right to self-organization and to the
observance of a CBA. For a charge of unfair labor practice to prosper, it must be shown
that ABI was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or
done in a manner contrary to morals, good customs, or public policy, and, of course,
that social humiliation, wounded feelings or grave anxiety resulted x x x" from ABI’s act
in discontinuing the union dues deduction from those employees it believed were
excluded by the CBA. Considering that the herein dispute arose from a simple
disagreement in the interpretation of the CBA provision on excluded employees from
the bargaining unit, respondent cannot be said to have committed unfair labor practice
that restrained its employees in the exercise of their right to self-organization, nor have
thereby demonstrated an anti-union stance.

Collective bargaining; procedure is mandatory

It bears stressing that the procedure in collective bargaining prescribed by the Code is
mandatory because of the basic interest of the state in ensuring lasting industrial peace.
Thus:
ART. 250. Procedure in collective bargaining. – The following procedures shall be
observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply
thereto not later than ten (10) calendar days from receipt of such notice. (Underscoring
supplied.)
GMC’s failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt
the union no longer represented the workers, was mainly dilatory as it turned out to be
utterly baseless.
We hold that GMC’s refusal to make a counter-proposal to the union’s proposal for CBA
negotiation is an indication of its bad faith. Where the employer did not even bother to
submit an answer to the bargaining proposals of the union, there is a clear evasion of
the duty to bargain collectively.
Failing to comply with the mandatory obligation to submit a reply to the union’s
proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor
practice. Perforce, the Court of Appeals did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in finding that GMC is, under the
circumstances, guilty of unfair labor practice.42

42
General Milling Corporation v. Hon. Court Of Appeals, et.al., G.R. No. 146728 February 11, 2004
Collective bargaining agreement; duty to bargain collectively

ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. – .... It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period [prior to its expiration date] and/or until a new agreement is
reached by the parties.

The provision mandates the parties to keep the status quo while they are still in the
process of working out their respective proposal and counter proposal. The general rule
is that when a CBA already exists, its provision shall continue to govern the relationship
between the parties, until a new one is agreed upon. The rule necessarily presupposes
that all other things are equal. That is, that neither party is guilty of bad faith. However,
when one of the parties abuses this grace period by purposely delaying the bargaining
process, a departure from the general rule is warranted.

Under ordinary circumstances, it is not obligatory upon either side of a labor controversy
to precipitately accept or agree to the proposals of the other. But an erring party should
not be allowed to resort with impunity to schemes feigning negotiations by going
through empty gestures. Thus, by imposing on GMC the provisions of the draft CBA
proposed by the union, in our view, the interests of equity and fair play were properly
served and both parties regained equal footing, which was lost when GMC thwarted the
negotiations for new economic terms of the CBA. 43

Collective bargaining agreement; Union shop clauses to promote unionism as

declared in the Constitution

“The rationale for upholding the validity of union shop clauses in a CBA, even if they
impinge upon the individual employee's right or freedom of association, is not to protect
the union for the union's sake. Laws and jurisprudence promote unionism and afford
certain protections to the certified bargaining agent in a unionized company because a
strong and effective union presumably benefits all employees in the bargaining unit
since such a union would be in a better position to demand improved benefits and
conditions of work from the employer. This is the rationale behind the State policy to
promote unionism declared in the Constitution.” 44

Confidential employees; definition; confidential employee rule

43
Id
44
Bank Of The Philippine Islands v. BPI Employees Union-Davao Chapter-Federation Of Unionsin Bpi
Unibank, G.R. No. 164301 August 10, 2010
Confidential employees are defined as those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management policies
in the field of labor relations. The two (2) criteria are cumulative, and both must be met if
an employee is to be considered a confidential employee – that is, the confidential
relationship must exist between the employee and his supervisor, and the supervisor
must handle the prescribed responsibilities relating to labor relations. The exclusion
from bargaining units of employees who, in the normal course of their duties, become
aware of management policies relating to labor relations is a principal objective sought
to be accomplished by the "confidential employee rule." There is no showing in this
case that the secretaries/clerks and checkers assisted or acted in a confidential
capacity to managerial employees and obtained confidential information relating to labor
relations policies. And even assuming that they had exposure to internal business
operations of the company, respondent claimed, this is not per se ground for their
exclusion in the bargaining unit of the daily-paid rank-and-file employees. 45

Gross Violation of Collective Bargaining Unit (CBA); Unfair Labor Practice; It shall
be unlawful for an employer to violate the collective bargaining agreement under
Article 248 (i), since a valid and binding CBA had been entered into by the
workers and the employer, hence the latter is behooved to observe the terms and
conditions thereof bearing on union dues and representation.

It is axiomatic in labor relations that a CBA entered into by a legitimate labor

organization that has been duly certified as the exclusive bargaining representative and
the employer becomes the law between them. Additionally, in the Certificate of
Registration issued by the DOLE, it is specified that the registered CBA serves as the
covenant between the parties and has the force and effect of law between them during
the period of its duration. Compliance with the terms and conditions of the CBA is
mandated by express policy of the law primarily to afford protection to labor and to
promote industrial peace.46

Unfair labor practice; Violation of CBA; Requisites; (1) gross violation of CBA and
(2) the violation pertains to the economic provisions of the CBA.

The correlations of Article 260 (i) and Article 274 of the Labor Code states that for unfair
labor practice pertaining to the violation of the CBA exist it must show prima facie the
concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation
pertains to the economic provisions of the CBA. Article 274 provides that gross violation
45
Tunay Na Pagkakaisa Ng Manggagawa Sa Asiabrewery v. Asia Brewery, Inc. G.R. No. 162025 August
3, 2010
46
Employees Union of Bayer v. Bayer Phils., GR No. 162943, December 6, 2010
of the CBA shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.47

Violations in the Economic Provisions of CBA; Jurisdiction; Unfair labor practice

cases shall be under the original and exclusive jurisdiction of the Labor Arbiter
as per Article 224.

Unfair labor practice case to be cognizable by the Labor Arbiter, and for the NLRC to
exercise appellate jurisdiction thereon, the allegations in the complaint must show prima
facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the
violation pertains to the economic provisions of the CBA. 48

Voluntary Arbitration/ Grievance Machinery; Limitations; Limited only to disputes

involving the union and the company.

Pursuant to Article 273 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.49

Exclusiveness of the Representative Rule; Article 255 of the Labor Code provides
that individual employee or group of employees shall have the right at any time to
present grievance to their employer.

The Supreme Court is not persuaded when petitioners invoke the first paragraph of
Article 255 of the Labor Code which states that 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. To petitioners, the
immediately quoted provision "is meant to be an exception to the exclusiveness of the
representative role of the labor organization/union."

However, the court disagrees by arguing that 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.50
47
Id
48
Id
49
Juanito Tabigue, et al v. International Copra Export Corporation (INTERCO), G.R. No. 183335
December 23, 2009
50
Id
Collective Bargaining Agreement; Purpose; CBA as a contract; Exclusive
Bargaining Unit; Terms and Conditions of Employment

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
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
c64onsideration to the context in which it is negotiated and the purpose which it is
intended to serve.51

Suspension of Collective Bargaining Agreement; Terms of a Collective

Bargaining Agreement; Purpose; Article 264 of the Labor Code; Representation
aspect of CBA; Rights of the parties

Insofar as representation is concerned, a CBA has a term of five years, while the other
provisions, except for representation, may be negotiated not later than three years after
the execution. Hence, by agreeing to a 10-year suspension do not abdicated the
workers’ constitutional right to bargain for another CBA at the mandated time as the
right to free collective bargaining, after all, includes the right to suspend it. The
agreement of 10-year suspension of CBA do not contravene with the protection of labor
policy of the Constitution and that the said agreement afforded full protection to labor;
promoted the shared responsibility between workers and employers; and they exercised
voluntary modes in settling disputes, including conciliation to foster industrial peace.

Article 264 (253-A) has a two-fold purpose. One is to promote industrial stability and
predictability. Inasmuch as the agreement sought to promote industrial peace, said
agreement satisfies the first purpose of Article 264 (253-A). The other is to assign
specific timetables wherein negotiations become a matter of right and requirement.
Nothing in Article 264 (253-A), prohibits the parties from waiving or suspending the
mandatory timetables and agreeing on the remedies to enforce the same. 52

Closed-shop agreement; Union Security Clause; Collective Bargaining

Agreement; Validity of the union security clause

51
Gerardo F. Rivera, v. Hon. Edgardo Espiritu G.R. No. 135547. January 23, 2002
52
Id
A union member may not be expelled from her union, and consequently from her job,
for personal or impetuous reasons or for causes foreign to the closed-shop agreement
and in a manner characterized by arbitrariness and whimsicality.

A closed-shop agreement is an agreement whereby an employer binds himself to hire

only members of the contracting union who must continue to remain members in good
standing to keep their jobs. It is "the most prized achievement of unionism." It adds
membership and compulsory dues. By holding out to loyal members a promise of
employment in the closed-shop, it welds group solidarity. It is a very effective form of
union security agreement.

Closed-shop is a valid form of union security, and such a provision in a collective

bargaining agreement is not a restriction of the right of freedom of association
guaranteed by the Constitution. A union security clauses are governed by law and by
principles of justice, fair play, and legality. It cannot be used by union officials against an
employer, much less their own members, except with a high sense of responsibility,
fairness, prudence, and judiciousness. 53

Quasi-judicial; National Labor Relations Commission; Jurisdiction; Agencies;

Grave abuse of discretion; CBA provisions on Illegal dismissal

It is a well-settled principle that findings of facts quasi-judicial agencies like the NLRC,
which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect but at times even finality if such findings are
supported by substantial evidence.54

Termination of Employees; Labor Code of the Philippines; Union Security Clause;

Collective Bargaining Agreement

the Labor Code of the Philippines has several provisions under which an employee may
be validly terminated, namely:

a. Just causes under Article 282;

b. Authorized causes under Article 283;
c. Termination due to disease under Article 284; and
d. Termination by the employee or resignation under Article 285.

53
Manila Mandarin Employees Union v. National Labor Relations Commission, G.R. No. 76989,
September 29, 1987, 154 SCRA 368, 375
54
Id
While the said provisions did not mention as ground the enforcement of the Union
Security Clause in the CBA, the dismissal from employment based on the same is
recognized and accepted in our jurisdiction. 55

Union Security Clause; Collective Bargaining Unit; Closed-Shop; Union-Shop;

Employment Condition; Union Membership; Agreement between Employer and
Employees

"Union security" is a generic term, which is applied to and comprehends "closed shop,"
"union shop," "maintenance of membership" or any other form of agreement which
imposes upon employees the obligation to acquire or retain union membership as a
condition affecting employment.

There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain
union membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit or the agreement is terminated.

A closed-shop, on the other hand, may be defined as an enterprise in which, by

agreement between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the enterprise unless
he or she is, becomes, and, for the duration of the agreement, remains a member in
good standing of a union entirely comprised of or of which the employees in interest are
a part.56

Union Security Clause; Enforcement; Termination of Employees; Requisites;

Collective Bargaining Agreement

In terminating the employment of an employee by enforcing the Union Security Clause,

the employer needs only to determine and prove that:

(1) The union security clause is applicable;

55
Inguillo v. First Philippine Scales, Inc., G.R. No. 165407, June 5, 2009, 588 SCRA 471, 485-486
56
Id
 (2) The union is requesting for the enforcement of the union security provision in the
cba; and
(3) There is sufficient evidence to support the union's decision to expel the employee
from the union or company.57

Dismissal of Employees; Union Security Clause; Due process; Arbitrary

Dismissal; Substantive and Procedural Due Process;

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."

To uphold dismissal pursuant to a union security clause, the same is not without a
condition or restriction. For to allow its untrammeled enforcement would encourage
arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus,
to safeguard the rights of the employees, time and again that 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. The enforcement of union security
clauses is authorized by law, provided such enforcement is not characterized by
arbitrariness, and always with due process.

The employer must furnish the employee two written notices before termination may be
effected. The first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought, while the second notice informs the employee of the
employer's decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that
an actual hearing was conducted.58

Union Security Clause; Types and Definition; Labor Code of the Philippines;
Agreement between parties

The other common types of union security clause are defined and distinguished in the
LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August
1997, to wit:

57
Id
58
Id
 (a) Open shop, which is an arrangement on recruitment whereby an employer may
hire any employee, union member or not, but the new employee must join the
union within a specified time and remain a member in good standing;
(b) Agency shop, which is an arrangement whereby non-members of the contracting
union must pay the union a sum equal to union dues known as "agency fees" for
the benefits they received as a consequence of the bargaining negotiations
effected through the efforts of the union; and
(c) Check off, which is an arrangement by a union with the employer for dues to be
deducted regularly from the members' salaries wherein the sum collected is
remitted to the union by check. 59

59
Id