Republic of the Philippines Supreme Court Manila THIRD DIVISION REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and

Employment (DOLE), Petitioner, G.R. No. 160352 Present: QUISUMBING,* J., YNARES-SANTIAGO, Chairperson, AUSTRIA-MARTINEZ, NACHURA, and REYES, JJ. Promulgated: July 23, 2008 x----------------------------------------------------------x DECISION AUSTRIA-MARTINEZ, J.: The Republic of the Philippines assails by way of Petition for Review on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002 Decision[1] of the Court of Appeals (CA), which reversed the August 18, 2000 Decision[2] of the Department of Labor and Employment (DOLE), and reinstated the May 17, 2000 Order[3] of MedArbiter Anastacio L. Bactin, dismissing the petition of Kawashima Free Workers Union-PTGWO Local Chapter No. 803 (KFWU) for the conduct of a certification election in Kawashima Textile Mfg. Phils., Inc. (respondent); and the October 7, 2003 CA Resolution[4] which denied the motion for reconsideration. The relevant facts are of record. On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for Certification Election to be conducted in the bargaining unit composed of 145 rankand-file employees of respondent.[5] Attached to its petition are a Certificate of Creation of Local/Chapter[6] issued on January 19, 2000 by DOLE Regional Office No. IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by the national federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of Local/Chapter.[7] Respondent filed a Motion to Dismiss[8] the petition on the ground that KFWU did not acquire any legal personality because its membership of mixed rank-and-file and supervisory employees violated Article 245 of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court in Progressive Development Corporation v. Secretary, Department of Labor and Employment.[9] In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWUs legal personality defective and dismissed its petition for certification election, thus: We scrutinize the facts and evidences presented by the parties and arrived at a decision that at least two (2) members of [KFWU], namely:Dany I. Fernandez and Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under them. Being supervisory employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the union of the rank and file employees. Dany I. Fernandez and Jesus R.Quinto, Jr., Chief Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen to the line engineers, mechanics and other non-skilled workers and responsible [for] the preparation and organization of maintenance shop fabrication and schedules, inventory and control of materials and supplies and tasked to implement training plans on line engineers and evaluate the performance of their subordinates. The above-stated actual functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are supervisory employees. xxxx Since petitioners members are mixture of rank and file and supervisory employees, petitioner union, at this point [in] time, has not attained the status of a legitimate labor organization. Petitioner should first exclude the supervisory employees from it membership before it can attain the status of a legitimate labor organization. The above judgment is supported by the decision of the Supreme Court in the Toyota Case[10] wherein the High Tribunal ruled: As respondent unions membership list contains the names of at least twenty seven (27) supervisory employees in Level Five Positions, the union could not prior to purging itself of its supervisory employee members,

- versus -

KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., Respondent.

attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election. (Underscoring omitted.) xxxx Furthermore, the commingling of rank and file and supervisory employees in one (1) bargaining unit cannot be cured in the exclusioninclusion proceedings [at] the pre-election conference. The above ruling is supported by the Decision of the Supreme Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and Employment, et al., G.R. No. 131248 dated December 11, 1998[11] x x x. xxxx WHEREFORE, premises considered, the petition for certification election is hereby dismissed for lack of requisite legal status of petitioner to file this instant petition. SO ORDERED.[12] (Emphasis supplied) On the basis of the aforecited decision, respondent filed with DOLE Regional Office No. IV a Petition for Cancellation of Charter/Union Registration of KFWU,[13] the final outcome of which, unfortunately, cannot be ascertained from the records. Meanwhile, KFWU appealed[14] to the DOLE which issued a Decision on August 18, 2000, the dispositive portion of which reads: WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be remanded to the office of origin for the immediate conduct of certification election, subject to the usual preelection conference, among the rank-and-file employees of Kawashima Textile Manufacturing Philippines, Inc. with the following choices: 1. 2. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and No union.

Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is hereby directed to submit to the office of origin the certified list of current employees in the bargaining unit for the last three months prior to the issuance of this decision. SO DECIDED.[15] The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union[16] and Dunlop Slazenger, Inc. v. Secretary of Labor and Employment[17]was misplaced, for while Article 245 declares supervisory employees ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the effect of such prohibited membership on the legitimacy of the labor organization and its right to file for certification election. Neither was such mixed membership a ground for cancellation of its registration. Section 11, Paragraph II, Rule XI of Department Order No. 9 provides for the dismissal of a petition for certification election based on lack of legal personality of a labor organization only on the following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal personality has been revoked or canceled with finality.[18] TheDOLE noted that neither ground existed; on the contrary, KFWU's legal personality was well-established, for it held a certificate of creation and had been listed in the registry of legitimate labor organizations. As to the failure of KFWU to file its books of account, the DOLE held that such omission was not a ground for revocation of union registration or dismissal of petition for certification election, for under Section 1, Rule VI of Department Order No. 9, a local or chapter like KFWU was no longer required to file its books of account.[19] Respondent filed a Motion for Reconsideration[20] but the DOLE denied the same in its September 28, 2000 Resolution.[21] However, on appeal by respondent, the CA rendered the December 13, 2002 Decision assailed herein, reversing the August 18, 2000 DOLE Decision, thus: Since respondent union clearly consists of both rank and file and supervisory employees, it cannot qualify as a legitimate labor organization imbued with the requisite personality to file a petition for certification election. This infirmity in union membership cannot be corrected in the inclusion-exclusion proceedings during the pre-election conference. Finally, contrary to the pronouncement of public respondent, the application of the doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Corporation Labor Union was not construed in a way that effectively denies the fundamental right of respondent union to organize and seek bargaining representation x x x. For ignoring jurisprudential precepts on the matter, the Court finds that the Undersecretary of Labor, acting under the authority of the Secretary of Labor, acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of the Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of the Med-Arbiter dismissing the petition for certification election filed by Kawashima Free Workers Union-PTGWO Local Chapter No. 803 is REINSTATED. SO ORDERED.[22] (Emphasis supplied) KFWU filed a Motion for Reconsideration[23]but the CA denied it. The Republic of the Philippines (petitioner) filed the present petition to seek closure on two issues: First, whether a mixed membership of rank-and-file and supervisory employees in a union is a ground for the dismissal of a petition for certification election in view of the amendment brought about by D.O. 9, series of 1997, which deleted the phraseology in the old rule that *t+he appropriate bargaining unit of the rank-and-file employee shall not include the supervisory employees and/or security guards; and Second, whether the legitimacy of a duly registered labor organization can be collaterally attacked in a petition for a certification election through a motion to dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc.[24] The petition is imbued with merit. The key to the closure that petitioner seeks could have been Republic Act (R.A.) No. 9481.[25] Sections 8 and 9 thereof provide: Section 8. Article 245 of the Labor Code is hereby amended to read as follows: "Art. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in 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." Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows: "Art. 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 union. Said employees are automatically deemed removed from the list of membership of said union." (Emphasis supplied) Moreover, under Section 4, a pending petition for cancellation of registration will not hinder a legitimate labor organization from initiating a certification election, viz: Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read as follows: "Art. 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." (Emphasis supplied) Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to interfere with or thwart a petition for certification election filed by a legitimate labor organization, to wit: Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read as follows: "Art. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer's participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition." (Emphasis supplied) However, R.A. No. 9481 took effect only on June 14, 2007;[26] hence, it applies only to labor representation cases filed on or after said date.[27] As the petition for certification election subject matter of the present petition was filed by KFWU on January 24, 2000,[28] R.A. No. 9481 cannot apply to it. There may have been curative

labor legislations[29] that were given retrospective effect,[30] but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive rights and interests already vested would be impaired in the process.[31] Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election on January 24, 2000 are R.A. No. 6715,[32] amending Book V of Presidential Decree (P.D.) No. 442 (Labor Code),[33] as amended, and the Rules and Regulations Implementing R.A. No. 6715,[34] as amended by Department Order No. 9, series of 1997.[35] It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court will now resolve the two issues raised by petitioner. If there is one constant precept in our labor laws be it Commonwealth Act No. 213 (1936),[36] R.A. No. 875 (1953),[37]P.D. No. 442 (1974), Executive Order (E.O.) No. 111 (1986)[38] or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may exercise the right to be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining.[39] What has varied over the years has been the degree of enforcement of this precept, as reflected in the shifting scope of administrative and judicial scrutiny of the composition of a labor organization before it is allowed to exercise the right of representation. One area of contention has been the composition of the membership of a labor organization, specifically whether there is a mingling of supervisory and rank-andfile employees and how such questioned mingling affects its legitimacy. It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited,[40] to wit: Sec. 3. Employees right to self-organization. Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. Individuals employed as supervisors shall not be eligible for membership in a labor organization of employees under their supervision but may form separate organizations of their own. (Emphasis supplied) Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the legitimacy of the labor organization. Under Section 15, the only instance when a labor organization loses its legitimacy is when it violates its duty to bargain collectively; but there is no word on whether such mingling would also result in loss of legitimacy. Thus, when the issue of whether the membership of two supervisory employees impairs the legitimacy of a rank-and-file labor organization came before the Court En Banc in Lopez v. Chronicle Publication Employees Association,[41] the majority pronounced: It may be observed that nothing is said of the effect of such ineligibility upon the union itself or on the status of the other qualified members thereof should such prohibition be disregarded. Considering that the law is specific where it intends to divest a legitimate labor union of any of the rights and privileges granted to it by law, the absence of any provision on the effect of the disqualification of one of its organizers upon the legality of the union, may be construed to confine the effect of such ineligibility only upon the membership of the supervisor. In other words, the invalidity of membership of one of the organizers does not make the union illegal, where the requirements of the law for the organization thereof are, nevertheless, satisfied and met.[42] (Emphasis supplied) Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875. The provision in the Labor Code closest to Sec. 3 is Article 290,[43] which is deafeningly silent on the prohibition against supervisory employees mingling with rank-and-file employees in one labor organization. Even the Omnibus Rules Implementing Book V of the Labor Code[44] (Omnibus Rules) merely provides in Section 11, Rule II, thus: Sec. 11. Supervisory unions and unions of security guards to cease operation. All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically cancelled. However, existing collective agreements with such unions, the life of which extends beyond the date of effectivity of the Code shall be respected until their expiry date insofar as the economic benefits granted therein are concerned. Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or assist the rank and file organization. The determination of who are managerial employees and who are not shall be the subject of negotiation between representatives of supervisory union and the employer. If no agreement s reached between the parties, either or both of them ma bring the issue to the nearest Regional Office for determination. (Emphasis supplied) The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in Bulletin v. Sanchez[45] that supervisory employees who do not fall under the category of managerial employees may join or assist in the formation of a labor organization for rank-and-file employees, but they may not form their own labor organization. While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its implementing rules[46] continued to recognize the right of supervisory employees, who do not fall under the category of managerial employees, to join a rank-and-file labor organization.[47]

Effective 1989, R.A. No. 6715 restored the prohibition against the questioned mingling in one labor organization, viz: Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read as follows Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own. (Emphasis supplied) Unfortunately,justlike R.A.No. 875,R.A. No.6715omittedspecifyingtheexacteffectany violationoftheprohibition wouldbring aboutonthe legitimacyofa labor organization. It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions): Sec. 1. Who may join unions. x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz: Sec. 1. Where to file. A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath. Sec. 2. Who may file. Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization, shall contain, among others: xxxx (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied) By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election. Thus, when the issue of the effect of mingling was brought to the fore in Toyota,[48] the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held: Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rankand-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. xxxx In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election.[49] (Emphasis supplied) In Dunlop,[50] in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members.[51] It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases.

But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules - that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees - was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus: Rule XI Certification Elections xxxx Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit.[52] In Pagpalain Haulers, Inc. v. Trajano,[53] the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit: Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapters constitution and by-laws; provided that where the local/chapters constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. which does not require that, for its creation and registration, a local or chapter submit a list of its members. Then came Tagaytay Highlands Intl. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO[54] in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlop and reverted to its pronouncement inLopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof.[55] Thus, 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.[56] In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW,[57] the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members.[58] More to the point is Air Philippines Corporation v. Bureau of Labor Relations,[59] which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership:[60]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.[61] All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court inTagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules. Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE granting the petition for certification election of KFWU. Now to the second issue of whether an employer like respondent may collaterally attack the legitimacy of a labor organization by filing a motion to dismiss the latters petition for certification election. Except when it is requested to bargain collectively,[62] 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.[63] 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;[64] 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.[65] The employer's only

right in the proceeding is to be notified or informed thereof.[66] The amendments to the Labor Code and its implementing rules have buttressed that policy even more. WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and October 7, 2003 Resolution of the Court of Appeals and the May 17, 2000 Order of Med-Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE, while the August 18, 2000 Decision and September 28, 2000 Resolution of the Department of Labor and Employment are REINSTATED. No costs. SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING Associate Justice

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

ANTONIO EDUARDO B. NACHURA Associate Justice

RUBEN T. REYES Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 77395 November 29, 1988 BELYCA CORPORATION, petitioner, vs. DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF LABOR AND EMPLOYMENT; MED-ARBITER, RODOLFO S. MILADO, MINISTRY OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10 AND ASSOCIATED LABOR UNION (ALU-TUCP), MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO CITY,respondents. Soriano and Arana Law Offices for petitioner. The Solicitor General for public respondent. Francisco D. Alas for respondent Associated Labor Unions-TUCP.

PARAS, J.: This is a petition for certiorari and prohibition with preliminary injunction seeking to annul or to set aside the resolution of the Bureau of Labor Relations dated November 24, 1986 and denying the appeal, and the Bureau's resolution dated January 13, 1987 denying petitioner's motion for reconsideration. The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo, p. 4) reads as follows: WHEREFORE, in view of all the foregoing considerations, the Order is affirmed and the appeal therefrom denied. Let, therefore, the pertinent records of the case be remanded to the office of origin for the immediate conduct of the certification election. The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads, as follows: WHEREFORE, the Motion for Reconsideration filed by respondent Belyca Corporation (Livestock Agro-Division) is hereby dismissed for lack of merit and the Bureau's Resolution dated 24 November 1986 is affirmed. Accordingly, let the records of this case be immediately forwarded to the Office of origin for the holding of the certification elections. No further motion shall hereafter be entertained. The antecedents of the case are as follows: On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor organization duly registered with the Ministry of Labor and Employment under Registration Certificate No. 783-IP, filed with the Regional Office No. 10, Ministry of Labor and Employment at Cagayan de Oro City, a petition for direct certification as the sole and exclusive bargaining agent of all the rank and file employees/workers of Belyca Corporation (Livestock and Agro-Division), a duly organized, registered and existing corporation engaged in the business of poultry raising, piggery and planting of agricultural crops such as corn, coffee and various vegetables, employing approximately 205 rank and file employees/workers, the collective bargaining unit sought in the petition, or in case of doubt of the union's majority representation, for the issuance of an order authorizing the immediate holding of a certification election (Rollo, p. 18). Although the case was scheduled for hearing at least three times, no amicable settlement was reached by the parties. During the scheduled hearing of July 31, 1986 they, however, agreed to submit simultaneously their respective position papers on or before August 11, 1986 (rollo. p. 62).

Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged, among others, (1) that there is no existing collective bargaining agreement between the respondent employer, petitioner herein, and any other existing legitimate labor unions; (2) that there had neither been a certification election conducted in the proposed bargaining unit within the last twelve (12) months prior to the filing of the petition nor a contending union requesting for certification as the. sole and exclusive bargaining representative in the proposed bargaining unit; (3) that more than a majority of respondent employer's rank-and-file employees/workers in the proposed bargaining unit or one hundred thirty-eight (138) as of the date of the filing of the petition, have signed membership with the ALU-TUCP and have expressed their written consent and authorization to the filing of the petition; (4) that in response to petitioner union's two letters to the proprietor/ General Manager of respondent employer, dated April 21, 1986 and May 8, 1 986, requesting for direct recognition as the sole and exclusive bargaining agent of the rank-and-file workers, respondent employer has locked out 119 of its rank-and-file employees in the said bargaining unit and had dismissed earlier the local union president, vice-president and three other active members of the local unions for which an unfair labor practice case was filed by petitioner union against respondent employer last July 2, 1986 before the NLRC in Cagayan de Oro City (Rollo, pp. 18; 263).<re||an1w> Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due to the nature of its business, very few of its employees are permanent, the overwhelming majority of which are seasonal and casual and regular employees; (2) that of the total 138 rankand-file employees who authorized, signed and supported the filing of the petition (a) 14 were no longer working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their membership from petitioner union (d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious insubordination and destruction of property and (f) 100 simply abandoned their work or stopped working; (3) that the 128 incumbent employees or workers of the livestock section were merely transferred from the agricultural section as replacement for those who have either been dismissed, retrenched or resigned; and (4) that the statutory requirement for holding a certification election has not been complied with by the union (Rollo, p. 26). The Labor Arbiter granted the certification election sought for by petitioner union in his order dated August 18, 1986 (Rollo, p. 62). On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor Arbiter to the Bureau of Labor Relations in Manila (Rollo, p. 67) which denied the appeal (Rollo, p. 80) and the motion for reconsideration (Rollo, p. 92). Thus, the instant petition received in this Court by mail on February 20, 1987 (Rollo, p. 3). In the resolution of March 4, 1987, the Second Division of this Court required respondent Union to comment on the petition and issued a temporary restraining order (,Rollo, p. 95). Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public respondents filed its comment on April 8, 1987 (Rollo, p. 218). On May 4, 1987, the Court resolved to give due course to the petition and to require the parties to submit their respective memoranda within twenty (20) days from notice (Rollo, p. 225). The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the comment for public respondents as its memorandum (Rollo, p. 226); memorandum for respondent ALU was filed on June 30, 1987 (Rollo, p. 231); and memorandum for petitioner, on July 30, 1987 (Rollo, p. 435). The issues raised in this petition are: I WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN APPROPRIATE BARGAINING UNIT. II WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW 20%) OF THE EMPLOYEES IN THE PROPOSED BARGAINING UNIT, ASKING FOR A CERTIFICATION ELECTION HAD BEEN STRICTLY COMPLIED WITH. In the instant case, respondent ALU seeks direct certification as the sole and exclusive bargaining agent of all the rank-and-file workers of the livestock and agro division of petitioner BELYCA Corporation (Rollo, p. 232), engaged in piggery, poultry raising and the planting of agricultural crops such as corn, coffee and various vegetables (Roa2sllo, p. 26). But petitioner contends that the bargaining unit must include all the workers in its integrated business concerns ranging from piggery, poultry, to supermarts and cinemas so as not to split an otherwise single bargaining unit into fragmented bargaining units (Rollo, p. 435).<re||an1w> The Labor Code does not specifically define what constitutes an appropriate collective bargaining unit. Article 256 of the Code provides:

Art. 256. Exclusive bargaining representative.The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employee shall have the right at any time to present grievances to their employer. According to Rothenberg, 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 (Rothenberg in Labor Relations, p. 482). 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". Under the circumstances of that case, the Court stressed the importance of the fourth factor and sustained the trial court's conclusion that two separate bargaining units should be formed in dealing with respondent company, one consisting of regular and permanent employees and another consisting of casual laborers or stevedores. Otherwise stated, temporary employees should be treated separately from permanent employees. But more importantly, this Court laid down the test of proper grouping, which is community and mutuality of interest. Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra Employees' Association 107 Phil. 28 [1960]) where the employment status was not at issue but the nature of work of the employees concerned; the Court stressed the importance of the second factor otherwise known as the substantial-mutual-interest test and found no reason to disturb the finding of the lower Court that the employees in the administrative, sales and dispensary departments perform work which has nothing to do with production and maintenance, unlike those in the raw leaf, cigar, cigarette and packing and engineering and garage departments and therefore community of interest which justifies the format or existence as a separate appropriate collective bargaining unit. Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the employees concerned was again challenged, the Court reiterating the rulings, both in Democratic Labor Association v. Cebu Stevedoring Co. Inc. supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees' Association (supra) held that among the factors to be considered are: employment status of the employees to be affected, that is the positions and categories of work to which they belong, and the unity of employees' interest such as substantial similarity of work and duties. In any event, whether importance is focused on the employment status or the mutuality of interest of the employees concerned "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 (Democratic Labor Association v. Cebu Stevedoring Co. Inc. supra) Hence, still later following the substantial-mutual interest test, the Court ruled that there is a substantial difference between the work performed by musicians and that of other persons who participate in the production of a film which suffice to show that they constitute a proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]). Coming back to the case at bar, it is beyond question that the employees of the livestock and agro division of petitioner corporation perform work entirely different from those performed by employees in the supermarts and cinema. Among others, the noted difference are: their working conditions, hours of work, rates of pay, including the categories of their positions and employment status. As stated by petitioner corporation in its position paper, due to the nature of the business in which its livestock-agro division is engaged very few of its employees in the division are permanent, the overwhelming majority of which are seasonal and casual and not regular employees (Rollo, p. 26). Definitely, they have very little in common with the employees of the supermarts and cinemas. To lump all the employees of petitioner in its integrated business concerns cannot result in an efficacious bargaining unit comprised of constituents enjoying a community or mutuality of interest. Undeniably, the rank and file employees of the livestock-agro division fully constitute a bargaining unit that satisfies both requirements of classification according to employment status and of the substantial similarity of work and duties which will ultimately assure its members the exercise of their collective bargaining rights. II It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division) employs more or less two hundred five (205) rank-and-file employees and workers. It has no existing duly certified collective bargaining agreement with any legitimate labor organization. There has not been any certification election conducted in the proposed bargaining unit within the last twelve (12) months prior to the filing of the petition

for direct certification and/or certification election with the Ministry of Labor and Employment, and there is no contending union requesting for certification as the sole and exclusive bargaining representative in the proposed bargaining unit. The records show that on the filing of the petition for certification and/or certification election on June 3, 1986; 124 employees or workers which are more than a majority of the rank-and-file employees or workers in the proposed bargaining unit had signed membership with respondent ALU-TUCP and had expressed their written consent and authorization to the filing of the petition. Thus, the Labor Arbiter ordered the certification election on August 18, 1986 on a finding that 30% of the statutory requirement under Art. 258 of the Labor Code has been met. But, petitioner corporation contends that after June 3, 1986 four (4) employees resigned; six (6) subsequently withdrew their membership; five (5) were retrenched; twelve (12) were dismissed for illegally and unlawfully barricading the entrance to petitioner's farm; and one hundred (100) simply abandoned their work. Petitioner's claim was however belied by the Memorandum of its personnel officer to the 119 employees dated July 28, 1986 showing that the employees were on strike, which was confirmed by the finding of the Bureau of Labor Relations to the effect that they went on strike on July 24, 1986 (Rollo, p. 419). Earlier the local union president, Warrencio Maputi; the Vice-president, Gilbert Redoblado and three other active members of the union Carmen Saguing, Roberto Romolo and Iluminada Bonio were dismissed and a complaint for unfair labor practice, illegal dismissal etc. was filed by the Union in their behalf on July 2, 1986 before the NLRC of Cagayan de Oro City (Rollo, p. 415).<re||an1w> The complaint was amended on August 20, 1986 for respondent Union to represent Warrencio Maputi and 137 others against petitioner corporation and Bello Casanova President and General Manager for unfair labor practice, illegal dismissal, illegal lockout, etc. (Rollo, p. 416). Under Art. 257 of the Labor Code once the statutory requirement is met, the Director of Labor Relations has no choice but to call a certification election (Atlas Free Workers Union AFWU PSSLU Local v. Noriel, 104 SCRA 565 [1981]; Vismico Industrial Workers Association (VIWA) v. Noriel, 131 SCRA 569 [1984]) It becomes in the language of the New Labor Code "Mandatory for the Bureau to conduct a certification election for the purpose of determining the representative of the employees in the appropriate bargaining unit and certify the winner as the exclusive bargaining representative of all employees in the unit." (Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72 SCRA 24 [1976]; Kapisanan Ng Mga Manggagawa v. Noriel, 77 SCRA 414 [1977]); more so when there is no existing collective bargaining agreement. (Samahang Manggagawa Ng Pacific Mills, Inc. v. Noriel, 134 SCRA 152 [1985]); and there has not been a certification election in the company for the past three years (PLUM Federation of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]) as in the instant case. It is significant to note that 124 employees out of the 205 employees of the Belyca Corporation have expressed their written consent to the certification election or more than a majority of the rank and file employees and workers; much more than the required 30% and over and above the present requirement of 20% by Executive Order No. 111 issued on December 24, 1980 and applicable only to unorganized establishments under Art. 257, of the Labor Code, to which the BELYCA Corporation belong (Ass. Trade Unions (ATU) v. Trajano, G.R. No. 75321, June 20, 1988).) More than that, any doubt cast on the authenticity of signatures to the petition for holding a certification election cannot be a bar to its being granted (Filipino Metals Corp. v. Ople 107 SCRA 211 [1981]). Even doubts as to the required 30% being met warrant holding of the certification election (PLUM Federation of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]). In fact, once the required percentage requirement has been reached, the employees' withdrawal from union membership taking place after the filing of the petition for certification election will not affect said petition. On the contrary, the presumption arises that the withdrawal was not free but was procured through duress, coercion or for a valuable consideration (La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor Relations, 123 SCRA 679 [1983]). Hence, the subsequent disaffiliation of the six (6) employees from the union will not be counted against or deducted from the previous number who had signed up for certification elections Vismico Industrial Workers Association (VIWA) v. Noriel 131 SCRA 569 [1984]).<re||an1w> Similarly, until a decision, final in character, has been issued declaring the strike illegal and the mass dismissal or retrenchment valid, the strikers cannot be denied participation in the certification election notwithstanding, the vigorous condemnation of the strike and the fact that the picketing were attended by violence. Under the foregoing circumstances, it does not necessarily follow that the strikers in question are no longer entitled to participate in the certification election on the theory that they have automatically lost their jobs. (Barrera v. CIR, 107 SCRA 596 [1981]). For obvious reasons, the duty of the employer to bargain collectively is nullified if the purpose of the dismissal of the union members is to defeat the union in the consent requirement for certification election. (Samahang Manggagawa Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this Court, the holding of a certification election is a statutory policy that should not be circumvented. (George and Peter Lines Inc. v. Associated Labor Unions (ALU), 134 SCRA 82 [1986]). Finally, 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 (Trade Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA 64 [1983]). There is no showing that the instant case falls under the above mentioned exception. However, it will be noted that petitioner corporation from the outset has actively participated and consistently taken the position of adversary in the petition for direct certification as the sole and exclusive bargaining representative and/or certification election filed by respondent Associated Labor Unions (ALU)-TUCP to the extent of filing this petition for certiorari in this Court. Considering that a petition for certification election is not a litigation but a mere investigation of a nonadversary character to determining the bargaining unit to represent the employees (LVN Pictures, Inc. v. Philippine Musicians Guild, supra; Bulakena Restaurant & Caterer v. Court of Industrial Relations, 45 SCRA 88 [1972]; George Peter Lines, Inc. v. Associated Labor Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC, 149 SCRA 470 [1987]), and its only purpose is to give the employees true representation in

their collective bargaining with an employer (Confederation of Citizens Labor Unions CCLU v. Noriel, 116 SCRA 694 [1982]), there appears to be no reason for the employer's objection to the formation of subject union, much less for the filing of the petition for a certification election. PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b) resolution of the Bureau of Labor Relations dated Nov. 24, 1986 is AFFIRMED; and the temporary restraining order issued by the Court on March 4, 1987 is LIFTED permanently. SO ORDERED. Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 164301 October 19, 2011

BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent. RESOLUTION LEONARDO-DE CASTRO, J.: In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration1 of our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in the then existing collective bargaining agreement (CBA)2 of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank (the Union). To recall, the Union Shop Clause involved in this long standing controversy provided, thus: ARTICLE II xxxx Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank.3 (Emphases supplied.) The bone of contention between the parties was whether or not the "absorbed" FEBTC employees fell within the definition of "new employees" under the Union Shop Clause, such that they may be required to join respondent union and if they fail to do so, the Union may request BPI to terminate their employment, as the Union in fact did in the present case. Needless to state, BPI refused to accede to the Unions request. Although BPI won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union Shop Clause was at war with the spirit and rationale why the Labor Code allows the existence of such provision. On review with this Court, we upheld the appellate courts ruling and disposed of the case as follows: WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be.4 Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now BPI continues to protest the inclusion of said employees in the Union Shop Clause. In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly intended to limit the application of the Union Shop Clause only to new employees who were hired as non-regular employees but later attained regular status at some point after

hiring. FEBTC employees cannot be considered new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.5 Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention that "the situation of absorbed employees can be likened to old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and their salaries were maintained and safeguarded from diminution" but such absorbed employees "cannot and should not be treated in exactly the same way as old BPI employees for there are substantial differences between them."6 Although petitioner admits that there are similarities between absorbed and new employees, they insist there are marked differences between them as well. Thus, adopting Justice Brions stance, petitioner contends that the absorbed FEBTC employees should be considered "a sui generis group of employees whose classification will not be duplicated until BPI has another merger where it would be the surviving corporation."7 Apparently borrowing from Justice Carpio, petitioner propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the right of the absorbed employees to abstain from joining labor organizations.8 Pursuant to our directive, the Union filed its Comment9 on the Motion for Reconsideration. In opposition to petitioners arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the voluntary nature of the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of employment contracts to the surviving corporation, and the consensual nature of employment contracts as valid bases for the conclusion that former FEBTC employees should be deemed new employees.10 The Union argues that the creation of employment relations between former FEBTC employees and BPI (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their wages, power of dismissal and of control over the employees conduct) occurred after the merger, or to be more precise, after the Securities and Exchange Commissions (SEC) approval of the merger.11 The Union likewise points out that BPI failed to offer any counterargument to the Courts reasoning that: The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employee's right or freedom of association, is not to protect the union for the union's sake. Laws and jurisprudence promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. x x x. x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice.12 While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010 Decision, we find that a qualification of our ruling is in order only with respect to the interpretation of the provisions of the Articles of Merger and its implications on the former FEBTC employees security of tenure. Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with the dictates of social justice and the State policy of according full protection to labor to deem employment contracts as automatically assumed by the surviving corporation in a merger, even in the absence of an express stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that: To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared policies on work, labor and employment, and the specific FEBTC-BPI situation i.e., a merger with complete "body and soul" transfer of all that FEBTC embodied and possessed and where both participating banks were willing (albeit by deed, not by their written agreement) to provide for the affected human resources by recognizing continuity of employment should point this Court to a declaration that in a complete merger situation where there is total takeover by one corporation over another and there is silence in the merger agreement on what the fate of the human resource complement shall be, the latter should not be left in legal limbo and should be properly provided for, by compelling the surviving entity to absorb these employees. This is what Section 80 of the Corporation Code commands, as the surviving corporation has the legal obligation to assume all the obligations and liabilities of the merged constituent corporation. Not to be forgotten is that the affected employees managed, operated and worked on the transferred assets and properties as their means of livelihood; they constituted a basic component of their corporation during its existence. In a merger and consolidation situation, they cannot be treated without consideration of the applicable constitutional declarations and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read and interpret the law so that they are treated in accordance with the legal requirements of mergers and consolidation, read in light of the social justice, economic and social provisions of our Constitution. Hence, there is a need for the surviving corporation to take responsibility for the affected employees and to absorb them into its workforce where no appropriate provision for the merged corporation's human resources component is made in the Merger Plan.13 By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the surviving corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of employees affected by a merger and avoids confusion regarding the status of their various benefits which were among the chief objections of our dissenting colleagues. However, nothing in this Resolution shall impair the right of an employer to terminate the employment of the absorbed employees for a lawful or authorized cause or the right of such an employee to resign, retire or otherwise sever his employment, whether before or after the merger, subject to existing

contractual obligations. In this manner, Justice Brions theory of automatic assumption may be reconciled with the majoritys concerns with the successor employers prerogative to choose its employees and the prohibition against involuntary servitude.1avvphi1 Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed FEBTC employees are covered by the Union Shop Clause. Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the surviving corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to adjudicate the rights and obligations between and among the merged corporations and the persons that deal with them.14 Such a legal fiction cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law. Hence, we stated in the Decision that: In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioner's insistence that the term "new employees" only refers to those who are initially hired as non-regular employees for possible regular employment. The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner's new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment.15 Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue their respective business operations until the SEC issues the certificate of merger and in the event no such certificate is issued, they shall hold each other blameless for the non-consummation of the merger.16 We likewise previously noted that BPI made its assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC approved the merger.17 In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger. What is material is that all of these legal consequences of the merger took place during the life of an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause. From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a) enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised of BPIs rank and file employees); and (c) become regular employees without distinguishing as to the manner they acquire their regular status. Consequently, the number of such employees may adversely affect the majority status of the Union and even its existence itself, as already amply explained in the Decision. Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular and permanent from the beginning of their employment with the surviving corporation. It bears reiterating here that these differences are too insubstantial to warrant the exclusion of the absorbed employees from the application of the Union Shop Clause. In the Decision, we noted that: Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated.18 Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute its efficacy and put the certified union that is supposedly being protected thereby at the mercy of management. For if the former FEBTC employees had no say in the merger of its former employer with another bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise could not prevent BPI from proceeding with the merger which undisputedly affected the number of employees in the bargaining unit that the Union represents and may negatively impact on the Unions majority status. In this instance, we should be guided by the principle that courts must place a practical and realistic construction upon a CBA, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.19

We now come to the question: Does our affirmance of our ruling that former FEBTC employees absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which we expressly upheld in this Resolution? We answer in the negative. In Rance v. National Labor Relations Commission,20 we held that: It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. Article 280 of the Labor Code has construed security of tenure as meaning that "the employer shall not terminate the services of an employee except for a just cause or when authorized by" the Code. x x x (Emphasis supplied.) We have also previously held that the fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due process is observed.21 Even as we now recognize the right to continuous, unbroken employment of workers who are absorbed into a new company pursuant to a merger, it is but logical that their employment may be terminated for any causes provided for under the law or in jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that termination of employment by virtue of a union security clause embodied in a CBA is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar,23 we explained the rationale for this policy in this wise: Article 279 of the Labor Code ordains that "in cases of regular employment, 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 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."24 (Emphasis supplied.) Although it is accepted that non-compliance with a union security clause is a valid ground for an employees dismissal, jurisprudence dictates that such a dismissal must still be done in accordance with due process. This much we decreed in General Milling Corporation v. Casio,25 to wit: The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that: While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. The twin requirements of notice and hearing constitute the essential elements of procedural due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality. Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union are not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. x x x26 (Emphases supplied.) In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period from notice of finality of the Decision given to the affected FEBTC employees to join the Union before the latter can request petitioner to terminate the formers employment, petitioner must still accord said employees the twin requirements of notice and hearing on the possibility that they may have other justifications for not joining the Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no material change in the situation of the parties in the interim. WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is AFFIRMED, subject to the qualifications that: (a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust Company (FEBTC) employees upon effectivity of the merger without break in the continuity of their employment, even without express stipulation in the Articles of Merger; and

(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, given to former FEBTC employees to join the respondent, said employees shall be accorded full procedural due process before their employment may be terminated. SO ORDERED. TERESITA J. LEONARDO-DE CASTRO Associate Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 84433 June 2, 1992 ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners, vs. CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med. Arbiter PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et al., respondent.

NARVASA, C.J.: The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the denial by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia ni Kristo" (INK), all employed in the same company, at a certification election at which two (2) labor organizations were contesting the right to be the exclusive representative of the employees in the bargaining unit. That denial is assailed as having been done with grave abuse of discretion in the special civil action of certiorari at bar, commenced by the INK members adversely affected thereby. The certification election was authorized to be conducted by the Bureau of Labor Relations among the employees of Tri-Union Industries Corporation on October 20, 1987. The competing unions were Tri-Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEU-OLALIA), and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers initially deemed to be qualified voters, only 240 actually took part in the election, conducted under the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were 141 members of the INK. The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of the two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably with established rule and practice, 1 for (c) a third choice: "NO UNION." The final tally of the votes showed the following results: TUPAS 1 TUEU-OLALIA 95 NO UNION 1 SPOILED 1 CHALLENGED 141 The challenged votes were those cast by the 141 INK members. They were segregated and excluded from the final count in virtue of an agreement between the competing unions, reached at the pre-election conference, that the INK members should not be allowed to vote "because they are not members of any union and refused to participate in the previous certification elections."

The INK employees promptly made known their protest to the exclusion of their votes. They filed f a petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended that the petitioners "do not have legal personality to protest the results of the election," because "they are not members of either contending unit, but . . . of the INK" which prohibits its followers, on religious grounds, from joining or forming any labor organization. . . ." The Med-Arbiter saw no merit in the INK employees 1 petition. By Order dated December 21, 1987, he certified the TUEU-OLALIA as the sole and exclusive bargaining agent of the rank-and-file employees. In that Order he decided the fact that "religious belief was (being) utilized to render meaningless the rights of the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor organization as the bargaining agent," and declared the petitioners as "not possessed of any legal personality to institute this present cause of action" since they were not parties to the petition for certification election. The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued that the Med-Arbiter had "practically disenfranchised petitioners who had an overwhelming majority," and "the TUEU-OLALIA certified union cannot be legally said to have been the result of a valid election where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall have cast their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that the petitioners are "bereft of legal personality to protest their alleged disenfrachisement" since they "are not constituted into a duly organized labor union, hence, not one of the unions which vied for certification as sole and exclusive bargaining representative." He also pointed out that the petitioners "did not participate in previous certification elections in the company for the reason that their religious beliefs do not allow them to form, join or assist labor organizations." It is this Decision of July 22, 1988 that the petitioners would have this Court annul and set aside in the present special civil action of certiorari. The Solicitor General having expressed concurrence with the position taken by the petitioners, public respondent NLRC was consequently required to file, and did thereafter file, its own comment on the petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the exercise of their religious belief opted not to join any labor organization as a consequence of which they themselves can not have a bargaining representative, then the right to be representative by a bargaining agent should not be denied to other members of the bargaining unit." Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining." This is made plain by no less than three provisions of the Labor Code of the Philippines. 2 Article 243 of the Code provides as follows: 3 ART. 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 or 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. Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to "interfere with, restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article 249 (a) makes it an unfair labor practice for a labor organization to "restrain or coerce employees in the exercise of their rights to self-organization . . . " The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as amended, as might be expected Section 1, Rule II (Registration of Unions), Book V (Labor Relations) of the Omnibus Rules provides as follows; 4 Sec. 1. Who may join unions; exception. All persons employed in commercial, industrial and agricultural enterprises, including employees of government corporations established under the Corporation Code as well as employees of religious, medical or educational institutions, whether operating for profit or not, except managerial employees, shall have the right to self-organization and to form, join or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and without any definite employers people, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection. xxx xxx xxx The right of self-organization includes the right to organize or affiliate with a labor union or determine which of two or more unions in an establishment to join, and to engage in concerted activities with co-workers for purposes of collective bargaining through representatives of their own choosing, or for their mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and interests. 5 Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain membership therein. The right to form or join a labor organization necessarily

includes the right to refuse or refrain from exercising 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. The fact that a person has opted to acquire membership in a labor union does not preclude his subsequently opting to renounce such membership. 6 As early as 1974 this Court had occasion to expatiate on these self-evident propositions in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.: . . .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 retains the liberty and the power to leave and cancel his membership with said organization at any time (Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil. 1010, 1019). It is clear, therefore, that the right to join a union includes the right to abstain from joining any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al., L-19912, January 20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as what both the Constitution and the Industrial Peace Act have recognized, the guaranteed to the employee, is the "right" to join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any association. The right to refuse to join or be represented by any labor organization is recognized not only by law but also in the rules drawn up for implementation thereof. The original Rules on Certification promulgated by the defunct Court of Industrial Relations required that the ballots to be used at a certification election to determine which of two or more competing labor unions would represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of the employee voting, to the effect that he desires not to which of two or more competing labor unions would represent the employees in the appropriate bargaining unit should contain, aside from the names of each union, an alternative choice of the employee voting, to the effect that he desires not to be represented by any union. 8 And where only one union was involved, the ballots were required to state the question "Do you desire to be represented by said union?" as regards which the employees voting would mark an appropriate square, one indicating the answer, "Yes" the other, "No." To be sure, the present implementing rules no longer explicitly impose the requirement that the ballots at a certification election include a choice for "NO UNION" Section 8 (rule VI, Book V of the Omnibus Rules) entitled"Marketing and canvassing of votes," pertinently provides that: . . . (a) The voter must write a cross (X) or a check (/) in the square opposite the union of his choice. If only one union is involved, the voter shall make his cross or check in the square indicating "YES" or "NO." xxx xxx xxx Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly bars the inclusion of the choice of "NO UNION" in the ballots. Indeed it is doubtful if the employee's alternative right NOT to form, join or assist any labor organization or withdraw or resign from one may be validly eliminated and he be consequently coerced to vote for one or another of the competing unions and be represented by one of them. Besides, the statement in the quoted provision that "(i)f only one union is involved, the voter shall make his cross or check in the square indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO" votes may outnumber the "YES" votes indicating that the majority of the employees in the company do not wish to be represented by any union in which case, no union can represent the employees in collective bargaining. And whether the prevailing "NO" votes are inspired by considerations of religious belief or discipline or not is beside the point, and may not be inquired into at all. The purpose of a certification election is precisely the ascertainment of the wishes of the majority of the employees in the appropriate bargaining unit: to be or not to be represented by a labor organization, and in the affirmative case, by which particular labor organization. If the results of the election should disclose that the majority of the workers do not wish to be represented by any union, then their wishes must be respected, and no union may properly be certified as the exclusive representative of the workers in the bargaining unit in dealing with the employer regarding wages, hours and other terms and conditions of employment. The minority employees who wish to have a union represent them in collective bargaining can do nothing but wait for another suitable occasion to petition for a certification election and hope that the results will be different. They may not and should not be permitted, however, to impose their will on the majority who do not desire to have a union certified as the exclusive workers' benefit in the bargaining unit upon the plea that they, the minority workers, are being denied the right of self-organization and collective bargaining. As repeatedly stated, the right of self-organization embraces not only the right to form, join or assist labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union. That the INK employees, as employees in the same bargaining unit in the true sense of the term, do have the right of self-organization, is also in truth beyond question, as well as the fact that when they voted that the employees in their bargaining unit should be represented by "NO UNION," they were simply exercising that right of self-organization, albeit in its negative aspect.

The respondents' argument that the petitioners are disqualified to vote because they "are not constituted into a duly organized labor union" "but members of the INK which prohibits its followers, on religious grounds, from joining or forming any labor organization" and "hence, not one of the unions which vied for certification as sole and exclusive bargaining representative," is specious. Neither law, administrative rule nor jurisprudence requires that only employees affiliated with any labor organization may take part in a certification election. On the contrary, the plainly discernible intendment of the law is to grant the right to vote to all bona fide employees in the bargaining unit, whether they are members of a labor organization or not. As held in Airtime Specialists, Inc. v. Ferrer-Calleja: 9 In a certification election all rank-and-file employees in the appropriate bargaining unit 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 the purpose 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-andfile employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment 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". Neither does the contention that petitioners should be denied the right to vote because they "did not participate in previous certification elections in the company for the reason that their religious beliefs do not allow them to form, join or assist labor organizations," persuade acceptance. No law, administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to exercise the right in past certification elections. In denying the petitioners' right to vote upon these egregiously fallacious grounds, the public respondents exercised their discretion whimsically, capriciously and oppressively and gravely abused the same. WHEREFORE, the petition for certiorari is GRANTED; the Decision of the then Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987 (affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and SET ASIDE; and the petitioners are DECLARED to have legally exercised their right to vote, and their ballots should be canvassed and, if validly and properly made out, counted and tallied for the choices written therein. Costs against private respondents. SO ORDERED. Paras, Padilla and Regalado, JJ., concur. Nocon, J., is on leave. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 161305 February 9, 2007

MILAGROS PANUNCILLO, Petitioner, vs. CAP PHILIPPINES, INC., Respondent. DECISION CARPIO MORALES, J.: Assailed via Petition for Review1 are the Decision dated May 16, 20032 and Resolution dated November 17, 20033 of the Court of Appeals in CAG.R. SP No. 74665 which declared valid the dismissal of Milagros Panuncillo (petitioner) by CAP Philippines, Inc. (respondent). Petitioner was hired on August 28, 1980 as Office Senior Clerk by respondent. At the time of her questioned separation from respondent on April 23, 1999, she was receiving a monthly salary of P16,180.60. In order to secure the education of her son, petitioner procured an educational plan (the plan) from respondent which she had fully paid but which she later sold to Josefina Pernes (Josefina) for P37,000. Before the actual transfer of the plan could be effected, however, petitioner pledged it for P50,000 to John Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to Gaudioso R. Uy for P60,000.

Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina, by letter of February 10, 1999,4 informed respondent that petitioner had "swindled" her but that she was willing to settle the case amicably as long as petitioner pay the amount involved and the interest. She expressed her appreciation "if [respondent] could help her in anyway." Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of respondent required petitioner to explain in writing why the plan had not been transferred to Josefina and was instead sold to another. Complying, petitioner proffered the following explanation: Because of extreme need of money, I was constrained to sell my CAP plan of my son to J. Pernes last July, 1996, in the amount of Thirty Seven Thousand Pesos (P37,000.) The plan was not transferred right away because of lacking requirement on the part of the buyer (birth certificate). The birth certificate came a month later. While waiting for the birth certificate, again because of extreme need of money, I was tempted to pawned [sic] the plan, believing I can redeemed [sic] it later when the birth certificate will come. Last year, I was already pressured by J. Pernes for the transfer of the plan. But before hand, she already knew the present situation. I was trying to find means to redeemed [sic] the plan but to no avail. I cannot borrow anymore from my creditors because of outstanding loans which remains unpaid. As of the present, I am heavily debtladen and I dont know where to run. I cant blame the person whom I pawned the plan if he had sold it. I cant redeemed *sic+ it anymore. Everybody needs money and besides, I have given them my papers. I admit, I had defrauded Ms. J. Pernes, but I didnt do it intentionally. At first, I believe I can redeem the plan hoping I can still borrow from somebody. With my more than 18 years stay with the company, I dont have the intention of ruining my image as well as the companys. I think I am just a victim of circumstances.5 (Emphasis and underscoring supplied) A show-cause memorandum6 dated February 23, 1999 was thereupon sent to petitioner, giving her 48 hours from receipt thereof to explain why she should not be disciplinarily dealt with. Petitioner did not comply, however. The IIAO of respondent thus conducted an investigation on the matter. By Memorandum of April 5, 1999,7 the IIAO recommended that, among other things, administrative action should be taken against petitioner for violating Section 8.4 of respondents Code of Discipline reading: Committing or dealing any act or conniving with co-employees or anybody to defraud the company or customer/sales associates. In the same memorandum, the IIAO reported other matters bearing on petitioners duties as an employee, to wit: OTHERS: We also received a copy of demand letter of a certain Evelia Casquejo addressed to Ms. Panuncillo requiring the latter to pay the amount of P54,870.00 for the supposed transfer of the lapsed plan of Subscriber Corazon Lintag with SFA # 25-67-40-01-00392. Ms. Panuncillo received the payment of P25,000.00 and P29,870.00 on July 17, 1997 and July 18, 1997 respectively (Exhibits L&M). Ms. Panuncillo verbally admitted that she was the one who sold the plan to Ms. Casquejo but with the authorization from Ms. Lintag. However, the transfer was not effected because she had misappropriated a portion of the moneyuntil the plan was terminated. Ms. Casquejo, however, did not file a complaint because Ms. Panuncillo executed a Special Power of Attorney authorizing the former to receive P68,000 of Ms. Panuncillos retirement pay (Exhibit N).8 (Emphasis in the original; underscoring supplied)) On April 7, 1999, another show-cause memorandum was sent to petitioner by Renato M. Daquiz (Daquiz), First Vice President of respondent, giving her another 48 hours to explain why she should not be disciplinarily dealt with in connection with the complaints of Josefina and Evelia Casquejo (Evelia). Complying with the directive, petitioner, by letter of April 10, 1999, on top of reiterating her admission of having "defrauded" Josefina, admitted having received from Evelia the payment for a lapsed plan, thus: With regards to *Evelias+ case, yes its *sic] true I had received the payment but it was accordingly given to the owner or Subscriber Ms. C. Lintag. The plan was not transferred because it was already forfeited and we, Ms. Lintag, [Evelia] and I already made settlement of the case. I think I have violated Sec. 8.4 of the companys Code of Discipline. I admit it is my wrongdoing. I was only forced to do this because of extreme needs to pay for my debts. I am open for whatever disciplinary action that will be sanctioned againts [sic] me. I hope it is not termination from my job. How can I pay for obligations if that will happen to me.

As for [Josefina], I have the greatest desire to pay for my indebtedness but my capability at the moment is nil. (space) I have been planning to retire early just to pay my obligations. That is why I had written to you last year inquiring tax exemption when retiring. I have been with the company for almost 19 years already and I never intend [sic] to smear its name as well as mine. I was only forced by circumstances. Although it hurts to leave CAP, I will be retiring on April 30, 1999. x x x x9 (Emphasis and underscoring supplied) Respondent thereupon terminated the services of petitioner by Memorandum dated April 20, 1999.10 Petitioner sought reconsideration of her dismissal, by letter of April 23, 1999 addressed to Daquiz, imploring as follows: . . . Please consider my retirement letter I sent to you. I would like to avail [of] the retirement benefit of the company. The proceeds of my retirement could help me pay some of my obligations as well as the needs of my family. My husband is jobless and I am the breadwinner of the family. If I will be terminated, I dont know what will happen to us. Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving that we have already settled the case. x x x x11 (Underscoring supplied)1awphi1.net Pending resolution of petitioners motion for reconsideration, respondent received a letter dated April 28, 199912from one Gwendolyn N. Dinoro (Gwendolyn) who informed that she had been paying her "quarterly dues" through petitioner but found out that none had been remitted to respondent, on account of which she (Gwendolyn) was being penalized with interest charges. Acting on petitioners motion for reconsideration, Daquiz, by letter-memorandum of May 5, 1999, denied the same in this wise: A review of your case was made per your request, and we note that it was not just a single case but multiple cases, that of Ms. Casquejo, Ms. Pernes, and newly reported Ms. Dinoro. Furthermore, the cases happened way back in July 1996 and 1997, and were just discovered recently. In addition, the misappropriation of money/or act to defraud the company or customer was deliberate and intentional. There were several payments received over a period of time. While you plead for your retirement benefit to help you pay some of your obligations, as well as the need of your family (your husband being jobless and being the breadwinner), these thoughts should have crossed your mind before you committed the violations rather than now. To allow you to retire with benefits, is to tolerate and encourage others to do the same in the future, as it will be a precedent that will surely be invoked in similar situations in the future, as it will be a precedent that will surely be invoked in similar situations in the future. It is also unfair to others who do their jobs faithfully and honestly. If we let you have your way, it will appear that we let you scot-free and even reward you with retirement someone who deliberately violated trust and confidence of the company and customers. Premises considered, the decision to terminate your services for cause stays and the request for reconsideration is denied. x x x x13 (Emphasis and underscoring supplied) Petitioner thus filed a complaint14 for illegal dismissal, 13th month pay, service incentive leave pay, damages and attorneys fees against respondent. The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too harsh. He thusordered the reinstatement of petitioner to a position one rank lower than her previous position, and disposed as follows: WHEREFORE, the foregoing considered, judgement [sic] is hereby rendered directing the respondent to pay complainants 13th Month pay and Service Incentive Leave Pay for 1999 in proportionate amount computed as follows: 13th Month Pay January 1, 1999 to April 1, 1999 = 3 months = P16,180.60/12 mos. x 3 mos. P4,045.14 Service Incentive Leave

= P16,180.60/26 days =P622.30 per day x 5 days/12 months. 777.87 TOTAL --------------------------------P4,823.01 Plus P482.30 ten (10%) Attorneys Fees or a total aggregate amount of PESOS: FIVE THOUSAND THREE HUNDRED FIVE & 31/100 (P5,305.31). Respondent is likewise, directed to reinstate the complainant to a position one rank lower without backwages.15(Underscoring supplied) On appeal, the National Labor Relations Commission (NLRC), by Decision of October 29, 2001, reversed that of the Labor Arbiter, it finding that petitioners dismissal was illegal and accordingly ordering her reinstatement to her former position. Thus it disposed: WHEREFORE, the Decision in the main case dated February 18, 2000 of the Labor Arbiter declaring the dismissal of the complainant valid, and his Order dated June 26, 2000 declaring the Motion to Declare Respondent-appellant in Contempt as prematurely filed and ordering the issuance of an alias writ of execution are hereby SET ASIDE, and a new one is rendered DECLARING the dismissal of the complainant illegal, and ORDERING the respondent, CAP PHILIPPINES, INCORPORATED, the following: 1. to reinstate the complainant MILAGROS B. PANUNCILLO to her former position without loss of seniority rights and with full backwages from the date her compensation was withheld from her on April 20, 1999 until her actual reinstatement; 2. to pay to the same complainant P4,045.14 as 13th month pay, and P777.89 as service incentive leave pay; 3. to pay to the same complainant moral damages of FIFTY THOUSAND PESOS (P50,000.00), and exemplary damages of another FIFTY THOUSAND PESOS (P50,000.00); 4. to pay attorneys fees equivalent to ten percent (10%) of the total award exclusive of moral and exemplary damages. Further, the complainants Motion to Declare Respondent in Contempt dated May 3, 2000 is denied and rendered moot by virtue of this Decision. All other claims are dismissed for lack of merit.16 (Underscoring supplied) In so deciding, the NLRC held that the transaction between petitioner and Josefina was private in character and, therefore, respondent did not suffer any damage, hence, it was error to apply Section 8.4 of respondents Code of Discipline. Respondent challenged the NLRC Decision before the appellate court via Petition for Certiorari.17 By Decision of May 16, 2003,18 the appellate court reversed the NLRC Decision and held that the dismissal was valid and that respondent complied with the procedural requirements of due process before petitioners services were terminated. Hence, the present petition, petitioner faulting the appellate court I x x x IN REVIEWING THE FINDINGS OF FACT OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION THAT RESPONDENT CAP PHILIPPINES, INC., HAS NOT BEEN DEFRAUDED NOR DAMAGED IN THE TRANSACTION/S ENTERED INTO BY PETITIONER RELATING TO HER FULLY PAID EDUCATIONAL PLAN. II x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES, INC. IS THE INSURER OF PETITIONERS FULLY PAID EDUCATIONAL PLAN UNDER THE INSURANCE CODE. III x x x IN HOLDING THAT PETITIONER WAS DULY AFFORDED DUE PROCESS BEFORE DISMISSAL[,]

and maintaining that she IV x x x IS ENTITLED TO HER FULL BACKWAGES FROM THE DATE HER COMPENSATION WAS WITHHELD FROM HER ON APRIL 20, 1999 PURSUANT TO THE DECISION OF THE NLRC REINSTATING HER TO HER PREVIOUS POSITION WITH FULL BACKWAGES AND SETTING ASIDE THE DECISION OF THE LABOR ARBITER REINSTATING HER TO A POSITION NEXT LOWER IN RANK, UNTIL THE REVERSAL OF THE NLRC DECISION BY THE HONORABLE COURT OF APPEALS.19 (Emphasis and underscoring supplied) The petition is not meritorious. 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. 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. 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 employees liability." x x x20(Italics in the original; underscoring supplied) The transaction with Josefina aside, there was this case of misappropriation by petitioner of the amounts given to her by Evelia representing payment for the lapsed plan of Corazon Lintag. While a settlement of the case between the two may have eventually been forged, that did not obliterate the misappropriation committed by petitioner against a client of respondent. Additionally, there was still another complaint lodged before respondent by Gwendolyn against petitioner for failure to remit the cash payments she had made to her, a complaint she was apprised of but on which she was silent. In fine, by petitioners repeated violation of Section 8.4 of respondents Code of Discipline, she violated the trust and confidence of respondent and its customers. To allow her to continue with her employment puts respondent under the risk of being embroiled in unnecessary lawsuits from customers similarly situated as Josefina, et al. Clearly, respondent exercised its management prerogative when it dismissed petitioner. . . . *T+ime and again, this Court has upheld a companys management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements. Deliberate disregard or disobedience of rules by the employees cannot be countenanced. 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. xxxx The employer cannot be compelled to continue the employment of a person who was found guilty of maliciously committing acts which are detrimental to his interests. It will be highly prejudicial to the interests of the employer to impose on him the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remain in the service. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. This Court was more emphatic in holding that in protecting the rights of the laborer, it cannot authorize the oppression or self-destruction of the employer.21 x x x (Underscoring supplied) Petitioner nevertheless argues that she was not afforded due process before her dismissal as she was merely required to answer a show-cause memorandum dated April 7, 1999 and there was no actual investigation conducted in which she could have been heard. 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 employers 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

When respondent received the letter-complaint of Josefina, petitioner was directed to comment and explain her side thereon. She did comply, by letter of February 22, 1999 wherein she admitted that she "had defrauded Ms. J. Pernes, but [that she+ didnt do it intentionally." Respondent subsequently sent petitioner a show-cause memorandum giving her 48 hours from receipt why she should not be disciplinarily sanctioned. Despite the 48-hour deadline, nothing was heard from her until April 10, 1999 when she complied with the second show-cause memorandum dated April 7, 1999. On April 20, 1999, petitioner was informed of the termination of her services to which she filed a motion for reconsideration. There can thus be no doubt that petitioner was given ample opportunity to explain her side. Parenthetically, when an employee admits the acts complained of, as in petitioners case, no formal hearing is even necessary.23 Finally, petitioner argues that even if the order of reinstatement of the NLRC was reversed on appeal, it is still obligatory on the part of an employer to reinstate and pay the wages of a dismissed employee during the period of appeal, citing Roquero v. Philippine Airlines,24 the third paragraph of Article 22325 of the Labor Code, and the last paragraph of Section 16,26 Rule V of the then 1990 New Rules of Procedure of the NLRC. Petitioner adds that respondent made "clever moves to frustrate [her] from enjoying the reinstatement aspect of the decision starting from that of the Labor Arbiter (although to a next lower rank), [to that] of the NLRC to her previous position without loss of seniority rights until it was caught up by the decision of the Honorable Court of Appeals reversing the decision of the NLRC and declaring the dismissal of petitioner as based on valid grounds." Respondent, on the other hand, maintains that Roquero and the legal provisions cited by petitioner are not applicable as they speak of reinstatement on order of the Labor Arbiter and not of the NLRC. The Labor Arbiter ordered the reinstatement of petitioner to a lower position. The third paragraph of Article 223 of the Labor Code is clear, however the employee, who is ordered reinstated, must be accepted back to workunder the same terms and conditions prevailing prior to his dismissal or separation. Petitioners being demoted to a position one rank lower than her original position is certainly not in accordance with the said third paragraph provision of Article 223. Besides, the provision contemplates a finding that the employee was illegally dismissed or there was no just cause for her dismissal. As priorly stated, in petitioners case, the Labor Arbiter found that there was just cause for her dismissal, but that dismissal was too harsh, hence, his order for her reinstatement to a lower position. 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. Where the totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their dismissal without making any distinction between a first offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect not only the labor or workers side but also the management and/or employers side. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer. x x x 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."27 (Emphasis and underscoring supplied) The NLRC was thus correct when it ruled that it was erroneous for the Labor Arbiter to order the reinstatement of petitioner, even to a position one rank lower than that which she formerly held.28 Now, on petitioners argument that, following the third paragraph of Article 223 of the Labor Code, the order of theNLRC to reinstate her and to pay her wages was immediately executory even while the case was on appeal before the higher courts: The third paragraph of Article 223 of the Labor Code directs that "the decision of the LaborArbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal." In Roquero, the Labor Arbiter upheld the dismissal of Roquero, along with another employee, albeit he found both the two and employer Philippine Airlines (PAL) at fault. The Labor Arbiter thus ordered the payment of separation pay and attorneys fees to the complainant. No order for reinstatement was issued by the Labor Arbiter, precisely because the dismissal was upheld. On appeal, the NLRC ruled in favor of Roquero and his co-complainant as it also found PAL guilty of instigation. The NLRC thus ordered the reinstatement of Roquero and his co-complainant to their former positions, but without backwages.

PAL appealed the NLRC decision via Petition for Review before this Court. Roquero and his co-complainant did not. They instead filed before the Labor Arbiter a Motion for Execution of the NLRC order for their reinstatement which the Labor Arbiter granted. Acting on PALs Petition for Review, this Court referred it to the Court of Appeals pursuant to St. Martin Funeral Home v. NLRC.29 The appellate court reversed the NLRC decision and ordered the reinstatement of the decision of the Labor Arbiter but only insofar as it upheld the dismissal of Roquero. Back to this Court on Roqueros Petition for Review, the following material issues were raised: xxxx 2. Can the executory nature of the decision, more so the reinstatement aspect of a labor tribunals order be halted by a petition having been filed in higher courts without any restraining order or preliminary injunction having been ordered in the meantime? 3. Would the employer who refused to reinstate an employee despite a writ duly issued be held liable to pay the salary of the subject employee from the time that he was ordered reinstated up to the time that the reversed decision was handed down?30 Resolving these issues, this Court held in Roquero: Article 223 (3rd paragraph) of the Labor Code as amended by Section 12 of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the Labor Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. The rationale of the law has been explained in Aris (Phil.) Inc. vs. NLRC: "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working man. xxxx These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an indispensable partner for the nations progress and stability. xxxx The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the NLRCuntil the finality of the decision of this Court. We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat them. Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.31 (Italics in the original, emphasis and underscoring supplied) In the present case, since the NLRC found petitioners dismissal illegal and ordered her reinstatement, following the provision of the sixth paragraph of Article 223, viz: The [National Labor Relations] Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties. (Emphasis and underscoring supplied), the NLRC decision became "final and executory after ten calendar days from receipt of the decision by the parties" for reinstatement.

In view, however, of Article 224 of the Labor Code which provides: ART. 224. Execution of decisions, orders or awards. (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprioor on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders or awards of the Secretary of Labor and Employment or regional director, the Commission, the Labor Arbiter or medarbiter, or voluntary arbitrators. In any case, it shall be the duty of the responsible officer to separately furnish immediately the counsels of record and the parties with copies of said decisions, orders or awards. Failure to comply with the duty prescribed herein shall subject such responsible officer to appropriate administrative sanctions. x x x x (Emphasis and underscoring supplied), there was still a need for the issuance of a writ of execution of the NLRC decision. Unlike then the order for reinstatement of a Labor Arbiter which is self-executory, that of the NLRC is not. There is still a need for the issuance of a writ of execution. Thus this Court held in Pioneer Texturizing Corp. v. NLRC:32 x x x The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall beimmediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion.33 (Italics in the original, emphasis and underscoring supplied) If a Labor Arbiter does not issue a writ of execution of the NLRC order for the reinstatement of an employee even if there is no restraining order, he could probably be merely observing judicial courtesy, which is advisable "if there is a strong probability that the issues before the higher court would be rendered moot and moribund as a result of the continuation of the proceedings in the lower court." 34 In such a case, it is as if a temporary restraining order was issued, the effect of which Zamboanga City Water District v. Buhat explains: The issuance of the temporary restraining order did not nullify the rights of private respondents to their reinstatement and to collect their wages during the period of the effectivity of the order but merely suspended the implementation thereof pending the determination of the validity of the NLRC resolutions subject of the petition. Naturally, a finding of this Court that private respondents were not entitled to reinstatement would mean that they had no right to collect any back wages. On the other hand, where the Court affirmed the decision of the NLRC and recognized the right of private respondents to reinstatement, private respondents are entitled to the wages accruing during the effectivity of the temporary restraining order.35 (Emphasis and underscoring supplied) While Zamboanga was decided prior to St. Martin Funeral and, therefore, the NLRC decisions were at the time passed upon by this Court to the exclusion of the appellate court, it is still applicable. 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. In sum, while under the sixth paragraph of Article 223 of the Labor Code, the decision of the NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by the parties, the adverse party is not precluded from assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to this Court via a Petition for Review under Rule 45. If during the pendency of the review no order is issued by the courts enjoining the execution of a decision of the Labor Arbiter or NLRC which is favorable to an employee, the Labor

Arbiter or the NLRC must exercise extreme prudence and observe judicial courtesy when the circumstances so warrant if we are to heed the injunction of the Court in Philippine Geothermal, Inc v. NLRC: While it is true that compassion and human consideration should guide the disposition of cases involving termination of employment since it affects ones source or means of livelihood, it should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the services of an employee who has been shown to be a gross liability to the employer. The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda est (Justice is to be denied to none).36 (Italics in the original; emphasis and underscoring supplied) WHEREFORE, the petition is DENIED. The assailed Court of Appeals Decision dated May 16, 2003 and Resolution dated November 17, 2003 are AFFIRMED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson ANTONIO T. CARPIO Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBING Associate Justice Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. REYNATO S. PUNO Chief Justice Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 160828 August 9, 2010 DANTE O. TINGA Asscociate Justice

PICOP RESOURCES, INCORPORATED (PRI), Petitioner, vs. ANACLETO L. TAECA, GEREMIAS S. TATO, JAIME N. CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B. BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN, MARGARITO G. ALICANTE, JERRY ROMEO T. AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y. ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT, CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J. TRIMIDAL, and NAMAPRI-SPFL, Respondents. DECISION PERALTA, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 dated July 25, 2003 and Resolution2 dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 20013 and April 29, 20024 of the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision5 dated March 16, 2001 of the Labor Arbiter. The facts, as culled from the records, are as follows: On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.6 (in his capacity as National President of SPFL). Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo saPRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI. PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995 until May 22, 2000. The CBA contained the following union security provisions: Article II- Union Security and Check-Off Section 6. Maintenance of membership. 6.1 All employees within the appropriate bargaining unit who are members of the UNION at the time of the signing of this AGREEMENT shall, as a condition of continued employment by the COMPANY, maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT. 6.2 Any employee who may hereinafter be employed to occupy a position covered by the bargaining unit shall be advised by the COMPANY that they are required to file an application for membership with the UNION within thirty (30) days from the date his appointment shall have been made regular. 6.3 The COMPANY, upon the written request of the UNION and after compliance with the requirements of the New Labor Code, shall give notice of termination of services of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to believe either that membership in the UNION was not available to the employee on the same terms and conditions generally applicable to other members, or that membership was denied or terminated for reasons other than voluntary resignation or non-payment of regular union dues. Separation under the Section is understood to be for cause, consequently, the dismissed employee is not entitled to separation benefits provided under the New Labor Code and in this AGREEMENT."7 On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate those union members who signed the Petition for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of employees. Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty as alleged by their Union. Within the period from May 26 to June 2, 2000, a number of employees who were served "explanation memorandum" submitted their explanation, while some did not. In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA. After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only of 46 member-employees, including respondents. On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of "acts of disloyalty" committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the "freedom period" during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE), Caraga Region. Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code. Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI any union dues and checkoff disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones disloyalty would have been the explicit resignation or withdrawal of membership from the Union accompanied by an advice to management to discontinue union dues and check-off deductions. They insisted that mere affixation of signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period. Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL. Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who supported the Petition for Certification Election of FFW. Respondents claimed that they should have been summoned individually, confronted with the accusation and investigated accordingly and from where the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for causes.1avvphi1 Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no justification in PRIs act of dismissing respondents due to acts of disloyalty. Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion of respondents exercise of their right to selforganization. The act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-organization and constituted acts of unfair labor practice. In a Decision8 dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the said Annex "A" plus damages in the amount ofP10,000.00 each, or a total of P210,000.00 and attorneys fees equivalent to 10% of the total monetary award. SO ORDERED.9 PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal. Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit. Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents motion for reconsideration. On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter. Thus, before this Court, PRI, as petitioner, raised the following issues: I WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO. II WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.10 We will first delve on the technical issue raised. PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of Rule 65. Petitioner is mistaken. The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.11 This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.12 Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. 13 We now come to the main issue of whether there was just cause to terminate the employment of respondents. PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA. Citing Article 253 of the Labor Code,14 PRI contends that as parties to the CBA, they are enjoined to keep thestatus quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached by the parties. Petitioner's argument is untenable.

"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.15 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.16 As to the first requisite, there is no question that the CBA between PRI and respondents included a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the employment of the employee who failed to maintain its good standing as a union member. Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to the Union. However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents. PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement. We are unconvinced. 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 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. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000.17 Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period.18 This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents right to self-organization. Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents. Petitioner's reliance on Article 253 is misplaced. The provision of Article 256 of the Labor Code is particularly enlightening. It reads: Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the

workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.19 Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative.20 The provision for statusquo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.21 In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.22 Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case. Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the statusquo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented,23 or compromised.1avvphi Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.24 We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor.25 An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary award.26 WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M-006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible. SO ORDERED. DIOSDADO M. PERALTA Associate Justice

WE CONCUR: ANTONIO T. CARPIO Associate Justice Chairperson ANTONIO EDUARDO B. NACHURA Associate Justice JOSE CATRAL MENDOZA Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Second Division, Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 146206 August 1, 2011 ROBERTO A. ABAD Associate Justice

SAN MIGUEL FOODS, INCORPORATED, Petitioner, vs. SAN MIGUEL CORPORATION SUPERVISORS and EXEMPT UNION, Respondent. DECISION PERALTA, J.: The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the application of the "community or mutuality of interests" test; and the determination of the employees who belong to the category of confidential employees, are not novel. In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma,1 the Court held that even if they handle confidential data regarding technical and internal business operations, supervisory employees 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees, because the same do not pertain to labor relations, particularly, negotiation and settlement of grievances. Consequently, they were allowed to form an appropriate bargaining unit for the purpose of collective bargaining. The Court also declared that the employees belonging to the three different plants of San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis, having "community or mutuality of interests," constitute a single bargaining unit. They perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities. It was immaterial that the three plants have different locations as they did not impede the operations of a single bargaining representative.2

Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and Employment National Capital Region (DOLE-NCR) conducted pre-election conferences.3 However, there was a discrepancy in the list of eligible voters, i.e., petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while respondent listed 60 and 82, respectively.4 On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order5 directing Election Officer Cynthia Tolentino to proceed with the conduct of certification election in accordance with Section 2, Rule XII of Department Order No. 9. On September 30, 1998, a certification election was conducted and it yielded the following results,6 thus:

Cabuyao Plant Yes No Spoiled Segregated Total Votes Cast 23 0 2 41 66

San Fernando Plant 23 0 0 35 58

Total

46 0 2 76 124

On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and Challenge to Voters,7 questioning the eligibility to vote by some of its employees on the grounds that some employees do not belong to the bargaining unit which respondent seeks to represent or that there is no existence of employer-employee relationship with petitioner. Specifically, it argued that certain employees should not be allowed to vote as they are: (1) confidential employees; (2) employees assigned to the live chicken operations, which are not covered by the bargaining unit; (3) employees whose job grade is level 4, but are performing managerial work and scheduled to be promoted; (4) employees who belong to the Barrio Ugong plant; (5) non-SMFI employees; and (6) employees who are members of other unions. On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that the employees in the submitted list are covered by the original petition for certification election and belong to the bargaining unit it seeks to represent and, likewise, directing petitioner to substantiate the allegations contained in its Omnibus Objections and Challenge to Voters.8 In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the Poultry Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in Calamba, Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga; and (3) it submitted individual and separate declarations of the employees whose votes were challenged in the election.9 Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final tally showed that: number of eligible voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total number of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) "Yes" votes and 3 "No" votes.10 The Med-Arbiter issued the Resolution11 dated February 17, 1999 directing the parties to appear before the Election Officer of the Labor Relations Division on March 9, 1999, 10:00 a.m., for the opening of the segregated ballots. Thereafter, on April 12, 1999, the segregated ballots were opened, showing that out of the 76 segregated votes, 72 were cast for "Yes" and 3 for "No," with one "spoiled" ballot.12 Based on the results, the Med-Arbiter issued the Order13 dated April 13, 1999, stating that since the "Yes" vote received 97% of the valid votes cast, respondent is certified to be the exclusive bargaining agent of the supervisors and exempt employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis. On appeal, the then Acting DOLE Undersecretary, in the Resolution14 dated July 30, 1999, in OS-A-2-70-91 (NCR-OD-M-9010-017), affirmed the Order dated April 13, 1999, with modification that George C. Matias, Alma Maria M. Lozano, Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded from the bargaining unit which respondent seeks to represent. She opined that the challenged voters should be excluded from the bargaining unit, because Matias and Lozano are members of Magnolia Poultry Processing Plants Monthly Employees Union, while Delos Reyes and Pajaron are employees of San Miguel Corporation, which is a separate and distinct entity from petitioner. Petitioners Partial Motion for Reconsideration15 dated August 14, 1999 was denied by the then Acting DOLE Undersecretary in the Order16 dated August 27, 1999.

In the Decision17 dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods, Inc. v. The Honorable Office of the Secretary of Labor, Bureau of Labor Relations, and San Miguel Corporation Supervisors and Exempt Union, the Court of Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the DOLE Undersecretary, stating that those holding the positions of Human Resource Assistant and Personnel Assistant are excluded from the bargaining unit. Petitioners Motion for Partial Reconsideration18 dated May 23, 2000 was denied by the CA in the Resolution19dated November 28, 2000. Hence, petitioner filed this present petition raising the following issues: I. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN IT EXPANDED THE SCOPE OF THE BARGAINING UNIT DEFINED BY THIS COURT'S RULING IN G.R. NO. 110399. II. WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE - SPECIFICALLY, THIS COURT'S DEFINITION OF A "CONFIDENTIAL EMPLOYEE" - WHEN IT RULED FOR THE INCLUSION OF THE "PAYROLL MASTER" POSITION IN THE BARGAINING UNIT. III. WHETHER THIS PETITION IS A "REHASH" OR A "RESURRECTION" OF THE ISSUES RAISED IN G.R. NO. 110399, AS ARGUED BY PRIVATE RESPONDENT. Petitioner contends that with the Court's ruling in G.R. No. 11039920 identifying the specific employees who can participate in the certification election, i.e., the supervisors (levels 1 to 4) and exempt employees of San Miguel Poultry Products Plants in Cabuyao, San Fernando, and Otis, the CA erred in expanding the scope of the bargaining unit so as to include employees who do not belong to or who are not based in its Cabuyao or San Fernando plants. It also alleges that the employees of the Cabuyao, San Fernando, and Otis plants of petitioners predecessor, San Miguel Corporation, as stated in G.R. No. 110399, were engaged in "dressed" chicken processing, i.e., handling and packaging of chicken meat, while the new bargaining unit, as defined by the CA in the present case, includes employees engaged in "live" chicken operations, i.e., those who breed chicks and grow chickens. Respondent counters that petitioners proposed exclusion of certain employees from the bargaining unit was a rehashed issue which was already settled in G.R. No. 110399. It maintains that the issue of union membership coverage should no longer be raised as a certification election already took place on September 30, 1998, wherein respondent won with 97% votes. Petitioners 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, oneunion 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.21 In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union United Lumber and General Workers of the Phils,22 the Court, taking 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 units acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.23 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.24 Thus, applying the ruling to the present case, the Court affirms the finding of the CA that there should be only one bargaining unit for the employees in Cabuyao, San Fernando, and Otis25 of Magnolia Poultry Products Plant involved in "dressed" chicken processing and Magnolia Poultry Farms engaged in "live" chicken operations. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit.

Petitioner asserts that the CA erred in not excluding the position of Payroll Master in the definition of a confidential employee and, thus, prays that the said position and all other positions with access to salary and compensation data be excluded from the bargaining unit. This argument must fail. Confidential employees are defined as those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations.26 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee - that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 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."27 A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and protection of the employers property.28 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.29 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. Corollarily, although Article 24530 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and, hence, are likewise privy to sensitive and highly confidential records.31 Confidential employees are thus excluded from the rank-and-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is similar to the inhibition for managerial employees, because if allowed to be affiliated with a union, the latter might not be assured of their loyalty in view of evident conflict of interests and the union can also become company-denominated with the presence of managerial employees in the union membership.32 Having access to confidential information, confidential employees may also become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining agreement.331avvphi1 In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant,34 the scope of ones work necessarily involves labor relations, recruitment and selection of employees, access to employees' personal files and compensation package, and human resource management. As regards a Personnel Assistant,35 one's work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioners team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. The proceedings for certification election are quasi-judicial in nature and, therefore, decisions rendered in such proceedings can attain finality.36 Applying the doctrine of res judicata, the issue in the present case pertaining to the coverage of the employees who would constitute the bargaining unit is now a foregone conclusion. 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.37 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.38 The only exception is where the employer itself has to file the petition pursuant to Article 25839 of the Labor Code because of a request to bargain collectively.40 With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall future suits of similar nature. WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated November 28, 2000 of the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with modification the Resolutions dated July 30, 1999 and August 27, 1999 of the Secretary of Labor, are AFFIRMED. SO ORDERED. DIOSDADO M. PERALTA Associate Justice

WE CONCUR: ANTONIO T. CARPIO* Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice MARIA LOURDES P. A. SERENO** Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. PRESBITERO J. VELASCO, JR. Associate Justice Third Division, Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 172666 December 7, 2011 ROBERTO A. ABAD Associate Justice

PICOP RESOURCES, INCORPORATED (PRI), Represented in this Petition by MR. WILFREDO D. FUENTES, in his capacity as Senior VicePresident and Resident Manager, Petitioner, vs. RICARDO DEQUILLA, ELMO PABILANDO, CESAR ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-SPFI,Respondents. DECISION MENDOZA, J.: This is a petition for review assailing the April 14, 2005 Decision1 of the Court of Appeals (CA) which reversed and set aside the Resolutions2 of the National Labor Relations Commission (NLRC) dated December 27, 2002 and March 28, 2003, and reinstated the June 9, 2001 Decision3 of the Labor Arbiter (LA), which declared the dismissal of the private respondents as illegal. The Facts Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rank-and-file employees of Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a duly registered labor organization and existing bargaining agent of the PICOP rank-and-file employees. PICOP and NAMAPRI-SPFL had a collective bargaining agreement (CBA) which would expire on May 22, 2000. On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of the Southern Philippines Federation of Labor (SPFL), advised the PICOP management to terminate about 800 employees due to acts of disloyalty, specifically, for allegedly

campaigning, supporting and signing a petition for the certification of a rival union, the Federation of Free Workers Union (FFW) before the 60day "freedom period" and during the effectivity of the CBA. Such acts of disloyalty were construed to be a valid cause for termination under the terms and conditions of the CBA. Based on the CBA, the freedom period would start on March 22, 2000. Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP Legal and Labor Relations Department, issued a memorandum directing the employees concerned to explain within seventy-two (72) hours why their employment should not be terminated due to alleged acts of disloyalty. Upon receiving their explanation letters, Atty. Boniel endorsed the same to Atty. Fuentes who then requested the termination of 46 employees found guilty of acts of disloyalty. On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31 of the 46 employees. Private respondents were among the 31 employees dismissed from employment by PICOP on November 16, 2000. Enraged at what management did to them, private respondents filed a complaint before the NLRC Regional Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal Dismissal with money claims, damages and attorneys fees. LA Ruling On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a decision declaring as illegal the termination of the private respondents. The dispositive portion of the LA Decision reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and 2. Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P 177,403.68, as shown in the computation, hereto attached and marked as Annex "A" hereof, plus damages in the amount of P 10,000.00 each and attorneys fees equivalent to 10% of the total monetary award. SO ORDERED. 4 NLRC Ruling PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19, 2002 NLRC Resolution.5 On motion for reconsideration, however, the NLRC issued another resolution,6 dated December 27, 2002, reversing and setting aside its November 19, 2002 Resolution, the dispositive portion of which reads: WHEREFORE, foregoing premises considered, the above resolution dated November 19, 2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered DISMISSING the above-entitled case for lack of merit. SO ORDERED.7 CA Ruling Upon the denial of their motion for reconsideration, the private respondents brought the case to the CA. On April 14, 2005, the CA rendered the subject decision reversing and setting aside the December 27, 2002 NLRC resolution and reinstating the June 9, 2001 Decision of the LA. The decretal portion of the CA decision reads: WHEREFORE, premises considered, [the] instant petition is GRANTED and the assailed resolutions of the Public Respondent NLRC are hereby REVERSED and SET ASIDE. In view thereof, ordered REINSTATED is the Decision of Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09 June 2001 which reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and

2. Ordering Respondents PRI and NAMPRI-SPFL to reinstate Complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P 177,403.68, plus damages in the amount of P 10,000.00 each and attorneys fees equivalent to 10% of the total monetary award. SO ORDERED.8 The CA ruled, among others, that although private respondents signed an authorization for the filing of the petition for certification election of a rival union, PICOP Democratic Trade Unionist-Federation of Free Workers (FFW),such act was not a sufficient ground to terminate the employment of private respondents. It explained: Ruminating from the alleged violation of the CBA, We see no reason, sufficient and compelling enough, to sustain the Public Respondents raison detre in overturning the Labor Arbiters ruling in favor of the Petitioners. While it is true that Petitioners signed the authorization in support of the Petition for certification election of FFW before the "freedom period," such act is not a sufficient ground to terminate the employment of the Petitioners in as much as the petition itself was filed during the freedom period. Hence, there is nil a basis to impute acts of disloyalty to Petitioners. Imputations of an alleged violation of the CBA should not arise from a vague and all embracing definition of alleged "acts of disloyalty." Neither should it arise from speculative inferences where no evidence appears from the record that Respondent NAMAPRI-SPFL expressly defined "acts of disloyalty." Besides, to Our mind, signing an authorization for the filing of the petition for certification election does not constitute an act of disloyalty per se. There must be proof of contemporaneous acts of resignation or withdrawal of their membership from the Respondent NAMAPRI-SPFL to which they are members. Respondents miserably failed to present evidence to justify a valid termination of employees in pursuance to the CBA allegedly violated. Petitioners, in fact remained in good standing, a continuing requirement for retaining their employment in the Respondent PRI. Petitioners neither joined nor affiliated with FFW and continuously paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this lends credence to the Labor Arbiters ruling that Petitioners dismissal was indeed illegal. Likewise, the advise of the Respondent NAMAPRI-SPFL to the Respondent PRI to effect the termination of employees, including herein Petitioners, finds no basis in fact and in law considering that at the time the Respondent PRI dismissed the Petitioners, among others, on 16 November 2000, there was no more CBA to speak of after it had already expired on 22 May 2000.9 The CA further agreed with private respondents that Article 256 and not Article 253, of the Labor Code applied in this case. The CA discussed this point as follows: We are inclined to favor Petitioners stance that Article 256, supra, is applicable. The issue of acts of disloyalty relates more to a direct connection on the alleged violation or breach of loyalty to the majority status of the incumbent union than on violation of the terms and conditions of the agreement under Article 253, supra, as the Respondents would want Us to believe. Article 256 provides that at the expiration of the 60-day period reckoned from the expiration date of the CBA, the employer shall continue to recognize the majority status of the incumbent bargaining agent only where no petition for certification election is filed. However, as earlier pointed, a petition was already filed by the Petitioners, among others, during the 60-day freedom period. Clearly, from the imports of said provision, it will render nugatory the purpose of the law providing for a freedom period for the filing of a petition for certification election should the act of signing/filing the said petition be interpreted as an act of disloyalty and will render farce the need for a certification election as an instrument of ascertaining the true expression of the will of the workers as to which labor organization would represent them. To construe the provision of law in Article 253, supra, as imposing a restriction against the signing and filing a petition for certification election during the freedom period, is to violate the constitutional right of the employees to organize freely. It is a basic precept of statutory construction that statutes should be construed not so much according to the letters that killeth but in line with the purpose for which they have been enacted.10 Not in conformity with the CA decision, PICOP filed this petition for review posing the following ISSUES WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO? WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALLS WITHIN THE AMBIT OF THE EXTRA ORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.11 PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the Labor Code provides that the terms and conditions of a CBA remain in full force and effect even beyond the 5-year period when no new CBA has yet been reached. It claims that the private respondents violated this provision when they campaigned for, supported and signed FFWs petition for certification election on March 19 and 20, 2000, before the onset of the freedom period. It further argues that private respondents were not denied due process when they

were terminated. Finally, it claims that the decision of the NLRC on the issues raised was not without merit. Even assuming that it erred in its judgment on the legal issues raised, its error is not equivalent to an abuse of discretion that should fall within the ambit of the extraordinary remedy of certiorari. Private respondents position Private respondents argue that the substantial arguments raised by PICOP in this petition are basically a rehash of the same issues and arguments contained in its Motion for Reconsideration of the CA decision. Private respondents adopted and repleaded the ruling of the CA in their Comment12 on this petition. The Courts Ruling The petition merits a denial. There is no question that in the CBA entered into by the parties, there is a union security clause. The clause imposes upon the workers the obligation to join and maintain membership in the companys recognized union as a condition for employment. "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.13 There is no dispute that private respondents were members of NAMAPRI-SPFL who were terminated by PICOP due to alleged acts of disloyalty. It is basic in labor jurisprudence that the burden of proof rests upon management to show that the dismissal of its worker was based on a just cause. When an employer exercises its power to terminate an employee by enforcing the union security clause, it needs to determine and prove the following: (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.14 In this case, the resolution thereof hinges on whether PICOP was able to show sufficient evidence to support the decision of the union to expel private respondents from it. PICOP basically contends that private respondents were justly terminated from employment for campaigning, supporting and signing a petition for the certification of FFW, a rival union, before the 60-day "freedom period" and during the effectivity of the CBA. Their acts constitute an act of disloyalty against the union which is valid cause for termination pursuant to the Union Security Clause in the CBA. The Court finds Itself unable to agree. Considering the peculiar circumstances, the Court is of the view that the acts of private respondents are not enough proof of a violation of the Union Security Clause which would warrant their dismissal. PICOP failed to show in detail how private respondents campaigned and supported FFW. Their mere act of signing an authorization for a petition for certification election before the freedom period does not necessarily demonstrate union disloyalty. It is far from being within the definition of "acts of disloyalty" as PICOP would want the Court to believe. The act of "signing an authorization for a petition for certification election" is not disloyalty to the union per se considering that the petition for certification election itself was filed during the freedom period which started on March 22, 2000. Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous acts of resignation or withdrawal of union membership or non-payment of union dues. Neither is there proof that private respondents joined FFW. The fact is, private respondents remained in good standing with their union, NAMAPRI-SPFL. This point was settled in the case of PICOP Resources, Incorporated (PRI) v. Anacleto L. Taeca,15 where it was written: However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents. PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced. 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 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. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents right to self-organization.16 Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article 256 thereof. The Court agrees with the CA that its argument is misplaced. This issue was tackled and settled in the same PICOP Resources, Incorporated (PRI) v. Taeca case, to wit: Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents. Petitioner's reliance on Article 253 is misplaced. The provision of Article 256 of the Labor Code is particularly enlightening. It reads: Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. 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 quois 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. In the instant case, four (4) petitions were filed as early as May 12, 2000.1awphi1 In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case. Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned. We will emphasize anew that the power to dismiss is a normal prerogative of the employer.1avvphi1 This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor. 17 Considering that private respondents were illegally dismissed, basic law provides that they shall be entitled to the benefit of full backwages and reinstatement unless the latter is no longer viable, in which case, a grant of separation pay shall be awarded equivalent to one month salary for every year of service. X x x Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision X x x.18 Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the total monetary award as they were compelled to litigate in order to seek redress for their illegal dismissal. WHEREFORE, the petition is DENIED. SO ORDERED. JOSE CATRAL MENDOZA Associate Justice WE CONCUR: DIOSDADO M. PERALTA* Associate Justice Acting Chairperson ROBERTO A. ABAD Associate Justice ESTELA M. PERLAS-BERNABE Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. DIOSDADO M. PERALTA Associate Justice Acting Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. MARIA LOURDES P. A. SERENO** Associate Justice

RENATO C. CORONA Chief Justice