Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. Nos. L-16292-94, L-16309 and L-16317-18 October 31, 1960

KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, petitioner,

vs.
YARD CREW UNION, STATION EMPLOYEES UNION, RAILROAD ENGINEERING DEPARTMENT UNION, MANILA RAILROAD
COMPANY, and COURT OF INDUSTRIAL RELATIONS, respondents.

MANILA RAILROAD COMPANY, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS, MANILA RAILROAD CREW UNION, STATION EMPLOYEES UNION and KAPISANAN
NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, respondents.

L-16292-94.
Jose Espinas for petitioner.
F.A. Sambajon for respondent CIR.
Government Corporate Counsel Simeon M. Gopengco and F.A. Umali for respondent MRR.
Carlos E. Santiago for respondent Unions.
F. Da. Bondoc for respondents (REDU).

L-16309 and L-16217-18.

Government Corporate Counsel Simeon M. Gopengco and F.A. Umali for petitioner.
V.C. Magbanua for respondent CIR.
F. Da. Bondoc for respondent (REDU).
Jose R. Espinas for respondent Kap. Ng Manggagawa sa MRR.
Carlos C. Santiago for the other respondent Unions.

PAREDES, J.:

In the Court of Industrial Relations, three separate petitions were registered: Case No. 491-MC, by Yard Crew Union, Case No. 494-
MC, by Station Employees' Union; and Case No. 507-MC, by Railroad Engineering Department Union. The Kapisanan Ng Mga
Manggagawa Sa Manila Railroad Company, intervened. They were treated jointly by the respondent Court because they involved
identical questions. On appeal, three separate petitions for certiorari were presented by the Kapisanan Ng Mga Manggagawa Sa
Manila Railroad Company (G.R. Nos. L-16292-94) and three separate petitions for certiorari by the Manila Railroad Company (G.R.
No. L-16309, L-16317 and L-16318.).

We glean from the record the following facts:

On March 7, 1955, the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company, hereinafter called Kapisanan, filed a petition
(Case No. 237-MC), praying that it be certified as the exclusive bargaining agent in the Manila Railroad Company, hereinafter called
Company. A decision was promulgated on September 29, 1956, affirmed by the Court en banc on January 16, 1957, in which the
respondent Court found three unions appropriate for purposes of collective bargaining, to wit: (1) The unit of locomotive drivers,
firemen, assistant firemen and motormen-otherwise known as the engine crew unit: (2) the unit of conductors, assistant conductors,
unit agents, assistant route agents and train posters, otherwise known as the train crew unit, and (3) the unit of all the rest of the
company personnel, except the supervisors, temporary employees, the members of the Auditing Department, the members of the
security guard and professional and technical employees, referred to by the respondent court as the unit of the rest of the
employees. To these 3 units, the following unions were respectively certified as the exclusive bargaining agents: (1) The Union de
Maquinistas, Fogoneros, Ayudantes y Motormen; (2) Union de Empleados de Trenes (conductors); and (3) the Kapisanan Ng Mga
Manggagawa Sa Manila Railroad Company.

After the decision had become final, Case No. 491-MC was filled on September 20, 1957, amended on August 13, 1958, by the
Manila Railroad Yard Crew Union, praying that it be defined as a separate unit; Case No. 494-MC, on September 25, 1957,
amended on August 13, 1958, by the Station Employees' Union, praying that it be constituted as a separate bargaining unit, and
Case No. 507- MC, on November 30, 1957, by the Railroad Engineering Department Union, praying that it be defined as a separate
bargaining unit. All asked that they be certified in the units sought to be separated. The respondent unions are legitimate labor
organizations with certificates of registration in the Department of Labor.

The Kapisanan and the Company opposed the separation of the said three units on the following grounds:
(1) That the Kapisanan had been duly certified as the collective bargaining agent in the unit of all of the rest of the employees and it
had entered into a collective bargaining agreement on November 4, 1957, and this agreement bars certification of a unit at least
during the first 12 months after the finality of Case No. 237-MC (contract bar rule).

(2) That the Court had denied similar petitions for separation of unit as was ordered in Case No. 488-MC, wherein the petition for the
separation of Mechanical Department Labor Union was dismissed by the respondent Court on April 25, 1958 and in the case of the
Benguet Auto Lines Union, Case No. 4-MC-PANG) dismissed on July 18, 1958.

(3) That the three unions in question are barred from petitioning for separate units because they are bound by the decision in Case
No. 237-MC, for having been represented therein by the Kapisanan.

After due hearing, the respondent Court, through the Hon. Arsenio Martinez, Associate Judge, handed down an order, dated June 8,
1959, the dispositive portion of which recites as follows:

Wherefore, all the foregoing considered, and without passing upon the basic questions raised herein and as part of its fact
finding investigations, the Court orders a plebiscite to be conducted among the employees in the three proposed groups,
namely: the Engineering Department, the Station Employees and the Yard Crew Personnel. The employee in the
proposed groups minus the supervisors, temporary employees, members of the Auditing Department, members of the
security group, professionals and technical employees, shall vote, in a secret ballot to be conducted by this Court, on the
question of whether or not they desire to be separated from the unit of the rest of the employees being represented by the
Kapisanan. In this connection, the Court requests the cooperation of the Manila Railroad Company to extend its facilities
for the holding of this plebiscite, particularly the payrolls for the month to be agreed upon by the parties. . . .

The respondent Court also declared that the collective bargaining agreement could not be a bar to another certification election
because one of its signatories, the Kapisanan President, Vicente K. Olazo, was a supervisor:

In considering however such existing contract between the Kapisanan and the Company, the Court cannot close its eyes
and fail to observe that among the signatories thereto, on the part of the Kapisanan, is the President of the Union, Vicente
K. Olazo.

In case No. 237-MC. one of the important and fundamental questions raised was whether or not Vicente K. Olazo is a
supervisor within the meaning of Section 2(k) of Republic Act 875. The Trial Court, as well as the majority of the Court en
banc, reached the conclusion in same Case No. 237-MC that he is a supervisor.

. . . For this reason, the Court believes that his existing contract, through embodying terms and conditions of employment
and with a reasonable period to run, would not be a bar to a certification proceeding.

A motion for reconsideration of the order of June 8, 1959, was presented by the Kapisanan, and same was denied on August 20,
1959, in an order, concurred in by three Judges of the Court, with two Judges dissenting, against which the Kapisanan on
November 28, 1959, filed its notice of appeal. Appeals by certiorari were filed by the Kapisanan and the Company. In this Court,
respondents presented motion to dismiss the petitions, on the ground that the order of the respondent court on June 8, 1959 and the
resolution of the respondent court en banc dated August 20, 1959, to hold a plebiscite, were interlocutory, not subject to appeal.
They also allege the same in their answers, as one of the defenses. The case, therefore, poses three questions, to wit:

1. Are the appealed orders interlocutory in nature?

2. Is the order of the respondent court, granting groups of employees to choose whether or not they desire to be separated from the
certified unit to which they belong, during the existence of a valid bargaining contract entered into by a union close to the heels of its
certification, contrary to law?

3. Is it legal error for the respondent court to hold that the bargaining agreement in question does not bar certification proceedings,
only because one of the signatories for the union was adjudged by the majority of such court to be supervisor, in a previous case?

Wherefore, all the foregoing considered, and without passing upon the basic question raised herein and as part of its fact
finding investigation, the Court orders a plebiscite to be conducted among the employees in the three proposed groups,
namely: the Engineering Department, the Station Employees and the Yard Crew Personnel.

The resolution en banc, dated August 20, 1959, partially states:

It will be further noted that it is just a part of the investigatory power of the Court to determine by secret ballot the desire of
the employees concerned. What has been ordered is merely a plebiscite and not the certification election itself. . . .
Proceedings may still continue and an order whether denying the petition or not would necessarily ensue. In a word,
 something else has to be done within the premises and the order does not deny or grant petition in the above entitled
case.

In the case of Democratic Labor Association vs. Cebu Stevedoring Co., G.R. No. L-10321, February 28, 1958, we stated that
because of the modern complexity of the relation between both employer and union structure, it becomes difficult to determine from
the evidence alone which of the several claimant groups forms a proper bargaining unit; that it becomes necessary to give
consideration to the express will or desire of the employees — a practice designated as the "Globe doctrine," which sanctions the
holding of a series of elections, not for the purpose of allowing the group receiving an over all majority of votes to represent all
employees, but for the specific purpose of permitting the employees in each of the several categories to select the group which each
chooses as a bargaining unit; that the factors which may be considered and weighed in fixing appropriate units are: the history, of
their collective bargaining; the history, extent and type of organization of employees in other plants of the same employer, or other
employers in the same industry; the skill, wages, work and working conditions of the employees; the desires of the employees; the
eligibility of the employees for membership in the union or unions involved; and the relationship between the unit or units proposed
and the employer's organization, management and operation, and the test in determining the appropriate bargaining unit is that a
unit must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other
subjects of collective bargaining.

It is manifest, therefore, that "the desires of the employees" is one of the factors in determining the appropriate bargaining unit. The
respondent Court was simply interested "in the verification of the evidence already placed on record and submitted wherein the
workers have signed manifestations and resolutions of their desire to be separated from Kapisanan." Certainly, no one would deny
the respondent court's right of full investigation in arriving at a correct and conclusive finding of fact in order to deny or grant the
conclusive findings of fact in order to deny or grant the petitions for certification election. On the contrary, all respondent court, or
any court for that matter, to investigate before acting, to do justice to the parties concerned. And one way of determining the will or
desire of the employees is what the respondent court had suggested: a plebiscite — carried by secret ballot. A plebiscite not to be
conducted by the Department of Labor, as contemplated in a certification election under Sec. 12 of the Magna Charter of Labor,
R.A. No. 875, but by the respondent court itself. As well as observed by the respondent court, "the votes of workers one way or the
other, in these cases will not by any chance choose the agent or unit which will represent them anew, for precisely that is a matter
that is within the issues raised in these petitions for certification".

The test in determining whether an order or judgment is interlocutory or final is "Does it leave something to be done in the trial court
with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final" (Moran's Comments on the Rules of Court,
1952 Ed., Vol. I, p. 41). Having in view the avowed purpose of the orders in question, as heretofore exposed, one should not stretch
his imagination far to see that they are clearly interlocutory, as they leave something more to be done in the trial court and do not
decide one way or the other the petitions of the respondent unions. We are, therefore, constrained to hold, as we do hereby hold,
that the present appeals or petitions for review by certiorari, are not authorized by law and should be dismissed (Section 2, Rule 44,
Rules of Court). There is, moreover, nothing, under the facts obtaining in these cases and the law on the subject, which would
warrant this Court to declare the orders under consideration, illegal.

The herein petitioners contend that the collective bargaining agreement, executed on November 4, 1957 (Case No. 237-MC), is a
bar to the certification proceedings under consideration. The respondents counter that it is not so, because one of the signatories in
the said agreement for the Kapisanan, Vicente K. Olazo, was found to be a supervisor under section 2(k) R.A. 875, in Kapisanan,
etc. vs. CIR, etc., 106 Phil., 607; 57 Off. Gaz. (2) 254. Having, however, reached the conclusion that the orders in question are not
appealable and that the respondent court has not as yet decided on whether the said collective bargaining agreement is a bar or not
to the petitions for separate units and for certification election, which could properly be determined after the result of the plebiscite
shall have been known by the respondent court, the consideration of this issue is premature.

In view hereof, the petitions or appeals for review by certiorari are dismissed, without costs.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. Barrera and Gutierrez David, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24711 April 30, 1968

BENGUET CONSOLIDATED, INC., plaintiff-appellant,

vs.
BCI EMPLOYEES and WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, CIPRIANO CID and
JUANITO GARCIA, defendants-appellees.
Ross, Selph, Del Rosario, Bito and Misa for plaintiff-appellant.
Cipriano Cid and Associates for defendants-appellees.

BENGZON, J.P., J.:

The contending parties in this case —Benguet Consolidated, Inc., ("BENGUET") on the one hand, and on the other, BCI Employees
& Workers Union ("UNION") and the Philippine Association of Free Labor Unions ("PAFLU") —do not dispute the following factual
settings established by the lower court.

On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in behalf of all BENGUET employees in its mines and
milling establishment located at Balatoc, Antamok and Acupan, Municipality of Itogon, Mt. Province, entered into a Collective
Bargaining Contract, Exh. "Z" ("CONTRACT") with BENGUET. Pursuant to its very terms, said CONTRACT became effective for a
period of four and a half (4-½) years, or from June 23, 1959 to December 23, 1963. It likewise embodied a No-Strike, No-Lockout
clause. 1

About three years later, or on April 6, 1962, a certification election was conducted by the Department of Labor among all the rank
and file employees of BENGUET in the same collective bargaining units. UNION obtained more than 50% of the total number of
votes, defeating BBWU, and accordingly, the Court of Industrial Relations, on August 18, 1962, certified UNION as the sole and
exclusive collective bargaining agent of all BENGUET employees as regards rates of pay, wages, hours of work and such other
terms and conditions of employment allowed them by law or contract.

Subsequently, separate meetings were conducted on November 22, 23 and 24, 1962 at Antamok, Balatoc and Acupan Mines
respectively by UNION. The result thereof was the approval by UNION members of a resolution 2directing its president to file a
notice of strike against BENGUET for:

1. [Refusal] to grant any amount as monthly living allowance for the workers;

2. Violation of Agreements reached in conciliation meetings among which is the taking down of investigation [sic] and
statements of employees without the presence of union representative;

3. Refusal to dismiss erring executive after affidavits had been presented, thereby company showing [sic] bias and
partiality to company personnel;

4. Discrimination against union members in the enforcement of disciplinary actions.

The Notice of Strike 3 was filed on December 28, 1962. Three months later, in the evening of March 2, 1963, UNION members who
were BENGUET employees in the mining camps at Acupan, Antamok and Balatoc, went on strike. Regarding the conduct of the
strike, the trial court reports: 4

... Picket lines were formed at strategic points within the premises of the plaintiff. The picketers, by means of threats and
intimidation, and in some instances by the use of force and violence, prevented passage thru the picket lines by personnel
of the plaintiff who were reporting for work. Human blocks were formed on points of entrance to working areas so that
even vehicles could not pass thru, while the officers of the plaintiff were not allowed for sometime to leave the "staff" area.

The strikers forming picket lines bore placards with the letters BBWU-PAFLU written thereon. As a general rule, the
picketers were unruly, aggressive and uttered threatening remarks to staff members and non-strikers who desire to pass
thru the picket lines. On some occasions, the picketers resorted to violence by pushing back the car wherein staff officers
were riding who would like to enter the mine working area. The picketers lifted one side of the vehicle and were in the act
of overturning it when they were prevented from doing so by the timely intervention of PC soldiers, who threw tear gas
bombs to make the crowd disperse. Many of the picketers were apprehended by the PC soldiers and criminal charges for
grave coercion were filed against them before the Court of First Instance of Baguio. Two of the strike leaders and twenty-
two picketers, however, were found guilty of light coercion while nineteen other accused were acquitted.

There was a complete stoppage of work during the strike in all the mines. After two weeks elapsed, repair and
maintenance of the water pump was allowed by the strikers and some of the staff members were permitted to enter the
mines, who inspected the premises in the company of PC soldiers to ascertain the extent of the damage to the equipment
and losses of company property.

xxx xxx xxx

On May 2, 1963, the parties agreed to end the raging dispute. Accordingly, BENGUET and UNION executed the AGREEMENT,
Exh. 1. PAFLU placed its conformity thereto and said agreement was attested to by the Director of the Bureau of Labor Relations.
About a year later or on January 29, 1964, a collective bargaining contract was finally executed between UNION-PAFLU and
BENGUET. 5

Meanwhile, as a result, allegedly, of the strike staged by UNION and its members, BENGUET had to incur expenses for the
rehabilitation of mine openings, repair of mechanical equipment, cost of pumping water out of the mines, value of explosives, tools
and supplies lost and/or destroyed, and other miscellaneous expenses, all amounting to P1,911,363.83. So, BENGUET sued
UNION, PAFLU and their respective Presidents to recover said amount in the Court of First Instance of Manila, on the sole premise
that said defendants breached their undertaking in the existing CONTRACT not to strike during the effectivity thereof .

In answer to BENGUET's complaint, defendants unions and their respective presidents put up the following defenses: (1) they were
not bound by the CONTRACT which BBWU, the defeated union, had executed with BENGUET; (2) the strike was due, inter alia, to
unfair labor practices of BENGUET; and (3) the strike was lawful and in the exercise of the legitimate rights of UNION-PAFLU under
Republic Act 875.

Issues having been joined, trial commenced. On February 23, 1965, the trial court rendered judgment dismissing the complaint on
the ground that the CONTRACT, particularly the No-Strike clause, did not bind defendants. The latters' counterclaim was likewise
denied. Failing to get a reconsideration of said decision, BENGUET interposed the present appeal.

The several errors assigned by BENGUET basically ask three questions:

(1) Did the Collective Bargaining Contract executed between BENGUET and BBWU on June 23, 1959 and effective until
December 23, 1963 automatically bind UNION-PAFLU upon its certification, on August 18, 1962, as sole bargaining
representative of all BENGUET employees?

(2) Are defendants labor unions and their respective presidents liable for the illegal acts committed during the course of
the strike and picketing by some union members?

(3) Are defendants liable to pay the damages claimed by BENGUET?

In support of an affirmative answer to the first question, BENGUET first invokes the so-called "Doctrine of Substitution" referred to
in General Maritime Stevedores' Union v. South Sea Shipping Lines, L-14689, July 26, 1960. There it was remarked:

xxx xxx xxx

We also hold that where the bargaining contract is to run for more than two years, the principle of substitution may well be
adopted and enforced by the CIR to the effect that after two years of the life of a bargaining agreement, a certification
election may be allowed by the CIR; that if a bargaining agent other than the union or organization that executed the
contract, is elected, said new agent would have to respect said contract, but that it may bargain with the management for
the shortening of the life of the contract if it considers it too long, or refuse to renew the contract pursuant to an automatic
renewal clause. (Emphasis supplied)

xxx xxx xxx

The submission utterly fails to persuade Us. The above-quoted pronouncement was obiter dictum. The only issue in the General
Maritime Stevedores' Union case was whether a collective bargaining agreement which had practically run for 5 years constituted a
bar to certification proceedings. We held it did not and accordingly directed the court a quo to order certification elections. With that,
nothing more was necessary for the disposition of the case. Moreover, the pronouncement adverted to was rather premature. The
possible certification of a union different from that which signed the bargaining contract was a mere contingency then since the
elections were still to be held. Clearly, the Court was not called upon to rule on possible effects of such proceedings on the
bargaining agreement. 6

But worse, BENGUET's reliance upon the Principle of Substitution is totally misplaced. This principle, formulated by the NLRB 7 as
its initial compromise solution to the problem facing it when there occurs a shift in employees' union allegiance after the execution of
a bargaining contract with their employer, merely states that even during the effectivity of a collective bargaining agreement
executed between employer and employees thru their agent, the employees can change said agent but the contract continues to
bind them up to its expiration date. They may bargain however for the shortening of said expiration date. 8

In formulating the "substitutionary" doctrine, the only consideration involved was the employees' interest in the existing bargaining
agreement. The agent's interest never entered the picture. In fact, the justification 9 for said doctrine was:
 ... that the majority of the employees, as an entity under the statute, is the true party in interest to the contract, holding
rights through the agency of the union representative. Thus, any exclusive interest claimed by the agent is defeasible at
the will of the principal.... (Emphasis supplied)

Stated otherwise, the "substitutionary" doctrine only provides that the employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that
the phrase "said new agent would have to respect said contract" must be understood. It only means that the employees, thru their
new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the
shortening thereof.

The "substitutionary" doctrine, therefore, cannot be invoked to support the contention that a newly certified collective bargaining
agent automatically assumes all the personal undertakings — like the no-strike stipulation here — in the collective bargaining
agreement made by the deposed union. When BBWU bound itself and its officers not to strike, it could not have validly bound also
all the other rival unions existing in the bargaining units in question. BBWU was the agent of the employees, not of the other unions
which possess distinct personalities. To consider UNION contractually bound to the no-strike stipulation would therefore violate the
legal maxim that res inter alios nec prodest nec nocet. 10

Of course, UNION, as the newly certified bargaining agent, could always voluntarily assume all the personal undertakings made by
the displaced agent. But as the lower court found, there was no showing at all that, prior to the strike, 11 UNION formally adopted the
existing CONTRACT as its own and assumed all the liability ties imposed by the same upon BBWU.

BENGUET also alleges that UNION is now in estoppel to claim that it is not contractually bound by the CONTRACT for having filed
on September 28, 1962, in Civil Case No. 1150 of the Court of First Instance of Baguio, entitled "Bobok Lumber Jack Ass'n. vs.
Benguet Consolidated, Inc. and BCI Employees Workers Union-PAFLU" 12 a motion praying for the dissolution of the ex parte writ of
preliminary injunction issued therein, wherein the following appears:

In that case, the CIR transfered the contactual rights of the BBWU to the defendant union. One of such rights transferred
was the right to the modified union-shop — checked off union dues arrangement now under injunction.

The collective bargaining contract mentioned in the plaintiff's complaint did not expire by the mere fact that the defendant
union was certified as bargaining agent in place of the BBWU. The Court of Industrial Relations in the case above
mentioned made it clear that the collective bargaining contract would be respected unless and until the parties act
otherwise. In effect, the defendant union by act of subrogation took the place of the BBWU as the UNION referred to in
the contract. (Emphasis supplied)

There is no estoppel. UNION did not assert the above statement against BENGUET to force it to rely upon the same to effect the
union check-off in its favor. UNION and BENGUET were together as co-defendants in said Civil Case No. 1150. Rather, the
statement was directed against Bobok Lumber Jack Ass'n., plaintiff therein, to weaken its cause of action. Moreover, BENGUET did
not rely upon said statement. What prompted Bobok Lumber Jack Ass'n. to file the complaint for declaratory relief was the fact that
"... the defendants [UNION and BENGUET] are planning to agree to the continuation of a modified union shop in the three camps
mentioned above without giving the employees concerned the opportunity to express their wishes on the matter ..." BENGUET even
went further in its answer filed on October 18, 1962, by asserting that "... defendants have already agreed to the continuation of the
modified union shop provision in the collective bargaining agreement...." 13

Neither can we accept BENGUET's contention that the inclusion of said aforequoted motion in the record on appeal filed in said Civil
Case No. 1150, now on appeal before Us docketed as case No. L-24729, refutes UNION's allegation that it has subsequently
abandoned its stand against Bobok Lumber Jack Ass'n., in said case. The mere appearance of such motion in the record on appeal
is but a compliance with the procedural requirement of Rule 41, Sec. 6, of the Rules of Court, that all matters necessary for a proper
understanding of the issues involved be included in the record on appeal. This therefore cannot be taken as a rebuttal of the
UNION's explanation.

There is nothing then, in law as well as in fact, to support plaintiff BENGUET's contention that defendants are contractually bound by
the CONTRACT. And the stand taken by the trial court all the more becomes unassailable in the light of Art. 1704 of the Civil Code
providing that:

In the collective bargaining, the labor union or members of the board or committee signing the contract shall be liable for
non-fulfillment thereof. (Emphasis supplied)

There is no question, defendants were not signatories nor participants in the CONTRACT.

Lastly, BENGUET contends, citing Clause II in connection with Clause XVIII of the CONTRACT, that since all the employees, as
principals, continue being bound by the no-strike stipulation until the CONTRACT's expiration, UNION, as their agent, must
necessarily be bound also pursuant to the Law on Agency. This is untenable. The way We understand it, everything binding on a
duly authorized agent, acting as such, is binding on the principal; not vice-versa, unless there is a mutual agency, or unless the
agent expressly binds himself to the party with whom he contracts. As the Civil Code decrees it: 14

The agent who acts as such is not personally liable to the party with whom he contracts, unless he expressly binds
himself or exceeds the limits of his authority without giving such party sufficient notice of his powers. (Emphasis
supplied) 1äwphï1.ñët

Here, it was the previous agent who expressly bound itself to the other party, BENGUET. UNION, the new agent, did not assume
this undertaking of BBWU.

In view of all the foregoing, We see no further necessity of delving further into the other less important points raised by BENGUET in
connection with the first question.

On the second question, it suffices to consider, in answer thereto, that the rule of vicarious liability has, since the passage of
Republic Act 875, been expressly legislated out. 15 The standing rule now is that for a labor union and/or its officials and members to
be liable, there must be clear proof of actual participation in, or authorization or ratification of the illegal acts. 16 While the lower court
found that some strikers and picketers resorted to intimidation and actual violence, it also found that defendants presented
uncontradicted evidence that before and during the strike, the strike leaders had time and again warned the strikers not to resort to
violence but to conduct peaceful picketing only. 17 Assuming that the strikers did not heed these admonitions coming from their
leaders, the failure of the union officials to go against the erring union members pursuant to the UNION and PAFLU constitutions
and by-laws exposes, at the most, only a flaw or weakness in the defense which, however, cannot be the basis for plaintiff
BENGUET to recover.

Lastly, paragraph VI of the Answer 18 sufficiently traverses the material allegations in paragraph VI of the Complaint, 19 thus
precluding a fatal admission on defendants' part. The purpose behind the rule requiring specific denial is obtained: defendants have
set forth the matters relied upon in support of their denial. Paragraph VI of the Answer may not be a model pleading, but it suffices
for purposes of the rule. Pleadings should, after all, be liberally construed. 20

Since defendants were not contractually bound by the no-strike clause in the CONTRACT, for the simple reason that they were not
parties thereto, they could not be liable for breach of contract to plaintiff. The lower court therefore correctly absolved them from
liability.

WHEREFORE, the judgment of the lower court appealed from is hereby affirmed. No costs. So ordered. 1äw phï1.ñët

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-28223 August 30, 1968

MECHANICAL DEPARTMENT LABOR UNION SA PHILIPPINE NATIONAL RAILWAYS, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and SAMAHAN NG MGA MANGGAGAWA SA CALOOCAN SHOPS,respondents.

Sisenando Villaluz for petitioner.

Gregorio E. Fajardo for respondent Samahan ng mga Manggagawa sa Caloocan Shops.

REYES, J.B.L., J.:

Petition by the "Mechanical Department Labor Union sa PNR" for a review of an order of the Court of Industrial Relations, in its
Case No. 1475-MC, directing the holding of a plebiscite election to determine whether the employees at the Caloocan Shops desire
the respondent union, "Samahan ng mga Manggagawa sa Caloocan Shops", to be separated from the Mechanical Department
Labor Union, with a view to the former being recognized as a separate bargaining unit.

The case began on 13 February 1965 by a petition of the respondent "Samahan ng mga Manggagawa, etc." calling attention to the
fact that there were three unions in the Caloocan shops of the Philippine National Railways: the "Samahan", the "Kapisanan ng
Manggagawa sa Manila Railroad Company", and the Mechanical Department Labor Union; that no certification election had been
held in the last 12 months in the Caloocan shops; that both the "Samahan" and the Mechanical Department Labor Union had
submitted different labor demands upon the management for which reason a certification election was needed to determine the
proper collective bargaining agency for the Caloocan shop workers.
The petition was opposed by the management as well as by the Mechanical Department Labor Union, the latter averring that it had
been previously certified in two cases as sole and exclusive bargaining agent of the employees and laborers of the PNR'S
mechanical department, and had negotiated two bargaining agreements with management in 1961 and 1963; that before the
expiration of the latter, a renewal thereof had been negotiated and the contract remained to be signed; that the "Samahan" had
been organized only in 21 January 1965; that the Caloocan shops unit was not established nor separated from the Mechanical
Department unit; that the "Samahan" is composed mainly of supervisors who had filed a pending case to be declared non-
supervisors; and that the purpose of the petition was to disturb the present smooth working labor management relations.

By an order of 18 August 1967, Judge Arsenio Martinez, after receiving the evidence, made the following findings:. 1äwphï1.ñët

The Court, after a cursory examination of the evidence presented made the following findings: That petitioner union is
composed of workers exclusively at the Caloocan shops of the Philippine National Railways charged with the
maintenance of rolling stocks for repairs; major repairs of locomotive, engines, etc. are done in the Caloocan shops while
minor ones in the Manila sheds; workers in the Caloocan shops do not leave their station unlike Manila shop workers who
go out along the routes and lines for repairs; workers both in the Caloocan shops and Manila sheds are exposed to
hazards occasioned by the nature of their work; that with respect to wages and salaries of employees, categories under
the Job Classification and Evaluation Plan of the company apply to all workers both in the Caloocan Shops and Manila
sheds; administration over employees, members of petitioner union as well as oppositor is under the Administrative
Division of the company; that from the very nature of their work, members of petitioner union and other workers of the
Mechanical Department have been under the coverage of the current collective bargaining agreement which was a result
of a certification by this Court of the Mechanical Department Labor union, first in 1960 and later in 1963. Subsequently,
when the latter contract expired, negotiations for its renewal were had and at the time of the filing of this petition was
already consummated, the only act remaining to be done was to affix the signatures of the parties thereto; that during the
pendency of this petition, on June 14, 1965, the aforesaid collective bargaining agreement was signed between the
Philippine National Railways and the Mechanical Department Labor Union sa Philippine National Railways (Manila
Railroad Company).

The main issue involved herein is: Whether or not a new unit should be established, the Caloocan shops, separate and
distinct from the rest of the workers under the Mechanical Department now represented by the Mechanical Department
Labor Union.

The Caloocan Shops, all located at Caloocan City have 360 workers more or less. It is part and parcel of the whole
Mechanical Department of the Philippine National Railways. The department is composed of four main divisions or units,
namely: Operations, Manila Area and Lines; Locomotive Crew; Motor Car Crew; and the Shops Rolling Stocks
Maintenance. (Exhibits "D" and "D-1").

The Locomotive crew and Motor Car Crew, though part of the Mechanical Department, is a separate unit, and is
represented by the Union de Maquinistas, Fogoneros Y Motormen. The workers under the other two main units of the
departments are represented by the Mechanical Department Labor Union. The workers of the Shops Rolling Stocks
Maintenance Division or the Caloocan Shops now seek to be separated from the rest of the workers of the department
and to be represented by the "Samahan Ng Mga Manggagawa sa Caloocan Shops." .

There is certainly a community of interest among the workers of the Caloocan Shops. They are grouped in one place.
They work under one or same working condition, same working time or schedule and are exposed to same occupational
risk.

Though evidence on record shows that workers at the Caloocan Shops perform the same nature of work as their
counterparts in the Manila Shed, the difference lies in the fact that workers at the Caloocan Shops perform major repairs
of locomotives, rolling stocks, engines, etc., while those in the Manila Shed, works on minor repairs. Heavy equipment
and machineries are found in the Caloocan Shops.

The trial judge then reviewed the collective bargaining history of the Philippine National Railways, as follows: 1äwphï1.ñët

On several similar instances, this Court allowed the establishment of new and separate bargaining unit in one company,
even in one department of the same company, despite the existence of the same facts and circumstances as obtaining in
the case at bar.

The history of the collective bargaining in the Manila Railroad Company, now the Philippine National Railways shows that
originally, there was only one bargaining unit in the company, represented by the Kapisanan Ng Manggagawa sa MRR.
Under Case No. 237-MC, this Court ordered the establishment of two additional units, the engine crew and the train crew
to be represented by the Union de Maquinistas, Fogoneros, Ayudante Y Motormen and Union de Empleados de Trenes,
respectively. Then in 1961, under Cases Nos. 491-MC, 494-MC and 507-MC three new separate units were established,
namely, the yard crew unit, station employees unit and engineering department employees unit, respectively, after the
employees concerned voted in a plebiscite conducted by the court for the separation from existing bargaining units in the
company. Then again, under Case No. 763-MC, a new unit, composed of the Mechanical Department employees, was
 established to be represented by the Mechanical Department Labor Union. Incidentally, the first attempt of the employees
of the Mechanical Department to be separated as a unit was dismissed by this Court of Case No. 488-MC.

In the case of the yard crew, station employees and the Engineering Department employees, the Supreme Court
sustained the order of this Court in giving the employees concerned the right to vote and decide whether or not they
desire to be separate units (See G.R. Nos. L-16292-94, L-16309 and L-16317-18, November, 1965).

In view of its findings and the history of "union representation" in the railway company, indicating that bargaining units had been
formed through separation of new units from existing ones whenever plebiscites had shown the workers' desire to have their own
representatives, and relying on the "Globe doctrine" (Globe Machine & Stamping Co., 3 NLRB 294) applied in Democratic Labor
Union vs. Cebu Stevedoring Co., L-10321, 28 February 1958, Judge Martinez held that the employees in the Caloocan Shops
should be given a chance to vote on whether their group should be separated from that represented by the Mechanical Department
Labor Union, and ordered a plebiscite held for the purpose. The ruling was sustained by the Court en banc; wherefore, the
Mechanical Department Labor Union appealed to this Court questioning the applicability under the circumstances of the "Globe
doctrine" of considering the will of the employees in determining what union should represent them.

Technically, this appeal is premature, since the result of the ordered plebiscite among the workers of the Caloocan shops may be
adverse to the formation of a separate unit, in which event, as stated in the appealed order, all questions raised in this case would
be rendered moot and academic. Apparently, however, the appellant Mechanical Department Labor Union takes it for granted that
the plebiscite would favor separation.

We find no grave abuse of discretion in the issuance of the ruling under appeal as would justify our interfering with it. Republic Act
No. 875 has primarily entrusted the prosecution of its policies to the Court of Industrial Relations, and, in view of its intimate
knowledge concerning the facts and circumstances surrounding the cases brought before it, this Court has repeatedly upheld the
exercise of discretion of the Court of Industrial Relations in matters concerning the representation of employee groups (Manila
Paper Mills Employees & Workers' Association vs. C.I.R. 104 Phil. 10; Benguet Consolidated vs. Bobok Lumber Jack Association,
103 Phil. 1150).

Appellant contends that the application of the "Globe doctrine" is not warranted because the workers of the Caloocan shops do not
require different skills from the rest of the workers in the Mechanical Department of the Railway Company. This question is primarily
one of facts. The Industrial Court has found that there is a basic difference, in that those in the Caloocan shops not only have a
community of interest and working conditions but perform major repairs of railway rolling stock, using heavy equipment and
machineries found in said shops, while the others only perform minor repairs. It is easy to understand, therefore, that the workers in
the Caloocan shops require special skill in the use of heavy equipment and machinery sufficient to set them apart from the rest of
the workers. In addition, the record shows that the collective bargaining agreements negotiated by the appellant union have been in
existence for more than two (2) years; hence, such agreements can not constitute a bar to the determination, by proper elections, of
a new bargaining representative (PLDT Employees' Union vs. Philippine Long Distance Telephone Co., 51 Off. Gaz., 4519).

As to the charge that some of the members of the appellee, "Samahan Ng Manggagawa", are actually supervisors, it appears that
the question of the status of such members is still pending final decision; hence, it would not constitute a legal obstacle to the
holding of the plebiscite. At any rate, the appellant may later question whether the votes of those ultimately declared to be
supervisors should be counted.

Whether or not the agreement negotiated by the appellant union with the employer, during the pendency of the original petition in
the Court of Industrial Relations, should be considered valid and binding on the workers of the Caloocan shops is a question that
should be first passed upon by the Industrial Court.

IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs against appellant Mechanical Department Labor
Union sa Philippine National Railways.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. 1äwphï1.ñët

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 77395 November 29, 1988

BELYCA CORPORATION, petitioner,

vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY OF LABOR AND EMPLOYMENT; MED-ARBITER,
RODOLFO S. MILADO, MINISTRY OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10 AND ASSOCIATED LABOR
UNION (ALU-TUCP), MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO CITY, respondents.

Soriano and Arana Law Offices for petitioner.

The Solicitor General for public respondent.

Francisco D. Alas for respondent Associated Labor Unions-TUCP.

PARAS, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking to annul or to set aside the resolution of the Bureau of Labor
Relations dated November 24, 1986 and denying the appeal, and the Bureau's resolution dated January 13, 1987 denying petitioner's motion
for reconsideration.

The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo, p. 4) reads as follows:

WHEREFORE, in view of all the foregoing considerations, the Order is affirmed and the appeal therefrom
denied.

Let, therefore, the pertinent records of the case be remanded to the office of origin for the immediate conduct of
the certification election.

The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads, as follows:

WHEREFORE, the Motion for Reconsideration filed by respondent Belyca Corporation (Livestock Agro-
Division) is hereby dismissed for lack of merit and the Bureau's Resolution dated 24 November 1986 is
affirmed. Accordingly, let the records of this case be immediately forwarded to the Office of origin for the holding
of the certification elections.

No further motion shall hereafter be entertained.

The antecedents of the case are as follows:

On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a legitimate labor organization duly registered with the
Ministry of Labor and Employment under Registration Certificate No. 783-IP, filed with the Regional Office No. 10, Ministry of Labor
and Employment at Cagayan de Oro City, a petition for direct certification as the sole and exclusive bargaining agent of all the rank
and file employees/workers of Belyca Corporation (Livestock and Agro-Division), a duly organized, registered and existing
corporation engaged in the business of poultry raising, piggery and planting of agricultural crops such as corn, coffee and various
vegetables, employing approximately 205 rank and file employees/workers, the collective bargaining unit sought in the petition, or in
case of doubt of the union's majority representation, for the issuance of an order authorizing the immediate holding of a certification
election (Rollo, p. 18). Although the case was scheduled for hearing at least three times, no amicable settlement was reached by the
parties. During the scheduled hearing of July 31, 1986 they, however, agreed to submit simultaneously their respective position
papers on or before August 11, 1986 (rollo. p. 62).

Petitioner ALU-TUCP, private respondent herein, in its petition and position paper alleged, among others, (1) that there is no
existing collective bargaining agreement between the respondent employer, petitioner herein, and any other existing legitimate labor
unions; (2) that there had neither been a certification election conducted in the proposed bargaining unit within the last twelve (12)
months prior to the filing of the petition nor a contending union requesting for certification as the. sole and exclusive bargaining
representative in the proposed bargaining unit; (3) that more than a majority of respondent employer's rank-and-file
employees/workers in the proposed bargaining unit or one hundred thirty-eight (138) as of the date of the filing of the petition, have
signed membership with the ALU-TUCP and have expressed their written consent and authorization to the filing of the petition; (4)
that in response to petitioner union's two letters to the proprietor/ General Manager of respondent employer, dated April 21, 1986
and May 8, 1 986, requesting for direct recognition as the sole and exclusive bargaining agent of the rank-and-file workers,
respondent employer has locked out 119 of its rank-and-file employees in the said bargaining unit and had dismissed earlier the
local union president, vice-president and three other active members of the local unions for which an unfair labor practice case was
filed by petitioner union against respondent employer last July 2, 1986 before the NLRC in Cagayan de Oro City (Rollo, pp. 18;
263).<äre|| anº•1àw>
Respondent employer, on the other hand, alleged in its position paper, among others, (1) that due to the nature of its business, very
few of its employees are permanent, the overwhelming majority of which are seasonal and casual and regular employees; (2) that of
the total 138 rank-and-file employees who authorized, signed and supported the filing of the petition (a) 14 were no longer working
as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their membership from petitioner union (d) 5 were retrenched on
June 23, 1986 (e) 12 were dismissed due to malicious insubordination and destruction of property and (f) 100 simply abandoned
their work or stopped working; (3) that the 128 incumbent employees or workers of the livestock section were merely transferred
from the agricultural section as replacement for those who have either been dismissed, retrenched or resigned; and (4) that the
statutory requirement for holding a certification election has not been complied with by the union (Rollo, p. 26).

The Labor Arbiter granted the certification election sought for by petitioner union in his order dated August 18, 1986 (Rollo, p. 62).

On February 4, 1987, respondent employer Belyca Corporation, appealed the order of the Labor Arbiter to the Bureau of Labor
Relations in Manila (Rollo, p. 67) which denied the appeal (Rollo, p. 80) and the motion for reconsideration (Rollo, p. 92). Thus, the
instant petition received in this Court by mail on February 20, 1987 (Rollo, p. 3).

In the resolution of March 4, 1987, the Second Division of this Court required respondent Union to comment on the petition and
issued a temporary restraining order (,Rollo, p. 95).

Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public respondents filed its comment on April 8, 1987 (Rollo,
p. 218).

On May 4, 1987, the Court resolved to give due course to the petition and to require the parties to submit their respective
memoranda within twenty (20) days from notice (Rollo, p. 225).

The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the comment for public respondents as its
memorandum (Rollo, p. 226); memorandum for respondent ALU was filed on June 30, 1987 (Rollo, p. 231); and memorandum for
petitioner, on July 30, 1987 (Rollo, p. 435).

The issues raised in this petition are:

WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN APPROPRIATE BARGAINING UNIT.

II

WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW 20%) OF THE EMPLOYEES IN THE
PROPOSED BARGAINING UNIT, ASKING FOR A CERTIFICATION ELECTION HAD BEEN STRICTLY
COMPLIED WITH.

In the instant case, respondent ALU seeks direct certification as the sole and exclusive bargaining agent of all the rank-and-file
workers of the livestock and agro division of petitioner BELYCA Corporation (Rollo, p. 232), engaged in piggery, poultry raising and
the planting of agricultural crops such as corn, coffee and various vegetables (Rollo, p. 26). But petitioner contends that the
bargaining unit must include all the workers in its integrated business concerns ranging from piggery, poultry, to supermarts and
cinemas so as not to split an otherwise single bargaining unit into fragmented bargaining units (Rollo, p. 435). <äre||anº•1àw>

The Labor Code does not specifically define what constitutes an appropriate collective bargaining unit. Article 256 of the Code
provides:

Art. 256. Exclusive bargaining representative.—The labor organization designated or

selected by the majority of the employees in an appropriate collective bargaining unit shall
be exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employee shall have the right at
any time to present grievances to their employer.

According to Rothenberg, a proper bargaining unit maybe said to be a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, which the collective interests of all the employees, consistent with equity to the
employer, indicate to be best suited to serve reciprocal rights and duties of the parties under the collective bargaining provisions of
the law (Rothenberg in Labor Relations, p. 482).

This Court has already taken cognizance of the crucial issue of determining the proper constituency of a collective bargaining unit.
Among the factors considered in Democratic Labor Association v. Cebu Stevedoring Co. Inc. (103 Phil 1103 [1958]) are: "(1) will of
employees (Glove Doctrine); (2) affinity and unity of employee's interest, such as substantial similarity of work and duties or
similarity of compensation and working conditions; (3) prior collective bargaining history; and (4) employment status, such as
temporary, seasonal and probationary employees".

Under the circumstances of that case, the Court stressed the importance of the fourth factor and sustained the trial court's
conclusion that two separate bargaining units should be formed in dealing with respondent company, one consisting of regular and
permanent employees and another consisting of casual laborers or stevedores. Otherwise stated, temporary employees should be
treated separately from permanent employees. But more importantly, this Court laid down the test of proper grouping, which is
community and mutuality of interest.

Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v. Alhambra Employees' Association 107 Phil. 28
[1960]) where the employment status was not at issue but the nature of work of the employees concerned; the Court stressed the
importance of the second factor otherwise known as the substantial-mutual-interest test and found no reason to disturb the finding of
the lower Court that the employees in the administrative, sales and dispensary departments perform work which has nothing to do
with production and maintenance, unlike those in the raw leaf, cigar, cigarette and packing and engineering and garage departments
and therefore community of interest which justifies the format or existence as a separate appropriate collective bargaining unit.

Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status of the employees concerned was again
challenged, the Court reiterating the rulings, both in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees' Association (supra) held that among the factors to be
considered are: employment status of the employees to be affected, that is the positions and categories of work to which they
belong, and the unity of employees' interest such as substantial similarity of work and duties.

In any event, whether importance is focused on the employment status or the mutuality of interest of the employees concerned "the
basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to
all employees the exercise of their collective bargaining rights (Democratic Labor Association v. Cebu Stevedoring Co. Inc. supra)

Hence, still later following the substantial-mutual interest test, the Court ruled that there is a substantial difference between the work
performed by musicians and that of other persons who participate in the production of a film which suffice to show that they
constitute a proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).

Coming back to the case at bar, it is beyond question that the employees of the livestock and agro division of petitioner corporation
perform work entirely different from those performed by employees in the supermarts and cinema. Among others, the noted
difference are: their working conditions, hours of work, rates of pay, including the categories of their positions and employment
status. As stated by petitioner corporation in its position paper, due to the nature of the business in which its livestock-agro division
is engaged very few of its employees in the division are permanent, the overwhelming majority of which are seasonal and casual
and not regular employees (Rollo, p. 26). Definitely, they have very little in common with the employees of the supermarts and
cinemas. To lump all the employees of petitioner in its integrated business concerns cannot result in an efficacious bargaining unit
comprised of constituents enjoying a community or mutuality of interest. Undeniably, the rank and file employees of the livestock-
agro division fully constitute a bargaining unit that satisfies both requirements of classification according to employment status and
of the substantial similarity of work and duties which will ultimately assure its members the exercise of their collective bargaining
rights.

II

It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division) employs more or less two hundred five (205)
rank-and-file employees and workers. It has no existing duly certified collective bargaining agreement with any legitimate labor
organization. There has not been any certification election conducted in the proposed bargaining unit within the last twelve (12)
months prior to the filing of the petition for direct certification and/or certification election with the Ministry of Labor and Employment,
and there is no contending union requesting for certification as the sole and exclusive bargaining representative in the proposed
bargaining unit.

The records show that on the filing of the petition for certification and/or certification election on June 3, 1986; 124 employees or
workers which are more than a majority of the rank-and-file employees or workers in the proposed bargaining unit had signed
membership with respondent ALU-TUCP and had expressed their written consent and authorization to the filing of the petition.
Thus, the Labor Arbiter ordered the certification election on August 18, 1986 on a finding that 30% of the statutory requirement
under Art. 258 of the Labor Code has been met.

But, petitioner corporation contends that after June 3, 1986 four (4) employees resigned; six (6) subsequently withdrew their
membership; five (5) were retrenched; twelve (12) were dismissed for illegally and unlawfully barricading the entrance to petitioner's
farm; and one hundred (100) simply abandoned their work.
Petitioner's claim was however belied by the Memorandum of its personnel officer to the 119 employees dated July 28, 1986
showing that the employees were on strike, which was confirmed by the finding of the Bureau of Labor Relations to the effect that
they went on strike on July 24, 1986 (Rollo, p. 419). Earlier the local union president, Warrencio Maputi; the Vice-president, Gilbert
Redoblado and three other active members of the union Carmen Saguing, Roberto Romolo and Iluminada Bonio were dismissed
and a complaint for unfair labor practice, illegal dismissal etc. was filed by the Union in their behalf on July 2, 1986 before the NLRC
of Cagayan de Oro City (Rollo, p. 415). The complaint was amended on August 20, 1986 for respondent Union to represent
<äre|| anº•1àw>

Warrencio Maputi and 137 others against petitioner corporation and Bello Casanova President and General Manager for unfair labor
practice, illegal dismissal, illegal lockout, etc. (Rollo, p. 416).

Under Art. 257 of the Labor Code once the statutory requirement is met, the Director of Labor Relations has no choice but to call a
certification election (Atlas Free Workers Union AFWU PSSLU Local v. Noriel, 104 SCRA 565 [1981]; Vismico Industrial Workers
Association (VIWA) v. Noriel, 131 SCRA 569 [1984]) It becomes in the language of the New Labor Code "Mandatory for the Bureau
to conduct a certification election for the purpose of determining the representative of the employees in the appropriate bargaining
unit and certify the winner as the exclusive bargaining representative of all employees in the unit." (Federacion Obrera de la
Industria Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72 SCRA 24 [1976]; Kapisanan Ng Mga Manggagawa v. Noriel, 77
SCRA 414 [1977]); more so when there is no existing collective bargaining agreement. (Samahang Manggagawa Ng Pacific Mills,
Inc. v. Noriel, 134 SCRA 152 [1985]); and there has not been a certification election in the company for the past three years (PLUM
Federation of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]) as in the instant case.

It is significant to note that 124 employees out of the 205 employees of the Belyca Corporation have expressed their written consent
to the certification election or more than a majority of the rank and file employees and workers; much more than the required 30%
and over and above the present requirement of 20% by Executive Order No. 111 issued on December 24, 1980 and applicable only
to unorganized establishments under Art. 257, of the Labor Code, to which the BELYCA Corporation belong (Ass. Trade Unions
(ATU) v. Trajano, G.R. No. 75321, June 20, 1988).) More than that, any doubt cast on the authenticity of signatures to the petition
for holding a certification election cannot be a bar to its being granted (Filipino Metals Corp. v. Ople 107 SCRA 211 [1981]). Even
doubts as to the required 30% being met warrant holding of the certification election (PLUM Federation of Industrial and Agrarian
Workers v. Noriel, 119 SCRA 299 [1982]). In fact, once the required percentage requirement has been reached, the employees'
withdrawal from union membership taking place after the filing of the petition for certification election will not affect said petition. On
the contrary, the presumption arises that the withdrawal was not free but was procured through duress, coercion or for a valuable
consideration (La Suerte Cigar and Cigarette Factory v. Director of the Bureau of Labor Relations, 123 SCRA 679 [1983]). Hence,
the subsequent disaffiliation of the six (6) employees from the union will not be counted against or deducted from the previous
number who had signed up for certification elections Vismico Industrial Workers Association (VIWA) v. Noriel 131 SCRA 569
[1984]). Similarly, until a decision, final in character, has been issued declaring the strike illegal and the mass dismissal or
<äre||anº•1àw>

retrenchment valid, the strikers cannot be denied participation in the certification election notwithstanding, the vigorous
condemnation of the strike and the fact that the picketing were attended by violence. Under the foregoing circumstances, it does not
necessarily follow that the strikers in question are no longer entitled to participate in the certification election on the theory that they
have automatically lost their jobs. (Barrera v. CIR, 107 SCRA 596 [1981]). For obvious reasons, the duty of the employer to bargain
collectively is nullified if the purpose of the dismissal of the union members is to defeat the union in the consent requirement for
certification election. (Samahang Manggagawa Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this Court, the holding
of a certification election is a statutory policy that should not be circumvented. (George and Peter Lines Inc. v. Associated Labor
Unions (ALU), 134 SCRA 82 [1986]).

Finally, as a general rule, a certification election is the sole concern of the workers. The only exception is where the employer has to
file a petition for certification election pursuant to Art. 259 of the Labor Code because the latter was requested to bargain
collectively. But thereafter the role of the employer in the certification process ceases. The employer becomes merely a bystander
(Trade Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA 64 [1983]).

There is no showing that the instant case falls under the above mentioned exception. However, it will be noted that petitioner
corporation from the outset has actively participated and consistently taken the position of adversary in the petition for direct
certification as the sole and exclusive bargaining representative and/or certification election filed by respondent Associated Labor
Unions (ALU)-TUCP to the extent of filing this petition for certiorari in this Court. Considering that a petition for certification election
is not a litigation but a mere investigation of a non-adversary character to determining the bargaining unit to represent the
employees (LVN Pictures, Inc. v. Philippine Musicians Guild, supra; Bulakena Restaurant & Caterer v. Court of Industrial Relations,
45 SCRA 88 [1972]; George Peter Lines, Inc. v. Associated Labor Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v.
NLRC, 149 SCRA 470 [1987]), and its only purpose is to give the employees true representation in their collective bargaining with
an employer (Confederation of Citizens Labor Unions CCLU v. Noriel, 116 SCRA 694 [1982]), there appears to be no reason for the
employer's objection to the formation of subject union, much less for the filing of the petition for a certification election.

PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b) resolution of the Bureau of Labor Relations dated
Nov. 24, 1986 is AFFIRMED; and the temporary restraining order issued by the Court on March 4, 1987 is LIFTED permanently.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
 SECOND DIVISION

G.R. No. 100485 September 21, 1994

SAN MIGUEL CORPORATION, petitioner,

vs.
THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION-
INDEPENDENT, respondents.

Siguion Reyna, Montecillo & Ongsiako for petitioner.

E.N.A. Cruz & Associates for private respondent.

PUNO, J.:

Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and the Order dated April 12, 1991 of
public respondent Undersecretary Bienvenido E. Laguesma declaring respondent union as the sole and exclusive bargaining agent
of all the Magnolia sales personnel in northern Luzon be set aside for having been issued in excess of jurisdiction and/or with grave
abuse of discretion.

On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity) filed with the Department of Labor a
petition for certification election among all the regular sales personnel of Magnolia Dairy Products in the North Luzon Sales Area. 1

Petitioner opposed the petition and questioned the appropriateness of the bargaining unit sought to be represented by respondent
union. It claimed that its bargaining history in its sales offices, plants and warehouses is to have a separate bargaining unit for each
sales office.

The petition was heard on November 9, 1990 with petitioner

being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty. Batalla withdrew petitioner's opposition to a
certification election and agreed to consider all the sales offices in northern Luzon as one bargaining unit. At the pre-election
conference, the parties agreed inter alia, on the date, time and place of the consent election. Respondent union won the election
held on November 24, 1990. In an Order dated December 3, 1990, Mediator-Arbiter Benalfre J. Galang certified respondent union
2

as the sole and exclusive bargaining agent for all the regular sales personnel in all the sales offices of Magnolia Dairy Products in
the North Luzon Sales Area.

Petitioner appealed to the Secretary of Labor. It claimed that

Atty. Batalla was only authorized to agree to the holding of certification elections subject to the following conditions: (1) there would
only be one general election; (2) in this general election, the individual sales offices shall still comprise separate bargaining units.
3

In a Resolution dated March 19, 1991, public respondent, by authority of the Secretary of Labor, denied SMC's appeal and affirmed
4

the Order of the Med- Arbiter.

Hence this petition for certiorari.

Petitioner claims that:

THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION

WHEN HE IGNORED AND TOTALLY DISREGARDED PETITIONER'S VALID AND JUSTIFIABLE GROUNDS
WHY THE ERROR MADE IN GOOD FAITH BY PETITIONER'S COUNSEL BE CORRECTED, AND INSTEAD
RULED:

THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE BARGAINING AGENT

FOR ALL THE REGULAR SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH
LUZON SALES AREA", COMPLETELY IGNORING THE ESTABLISHED BARGAINING
HISTORY OF PETITIONER SMC.
 B

THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE "AGREEMENT"

ENTERED INTO AT THE HEARING ON
9 NOVEMBER 1990, IN CONTRAVENTION OF THE ESTABLISHED FACTS OF THE
CASE AND THE APPLICABLE LAW ON THE MATTER.

We find no merit in the petition.

The issues for resolution are: (1) whether or not respondent union represents an appropriate bargaining unit, and (2) whether or not
petitioner is bound by its lawyer's act of agreeing to consider the sales personnel in the north Luzon sales area as one bargaining
unit.

Petitioner claims that in issuing the impugned Orders, public respondent disregarded its collective bargaining history which is to
have a separate bargaining unit for each sales office. It insists that its prior collective bargaining history is the most persuasive
criterion in determining the appropriateness of the collective bargaining unit.

There is no merit in the contention.

A bargaining unit is a "group of employees of a given employer, comprised of all or less than all of the entire body of employees,
consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law." 5

The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of
6

compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status. 7

Contrary to petitioner's assertion, this Court has categorically ruled that the existence of a prior collective bargaining history is
neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. 8

Indeed, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of
work they perform.

In the case at bench, respondent union sought to represent the sales personnel in the various Magnolia sales offices in northern
Luzon. There is similarity of employment status for only the regular sales personnel in the north Luzon area are covered. They have
the same duties and responsibilities and substantially similar compensation and working conditions. The commonality of interest
among he sales personnel in the north Luzon sales area cannot be gainsaid. In fact, in the certification election held on November
24, 1990, the employees concerned accepted respondent union as their exclusive bargaining agent. Clearly, they have expressed
their desire to be one.

Petitioner cannot insist that each of the sales office of Magnolia should constitute only one bargaining unit. What greatly militates
against this position is the meager number of sales personnel in each of the Magnolia sales office in northern Luzon. Even the
bargaining unit sought to be represented by respondent union in the entire north Luzon sales area consists only of approximately
fifty-five (55) employees. Surely, it would not be for the best interest of these employees if they would further be fractionalized. The
9

adage "there is strength in number" is the very rationale underlying the formation of a labor union.

Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for Atty. Christine Ona, who got stranded
in Legaspi City. Atty. Batalla was allegedly unfamiliar with the collective bargaining history of its establishment. Petitioner claims it
should not be bound by the mistake committed by its substitute lawyer.

We are not persuaded. As discussed earlier, the collective bargaining history of a company is not decisive of what should comprise
the collective bargaining unit. Insofar as the alleged "mistake" of the substitute lawyer is concerned, we find that this mistake was
the direct result of the negligence of petitioner's lawyers. It will be noted that Atty. Ona was under the supervision of two (2) other
lawyers, Attys. Jacinto de la Rosa, Jr. and George C. Nograles. There is nothing in the records to show that these two (2) counsels
were likewise unavailable at that time. Instead of deferring the hearing, petitioner's counsels chose to proceed therewith. Indeed,
prudence dictates that, in such case, the lawyers allegedly actively involved in SMC's labor case should have adequately and
sufficiently briefed the substitute lawyer with respect to the matters involved in the case and the specific limits of his authority.
Unfortunately, this was not done in this case. The negligence of its lawyers binds petitioner. As held by this Court in the case of Villa
Rhecar Bus v. De la Cruz: 10
 . . . As a general rule, a client is bound by the mistakes of his counsel. Only when the application of the general
rule would result in serious injustice should an exception thereto be called for.

In the case at bench, petitioner insists that each of the sales offices in northern Luzon should be considered as a separate
bargaining unit for negotiations would be more expeditious. Petitioner obviously chooses to follow the path of least resistance. It is
not, however, the convenience of the employer that constitutes the determinative factor in forming an appropriate bargaining unit.
Equally, if not more important, is the interest of the employees. In choosing and crafting an appropriate bargaining unit, extreme
care should be taken to prevent an employer from having any undue advantage over the employees' bargaining representative. Our
workers are weak enough and it is not our social policy to further debilitate their bargaining representative.

In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public respondents certification of respondent
union as the sole and exclusive bargaining agent of all the regular Magnolia sales personnel of the north Luzon sales area.

WHEREFORE, premises considered, the challenged Resolution and Order of public respondent are hereby AFFIRMED in toto,
there being no showing of grave abuse of discretion or lack of jurisdiction.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 97237 August 16, 1991

FILIPINAS PORT SERVICES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, PATERNO LIBOON, SEGUNDO AQUINO, JOVITO BULAY, DOMINGO
NAVOA, DELFIN BERMEJO, CELEDONIO MANCUBAT, ALBERTO MAHINAY, SR., TEODULO SILAYA, SANTOS ARGUIDO,
JUANITO LABANON, FLORENCIO MIRANTES, LUCIO BARRERA, VICENTE GILDORE, LEON FUENTES, CASIMIRO
MAGSAYO, FERNANDO MORIENTE, MATIAS ORBITA, SR., FRANCISCO PARDILLO, ILDEFONSO JUMILLA AND JOSE
CANTONJOS, respondents.

Yap, Ocampo & Associates for petitioner.

Porfirio S. Daclan for private respondents.

PARAS, J.:

This is a petition for clarification with prayer for preliminary injunction filed by Filipinas Port Services, Inc. (hereinafter referred to as
Filport) seeking to clarify two conflicting decisions rendered by this Court in cases involving identical or similar parties, facts and
issues.

The antecedent facts of the case are as follows:

In view of the government policy which ordained that cargo handling operations should be limited to only one cargo handling
operator-contractor for every port (under Customs Memorandum Order 28075, later on superseded by General Ports Regulations of
the Philippine Ports Authority) the different stevedoring and arrastre corporations operating in the Port of Davao were integrated into
a single dockhandlers corporation, known as the Davao Dockhandlers, Inc., which was registered with the Securities and Exchange
Commission on July 13, 1976.

Due to the late receipt of its permit to operate at the Port of Davao from the Bureau of Customs, Davao Dockhandlers, Inc., which
was subsequently renamed Filport, actually started its operation on February 16, 1977.
As a result of the merger, Section 118, Article X of the General Guidelines on The Integration of Stevedoring/Arrastre Services (PPA
Administrative Order No. 13-77) mandated Filport to draw its personnel complements from the merging operators, as follows:

Sec. 118. Absorption of labor.—Subject to the provisions of the immediate preceding section, and consistent with the
actual operational requirements of the new management, all labor force together with its necessary personnel
complement, of the merging operators shall be absorbed by the merged or integrated organization to constitute its labor
force. (Emphasis supplied)

Thus, Filport's labor force was mostly taken from the integrating corporations, among them the private respondents.

On February 4,1987, private respondent Paterno Liboon and 18 others filed a complaint with the Department of Labor and
Employment Regional Office in Davao City, alleging that they were employees of Filport since 1955 through 1958 up to December
31, 1986 when they retired; that they were paid retirement benefits computed from February 16,1977 up to December 31, 1986 only;
and that taking into consideration their continuous length of service, they are entitled to be paid retirement benefits differentials from
the time they started working with the predecessors of Filport up to the time they were absorbed by the latter in 1977 (p. 15, Rollo).

Finding Filport a mere alter ego of the different integrating corporations, the Labor Arbiter held Filport liable for retirement benefits
due private respondents for services rendered prior to February 16, 1977. Said decision was affirmed by the NLRC on appeal.

Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 85704, claiming that it is an entirely new
corporation with a separate juridical personality from the integrating corporations; and that Filport is not a successor-employer, liable
for the obligations of private respondents' previous employers, as shown clearly in the memorandum dated November 21,1978 of
PPA Assistant General Manager Maximo S. Dumlao, Jr., to wit:

21 November 1978

MEMORANDUM

TO: The Officer-in-Charge

PMU Davao

FROM: The AGM for Operations

SUBJECT: Clarification of Sec. 116 of PPA Administrative

Order No. 13-77 of New Organization's Liability.

In reply to your telegram dated November 16, 1978, Sec. 116 of PPA Administrative Order #13-77 is hereby quoted for clarification:

New Organization's Liability—The integrated cargo-handling organization shall be absolutely free from any liability or obligation of
the merging operators who shall continue to be individually liable for their respective liabilities or obligations, if any. (emphasis
supplied) ...

xxx xxx xxx

The new organization's liability shall be the payment of salaries, benefits and all other money due the employee as a result of his
employment, starting on the date of his service in the newly integrated organization.

In answer to your query, therefore, the absorption of an employee into a newly integrated organization does not include the carry
over of his length of service.

s/t MAXIMO S. DUMLAO, JR.

Asst. General Manager

While G.R. No. 85704 was still pending decision by this Court, Josefino Silva, another employee of Filport, instituted a suit against
Filport and Damasticor (one of the defunct stevedoring firms) claiming for retirement benefits for services rendered prior to February
19, 1977. The labor arbiter found for Josefino Silva and said decision was affirmed by the NLRC.
Filport filed a petition for certiorari with the Supreme Court docketed as G.R. No. 86026. On August 31, 1989, this Court, through the
First Division, rendered a decision, holding that:

Petitioner (Filport) cannot be held liable for the payment of the retirement pay of private respondent (Josefino Silva) while in the
employ of DAMASTICOR ... who is held responsible for the same as the labor contract is in personamand cannot be passed on to
the petitioner." (Rollo, p. 7)

In so ruling, the First Division relied heavily on the case of Fernando v. Angat Labor Union (5 SCRA 248) where it was held that
unless expressly assumed, labor contracts are not enforceable against a transferee of an enterprise labor contracts being
in personam.

Per entry of judgment, the aforesaid decision became final and executory on November 24, 1989 (p. 87, Rollo).

On September 3, 1990, however, this Court, through the Second Division, dismissed the petition in G.R. No. 85704 "for failure to
sufficiently show that the questioned judgment is tainted with grave abuse of discretion."

Per entry of judgment, said resolution became final and executory on December 4, 1 990 (p. 108, Rollo).

Hence, the instant petition for clarification with prayer for preliminary injunction to enjoin the respondents from enforcing the decision
in G.R. No. 85704 until further orders of this Court.

We see no reason to disturb the findings of fact of the public respondent, supported as they are by substantial evidence in the light
of the well established principle that findings of administrative agencies which have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not only respect but at times even finality, and that judicial review by this Court
on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the Labor Arbiter and the NLRC based
their determinations but are limited to issues of jurisdiction or grave abuse of discretion. (National Federation of Labor Union v. Ople,
143 SCRA 129).

In the case filed by private respondent Paterno Liboon et al against Filport, the findings of the NLRC in its November 27, 1987
decision are categorical:

In resolving the issues, the Labor Arbiter concludes as follows:

The eventual incorporation of the arrastre/stevedoring firms and their subsequent registration with the Securities and
Exchange Commission on July 13, 1975 brought to the fore the interlocking ownership of the new corporation.

xxx xxx xxx

Subsequent amendment of its Articles of Incorporation highlighted by the renaming of the Davao Dockhandlers, Inc. to
Filipinas Port Services, Inc. did not diminish the fact that the ownership and constituency of the new corporation are
basically Identical with the previous owners.

It is, therefore, the considered view of this Office that respondent Filport being a mere alter ego of the different merging
companies has at the very least, the obligation not only to absorb into its employ workers of the dissolved companies, but
also to absorb the length of service earned by the absorbed employees from their former employers.

xxx xxx xxx

We are in full accord with, and hereby sustain, the findings and conclusions of the Labor Arbiter. Under the
circumstances, respondent-appellant is a successor-employer. As a successor entity, it is answerable to the lawful
obligations of the predecessor employers, herein integrees. This Commission has so held under the principle of
'substitution' that the successor firm is liable to (sic) the obligations of the predecessor employer, notwithstanding the
change in management or even personality, of the new contracting employer." (Lakas Ng Manggagawang Filipino
(LAKAS] v. Tarlac Electrical Cooperative, Inc. et al., NLRC Case No. RB III-1 57-75, January 28,1978, En Banc). ... The
Supreme Court earlier upheld the "Substitutionary" doctrine in the case of Benguet Consolidated, Inc. vs. BOI Employees
& Workers Union, (G.R. L-24711, April 30, 1968, 23 SCRA 465). (pp. 35 & 37, Rollo)

Said findings were reiterated in the case filed by Josefino Silva against Filport where the NLRC, in its decision dated January 19,
1988, further ruled that:
 ... As We have ruled in the similar case involving herein appellant, the latter is deemed a survivor entity because it
continued in an essentially unchanged manner the business operators of the predecessor arrastre and port service
operators, hiring substantially the same workers, including herein appellee, of the integree predecessors, using
substantially the same facilities, with similar working conditions and line of business, and employing the same corporate
control, although under a new management and corporate personality. (G.R. No. 86026, p. 35, Rollo)

Thus, granting that Filport had no contract whatsoever with the private respondents regarding the services rendered by them prior to
February 16, 1977, by the fact of the merger, a succession of employment rights and obligations had occurred between Filport and
the private respondents. The law enforced at the time of the merger was Section 3 of Act No. 2772 which took effect on March 6,
1918. Said law provides:

Sec. 3. Upon the perfecting, as aforesaid, of a consolidation made in the manner herein provided, the several
corporations parties thereto shall be deemed and taken as one corporation, upon the terms and conditions set forth in
said agreement; or, upon the perfecting of a merger, the corporation merged shall be deemed and taken as absorbed by
the other corporation and incorporated in it; and all and singular rights, privileges, and franchises of each of said
corporations, and all property, real and personal, and all debts due on whatever account, belonging to each of such
corporations, shall be taken and deemed as transferred to and vested in the new corporation formed by the consolidation,
or in the surviving corporation in case of merger, without further act or deed; and the title to real estate, either by deed or
otherwise, under the laws of the Philippine Islands vested in either corporation, shall not be deemed in any way impaired
by reason of this Act: Provided, however, That the rights of creditors and all liens upon the property of either of said
corporations shall be preserved unimpaired; and all debts liabilities, and duties of said corporations shall thenceforth
attach to the new corporation in case of a consolidation, or to the surviving corporation in case of a merger, and be
enforced against said new corporation or surviving corporation as if said debts, liabilities, and duties had been incurred or
contracted by it.

As earlier stated, it was mandated that Filport shall absorb all labor force and necessary personnel complement of the merging
operators, thus, clearly indicating the intention to continue the employer-employee relationships of the individual companies with its
employees through Filport.

The alleged memorandum of the PPA Assistant General Manager exonerating Filport from any liability arising from and as a result
of the merger is contrary to public policy and is violative of the workers' right to security of tenure. Said memorandum was issued in
response to a query of the PMU Officer-in-Charge and was not even published nor made known to the workers who came to know
of its existence only at the hearing before the NLRC. (G.R. No. 86026, pp. 93-94, Rollo)

The principle involved in the case cited by the First Division (Fernando v. Angat Labor Union [supra]) applies only when the
transferee is an entirely new corporation with a distinct personality from the integrating firms and NOT where the transferee was
found to be merely an alter ego of the different merging firms, as in this case. Thus, Filport has the obligation not only to absorb the
1âwphi1

workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former
employees as well. To rule otherwise would be manifestly less than fair, certainly, less than just and equitable.

Finally, to deny the private respondents the fruits of their labor corresponding to the time they worked with their previous employers
would render at naught the constitutional provisions on labor protection. In interpreting the protection to labor and social justice
provisions of the Constitution and the labor laws, and rules and regulations implementing the constitutional mandate, the Supreme
Court has always adopted the liberal approach which favors the exercise of labor rights. (EuroLinea Phils., Inc. v. NLRC, 156 SCRA
83).

WHEREFORE, the Resolution of the Second Division of this Court in G.R. No. 85704 dated September 3, 1990 is hereby
REITERATED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR
SUPERVISORY UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

DECISION

REGALADO, J p:

The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article
212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III
of the same Code, and hence are not entitled to overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the
Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on
April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO
Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor,
Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift
Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor,
Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel
Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day
Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department
heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility,
and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working
conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of
respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the
same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the
provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following
adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered
managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their
basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared
to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled
to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO.
6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at
the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed
a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article
100 of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to —

1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead
of the P100.00 special allowance which was implemented on June 11, 1988; and

2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the
overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being
paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be
estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits
therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program,
hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union;
and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given
NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been
discontinued, which arrangement, therefore, amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission
(NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial
employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday
pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the
evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and
independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and
their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a
resolution of public respondent dated August 30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave
abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff
who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the
benefits due to rank-and-file employees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and
holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as
supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of
Article 82 of the Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article
212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are
considered rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter
are not managerial employees, adopted the definition stated in the aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to
overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as
defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I,
Book III of the Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. — The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or
not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff."
(Emphasis supplied.)

xxx xxx xxx

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if they qualify for exemption under the
condition set forth herein:
xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or
subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring
and firing and as to the promotion or any other change of status of other employees are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of their employer;

(2) Customarily and regularly exercise discretion and independent judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and

(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related
to the performance of the work described in paragraphs (1), (2), and above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial
positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and,
hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to
the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of
the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of
the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions,
certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working
conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial
staff, hence they are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed
that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are
entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this
Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism,
however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established
facts and the applicable law and doctrine. 5

This is one such case where we are inclined to tip the scales of justice in favor of the employer.

The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of
the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work
performed, rather than the title of the employee's position. 6

Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice
and the peculiar circumstances obtaining herein mandate a deviation from the rule.

A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory
employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in
planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and
objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective
departments. More specifically, their duties and functions include, among others, the following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning
complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their
development/advancement;

5) represents the superintendent or the department when appointed and authorized by the former;

6) coordinates and communicates with other inter and intra department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees,
recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed
abnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented;
and

11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to
Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of
their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly
assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they
are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote
more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of
their work hereinbefore described.

Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as
officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not
entitled to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to
determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members
are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their
functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code,
is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory
employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been
made along that line and its corresponding conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members
has ripened into a contractual obligation.
A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees
such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and
their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as
supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification
made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated
August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as
'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday
and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their
organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be
said to occupy the same positions." 9

It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed
before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent
union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE
Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then
treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of
voluntary employer practice, which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have
been practiced over a long period of time, and must be shown to have been consistent and deliberate. 10

The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the
benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar,
respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure
generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified
under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that
they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the
JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion
which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by
law, and usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain
exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth
therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements
imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their
former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As
the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law
and fairness, get the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in
good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted
implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the
members of respondent union of the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold that:

". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This
flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special
laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or
spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19,
1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave
abuse of discretion, and the basic complaint of private respondent union is DISMISSED.
 Republic of the Philippines
SUPREME COURT
Manila

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:

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 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.)

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

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
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 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.

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 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.

FIRST DIVISION

[G.R. No. 103525. March 29, 1996]

MARCOPPER MINING CORPORATION, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION and NATIONAL MINES AND
ALLIED WORKERS UNION (NAMAWU-MIF), respondents.

DECISION
KAPUNAN, J.:

Social justice and full protection to labor guaranteed by the fundamental

law of this land is not some romantic notion, high in rhetoric but low in
substance. The case at bench provides yet another example of harmonizing
and balancing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to
expansion and growth. [1]

In this petition for certiorari and prohibition under Rule 65 of the Revised
Rules of Court, Marcopper Mining Corporation impugns the decision rendered
by the National Labor Relations Commission (NLRC) on 18 November 1991 in
RAB-IV-12-2588-88 dismissing petitioners appeal, and the resolution issued
by the said tribunal dated 20 December 1991 denying petitioners motion for
reconsideration.
There is no disagreement as to the following facts:
On 23 August 1984, Marcopper Mining Corporation, a corporation duly
organized and existing under the laws of the Philippines, engaged in the
business of mineral prospecting, exploration and extraction, and private
respondent NAMAWU-MIF, a labor federation duly organized and registered
with the Department of Labor and Employment (DOLE), to which the
Marcopper Employees Union (the exclusive bargaining agent of all rank-and-
file workers of petitioner) is affiliated, entered into a Collective Bargaining
Agreement (CBA) effective from 1 May 1984 until 30 April 1987.
Sec. 1, Art. V of the said Collective Bargaining Agreement provides:

Section 1. The COMPANY agrees to grant general wage increase to all employees
within the bargaining unit as follows:

Effectivity Increase per day on

the Basic Wage

May 1,1985 5%

May 1,1986 5%

It is expressly understood that this wage increase shall be exclusive of any increase in
the minimum wage and/or mandatory living allowance that may be promulgated
during the life of this Agreement.[2]

Prior to the expiration of the aforestated Agreement, on 25 July 1986,

petitioner and private respondent executed a Memorandum of Agreement
(MOA) wherein the terms of the CBA, specifically on matters of wage increase
and facilities allowance, were modified as follows:

1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all
employees and workers within the bargaining units (sic) as follows:

(a) 5% effective May 1,1986.

This will mean that the members of the bargaining unit will get an effective increase
of 10% from May 1, 1986.

(b) 5% effective May 1,1987.

2. The COMPANY hereby grants an increase of the facilities allowance from P50.00
to P100.00 per month effective May 1, 1986. [3]

In compliance with the amended CBA, petitioner implemented the

initial 5% wage increase due on 1 May 1986. [4]

On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated

mandating the integration of the cost of living allowance under Wage Orders
Nos. 1, 2, 3, 5 and 6 into the basic wage of workers, its effectivity retroactive
to 1 May 1987. Consequently, effective on 1 May 1987, the basic wage rate
[5]

of petitioners laborers categorized as non-agricultural workers was increased

by P9.00 per day. [6]

Petitioner implemented the second five percent (5%) wage increase due
on 1 May 1987 and thereafter added the integrated COLA. [7]

Private respondent, however, assailed the manner in which the second

wage increase was effected. It argued that the COLA should first be
integrated into the basic wage before the 5% wage increase is computed. [8]

Consequently, on 15 December 1988, the union filed a complaint for

underpayment of wages before the Regional Arbitration Branch IV, Quezon
City.
On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the
union. The dispositive part reads, thus:

WHEREFORE, consistent with the tenor hereof, judgment is rendered directing

respondent company to pay the wage differentials due its rank-and-file workers
retroactive to 1 May 1987.

SO ORDERED. [9]

The Labor Arbiter ruled in this wise:

First and foremost, the written instrument and the intention of the parties must be
brought to the fore. And talking of intention, we conjure to sharp focus the provision
embossed in Section 1, Article V of the collective agreement, viz:

xxx xxx xxx.

It is expressly understood that this wage increase shall be exclusive of increase in the
minimum wage and/or mandatory living allowance that may be promulgated during
the life of this Agreement. (Italics ours.)

The foregoing phrase albeit innocuously framed offers the cue. This ushers us to the
inner sanctum of what really was the intention of the parties to the contract. Treading
along its lines, it becomes readily discernible that this portion of the contract is the
stop-lock gate or known in its technical term as the non-chargeability clause. There
can be no quibbling that on the strength of this provision, the wage/allowance granted
under this accord cannot be credited to similar form of benefit that may be thereafter
ordained by the government through legislation. That the parties therefore were
consciously aware at the time of the conclusion of the agreement of the never-ending
rise in the cost of living is a logical corollary. And while this upward trend may not be
a welcome phenomenon, there was the intention to yield and comply in the event of
an imposition. Of course, there cannot likewise be any rivalry that if the Executive
Order were to retroact to 2 May 1987 or a day after the last contractual increase, this
question will not arise. It is in this sense of fairness that we cannot allow this one (1)
day to be an insulating medium to deny the workers the benediction endowed by
Executive Order No. 178. [10]

Petitioner appealed the Labor Arbiters decision and on 18 November 1991 the NLRC
rendered its decision sustaining the Labor Arbiters ruling. The dispositive portion
states:

WHEREFORE, in view of the foregoing, the Decision of the Labor Arbiter is hereby
AFFIRMED and the appeal filed is hereby DISMISSED for lack of merit.

SO ORDERED. [11]

The NLRC declared:

x x x Increments to the laborers financial gratification, be they in the form of salary

increases or changes in the salary scale are aimed at one thing -improvement of the
economic predicament of the laborers. As such, they should be viewed in the light of
the States avowed policy to protect labor. Thus, having entered into an agreement
with its employees, an employer may not be allowed to renege on its obligation under
a collective bargaining agreement should, at the same time, the law grants the
employees the same or better terms and conditions of employment. Employee benefits
derived from law are exclusive of benefits arrived at through negotiation and
agreement unless otherwise provided by the agreement itself or by law.
(Meycauayan College v. Hon. Franklin N. Drilon, 185 SCRA 50). [12]

Petitioners motion for reconsideration was denied by the NLRC in its

resolution dated 20 December 1991.
In the present petition, Marcopper challenges the NLRC decision on the
following grounds:
I

PUBLIC RESPONDENT NLRC ACTED WITH GRAVE ABUSE OF DISCRETION

IN AFFIRMING THE DECISION OF LABOR ARBITER JOAQUIN TANODRA
DIRECTING MARCOPPER TO PAY WAGE DIFFERENTIALS DUE ITS RANK-
AND-FILE EMPLOYEES RETROACTIVE TO 1 MAY 1987 CONSIDERING
THAT SANS EO 178, THE FUNDAMENTAL MEANING OF THE BASIC WAGE
IS CLEARLY DIFFERENT FROM, AND DOES NOT INCLUDE THE COLA AT
THE TIME THE CBA WAS ENTERED INTO. THUS, PUBLIC
RESPONDENTS READING OF THE CBA, AS AMENDED BY THE
MEMORANDUM OF AGREEMENT DATED 25 JULY 1986, ULTIMATELY
DISREGARDED THE ORDINARY MEANING OF THE PHRASE BASIC WAGE,
OTHERWISE INTENDED BY THE PARTIES DURING THE TIME THE CBA
WAS EXECUTED.

II

THE LABOR ARBITER AND PUBLIC RESPONDENT NLRCS RELIANCE ON

THE LAST PARAGRAPH OF SECTION 1, ARTICLE V OF THE CBA WHICH
STATES: IT IS EXPRESSLY UNDERSTOOD THAT THIS WAGE INCREASE
SHALL BE EXCLUSIVE OF ANY INCREASE IN THE MINIMUM WAGE
AND/OR MANDATORY LIVING ALLOWANCE THAT MAY BE
PROMULGATED DURING THE LIFE OF THIS AGREEMENT IS MISPLACED
AND WITHOUT BASIS BECAUSE SAID PROVISION HARDLY OFFERS A
HINT AS TO WHAT BASIC WAGE THE PARTIES HAD IN MIND AT THE
TIME THEY EXECUTED THE CBA AS AMENDED BY THE MEMORANDUM
OF AGREEMENT.

III

PETITIONER COMPUTED THE 5% WAGE INCREASE BASED ON THE

UNINTEGRATED BASIC WAGE IN ACCORDANCE WITH THE INTENT AND
TERMS OF THE CBA, AS AMENDED BY THE MEMORANDUM OF
AGREEMENT. THIS WAS IN FULL ACCORD AND IN FAITHFUL
COMPLIANCE WITH EO 178. HENCE, PETITIONER DID NOT COMMIT ANY
UNDERPAYMENT.

IV

THE DOCTRINE OF LIBERAL INTERPRETATION IN FAVOR OF LABOR IN

CASE OF DOUBT IS NOT APPLICABLE TO THE INSTANT CASE. [13]

Stripped of the non-essentials, the question for our resolution is what

should be the basis for the computation of the CBA increase, the basic wage
without the COLA or the so-called integrated basic wage which, by mandate
of E.O. No. 178, includes the COLA.
It is petitioners contention that the basic wage referred to in the CBA
pertains to the unintegrated basic wage. Petitioner maintains that the rules on
interpretation of contracts, particularly Art. 1371 of the New Civil Code which
states that:

Art. 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.

should govern. Accordingly, applying the aforequoted provision in the case at

bench, petitioner concludes that it was clearly not the intention of the parties
(petitioner and private respondent) to include the COLA in computing the
CBA/MOA mandated increase since the MOA was entered into a year before
E.O. No. 178 was enacted even though their effectivity dates coincide. In
other words, the situation contemporaneous to the execution of the
amendatory MOA was that there was yet no law requiring the integration of
the COLA into the basic wage. Petitioner, therefore, cannot be compelled to
[14]

undertake an obligation it never assumed or contemplated under the CBA or

MOA.
Siding with the petitioner, the Solicitor General opines that for the purpose
of complying with the obligations imposed by the CBA, the integrated COLA
should not be considered due to the exclusivity of the benefits under the said
CBA and E.O. No. 178. He explains thus:

A collective bargaining agreement is a contractual obligation. It is distinct from an

obligation imposed by law. The terms and conditions of a CBA constitute the law
between the parties. Thus, employee benefits derived from either the law or a contract
should be treated as distinct and separate from each other. (Meycauayan College vs.
Drilon, supra.)

xxx xxx xxx.

Very clearly, the CBA and E.O. 178 provided for the exclusiveness of the benefits to
be given or awarded to the employees of petitioner. Thus, when petitioner computed
the 5% wage increase based on the unintegrated basic wage, it complied with its
contractual obligations under the CBA. When it thereafter integrated the COLA into
the basic wage, it complied also with the mandate of E.O. 178. Petitioner, therefore,
complied with its contractual obligations in the CBA as well as with the legal mandate
of the law. Consequently, petitioner is not guilty of underpayment.

To follow the theory of private respondent, that is - to integrate first the COLA into
the basic wage and thereafter compute the 5% wage increase therefrom, would violate
the exclusiveness of the benefits granted under the CBA and under E.O. 178. [15]
 Private respondent counters by asserting that the purpose, nature and
essence of CBA negotiation is to obtain wage increases and benefits over and
above what the law provides and that the principle of non-diminution of
benefits should prevail.
The NLRC, which filed its own comment, likewise, made the following
assertions:

x x x However, to state outright that the parties intended the basic wage to remain
invariable even after the advent of EO 178 is unfounded and presumptuous a claim as
such inevitably works to the utmost disadvantage of the workers and runs counter to
the constitutional guarantee of affording protection to labor. Evidently, the rationale
for the integration of the COLA with the basic wage was primarily to increase the
base wage for purposes of computation of such items as overtime and premium pay,
fringe benefits, etc. To adopt the statement and claim of the petitioner would then
redound to depriving the workers of the full benefits the law intended for them, which
in the final analysis was solely for the purpose of alleviating their plight due to the
continuous undue hardship they suffer caused by the ever escalating prices of prime
commodities. [16]

We rule for the respondents.

The principle that the CBA is the law between the contracting parties
stands strong and true. However, the present controversy involves not
[17]

merely an interpretation of CBA provisions. More importantly, it requires a

determination of the effect of an executive order on the terms and the
conditions of the CBA. This is, and should be, the focus of the instant case.
It is unnecessary to delve too much on the intention of the parties as to
what they allegedly meant by the term basic wage at the time the CBA and
MOA were executed because there is no question that as of 1 May 1987, as
mandated by E.O. No. 178, the basic wage of workers, or the statutory
minimum wage, was increased with the integration of the COLA. As of said
date, then, the term basic wage includes the COLA. This is what the law
ordains and to which the collective bargaining agreement of the parties must
conform.
Petitioners arguments eventually lose steam in the light of the fact that
compliance with the law is mandatory and beyond contractual stipulation by
and between the parties; consequently, whether or not petitioner intended the
basic wage to include the COLA becomes immaterial. There is evidently
nothing to construe and interpret because the law is clear and
unambiguous. Unfortunately for petitioner, said law, by some uncanny
coincidence, retroactively took effect on the same date the CBA increase
became effective.Therefore, there cannot be any doubt that the computation
of the CBA increase on the basis of the integrated wage does not constitute a
violation of the CBA.
Petitioners contention that under the Rules Implementing E.O. No. 178,
the definition of the term -basic wage has remained unchanged is off the mark
since said definition expressly allows integration of monetary benefits into the
regular pay of employees:

Chapter 1. Definition of Terms and Coverage.

Section 1. Definition of Terms.

xxx xxx xxx.

(j) Basic Wage means all regular remuneration or earnings paid by an employer for
services rendered on normal working days and hours but does not include cost-of-
living allowances, profit-sharing payments, premium payments, 13th month pay, and
other monetary benefits which are not considered as part of or integrated into the
regular salary of the employee on the date the Order became effective. (Italics ours.)

What E.O. No. 178 did was exactly to integrate the COLA under Wage
Orders Nos. 1, 2, 3, 5 and 6 into the basic pay so as to increase the statutory
daily minimum wage. Section 2 of the Rules is quite explicit:

Section 2. Amount to be Integrated. - Effective on the dates specified, as a result of

the integration, the basic wage rate of covered workers shall be increased by the
following amounts: (Italics ours.)

xxx xxx xxx.

Integration of monetary benefits into the basic pay of workers is not a new
method of increasing the minimum wage. But even so, we are still guided by
[18]

our ruling in Davao Integrated Port Stevedoring Services v. Abarquez, which [19]

we herein reiterate:
While the terms and conditions of the CBA constitute the law between the
parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code of
the Philippines which governs the relations between labor and capital, is not
merely contractual in nature but impressed with public interest, thus, it must
yield to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.
Finally, petitioner misinterprets the declaration of the Labor Arbiter in the
assailed decision that when the pendulum of judgment swings to and fro and
the forces are equal on both sides, the same must be stilled in favor of labor.
While petitioner acknowledges that all doubts in the interpretation of the Labor
Code shall be resolved in favor of labor, it insists that what is involved-here
[20]

is the amended CBA which is essentially a contract between private

persons. What petitioner has lost sight of is the avowed policy of the State,
enshrined in our Constitution, to accord utmost protection and justice to labor,
a policy, we are, likewise, sworn to uphold.
In Philippine Telegraph & Telephone Corporation v. NLRC, we [21]

categorically stated that:

When conflicting interests of labor and capital are to be weighed on the scales of
social justice, the heavier influence of the latter should be counter-balanced by
sympathy and compassion the law must accord the underprivileged worker.

Likewise, in Terminal Facilities and Services Corporation v. NLRC, we [22]

declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to
the social justice policy.

The purpose of E.O. No. 178 is to improve the lot of the workers covered
by the said statute. We are bound to ensure its fruition.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.