LABOR CASE 1

SECOND DIVISION

G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,

HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166,
RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:

Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and
Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San
Miguel Corporation vs. SMCEU-PTGWO, et als."

Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for
short), for its part, defends the Writ on the ground of absence of any employer-employee relationship
between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon)
and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to
represent said workers for purposes of collective bargaining. The Solicitor General agrees with the
position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon
and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent
contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into
those contracts to maintain its competitive position and in keeping with the imperatives of efficiency,
business expansion and diversity of its operation. In said contracts, it was expressly understood and
agreed that the workers employed by the contractors were to be paid by the latter and that none of
them were to be deemed employees or agents of SanMig. There was to be no employer-employee
relation between the contractors and/or its workers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter
executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or
contract employees and workers are excluded from the bargaining unit and, therefore, outside the
scope of this Agreement."

In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for SanMig
for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor
seasonal as they are performing work or activities necessary or desirable in the usual business or
trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was
then demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig,
the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D,
Petition).

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On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F,
Petition).

As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to settle
the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).

Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite
workers in various SMC plants and offices.

On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court
to enjoin the Union from:

a. representing and/or acting for and in behalf of the employees of LIPERCON and/or
D'RITE for the purposes of collective bargaining;

b. calling for and holding a strike vote, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;

c. inciting, instigating and/or inducing the employees or workers of LIPERCON and

D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA,...;

d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON

and D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to man the strike area
and/or picket lines and/or barricades which the defendants may set up at the plants
and offices of plaintiff within the bargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harm and/or molesting the other employees
and/or contract workers of plaintiff, as well as those persons lawfully transacting
business with plaintiff at the work places within the bargaining unit referred to in the
CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;

g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to,
and egress from, the work places within the bargaining unit referred to in the CBA ..,
to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the
work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to
compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex
H, Petition)

Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.

In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig.
That Motion was denied by respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.

In issuing the Injunction, respondent Court rationalized:

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 The absence of employer-employee relationship negates the existence of labor
dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance.

The evidence so far presented indicates that plaintiff has contracts for services with
Lipercon and D'Rite. The application and contract for employment of the defendants'
witnesses are either with Lipercon or D'Rite. What could be discerned is that there is
no employer-employee relationship between plaintiff and the contractual workers
employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and engagement of the
putative employee; the mode of payment of wages; the presence or absence of a
power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are
not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the
other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.

Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required
the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).

In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.

On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees
were recalled, and discussion on their other demands, such as wage distortion and appointment of
coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig
and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No.
57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former
jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig
Comment). In turn, the Union would immediately lift the pickets and return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January
1990.

The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of
that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive
jurisdiction of labor tribunals to the exclusion of the regular Courts.

Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with the
NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).

On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to compel

the employer to hire and thereby create an employment relationship with contractual
workers, especially were the contractual workers were recognized by the union, under

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 the governing collective bargaining agreement, as excluded from, and therefore
strangers to, the bargaining unit.

B. A strike is a coercive economic weapon granted the bargaining representative only

in the event of a deadlock in a labor dispute over 'wages, hours of work and all other
and of the employment' of the employees in the unit. The union leaders cannot
instigate a strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope the latter will help
re-elect them.

C. Civil courts have the jurisdiction to enjoin the above because this specie of strike
does not arise out of a labor dispute, is an abuse of right, and violates the employer's
constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).

We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."

While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof (ibid).
Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that
the plaintiffs and defendants do not stand in the proximate relation of employer and employee.

That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed
up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that
Union demand on the ground that there is no employer-employee relationship between it and those
workers and because the demand violates the terms of their CBA. Obvious then is that representation
and association, for the purpose of negotiating the conditions of employment are also involved. In fact,
the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter
of representation falls within the scope of a labor dispute. Neither can it be denied that the controversy
below is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE
(NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice
of strike was valid and the strike itself legal when it was allegedly instigated to compel the employer
to hire strangers outside the working unit; — those are issues the resolution of which call for the
application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with
those issues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions,
of employment or the representation of employees that called for the application of labor laws. In that
case, what the petitioning union demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as stevedores in the place of the
members of a rival union, which petitioners wanted discharged notwithstanding the existing contract
of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts
unique to that case, that such a demand could hardly be considered a labor dispute.

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21
March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and

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exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair
labor practice cases; 2. those that workers may file involving wages, hours of work and other terms
and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code,
including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain
command of the law.

The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its
best business judgment to determine whether it should contract out the performance of some of its
work to independent contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge
is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing
it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed
pending the proceedings in the National Conciliation Mediation Board-Department of Labor and
Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.

SO ORDERED.

Paras and Regalado, JJ., concur.

Padilla, Sarmiento, JJ., took no part.

LABOR CASE 2
EN BANC

G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private
respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No.
III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations
Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract
of employment executed between him and petitioner nor was his name included in the semi-monthly
payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating
P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau
of Internal Revenue (BIR). 1

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Petitioner on the other hand claims that private respondent was not its employee but only the uncle of
Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private
respondent, who was formerly working as an overseas contract worker, asked for financial assistance
from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily
helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of
the business. She then discovered that there were arrears in the payment of taxes and other
government fees, although the records purported to show that the same were already paid. Amelita
then made some changes in the business operation and private respondent and his wife were no
longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint
charging that petitioner had illegally terminated his employment. 2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner
on October 25, 1996 declaring that no employer-employee relationship existed between the parties
and, therefore, his office had no jurisdiction over the case. 3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the
labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he
worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995
to January 23, 1996, or a period of about one year; and (3) in ruling that there was no employer-
employee relationship between him and petitioner. 4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then filed a
motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for
lack of merit,6 hence the present petition alleging that the NLRC committed grave abuse of discretion. 7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and
opportune to reexamine the functional validity and systemic practicability of the mode of judicial review
it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of
labor disputes that find their way to this Court and the legislative changes introduced over the years
into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas
Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and
warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of
Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable
to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six
months after its promulgation. 8 Created and regulated therein is the present NLRC which was
attached to the Department of Labor and Employment for program and policy coordination
only.9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of
appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently
amended said provision and abolished such appeals. No appellate review has since then been
provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision
of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead
merely provides that the Commission shall decide all cases within twenty days from receipt of the
answer of the appellee, and that such decision shall be final and executory after ten calendar days
from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to
review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal
provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is
an underlying power of the courts to scrutinize the acts of such agencies on questions of law and
jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to
keep the administrative agency within its jurisdiction and protect the substantial rights of the parties;
and that it is that part of the checks and balances which restricts the separation of powers and forestalls
arbitrary and unjust adjudications. 11

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the
aggrieved party is to timely file a motion for reconsideration as a precondition for any further or

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subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule
65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the
decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already
have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may
still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed
within the reglementary period under Rule 65. 14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as
follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its
appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards, or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the
Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March
18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its
appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in
cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings. Trials or hearings in the Court of
Appeals must be continuous and must be completed within, three (3) months, unless
extended by the Chief Justice.

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It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the
following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A.
No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the
Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the
Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the
section, such that the original exclusionary clause therein now provides "except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of
the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17
of the Judiciary Act of 1948." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over
which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation Commission and the
Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As
earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been
understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a
special original action limited to the resolution of jurisdictional issues, that is, lack or excess of
jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting
to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial
Courts and the quasi-judicial agencies generally or specifically referred to therein except, among
others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would
necessarily contradict what has been ruled and said all along that appeal does not lie from decisions
of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot
be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has
no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section
17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive
appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment
by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the
Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress
could not have intended that procedural gaffe, since there are no cases in the Labor Code the
decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme
Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may
have been an oversight in the course of the deliberations on the said Act or an imprecision in the
terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications
of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for
the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has
been drawn from the considerations extant in the records of Congress, more particularly on Senate
Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from
which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its jurisdiction and
powers. Among others, its appellate jurisdiction was expanded to cover not only final
judgment of Regional Trial Courts, but also all final judgment(s), decisions, resolutions,
orders or awards of quasi-judicial agencies, instrumentalities, boards and
commissions, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the provisions of BP Blg. 129 and of

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 subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the
Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court by
the transfer of some of its burden of review of factual issues to the Court of
Appeals. However, whatever benefits that can be derived from the expansion of the
appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of
Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions
and interlocutory orders issued under the Labor Code of the Philippines and by the
Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court
are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally, extends the coverage of appellate review
of the Court of Appeals in the decision(s) of the Securities and Exchange Commission,
the Social Security Commission, and the Employees Compensation Commission to
reduce the number of cases elevated to the Supreme Court. (Emphases and
corrections ours)

xxx xxx xxx

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides
the ideal situation of drastically reducing the workload of the Supreme Court without
depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in

1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme

Court of the burden of reviewing these cases which present no
important issues involved beyond the particular fact and the parties
involved, so that the Supreme Court may wholly devote its time to
cases of public interest in the discharge of its mandated task as the
guardian of the Constitution and the guarantor of the people's basic
rights and additional task expressly vested on it now "to determine
whether or not there has been a grave abuse of discretion amounting
to lack of jurisdiction on the part of any branch or instrumentality of the
Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been
cut down to 300,000 cases some five years ago. I understand we are now back to
400,000 cases. Unless we distribute the work of the appellate courts, we shall continue
to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have
submitted, the Committee on Justice and Human Rights requests the support and
collegial approval of our Chamber.

xxx xxx xxx

Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced
by the said sponsor and the following proceedings transpired: 20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the
Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER
P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising
from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was
also discussed with our Colleagues in the House of Representatives and as we
understand it, as approved in the House, this was also deleted, Mr. President.

Page | 9
 The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved. (Emphasis supplied).

xxx xxx xxx

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second
reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference
Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been
approved by the House of Representatives, the same was likewise approved by the Senate on
February 20, 1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier
discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of
the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus
plumae because appeals by certiorari and the original action for certiorari are both modes of judicial
review addressed to the appellate courts. The important distinction between them, however, and with
which the Court is particularly concerned here is that the special civil action of certiorari is within the
concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the
assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would
subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse
from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be
circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically
emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of
Appeals would give litigants the advantage to have all the evidence on record be
reexamined and reweighed after which the findings of facts and conclusions of said
bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that factual
findings of the Court of Appeals are final and may not be reversed on appeal to the
Supreme Court. A perusal of the records will reveal appeals which are factual in nature
and may, therefore, be dismissed outright by minute resolutions. 24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law,
on this score we add the further observations that there is a growing number of labor cases being
elevated to this Court which, not being a trier of fact, has at times been constrained to remand the
case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is
procedurally equipped for that purpose, aside from the increased number of its component divisions;
and that there is undeniably an imperative need for expeditious action on labor cases as a major
aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the
Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate
forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account:

Page | 10
 One final observation. We discern in the proceedings in this case a propensity on the
part of petitioner, and, for that matter, the same may be said of a number of litigants
who initiate recourses before us, to disregard the hierarchy of courts in our judicial
system by seeking relief directly from this Court despite the fact that the same is
available in the lower courts in the exercise of their original or concurrent jurisdiction,
or is even mandated by law to be sought therein. This practice must be stopped, not
only because of the imposition upon the precious time of this Court but also because
of the inevitable and resultant delay, intended or otherwise, in the adjudication of the
case which often has to be remanded or referred to the lower court as the proper forum
under the rules of procedure, or as better equipped to resolve the issues since this
Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will
not entertain direct resort to it unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify
availment of a remedy within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED,
and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate
action and disposition consistent with the views and ruling herein set forth, without pronouncement as
to costs.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban
Martinez, Quisumbing and Purisima, JJ., concur.

Footnotes

1 Rollo, 17.

2 Ibid., 18-19.

3 Ibid., 19.

4 Ibid., 16.

5 Ibid., 21.

6 Ibid., 23-24.

7 Ibid., 6.

8 Art. 2.

9 Art. 213.

10 While Art. 223 bears the epigraph of "Appeal," it actually refers only to decisions, awards,
or orders of the labor arbiter which shall be final and executory unless appealed to the NLRC
by any or both parties within ten calendar days from receipt thereof.

11 San Miguel Corporation vs. Secretary of Labor, et al., G.R. No. L-39195, May 15, 1975, 64
SCRA 56; Scott vs. Inciong, et al. G.R. No. L-38868, December 29, 1975, 68 SCRA 473;
Bordeos, et al., vs. NLRC, et al., G.R. Nos. 115314-23, September 26, 1996, 262 SCRA 424.

12 Zapata vs. NLRC, et al., G.R. No. 77827, July 5, 1989, 175 SCRA 56.

13 See, for instance , Pure Foods Corporation vs. NLRC, et al., G.R. No. 78591, March 21,
1989, 171 SCRA 415.

14 Mantrade, etc. vs. Bacungan, et al., G.R. No. L-48437, September 30, 1986, 144 SCRA
511.

15 75 O.G. 4781, August 29, 1983.

Page | 11
 16 Executive Order No. 33 restored the name of the Court of Appeals, in lieu of the
Intermediate Appellate Court, effective July 28, 1986.

17 The different modes of appeal, that is, by writ of error (Rule 41), petition for review (Rules
42 and 43), and petition for review on certiorari (Rule 45) obviously cannot be availed of
because there is no provision appellate review of NLRC decisions in P.D. No. 442, as
amended.

18 All Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose
Section 9 of Batas Pambansa Blg. 129, known as the Judiciary Reorganization Act of 1980.

19 Transcript of Session Proceedings (TSP). S. No. 1495, February 8, 1995, 31-36.

20 TSP, id., February 15, 1995, 18-19.

21 TSP, id., id., 19-21; Record of the Senate, Vol. V, No. 63, pp. 180-181.

22 TSP, id., February 20, 1995, pp. 42-43.

23 The Regional Trial Court also shares that concurrent jurisdiction but that cannot be
considered with regard to the NLRC since they are of the same rank.

24 TSP, S. No. 1495, February 8, 1995, pp. 32-33.

25 G.R. Nos. 99289-90, January 27, 1993, 217 SCRA 633. See also Tano, et al. vs.
Socrates. et al., G.R. No. 110249, August 21, 1997, 278 SCRA 155.

LABOR CASE 3
THIRD DIVISION

G.R. No. 99395 June 29, 1993

ST. LUKE'S MEDICAL CENTER, INC., petitioner,

vs.
HON. RUBEN O. TORRES and ST. LUKE'S MEDICAL CENTER ASSOCIATION-ALLIANCE OF
FILIPINO WORKERS ("SLMCEA-AFW"), respondents.

Sofronio A. Ona for petitioner.

Edgar R. Martir for respondent union.

MELO, J.:

In response to the mandate under Article 263(g) of the Labor Code and amidst the labor controversy
between petitioner St. Luke's Medical Center and private respondent St. Luke's Medical Center
Employees Association-Alliance of Filipino Workers (SLMCEA-AFW), then Secretary of Labor Ruben
D. Torres, issued the Order of January 28, 1991 requiring the parties to execute and finalize their
1990-1993 collective bargaining agreement (CBA) to retroact to the expiration of the anterior CBA.
The parties were also instructed to incorporate in the new CBA the disposition on economic and non-
economic issues spelled out in said Order (p. 48, Rollo). Separate motions for re-evaluation from the
parties were to no avail; hence, the petition at bar premised on the following ascriptions of error, to
wit:

Page | 12
 PUBLIC RESPONDENT HON. SECRETARY OF LABOR ACTED IN EXCESS OF
JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE
VIOLATED PETITIONER'S RIGHT TO DUE PROCESS, PUBLIC RESPONDENT
COMPLETELY IGNORED THE LATTER'S EVIDENCE AND ISSUED THE
QUESTIONED AWARDS ON THE BASIS OF ARBITRARY GUESSWORKS,
CONJECTURES AND INFERENCES.

II

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

CURTAILED THE PARTIES' RIGHT TO FREE COLLECTIVE BARGAINING, AND
WHEN HE GRANTED MONETARY AWARDS AND ADDITIONAL BENEFITS TO THE
EMPLOYEES GROSSLY DISPROPORTIONATE TO THE OPERATING INCOME OF
PETITIONER.

III

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

ADOPTED/CONSIDERED THE ALLEGATIONS OF THE UNION THAT THE
HOSPITAL OFFERED SALARY AND MEAL ALLOWANCE INCREASES IN THE
AMOUNT OF P1,140,00 FOR THE FIRST YEAR AND P700.00 ACROSS THE
BOARD MONTHLY SALARY INCREASES FOR THE SECOND AND THIRD YEARS
OF THE NEW CBA.

IV

FINALLY, PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

WHEN HE GAVE HIS AWARD RETROACTIVE EFFECT.

When the collective bargaining agreement for the period August 1, 1987 to July 30, 1990 was forged
between petitioner and private respondent, the incumbent national president of AFW, the federation
to which the local union SLMCEA is affiliated, was Gregorio del Prado.

Before the expiration of the 1987-90 CBA, the AFW was plagued by internal squabble splitting its
leadership between Del Prado and Purita Ramirez, resulting in the filing by AFW and Del Prado of a
petition later docketed before the Department of Labor as NCR-00-M-90-05-077, where a declaration
was sought on the legitimacy of Del Prado's faction as bona fide officers of the federation. Pending
resolution of said case, herein private respondent SLMCEA-AFW brought to the attention of
petitioner via a letter dated July 4, 1990 that the 1987-1990 was about to expire, and manifested in
the process that private respondent wanted to renew the CBA. This development triggered round-
table talks on which occasions petitioner proposed, among other items, a maximum across-the-board
monthly salary increase of P375.00 per employee, to which proposal private respondent demanded a
P1,500.00 hike or 50% increase based on the latest salary rate of each employee, whichever is higher.

In the meantime, relative to the interpleader case (NCR-00-M-90-05-070) initiated by petitioner to

settle the question as to who between Del Prado and Diwa was authorized to collect federation dues
assessed from hospital employees, the Med-Arbiter recognized Del Prado's right (p. 423, Rollo). This
resolution of July 31, 1990 was elevated to the Labor Secretary.

That talks that then ensued between petitioner and private respondent were disturbed anew when the
other wing in the AFW headed by Purita Ramirez, expressed its objections to the on-going
negotiations, and when a petition for certification election was filed by the Association of Democratic
Labor Organization of petitioner. However, private respondent emerged victorious after the elections
and was thus certified as the exclusive bargaining entity of petitioner's rank and file employees.

Following the decision dated September 14, 1990 in NCR-00-M-90-05-077 (pp. 444-445, Rollo) which
upheld the legitimacy of Del Prado's
status including the other officers, Bayani Diwa of the Ramirez Wing
appealed; the two cases — NCR-00-M-90-05-070 for interpleader and NCR-00-90-05-077 — were
consolidated.

On September 17, 1990, private respondent wrote petitioner for the resumption of their negotiations
concerning the union's proposed CBA. Petitioner reacted by writing a letter on September 20, 1990
expressing willingness to negotiate a new CBA for the rank and file employees who are not occupying
confidential positions. Negotiations thus resumed. However, a deadlock on issues, especially that

Page | 13
bearing on across-the-board monthly and meal allowances followed and to pre-empt the impending
strike as voted upon by a majority of private respondent's membership, petitioner lodged the petition
below. The Secretary of Labor immediately assumed jurisdiction and the parties submitted their
respective pleadings.

On January 22, 1991, a resolution was issued in the consolidated cases which eventually declared
Gregorio del Prado and his group as the legitimate officials of the AFW and the acknowledged group
to represent AFW (pp. 320-321, Rollo).

On January 28, 1991, public respondent Secretary of Labor issued the Order now under challenge.
Said Order contained a disposition on both the economic and non-economic issues raised in the
petition. On the economic issues, he thus ruled:

First year — P1,140.00 broken down as follows: P510.00 in compliance with the
government mandated daily salary increase of P17.00; and P630.00 CBA across the
board monthly salary increase.

Second year — P700.00 across the board monthly salary increase.

Third year — P700.00 across the board monthly salary increase.

It is understood that the second and third year salary increases shall not be chargeable
to future government mandated wage increases. (p. 47, Rollo.)

As earlier stated, both parties moved for reconsideration of the above order, but both motions were
denied. Consequently, petitioner St. Luke's filed the instant petition, a special civil action on certiorari.

In assailing the Order of January 28, 1991, petitioner St. Luke's focuses on public respondent's
disposition of the economic issues.

First, petitioner finds highly questionable the very basis of public respondent's decision to award
P1,140.00 as salary and meal allowance increases for the first year and P700.00 across-the-board
monthly salary increases for the succeeding second and third years of the new CBA. According to
petitioner, private respondent SLMCEA-AFW misled public respondent into believing that said
amounts were the last offer of petitioner St. Luke's immediately prior to the deadlock. Petitioner
vehemently denies having made such offer, claiming that its only offer consists of the following:

Non-Economic Issues:

St. Luke's submits that it is adopting the non-economic issues proposed and agreed
upon in its Collective Bargaining Agreement with SLMCEA-AFW for the period
covering 1987, 1990. Copy of the CBA is attached as Annex "F" hereof.

Economic Issue

St. Luke's respectfully offers to give an increase to all its rank and file employees
computed as follows:

First Year — P900 (P700.00 basic + P200.00 food allowance) for an

over all total food allowance of P320.00.

Second Year — P400

Third Year — P400

plus the union will be allowed to operate and manage one (1) canteen for free to
augment their funds. Although the profit shall be divided equally between union and
SLMC, the operation of the canteen will generate for them a monthly income of no less
than P15,000.00, and likewise provide cheap and subsidized food to Union members.

The wage increase as proposed shall be credited to whatever increases in the

minimum wage or to any across the board increases that may be mandated by the
government or the DOLE. (pp. 20-21, Rollo.)

Page | 14
Petitioner charges that public respondent, in making such award, erroneously relied on the
extrapolated figures provided by respondent SLMCEA-AFW, which grossly inflated petitioner St.
Luke's net income. Petitioner contends that if the disputed award are sustained, the wage increases
and benefits shall total approximately P194,403,000.00 which it claims is excessive and unreasonable,
considering that said aggregate amount is more than its projected income for the next three years. To
illustrate its point, petitioner submits the following computation:

YR I

A. P1,40 added to basic pay

a) P1,140 x 1,500 (no. of employees) x 12 (months) — P 20,520,000

b) 13th month pay: P1,140 x 1,500 — 1,710,000

c) Overtime pay, 20% of payroll — 4,104,000

d) Holiday pay, PM/Night pay — 1,026,000

e) Sick leave — 855,000

f) Funeral, Paternity, Maternity leaves, retirement

pay — 820,000

B. P230 added to meal allowance

a) P230 x 1,500 x 12 — 4,140,000

C. One day added to sick leave

a) (Ave. pay P3,000 = P1,140) divided by 30 x 1,500 — 222,000

D. Sick leave cash conversion base reduced from 60 to 45 days

a) (P3,300 = P1,140)/30 x 1,200 — 2,664,000

E. Retirement benefits adjustment — 500,000

—————

FIRST YEAR ADDITIONAL COST P 36,561,000

YR II

A. Yr I increase except sick leave cash conversion

from 60 to 45 — P33,897,000

B. P700 added to monthly basic pay

a) P700 x 1,500 x 12 — 2,600,000

b) 13th month pay: P700 x 1,500 — 1,050,000
c) Overtime, pay, 20% of P12.6 M — 2,520,000
d) Holiday pay, PM/Night pay — 630,000
e) Sick leave: 15 days x 700/30 x 1,500 — 525,000
f) Funeral, paternity, maternity leaves, retirement pay — 504,000
————

SECOND YEAR ADDITIONAL COST P51,726,000

YR III

Page | 15
 A. Yr I and Yr II increases — 88,287,000

B. P700 added to basic pay

a) P700 x 1,500 x 12 — 12,600,000

b) 13th month pay: P700 x 1,500 — 1,050,000
c) Overtime pay, 20% of P12.6 M — 2,520,000
d) Holiday pay, PM/Night pay — 630,000
e) Sick leave — 525,000
f) Funeral, paternity, maternity, leaves,
retirement pay — 504,000
————

THIRD YEAR ADDITIONAL COST — 106,116,000

TOTAL THREE-YEAR ADDITIONAL

BENEFIT/WAGES — 194,403,000

(pp. 14-16, Rollo).

On the basis of the foregoing, petitioner St. Luke's concludes that it would be in a very poor position
to even produce the resources necessary to pay the wage increases of its rank and file employees.

Petitioner also impugns public respondent's awards on grounds of prematurity, emphasizing that the
awards in question even preceded collective bargaining negotiations which have to take place first
between both litigants. It denies entering into a round of negotiations with private respondent
SLMCEA-AFW on the theory that the meetings referred to by the latter were merely informal ones,
without any binding effect on the parties because AFW is torn between two factions vying for the right
to represent it. Thus, petitioner maintains that nothing conclusive on the terms and conditions of the
proposed CBA could be arrived at when the other party, private respondent SLMCEA-AFW is
confronted with an unresolved representation issue.

Petitioner argues further that since no formal negotiations were conducted, it could not have possibly
made an offer of P1,140.00 as salary and meal allowance increases for the first year and an increase
of P700.00 across-the-board monthly salary for the second and third years of the new CBA. It raises
doubts on the veracity of the minutes presented by private respondent SLMCEA-AFW to prove that
negotiations were held, particularly on October 26, 1990, when petitioner allegedly made said offer as
its last ditch effort for a compromise prior to the deadlock. According to petitioner, these minutes,
unsigned by petitioner, were merely concocted by private respondent SLMCEA-AFW.

Finally, petitioner attacks the Order of January 28, 1991 for being violative of Article 253-A of the Labor
Code, particularly its provisions on retroactivity. Said Article pertinently provides:

xxx xxx xxx

Any agreement on such other provisions of the collective bargaining agreement

entered into within six (6) months from the date of expiry of the term of such other
provisions as fixed in the collective bargaining agreement, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond six
months, the parties shall agree on the duration of retroactivity thereof. In case of a
deadlock in the renegotiation of the collective bargaining agreement, the parties may
exercise their rights under this Code.

Petitioner argues that in granting retroactive effect to the enforceability of the CBA, public respondent
committed an act contrary to the above provision of law, pointing out that the old CBA expired on July
30, 1990 and the questioned order was issued on January 28, 1991. Petitioner theorizes that following
Article 13 of the Civil Code which provides that there are 30 days in one month, the questioned Order
of January 28, 1991 was issued beyond the six-month period, graphically shown thus:

July 30, 1990 Expiration

July 31 = 1 day
August 1-31, 1990 = 31 days

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 September 1-30, 1990 = 30 days
October 1-31, 1990 = 31 days
November 1-30, 1990 = 30 days
December 1-31, 1990 = 31 days
January 1-28, 1991 = 28 days
—————————
TOTAL = 182 days

(6 months and 2 days)

(p. 34, Rollo.)

Traversing petitioner's arguments, private respondent SLMCEA-AFW contends that the formulation of
the terms and conditions of the CBA awards is well supported by the factual findings of public
respondent which established that petitioner failed to refute private respondent's allegation that during
their last meeting on October 26, 1990, petitioner stood pat on its offer of P1,140.00 as salary and
meal allowance increases for the first year of the new CBA and P700.00 across-the-board salary
increases for the second and third years thereof. Said awards, it said, are well within the means of
petitioner because its reported net income of P15 million, P11 million, and 13 million for 1987, 1988,
and 1989, respectively, have been actually understated. Moreover, private respondent claims that
petitioner, in actual terms, does not have to pay the alleged amount of P194,403,000.00 for wages
and benefits in favor of its employees. Such amount, according to private respondent, is bloated and
excessive. Private respondent in substantiating such claim made the following analysis:

First P1,140.00 total salary increase for the first year (1990-1991) of the new CBA is
divided into: P510.00 in compliance with the government mandated daily salary
increase of P17.00 and P630.00 CBA across the board monthly salary increase, thus,
the whole P1,140.00 salary increase is payable only beginning August 1, 1990
(reckoned from the CBA July 30, 1990 expiry date) up to October 31, 1990 only
following the November 1, 1990 effectivity of WAGE ORDER NO. NCR-01 which
granted the said P17.00 daily wage increase or P510.00 monthly of
which herein petitioner promptly complied with and paid to its employees and therefore
deductible from P1,140.00 total monthly salary increase (Annex "A" — Petitioner and
Annex "13" hereof);

Second, the remaining P630.00 CBA across the board monthly salary increase takes
effect on November 1, 1990 up to January 7, 1991 only following the January 8, 1991
effectivity of WAGE ORDER NO. NCR-02 which mandated P12.00 daily wage
increase or P630.00 monthly, hence, reducing the P630.00 CBA monthly salary
increase to P270.00 CBA monthly salary increase effective January 8, 1991 and
onwards till July 31, 1991 (Annexes "22" and "23" hereof);

Third, that out of an estimated workforce of 1,264 regular employees inclusive of about
209 supervisors, unit, junior area, division department managers and top level
executives, all occupying permanent positions, and approximately 55 regular but
highly confidential employees, only 1,000 rank-and-file regular/permanent employees
(casuals, contractuals, probies and security guards excluded) are entitled to the CBA
benefits for three (3) years (1990-1993) (as private respondent SLMCEA-AFW
gathered and analyzed from the petitioner's Personnel Strength Report hereto
attached as Annex "28" hereof) vis-a-vis the generalized and inflated 1,500 employees
as total workforce purportedly entitled to CBA benefits per its self-serving and
incredible computation;

Fourth, the petitioner's computed 20% overtime pay of the basic salary is unrealistic
and overstated in view of its extreme cost-cutting/ savings measures on all
expenditures, most specially, on overtime work adopted since last year and a
continuing management priority project up to the present; and

Fifth, due to the above consideration, the total real award of wages and fringe benefits
is far less than the true annual hefty operating net income of the petitioner.

The net result is that the first year award of P1,140.00 monthly salary increase of which
P510.00 monthly salary increase is made in compliance with the P510.00 monthly
wage increase at P17.00 daily wage increase effective November 1, 1990 under Wage
Order No. NCR-01 (Annex "13" hereof) or with the intended P630.00 CBA monthly

Page | 17
 salary increase is further reduced by P360.00 monthly wage increase at P12.00 daily
wage increase effective January 8, 1991 under Wage Order No.
NCR-02 (Annex "22" hereof), thereby leaving a downgraded or watered down CBA
monthly increase of P270.00 only.

Comparatively speaking, the 13% monthly salary increase of each employee average
basic monthly salary of P2,500.00 in 1987 or P325.00 monthly salary increase granted
by the petitioner under the first old CBA (1987-1990) is better than the much diluted
P270.00 CBA monthly salary increase (in lieu of the awarded P630.00 CBA monthly
salary increase for the first year of the new CBA under Order, dated January 28, 1991,
of public respondent). (Annexes "A" and "G" — Petition). (pp. 390-391, Rollo.)

Private respondent concludes that petitioner's version that it will have to pay P194,403,000.00 is not
true because this will be drastically reduced by 40% to 60% in real terms due to a smaller number of
employees covered. It is further explained that the government-decreed wage increases
abovementioned already form part of the P1,140.00 wage and meal allowance increases, not to
mention the strict cost-cutting measures and practices on overtime and expense items adopted by
petitioner since 1990.

With respect to public respondent's ruling that the CBA awards should be given retroactive effect,
private respondent agrees with the Labor Secretary's view that Article 253-A of the Labor Code does
not apply to arbitral awards such as those involved in the instant case. According to private
respondent, Article 253-A of the Labor Code is clear and plain on its face as referring only to collective
bargaining agreements entered into by management and the certified exclusive bargaining agent of
all rank-and-file employees therein within six (6) months from the expiry of the old CBA.

These foregoing contentions and arguments of private respondent have been similarly put forward by
the Office of the Solicitor General in its Consolidated Comment filed on November 23, 1991. The
Solicitor General share a the views of private respondent SLMCEA-AFW.

We are now tasked to rule on the petition. Do petitioner's evidence and arguments provide adequate
basis for the charge of alleged grave abuse of discretion committed by public respondent in his Order
of January 28, 1991 as to warrant its annulment by this Court? This is the sole issue in the case at
bar. Consequently, this Court would apply the following yardstick in resolving the aforestated issue:
that public respondent, in the exercise of his power to assume over subject labor dispute, acted
whimsically, capriciously, or in an arbitrary, despotic manner by reason of passion or personal hostility
which was so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform a duty enjoined or to act at all in contemplation of law (San Sebastian College vs. Court of
Appeals, 197 SCRA 138 [1991]).

Subjected to and measure by this test, the challenged Order, we believe, can withstand even the most
rigorous scrutiny.

Petitioner assails the Order of January 28, 1991 on three grounds:

(a) unreasonable and baselessness; (b) prematurity; and (c) violation of Article 253-A of the Labor
Code.

We rule that the Order, particularly in its disposition on the economic issues, was not arbitrarily
imposed by public respondent. A perusal of the Order shows that public respondent took into
consideration the parties' respective contentions, a clear indication that he was keenly aware of their
contrary positions. Both sides having been heard, they were allowed to present their respective
evidence. The due process requirement was thus clearly observed. Considering public respondent's
expertise on the subject and his observance of the cardinal principles of due process, the assailed
Order deserves to be accorded great respect by this Court.

Equally worth mentioning is the fact that in resolving the economic issues, public respondent merely
adopted in toto petitioner's proposals. Consequently, petitioner cannot now claim that the awards are
unreasonable and baseless. Neither can it deny having made such proposals, as it attempted to do in
its Motion for Reconsideration of the challenged Order before public respondent and which it continues
to pursue in the instant petition. It is too late in the day for such pretense, especially so because
petitioner failed to controvert private respondent's allegation contained in its Comment to the petition
before the Labor Secretary that petitioner had offered as its last proposal said salary and meal
allowance increases. As correctly pointed out by public respondent, petitioner failed, when it had the
chance, to rebut the same in its Reply to said Comment, considering that the resolution of the labor
dispute at that was still pending. Any objection on this point is thus deemed waived.

Page | 18
We do not see merit in petitioner's theory that the awards were granted prematurely. In its effort to
persuade this Court along this point, petitioner denies having negotiated with private respondent
SLMCEA-AFW. Petitioner collectively refers to all the talks conducted with private respondent as mere
informal negotiations due to the representation issue involving AFW. Petitioner thus argues that in the
absence of any formal negotiations, no collective bargaining could have taken place. Public
respondent, petitioner avers, should have required the parties instead to negotiate rather than
prematurely issuing his order.

We cannot agree with this line of reasoning. It is immaterial whether the representation issue within
AFW has been resolved with finality or not. Said squabble could not possibly serve as a bar to any
collective bargaining since AFW is not the real party-in-interest to the talks; rather, the negotiations
were confined to petitioner and the local union SLMCEA which is affiliated to AFW. Only the collective
bargaining agent, the local union SLMCEA in this case, possesses legal standing to negotiate with
petitioner. A duly registered local union affiliated with a national union or federation does not lose its
legal personality or independence (Adamson and Adamson, Inc. vs. The Court of Industrial Relations
and Adamson and Adamson Supervising Union (FFW), 127 SCRA 268 [1984]). In Elisco-Elirol Labor
Union (NAFLU) vs. Noriel (180 SCRA 681 [1977]), then Justice Teehankee re-echoed the words of
Justice Esguerra in Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. (66 SCRA 512
[1975]), thus:

(T)he locals are separate and distinct units primarily designed to secure and maintain
an equality of bargaining power between the employer and their employee-members
in the economic struggle for the fruits of the joint productive effort of labor and capital;
and the association of the locals into the national union (as PAFLU) was in furtherance
of the same end. These associations are consensual entities capable of entering into
such legal relations with their members. The essential purpose was the affiliation of
the local unions into a common enterprise to increase by collective action the common
bargaining power in respect of the terms and conditions of labor. Yet the locals
remained the basic units of association, free to serve their own and the common
interest of all, subject to the restraints imposed by the Constitution and By-Laws of the
Association, and free also to renounce the affiliation for mutual welfare upon the terms
laid down in the agreement which brought it into existence. (at p. 688; emphasis in the
original.)

Appending "AFW" to the local union's name does not mean that the federation absorbed the latter. No
such merger can be construed. Rather, what is conveyed is the idea of affiliation, with the local union
and the larger national federation retaining their separate personalities.

Petitioner cannot pretend to be unaware of these legal principles since they enjoy the benefit of legal
advice from their distinguished counsel. Thus, we are constrained to agree with the position of the
Solicitor General that petitioner conveniently used the representation issue within AFW to skirt entering
into bargaining negotiations with the private respondent.

Too, petitioner is in error in contending that the order was prematurely issued. It must be recalled that
immediately after the deadlock in the talks, it was petitioner which filed a petition with the Secretary of
Labor for the latter to assume jurisdiction over the labor dispute. In effect, petitioner submitted itself to
the public respondent's authority and recognized the latter's power to settle the labor dispute pursuant
to article 263(g) of the Labor Code granting him the power and authority to decide the dispute. It
cannot, therefore, be said that public respondent's decision to grant the awards is premature and pre-
emptive of the parties' right to collectively bargain, simply because the Order of January 28, 1991 was
unfavorable to one or the other party, for as we held in Saulog Transit, Inc. vs. Lazaro, (128 SCRA
591 [1984]):

It is a settled rule that a party cannot invoke the jurisdiction of a court to secure
affirmative relief against his opponent and after failing to obtain such relief, repudiate
or question that same jurisdiction. A party cannot invoke jurisdiction at one time and
reject it at another time in the same controversy to suit its interests and convenience.
The Court frowns upon and does not tolerate the undesirable practice of same litigants
who submit voluntarily a cause and then accepting the judgment when favorable to
them and attacking it for lack of jurisdiction when adverse. (Tajonera v. Lamaroxa, 110
SCRA 447, citingTijam v. Sibonghanoy, 23 SCRA 35). (at p. 601.)

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of
the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article

Page | 19
253-A cannot be property applied to herein case. As correctly stated by public respondent in his
assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded, we would
stress that the provision of law invoked by the Hospital, Article 253-A of the Labor
Code, speak of agreements by and between the parties, and not arbitral awards . . .
(p. 818, Rollo.)

Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such
as herein involved, public respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.

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

SO ORDERED.

Feliciano, Bidin and Davide, JJ., concur.

Romero, J., took no part.

LABOR CASE 4

FIRST DIVISION

G.R. No. 80485 November 11, 1988

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner,

vs.
DIRECTOR PURA FERRER-CALLEJA, RASIDALI C. ABDULLAH, ENFORCEMENT UNIT NCR
ARBITRATION BRANCH, REYNALDO SANTOS, ET AL., respondents.

The Government Corporate Counsel for petitioner.

The Solicitor General for public respondent.

P.B. Iyog & Associates Law Office for private respondents.

GANCAYCO, J.:

The center of controversy in this petition is whether or not the Bureau of Labor Relations has jurisdiction over the case involving the validity
and refund of check-off assessments made by a labor union against the salaries of union members through the petitioner-employer. The other
issue is whether or not petitioner has been afforded due process.

The 388 private respondents are employees of petitioner who are members of the PNCC Tollways
Employees and Workers Union. The union, through its Executive Board, adopted on October 22, 1983
Executive Committee Resolution No. 001-83 providing for the affiliation of the union with the Central
Luzon Labor Congress. The union also engaged the services of Atty. Emmanuel Clave as labor
advocate, negotiator and adviser, with a compensation of 10% on any arbitration award, settlement,
collective bargaining agreement (CBA) negotiation gains, plus expenses in the performance of his
responsibilities. The said resolution provided that the advocate's fees due Atty. Clave, in any form,
shall be subject to "check-off" arrangement with the petitioner.

Page | 20
Subsequently, the union adopted Executive Board Resolution No. 012-S-84 making the affiliation
regular and the retainer of Atty. Clave as official.

The union passed Resolution No. 15-S-84 providing that each union member and all other rank and
file employees of petitioner's Tollways Division shall be assessed the sum of 10% of all monetary
benefits that may be due them as a result of collective bargaining, arbitration, and other forms of
representation, and that the sums assessed shall be collected by the union by means of the check-off
arrangement with petitioner and shall be paid to Atty. Clave, in accordance with the retainer agreement
between Atty. Clave and the union. Resolution No. 15-S-84 was subsequently modified which only
affected the amount of negotiation fees payable to Atty. Clave, from 10% down to 5%

After the promulgation of Resolution No. 15-S-84, the Acting President of the union issued a
Memorandum dated June 2, 1984, directing all union members to comply with said resolution and to
execute check-off authorization. The private respondents alleged that they did not comply with the
directive respondents of the Acting President, but the union officers stated that 167 employees
accomplished the authorization forms and sent them to the personnel department of petitioner.

Petitioner, relying on Resolution No. 001-83, Resolution No. 15-S-84, Resolution No. 1-S-84, the letter
dated January 4, 1984 by David Clave, and the letter dated October 1, 1983 by Cipriano Mangubat,
CLCC President, through the then Head of the Tollways Division, advanced the total amount of
P120,000.00 to Atty. Clave, as follows:

(1) P100,000.00 in August of 1984; and

(2) P20,000.00 in February of 1985.

Petitioner, pursuant to Resolution No. 001-83, Resolution No. 15-S-84, General Membership
Resolution No. 1-S-84, as well as the submitted individual check-off authorizations, deducted P20.00
monthly from the salaries of its employees subject of said resolutions, effective March, 1985. The
deduction was increased to P30.00 monthly per employee, effective April, 1985. Petitioner was not
able to check-off said amounts against all of its rank and file employees for the Tollways Division.

On April 17, 1985, petitioner turned over the total sum of Sixty Thousand Pesos (P60,000.00) to Atty.
Clave coming from the check-off special assessments. On September 30, 1985, petitioner turned over
to said lawyer the sum of Ten Thousand Pesos (P10,000.00) also out of the check-off special
assessments.

Petitioner stopped the said deductions effective April, 1986, at which time it had allegedly collected a
total amount of One Hundred Fifty-Five Thousand Eight Hundred Pesos (P1,55800.00) as assessment
fees.

On July 11, 1985, the 388 private respondents, members of the then CDCP Union, now PNCC
Employees and Workers Union, filed a petition with the National Capital Region Director of the
Department of Labor and Employment (DOLE) against their own union officers and the petitioner. The
petition asked for the following reliefs:

(1) The issuance of a temporary restraining order enjoining petitioner, as their employer, from further
collecting special assessments from the salaries of the union members;

(2) The issuance of an order requiring the petitioner-employer to deposit with the Regional Office of
DOLE all sums of money in its possession collected from employees pursuant to said assessment;

(3) A declaration that the Resolution No. 15-S-84 of the Executive Board of the Union is null and void;

(4) The issuance of an order permanently enjoining the petitioner-employer from making deductions
from the employees' salaries by authority of Resolution No. 15-S-84; and

(5) The issuance of an order directing the petitioner-employer and/or the union officers to return the
amounts already deducted from their salaries pursuant to Resolution No. 15-S84.

The petition was certified to the Med-Arbiter for hearing and resolution. The summons supposedly
sent to the petitioner by the BLR was not served on responsible officials of petitioner. The records
show that the first summons was served by a private messengerial company; the second summons
was served on Armando Ancheta, a personnel assistant, on August 5, 1985; then upon Francisco

Page | 21
Gabis, Jr., liaison officer, on August 14, 1985; and finally on Mary Fernandez, a clerk, on September
9, 1985. Petitioner was not able to file any pleading in the hearings of the case, and was unable to
present its side.

On September 18, 1985, Atty. Clave moved to intervene and filed his position paper with the Med-
Arbiter. On October 14, 1985, public respondent Med-Arbiter issued an Order, which declared
Resolution No. 15-S-84 null and void and of no effect, ordered petitioner to stop collecting special
assessments against the salaries of union members and other rank and file employees of petitioner,
and ordered petitioner and the union, jointly and severally, to return to the employees concerned the
amounts deducted from their salaries pursuant to Resolution No. 15-S84. Atty. Clave filed an appeal
with the BLR on November 15, 1985. On June 30, 1986, the then Director of the Bureau of Labor
Relations (BLR), Cresencio B. Trajano, dismissed the appeal and affirmed the order of the
Med-Arbiter.

Public respondent BLR Director Pura Ferrer-Calleja issued a writ of execution on November 5, 1986,
directing the Enforcement Unit of the NCR Branch to collect from petitioner-employer and/or the CDCP
Union the sum of P257,400.00, the total amount of deductions made against the salaries of the
employees, or to satisfy said amount from the movable or immovable properties of the petitioner and/or
union which are not exempt from execution.

On December 29, 1986, petitioner filed an Urgent Motion for Reconsideration and to Quash Writ of
Execution on the ground that it was denied due process because it was never notified of the
proceedings and it had no opportunity to be heard. In an Order dated September 19, 1987, the Director
of the BLR denied the motion for reconsideration.

The Director of BLR issued an alias writ of execution dated October 13, 1987. Notice of this writ was
received by the petitioner on October 26, 1987 and subsequently the Enforcement Unit of the NCR
Arbitration Branch garnished the bank deposits of petitioner with the Philippine National Bank (PNB),
Buendia Avenue Branch and the Far East Bank and Trust Company, Shaw Boulevard Branch.

The responsible officials of petitioner who could have known of the case have left or were retired from
the petitioner after the EDSA Revolution of February, 1986. The new management of the petitioner
was never informed of this pending case, until petitioner received the first writ of execution. This case
was referred to the Office of the Government Corporate Counsel only on November 6, 1987.

Petitioner now questions the said orders of public respondents, as issued without jurisdiction, or in
excess of their jurisdiction and/or committed with grave abuse of discretion, because—

(1) There was a denial of petitioner's right to due process of law;

(2) The jurisdiction of the Med-Arbiter and the BLR covers only disputes between and among the
union, its officers and members, and that the BLR has no jurisdiction over matters where an interested
party, like the petitioner-employer herein, is involved;

(3) The petitioner-employer has no obligation to guarantee that the agent of private respondents,
namely the union acting through its officers, will faithfully comply with its obligation to its members;

(4) The 167 workers who submitted individual written authorizations for check-off are now estopped
from seeking a reimbursement from the petitioner;

(5) Petitioner has a just claim amounting to P190,000.00 against the union for advocate's fees paid to
Atty. Clave; and

(6) The amount of P257,400.00 stated in the Writ of Execution and the alias writ is not based on
evidence presented, and consequently, the public respondents acted with grave abuse of discretion
in granting that amount. The petitioner's records show that the amounts checked-off add up to only
P155,800.00.

On November 23, 1987, this Court issued a temporary restraining order, enjoining the public
respondents from enforcing all the assailed orders, writs of executions and notices of garnishment in
BLR Case No. A-11-282-85 (NCR-LRD-M-7-275- 85). 1

On the issue of jurisdiction, the Court finds that respondent Director has jurisdiction over the
controversy. Under Article 241 of the Labor Code, the Bureau of Labor Relations has jurisdiction over

Page | 22
cases of reported violations thereof and to mete the appropriate penalty in disputes between and
among the union, its officers and members. The petition was for violation of said article which provides
that "(n)o special assessment or other extra-ordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. ..." 2

The principal relief sought in the case was for the nullification of Union Resolution No. 15-S-84. The
inclusion of petitioner as a co-respondent and the monetary claim against it is only incidental or
ancillary to the principal relief and is a consequence of petitioner having acted as a collection agent of
the respondent union officers. The action, therefore, is not essentially a money claim for underpayment
of wages that would fall under the jurisdiction of the labor arbiter. 3

The next issue is whether or not petitioner was afforded due process. The original claim of private
respondents was filed with the DOLE on July 11, 1985. Records of the BLR disclose that summons
were served upon minor employees of the petitioner, the last being on September 9, 1985. There
followed those abnormal times, the snap elections and the chaotic situation of the national elections
culminating in the EDSA Revolution of 1986. We can take judicial notice that the political upheaval of
1986 affected the petitioner as a government-controlled corporation. There was a change of
management. The defective service of summons prevented the pending case from being brought to
the attention of petitioner's Legal Department. The eloquent non-appearance of petitioner in all the
hearings establishing a money claim against it is an indication of lack of sufficient notice regarding the
case. It came to know of the case only when the judgment against it was being executed.

Notice to enable the other party to be heard and to present evidence is not a mere technicality or a
trivial matter in any administrative or judicial proceedings. The service of summons is a very vital and
indispensable ingredient of due process.

In this case, the service of summons upon the minor subordinates of petitioner's Tollways Division is
not valid and binding. Under Section 15, Rule 14 of the Rules of Court, service of summons upon
public corporations must be made on its executive head or on such officer or officers as the law or the
court may direct. Under Section 13 of the same Rule, service upon a private corporation may be made
on the president, manager, secretary, cashier, agent or any of its directors.

The contention of public respondent is that petitioner had due notice and that technical rules are not
binding in proceedings under the Labor Code. 4 However, under Sections 4 and 5 of Rule IV of the
Revised Rules of the NLRC, service of such summons must be made as follows:

Section 4. Service of notices and resolutions. Notice of summons and copies of orders,
resolutions or decisions shall be served personally by the bailiff or duly authorized
public officer or by registered mail on the parties to the case; Provided, that where a
party is represented by counsel or authorized representative, service shall be made
on the latter ... (Emphasis supplied.)

and

Section 5. Proof and completeness of service. The return is prima facie proof of the
facts indicated therein Service by registered mails is complete upon receipt by the
addressee or his agents. (Emphasis supplied.)

To determine the scope or meaning of such authorized representative or agents of parties on whom
summon served, the provisions of the Rules of Court should apply in a suppletory character. 5

Public respondents argue that as petitioner filed a motion for reconsideration of the order of respondent
calling for the issuance of the writ of execution there was no denial of the opportunity to be heard.
However, said motion was denied without even considering the merit of the same but on the technical
ground that it was filed out of time. Accordingly thereby petitioner was denied due process.

Petitioner should be afforded its day in court. It must be given the opportunity to prove its contention
that what was actually collected as check-off assessments from union members is only P155,800.00
and not P257,400.00 as assessed by public respondents. Its advance payments to the labor advocate
must also be considered.

In sum, the Court holds that petitioner was not duly notified of the pending case because of defective
service of summons. It was derived of its right to be heard and to present evidence which are essential
ingredients of due process of law.

Page | 23
WHEREFORE AND BY REASON OF THE FOREGOING, the restraining order issued by this Court
in favor of petitioner is made permanent, and all the assailed orders of October 14, 1985, June 30,
1986, November 5, 1986, September 12, 1987 and October 13, 1987, writs of execution and notices
of garnishment in BLR Case No. A-11-282-85 (NCR-LRD-M-7-275-85) against petitioner only are SET
ASIDE for being null and void. This decision is immediately executory.

SO ORDERED.

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

Footnotes

1 Page 182, Rollo.

2 Article 241, paragraph (n) of the Labor Code.

3 Article 217, Labor Code.

4 Article 221, Labor Code.

5 Section 3, Rule 1, Revised Rules of the NLRC.

LABOR CASE 5

THIRD DIVISION

G.R. No. 106518 March 11, 1999

ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner,

vs.
ABS-CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUNOZ,
CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO ALCAZAR, JAKE MADERAZO, GON
CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ and RUBEN
BARRAMEDA, respondents.

PURISIMA, J.:

At bar is a special civil action for Certiorari 1 seeking the reversal of the Order2 dated July 31, 1992 of public respondent
Department of Labor and Employment Undersecretary Bienvenido E. Laguesma3 in Case No. NCR -
OD-M -90 -07-037.

From the records on hand, it can be gathered, that:

On December 7, 1989, the ABS-CBN Supervisors Employees Union ("the Union"), represented by
respondent Union Officers, and ABS-CBN Broadcasting Corporation ("the Company") signed and
concluded a Collective Bargaining Agreement with the following check-off provision, to wit:

Art. XII — The [C]ompany agrees to advance to the Union a sum equivalent to 10% of
the sum total of all the salary increases and signing bonuses granted to the
Supervisors under this collective Bargaining Agreement and upon signing hereof to
cover the Union's incidental expenses, including attorney's fees and representation

Page | 24
 expenses for its organization and (sic) preparation and conduct hereof, and such
advance shall be deducted from the benefits granted herein as they accrue.

On September 19, 1990, Petitioners4 filed with the Bureau of Labor Relations, DOLE-NCR, Quezon
City, a Complaint against the Union Officers5 and ABS-CBN Broadcasting corporation, praying that (1)
the special assessment of ten percent (10%) of the sum total of all salary increases and signing
bonuses granted by respondent Company to the members of the Union be declared illegal for failure
to comply with the Labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and
in utter violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2)
respondent Company be ordered to suspend further deductions from petitioners' salaries for their
shares thereof.

In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint
for lack of merit. They argued that the check-off provision is in accordance with law as majority of the
Union members individually executed a written authorization giving the Union officers and the
Company a blanket authority to deduct subject amount.

On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order:6

WHEREFORE, premises considered judgment is hereby rendered:

a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal;

b) ordering respondents union officers to refund to the complainants and other union
members the amount of Five Hundred Thousand Pesos (P500,000.00) advanced by
the respondent Company as part of the 10% sum total of CBA benefits without
unnecessary delay;

c) ordering the respondent company to stop and desist from further making advances
and deductions from the union members' salaries their share in the advances already
made to the union;

d) ordering the respondent Company to remit directly to the complainants and other
union members the amount already deducted from the union members' salaries as
part of their share advances already made to the union and which it had kept in trust
during the pendency of this case; and

e) directing the respondents union officers and respondent Company to submit report
on the compliance thereof.

SO ORDERED.

On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision 7 on

July 1, 1991, disposing as follows:

WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is
affirmed en toto.

On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and
respondent Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter
alia that the questioned ten percent (10%) special assessment is valid pursuant to the ruling in Bank
of the Philippine Islands Employee Union - ALU vs. NLRC.8

On July 31, 1992, Undersecretary B. E. Laguesma issued an Order 9; resolving, thus:

WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE, In lieu thereof,
a new one is hereby entered DISMISSING the Complaint/Petition for lack of merit.

Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent
Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting
to lack of jurisdiction.

Page | 25
Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing
his own Decision of July 1,1991? Such is the sole issue posited, which we resolve in the negative. The
petition is unmeritorious.

Petitioners claim10 that the Decision of the Secretary of Labor and Employment dated July 1, 1991,
affirming in totothe Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a
subject of a motion for reconsideration because it is final and unappealable pursuant to Section 8,
Rule VIII, Book V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only
remedy of the respondent Union Officers' is to file a petition for certiorari with this Court.

Sec. 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:

The Secretary shall have fifteen (15) calendar days within which to decide the appeal
from receipt of the records of the case. The decision of the Secretary shall be final and
inappealable. [Underscoring supplied]. (Comment, p. 101)

The aforecited provision cannot be construed to mean that the Decision of the public respondent
cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules
of Court. As a rule, the law requires a motion for reconsideration to enable the public respondent to
correct his mistakes, if any. In Pearl S. Buck Foundation, Inc., vs. NLRC, 11 this Court held:

Hence, the only way by which a labor case may reach the Supreme Court is through
a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable
time from receipt of the resolution denying the motion for reconsideration of the NLRC
decision. [Emphasis supplied].

Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of,
the filing of a motion for reconsideration is a condition sine qua non to afford an opportunity for
the correction of the error or mistake complained of.

So also, considering that a decision of the Secretary of Labor is subject to judicial review only through
a special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party
having exhausted administrative remedies through a motion for reconsideration, the aggrieved party,
must be allowed to move for a reconsideration of the same so that he can bring a special civil action
for certiorari before the Supreme Court.12

Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early
Resolution13 dated June 24, 1992, averring that private respondents' Motion for Reconsideration did
not contain substantial factual or legal grounds for the reversal of subject decision. Consequently,
petitioners are now estopped from raising the issue sought for resolution. In Alfredo Marquez vs.
Secretary of Labor 14 the Court said:

. . . The active participation of the party against whom the action was brought, coupled
with his failure to object to the jurisdiction of the court or quasi-judicial body where the
action is pending, is tantamount to an invocation of that jurisdiction and a willingness
to abide by the resolution of the case and will bar said party from later on impugning
the court or body's jurisdiction.

What is more, it was only when the public respondent issued the Order adverse to them that the
petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought
which must be abhorred.

Petitioners also argued that the check-off provision in question is illegal because it was never
submitted for consideration and approval to "all the members at a general membership meeting called
for the purpose"; and further alleged that the formalities mandated by Art. 241, paragraphs (n) and (o)
of the Labor Code, as amended, were not complied with.

"A check-off is a process or device whereby the employer, on agreement with the Union, recognized
as the proper bargaining representative, or on prior authorization from its employees, deducts union
dues or agency fees from the latter's wages and remits them directly to the union."15 Its desirability in
a labor organization is quite evident. It is assured thereby of continuous funding. As this Court has
acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for
the individual employees.

Page | 26
The legal basis of check-off is found in statutes or in contracts.16 The statutory limitations on check-
offs are found in Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads:

Rights and conditions of membership in a labor organization — The following are the
rights and conditions of membership in a labor organization:

xxx xxx xxx

(g) No officer, agent, or member of a labor organization shall collect any fees, dues, or
other contributions in its behalf to make any disbursement of its money or funds unless
he is duly authorized pursuant to its constitution and by-laws.

xxx xxx xxx

(n) No special assessement or other extraordinary fees may be leavied upon the
members of a labor organization unless authorized by a written resolution of a majority
of all the members of a general membership meeting duly called for the purpose. The
secretary of the organization shall record the minutes of the meeting including the list
of all members present, the votes cast, the purpose of the special assessment or fees
and the recipient of such assessment or fees. The record shall be attested to by the
president.

(o) Other than for mandatory activities under the Code, no special assessments,
attorney's fees negotiation fees or any other extraordinary fees may be checked off
from any amount due to an employee without an individual written authorization duly
signed by the employee. The authorization should specifically state the amount,
purpose and beneficiary of the deductions. [Emphasis; supplied]

Art. 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the
same law, which states:

No attorney's fees, negotiation fees or similar charges of any kind arising from
collective bargaining negotiations or conclusion of the collective agreement shall be
imposed on any individual member of the contracting union: Provided, however, that
attorney's fees may be charged against union funds in an amount to be agreed upon
by the parties. Any contract, agreement or arrangement of any sort to the contrary shall
be null and void. [Emphasis; supplied]

And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands
Employees Union - Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission:17

The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as
prohibiting the payment of attorney's fees only when it is effected through forced
contributions from the workers from their own funds as distinguished from the union
funds. . . .

Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the
special assessment for Union's incidental expenses, attorney's fees and representation expenses, as
stipulated in Article XII of the CBA, be valid and upheld namely: 1) authorization by a written resolution
of the majority of all the members at the general membership meeting duly called for the purpose; (2)
secretary's record of the minutes of the meeting; and (3) individual written authorization for check-off
duly signed by the employee concerned.

After a thorough review of the records on hand, we find that the three (3) requisites for the validity of
the ten percent (10%) special assessment for Union's incidental expenses, attorney's fees and
representation expenses were met.

It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee Union held its general
meeting, whereat it was agreed that a ten percent (10%) special assessment from the total economic
package due to every member would be checked-off to cover expenses for negotiation, other
miscellaneous expenses and attorney's fees. The minutes of the said meeting were recorded by the
Union's Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera. 18

Page | 27
On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members
agreed that "in as much as the Union had already paid Atty. P. Pascual the amount of P500,000.00,
the same must be shared by all the members until this is fully liquidated. 19

Eighty-five (85) members of the same Union executed individual written authorizations for check-off,
thus:

Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN
BROADCASTING CORPORATION to deduct from my salary the sum of P30.00 per
month as my regular union dues and said Management and/or Cashier are further
authorize (sic) to deduct a sum equivalent to10% of all and whatever benefits that will
become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA) that
may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to
the advance that Management will make to our Union for incidental expenses such as
attorney's fees, representations and other miscellaneous expenses pursuant to Article
XII of the proposed CBA.20

Records do not indicate that the aforesaid check-off authorizations were executed by the eighty-five
(85) Union members under the influence of force or compulsion. There is, then, the presumption that
such check-off authorizations were executed voluntarily by the signatories thereto. Petitioner's
contention that the amount to be deducted is uncertain21 is not persuasive because the check-off
authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and
whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is
determinable.

Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special
assessments, contemplates a general meeting after the conclusion of the collective bargaining
agreement.

Subject Article does not state that the general membership meeting should be called after the
conclusion of a collective bargaining agreement. Even granting ex gratia argumenti that the general
meeting should be held after the conclusion of the CBA, such requirement was complied with since
the May 24, 1991 General Membership Meeting was held after the conclusion of the Collective
Bargaining Agreement, which was signed and concluded on December 7, 1989.

Considering that the three requisites afforesaid for the validity of a special assessment were observed
or met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of
the CBA.

We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees
Union - ALU vs. NLRC 22 is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order
of the NLRC, holding that the validity of the five percent (5%) special assessment for attorney's fees
is contrary to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus:

The Court reads the aforecited provision as prohibiting the payment of attorney's fees
only when it is effected through forced contributions from the workers from their own
funds as distinguished from the union funds. The purpose of the provision is to prevent
imposition on the workers of the duty to individually contribute their respective shares
in the fee to be paid the attorney for his services on behalf of the union in its
negotiations with the management. . . . [Emphasis supplied]

However, the public respondent overlooked the fact that in the said case, the deduction of the
stipulated five percent (5%) of the total economic benefits under the new collective bargaining
agreement was applied only to workers who gave their individual signed authorizations. The Court
explained:

. . . And significantly, the authorized deductions affected only the workers who adopted
and signed the resolution and who were the only ones from whose benefits the
deductions were made by BPI. No similar deductions were taken from the other
workers who did not sign the resolution and so were not bound by it. [Underscoring;
supplied]

While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-
Calleja 23 is inapropos in the case under scrutiny, it does not subscribe to public respondent's reasoning — that Palacol should not be
retroactively applied to the present case in the interest of justice, equity and fairplay.24 The inapplicability of Palacol lies in the fact that it has a

Page | 28
different factual milieu from the present case. In Palacol, the check-off authorization was declared invalid because majority of the Union
members had withdrawn their individual authorizations, to wit:

Paragraph (o) on the other hand requires an individual written authorization duly
signed by every employee in order that special assessment may be validly checked-
off. Even assuming that the special assessment was validly levied pursuant to
paragraph (n), and granting that individual written authorizations were obtained by the
Union, nevertheless there can be no valid check-off considering that the majority of the
Union members had already withdrawn their individual authorizations. A withdrawal of
individual authorization is equivalent to no authorization at all. . . . [Emphasis; supplied]

In this case, majority of the Union members gave their individual written check-off
authorizations for the ten percent (10%) special assessment. And they have never withdrawn
their individual written authorizations for check-off.

There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case
that twenty (20)25 of the forty-two (42) petitioners executed a Compromise Agreement 26 ratifying the
controversial check-off provision in the CBA.

Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling
in BPIEU-ALU vs. NLRC that (1) the prohibition against attorney's fees in Article 222, paragraph (b) of
the Labor Code applies only when the payment of attorney's fees is effected through forced
contributions from the workers; and (2) that no deductions must be taken from the workers who did
not sign the check-off authorization, applies to the case under consideration.

WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is
AFFIRMED except that no deductions shall be taken from the workers who did not give their individual
written check-off authorization. No pronouncement as to costs.

SO ORDERED.

Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.

Footnotes

1 The nature of the petition is ambiguous as it is worded, as follows: "This is a petition

for review on certiorari under Rule 45/65 of the Revised Rules of Court . . . ." The
Court, however, resolved to treat the petition as one under Rule 65 in the interest of
justice, equity and fairplay." (Salazar vs. NLRC, 256 SCRA 273 [1996])

2 Annex A," Petition; Rollo, 28-33.

3 Public respondent Bienvenido E. Laguesma is not named in the case title but his
Order dated 31 July1992 is subject of this case. Petitioner's counsel, Atty. Manuel N.
Camacho had impressed to this Court his inadequacy and incompetency of procedural
law and he is hereby sternly warned that a repetition of a similar display of lack of legal
skills will be dealt with more severely.

4 Namely: Corina Sanchez, Ma. Angelica Lazo, Nicolas Belleza, Rogelio I. Gomez,
Abraham Alhambra, Adelaida M. Espiritu, Servillano Caoagdan, Arlene Sinsuan,
David Fabros, Adoracion, G. Camacho, Beverly S. Fernandez, Adora L. Jacila,
Teresita C. Estrella, Josefino M. Sta. Ana, Emilia F. Guilalas, Albert L. Brillantes,
Rodolfo Tapel, Zoilo Gonzales, Ernesto Balingit, Victoriano Rasido, Isabelo C.
Albarracin, Cesar M. Solidum, Leonora V. Buenaventura, Roberto Saura, Diosdado
Ricafrente, Alfon Marquez III, Rosario Villa, Gus Abelgas, Stephanie Quirino, Victor L.
Lima, Erlindo Alvarado, Atanacio Pascua, Edgar Padil, Rizal C. Benjamia, Edgardo
Ramos, Santos Bautista, Manuel Manio, Eladio Aligora, W. Osinsao, Neil A. Ocampo,
Maria Teresita F. Naval, Claude Vitug and Isagani Oro.

5 Namely: Herbert R. Rivera, Alberto Berbon, Cindy Munoz, Celso Jambalos, Salvador
De Vera, Arnulfo Alcazar, Jake Maderazo, Gon Carpio, Oscar Landrito, Fred Garcia,
Cesar Lopez, Ruben Barrameda.

6 Annex C," Petition; Rollo, 41-56.

Page | 29
 7 Annex B," Petition; Rollo, pp. 34-40.

8 171 SCRA 556.

9 Annex A," Petition; Rollo, 28-33.

10 see: Petition, p. 9; Rollo, 15.

11 182 SCRA 446 [1990]; Rodrigo Bordeos et. al., vs. NLRC, 262 SCRA 424 [1996].

12 Due to ambiguous nature of this petition, the Court restrained itself to discuss the
failure of herein petitioners to file a motion for reconsideration before the sala of public
respondent to have the assailed Order dated July 31, 1992 reconsidered.

13 see: private respondents' "Rejoinder," p. 3; Rollo, 133-144.

14 171 SCRA 337, 346.

15 Holy Cross of Davao College, Inc. vs. Joaquin, 263 SCRA 358 [1996].

16 Ibid., p.368.

17 171 SCRA 556, 569.

18 see: p. 205, "Memorandum," Solicitor General; Rollo, 193-213; Records, pp. 391 -
393;

19 Ibid., p. 206; Minutes of General Membership Meeting; May 24, 1991.

20 Ibid.; Records, pp. 289-374.

21 Petition, p. 13; Rollo, 19.

22 supra, p.11.

23 182 SCRA 710.

24 Order dated 31 July 1992; Rollo, 32.

25 namely: Corina Sanchez, Ma. Angelica Lazo, Isagani Oro, Albert Brillantes, Ernesto
Balingit, Victoriano Rizaldo, Isabelo Albarracin, Cesar Solidum, Roberto Saura, Alfon
Marquez III, Rosario Villa, Gus Abelgas, Victor Lima, Erlindo Alvarado, Atanacio
Pascual, Edgar Padil, Santos Bautista, Manuel Manio, W. Osinsao and Claude Vitug.

26 Annex 39;" Rollo, 78-80.

LABOR CASE 6
SECOND DIVISION

G.R. No. L-25246 September 12, 1974

BENJAMIN VICTORIANO, plaintiff-appellee,

vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION, defendant-appellant.

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.

Page | 30
Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:p

Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila in its Civil Case No. 58894.

The undisputed facts that spawned the instant case follow:

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the
"Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to
as Company) since 1958. As such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective bargaining agreement
containing a closed shop provision which reads as follows:

Membership in the Union shall be required as a condition of employment for all

permanent employees workers covered by this Agreement.

The collective bargaining agreement expired on March 3, 1964 but was renewed the following day,
March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No.
3350, the employer was not precluded "from making an agreement with a labor organization to require
as a condition of employment membership therein, if such labor organization is the representative of
the employees." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to — paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but
such agreement shall not cover members of any religious sects which prohibit affiliation of their
members in any such labor organization".

Being a member of a religious sect that prohibits the affiliation of its members with any labor
organization, Appellee presented his resignation to appellant Union in 1962, and when no action was
taken thereon, he reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a
formal letter to the Company asking the latter to separate Appellee from the service in view of the fact
that he was resigning from the Union as a member. The management of the Company in turn notified
Appellee and his counsel that unless the Appellee could achieve a satisfactory arrangement with the
Union, the Company would be constrained to dismiss him from the service. This prompted Appellee
to file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila
to enjoin the Company and the Union from dismissing Appellee. 1 In its answer, the Union invoked the
"union security clause" of the collective bargaining agreement; assailed the constitutionality of
Republic Act No. 3350; and contended that the Court had no jurisdiction over the case, pursuant to
Republic Act No. 875, Sections 24 and 9 (d) and (e).2 Upon the facts agreed upon by the parties during
the pre-trial conference, the Court a quo rendered its decision on August 26, 1965, the dispositive
portion of which reads:

IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant

Elizalde Rope Factory, Inc. from dismissing the plaintiff from his present employment
and sentencing the defendant Elizalde Rope Workers' Union to pay the plaintiff P500
for attorney's fees and the costs of this action. 3

From this decision, the Union appealed directly to this Court on purely questions of law, assigning the
following errors:

I. That the lower court erred when it did not rule that Republic Act No. 3350 is
unconstitutional.

II. That the lower court erred when it sentenced appellant herein to pay plaintiff the
sum of P500 as attorney's fees and the cost thereof.

In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that
the Act infringes on the fundamental right to form lawful associations; that "the very phraseology of
said Republic Act 3350, that membership in a labor organization is banned to all those belonging to
such religious sect prohibiting affiliation with any labor organization" 4 , "prohibits all the members of a
given religious sect from joining any labor union if such sect prohibits affiliations of their members

Page | 31
thereto"5 ; and, consequently, deprives said members of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to Article
III, Section 1 (6) of the 1935 Constitution. 6

Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the
obligation of contracts in that, while the Union is obliged to comply with its collective bargaining
agreement containing a "closed shop provision," the Act relieves the employer from its reciprocal
obligation of cooperating in the maintenance of union membership as a condition of employment; and
that said Act, furthermore, impairs the Union's rights as it deprives the union of dues from members
who, under the Act, are relieved from the obligation to continue as such members. 7

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects
which ban their members from joining labor unions, in violation of Article Ill, Section 1 (7) of the 1935
Constitution; and while said Act unduly protects certain religious sects, it leaves no rights or protection
to labor organizations.8

Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no
religious test shall be required for the exercise of a civil right," in that the laborer's exercise of his civil
right to join associations for purposes not contrary to law has to be determined under the Act by his
affiliation with a religious sect; that conversely, if a worker has to sever his religious connection with a
sect that prohibits membership in a labor organization in order to be able to join a labor organization,
said Act would violate religious freedom.9

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause
of the Constitution, it being a discriminately legislation, inasmuch as by exempting from the operation
of closed shop agreement the members of the "Iglesia ni Cristo", it has granted said members undue
advantages over their fellow workers, for while the Act exempts them from union obligation and liability,
it nevertheless entitles them at the same time to the enjoyment of all concessions, benefits and other
emoluments that the union might secure from the employer. 10

Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding
the promotion of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining
agreement cannot be considered violative of religious freedom, as to call for the amendment
introduced by Republic Act No. 3350; 12and that unless Republic Act No. 3350 is declared
unconstitutional, trade unionism in this country would be wiped out as employers would prefer to hire
or employ members of the Iglesia ni Cristo in order to do away with labor organizations. 13

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the
right to form lawful associations, for the right to join associations includes the right not to join or to
resign from a labor organization, if one's conscience does not allow his membership therein, and the
Act has given substance to such right by prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of contracts for said law formed part of,
and was incorporated into, the terms of the closed shop agreement; 15 that the Act does not violate the
establishment of religion clause or separation of Church and State, for Congress, in enacting said law,
merely accommodated the religious needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized labor with the constitutional right
of an individual to freely exercise his chosen religion; that the constitutional right to the free exercise
of one's religion has primacy and preference over union security measures which are merely
contractual 16; that said Act does not violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious tenets is based on substantial
distinction, is germane to the purpose of the law, and applies to all the members of a given class; 17 that
said Act, finally, does not violate the social justice policy of the Constitution, for said Act was enacted
precisely to equalize employment opportunities for all citizens in the midst of the diversities of their
religious beliefs." 18

I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there
are some thoroughly established principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond
a reasonable doubt, that a law may work hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger
must negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or

Page | 32
expediency of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19

1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such
religious sects that forbid affiliation of their members with labor unions from joining labor unions
appears nowhere in the wording of Republic Act No. 3350; neither can the same be deduced by
necessary implication therefrom. It is not surprising, therefore, that appellant, having thus misread the
Act, committed the error of contending that said Act is obnoxious to the constitutional provision on
freedom of association.

Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of
Article III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973,
provide that the right to form associations or societies for purposes not contrary to law shall not be
abridged. Section 3 of Republic Act No. 875 provides that employees shall have the right to self-
organization and to form, join of assist labor organizations of their own choosing for the purpose of
collective bargaining and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid or protection. What the Constitution and the Industrial Peace Act recognize and
guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded
by the different schools of jurisprudence regarding the nature and contents of a "right", it can be safely
said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely:
first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for himself
without being prevented by law; and second, power, whereby an employee may, as he pleases, join
or refrain from Joining an association. It is, therefore, the employee who should decide for himself
whether he should join or not an association; and should he choose to join, he himself makes up his
mind as to which association he would join; and even after he has joined, he still retains the liberty
and the power to leave and cancel his membership with said organization at any time. 20 It is clear,
therefore, that the right to join a union includes the right to abstain from joining any union. 21 Inasmuch
as what both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the
employee, is the "right" to join associations of his choice, it would be absurd to say that the law also
imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin
an employee to sign up with any association.

The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace
Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn
by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of
which the employer may employ only member of the collective bargaining union, and the employees
must continue to be members of the union for the duration of the contract in order to keep their jobs.
Thus Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350,
provides that although it would be an unfair labor practice for an employer "to discriminate in regard
to hire or tenure of employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded "from making an
agreement with a labor organization to require as a condition of employment membership therein, if
such labor organization is the representative of the employees". By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must become a member of the collective
bargaining union. Hence, the right of said employee not to join the labor union is curtailed and
withdrawn.

To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but
such agreement shall not cover members of any religious sects which prohibit affiliation of their
members in any such labor organization". Republic Act No. 3350 merely excludes ipso jure from the
application and coverage of the closed shop agreement the employees belonging to any religious
sects which prohibit affiliation of their members with any labor organization. What the exception
provides, therefore, is that members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with the employers; that in spite of
any closed shop agreement, members of said religious sects cannot be refused employment or
dismissed from their jobs on the sole ground that they are not members of the collective bargaining
union. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on
freedom of association, upholds and reinforces it. It does not prohibit the members of said religious
sects from affiliating with labor unions. It still leaves to said members the liberty and the power to
affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of
said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to
their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither
does the law prohibit them from joining; and neither may the employer or labor union compel them to

Page | 33
join. Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of
association.

2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its
contract, specifically, the "union security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was required as a condition for employment
for all permanent employees workers". This agreement was already in existence at the time Republic
Act No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been
incorporated into the agreement. But by reason of this amendment, Appellee, as well as others
similarly situated, could no longer be dismissed from his job even if he should cease to be a member,
or disaffiliate from the Union, and the Company could continue employing him notwithstanding his
disaffiliation from the Union. The Act, therefore, introduced a change into the express terms of the
union security clause; the Company was partly absolved by law from the contractual obligation it had
with the Union of employing only Union members in permanent positions, It cannot be denied,
therefore, that there was indeed an impairment of said union security clause.

According to Black, any statute which introduces a change into the express terms of the contract, or
its legal construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the
contract. The extent of the change is not material. It is not a question of degree or manner or cause,
but of encroaching in any respect on its obligation or dispensing with any part of its force. There is an
impairment of the contract if either party is absolved by law from its performance. 22 Impairment has
also been predicated on laws which, without destroying contracts, derogate from substantial
contractual rights. 23

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not
absolute and unqualified. The prohibition is general, affording a broad outline and requiring
construction to fill in the details. The prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable impairment only. 24 In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or abrogate contracts already in
effect. 25 For not only are existing laws read into contracts in order to fix the obligations as between the
parties, but the reservation of essential attributes of sovereign power is also read into contracts as a
postulate of the legal order. All contracts made with reference to any matter that is subject to regulation
under the police power must be understood as made in reference to the possible exercise of that
power. 26 Otherwise, important and valuable reforms may be precluded by the simple device of entering
into contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting
contracts against impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains adequate authority to secure the
peace and good order of society. The contract clause of the Constitution must, therefore, be not only
in harmony with, but also in subordination to, in appropriate instances, the reserved power of the state
to safeguard the vital interests of the people. It follows that not all legislations, which have the effect
of impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a statute
passed in the legitimate exercise of police power, although it incidentally destroys existing contract
rights, must be upheld by the courts. This has special application to contracts regulating relations
between capital and labor which are not merely contractual, and said labor contracts, for being
impressed with public interest, must yield to the common good. 27

In several occasions this Court declared that the prohibition against impairing the obligations of
contracts has no application to statutes relating to public subjects within the domain of the general
legislative powers of the state involving public welfare. 28 Thus, this Court also held that the Blue
Sunday Law was not an infringement of the obligation of a contract that required the employer to
furnish work on Sundays to his employees, the law having been enacted to secure the well-being and
happiness of the laboring class, and being, furthermore, a legitimate exercise of the police power. 29

In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging

yardstick, applicable at all times and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must be determined upon its own
circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted
for the promotion of the general good of the people, and when the means adopted to secure that end
are reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the scope
of the reserved power of the state construed in harmony with the constitutional limitation of that
power. 30

What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to
insure freedom of belief and religion, and to promote the general welfare by preventing discrimination

Page | 34
against those members of religious sects which prohibit their members from joining labor unions,
confirming thereby their natural, statutory and constitutional right to work, the fruits of which work are
usually the only means whereby they can maintain their own life and the life of their dependents. It
cannot be gainsaid that said purpose is legitimate.

The questioned Act also provides protection to members of said religious sects against two aggregates
of group strength from which the individual needs protection. The individual employee, at various times
in his working life, is confronted by two aggregates of power — collective labor, directed by a union,
and collective capital, directed by management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover,
when the Union interacts with management, it produces yet a third aggregate of group strength from
which the individual also needs protection — the collective bargaining relationship. 31

The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House
Bill No. 5859, which later became Republic Act No. 3350, as follows:

It would be unthinkable indeed to refuse employing a person who, on account of his

religious beliefs and convictions, cannot accept membership in a labor organization
although he possesses all the qualifications for the job. This is tantamount to punishing
such person for believing in a doctrine he has a right under the law to believe in. The
law would not allow discrimination to flourish to the detriment of those whose religion
discards membership in any labor organization. Likewise, the law would not commend
the deprivation of their right to work and pursue a modest means of livelihood, without
in any manner violating their religious faith and/or belief. 32

It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose —
exempting the members of said religious sects from coverage of union security agreements — is
reasonable.

It may not be amiss to point out here that the free exercise of religious profession or belief is superior
to contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court
of the United States has also declared on several occasions that the rights in the First Amendment,
which include freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious
freedom, although not unlimited, is a fundamental personal right and liberty, 34 and has a preferred
position in the hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an immediate and grave danger to the security and
welfare of the community that infringement of religious freedom may be justified, and only to the
smallest extent necessary to avoid the danger.

3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union
averred that said Act discriminates in favor of members of said religious sects in violation of Section 1
(7) of Article Ill of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973
Constitution, which provides:

No law shall be made respecting an establishment of religion, or prohibiting the free

exercise thereof, and the free exercise and enjoyment of religious profession and
worship, without discrimination and preference, shall forever be allowed. No religious
test shall be required for the exercise of civil or political rights.

The constitutional provision into only prohibits legislation for the support of any religious tenets or the
modes of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship, 35 but also assures the free exercise of one's chosen form of religion
within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all
designed to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with
the liberty of others and with the common good. 36 Any legislation whose effect or purpose is to impede
the observance of one or all religions, or to discriminate invidiously between the religions, is invalid,
even though the burden may be characterized as being only indirect. 37 But if the stage regulates
conduct by enacting, within its power, a general law which has for its purpose and effect to advance
the state's secular goals, the statute is valid despite its indirect burden on religious observance, unless
the state can accomplish its purpose without imposing such burden. 38

In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should not be precluded
from pursuing valid objectives secular in character even if the incidental result would be favorable to

Page | 35
a religion or sect. It has likewise been held that the statute, in order to withstand the strictures of
constitutional prohibition, must have a secular legislative purpose and a primary effect that neither
advances nor inhibits religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be said to
violate the constitutional inhibition of the "no-establishment" (of religion) clause of the Constitution.

The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or
holy and eternal. It was intended to serve the secular purpose of advancing the constitutional right to
the free exercise of religion, by averting that certain persons be refused work, or be dismissed from
work, or be dispossessed of their right to work and of being impeded to pursue a modest means of
livelihood, by reason of union security agreements. To help its citizens to find gainful employment
whereby they can make a living to support themselves and their families is a valid objective of the
state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to labor, and regulate
the relations between labor and capital and industry. 41 More so now in the 1973 Constitution where it
is mandated that "the State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race or creed and regulate the
relation between workers and employers. 42

The primary effects of the exemption from closed shop agreements in favor of members of religious
sects that prohibit their members from affiliating with a labor organization, is the protection of said
employees against the aggregate force of the collective bargaining agreement, and relieving certain
citizens of a burden on their religious beliefs; and by eliminating to a certain extent economic insecurity
due to unemployment, which is a serious menace to the health, morals, and welfare of the people of
the State, the Act also promotes the well-being of society. It is our view that the exemption from the
effects of closed shop agreement does not directly advance, or diminish, the interests of any particular
religion. Although the exemption may benefit those who are members of religious sects that prohibit
their members from joining labor unions, the benefit upon the religious sects is merely incidental and
indirect. The "establishment clause" (of religion) does not ban regulation on conduct whose reason or
effect merely happens to coincide or harmonize with the tenets of some or all religions. 43 The free
exercise clause of the Constitution has been interpreted to require that religious exercise be
preferentially aided. 44

We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. It was Congress itself that imposed that burden
when it enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems
advisable, could take away the same burden. It is certain that not every conscience can be
accommodated by all the laws of the land; but when general laws conflict with scrupples of conscience,
exemptions ought to be granted unless some "compelling state interest" intervenes. 45 In the instant
case, We see no such compelling state interest to withhold exemption.

Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it
leaves no right to, and is silent as to the protection of, labor organizations. The purpose of Republic
Act No. 3350 was not to grant rights to labor unions. The rights of labor unions are amply provided for
in Republic Act No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the
rights and protection of labor unions, suffice it to say, first, that the validity of a statute is determined
by its provisions, not by its silence 46 ; and, second, the fact that the law may work hardship does not
render it unconstitutional. 47

It would not be amiss to state, regarding this matter, that to compel persons to join and remain
members of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than
help, labor unions, Congress has seen it fit to exempt religious objectors lest their resistance spread
to other workers, for religious objections have contagious potentialities more than political and
philosophic objections.

Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor
— union assuming that such unity and loyalty can be attained through coercion — is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A desirable end cannot be promoted
by prohibited means.

4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition
against requiring a religious test for the exercise of a civil right or a political right, is not well taken. The
Act does not require as a qualification, or condition, for joining any lawful association membership in
any particular religion or in any religious sect; neither does the Act require affiliation with a religious
sect that prohibits its members from joining a labor union as a condition or qualification for withdrawing
from a labor union. Joining or withdrawing from a labor union requires a positive act. Republic Act No.

Page | 36
3350 only exempts members with such religious affiliation from the coverage of closed shop
agreements. So, under this Act, a religious objector is not required to do a positive act — to exercise
the right to join or to resign from the union. He is exempted ipso jure without need of any positive act
on his part. A conscientious religious objector need not perform a positive act or exercise the right of
resigning from the labor union — he is exempted from the coverage of any closed shop agreement
that a labor union may have entered into. How then can there be a religious test required for the
exercise of a right when no right need be exercised?

We have said that it was within the police power of the State to enact Republic Act No. 3350, and that
its purpose was legal and in consonance with the Constitution. It is never an illegal evasion of a
constitutional provision or prohibition to accomplish a desired result, which is lawful in itself, by
discovering or following a legal way to do it. 49

5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation,
inasmuch as it grants to the members of certain religious sects undue advantages over other workers,
thus violating Section 1 of Article III of the 1935 Constitution which forbids the denial to any person of
the equal protection of the laws. 50

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws
upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should be affected alike by a statute.
Equality of operation of statutes does not mean indiscriminate operation on persons merely as such,
but on persons according to the circumstances surrounding them. It guarantees equality, not identity
of rights. The Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination as to things
that are different. 51 It does not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law,
as in the other departments of knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A law is not invalid because of
simple inequality. 52 The very idea of classification is that of inequality, so that it goes without saying
that the mere fact of inequality in no manner determines the matter of constitutionality. 53 All that is
required of a valid classification is that it be reasonable, which means that the classification should be
based on substantial distinctions which make for real differences; that it must be germane to the
purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally
to each member of the class. 54 This Court has held that the standard is satisfied if the classification or
distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. 55

In the exercise of its power to make classifications for the purpose of enacting laws over matters within
its jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that
the classification be based on scientific or marked differences of things or in their relation. 57 Neither is
it necessary that the classification be made with mathematical nicety. 58 Hence legislative classification
may in many cases properly rest on narrow distinctions, 59 for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils
as they may appear.

We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies
employees and workers, as to the effect and coverage of union shop security agreements, into those
who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those
whose religion does not prohibit membership in labor unions. Tile classification rests on real or
substantial, not merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs,
feelings and sentiments of employees. Employees do not believe in the same religious faith and
different religions differ in their dogmas and cannons. Religious beliefs, manifestations and practices,
though they are found in all places, and in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum of religious beliefs among the
people. There are diverse manners in which beliefs, equally paramount in the lives of their possessors,
may be articulated. Today the country is far more heterogenous in religion than before, differences in
religion do exist, and these differences are important and should not be ignored.

Even from the phychological point of view, the classification is based on real and important differences.
Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them
practical consequences and are the motives of certain rules. of human conduct and the justification of
certain acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or unhappiness its enjoyment or

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irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain
persons, no single factor of their experience is more important to them than their religion, or their not
having any religion. Because of differences in religious belief and sentiments, a very poor person may
consider himself better than the rich, and the man who even lacks the necessities of life may be more
cheerful than the one who has all possible luxuries. Due to their religious beliefs people, like the
martyrs, became resigned to the inevitable and accepted cheerfully even the most painful and
excruciating pains. Because of differences in religious beliefs, the world has witnessed turmoil, civil
strife, persecution, hatred, bloodshed and war, generated to a large extent by members of sects who
were intolerant of other religious beliefs. The classification, introduced by Republic Act No. 3350,
therefore, rests on substantial distinctions.

The classification introduced by said Act is also germane to its purpose. The purpose of the law is
precisely to avoid those who cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their work because of union shop security
agreements.

Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of
its enactment. The law does not provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the law is applicable exist. As long as
there are closed shop agreements between an employer and a labor union, and there are employees
who are prohibited by their religion from affiliating with labor unions, their exemption from the coverage
of said agreements continues.

Finally, the Act applies equally to all members of said religious sects; this is evident from its provision.
The fact that the law grants a privilege to members of said religious sects cannot by itself render the
Act unconstitutional, for as We have adverted to, the Act only restores to them their freedom of
association which closed shop agreements have taken away, and puts them in the same plane as the
other workers who are not prohibited by their religion from joining labor unions. The circumstance, that
the other employees, because they are differently situated, are not granted the same privilege, does
not render the law unconstitutional, for every classification allowed by the Constitution by its nature
involves inequality.

The mere fact that the legislative classification may result in actual inequality is not violative of the
right to equal protection, for every classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid. A classification otherwise
reasonable does not offend the constitution simply because in practice it results in some
inequality. 61 Anent this matter, it has been said that whenever it is apparent from the scope of the law
that its object is for the benefit of the public and the means by which the benefit is to be obtained are
of public character, the law will be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62

6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on
social justice is also baseless. Social justice is intended to promote the welfare of all the
people. 63 Republic Act No. 3350 promotes that welfare insofar as it looks after the welfare of those
who, because of their religious belief, cannot join labor unions; the Act prevents their being deprived
of work and of the means of livelihood. In determining whether any particular measure is for public
advantage, it is not necessary that the entire state be directly benefited — it is sufficient that a portion
of the state be benefited thereby.

Social justice also means the adoption by the Government of measures calculated to insure economic
stability of all component elements of society, through the maintenance of a proper economic and
social equilibrium in the inter-relations of the members of the community. 64 Republic Act No. 3350
insures economic stability to the members of a religious sect, like the Iglesia ni Cristo, who are also
component elements of society, for it insures security in their employment, notwithstanding their failure
to join a labor union having a closed shop agreement with the employer. The Act also advances the
proper economic and social equilibrium between labor unions and employees who cannot join labor
unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed
shop agreements and equalizes, in so far as opportunity to work is concerned, those whose religion
prohibits membership in labor unions with those whose religion does not prohibit said membership.
Social justice does not imply social equality, because social inequality will always exist as long as
social relations depend on personal or subjective proclivities. Social justice does not require legal
equality because legal equality, being a relative term, is necessarily premised on differentiations based
on personal or natural conditions. 65 Social justice guarantees equality of opportunity 66 , and this is
precisely what Republic Act No. 3350 proposes to accomplish — it gives laborers, irrespective of their
religious scrupples, equal opportunity for work.

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7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is
not called for — in other words, the Act is not proper, necessary or desirable. Anent this matter, it has
been held that a statute which is not necessary is not, for that reason, unconstitutional; that in
determining the constitutional validity of legislation, the courts are unconcerned with issues as to the
necessity for the enactment of the legislation in question. 67 Courts do inquire into the wisdom of
laws. 68 Moreover, legislatures, being chosen by the people, are presumed to understand and correctly
appreciate the needs of the people, and it may change the laws accordingly. 69 The fear is entertained
by appellant that unless the Act is declared unconstitutional, employers will prefer employing members
of religious sects that prohibit their members from joining labor unions, and thus be a fatal blow to
unionism. We do not agree. The threat to unionism will depend on the number of employees who are
members of the religious sects that control the demands of the labor market. But there is really no
occasion now to go further and anticipate problems We cannot judge with the material now before Us.
At any rate, the validity of a statute is to be determined from its general purpose and its efficacy to
accomplish the end desired, not from its effects on a particular case. 70 The essential basis for the
exercise of power, and not a mere incidental result arising from its exertion, is the criterion by which
the validity of a statute is to be measured. 71

II. We now pass on the second assignment of error, in support of which the Union argued that the
decision of the trial court ordering the Union to pay P500 for attorney's fees directly contravenes
Section 24 of Republic Act No. 875, for the instant action involves an industrial dispute wherein the
Union was a party, and said Union merely acted in the exercise of its rights under the union shop
provision of its existing collective bargaining contract with the Company; that said order also
contravenes Article 2208 of the Civil Code; that, furthermore, Appellee was never actually dismissed
by the defendant Company and did not therefore suffer any damage at all . 72

In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no
industrial dispute involved in the attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted intentional harm on Appellee; that since
Appellee was compelled to institute an action to protect his right to work, appellant could legally be
ordered to pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides
that:

No suit, action or other proceedings shall be maintainable in any court against a labor
organization or any officer or member thereof for any act done by or on behalf of such
organization in furtherance of an industrial dispute to which it is a party, on the ground
only that such act induces some other person to break a contract of employment or
that it is in restraint of trade or interferes with the trade, business or employment of
some other person or with the right of some other person to dispose of his capital or
labor. (Emphasis supplied)

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

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

WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court
of First Instance of Manila, in its Civil Case No. 58894, appealed from is affirmed, with costs against
appellant Union. It is so ordered.

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Makalintal, C.J, Castro, Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino,
JJ., concur.

Separate Opinions

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the
constitutional infirmities imputed to it was demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of the ponente, Justice Zaldivar. Like
the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and persuasiveness with which it was shown to
be devoid of support in authoritative doctrines, it would appear that the last word has been written on
this particular subject. Nonetheless, I deem it proper to submit this brief expression of my views on the
transcendent character of religious freedom1 and its primacy even as against the claims of protection
to labor,2 also one of the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a
Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is
constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an active power
that binds and elevates man to his Creator ...."3 The choice of what a man wishes to believe in is his
and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel to which the
law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns supreme.
The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational
foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It
suffices that for him such a concept holds undisputed sway. That is a recognition of man's freedom.
That for him is one of the ways of self- realization. It would be to disregard the dignity that attaches to
every human being to deprive him of such an attribute. The "fixed star on our constitutional
constellation," to borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the
highest, has it in his power to prescribe what shall be orthodox in matters of conscience — or to
mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief
and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief, including religious belief, limitless
and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the same may appear to others, even
heretical when weighed in the scales of orthodoxy or doctrinal standards."5 There was this qualification though: "But between the freedom of
belief and the exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established
institutions of society and with the law, then the former must yield and give way to the latter. The Government steps in and either restrains said
exercise or even prosecutes the one exercising it."6 It was on that basis that the daily compulsory flag ceremony in accordance with a
statute7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that
their participation would be offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette,8 the
American Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The
case is made difficult not because the principles of its decision are obscure but because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine
is to make an unflattering estimate of the appeal of our institutions to free minds. We can have intellectual individualism and the rich cultural
diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they are so harmless to
others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much.
That would be a mere shadow of freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order."9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom
in the forum of conscience even as against the command of the State itself: "Much has been said of
the paramount duty to the state, a duty to be recognized, it is urged, even though it conflicts with
convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for
government may enforce obedience to laws regardless of scruples. When one's belief collides with
the power of the state, the latter is supreme within its sphere and submission or punishment follows.
But, in the forum of conscience, duty to a moral power higher than the state has always been
maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably
be made by many of our conscientious and law-abiding citizens. The essence of religion is belief in a
relation to God involving duties superior to those arising from any human relation." 10 The American

Page | 40
Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists
who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted
and entire. With such a cardinal postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase Cardozo, a fundamental principle
that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision
in question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the
judicial function, to restrict the scope of a preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens
the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand
scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty.
For the late Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes,
it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the
autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can determine
for himself whether or not he should join or refrain from joining a labor organization, an institutional
device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently
coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v.
Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then
to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of
constitutional tradition. That, for me, is the channel to follow.

Separate Opinions

FERNANDO, J, concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the
constitutional infirmities imputed to it was demonstrated in a manner wellnigh conclusive in the learned,
scholarly, and comprehensive opinion so typical of the efforts of the ponente, Justice Zaldivar. Like
the rest of my brethren, I concur fully. Considering moreover, the detailed attention paid to each and
every objection raised as to its validity and the clarity and persuasiveness with which it was shown to
be devoid of support in authoritative doctrines, it would appear that the last word has been written on
this particular subject. Nonetheless, I deem it proper to submit this brief expression of my views on the
transcendent character of religious freedom1 and its primacy even as against the claims of protection
to labor,2 also one of the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a
Supreme Being, and if a devotee of any sect, to act in accordance with its creed. Thus is
constitutionally safeguarded, according to Justice Laurel, that "profession of faith to an active power
that binds and elevates man to his Creator ...."3 The choice of what a man wishes to believe in is his
and his alone. That is a domain left untouched, where intrusion is not allowed, a citadel to which the
law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns supreme.
The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational
foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It
suffices that for him such a concept holds undisputed sway. That is a recognition of man's freedom.
That for him is one of the ways of self- realization. It would be to disregard the dignity that attaches to
every human being to deprive him of such an attribute. The "fixed star on our constitutional
constellation," to borrow the felicitous phrase of Justice Jackson, is that no official, not excluding the
highest, has it in his power to prescribe what shall be orthodox in matters of conscience — or to
mundane affairs, for that matter.

Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm of belief
and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief, including religious belief, limitless
and without bounds. One may believe in most anything, however strange, bizarre and unreasonable the same may appear to others, even
heretical when weighed in the scales of orthodoxy or doctrinal standards."5 There was this qualification though: "But between the freedom of
belief and the exercise of said belief, there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established
institutions of society and with the law, then the former must yield and give way to the latter. The Government steps in and either restrains said
exercise or even prosecutes the one exercising it."6 It was on that basis that the daily compulsory flag ceremony in accordance with a
statute7 was found free from the constitutional objection on the part of a religious sect, the Jehovah's Witnesses, whose members alleged that

Page | 41
their participation would be offensive to their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette,8 the
American Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive. Thus: "The
case is made difficult not because the principles of its decision are obscure but because the flag involved is our own. Nevertheless, we apply
the limitations of the Constitution with no fear that freedom to be intellectually and spiritually diverse or even contrary will disintegrate the social
organization. To believe that patriotism will not flourish if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine
is to make an unflattering estimate of the appeal of our institutions to free minds. We can have intellectual individualism and the rich cultural
diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When they are so harmless to
others or to the State as those we deal with here, the price is not too great. But freedom to differ is not limited to things that do not matter much.
That would be a mere shadow of freedom. The test of its substance is the right to differ as to things that touch the heart of the existing order."9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom
in the forum of conscience even as against the command of the State itself: "Much has been said of
the paramount duty to the state, a duty to be recognized, it is urged, even though it conflicts with
convictions of duty to God. Undoubtedly that duty to the state exists within the domain of power, for
government may enforce obedience to laws regardless of scruples. When one's belief collides with
the power of the state, the latter is supreme within its sphere and submission or punishment follows.
But, in the forum of conscience, duty to a moral power higher than the state has always been
maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably
be made by many of our conscientious and law-abiding citizens. The essence of religion is belief in a
relation to God involving duties superior to those arising from any human relation." 10 The American
Chief Justice spoke in dissent, it is true, but with him in agreement were three of the foremost jurists
who ever sat in that Tribunal, Justices Holmes, Brandeis, and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted
and entire. With such a cardinal postulate as the basis of our polity, it has a message that cannot be
misread. Thus is intoned with a reverberating clang, to paraphrase Cardozo, a fundamental principle
that drowns all weaker sounds. The labored effort to cast doubt on the validity of the statutory provision
in question is far from persuasive. It is attended by futility. It is not for this Court, as I conceive of the
judicial function, to restrict the scope of a preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens
the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand
scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty.
For the late Professor Howe a constitutionalist and in his lifetime the biographer of the great Holmes,
it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the
autonomy accorded voluntary societies. 11 Such a right implies at the very least that one can determine
for himself whether or not he should join or refrain from joining a labor organization, an institutional
device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently
coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v.
Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then
to further curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of
constitutional tradition. That, for me, is the channel to follow.

Footnotes

1 Record on Appeal, pages 2-7.

2 Record on Appeal, pages 14-17.

3 Record on Appeal, pages 27-35.

4 Quoted from Brief for Appellant, page 3.

5 Quoted from Brief for Appellant, page 2.

6 Brief for Appelant, pages 2-3.

7 Brief for Appellant, pages 3-5.

8 Brief for Appellant, pages 5-6.

9 Brief for Appellant, page 6.

10 Brief for Appellant, pages 7-8.

Page | 42
11 Brief for Appellant, pages 8-9.

12 Appellant cites in support thereof Otten v. Baltimore & Or., et al., 205 F 2d 58, and
Wicks v. Southern Pacific Co., D.C. Cal., 121 F. Supp. 454; Jenson v. Union Pacific
R. Co., et al., 121 F. Supp. 454.

13 Brief for Appellant, pages 9-11.

14 Brief for Plaintiff-Appellee, pages 6-8.

15 Brief for Plaintiff-Appellee, pages 8-11.

16 Brief for Plaintiff-Appellee, pages 11-28.

17 Brief for Plaintiff-Appellee, pages 28-32.

18 Brief for Plaintiff-Appellee, pages 32-36.

19 Danner v. Hass, 194 N.W. 2d 534, 539; Spurbeck v. Statton 106 N. W. 2d, 660,
663.

20 Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al.,

108 Phil., 1010, 1019.

21 Abo, et al. vs. PHILAME (KG) Employees Union, et al., L- 19912, January 30, 1965,
13 SCRA 120,123, quoting Rothenberg, Labor Relations.

22 Black's Constitutional Law, 2nd ed., page 607.

23 Home Building & Loan Association vs. Blaisdell 290 U.S. 398, 8 L Ed 413, 425.

24 Re People (Title & Mort. Guar. Co.) 264 N.Y. 69, 190 N.E., 153, 96 A LR 297, 304.

25 Stephenson v. Binford, 287 U.S. 251, 176, 77 L. ed. 288., 301, 53 S. Ct. 181, 87
A.L.R. 721.

26 16 Am. Jur. 2d, pages 584-585.

27 Art. 1700, Civil Code of the Philippines.

28 llusorio, et al. vs. Court of Agrarian Relations, et al., L-20,344, May 16, 1966,17
SCRA 25, 29; Ongsiako v. Gamboa, et al., 86 Phil., 50, 54-55.

29 Asia Bed Factory vs. National Bed and Kapok Industries Workers' Union, 100 Phil.,
837, 840.

30 Re People (Title & Mort. Guar. Co.), 264 N.Y. 69, 190 N.E. 153, 96 ALR 297, 304.

31 "Individual Rights in Industrial Self-Government — A 'State Action' Analysis",

Northwestern University Law Review Vol. 63, No. 1, March-April, 1968, page 4.

32 Congressional Record of the House, Vol- IV, Part 11, April 11 to May 18,1961,
pages 3300-3301.

33 Jones vs. Opelika, 316 U.S. 584, 86 L. ed. 1691, 62 S. Ct. 717; Follet vs.
McCormick, 321 U.S. 158, 88 L ed 938, 64 S. Ct. 717.

34 Schneider v. Irgington, 308 U.S. 147, 161, 84 L. ed. 155, 164, 60 S. Ct. 146.

35 U.S. v. Ballard, 322 U.S. 78,88 L. ed. 1148,1153.

Page | 43
36 William A. Carroll, "The Constitution, the Supreme Court, and Religion", The
American Political Science Review, LXI: 657-674, page 663, Sept., 1967.

37 Sherbert v. Verner, 374 U.S. 398, 10 L.ed. 2d 965, 83 S. Ct. 1970.

38 Braunfeld v. Brown, 366 US 599, 6 L ed. 2d. 563, 81 S. Ct. 1144; McGowan v.
Maryland 366 U.S. 420, 444-5 and 449.

39 64 Phil. 201, 209-210.

40 Board of Education v. Allen, 392 US 236, 20 L. ed, 2d, 1060, 88 S. Ct 1923.

41 Art. XIV, Section 6,1935 Constitution of the Philippines.

42 Article II, Section 9, 1973 Constitution.

43 McGowan v. Maryland, 366 U.S. 420, 422, 6 L. ed. 2d 393, 408, 81 S. Ct. 1101.

44 Alan Schwartz, "No Imposition of Religion: The Establishment Clause Value", Yale
Law Journal, 1968 Vol. 77, page 692. "

45 Sherbert v. Verner, 374 U.S. 398, 10 L. ed. 2d 965, 970, 83 S. Ct. 1790.

46 People ex rel. Ryan v. Sempek, 147 N.E. 2d 295, 298.

47 Diamond Auto Sales Inc. v. Erbe, 105 N.W. 2d 650, 652; Spurbeck v. Statton, 106
N.W. 2d 660, 663; Danner v. Hass 134 N.W. 2d 534, 539.

48 Cf. Meyer v. Nebraska, 262 U.S. 390, 67 L. ed. 1042, 1046.

49 Book v. State Office Bldg. Commission, 149 N.E. 2d 273, 278.

50 Now Section 1, Article IV, 1973 Constitution.

51 16 Am Jur. 2d, page 850.

52 International Harvester Co. v. Missouri, 234 U.S. 199, 58 L. ed. 1276, 1282.

53 Atchison T.S.F.R. Co. v. Missouri, 234 U.S. 199, 58 L. ed, 1276,1282.

54 People v. Vera, 65 Phil. 56, 126.

55 People v. Carlos, 78 Phil. 535, 542, citing 16 C.J.S. 997.

56 16 Am. Jur. 2d, page 862.

57 Continental Baking Co. v. Woodring, 286 U.S. 352, 76 L. ed. 1155,1182.

58 Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 81 L.ed. 1193, 1200.

59 German Alliance Ins. Co. v. Lewis, 233 U.S. 389,58 L. ed., 1011, 1024.

60 Charles Dubray, Introductory Philosophy, 1923, page 132.

61 Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 81 L.ed. 1193, 1200.

62 State v. Stinson Canning Co., 211 A, 2d 553, 555.

63 Calalang v. Williams, 70 Phil. 726, 734.

64 Ibid.

Page | 44
65 Speech delivered by Jose P. Laurel before the Constitutional Convention on
November 19, 1934, In Malcolm and Laurel, Philippine Constitutional Law, page 534.

66 Guido v. Rural Progress Administration, 84 Phil. 847, 852.

67 16 Am Jur. 2d. page 378.

68 Province of Pangasinan v. Hon. Secretary of Public Works, et al., L-27861, October

31, 1969, 30 SCRA 134.

69 Arizona Copper Co. v. Hammer, 250 U.S. 400, 63 L. ed. 1058, 1066.

70 Sanitation Dist. v. Campbell, 249 SW 2d 767, 770, City of Rochester v. Gutberlett,

211 NW 309, 105 NE 548, 550.

71 Hammond Packing Co. v. Arkansas, 212 U.S. 322, 53 L. ed. 530, 545.

72 Brief for Appellant, pages 12-14.

73 Brief for Plaintiff-Appellee, pages 48-49.

74 Seno v. Mendoza, L-20565, Nov. 29, 1967, 21 SCRA 1124, 1129.

75 Abo v. PHILAME (kg) Employees and Workers Union, L19912, January 30, 1965,
13 SCRA 120, 124.

FERNANDO, J., concurring:

1 Article IV, Section 8 of the Constitution provides: "No law shall be made respecting
an establishment of religion, or prohibiting the free exercise thereof. The free exercise
and enjoyment of religious profession and worship, without discrimination or
preference, shall forever be allowed. No religious test shall be required for the exercise
of civil or political rights." There is thus a reiteration of such freedom as found in Article
III, Section 1, par. 7 of the 1935 Constitution.

2 Article II, Section 9 of the Constitution provides: "The State shall afford protection to
labor, promote full employment and equality in employment, ensure equal work
opportunities regardless of sex, race, or and regulate the relations between workers
and employers. The State shall assure the rights of workers to self organization,
collective bargaining, security of tenure, and just and humane conditions of work. The
State may provide for compulsory arbitration." The above is an expanded version of
what is found in Article XIV, Section 6 of the 1935 Constitution.

3 Aglipay v. Ruiz, 64 Phil. 201, 206 (1937).

4 106 Phil. 2 (1959).

5 Ibid, 9-10.

6 Ibid, 10.

7 Republic Act No. 1265 (1955).

8 319 US 624 (1943). Minersville School District v. Gobitis, 310 US 586 (1940) was
thus overruled.

9 Ibid, 641-642.

10 United States v. Macintosh, 283 US 605, 633-634 (1931).

11 Cf. Howe, Political Theory and the Nature of Liberty, 67 Harvard Law Review, 91,
94 (1953). He was reflecting on the radiations to which Kedroff v. St. Nicholas

Page | 45
 Cathedral, 344 US 94 (1 952) and Barrows v. Jackson, 346 US 249 (1953) might give
rise to.

12 L-28791, August 27, 1973, 52 SCRA 307. Cf. Confederated Sons of Labor v.
Anakan Lumber Co., 107 Phil. 915 (1960); Freeman Shirt Manufacturing Co., Inc. v.
Court of Industrial Relations, L-16561, Jan. 28,1961, 1 SCRA 353; Findlay Millar
Timber Co. v. Phil. Land-Air-Sea Labor Union, L-18217, Sept. 29, 1962, 6 SCRA 227;
Kapisanan Ng Mga Manggagawa Ng Alak v. Hamilton Distillery Company, L-18112,
Oct. 30, 1962, 6 SCRA 367; United States Lines Co. v. Associated Watchmen &
Security Union, L-15508, June 29, 1963, 8 SCRA 326; National Brewery & Allied
Industries Labor Union of the Phil. v. San Miguel Brewery, Inc., L-18170, Aug. 31,
1963, 8 SCRA 805; Phil. Steam Navigation Co. v. Phil. Marine Officers Guild,
L-20667, Oct. 29, 1965, 15 SCRA 174; Rizal Labor Union v. Rizal Cement Co., Inc.,
L-19779, July 30, 1966, 17 SCRA 857.

LABOR CASE 7
THIRD DIVISION

G.R. No. 85279 July 28, 1989

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON,

RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO
ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO,
RTC, BRANCH 98, QUEZON CITY, respondents.

Vicente T. Ocampo & Associates for petitioners.

CORTES, J:

Primarily, the issue raised in this petition is whether or not the Regional Trial Court can enjoin the
Social Security System Employees Association (SSSEA) from striking and order the striking
employees to return to work. Collaterally, it is whether or not employees of the Social Security System
(SSS) have the right to strike.

The antecedents are as follows:

On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for damages
with a prayer for a writ of preliminary injunction against petitioners, alleging that on June 9, 1987, the
officers and members of SSSEA staged an illegal strike and baricaded the entrances to the SSS
Building, preventing non-striking employees from reporting for work and SSS members from
transacting business with the SSS; that the strike was reported to the Public Sector Labor -
Management Council, which ordered the strikers to return to work; that the strikers refused to return
to work; and that the SSS suffered damages as a result of the strike. The complaint prayed that a writ
of preliminary injunction be issued to enjoin the strike and that the strikers be ordered to return to work;
that the defendants (petitioners herein) be ordered to pay damages; and that the strike be declared
illegal.

It appears that the SSSEA went on strike after the SSS failed to act on the union's demands, which
included: implementation of the provisions of the old SSS-SSSEA collective bargaining agreement
(CBA) on check-off of union dues; payment of accrued overtime pay, night differential pay and holiday
pay; conversion of temporary or contractual employees with six (6) months or more of service into
regular and permanent employees and their entitlement to the same salaries, allowances and benefits
given to other regular employees of the SSS; and payment of the children's allowance of P30.00, and
after the SSS deducted certain amounts from the salaries of the employees and allegedly committed
acts of discrimination and unfair labor practices [Rollo, pp. 21-241].

Page | 46
The court a quo, on June 11, 1987, issued a temporary restraining order pending resolution of the
application for a writ of preliminary injunction [Rollo, p. 71.] In the meantime, petitioners filed a motion
to dismiss alleging the trial court's lack of jurisdiction over the subject matter [Rollo, pp. 72-82.] To this
motion, the SSS filed an opposition, reiterating its prayer for the issuance of a writ of injunction [Rollo,
pp. 209-222]. On July 22,1987, in a four-page order, the court a quo denied the motion to dismiss and
converted the restraining order into an injunction upon posting of a bond, after finding that the strike
was illegal [Rollo, pp. 83- 86]. As petitioners' motion for the reconsideration of the aforesaid order was
also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a petition for certiorari and prohibition
with preliminary injunction before this Court. Their petition was docketed as G.R. No. 79577. In a
resolution dated October 21, 1987, the Court, through the Third Division, resolved to refer the case to
the Court of Appeals. Petitioners filed a motion for reconsideration thereof, but during its pendency the
Court of Appeals on March 9,1988 promulgated its decision on the referred case [Rollo, pp. 130-137].
Petitioners moved to recall the Court of Appeals' decision. In the meantime, the Court on June 29,1988
denied the motion for reconsideration in G.R. No. 97577 for being moot and academic. Petitioners'
motion to recall the decision of the Court of Appeals was also denied in view of this Court's denial of
the motion for reconsideration [Rollo, pp. 141- 143]. Hence, the instant petition to review the decision
of the Court of Appeals [Rollo, pp. 12-37].

Upon motion of the SSS on February 6,1989, the Court issued a temporary restraining order enjoining
the petitioners from staging another strike or from pursuing the notice of strike they filed with the
Department of Labor and Employment on January 25, 1989 and to maintain the status quo [Rollo, pp.
151-152].

The Court, taking the comment as answer, and noting the reply and supplemental reply filed by
petitioners, considered the issues joined and the case submitted for decision.

The position of the petitioners is that the Regional Trial Court had no jurisdiction to hear the case
initiated by the SSS and to issue the restraining order and the writ of preliminary injunction, as
jurisdiction lay with the Department of Labor and Employment or the National Labor Relations
Commission, since the case involves a labor dispute.

On the other hand, the SSS advances the contrary view, on the ground that the employees of the SSS
are covered by civil service laws and rules and regulations, not the Labor Code, therefore they do not
have the right to strike. Since neither the DOLE nor the NLRC has jurisdiction over the dispute, the
Regional Trial Court may enjoin the employees from striking.

In dismissing the petition for certiorari and prohibition with preliminary injunction filed by petitioners,
the Court of Appeals held that since the employees of the SSS, are government employees, they are
not allowed to strike, and may be enjoined by the Regional Trial Court, which had jurisdiction over the
SSS' complaint for damages, from continuing with their strike.

Thus, the sequential questions to be resolved by the Court in deciding whether or not the Court of
Appeals erred in finding that the Regional Trial Court did not act without or in excess of jurisdiction
when it took cognizance of the case and enjoined the strike are as follows:

1. Do the employees of the SSS have the right to strike?

2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS and to enjoin
the strikers from continuing with the strike and to order them to return to work?

These shall be discussed and resolved seriatim

The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State "shall
guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law" [Art. XIII, Sec. 31].

By itself, this provision would seem to recognize the right of all workers and employees, including
those in the public sector, to strike. But the Constitution itself fails to expressly confirm this impression,
for in the Sub-Article on the Civil Service Commission, it provides, after defining the scope of the civil
service as "all branches, subdivisions, instrumentalities, and agencies of the Government, including
government-owned or controlled corporations with original charters," that "[t]he right to self-
organization shall not be denied to government employees" [Art. IX(B), Sec. 2(l) and (50)].
Parenthetically, the Bill of Rights also provides that "[tlhe right of the people, including those employed

Page | 47
in the public and private sectors, to form unions, associations, or societies for purposes not contrary
to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no question that the Constitution
recognizes the right of government employees to organize, it is silent as to whether such recognition
also includes the right to strike.

Resort to the intent of the framers of the organic law becomes helpful in understanding the meaning
of these provisions. A reading of the proceedings of the Constitutional Commission that drafted the
1987 Constitution would show that in recognizing the right of government employees to organize, the
commissioners intended to limit the right to the formation of unions or associations only, without
including the right to strike.

Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that "[tlhe right to self-
organization shall not be denied to government employees" [Art. IX(B), Sec. 2(5)], in answer to the
apprehensions expressed by Commissioner Ambrosio B. Padilla, Vice-President of the Commission,
explained:

MR. LERUM. I think what I will try to say will not take that long. When we proposed
this amendment providing for self-organization of government employees, it does not
mean that because they have the right to organize, they also have the right to strike.
That is a different matter. We are only talking about organizing, uniting as a union.
With regard to the right to strike, everyone will remember that in the Bill of Rights, there
is a provision that the right to form associations or societies whose purpose is not
contrary to law shall not be abridged. Now then, if the purpose of the state is to prohibit
the strikes coming from employees exercising government functions, that could be
done because the moment that is prohibited, then the union which will go on strike will
be an illegal union. And that provision is carried in Republic Act 875. In Republic Act
875, workers, including those from the government-owned and controlled, are allowed
to organize but they are prohibited from striking. So, the fear of our honorable Vice-
President is unfounded. It does not mean that because we approve this resolution, it
carries with it the right to strike. That is a different matter. As a matter of fact, that
subject is now being discussed in the Committee on Social Justice because we are
trying to find a solution to this problem. We know that this problem exist; that the
moment we allow anybody in the government to strike, then what will happen if the
members of the Armed Forces will go on strike? What will happen to those people
trying to protect us? So that is a matter of discussion in the Committee on Social
Justice. But, I repeat, the right to form an organization does not carry with it the right
to strike. [Record of the Constitutional Commission, vol. 1, p. 569].

It will be recalled that the Industrial Peace Act (R.A. No. 875), which was repealed by the Labor Code
(P.D. 442) in 1974, expressly banned strikes by employees in the Government, including
instrumentalities exercising governmental functions, but excluding entities entrusted with proprietary
functions:

.Sec. 11. Prohibition Against Strikes in the Government. — The terms and conditions
of employment in the Government, including any political subdivision or instrumentality
thereof, are governed by law and it is declared to be the policy of this Act that
employees therein shall not strike for the purpose of securing changes or modification
in their terms and conditions of employment. Such employees may belong to any labor
organization which does not impose the obligation to strike or to join in strike: Provided,
however, That this section shall apply only to employees employed in governmental
functions and not those employed in proprietary functions of the Government including
but not limited to governmental corporations.

No similar provision is found in the Labor Code, although at one time it recognized the right of
employees of government corporations established under the Corporation Code to organize and
bargain collectively and those in the civil service to "form organizations for purposes not contrary to
law" [Art. 244, before its amendment by B.P. Blg. 70 in 1980], in the same breath it provided that "[t]he
terms and conditions of employment of all government employees, including employees of
government owned and controlled corporations, shall be governed by the Civil Service Law, rules and
regulations" [now Art. 276]. Understandably, the Labor Code is silent as to whether or not government
employees may strike, for such are excluded from its coverage [Ibid]. But then the Civil Service Decree
[P.D. No. 807], is equally silent on the matter.

On June 1, 1987, to implement the constitutional guarantee of the right of government employees to
organize, the President issued E.O. No. 180 which provides guidelines for the exercise of the right to

Page | 48
organize of government employees. In Section 14 thereof, it is provided that "[t]he Civil Service law
and rules governing concerted activities and strikes in the government service shall be observed,
subject to any legislation that may be enacted by Congress." The President was apparently referring
to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission under date April 21, 1987
which, "prior to the enactment by Congress of applicable laws concerning strike by government
employees ... enjoins under pain of administrative sanctions, all government officers and employees
from staging strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which
will result in temporary stoppage or disruption of public service." The air was thus cleared of the
confusion. At present, in the absence of any legislation allowing government employees to strike,
recognizing their right to do so, or regulating the exercise of the right, they are prohibited from striking,
by express provision of Memorandum Circular No. 6 and as implied in E.O. No. 180. [At this juncture,
it must be stated that the validity of Memorandum Circular No. 6 is not at issue].

But are employees of the SSS covered by the prohibition against strikes?

The Court is of the considered view that they are. Considering that under the 1987 Constitution "[t]he
civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original charters" [Art. IX(B), Sec. .2(l)
see also Sec. 1 of E.O. No. 180 where the employees in the civil service are denominated as
"government employees"] and that the SSS is one such government-controlled corporation with an
original charter, having been created under R.A. No. 1161, its employees are part of the civil service
[NASECO v. NLRC, G.R. Nos. 69870 & 70295, November 24,1988] and are covered by the Civil
Service Commission's memorandum prohibiting strikes. This being the case, the strike staged by the
employees of the SSS was illegal.

The statement of the Court in Alliance of Government Workers v. Minister of Labor and
Employment [G.R. No. 60403, August 3, 1:983, 124 SCRA 11 is relevant as it furnishes the rationale
for distinguishing between workers in the private sector and government employees with regard to the
right to strike:

The general rule in the past and up to the present is that 'the terms and conditions of
employment in the Government, including any political subdivision or instrumentality
thereof are governed by law" (Section 11, the Industrial Peace Act, R.A. No. 875, as
amended and Article 277, the Labor Code, P.D. No. 442, as amended). Since the
terms and conditions of government employment are fixed by law, government workers
cannot use the same weapons employed by workers in the private sector to secure
concessions from their employers. The principle behind labor unionism in private
industry is that industrial peace cannot be secured through compulsion by law.
Relations between private employers and their employees rest on an essentially
voluntary basis. Subject to the minimum requirements of wage laws and other labor
and welfare legislation, the terms and conditions of employment in the unionized
private sector are settled through the process of collective bargaining. In government
employment, however, it is the legislature and, where properly given delegated power,
the administrative heads of government which fix the terms and conditions of
employment. And this is effected through statutes or administrative circulars, rules,
and regulations, not through collective bargaining agreements. [At p. 13; Emphasis
supplied].

Apropos is the observation of the Acting Commissioner of Civil Service, in his position paper submitted
to the 1971 Constitutional Convention, and quoted with approval by the Court in Alliance, to wit:

It is the stand, therefore, of this Commission that by reason of the nature of the public
employer and the peculiar character of the public service, it must necessarily regard
the right to strike given to unions in private industry as not applying to public employees
and civil service employees. It has been stated that the Government, in contrast to the
private employer, protects the interest of all people in the public service, and that
accordingly, such conflicting interests as are present in private labor relations could
not exist in the relations between government and those whom they employ. [At pp.
16-17; also quoted in National Housing Corporation v. Juco, G.R. No. 64313, January
17,1985,134 SCRA 172,178-179].

E.O. No. 180, which provides guidelines for the exercise of the right to organize of government
employees, while clinging to the same philosophy, has, however, relaxed the rule to allow negotiation
where the terms and conditions of employment involved are not among those fixed by law. Thus:

Page | 49
 .SECTION 13. Terms and conditions of employment or improvements thereof, except
those that are fixed by law, may be the subject of negotiations between duly
recognized employees' organizations and appropriate government authorities.

The same executive order has also provided for the general mechanism for the settlement of labor
disputes in the public sector to wit:

.SECTION 16. The Civil Service and labor laws and procedures, whenever applicable,
shall be followed in the resolution of complaints, grievances and cases involving
government employees. In case any dispute remains unresolved after exhausting all
the available remedies under existing laws and procedures, the parties may jointly
refer the dispute to the [Public Sector Labor- Management] Council for appropriate
action.

Government employees may, therefore, through their unions or associations, either petition the
Congress for the betterment of the terms and conditions of employment which are within the ambit of
legislation or negotiate with the appropriate government agencies for the improvement of those which
are not fixed by law. If there be any unresolved grievances, the dispute may be referred to the Public
Sector Labor - Management Council for appropriate action. But employees in the civil service may not
resort to strikes, walk-outs and other temporary work stoppages, like workers in the private sector, to
pressure the Govemment to accede to their demands. As now provided under Sec. 4, Rule III of the
Rules and Regulations to Govern the Exercise of the Right of Government- Employees to Self-
Organization, which took effect after the instant dispute arose, "[t]he terms and conditions of
employment in the government, including any political subdivision or instrumentality thereof and
government- owned and controlled corporations with original charters are governed by law and
employees therein shall not strike for the purpose of securing changes thereof."

II

The strike staged by the employees of the SSS belonging to petitioner union being prohibited by law,
an injunction may be issued to restrain it.

It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive jurisdiction
of the NLRC and, hence, the Regional Trial Court had no jurisdiction to issue a writ of injunction
enjoining the continuance of the strike. The Labor Code itself provides that terms and conditions of
employment of government employees shall be governed by the Civil Service Law, rules and
regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Sector Labor - Management
Council with jurisdiction over unresolved labor disputes involving government employees [Sec. 16].
Clearly, the NLRC has no jurisdiction over the dispute.

This being the case, the Regional Trial Court was not precluded, in the exercise of its general
jurisdiction under B.P. Blg. 129, as amended, from assuming jurisdiction over the SSS's complaint for
damages and issuing the injunctive writ prayed for therein. Unlike the NLRC, the Public Sector Labor
- Management Council has not been granted by law authority to issue writs of injunction in labor
disputes within its jurisdiction. Thus, since it is the Council, and not the NLRC, that has jurisdiction
over the instant labor dispute, resort to the general courts of law for the issuance of a writ of injunction
to enjoin the strike is appropriate.

Neither could the court a quo be accused of imprudence or overzealousness, for in fact it had
proceeded with caution. Thus, after issuing a writ of injunction enjoining the continuance of the strike
to prevent any further disruption of public service, the respondent judge, in the same order,
admonished the parties to refer the unresolved controversies emanating from their employer-
employee relationship to the Public Sector Labor - Management Council for appropriate action [Rollo,
p. 86].

III

In their "Petition/Application for Preliminary and Mandatory Injunction," and reiterated in their reply and
supplemental reply, petitioners allege that the SSS unlawfully withheld bonuses and benefits due the
individual petitioners and they pray that the Court issue a writ of preliminary prohibitive and mandatory
injunction to restrain the SSS and its agents from withholding payment thereof and to compel the SSS
to pay them. In their supplemental reply, petitioners annexed an order of the Civil Service Commission,
dated May 5, 1989, which ruled that the officers of the SSSEA who are not preventively suspended
and who are reporting for work pending the resolution of the administrative cases against them are

Page | 50
entitled to their salaries, year-end bonuses and other fringe benefits and affirmed the previous order
of the Merit Systems Promotion Board.

The matter being extraneous to the issues elevated to this Court, it is Our view that petitioners' remedy
is not to petition this Court to issue an injunction, but to cause the execution of the aforesaid order, if
it has already become final.

WHEREFORE, no reversible error having been committed by the Court of Appeals, the instant petition
for review is hereby DENIED and the decision of the appellate court dated March 9, 1988 in CA-G.R.
SP No. 13192 is AFFIRMED. Petitioners' "Petition/Application for Preliminary and Mandatory
Injunction" dated December 13,1988 is DENIED.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

LABOR CASE 8
THIRD DIVISION

G.R. No. 79025. December 29, 1989.

BENGUET ELECTRIC COOPERATIVE, INC., petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO
EMPLOYEES LABOR UNION, respondents.

E.L. Gayo & Associates for petitioner.

CORTES, J.:

On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations
(hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and exclusive
bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc.
(hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that
BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one hundred
and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no
certification election has been conducted for the last 12 months; that there is no existing collective
bargaining representative of the rank and file employees sought to represented by BWLU- ADLO; and,
that there is no collective bargaining agreement in the cooperative.

An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to
as BELU) contending that it was certified as the sole and exclusive bargaining representative of the
subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending
resolution by the National Labor Relations Commission are two cases it filed against BENECO
involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars
any representation question.

BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric
cooperative engaged in providing electric services to its members and patron-consumers in the City
of Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO
are not eligible to form, join or assist labor organizations of their own choosing because they are
members and joint owners of the cooperative.

On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification
election. However, the med-arbiter limited the election among the rank and file employees of petitioner

Page | 51
who are non-members thereof and without any involvement in the actual ownership of the cooperative.
Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37)
employees who are not members and without any involvement in the actual ownership of the
cooperative. The dispositive portion of the med-arbiter's order is as follows:

WHEREFORE, premises considered, a certification election should be as it is hereby

ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at
Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all
the rank and file employees (non-members/consumers and without any involvement
in the actual ownership of the cooperative) with the following choices:

1. BENECO WORKERS LABOR UNION-ADLO

2. BENECO EMPLOYEES LABOR UNION

3. NO UNION

The payroll for the month of June 1985 shall be the basis in determining the qualified
voters who may participate in the certification election to be conducted.

SO ORDERED. [Rollo, pp. 22-23.]

BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March
25,1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for preliminary
injunction and /or restraining order, docketed as G.R. No. 74209, which the Supreme Court dismissed
for lack of merit in a minute resolution dated April 28, 1986.

The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO's
counsel verbally manifested that "the cooperative is protesting that employees who are members-
consumers are being allowed to vote when . . . they are not eligible to be members of any labor union
for purposes of collective bargaining; much less, to vote in this certification election." [Rollo, p. 28].
Petitioner submitted a certification showing that only four (4) employees are not members of BENECO
and insisted that only these employees are eligible to vote in the certification election. Canvass of the
votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.

Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that
the issue as to whether or not member-consumers who are employees of BENECO could form, assist
or join a labor union has been answered in the affirmative by the Supreme Court in G.R. No. 74209,
the med-arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of Labor
Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified BELU as
the sole and exclusive bargaining agent of all the rank and file employees of BENECO.

Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of
jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General
agreed with BENECO's stance and prayed that the petition be given due course. In view of this
respondent director herself was required by the Court to file a Comment. On April 19, 1989 the Court
gave due course to the petition and required the parties to submit their respective memoranda.

The main issue in this case is whether or not respondent director committed grave abuse of discretion
in certifying respondent BELU as the sole and exclusive bargaining representtative of the rank and file
employees of BENECO.

Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification 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 workers in the
unit." Petitioner BENECO asserts that the certification election held on October 1, 1986 was null and
void since members-employees of petitioner cooperative who are not eligible to form and join a labor
union for purposes of collective bargaining were allowed to vote therein.

Respondent director and private respondent BELU on the other hand submit that members of a
cooperative who are also rank and file employees are eligible to form, assist or join a labor union
[Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99-100].

The Court finds the present petition meritorious.

Page | 52
The issue of whether or not employees of a cooperative are qualified to form or join a labor organization
for purposes of collective bargaining has already been resolved and clarified in the case
of Cooperative Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No. 7795, September
26,1988] and reiterated in the cases of Batangas-Electric Cooperative Labor Union v. Young, et
al. [G.R. Nos. 62386, 70880 and 74560 November 9, 1988] and San Jose City Electric Service
Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989] wherein
the Court had stated that the right to collective bargaining is not available to an employee of a
cooperative who at the same time is a member and co-owner thereof. With respect, however, to
employees who are neither members nor co-owners of the cooperative they are entitled to exercise
the rights to self-organization, collective bargaining and negotiation as mandated by the 1987
Constitution and applicable statutes.

Respondent director argues that to deny the members of petitioner cooperative the right to form, assist
or join a labor union of their own choice for purposes of collective bargaining would amount to a patent
violation of their right to self-organization. She points out that:

Albeit a person assumes a dual capacity as rank and file employee and as member of
a certain cooperative does not militate, as in the instant case, against his/her exercise
of the right to self-organization and to collective bargaining guaranteed by the
Constitution and Labor Code because, while so doing, he/she is acting in his/her
capacity as rank and file employee thereof. It may be added that while the employees
concerned became members of petitioner cooperative, their status employment as
rank and filers who are hired for fixed compensation had not changed. They still do not
actually participate in the management of the cooperative as said function is entrusted
to the Board of Directors and to the elected or appointed officers thereof. They are not
vested with the powers and prerogatives to lay down and execute managerial policies;
to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees;
and/or to effectively recommend such managerial functions [Comment of Respondent
Director, p. 4; Rollo, p. 125.]

Private respondent BELU concurs with the above contention of respondent director and, additionally,
claims that since membership in petitioner cooperative is only nominal, the rank and file employees
who are members thereof should not be deprived of their right to self-organization.

The above contentions are untenable. Contrary to respondents' claim, the fact that the members-
employees of petitioner do not participate in the actual management of the cooperative does not make
them eligible to form, assist or join a labor organization for the purpose of collective bargaining with
petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor
union for purposes of collective bargaining was based on the fact that as members of the cooperative
they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly
an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc.
v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in
the management thereof, which disqualifies a member from joining any labor organization within the
cooperative. Thus, irrespective of the degree of their participation in the actual management of the
cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of
collective bargaining.

Respondent union further claims that if nominal ownership in a cooperative is "enough to take away
the constitutional protections afforded to labor, then there would be no hindrance for employers to
grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim
that since their employees are not stockholders [of the corporation], albeit in a minimal and involuntary
manner, they are now also co-owners and thus disqualified to form unions." To allow this, BELU
argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which
the Constitution endeavors to protect and which welfare it promises to promote." [Comment of BELU,
p. 10; Rollo, p. 100].

The above contention of respondent union is based on the erroneous presumption that membership
in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may
exercise some of the rights and privileges given to ordinary corporations provided under existing laws,
such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres.
Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members
of cooperatives have rights and obligations different from those of stockholders of ordinary
corporations. It was precisely because of the special nature of cooperatives, that the Court held in the
Davao City case that members-employees thereof cannot form or join a labor union for purposes of
collective bargaining. The Court held that:

Page | 53
 A cooperative ... is by its nature different from an ordinary business concern being run
either by persons, partnerships, or corporations. Its owners and/or members are the
ones who run and operate the business while the others are its employees. As above
stated, irrespective of the number of shares owned by each member they are entitled
to cast one vote each in deciding upon the affairs of the cooperative. Their share capital
earn limited interest. They enjoy special privileges as-exemption from income tax and
sales taxes, preferential right to supply their products to State agencies and even
exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof

cannot invoke the right to collective bargaining for certainly an owner cannot bargain
with himself or his co-owners.

It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made
a specific finding that there are only thirty-seven (37) employees of petitioner who are not members of
the cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form
or join a labor union for purposes of collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p.
22]. However, the minutes of the certification election [Annex "C" of the Petition: Rollo, p. 28] show
that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for
respondent union. Thus, even if We agree with respondent union's contention that the thirty seven
(37) employees who were originally non-members of the cooperative can still vote in the certification
election since they were only "forced and compelled to join the cooperative on pain of disciplinary
action," the certification election held on October 1, 1986 is still null and void since even those who
were already members of the cooperative at the time of the issuance of the med-arbiter's order, and
therefore cannot claim that they were forced to join the union were allowed to vote in the election.

Article 256 of the Labor Code provides, among others, that:

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 workers in the unit . . . [Italics supplied.]

In this case it cannot be determined whether or not respondent union was duly elected by the eligible
voters of the bargaining unit since even employees who are ineligible to join a labor union within the
cooperative because of their membership therein were allowed to vote in the certification election.
Considering the foregoing, the Court finds that respondent director committed grave abuse of
discretion in certifying respondent union as the sole and exclusive bargaining representative of the
rank and file employees of petitioner cooperative.

WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director is
ANNULLED. The certification election conducted on October 1, 1986, is SET ASIDE. The Regional
Office No. 1 of San Fernando, La Union is hereby directed to immediately conduct new certification
election proceedings among the rank and file employees of the petitioner who are not members of the
cooperative.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., and Bidin, JJ., concur.

Feliciano, J., on leave.

LABOR CASE 9
FIRST DIVISION

[G.R. No. 108855. February 28, 1996]

Page | 54
METROLAB INDUSTRIES, INC., petitioner, vs. HONORABLE MA. NIEVES ROLDAN-
CONFESOR, in her capacity as Secretary of the Department of Labor and
Employment and METRO DRUG CORPORATION EMPLOYEES
ASSOCIATION-FEDERATION OF FREE WORKERS, respondents.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF ADMINISTRATIVE
AGENCIES; RULE; CASE AT BAR. - We reaffirm the doctrine that considering their
expertise in their respective fields, factual findings of administrative agencies
supported by substantial evidence are accorded great respect and binds this
Court. The Secretary of Labor ruled, thus: x x x Any act committed during the
pendency of the dispute that tends to give rise to further contentious issues or
increase the tensions between the parties should be considered an act of
exacerbation. One must look at the act itself, not on speculative reactions. A
misplaced recourse is not needed to prove that a dispute has been exacerbated. For
instance, the Union could not be expected to file another notice of strike. For this
would depart from its theory of the case that the layoff is subsumed under the instant
dispute, for which a notice of strike had already been filed. On the other hand, to
expect violent reactions, unruly behavior, and any other chaotic or drastic action from
the Union is to expect it to commit acts disruptive of public order or acts that may be
illegal. Under a regime of laws, legal remedies take the place of violent ones. x xx
Protest against the subject layoffs need not be in the form of violent action or any
other drastic measure. In the instant case the Union registered their dissent by swiftly
filing a motion for a cease and desist order. Contrary to petitioners allegations, the
Union strongly condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene: x x x 3. This unilateral action of management is a
blatant violation of the injunction of this Office against committing acts which would
exacerbate the dispute. Unless such act is enjoined the Union will be compelled to
resort to its legal right to mass actions and concerted activities to protest and stop the
said management action. This mass layoff is clearly one which would result in a very
serious dispute unless this Office swiftly intervenes. x x x Metrolab and the Union
were still in the process of resolving their CBA deadlock when petitioner implemented
the subject layoffs. As a result, motions and oppositions were filed diverting the
parties attention, delaying resolution of the bargaining deadlock and postponing the
signing of their new CBA, thereby aggravating the whole conflict.
2. LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;
EXERCISE OF MANAGEMENT PREROGATIVES; NOT ABSOLUTE; SUBJECT
TO EXCEPTIONS IMPOSED BY LAW. - This Court recognizes the exercise of
management prerogatives and often declines to interfere with the legitimate business
decisions of the employer. However, this privilege is not absolute but subject to
limitations imposed by law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we issued this
reminder: ... the exercise of management prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that
managements prerogatives must be without abuse of discretion ...All this points to
the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limi(ations found in law, a collective bargaining agreement, or the
general principles of fair play and justice (University of Sto. Tomas v. NLRC, 190
SCRA 758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION. - The case at bench constitutes
one of the exceptions. The Secretary of Labor is expressly given the power under the
Labor Code to assume jurisdiction and resolve labor disputes involving industries
indispensable to national interest. The disputed injunction is subsumed under this
special grant of authority. Art. 263 (g) of the Labor Code specifically provides that: x
x x (g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration. Such assumption or

Page | 55
 certification shall have the effect of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall immediately
resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce
the same. . . . That Metrolabs business is of national interest is not disputed. Metrolab
is one of the leading manufacturers and suppliers of medical and pharmaceutical
products to the country. Metrolabs management prerogatives, therefore, are not
being unjustly curtailed but duly balanced with and tempered by the limitations set by
law, taking into account its special character and the particular circumstances in the
case at bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY OF MANAGERIAL EMPLOYEES TO
JOIN, FORM AND ASSIST ANY LABOR ORGANIZATION; PROHIBITION
EXTENDED TO CONFIDENTIAL EMPLOYEES. - Although Article 245 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.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL EMPLOYEES FROM THE RANK AND
FILE BARGAINING UNIT; NOT TANTAMOUNT TO DISCRIMINATION.
- Confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from
the rank and file, thus, warranting a separate category. Excluding confidential
employees from the rank and file bargaining unit, therefore, is not tantamount to
discrimination.
APPEARANCES OF COUNSEL
Bautista Picazo Buyco Tan & Fider for petitioner.
The Solicitor General for public respondent.
Perfecto V. Fernandez, Jose P. Fernandez & Cristobal P. Fernandez for Metro Drug
Corporation.

DECISION
KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking
the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and
Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-04491-11
(NCMB-NCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on grounds that these were
issued with grave abuse of discretion and in excess of jurisdiction.
Private respondent Metro Drug Corporation Employees Association-Federation of
Free Workers (hereinafter referred to as the Union) is a labor organization representing
the rank and file employees of petitioner Metrolab Industries, Inc. (hereinafter referred to
as Metrolab/MII) and also of Metro Drug, Inc.
On 31 December 1990, the Collective Bargaining Agreement (CBA) between
Metrolab and the Union expired. The negotiations for a new CBA, however, ended in a
deadlock.
Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab
and Metro Drug Inc. The parties failed to settle their dispute despite the conciliation efforts
of the National Conciliation and Mediation Board.

Page | 56
 To contain the escalating dispute, the then Secretary of Labor and Employment,
Ruben D. Torres, issued an assumption order dated 20 September 1991, the dispositive
portion of which reads, thus:

WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the

Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor
dispute at Metro Drug, Inc. - Metro Drug Distribution Division and Metrolab
Industries Inc.

Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the
Metro Drug Corp. Employees Association - FFW are likewise directed to cease and
desist from committing any and all acts that might exacerbate the situation.

Finally, the parties are directed to submit their position papers and evidence on the
aforequoted deadlocked issues to this office within twenty (20) days from receipt
hereof.

SO ORDERED. (Italics ours.)

[1]

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the
disputed items in the CBA and ordered the parties involved to execute a new CBA.
Thereafter, the Union filed a motion for reconsideration.
On 27 January 1992, during the pendency of the abovementioned motion for
reconsideration, Metrolab laid off 94 of its rank and file employees.
On the same date, the Union filed a motion for a cease and desist order to enjoin
Metrolab from implementing the mass layoff, alleging that such act violated the prohibition
against committing acts that would exacerbate the dispute as specifically directed in the
assumption order.[2]
On the other hand, Metrolab contended that the layoff was temporary and in the
exercise of its management prerogative. It maintained that the company would suffer a
yearly gross revenue loss of approximately sixty-six (66) million pesos due to the
withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab
further asserted that with the automation of the manufacture of its product Eskinol, the
number of workers required its production is significantly reduced.[3]
Thereafter, on various dates, Metrolab recalled some of the laid off workers on a
temporary basis due to availability of work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution
declaring the layoff of Metrolabs 94 rank and file workers illegal and ordered their
reinstatement with full backwages. The dispositive portion reads as follows:

WHEREFORE, the Unions motion for reconsideration is granted in part, and our
order of 28 December 1991 is affirmed subject to the modifications in allowances and
in the close shop provision. The layoff of the 94 employees at MII is hereby declared
illegal for the failure of the latter to comply with our injunction against committing
any act which may exacerbate the dispute and with the 30-day notice
requirement. Accordingly, MII is hereby ordered to reinstate the 94 employees, except
those who have already been recalled, to their former positions or substantially
equivalent, positions with full backwages from the date they were illegally laid off on
27 January 1992 until actually reinstated without loss of seniority rights and other
benefits. Issues relative to the CBA agreed upon by the parties and not embodied in
our earlier order are hereby ordered adopted for incorporation in the CBA. Further,
the dispositions and directives contained in all previous orders and resolutions relative

Page | 57
to the instant dispute, insofar as not inconsistent herein, are reiterated. Finally, the
parties are enjoined to cease and desist from committing any act which may tend to
circumvent this resolution.

SO RESOLVED. [4]

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that
the layoff did not aggravate the dispute since no untoward incident occurred as a result
thereof. It, likewise, filed a motion for clarification regarding the constitution of the
bargaining unit covered by the CBA.
On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA.
The execution, however, was without prejudice to the outcome of the issues raised in the
reconsideration and clarification motions submitted for decision to the Secretary of
Labor.[5]
Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid
off 73 of its employees on grounds of redundancy due to lack of work which the Union
again promptly opposed on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor again issued a cease and desist
order. Metrolab moved for a reconsideration.[6]
On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus
Resolution containing the following orders:
xxx xxx xxx.

1. MIIs motion for partial reconsideration of our 14 April 1992 resolution specifically
that portion thereof assailing our ruling that the layoff of the 94 employees is illegal,
is hereby denied. MII is hereby ordered to pay such employees their full backwages
computed from the time of actual layoff to the time of actual recall;

2. For the parties to incorporate in their respective collective bargaining agreements

the clarifications herein contained; and

3. MIIs motion for reconsideration with respect to the consequences of the second
wave of layoff affecting 73 employees, to the extent of assailing our ruling that such
layoff tended to exacerbate the dispute, is hereby denied. But inasmuch as the legality
of the layoff was not submitted for our resolution and no evidence had been adduced
upon which a categorical finding thereon can be based, the same is hereby referred to
the NLRC for its appropriate action.

Finally, all prohibitory injunctions issued as a result of our assumption of jurisdiction

over this dispute are hereby lifted.

SO RESOLVED. [7]

Labor Secretary Confesor also ruled that executive secretaries are excluded from the
closed-shop provision of the CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for execution. Metrolab
opposed. Hence, the present petition for certiorari with application for issuance of a
Temporary Restraining Order.
On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary
of Labor from enforcing and implementing the assailed Resolution and Omnibus
Resolution dated 14 April 1992 and 25 January 1993, respectively.

Page | 58
 In its petition, Metrolab assigns the following errors:
A

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND

EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND
EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF
ILLEGAL AND ORDERING THE REINSTATEMENT AND PAYMENT OF
BACKWAGES TO THE AFFECTED EMPLOYEES. *

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND

EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING
EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK
AND FILE EMPLOYEES. [8]

Anent the first issue, we are asked to determine whether or not public respondent
Labor Secretary committed grave abuse of discretion and exceeded her jurisdiction in
declaring the subject layoffs instituted by Metrolab illegal on grounds that these unilateral
actions aggravated the conflict between Metrolab and the Union who were, then, locked
in a stalemate in CBA negotiations.
Metrolab argues that the Labor Secretarys order enjoining the parties from committing
any act that might exacerbate the dispute is overly broad, sweeping and vague and should
not be used to curtail the employers right to manage his business and ensure its viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management prerogatives and often declines
to interfere with the legitimate business decisions of the employer. However, this privilege
is not absolute but subject to limitations imposed by law.[9]
In PAL v. NLRC,[10] we issued this reminder:
xxx xxx xxx

. . .the exercise of management prerogatives was never considered boundless. Thus,

in Cruz vs. Medina ( 177 SCRA 565 [1989]), it was held that managements
prerogatives must be without abuse of discretion....

xxx xxx xxx

All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice (University of Sto. Tomas
v. NLRC, 190 SCRA 758 [1990]). . . . (Italics ours.)

xxx xxx xxx.

The case at bench constitutes one of the exceptions. The Secretary of Labor is
expressly given the power under the Labor Code to assume jurisdiction and resolve labor
disputes involving industries indispensable to national interest. The disputed injunction is
subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically
provides that:
xxx xxx xxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest, the Secretary of Labor

Page | 59
and Employment may assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out employees
shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing
before the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as with such orders as he may issue to enforce
the same. . . (Italics ours.)

xxx xxx xxx.

That Metrolabs business is of national interest is not disputed. Metrolab is one of the
leading manufacturers and suppliers of medical and pharmaceutical products to the
country.
Metro labs management prerogatives, therefore, are not being unjustly curtailed but
duly balanced with and tempered by the limitations set by law, taking into account its
special character and the particular circumstances in the case at bench.
As aptly declared by public respondent Secretary of Labor in its assailed resolution:
xxx xxx xxx.

MII is right to the extent that as a rule, we may not interfere with the legitimate
exercise of management prerogatives such as layoffs. But it may nevertheless be
appropriate to mention here that one of the substantive evils which Article 263 (g) of
the Labor Code seeks to curb is the exacerbation of a labor dispute to the further
detriment of the national interest. When a labor dispute has in fact occurred and a
general injunction has been issued restraining the commission of disruptive acts,
management prerogatives must always be exercised consistently with the statutory
objective.[11]

xxx xxx xxx.

Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union
since no untoward incident occurred after the layoffs were implemented. There were no
work disruptions or stoppages and no mass actions were threatened or
undertaken. Instead, petitioner asserts, the affected employees calmly accepted their fate
as this was a matter which they had been previously advised would be inevitable.[12]
After a judicious review of the record, we find no compelling reason to overturn the
findings of the Secretary of Labor.
We reaffirm the doctrine that considering their expertise in their respective fields,
factual findings of administrative agencies supported by substantial evidence are
accorded great respect and binds this Court.[13]
The Secretary of Labor ruled, thus:
xxx xxx xxx.

Any act committed during the pendency of the dispute that tends to give rise to further
contentious issues or increase the tensions between the parties should be considered
an act of exacerbation. One must look at the act itself, not on speculative reactions. A
misplaced recourse is not needed to prove that a dispute has been exacerbated. For
instance, the Union could not be expected to file another notice of strike. For this

Page | 60
would depart from its theory of the case that the layoff is subsumed under the instant
dispute, for which a notice of strike had already been filed. On the other hand, to
expect violent reactions, unruly behavior, and any other chaotic or drastic action from
the Union is to expect it to commit acts disruptive of public order or acts that may be
illegal. Under a regime of laws, legal remedies take the place of violent ones. [14]

xxx xxx xxx.

Protest against the subject layoffs need not be in the form of violent action or any
other drastic measure. In the instant case the Union registered their dissent by swiftly
filing a motion for a cease and desist order. Contrary to petitioners allegations, the
Union strongly condemned the layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene:

xxx xxx xxx.

3. This unilateral action of management is a blatant violation of the injunction of this

Office against committing acts which would exacerbate the dispute. Unless such act is
enjoined the Union will be compelled to resort to its legal right to mass actions and
concerted activities to protest and stop the said management action. This mass layoff
is clearly one which would result in a very serious labor dispute unless this Office
swiftly intervenes.[15]

xxx xxx xxx.

Metrolab and the Union were still in the process of resolving their CBA deadlock when
petitioner implemented the subject layoffs. As a result, motions and oppositions were filed
diverting the parties attention, delaying resolution of the bargaining deadlock and
postponing the signing of their new CBA, thereby aggravating the whole conflict.
We, likewise, find untenable Metrolabs contention that the layoff of the 94 rank-and-
file employees was temporary, despite the recall of some of the laid off workers.
If Metrolab intended the layoff of the 94 workers to be temporary, it should have
plainly stated so in the notices it sent to the affected employees and the Department of
Labor and Employment. Consider the tenor of the pertinent portions of the layoff notice
to the affected employees:
xxx xxx xxx.

Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng lay-off ng
mga empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa
kanila. Marami sa atin ang kasama sa lay-off dahil wala nang trabaho para sa
kanila. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil
hindi kaya ng kumpanya ang magbayad ng suweldo kung ang empleyado ay walang
trabaho. Kung tayo ay patuloy na magbabayad ng suweldo, mas hihina ang ating
kumpanya at mas marami ang maaring maapektuhan.

Sa pagpapatupad ng lay-off susundin natin ang LAST IN-FIRST OUT policy. Ang
mga empleyadong may pinakamaikling serbisyo sa kumpanya ang unang
maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na ang mga huling
pumasok sa kumpanya ang unang masasama sa lay-off kapag nagkaroon ng ganitong
mga kalagayan.

Page | 61
Ang mga empleyado na kasama sa lay-off ay nakalista sa sulat na ito. Ang umpisa ng
lay-off ay sa Lunes, Enero 27. Hindi na muna sila papasok sa kumpanya. Makukuha
nila ang suweldo nila sa Enero 30, 1992.

Hindi po natin matitiyak kung gaano katagal ang lay-off ngunit ang aming tingin ay
matatagalan bago magkaroon ng dagdag na trabaho. Dahil dito, sinimulan na namin
ang isang Redundancy Program sa mga supervisors. Nabawasan ang mga puwesto
para sa kanila, kaya sila ay mawawalan ng trabaho at bibigyan na ng redundancy
pay. (Italics ours.)
[16]

xxx xxx xxx.

We agree with the ruling of the Secretary of Labor, thus:
xxx xxx xxx.

. . .MII insists that the layoff in question is temporary not permanent. It then
cites International Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the Supreme
Court held that the 30-day notice required under Article 283 of the Labor Code need
not be complied with if the employer has no intention to permanently severe (sic) the
employment relationship.

We are not convinced by this argument. International Hardware involves a case

where there had been a reduction of workload. Precisely to avoid laying off the
employees, the employer therein opted to give them work on a rotating basis. Though
on a limited scale, work was available. This was the Supreme Courts basis for holding
that there was no intention to permanently severe (sic) the employment relationship.

Here, there is no circumstance at all from which we can infer an intention from MII
not to sever the employment relationship permanently. If there was such an intention,
MII could have made it very clear in the notices of layoff. But as it were, the notices
are couched in a language so uncertain that the only conclusion possible is the
permanent termination, not the continuation, of the employment relationship.

MII also seeks to excuse itself from compliance with the 30-day notice with a
tautology. While insisting that there is really no best time to announce a bad news,
(sic) it also claims that it broke the bad news only on 27 January 1992 because had it
complied with the 30-day notice, it could have broken the bad news on 02 January
1992, the first working day of the year. If there is really no best time to announce a
bad news (sic), it wouldnt have mattered if the same was announced at the first
working day of the year. That way, MII could have at least complied with the
requirement of the law. [17]

The second issue raised by petitioner merits our consideration.

In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA
provisions on closed-shop and the scope of the bargaining unit in this wise:
xxx xxx xxx.
Appropriateness of the bargaining unit.
xxx xxx xxx.
Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as
follows:

Page | 62
These aside, we reconsider our denial of the modifications which the Union proposes
to introduce on the close shop provision. While we note that the provision as presently
worded has served the relationship of the parties well under previous CBAs, the shift
in constitutional policy toward expanding the right of all workers to self-organization
should now be formally recognized by the parties, subject to the following exclusions
only:

1. Managerial employees; and

2. The executive secretaries of the President, Executive Vice-President, Vice-

President, Vice President for Sales, Personnel Manager, and Director for Corporate
Planning who may have access to vital labor relations information or who may
otherwise act in a confidential capacity to persons who determine or formulate
management policies.

The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be
modified consistently with the foregoing.

Article I (b) of the 1988-1990 CBA provides:

b)Close Shop. - All Qualified Employees must join the Association immediately upon
regularization as a condition for continued employment. This provision shall not apply
to: (i) managerial employees who are excluded from the scope of the bargaining unit;
(ii) the auditors and executive secretaries of senior executive officers, such as, the
President, Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-
President for Sales, who are excluded from membership in the Association; and (iii)
those employees who are referred to in Attachment I hereof, subject, however, to the
application of the provision of Article II, par. (b) hereof. Consequently, the above-
specified employees are not required to join the Association as a condition for their
continued employment.

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision
The following positions in the Bargaining Unit are not covered by the Close Shop
provision of the CBA (Article I, par. b):

1. Executive Secretaries of Vice-Presidents, or equivalent positions.

2. Executive Secretary of the Personnel Manager, or equivalent positions.

3. Executive Secretary of the Director for Corporate Planning, or equivalent positions.

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll
Staff at Head Office, Accounting Department at Head Office, and Budget Staff, who
because of the nature of their duties and responsibilities need not join the Association
as a condition for their employment.

5. Newly-hired secretaries of Branch Managers and Regional Managers.

Both MDD and MII read the exclusion of managerial employees and executive
secretaries in our 14 April 1992 resolution as exclusion from the bargaining unit. They
point out that managerial employees are lumped under one classification with executive

Page | 63
secretaries, so that since the former are excluded from the bargaining unit, so must the
latter be likewise excluded.
This reading is obviously contrary to the intent of our 14 April 1992 resolution. By
recognizing the expanded scope of the right to self-organization, our intent was to delimit
the types of employees excluded from the close shop provision, not from the bargaining
unit, to executive secretaries only. Otherwise, the conversion of the exclusionary
provision to one that refers to the bargaining unit from one that merely refers to the close
shop provision would effectively curtail all the organizational rights of executive
secretaries.
The exclusion of managerial employees, in accordance with law, must therefore still
carry the qualifying phrase from the bargaining unit in Article I (b)(i) of the 1988-1990
CBA. In the same manner, the exclusion of executive secretaries should be read together
with the qualifying phrase are excluded from membership in the Association of the same
Article and with the heading of Attachment I. The latter refers to Exclusions from Scope
of Close Shop Provision and provides that [t]he following positions in Bargaining Unit are
not covered by the close shop provision of the CBA.
The issue of exclusion has different dimension in the case of MII. In an earlier motion
for clarification, MII points out that it has done away with the positions of Executive Vice-
President, Vice-President for Sales, and Director for Corporate Planning. Thus, the
foregoing group of exclusions is no longer appropriate in its present organizational
structure. Nevertheless, there remain MII officer positions for which there may be
executive secretaries. These include the General Manager and members of the
Management Committee, specifically i) the Quality Assurance Manager; ii) the Product
Development Manager; iii) the Finance Director; iv) the Management System Manager;
v) the Human Resources Manager; vi) the Marketing Director; vii) the Engineering
Manager; viii) the Materials Manager; and ix) the Production Manager.
xxx xxx xxx
The basis for the questioned exclusions, it should be noted, is no other than the
previous CBA between MII and the Union. If MII had undergone an organizational
restructuring since then, this is a fact to which we have never been made privy. In any
event, had this been otherwise the result would have been the same. To repeat, we
limited the exclusions to recognize the expanded scope of the right to self-organization
as embodied in the Constitution.[18]
Metrolab, however, maintains that executive secretaries of the General Manager and
the executive secretaries of the Quality Assurance Manager, Product Development
Manager, Finance Director, Management System Manager, Human Resources Manager,
Marketing Director, Engineering Manager, Materials Manager and Production Manager,
who are all members of the companys Management Committee should not only be
exempted from the closed-shop provision but should be excluded from membership in
the bargaining unit of the rank and file employees as well on grounds that their executive
secretaries are confidential employees, having access to vital labor information. [19]
We concur with Metrolab.
Although Article 245 of the Labor Code[20] limits the ineligibility to join, form and assist
any labor organization to managerial employees, jurisprudence has extended this
prohibition to confidential employees or those who by reason of their positions or nature
of work are required to assist or act in a fiduciary manner to managerial employees and
hence, are likewise privy to sensitive and highly confidential records.
The rationale behind the exclusion of confidential employees from the bargaining unit
of the rank and file employees and their disqualification to join any labor organization was
succinctly discussed in Philips Industrial Development v. NLRC:[21]
xxx xxx xxx.

Page | 64
On the main issue raised before Us, it is quite obvious that respondent NLRC
committed grave abuse of discretion in reversing the decision of the Executive Labor
Arbiter and in decreeing that PIDIs Service Engineers, Sales Force, division
secretaries, all Staff of General Management, Personnel and Industrial Relations
Department, Secretaries of Audit, EDP and Financial Systems are included within the
rank and file bargaining unit.

In the first place, all these employees, with the exception of the service engineers and
the sales force personnel, are confidential employees. Their classification as such is
not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and
PEO-FFW explicitly considered them as confidential employees. By the very nature
of their functions, they assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field of
labor relations. As such, the rationale behind the ineligibility of managerial employees
to form, assist or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this Court elaborated on
this rationale, thus:

x x x The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership.

In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale
applicable to confidential employees:

This rationale holds true also for confidential employees such as accounting
personnel, radio and telegraph operators, who having access to confidential
information, may become the source of undue advantage. Said employee(s) may act as
a spy or spies of either party to a collective bargaining agreement. This is specially
true in the present case where the petitioning Union is already the bargaining agent of
the rank-and-file employees in the establishment. To allow the confidential employees
to join the existing Union of the rank-and-file would be in violation of the terms of the
Collective Bargaining Agreement wherein this kind of employees by the nature of
their functions/positions are expressly excluded.

xxx xxx xxx.

Similarly, in National Association of Trade Union - Republic Planters Bank
Supervisors Chapter v. Torres[22] we declared:
xxx xxx xxx.

. . . As regards the other claim of respondent Bank that Branch Managers/OICs,

Cashiers and Controllers are confidential employees, having control, custody and/ or
access to confidential matters, e.g., the branchs cash position, statements of financial
condition, vault combination, cash codes for telegraphic transfers, demand drafts and
other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual
regarding joint custody, this claim is not even disputed by petitioner. A confidential
employee is one entrusted with confidence on delicate matters, or with the custody,
handling, or care and protection of the employers property. While Art. 245 of the
Labor Code singles out managerial employees as ineligible to join, assist or form any

Page | 65
labor organization, under the doctrine of necessary, implication, confidential
employees are similarly disqualified. . . .

xxx xxx xxx.

. . .(I)n the collective bargaining process, managerial employees are supposed to be on

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

xxx xxx xxx.

And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-
Confesor,[23] we ruled that:
xxx xxx xxx.

Upon the other hand, legal secretaries are neither managers nor supervisors. Their
work is basically routinary and clerical. However, they should be differentiated from
rank-and-file employees because they are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping of records and files,
the giving of and receiving notices, and such other duties as required by the legal
personnel of the corporation. Legal secretaries therefore fall under the category of
confidential employees. . . .

xxx xxx xxx.

We thus hold that public respondent acted with grave abuse of discretion in not
excluding the four foremen and legal secretary from the bargaining unit composed of
rank-and-file employees.

xxx xxx xxx.

In the case at bench, the Union does not disagree with petitioner that the executive
secretaries are confidential employees. It however, makes the following contentions:

xxx xxx xxx.

There would be no danger of company domination of the Union since the confidential
employees would not be members of and would not participate in the decision making
processes of the Union.

Neither would there be a danger of espionage since the confidential employees would
not have any conflict of interest, not being members of the Union. In any case, there is
always the danger that any employee would leak management secrets to the Union out

Page | 66
of sympathy for his fellow rank and filer even if he were not a member of the union
nor the bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank
and file employees, should be granted the benefits of the Collective Bargaining
Agreement. There is no valid basis for discriminating against them. The mandate of
the Constitution and the Labor Code, primarily of protection to Labor, compels such
conclusion. [24]

xxx xxx xxx.

The Unions assurances fail to convince. The dangers sought to be prevented,
particularly the threat of conflict of interest and espionage, are not eliminated by non-
membership of Metrolabs executive secretaries or confidential employees in the
Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from
any agreement executed between the Union and Metrolab. Such a scenario, thus, gives
rise to a potential conflict between personal interests and their duty as confidential
employees to act for and in behalf of Metrolab. They do not have to be union members to
affect or influence either side.
Finally, confidential employees cannot be classified as rank and file. As previously
discussed, the nature of employment of confidential employees is quite distinct from the
rank and file, thus, warranting a separate category. Excluding confidential employees
from the rank and file bargaining unit, therefore, is not tantamount to discrimination.
WHEREFORE, premises considered, the petition is partially GRANTED. The
resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25 January
1993 are hereby MODIFIED to the extent that executive secretaries of petitioner
Metrolabs General Manager and the executive secretaries of the members of its
Management Committee are excluded from the bargaining unit of petitioners rank and file
employees.
SO ORDERED.
Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.

[1]
Rollo, p.74.
[2]
Id., at 202-204.
[3]
Id., at 8-9.
[4]

[5]
Id., at 303.
[6]
Id., at 236-241.
[7]
Id., at 70-71.
*
Metrolab submits that the issue in the instant petition for certiorari is limited to the determination of whether
or not the Secretary of Labor gravely abused her discretion in ruling that the layoff of its 94 workers
exacerbated their labor dispute with the Union. Metrolab underscores that the basis for the said
layoff has never been placed in issue. (Rollo, pp. 327- 328.)
In the same manner, Metrolab prefatorily declared that it does not dispute the Secretary of Labors
certification to the NLRC of the legality (or illegality) of the second layoff of Metrolabs 73 rank and
file workers on grounds of redundancy (Rollo, pp. 11-12). In its Consolidated Reply, Metrolab
states, thus:
5.0. Moreover, the redundancy program of October 1992 is not an issue in the present petition. The assailed
Omnibus Order, in no uncertain terms, ordered that this matter be brought before the National
Labor Relations Commission (NLRC) for adjudication (Please see Annex A-i of the Petition).
Petitioner herein does not question the said part of the Omnibus Resolution in the present petition.

Page | 67
 The time for the same is not yet ripe, as the NLRC still has to pass judgment upon the facts
surrounding the redundancy program. As of this writing, the said redundancy program is presently
being litigated before the Arbitration Branch of the NLRC in NLRC-NCR Case No. 00-05-03325-93
entitled Metro Drug Corporation Employees Association - FFW v. Metrolab Industries, Inc., et al.
before Labor Arbiter Cornelio Linsangan. (Rollo, p. 330.)
[8]
Id., at 13.
[9]
Radio Communications of the Philippines, Inc. v. NLRC, 221 SCRA 782 (1993); Corral v. NLRC, 221
SCRA 693(1993); Rubberworld (Phils.), Inc. v. NLRC, 175 SCRA 450 (1989).
[10]
225 SCRA 301 (1993).
[11]
Rollo, p. 46.
[12]
Id., at 335.
[13]
Association of Marine Officers & Seamen of Reyes & Lim Co. v. Laguesma, 239 SCRA 460 (1994); Maya
Farms Employees Organization v. NLRC, 239 SCRA 508 (1994); Rabago v. NLRC, 200 SCRA 158
(1991); Pan Pacific Industrial Sales, Co., Inc. v. NLRC, 194 SCRA 633 (1991).
[14]
Rollo, p. 57.
[15]
Id., at 202-204; 228-234; Urgent Motion to Resolve Unions Motion dated 27 January 1992, Folder 4,
Original Record.
[16]
Rollo, p. 198.
[17]
Id., at 58-59.
[18]
Rollo, pp. 59-63.
[19]
Id., at 31-32.
[20]
Art. 245. Labor Code. 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.
[21]
210 SCRA 339(1992).
[22]
239 SCRA 546(1994).
[23]
241 SCRA 294(1995).
[24]
Rollo, pp. 192-193.

LABOR CASE 10
SECOND DIVISION

[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION

AND ERNESTO L. PONCE, President, petitioners,
vs. HONARABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY
AS UNDERSECRETARY OF LABOR AND EMPLOYMENT,
HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-
ARBITER AND SAN MIGUEL CORPORATION, respondents.

DECISION
ROMERO, J.:

Page | 68
 This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction
seeking to reverse and set aside the Order of public respondent, Undersecretary of the
Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993,
in Case No. OS MA A-2-70-91[1] entitled In Re: Petition for Certification Election Among
the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry
Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and
Exempt Union, Petitioner. The Order excluded the employees under supervisory levels 3
and 4 and the so-called exempt employees from the proposed bargaining unit and ruled
out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and
Employment (DOLE) a Petition for District Certification or Certification Election among the
supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of
Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering
the conduct of certification among the supervisors and exempt employees of the SMC
Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining
unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal
with Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in
grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into
one bargaining unit, and in including supervisory levels 3 and above whose positions are
confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted
respondent companys Appeal and ordered the remand of the case to the Med-Arbiter of
origin for determination of the true classification of each of the employees sought to be
included in the appropriate bargaining unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary Laguesma
granted the reconsideration prayed for on September 3, 1991 and directed the conduct
of separate certification elections among the supervisors ranked as supervisory levels 1
to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San
Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a Motion
for Reconsideration with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the
Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v.
NLRC[2] case. Said Order reads in part:

x x x Confidential employees, like managerial employees, are not allowed to form,

join or assist a labor union for purposes of collective bargaining.

In this case, S3 and S4 and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or assist a
labor union for purposes of collective bargaining following the above courts
ruling. Consequently, they are not allowed to participate in the certification election.

WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03
September 1991 is hereby modified to the extent that employees under supervisory
levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join
the proposed bargaining unit and are therefore excluded from those who could
participate in the certification election.
[3]

Page | 69
Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the company
are considered confidential employees, hence ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three plants constitute
an appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the term
confidential employees who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt
employees, are not vested with the powers and prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss
employees. They are, therefore, not qualified to be classified as managerial employees
who, under Article 245[4] of the Labor Code, are not eligible to join, assist or form any labor
organization. In the very same provision, they are not allowed membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own. The only question that need be addressed is whether these
employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2)
to persons who formulate, determine, and effectuate management policies in the field of
labor relations.[5] 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 employees and his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations.[6]
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. The broad
rationale behind this rule is that employees should not be placed in a position involving a
potential conflict of interests.[7] Management should not be required to handle labor
relations matters through employees who are represented by the union with the company
is required to deal and who in the normal performance of their duties may obtain advance
information of the companys position with regard to contract negotiations, the disposition
of grievances, or other labor relations matters.[8]
There have been ample precedents in this regard, thus in Bulletin Publishing
Company v. Hon. Augusto Sanchez,[9] the Court held that if these managerial employees
would belong to or be affiliated with a Union, the latter might not be assured of their loyalty
to the Union in view of evident conflict of interest. The Union can also become company-
dominated with the presence of managerial employees in Union membership. The same
rationale was applied to confidential employees in Golden Farms, Inc. v. Ferrer-
Calleja[10] and in the more recent case of Philips Industrial Development, Inc. v.
NLRC[11] which held that confidential employees, by the very nature of their functions,
assist and act in a confidential capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of labor relations. Therefore, the
rationale behind the ineligibility of managerial employees to form, assist or join a labor
union was held equally applicable to them.[12]
An important element of the confidential employee rule is the employees need to use
labor relations information. Thus, in determining the confidentiality of certain employees,
a key questions frequently considered is the employees necessary access to confidential
labor relations information.[13]
It is the contention of respondent corporation that Supervisory employees 3 and 4
and the exempt employees come within the meaning of the term confidential employees
primarily because they answered in the affirmative when asked Do you handle
confidential data or documents? in the Position Questionnaires submitted by the
Union.[14] In the same questionnaire, however, it was also stated that the confidential

Page | 70
information handled by questioned employees relate to product formulation, product
standards and product specification which by no means relate to labor relations. [15]
Granting arguendo that an employee has access to confidential labor relations
information but such is merely incidental to his duties and knowledge thereof is not
necessary in the performance of such duties, said access does not render the employee
a confidential employee.[16] If access to confidential labor relations information is to be a
factor in the determination of an employees confidential status, such information must
relate to the employers labor relations policies. Thus, an employee of a labor union, or of
a management association, must have access to confidential labor information with
respect to his employer, the union, or the association, to be regarded a confidential
employee, and knowledge of labor relations information pertaining to the companies with
which the union deals, or which the association represents, will not clause an employee
to be excluded from the bargaining unit representing employees of the union or
association.[17] Access to information which is regarded by the employer to be confidential
from the business standpoint, such as financial information[18] or technical trade secrets,
will not render an employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift operations when
situations require.
2. To effectively oversee the quality control function at the processing lines in the storage
of chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct manufacturing
materials.
5. To recommend and initiate actions in the maintenance of sanitation and hygiene
throughout the plant.[20]
It is evident that whatever confidential data the questioned employees may handle
will have to relate to their functions. From the foregoing functions, it can be gleaned that
the confidential information said employees have access to concern the employers
internal business operations. As held in Westinghouse Electric Corporation v. National
Labor Relations Board,[21] an employee may not be excluded from appropriate bargaining
unit merely because he has access to confidential information concerning employers
internal business operations and which is not related to the field of labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution
mandates the State to guarantee to all workers the right to self-organization. Hence,
confidential employees who may be excluded from bargaining unit must be strictly defined
so as not to needlessly deprive many employees of their right bargain collectively through
representatives of their choosing.[22]
In the case at bar, supervisors 3 and above may not be considered confidential
employees merely because they handle confidential data as such must first be strictly
classified as pertaining to labor relations for them to fall under said restrictions. The
information they handle are properly classifiable as technical and internal business
operations data which, to our mind, has no relevance to negotiations and settlement of
grievances wherein the interests of a union and the management are invariably
adversarial. Since the employees are not classifiable under the confidential type, this
Court rules that they may appropriately form a bargaining unit for purposes of collective
bargaining. Furthermore, even assuming that they are confidential employees,
jurisprudence has established that there is no legal prohibition against confidential
employees who are not performing managerial functions to form and join a union. [23]
In this connection, the issue of whether the employees of San Miguel Corporation
Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit needs to be threshed out.

Page | 71
 It is the contention of the petitioner union that the creation of three (3) separate
bargaining units, one each for Cabuyao Otis and San Fernando as ruled by the
respondent Undersecretary, is contrary to the one-company, one-union policy. It adds
that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity
or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be 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.[24]
A unit to be appropriate must effect a grouping of employees who have substantial,
mutual interests in wages, hours, working conditions and other subjects of collective
bargaining.[25]
It is readily seen that the employees in the instant case have community or mutuality
of interest, which is the standard in determining the proper constituency of a collective
bargaining unit.[26] It is undisputed that they all belong to the Magnolia Poultry Division of
San Miguel Corporation. This means that, although they belong to three different plants,
they perform work of the same nature, receive the same wages and compensation, and
most importantly, share a common stake in concerted activities.
In light of these considerations, the Solicitor General has opined that separate
bargaining units in the three different plants of the division will fragmentize the employees
of the said division, thus greatly diminishing their bargaining leverage. Any concerted
activity held against the private respondent for a labor grievance in one bargaining unit
will, in all probability, not create much impact on the operations of the private
respondent. The two other plants still in operation can well step up their production and
make up for the slack caused by the bargaining unit engaged in the concerted
activity. This situation will clearly frustrate the provisions of the Labor Code and the
Mandate of the Constitution.[27]
The fact that the three plants are located in three different places, namely, in
Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is
immaterial.Geographical location can be completely disregarded if the communal or
mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-
Ferrer where all non-academic rank and file employees of the University of the Philippines
inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and the Visayas were
allowed to participate in a certification election. We rule that the distance among the three
plants is not productive of insurmountable difficulties in the administration of union
affairs. Neither are there regional differences that are likely to impede the operations of a
single bargaining representative.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the
Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a
certification election among the supervisors (level 1 to 4) and exempt employees of the
San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando,
and Otis as one bargaining unit is ordered conducted.
SO ORDERED.
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

[1]
(NCR OD M 90-10-01).
[2]
210 SCRA 339 (1992)
[3]
Rollo, pp. 45-46.

Page | 72
[4]
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 organization of their own.
[5]
Westinghouse Electric Corp. v. NLRB (CA6) 398 F2d 669 (1968); Ladish Co., 178 NLRB 90, 1969.
[6]
B.F. Goodrich Co. 115 NLRB 722 (1956).
[7]
Westinghouse Electric Corporation v. NLRB, supra; citing Retail Clerks International Assn. v. NLRB., 125
Us App D.C. 63, 366 F2d 642, 645 n. 7 (1966)
[8]
In the Matter of The Hoover Company and United Electrical, Radio and Machine workers of America 55
NLRB 1321 (1941); Philippine Phosphate Fertilizer Corporation v. Hon. Ruben Torres, et al. 231
SCRA 335 (1994); National Association of trade Unions, etc. v. Hon R. Torres, et al., 239 SCRA
546 (1994).
[9]
144 SCRA 682 (1986).
[10]
175 SCRA 471 (1989).
[11]
Supra.
[12]
Philips Industrial Development Inc. v. NLRC, supra.
[13]
NLRB v. Swift and Co. (CA1) 292 F2d 561; citing Pullman Standard Div., Pullman Inc., 214 NLRB 762,
1974-1975; Kieckhefer Container Co., 118 NLRB 950, 1957-1958.
[14]
Rollo, p.86.
[15]
Rollo, p.131.
[16]
Chrysler Corp. 173 NLRB 1046 (1968); Standard Oil Co., 127 NLRB 656 (1960).
[17]
Pacific Maritime Assn. 185 NLRB 780 (1970); Air Line Pilots Asso., 97 NLRB 929 (1951).
[18]
Westinghouse Electric Corp. v. NLRB, supra, citing NLRB v. Armour and Co. (CA10) 154 F2d 570, 169
ALR 421, cert den 329 US 732, 91 L Ed 633, 67 S Ct 92; NLRB v. Poutrymens Service Corp. (CA3)
138 F2d 204; Pacific Far East Line Inc., 174 NLRB 1168 (1969), Dun and Bradstreet, Inc., 194
NLRB 9 (1972); Fairfax Family Fund Inc., 195 NLRB 306 (1972).
[19]
Lykiens Hosiery Mills, Inc. 82 NLRB 981 (1948); Janowski 83 NLRB 273 (1948).
[20]
Rollo, p. 157.
[21]
Supra.
[22]
Ford Motor Co., 66 NLRB 1317, 1322 (1946); B. F. Goodrich Co., supra; Vulcanized Rubber and Plastics
Co., Inc., 129 NLRB 1256 (1961).
[23]
National Association of Trade Unions v. Hon. Ruben Torres, et al., supra.
[24]
University of the Philippines v. Calleja-Ferrer, 211 SCRA 464 (1992); citing Rothenberg on Labor
Relations, p. 482.
[25]
Democratic Labor Association v. Cebu Stevedoring Co., Inc., et al., G.R. No. L-10321, February 28,
1958; citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162.
[26]
Supra; National Association of Free Trade Unions v. Mainit Lumber Development Company Workers
Union-United Lumber and General Workers of the Philippines, 192 SCRA 598 (1990); Philippine
Land-Air-Sea Labor Union v. Court of Industrial Relations, 110 Phil. 176.
[27]
Rollo, pp. 136-137.

LABOR CASE 11
FIRST DIVISION

G.R. No. 121084 February 19, 1997

TOYOTA MOTOR PHILIPPINES CORPORATION , petitioner,

vs.

Page | 73
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF
LABOR AND EMPLOYMENT, respondents.

KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a
petition for certification election with the Department of Labor, National Capital Region, for all rank-
and-file employees of the Toyota Motor Corporation. 1

In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the issuance
of an Order directing the holding of a certification election on two grounds: first, that the respondent
union, being "in the process of registration" had no legal personality to file the same as it was not a
legitimate labor organization as of the date of the filing of the petition; and second, that the union was
composed of both rank-and-file and supervisory employees in violation of law.2 Attached to the position
paper was a list of union members and their respective job classifications, indicating that many of the
signatories to the petition for certification election occupied supervisory positions and were not in fact
rank-and-file employees.3

The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for
lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor organization's
membership was composed of supervisory and rank-and-file employees in violation of Article 245 of
the Labor Code,4 and that at the time of the filing of its petition, respondent union had not even acquired
legal personality yet.5

On appeal, the Office of the Secretary of Labor, in a Resolution6 dated November 9, 1993 signed by
Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993, and
directed the holding of a certification election among the regular rank.-and-file employees of Toyota
Motor Corporation. In setting aside the questioned Order, the Office of the Secretary contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was

already a legitimate labor organization at the time of the filing of the petition on 26
November 1992. Records show that on 24 November 1992 or two (2) days before the
filing of the said petition, it was issued a certificate of registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed
the petition for certification election based on the ground that the proposed bargaining
unit is a mixture of supervisory and rank-and-file employees, hence, violative of Article
245 of the Labor Code as amended.

A perusal of the petition and the other documents submitted by petitioner-appellant will
readily show that what the former really seeks to represent are the regular rank-and-
file employees in the company numbering about 1,800 more or less, a unit which is
obviously appropriate for bargaining purposes. This being the case, the mere
allegation of respondent-appellee that there are about 42 supervisoy employees in the
proposed bargaining unit should have not caused the dismissal of the instant petition.
Said issue could very well be taken cared of during the pre-election conference where
inclusion/exclusion proceedings will be conducted to determine the list of eligible
voters.7

Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for
Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of
petition for certification election, respondent TMPCLU had not yet acquired the status of a legitimate
labor organization as required by the Labor Code, and that the proposed bargaining unit was
inappropriate.

Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside its
earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised by
petitioner both on appeal and in its motion for reconsideration were factual issues requiring further
hearing and production of evidence. 8 The Order stated

We carefully re-examined the records vis-a-vis the arguments raised by the movant,
and we note that movant correctly pointed out that petitioner submitted a copy of its
certificate of registration for the first time on appeal and that in its petition, petitioner

Page | 74
 alleges that it is an independent organization which is in the process of registration."
Movant strongly argues that the foregoing only confirms what it has been pointing out
all along, that at the time the petition was filed petitioner is (sic) not yet the holder of a
registration certificate; that what was actually issued on 24 November 1992 or two (2)
days before the filing of the petition was an official receipt of payment for the application
fee; and, that the date appearing in the Registration certificate which is November 24,
1992 is not the date when petitioner was actually registered, but the date when the
registration certificate was prepared by the processor. Movant also ratiocinates that if
indeed petitioner has been in possession of the registration certificate at the time this
petition was filed on November 26, 1992, it would have attached the same to the
petition.

The foregoing issues are factual ones, the resolution of which is crucial to the petition.
For if indeed it is true that at the time of filing of the petition, the said registration
certificate has not been approved yet, then, petitioner lacks the legal personality to file
the petition and the dismissal order is proper. Sadly, we can not resolve the said
questions by merely perusing the records. Further hearing and introduction of evidence
are required. Thus, there is a need to remand the case to the Med-Arbiter solely for
the purpose.

WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside.
Let the case be remanded to the Med-Arbiter for the purpose aforestated.

SO ORDERED.9

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on
September 28, 1994, stating the following: 10

[T]he controvertible fact is that petitioner could not have been issued its Certificate of
Registration on November 24, 1992 when it applied for registration only on November
23, 1992 as shown by the official receipt of payment of filing fee. As Enrique Nalus,
Chief LEG, this office, would attest in his letter dated September 8, 1994 addressed to
Mr. Porfirio T. Reyes, Industrial Relations Officer of respondent company, in response
to a query posed by the latter, "It is unlikely that an application for registration is
approved on the date that it is filed or the day thereafter as the processing course has
to pass thought routing, screening, and assignment, evaluation, review and initialing,
and approval/disapproval procedure, among others, so that a 30-day period is
provided for under the Labor Code for this purpose, let alone opposition thereto by
interested parties which must be also given due course.

Another evidence which petitioner presented. . . is the "Union Registration 1992

Logbook of IRD". . . and the entry date November 25, 1992 as allegedly the date of
the release of the registration certificate. . . On the other hand, respondent company
presented . . . a certified true copy of an entry on page 265 of the Union Registration
Logbook showing the pertinent facts about petitioner but which do not show the
petitioner's registration was issued on or before November 26, 1992. 11

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that
respondent TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its)
petition." 12

On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a
certification election among the regular rank-and-file employees of the Toyota Motor Philippines
Corporation. 13 Petitioner's motion for reconsideration was denied by public respondent in his Order
dated July 14, 1995.14

Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where
petitioner contends that "the Secretary of Labor and Employment committed grave abuse of discretion
amounting to lack or excess of jurisdiction in reversing, contrary to law and facts the findings of the
Med-Arbiters to the effect that: 1) the inclusion of the prohibited mix of rank-and file and supervisory
employees in the roster of members and officers of the union cannot be cured by a simple inclusion-
exclusion proceeding; and that 2) the respondent union had no legal standing at the time of the filing
of its petition for certification election. 15

We grant the petition.

Page | 75
The purpose of every certification election is to determine the exclusive representative of employees
in an appropriate bargaining unit for the purpose of collective bargaining. A certification election for
the collective bargaining process is one of the fairest and most effective ways of determining which
labor organization can truly represent the working force. 16 In determining the labor organization which
represents the interests of the workforce, those interests must be, as far as reasonably possible,
homogeneous, so as to genuinely reach the concerns of the individual members of a labor
organization.

According to Rothenberg, 17 an appropriate bargaining unit is a group of employees of a given

employer, composed of all or less than 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 law. In Belyca Corporation
v. Ferrer Calleja, 18 we defined the bargaining unit as "the legal collectivity for collective bargaining
purposes whose members have substantially mutual bargaining interests in terms and conditions of
employment as will assure to all employees their collective bargaining rights." This in mind, the Labor
Code has made it a clear statutory policy to prevent supervisory employees from joining labor
organizations consisting of rank-and-file employees as the concerns which involve members of either
group are normally disparate and contradictory. Article 245 provides:

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.

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 rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor organization, including the right to
file a petition for certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor organization is challenged on
the basis of Article 245 of the Labor Code.

It is the petitioner's contention that forty-two (42) of the respondent union's members, including three
of its officers, occupy supervisory positions 19 In its position paper dated February 22, 1993, petitioner
identified fourteen (14) union members occupying the position of Junior Group Chief 11 20 and twenty-
seven (27) members in level five positions. Their respective job-descriptions are quoted below:

LEVEL 4 (JUNIOR GROUP CHIEF II) — He is responsible for all operators and
assigned stations, prepares production reports related to daily production output. He
oversees smooth flow of production, quality of production, availability of manpower,
parts and equipments. He also coordinates with other sections in the Production
Department.

LEVEL 5 — He is responsible for overseeing initial production of new models, prepares

and monitors construction schedules for new models, identifies manpower
requirements for production, facilities and equipment, and lay-out processes. He also
oversees other sections in the production process (e.g. assembly, welding, painting)."
(Annex "V" of Respondent TMP's Position Paper; which is the Job Description for an
Engineer holding Level 5 position in the Production Engineering Section of the
Production Planning and Control Department).

While there may be a genuine divergence of opinion as to whether or not union members occupying
Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the Labor Code's
definition of the term that those occupying Level 5 positions are unquestionably supervisory
employees. Supervisory employees, as defined above, are those who, in the interest of the employer,
effectively recommend managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but require the use of independent judgment. 21Under the job description for level five
employees, such personnel — all engineers — having a number of personnel under them, not only
oversee production of new models but also determine manpower requirements, thereby influencing
important hiring decisions at the highest levels. This determination is neither routine nor clerical but
involves the independent assessment of factors affecting production, which in turn affect decisions to
hire or transfer workers. The use of independent judgment in making the decision to hire, fire or transfer
in the identification of manpower requirements would be greatly impaired if the employee's loyalties

Page | 76
are torn between the interests of the union and the interests of management. A supervisory employee
occupying a level five position would therefore find it difficult to objectively identify the exact manpower
requirements dictated by production demands.

This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees
on one hand, and supervisory employees on the other, seeks to avoid. The rationale behind the Code's
exclusion of supervisors from unions of rank-and-file employees is that such employees, while in the
performance of supervisory functions, become the alter ego of management in the making and the
implementing of key decisions at the sub-managerial level. Certainly, it would be difficult to find unity
or mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory
employees. And this is so because the fundamental test of a bargaining unit's acceptability is whether
or not such a unit will best advance to all employees within the unit the proper exercise of their
collective bargaining rights. 22 The Code itself has recognized this, in preventing supervisory
employees from joining unions of rank-and-file employees.

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.

The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to
whether or not respondent union was in possession of the status of a legitimate labor organization at
the time of filing, when, as petitioner vigorously claims, the former was still at the stage of processing
of its application for recognition as a legitimate labor organization. The union's composition being in
violation of the Labor Code's Prohibition of unions composed of supervisory and rank-and-file
employees, it could not possess the requisite personality to file for recognition as a legitimate labor
organization. In any case, the factual issue, albeit ignored by the public respondent's assailed
Resolution, was adequately threshed out in the Med-Arbiter's September 28, 1994 Order

The holding of a certification election is based on clear statutory policy which cannot be
circumvented. 23 Its rules, strictly construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development Corporation v. Secretary, Department
of Labor and Employment, 24 the Court's conclusion should not be interpreted as impairing any union's
right to be certified as the employees' bargaining agent in the petitioner's establishment. Workers of
an appropriate bargaining unit must be allowed to freely express their choice in an election where
everything is open to sound judgment and the possibility for fraud and misrepresentation is absent. 25

WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order
dated July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated
September 28, 1994 of the Med-Arbiter is REINSTATED.

SO ORDERED.

Padilla, Belosillo, Vitug and Hermosisima, Jr., JJ., concur.

Footnotes

1 Annex"A," Rollo p. 42.

2 Annex "D," Id., at 72.

3 Rollo, pp. 90-96.

4 Id., at 110.

5 Id., at 109.

6 Annex "I," Id., at 137-142.

7 Rollo, pp. 141-142.

8 Id, at p. 192.

9 Id., at 192-193.

Page | 77
 10 Id., at 231-236.

11 Id., at 233-23

12 Id., at 236.

13 Id., at 307-312.

14 Id., at 338-340.

15 Id., at 15-16.

16 PAFLU v. BLR, 69 SCRA 132 (1976).

17 ROTHENBERG, LABOR RELATIONS, cite in C.A. AZUCENA, II THE LABOR

CODE (1993).

18 168 SCRA 184 (1988).

19 Rollo, p. 69.

20 Id., at 71.

21 Labor Code, art. 212 (m).

22 Philippine Land Air Sea Labor Union v. Court of Industrial Relations, et al., 110 Phil.
176 (1960).

23 Progressive Development Corporation v. Secretary, Department of Labor and

Employment, 205 SCRA 802 (1992).

24 205 SCRA 802, 815 (1992).

25 Id.

LABOR CASE 12
SECOND DIVISION

[G.R. No. 125195. July 17, 1997]

SAMAHAN NG MGA MANGGAGAWA SA BANDOLINO-LMLC

(represented by Lauro de Leon, President) and ROMEO REYES,
LAURO DE LEON, JAIME SIBUG, ROLANDO RAMOS, FREDDIE
ACAMPADO, REYNALDO DE LA PAZ, ELIAS CABRIA, JOHNNY
FLORENCIO, EMELITA BATOON, CORAZON REYES, DANIEL
MARISCOTES, REGOLITO BANAGA, JOSELITO TAPAR, JOSE
TUGAY, MARCIAL B. FRANCO, SALVADOR LLABRES, LIGAYA
FRANCO, AUREA B. BONON, ADORACION C. BROZO, CAMILA
TUGA, ROMULO G. ALMONITE, JACINTO RODRIGUEZ, JR.,
ROSALINDA FLORENCIO, and EMMA BROZO, petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION, BANDOLINO

Page | 78
 SHOE CORPORATION and/or GERMAN ALCANTARA, AIDA
ALCANTARA, and MIMI ALCANTARA, respondents.

DECISION
MENDOZA, J.:

This is a petition for certiorari to set aside the decision of the National Labor Relations
Commission (NLRC), dated May 31, 1995, which reversed the decision of the labor
arbiter, dated July 22, 1992, finding petitioners to have been illegally dismissed and
consequently ordering their reinstatement and the payment to them of their monetary
claims.
The facts are as follows:
Petitioners are former employees of private respondent Bandolino Shoe Corporation
and members of petitioner union, Samahan ng Manggagawa sa Bandolino-LMLC. Private
respondents German Alcantara, Aida Alcantara, and Mimi Alcantara are the owners and
officers of Bandolino Shoe Corporation.
On June 4, 1990, petitioners Marcial Franco, Johnny Florencio, and Romeo Reyes
were directed to take a two-week leave because of a strike at the Shoemart, Bandolinos
biggest customer. Apparently, the strike adversely affected private respondents
business. Petitioners were told by management that, should the circumstances improve,
they would be recalled to work after two weeks.
Later that day, petitioner Marcial Franco and his wife were called to the personnel
managers office and told that Ligaya Franco had been dismissed. Marcial Franco pleaded
with German Alcantara not to terminate his wife from employment, but his entreaties were
rejected, allegedly because of his refusal to divulge the names of the organizers and
members of the petitioner union. Three other relatives, namely Emma Brozo, Adoracion
Brozo, and Aurea Bonon, were subsequently dismissed.
On June 9, 1990, the other petitioners were likewise informed by the personnel
manager of the termination of their employment and asked to turn in their identification
cards.
The petitioners tried to return to work after two weeks on June 11, 1990, but they
were refused entry into the company premises. Subsequent efforts to return to work were
likewise thwarted. The management refused to allow them to return to work allegedly to
prevent any untoward incident between the petitioner union and the Bandolino Shoes
Independent Labor Union.
On June 11, 1990, petitioners filed a notice of strike. A conciliation conference was
held but it was unsuccessful. Although petitioners did not strike, they staged a picket for
one hour each on two successive Saturdays to protest their dismissal.
On August 22, 1990, they filed a complaint for illegal dismissal, unfair labor practice,
underpayment, overtime pay, and holiday pay. At the initial conference, the labor arbiter
issued a return to work order to the private respondents based on the private respondents
claim that they had not dismissed petitioners. But petitioners were not allowed to work by
private respondents. The labor arbiters efforts to get the parties to settle their dispute
amicably proved unavailing, as the private respondents imposed conditions unacceptable
to petitioners. As private respondents themselves stated in their position paper dated
November 27, 1990, management was willing to allow complainants to report for work
immediately . . . if complainants were willing to forego their strike and Petition for
Certification and to recognize the majority representation status of the existing Union
(then uncertified), but they were not.
On July 22, 1992, the Labor Arbiter, Potenciao S. Caizares, Jr., decided the case in
favor of petitioners. He found that petitioners had been illegally dismissed because of
their union activities and that private respondents had committed unfair labor

Page | 79
practice. Although private respondents claimed to have merely placed petitioners on
rotation because of the Shoemart strike, the labor arbiter found that even after the end of
the strike, petitioners were still not allowed to return to work. Referring to private
respondents position paper, the labor arbiter found that private respondents had imposed
illegal conditions on petitioners reinstatement by requiring them to forego their intended
strike, withdraw their petition for certification election, and instead recognize the existing
union. On this basis and noting that during the hearings private respondents counsel
subjected the petitioners to a barrage of questioning regarding their union activities, the
labor arbiter concluded that private respondents were guilty of unfair labor practice for
having restrained the petitioners exercise of the right to self-organization.Accordingly, the
labor arbiter ordered:

WHEREFORE, judgment is hereby rendered:

1. Declaring the respondents guilty of unfair labor practice and ordering the
respondents to cease and desist from further committing the ULP acts as charged;

2. Ordering the respondents to reinstate the complainants in their previous jobs and to
pay them backwages for one (1) year without qualifications or deductions for earning
elsewhere during their illegal dismissal.

The aspect of reinstatement, either in the job or payroll at the option of the
respondents, pursuant to Article 223 of the Labor Code, being immediately executory,
the respondents are hereby directed to reinstate the complainants either way upon their
presentation of themselves for work.

3. Ordering the respondents to pay the complainants salary differential and legal
holiday pay.

The following are the monetary awards as computed by Ma. Cristina T. Paraoan of the
Commissions Research and Information Unit:

1. ROMULO ALMONTE P43,087.76

2. REGOLITO BAAGA 53,953.93

3. EMELITA BATOON 43,533.46

4. ELIAS ECABRIA 42,229.72

5. LAURO DE LEON 45,499.32

6. NILDA DELGADO 32,625.72

7. JOHNNY FLORENCIO 45,499.72

8. MARCIAL FRANCO 43,147.72

9. SALVADOR LLABRES 44,915.32

10.ROSALINA FLORENCIO 37,564.85

11.DANIEL MARISCOTES 44,639.72

12.ROLANDO MATRE 44,713.52

Page | 80
13.VIRGINIA PEDRACIO 54,498.96

14.ROLANDO RAMOS 44,772.60

15.CORAZON REYES 58,868.46

16.ROMEO REYES 56,779.27

17.JACINTO RODRIGUEZ, JR. 37,674.12

18.CAROLINA SANTIAGO 35,257.14

19.JAIME SIBUG 32,453.72

20.MARITA SORIANO 37,900.72

21.CAMILA TUGAY 39,046.68

The claim for overtime pay is hereby dismissed for lack of sufficient evidence.

Pursuant to the decision of the labor arbiter, private respondents sent telegrams,
dated August 29, 1992, to the petitioners ordering them to -

REPORT TO WORK IMMEDIATELY AT 131 LOPEZ JAENA ST. JESUS DELA

PEA, MARIKINA. FAILURE TO DO SO WITHIN TEN (10) DAYS SHALL BE
INTERPRETED THAT YOU ARE NO LONGER INTERESTED TO WORK
HERE. [1]

In a letter dated September 3, 1992, petitioners responded, thus:

While all the complainants are ready and willing to return to work at the soonest time
possible and while we do not in any way reject the scheduled reinstatement, it may not
be possible within the time frame stated by you in the telegram.

Inasmuch as there are more than four members of the union, in fact more than twenty
(20), who are entitled to reinstatement; and inasmuch as there are other aspects of the
decision of the labor arbiter covering the above-stated case which have to be
discussed, we hereby propose that a conference be held between the arbiter, the union
leaders and managements representatives in order that all concerned will be able to
thresh out these matters and prepare for a smooth and amicable implementation of the
decision in the above-mentioned case.

In this connection, a motion for immediate execution of the decision of the arbiter has
been filed in behalf of the complainant and a conference on the basis of this motion
will be set by Arbiter Caizares to be held before him at the NLRC. A copy of the
motion has been sent you and your office will be notified of the date of the
conference. [2]

In response, private respondents wrote:

We are of the considered opinion that, since you have already admitted in behalf of
the complainants that they are ready and willing to report for work and do not reject
the scheduled reinstatement, there is no justifiable reason why they should not
immediately return to work and cause unnecessary delay.

Page | 81
....

Considering that both parties have already appealed the decision and that respondent
has already posted a surety bond, nothing is left then to be done but to follow the
legitimate order of Bandolinos management for the return of the complainants. The
request for a conference, to be mediated by the Honorable Arbiter Caizares is not
necessary since once an order has been appealed, the Honorable Arbiter loses his
jurisdiction.

And, considering further, that two (2) months have already lapsed from the time the
decision was promulgated and more than a month from the time the telegram was sent
individually, the interest and desire to return to work by your clients is surely doubtful
and highly questionable. [3]

Private respondents appealed to the NLRC, contending that the rotation of petitioners
was not a termination of employment; that petitioners did not report for work although they
had been reinstated; and that the labor arbiters finding that the company imposed illegal
conditions was based upon an off the record offer which was privileged in nature and
therefore could not be used in evidence against private respondents. According to private
respondents, petitioners lay off because of the rotation scheme could not be considered
union busting because it was adopted in 1989, before the registration of petitioner union
as an affiliate of Lakas ng Manggagawa Labor Center (LMLC) on November 7,
1990. They contended that the monetary awards had no basis.
In its decision dated May 31, 1995, the NLRC reversed the labor arbiter. It ruled that
except for Jaime Sibug, petitioners were all piece-rate workers entitled only to 13th month
pay for three years. It held further that there was no evidence showing specific instances
of coercion or restraint committed by the private respondents to justify a finding of
ULP. The NLRC gave credence instead to private respondents claim that, at the time the
rotation scheme was implemented, they did not know that petitioner union was registered
or that the petitioners were the organizers; and that petitioners misrepresented that their
union was a member of the LMLC, when in fact it was only on November 7, 1990 that
they affiliated with the LMLC. The NLRC found that petitioners organized a union only
after the implementation of the 1990 rotation scheme. The NLRC agreed with the private
respondents claim that the off the record offer made by them constitutes privileged
communication and that under Art. 233 of the Labor Code it cannot be taken in evidence
against them. The NLRC therefore ruled that There being no other evidence to support
the claim of ULP, such finding must be overturned. Hence, this petition.
Petitioners contend that the NLRC acted with grave abuse of discretion in reversing
the labor arbiters findings. They contend that the labor arbiters decision finding that they
had been illegally dismissed is supported by other evidence and not only the conditions
attached to the offer, namely (1) that petitioners non-reinstatement even after the end of
the Shoemart strike contradicts the claim of private respondents that petitioners were
merely put on rotation because business was poor on account of the Shoemart strike and
(2) that the order to petitioners to turn in their ID cards implied termination of their
employment. Petitioners also maintain that the offer of reinstatement made by private
respondents at the hearing was properly used as evidence of ULP because private
respondents themselves adverted to the offer in their position paper and therefore took
the conditions attached to their offer out of the ambit of privileged communication. They
contend finally that it was error for the NLRC to rule that private respondents did not
commit unfair labor practice because, at that time, there was yet no union of
petitioners. Petitioners contend that under the ruling in Judric Canning Corp. v.
Inciong,[4] restraint or coercion may be employed even prior to the registration of a union.
While generally speaking factual findings of administrative agencies are not subject
to review by this Court, it is equally established that the Court will not uphold erroneous
conclusions which are contrary to the evidence because then the agency would be guilty

Page | 82
of a grave abuse of discretion. Nor is this Court bound by conclusions which are not
supported by substantial evidence.[5]
The substantial evidence rule does not authorize any finding to be made just as long
as there is any evidence to support it. It does not excuse administrative agencies from
considering contrary evidence which fairly detracts from the evidence supporting a
finding. In this case, the labor arbiters finding of illegal dismissal was based not only upon
the private respondents off the record offer containing illegal conditions but also on facts
of record found by the arbiter which the NLRC disregarded. These are: (1) that following
the order for rotation, some of the petitioners were made to surrender their IDs and (2)
that although the rotation scheme was ostensibly implemented because of the Shoemart
strike, even after the strike had ended, petitioners attempts to return to work were
thwarted. In truth, private respondents claim that petitioners, who were regular
employees, were put on rotation while the casual workers were not because petitioners
were skilled and it was much easier for them to find new jobs only succeeds in revealing
their real intention. Would it be necessary for petitioners to look for new jobs if the rotation
was merely temporary? The NLRC plainly ignored these facts which amply supported the
labor arbiters decision.
It is untenable for the Solicitor General to contend, [6] that petitioners were dismissed
for their refusal to return to work. Petitioners did not refuse to work. They responded
promptly to private respondents telegrams and expressed their intention to resume work
immediately. This is clear from their letter to the management on September 3, 1992[7] as
quoted above.Moreover, it has been ruled that mere failure to report for work after notice
to return does not constitute abandonment or bar reinstatement. [8] Thus, petitioners may
even be considered dismissed without cause as a result of private respondents refusal to
accept them, in addition to having been earlier dismissed by being put on rotation.
To repeat, even disregarding evidence of the illegal conditions imposed by private
respondents for petitioners return to work, there was substantial evidence remaining in
the record to sustain the labor arbiters decision that private respondents were guilty of
ULP. There was evidence to the effect that Marcial Franco had been asked to disclose
the names of the members of the union and that the management had shown interest in
the unionizing activities of the petitioners. This evidence has remained
unchallenged.[9] What is more, it appears that only alleged members of the petitioner union
were put on rotation.[10] The labor arbiters observation during the hearing that the private
respondents had shown hostility towards petitioners for their union activities is a
determination of fact which is based on the totality of private respondents conduct,
indicating anti-union bias.[11] Nor is it disputed that private respondents opposed
petitioners petition for certification election when this matter should be the sole concern
of the workers.[12] Private respondents interest belies their claim that they were not aware
of petitioners organizational and union activities prior to the unions registration. An
employer may be guilty of ULP in interfering with the right to self-organization even before
the union has been registered.[13]
We therefore proceed to petitioners prayer for monetary awards. Petitioners do not
dispute the NLRCs finding that, except for Jaime Sibug, the rest of petitioners are piece-
rate workers.Consequently, all petitioners are entitled to minimum wage and 13th-month
pay, but only Jaime Sibug is entitled to an additional award of holiday pay. All of the
petitioners are entitled to salary differentials, as found by the labor arbiter, and to 13th-
month pay, as ruled by the NLRC. Pursuant to Art. 279 of the Labor Code, as amended
by Republic Act No. 6715, and our ruling in Bustamante v. National Labor Relations
Commission,[14] the petitioners are entitled to full backwages from the time their
compensation was withheld up to the time of their actual reinstatement or, where
reinstatement is no longer possible, to full backwages up to the time of finality of this
decision.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated May 31,
1995 is set aside and the decision of the labor arbiter dated July 22, 1992 is reinstated,

Page | 83
with the modification that only Jaime Sibug should be given holiday pay, while all
petitioners should be given 13th-month pay and full backwages.
SO ORDERED.
Regalado, (Chairman), Romero and Puno, JJ., concur.
Torres, Jr., J., on leave.

[1]
Rollo, p. 42.
[2]
Id., pp. 42-43.
[3]
Id., pp. 43-44.
[4]
115 SCRA 887 (1982).
[5]
Labor v. National Labor Relations Commission, 248 SCRA 183 (1995).
[6]
Comment, p. 9; Rollo, p. 144.
[7]
Rollo, pp. 42-43.
[8]
The Insular Life Assurance Co., Ltd. Employees Association-NATU v. The Insular Life Assurance Co.,
Ltd., 37 SCRA 244 (1971).
[9]
Ibid.
[10]
Manila Pencil Co., Inc. v. Court of Industrial Relations, 14 SCRA 955 (1965).
[11]
The Insular Life Assurance Co., Ltd. Employees Association-NATU v. The Insular Life Assurance Co.,
Ltd., 37 SCRA 244.
[12]
Golden Farms, Inc. v. Secretary of Labor, 234 SCRA 517 (1994); Philippine Telegraph and Telephone
Corp. v. Laguesma, 223 SCRA 452 (1993).
[13]
Judric Canning Corp. v. Inciong, 115 SCRA 887.
[14]
G.R. No. 111651, November 28, 1996.

LABOR CASE 13
FIRST DIVISION

[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF

EMPLOYEES AND FACULTY OF LETRAN and ELEONOR
AMBAS, respondents.

DECISION
KAPUNAN, J.:

This is a petition for review on certiorari seeking the reversal of the Decision of the
Court of Appeals, promulgated on 9 August 1999, dismissing the petition filed by Colegio
de San Juan de Letran (hereinafter, "petitioner") and affirming the Order of the Secretary
of Labor, dated December 2, 1996, finding the petitioner guilty of unfair labor practice on
two (2) counts.

Page | 84
 The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals,
are as follows:

"On December 1992, Salvador Abtria, then President of respondent union,

Association of Employees and Faculty of Letran, initiated the renegotiation of its
Collective Bargaining Agreement with petitionerColegio de San Juan de Letran for
the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. On the same
year, the union elected a new set of officers wherein private respondent Eleanor
Ambas emerged as the newly elected President (Secretary of Labor and Employment's
Order dated December 2, 1996, p. 12).

Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr.
Edwin Lao, claimed that the CBA was already prepared for signing by the parties. The
parties submitted the disputed CBA to a referendum by the union members, who
eventually rejected the said CBA (Ibid, p. 2).

Petitioner accused the union officers of bargaining in bad faith before the National
Labor Relations Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided
in favor of petitioner. However, the Labor Arbiter's decision was reversed on appeal
before the NLRC (Ibid, p. 2).

On January 1996, the union notified the National Conciliation and Mediation Board
(NCMB) of its intention to strike on the grounds (sic) of petitioner's: non-
compliance with the NLRC (1) order to delete the name of Atty. Federico Leynes as
the union's legal counsel; and (2) refusal to bargain (Ibid, p. 1).

On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start
negotiation on a new five-year CBA starting 1994-1999. On February 7, 1996, the
union submitted its proposals to petitioner, which notified the union six days later or
on February 13, 1996 that the same had been submitted to its Board of Trustees. In the
meantime, Ambas was informed through a letter dated February 15, 1996 from her
superior that her work schedule was being changed from Monday to Friday to
Tuesday to Saturday. Ambas protested and requested management to submit the issue
to a grievance machinery under the old CBA (Ibid, p. 2-3).

Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The
parties met on March 27, 1996 before the NCMB to discuss the ground rules for the
negotiation. On March 29, 1996, the union received petitioner's letter dismissing
Ambas for alleged insubordination. Hence, the union amended its notice of strike to
include Ambas' dismissal. (Ibid, p. 2-3).

On April 20, 1996, both parties again discussed the ground rules for the CBA
renegotiation. However, petitioner stopped the negotiations after it purportedly
received information that a new group of employees had filed a petition for
certification election (Ibid, p. 3).

On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the
Secretary of Labor and Employment assumed jurisdiction and ordered all striking
employees including the union president to return to work and for petitioner to accept
them back under the same terms and conditions before the actual strike. Petitioner
readmitted the striking members except Ambas. The parties then submitted their
pleadings including their position papers which were filed on July 17, 1996 ( Ibid, pp.
2-3).

Page | 85
On December 2, 1996, public respondent issued an order declaring petitioner guilty of
unfair labor practice on two counts and directing the reinstatement of private
respondent Ambas with backwages. Petitioner filed a motion for reconsideration
which was denied in an Order dated May 29, 1997 (Petition, pp. 8-9)."[1]

Having been denied its motion for reconsideration, petitioner sought a review of the
order of the Secretary of Labor and Employment before the Court of Appeals. The
appellate court dismissed the petition and affirmed the findings of the Secretary of Labor
and Employment. The dispositive portion of the decision of the Court of Appeals sets
forth:

WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for

being without merit in fact and in law.

With cost to petitioner.

SO ORDERED.[2]

Hence, petitioner comes to this Court for redress.

Petitioner ascribes the following errors to the Court of Appeals:
I

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE

ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR PRACTICE) FOR
SUSPENDING THE COLLECTIVE BARGAINING NEGOTIATIONS WITH
RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A PETITION
FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE
BARGAINING UNIT.
II

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE

ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING RESPONDENT
AMBAS, DESPITE THE FACT THAT HER DISMISSAL WAS CAUSED BY HER
INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW
THE PRESCRIBED WORK SCHEDULE.[3]

The twin questions of law before this Court are the following: (1) whether petitioner is
guilty of unfair labor practice by refusing to bargain with the union when it unilaterally
suspended the ongoing negotiations for a new Collective Bargaining Agreement (CBA)
upon mere information that a petition for certification has been filed by another legitimate
labor organization? (2) whether the termination of the union president amounts to an
interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has
not shown any compelling reason sufficient to overturn the ruling of the Court of Appeals
affirming the findings of the Secretary of Labor and Employment. It is axiomatic that the

Page | 86
findings of fact of the Court of Appeals are conclusive and binding on the Supreme Court
and will not be reviewed or disturbed on appeal. In this case, the petitioner failed to show
any extraordinary circumstance justifying a departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the
phrase "duty to bargain collectively," as follows:

Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreement and
executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession.

Noteworthy in the above definition is the requirement on both parties of the

performance of the mutual obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement. Undoubtedly, respondent
Association of Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived up to
this requisite when it presented its proposals for the CBA to petitioner on February 7,
1996. On the other hand, petitioner devised ways and means in order to prevent the
negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to
make a timely reply to the proposals presented by the latter. More than a month after the
proposals were submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that
the Board of Trustees had not yet convened to discuss the matter as its excuse for failing
to file its reply. This is a clear violation of Article 250 of the Labor Code governing the
procedure in collective bargaining, to wit:

Art. 250. Procedure in collective bargaining. - The following procedures shall be

observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a
reply thereto not later than ten (10) calendar days from receipt of such notice.[4]

xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make
counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the employer
did not even bother to submit an answer to the bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively. [6] In the case at bar, petitioner's actuation show a lack
of sincere desire to negotiate rendering it guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first notice of strike
in January 1996 show petitioner's resort to delaying tactics to ensure that negotiation
would not push through. Thus, on February 15, 1996, or barely a few days after the union
proposals for the new CBA were submitted, the union president was informed by her
superior that her work schedule was being changed from Mondays to Fridays to Tuesdays
to Saturdays. A request from the union president that the issue be submitted to a
grievance machinery was subsequently denied. Thereafter, the petitioner and the union
met on March 27, 1996 to discuss the ground rules for negotiation. However, just two
days later, or on March 29, 1996, petitioner dismissed the union president for alleged
insubordination. In its final attempt to thwart the bargaining process, petitioner
suspended the negotiation on the ground that it allegedly received information that a new
group of employees called the Association of Concerned Employees of Colegio (ACEC)

Page | 87
had filed a petition for certification election. Clearly, petitioner tried to evade its duty to
bargain collectively.
Petitioner, however, argues that since it has already submitted the union's proposals
to the Board of Trustees and that a series of conferences had already been undertaken
to discuss the ground rules for negotiation such should already be considered as acts
indicative of its intention to bargain. As pointed out earlier, the evidence on record belie
the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the
filing of the petition for certification election the issue on majority representation of the
employees has arose. According to petitioner, the authority of the union to negotiate on
behalf of the employees was challenged when a rival union filed a petition for certification
election. Citing the case of Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises,[7] petitioner asserts that in view of the pendency of the petition for certification
election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining process
there must be a valid petition for certification election raising a legitimate representation
issue. Hence, the mere filing of a petition for certification election does not ipso
facto justify the suspension of negotiation by the employer. The petition must first comply
with the provisions of the Labor Code and its Implementing Rules. Foremost is that a
petition for certification election must be filed during the sixty-day freedom period. The
"Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules
Implementing the Labor Code, provides that: " . If a collective bargaining agreement has
been duly registered in accordance with Article 231 of the Code, a petition for certification
election or a motion for intervention can only be entertained within sixty (60) days prior to
the expiry date of such agreement." The rule is based on Article 232,[8] in relation to Articles
253, 253-A and 256 of the Labor Code. No petition for certification election for any representation
issue may be filed after the lapse of the sixty-day freedom period. The old CBA is extended until
a new one is signed. The rule is that despite the lapse of the formal effectivity of the CBA the law
still considers the same as continuing in force and effect until a new CBA shall have been validly
executed.[9] Hence, the contract bar rule still applies.[10] The purpose is to ensure stability in the
relationship of the workers and the company by preventing frequent modifications of any CBA
earlier entered into by them in good faith and for the stipulated original period .[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition
for certification election by ACEC, allegedly a legitimate labor organization, was filed with
the Department of Labor and Employment (DOLE) only on May 26, 1996. Clearly, the
petition was filed outside the sixty-day freedom period. Hence, the filing thereof was
barred by the existence of a valid and existing collective bargaining agreement.
Consequently, there is no legitimate representation issue and, as such, the filing of the
petition for certification election did not constitute a bar to the ongoing
negotiation. Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang
Makabayan v. Marcelo Enterprises[12] is misplaced since that case involved a legitimate
representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the
Secretary of Labor on October 25, 1996. The dismissal was upheld by this Court in a
Resolution, dated April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice
by its stern refusal to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we hold
that the dismissal was effected in violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union president was terminated for
cause, allegedly for insubordination for her failure to comply with the new working
schedule assigned to her, and pursuant to its managerial prerogative to discipline and/or
dismiss its employees. While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, nevertheless, the dismissal of
employees must be made within the parameters of law and pursuant to the tenets of

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equity and fair play.[14] The employer's right to terminate the services of an employee for
just or authorized cause must be exercised in good faith.[15] More importantly, it must not
amount to interfering with, restraining or coercing employees in the exercise of their right
to self-organization because it would amount to, as in this case, unlawful labor practice
under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion
that she was dismissed in order to strip the union of a leader who would fight for the right
of her co-workers at the bargaining table. Ms. Ambas, at the time of her dismissal, had
been working for the petitioner for ten (10) years already. In fact, she was a recipient of a
loyalty award.Moreover, for the past ten (10) years her working schedule was from
Monday to Friday. However, things began to change when she was elected as union
president and when she started negotiating for a new CBA. Thus, it was when she was
the union president and during the period of tense and difficult negotiations when her
work schedule was altered from Mondays to Fridays to Tuesdays to Saturdays. When
she did not budge, although her schedule was changed, she was outrightly dismissed for
alleged insubordination.[16] We quote with approval the following findings of the Secretary
of Labor on this matter, to wit:

"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not,
however, a valid ground to teminate her employment. The disputed management
action was directly connected with Ms. Ambas' determination to change the
complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching position in
faithfully and truthfully carrying out her duties and responsibilities to her Union and
its members in getting a fair share of the fruits of their collective endeavors was the
proximate cause for her dismissal, the charge of insubordination being merely a ploy
to give a color of legality to the contemplated management action to dismiss
her. Thus, the dismissal of Ms. Ambas was heavily tainted with and evidently done in
bad faith. Manifestly, it was designed to interfere with the members' right to self-
organization.

Admittedly, management has the prerogative to discipline its employees for

insubordination. But when the exercise of such management right tends to interfere
with the employees' right to self-organization, it amounts to union-busting and is
therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to
frustrate the Union in its desire to forge a new CBA with the College that is reflective
of the true wishes and aspirations of the Union members. Her dismissal was merely a
subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her from the
premises of the College. It has the effect of busting the Union, stripping it of its
strong-willed leadership. When management refused to treat the charge of
insubordination as a grievance within the scope of the Grievance Machinery, the
action of the College in finally dismissing her from the service became arbitrary,
capricious and whimsical, and therefore violated Ms. Ambas' right to due process." [17]

In this regard, we find no cogent reason to disturb the findings of the Court of Appeals
affirming the findings of the Secretary of Labor and Employment. The right to self-
organization of employees must not be interfered with by the employer on the pretext of
exercising management prerogative of disciplining its employees. In this case, the totality
of conduct of the employer shows an evident attempt to restrain the employees from fully
exercising their rights under the law. This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Pardo, JJ., concur.
Ynares-Santiago, J., on leave.

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[1]
Rollo, pp. 32-34.
[2]
Id., at 37-38.
[3]
Id., at 16.
[4]
Underscoring supplied.
[5]
141 SCRA 179, 186 (1986).
[6]
The Bradman Co., Inc. vs. Court of Industrial Relations, 78 SCRA 10, 15 (1977).
[7]
118 SCRA 422 (1982).
[8]
Article 232. Prohibition on Certification Election. -- The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered existing
collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this
Code.
[9]
Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 294, 307 (1995).
[10]
National Congress of Unions in the Sugar Industry of the Philippines vs. Ferrer-Calleja, 205 SCRA 478,
485 (1992).
[11]
Ibid.
[12]
Supra; note 6.
[13]
G.R. No 128483, Association of Concerned Employees of Colegio (ACEC) vs. Secretary of Labor
and Employment, et al.
[14]
Philippine Singapore Transport Services, Inc. vs. NLRC, 277 SCRA 506, 512 (1997).
[15]
Samar II Electric Cooperative, Inc. vs. NLRC, 270 SCRA 290, 295 (1997).
[16]
Rollo, p. 45.
[17]
Id., at 46.

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