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PEPSI-COLA PRODUCTS PHILIPPINES, INC., petitioner, vs. HONORABLE SECRETARY
OF LABOR, MED-ARBITER NAPOLEON V. FERNANDO & PEPSI-COLA
SUPERVISORY EMPLOYEES ORGANIZATION-UOEF, respondents
RELEVANT FACTS
The Pepsi-Cola Employees Organization-UOEF (Union) filed a petition for certification
election with the Med-Arbiter seeking to be the exclusive bargaining agent of supervisors of
Pepsi-Cola Philippines, Inc. (PEPSI). The Med-Arbiter granted the Petition, with the explicit
statement that it was an affiliate of Union de Obreros Estivadores de Filipinas (federation);
together with two (2) rank and file unions, Pepsi-Cola Labor Unity (PCLU) and Pepsi-Cola
Employees Union of the Philippines (PEUP). Pepsi filed with the Bureau of Labor Relations a
petition to Set Aside, Cancel and/or Revoke Charter Affiliation of the Union on the ground that
(a) members of the Union were managers, and (b) a supervisors; union can not affiliate with a
federation whose members include the rank and file union of the same company. Pepsi
presented a motion to re-open the case since it was not furnished with a copy of the Petition for
Certification Election. Pepsi filed a Notice of Appeal and Memorandum of Appeal with the
Secretary of Labor, questioning the setting of the certification election on the said date and five
days after. Pepsi found its way to this Court via the present petition for certiorari.
The Court dismissed the case for failure to sufficiently show that the questioned judgment was
tainted with grave abuse of discretion. The Court found merit in the submission of the Office of
the Solicitor General that the designation should be reconciled with the actual job description of
the subject employees. The mere fact that an employee was designated manager does not
necessarily make him one. Otherwise, there would be an absurd situation where one can be
given the title just to be deprived of the right to be a member of a union. The petitions under
consideration were dismissed; however, Credit and Collection Managers and Accounting
Managers were highly confidential employees not eligible for membership in a supervisors'
union.
ISSUE AND RATIO DECIDENDI
W/N local union of supervisors may join union of rank and file employees? NO
In Atlas Lithographic Services, Inc. vs. Laguesma, 205 SCRA 12, [1992] decided by the Third
Division with J. Gutierrez, Jr., as ponente and JJ. Feliciano, Bidin, Romero and now Chief
Justice Davide, Jr., as members it was ratiocinated:
". . . Thus, if the intent of the law is to avoid a situation where supervisors would merge with the
rank-and-file or where the supervisors' labor organization would represent conflicting interests,
then a local supervisors' union should not be allowed to affiliate with the national federation of
union of rank-and-file employees where that federation actively participates in union activity in
the company. . . The prohibition against a supervisors' union joining a local union of rank and file
is replete with jurisprudence. The Court emphasizes that the limitation is not confined to a case
of supervisors' wanting to join a rank-and-file union. The prohibition extends to a supervisors'
local union applying for membership in a national federation the members of which include local
unions of rank and file employees. The intent of the law is clear especially where, as in this case
at bar, the supervisors will be co-mingling with those employees whom they directly supervise in
their own bargaining unit."
W/N confidential employees can join the labor union of the rank and file? NO
What was held in the case of National Association of Trade Unions (NATU) — Republic Planters
Bank Supervisors Chapter vs. Hon. R. D. Torres, et al., G.R. No. 93468, December 29, 1994,
applies to this case. Citing Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 628, 635;
Golden Farms vs. NLRC, 175 SCRA 471, and Pier 8 Arrastre and Stevedoring Services, Inc. vs.
Hon. Nieves Roldan-Confesor, et al., G.R. No. 110854, February 14, 1995, the Court ruled:
". . . A confidential employee is one entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employer's property. While Art. 245 of the Labor
Code singles out managerial employee as ineligible to join, assist or form any labor organization,
under the doctrine of necessary implication, confidential employees are similarly disqualified.
This doctrine states that what is implied in a statute is as much a part thereof as that which is
expressed, as elucidated in several case; the latest of which is Chua vs. Civil Service
Commission where we said: No statute can be enacted that can provide all the details involved
in its application. There is always an omission that may not meet a particular situation. What is
thought, at the time of the enactment, to be an all embracing legislation may be inadequate to
provide for the unfolding events of the future. So-called gaps in the law develop as the law is
enforced One of the rules of statutory construction used to fill in the gap is the doctrine of
necessary implication . . . Every statute is understood, by implication, to contain all such
provisions as may be necessary to effectuate its object and purpose, or to make effective rights,
powers, privileges or jurisdiction which it grants, including all such collateral and subsidiary
consequences as may be fairly and logically inferred from its terms. Ex necessitate legis . . . In
applying the doctrine of necessary implication, we took into consideration the rationale behind
the disqualification of managerial employees expressed in Bulletin Publishing Corporation vs.
Sanchez, thus ". . . if these managerial employees would belong to or be affiliated with a Union,
the latter might not be assured of their loyalty to the Union in view of evident conflict of interests.
The Union can also become company — dominated with the presence of managerial employees
in Union membership."
Stated differently, in the collective bargaining process, managerial employees are supposed to
be on the side of the employer, to act as its representatives, and to see to it that its interest are
well protected. The employer is not assured of such protection if these employees themselves
are union members. Collective bargaining in such a situation can become one-sided. It is the
same reason that impelled this Court to consider the position of confidential employees as
included in the disqualification found in Art. 245 as if the disqualification of confidential
employees were written in the provision. If confidential employees could unionize in order to
bargain for advantages for themselves, then they could be governed by their own motives rather
than the interest of the employers. Moreover, unionization of confidential employees for the
purpose of collective bargaining would mean the extension of the law to persons or individuals
who are supposed to act "in the interest of" the employers. It is not far fetched that in the course
of collective bargaining, they might jeopardize that interest which they are duty bound to protect.
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W/N membership is determined by the nomenclature of the positions given? NO
Designation should be reconciled with the actual job description of subject employees. A careful
scrutiny of their job description indicates that they don't lay down company policies. Theirs is not
a final determination of the company policies since they have to report to their respective
superior. The mere fact that an employee is designated manager does not necessarily make him
one. Otherwise, there would be an absurd situation where one can be given the title just to be
deprived of the right to be a member of a union. In the case of National Steel Corporation vs.
Laguesma, G.R. No. 103743, January 29, 1996, it was stressed that: "What is essential is the
nature of the employee's function and not the nomenclature or title given to the job which
determines whether the employee has rank and file or managerial status, or whether he is a
supervisory employee."
Standard Chartered Bank Employees Union (SCBEU-NUBE) v Standard Chartered Bank
FACTS:
● SCBEU and SCB began negotiating for a new CBA in May 2000 as their 1998-2000
CBA already expired. Due to a deadlock in the negotiations, SCBEU filed a Notice of
Strike prompting the OLE to assume jurisdiction over the labor dispute.
● SOLE issued an order:
○ WHEREFORE, PREMISES CONSIDERED, the Standard Chartered Bank
and the Standard Chartered Bank Employees Union are directed to execute
their collective bargaining agreement effective 01 April 2001 until 30 March
2003 incorporating therein the foregoing dispositions and the agreements
they reached in the course of negotiations and conciliation. All other
submitted issues that were not passed upon are dismissed.
○ The charge of unfair labor practice for bargaining in bad faith and the claim
for damages relating thereto are hereby dismissed for lack of merit.
○ Finally, the charge of unfair labor practice for gross violation of the
economic provisions of the CBA is hereby dismissed for want of jurisdiction.
● Both parties filed a motion for reconsideration regarding the order but were denied.
● SCBEU then filed an appeal to the CA but CA affirmed the SOLE’s order. Hence, this
Rule 45 petition.
○ The resolution of this case has been overtaken by the execution of the
parties' 2003-2005 CBA. But the SC ruled on it despite being moot and
academic because the issues are capable of repetition yet evading review.
The CBA provisions in dispute are the exclusion of certain employees from the appropriate
bargaining unit and the adjustment of remuneration for employees serving in an acting
capacity for one month.
In their proposal, Union sought the exclusion of only the following employees from the
appropriate bargaining unit – all managers who are vested with the right to hire and fire
employees, confidential employees, those with access to labor relations materials, Chief
Cashiers, Assistant Cashiers, personnel of the Telex Department and one Human
Resources (HR) staff.
In the previous 1998-2000 CBA,10 the excluded employees are as follows:
A. All covenanted and assistant officers (now called National Officers)
B. One confidential secretary of each of the:
1. Chief Executive, Philippine Branches
2. Deputy Chief Executive/Head, Corporate Banking Group
3. Head, Finance
4. Head, Human Resources
. Manager, Cebu
6. Manager, Iloilo
7. Covenanted Officers provided said positions shall be filled by new
recruits.
C. The Chief Cashiers and Assistant Cashiers in Manila, Cebu and Iloilo, and in
any other branch that the BANK may establish in the country.
D. Personnel of the Telex Department
E. All Security Guards
F. Probationary employees, without prejudice to Article 277 (c) of the Labor
Code, as amended by R.A. 6715, casuals or emergency employees; and
G. One (1) HR Staff11
The Secretary, however, maintained the previous exclusions because Union failed to
show that the employees sought to be removed from the list qualify for exclusion.
With regard to the remuneration of employees working in an acting capacity, it was
petitioner's position that additional pay should be given to an employee who has been
serving in a temporary/acting capacity for one week. The Secretary likewise rejected
petitioner's proposal and instead, allowed additional pay for those who had been working
in such capacity for one month. The Secretary agreed with the Bank's position that a
restrictive provision would curtail management's prerogative, and at the same time,
recognized that employees should not be made to work in an acting capacity for long
periods of time without adequate compensation.
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ISSUE & RULING: W/N SCB's Chief Cashiers and Assistant Cashiers, personnel of the Telex
Department and HR staff are confidential employees, such that they should be excluded from
the bargaining unit? YES
The disqualification of managerial and confidential employees from joining a bargaining unit for
rank and file employees is already well-entrenched in jurisprudence. While Article 245 of the
Labor Code limits the ineligibility to join, form and assist any labor organization to managerial
employees, jurisprudence has extended this prohibition to confidential employees or those who
by reason of their positions or nature of work are required to assist or act in a fiduciary manner
to managerial employees and hence, are likewise privy to sensitive and highly confidential
records.
In this case, the question that needs to be answered is whether the Bank's Chief Cashiers and
Assistant Cashiers, personnel of the Telex Department and HR staff are confidential employees,
such that they should be excluded.
➔ SCBEU wanted to remove from the list of excluded employees Chief Cashiers and
Assistant Cashiers, personnel of the Telex department and one (1) HR Staff because
they have mutuality of interest with the other rank and file employees.
➔ Re: Cashiers
◆ National Association of Trade Unions (NATU) Republic Planters Bank
Supervisors Chapter v. Torres declared that they are confidential employees
having control, custody and/or access to confidential matters, e.g., the
branch's cash position, statements of financial condition, vault combination,
cash codes for telegraphic transfers, demand drafts and other negotiable
instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding
joint custody, and therefore, disqualified from joining or assisting a union; or
joining, assisting or forming any other labor organization.
➔ Re: Telex personnel
◆ Golden Farms, Inc. v. Ferrer-Calleja meanwhile stated that confidential
employees such as accounting personnel, radio and telegraph operators
who, having access to confidential information, may become the source of
undue advantage. Said employee(s) may act as spy or spies of either party
to a collective bargaining agreement.
➔ Re: HR staff
◆ in Philips Industrial Development, Inc. v. National Labor Relations
Commission, the Court designated personnel staff, in which human
resources staff may be qualified, as confidential employees because by the
very nature of their functions, they assist and act in a confidential capacity
to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations.
➔ “Absent any proof that Chief Cashiers and Assistant Cashiers, personnel of the Telex
department and one (1) HR Staff have mutuality of interest with the other rank and file
employees, then they are rightfully excluded from the appropriate bargaining unit.”
Union insists that the foregoing employees are not confidential employees; however, it failed to
buttress its claim. Aside from its generalized arguments, and despite the Secretary's finding that
there was no evidence to support it, petitioner still failed to substantiate its claim. Petitioner did
not even bother to state the nature of the duties and functions of these employees, depriving the
Court of any basis on which it may be concluded that they are indeed confidential employees
There is likewise no reason for the Court to disturb the conclusion of the Secretary and the CA
that the additional remuneration should be given to employees placed in an acting
capacity for one month. The CA correctly stated:
Likewise, We uphold the public respondent's Order that no employee should be
temporarily placed in a position (acting capacity) for more than one month without the
corresponding adjustment in the salary. Such order of the public respondent is not in
violation of the "equal pay for equal work" principle, considering that after one (1)
month, the employee performing the job in an acting capacity will be entitled to salary
corresponding to such position.
In arriving at its Order, the public respondent took all the relevant evidence into
account and weighed both parties arguments extensively. Thus, public respondent
concluded that a restrictive provision with respect to employees being placed in an
acting capacity may curtail management's valid exercise of its prerogative. At the
same time, it recognized that employees should not be made to perform work in an
acting capacity for extended periods of time without being adequately compensated.
DISPOSITIVE: WHEREFORE, the petition is DENIED.
Workers-Members of a Cooperative
Central Negros Electric Cooperative (CENECO) vs DOLE Sec., CENECO Union of Rational
Employees (CURE)
In 1987, CENECO entered into a CBA with CURE, a labor union representing its rank-and-file
employees, providing for a term of 3 years retroactive to April 1, 1987 and extending up to March
31, 1990. On In 1989, CURE wrote CENECO proposing that negotiations be conducted for
a new CBA.
CENECO denied on the ground that, under applicable decisions of the SC, employees who at
the same time are members of an electric cooperative are not entitled to form or join a union.
Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general
assembly held, approved Resolution No. 35 whereby it was agreed that 'all union members
shall withdraw, retract, or recall the union members' membership from CENECO in order
to avail (of) the full benefits under the existing CBA entered into by and between CENECO
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and CURE, and the supposed benefits that our union may avail (of) under the renewed CBA.
This was ratified by 259 of the 362 union members. CENECO and the DOLE were furnished
copies of this resolution.
However, the withdrawal was denied by CENECO "for the reason that the basis of withdrawal is
not among the grounds covered by Board Resolution No. 5023, and that said request is contrary
to Board Resolution No. 5033”
By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct
recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file
employees in the bargaining unit of CENECO.
CENECO filed a MTD on the ground that there are legal constraints to the filing of the
certification election, citing the ruling laid down by this Court in Batangas I Electric Cooperative
Labor Union vs. Young, to the effect that "employees who at the same time are members of an
electric cooperative are not entitled to form or join unions for purposes of CBA, for certainly an
owner cannot bargain with himself or his co-owners."
Med-Arbiter Serapio granted the petition for certification election which, in effect, was a
denial of CENECO's MTD, and directing the holding of a certification election between CURE
and No Union.
CENECO appealed to the DOLE which modified the aforestated order of the med-arbiter by
directly certifying CURE as the exclusive bargaining representative of the rank-and-file
employees of CURE.
CENECO filed a petition for certiorari seeking to annul the order of the DOLE Sec.
Issue: W/N DOLE Sec. GAOD? NO
Ruling:
Procedural: CENECO avers that the med-arbiter has no jurisdiction to rule on the issue of
withdrawal from membership of its employees in the cooperative which, it claims, is properly
vested in the NEA which has control and supervision over all electric cooperatives.
From a perusal of CENECO’s MTD filed with the med-arbiter, it becomes readily apparent that
the sole basis for the motion is the illegality of the employees' membership in Union despite the
fact that they allegedly are still members of the cooperative.Hence, CENECO is deemed to have
submitted the issue of membership withdrawal from the cooperative to the jurisdiction of the
med-arbiter and it is now estopped from questioning that same jurisdiction which it invoked
in its MTD after obtaining an adverse ruling thereon.
Under Article 256 LC, to have a valid certification election at least a majority of all eligible voters
in the unit must have cast their votes. It is apparent that incidental to the power of the med-
arbiter to hear and decide representation cases is the power to determine who the eligible
voters are. In so doing, it is axiomatic that the med-arbiter should determine the legality of the
employees' membership in the union.
Lastly, it is CENECO who is actually questioning the propriety of the withdrawal of its members
from the cooperative. It could have brought the matter before the NEA if it wanted to and. if such
remedy had really been available, and there is nothing to prevent it from doing so. It would be
absurd to fault the employees for the neglect or laxity of petitioner in protecting its own interests.
W/N the employees of CENECO who withdrew their membership from the cooperative are
entitled to form or join CURE for purposes of the negotiations for a CBA proposed by the latter?
YES
The argument of CENECO that the withdrawal was merely to subvert the ruling of this Court in
the BATANGAS case is without merit. The case referred to merely declared that employees who
are at the same time members of the cooperative cannot join labor unions for purposes of
collective bargaining. However, nowhere in said case is it stated that member-employees
are prohibited from withdrawing their membership in the cooperative in order to join a
labor union.
As discussed by the Solicitor General, Article I, Section 9 of the Articles of Incorporation and By-
Laws of CENECO provides that "any member may withdraw from membership upon compliance
with such uniform terms and conditions as the Board may prescribe." The same section provides
that upon withdrawal, the member is merely required to surrender his membership certificate
and he is to be refunded his membership fee less any obligation that he has with the
cooperative. There appears to be no other condition or requirement imposed upon a withdrawing
member. Hence, there is no just cause for petitioner's denial of the withdrawal from membership
of its employees who are also members of the union.
The alleged board resolutions relied upon by CENECO in denying the withdrawal of the
members concerned were never presented nor their contents disclosed either before the med-
arbiter or the SOL if only to prove the ratiocination for said denial. Furthermore, CENECO never
averred non-compliance with the terms and conditions for withdrawal, if any. The Articles of
Incorporation of CENECO do not provide any ground for withdrawal from membership which
accordingly gives rise to the presumption that the same may be done at any time and for
whatever reason. In addition, membership in the cooperative is on a voluntary basis. Hence,
withdrawal therefrom cannot be restricted unnecessarily. The right to join an organization
necessarily includes the equivalent right not to join the same.
The right of the employees to self-organization is a compelling reason why their withdrawal from
the cooperative must be allowed. The resignation of the member- employees is an expression of
their preference for union membership over that of membership in the cooperative. The avowed
policy of the State to afford fall protection to labor and to promote the primacy of free collective
bargaining mandates that the employees' right to form and join unions for purposes of collective
bargaining be accorded the highest consideration.
Membership in an electric cooperative which merely vests in the member a right to vote
during the annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and
more important constitutional right of an employee to join a union of his choice. Besides,
the 390 employees of CENECO, some of whom have never been members of the cooperative,
represent a very small percentage of the cooperative's total membership of 44k. It is
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inconceivable how the withdrawal of a negligible number of members could adversely
affect the business concerns and operations of CENECO.
Direct Certification? Not proper.
By virtue of EO 111, the direct certification originally allowed under Article 257 LC has
apparently been discontinued as a method of selecting the exclusive bargaining agent of the
workers. This amendment affirms the superiority of the certification election over the direct
certification which is no longer available now under the change in said provision.
We have said that where a union has filed a petition for certification election, the mere fact that
no opposition is made does not warrant a direct certification. In said case which has similar
features to that at bar, wherein the respondent Minister directly certified the union, we held that:
... As pointed out by petitioner in its petition, what the respondent Minister achieved in
rendering the assailed orders was to make a mockery of the procedure provided under
the law for representation cases because: ... (c) By directly certifying a Union without
sufficient proof of majority representation, he has in effect arrogated unto himself the
right, vested naturally in the employee's to choose their collective bargaining
representative. (d) He has in effect imposed upon the petitioner the obligation to
negotiate with a union whose majority representation is under serious question. This is
highly irregular because while the Union enjoys the blessing of the Minister, it does not
enjoy the blessing of the employees. Petitioner is therefore under threat of being held
liable for refusing to negotiate with a union whose right to bargaining status has not
been legally established.
The most effective way of determining which labor organization can truly represent the working
force is by certification election.
International Catholic Immigration Commission (ICMC) vs Calleja (Director of BLR), Trade
Unions of the Philippines and Allied Services (TUPAS) WFTU
Kapisansn ng Manggagawa at Tac sa IRRI-organized Labor Ass’n In Line Industries and
Agriculture vs SOLE, IRRI
G.R. No. 85750 —ICMC Case.
As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South
Vietnam's communist rule confronted the international community.
In response to this crisis, an Agreement was forged between the Ph Government and the UN
High Commissioner for Refugees whereby an operating center for processing Indo-Chinese
refugees for eventual resettlement to other countries was to be established in Bataan.
ICMC was one of those accredited by the Ph Government to operate the refugee processing
center in Morong, Bataan. It was incorporated in New York, at the request of the Holy See, as a
non-profit agency involved in international humanitarian and voluntary work. It is duly registered
with the UN Economic and Social Council (ECOSOC) and enjoys Consultative Status,
Category II. As an international organization rendering voluntary and humanitarian services in
the Philippines, its activities are parallel to those of the International Committee for Migration
(ICM) and the International Committee of the Red Cross (ICRC).
Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then MOLE a
Petition for Certification Election among the rank and file members employed by ICMC.
ICMC opposed the petition on the ground that it is an international organization registered with
the UN and, hence, enjoys diplomatic immunity.
Med-Arbiter Bactin sustained ICMC and dismissed the petition for lack of jurisdiction.
On appeal by TUPAS, Director Calleja reversed and ordered the immediate conduct of a
certification election. At that time, ICMC's request for recognition as a specialized agency was
still pending with the DFA.
Subsequently, however, the Ph Government, through the DFA, granted ICMC the status of a
specialized agency with corresponding diplomatic privileges and immunities, as evidenced by a
MOA between the Government and ICMC.
ICMC then sought the immediate dismissal of the TUPAS Petition for Certification
Election invoking the immunity expressly granted but the same was denied by BLR Director
who, again, ordered the immediate conduct of a pre-election conference. ICMC's two MRs were
denied despite an opinion rendered by DFA that said BLR Order violated ICMC's diplomatic
immunity.
Thus, ICMC filed the present Petition for Certiorari with Preliminary Injunction assailing
the BLR Order. SC issued a TRO enjoining the holding of the certification election.
DFA, through its Legal Adviser, retired Justice Coquia of the CA, filed a Motion for Intervention
alleging that, as the highest executive department with the competence and authority to act on
matters involving diplomatic immunity and privileges, and tasked with the conduct of Philippine
diplomatic and consular relations with foreign governments and UN organizations, it has a legal
interest in the outcome of this case.
Over the opposition of the Solgen, the Court allowed DFA intervention.
Issue: W/N the grant of diplomatic privileges and immunities to ICMC extends to immunity from
the application of Philippine labor laws?
ICMC sustains the affirmative of the proposition citing (1) its MOA with the Ph Government
giving it the status of a specialized agency,(2) the Convention on the Privileges and Immunities
of Specialized Agencies, adopted by the UN General Assembly and concurred in by the
Philippine Senate through Resolution No. 91 (the Philippine Instrument of Ratification was
signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) (3)
Article II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the
generally accepted principles of international law as part of the law of the land.
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DFA upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of the DFA
determination that the BLR Order for a certification election among the ICMC employees is
violative of the diplomatic immunity of said organization.
BLR Director, with whom the Solicitor General agrees, cites State policy and Philippine labor
laws to justify its assailed Order, particularly, Article II, Section 18 and Article III, Section 8 of the
1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In
addition, she contends that a certification election is not a litigation but a mere investigation of a
non-adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets,
but is the sole concern of the workers themselves.
G.R. No. 89331 — (IRRI Case)
Before a Decision could be rendered in the ICMC Case, the Third Division, resolved to
consolidate G.R. No. 89331 pending before it with G.R. No. 85750, upon manifestation by
the Solgen that both cases involve similar issues.
The facts disclose that the Ph Government and the Ford and Rockefeller Foundations signed a
MOU establishing the IRRI at Los Baños, Laguna. It was intended to be an autonomous,
philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal
objective of conducting "basic research on the rice plant, on all phases of rice production,
management, distribution and utilization with a view to attaining nutritive and economic
advantage or benefit for the people of Asia and other major rice-growing areas through
improvement in quality and quantity of rice."
Initially, IRRI was organized and registered with the SEC as a private corporation subject to all
laws and regulations. However, by virtue of PD 1620, IRRI was granted the status,
prerogatives, privileges and immunities of an international organization.
The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate
labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI
(Kapisanan, for short) in IRRI.
Kapisanan filed a Petition for Direct Certification Election with Region IV, Regional Office of
the DOLE.
IRRI opposed the petition invoking PD1620 conferring upon it the status of an international
organization and granting it immunity from all civil, criminal and administrative proceedings
under Philippine laws.
Med-Arbiter Garcia, upheld the opposition on the basis of PD 1620 and dismissed the Petition
for Direct Certification.
On appeal, the BLR Director, reversed and authorized the calling of a certification election
among the rank-and-file employees of IRRI. Said Director relied on Article 243 LC, infra and
Article XIII, Section 3 of the 1987 Constitution, 1 and held that "the immunities and privileges
granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration
sought by IRRI was denied.
On appeal, SOLE set aside the BLR Director's Order, dismissed the Petition for Certification
Election, and held that the grant of specialized agency status by the Ph Government to the IRRI
bars DOLE from assuming and exercising jurisdiction over IRRI Said Resolution reads in part as
follows:
PD 1620 which grants to the IRRI the status, prerogatives, privileges and immunities
of an international organization is clear and explicit.
Verily, unless and until the Institute expressly waives its immunity, no summons,
subpoena, orders, decisions or proceedings ordered by any court or
administrative or quasi-judicial agency are enforceable as against the Institute.
In the case at bar there was no such waiver made by the Director-General of the
Institute. Indeed, the Institute, at the very first opportunity already vehemently
questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss
the case.
Kapisanan contends that Article 3 of PD 1620 granting IRRI the status, privileges, prerogatives
and immunities of an international organization, invoked by the SOL, is unconstitutional in so
far as it deprives the Filipino workers of their fundamental and constitutional right to form
trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.
Issue: W/N the employees in ICMC and IRRI may form trade unions?
Ruling:
There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.
Article II of the MOA between the Ph Government and ICMC provides that ICMC shall have a
status "similar to that of a specialized agency." Article III, Sections 4 and 5 of the Convention on
the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on
21 November 1947 and concurred in by the Philippine Senate through Resolution No. 19 on 17
May 1949, explicitly provides:
Art. III, Section 4. The specialized agencies, their property and assets, wherever
located and by whomsoever held, shall enjoy immunity from every form of legal
process except insofar as in any particular case they have expressly waived their
immunity. It is, however, understood that no waiver of immunity shall extend to any
measure of execution.
Sec. 5. The property and assets of the specialized agencies, wherever located and
by whomsoever held shall be immune from search, requisition, confiscation,
expropriation and any other form of interference, whether by executive, administrative,
judicial or legislative action.
IRRI is similarly situated, PD 1620, Article 3, is explicit in its grant of immunity, thus:
 University of the Philippines College of Law
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Art. 3. The Institute shall enjoy immunity from any penal, civil and administrative
proceedings, except insofar as that immunity has been expressly waived by the
Director-General of the Institute or his authorized representatives.
Thus it is that the DFA sustained ICMC'S invocation of immunity when in a Memorandum, it
expressed the view that "the Order of the Director of the BLR for the conduct of Certification
Election within ICMC violates the diplomatic immunity of the organization." Similarly, in respect
of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Ingles, in a
letter to the SOL, maintained that "IRRI enjoys immunity from the jurisdiction of DOLE in this
particular instance."
The foregoing opinions constitute a categorical recognition by the Executive Branch of the
Government that ICMC and IRRI enjoy immunities accorded to international organizations,
which determination has been held to be a political question conclusive upon the Courts in
order not to embarrass a political department of Government.
It is a recognized principle of international law and under our system of separation of
powers that diplomatic immunity is essentially a political question and courts should
refuse to look beyond a determination by the executive branch of the government, and
where the plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government as in the case at bar, it is then the duty of the courts to
accept the claim of immunity upon appropriate suggestion by the principal law
officer of the government . . . or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise their
jurisdiction . . . as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that in such cases the judicial
department of (this) government follows the action of the political branch and will not
embarrass the latter by assuming an antagonistic jurisdiction.
The term "international organization" is generally used to describe an organization set up by
agreement between two or more states. Under contemporary international law, such
organizations are endowed with some degree of international legal personality such that they are
capable of exercising specific rights, duties and powers. They are organized mainly as a means
for conducting general international business in which the member states have an interest. The
UN, for instance, is an international organization dedicated to the propagation of world peace.
"Specialized agencies" are international organizations having functions in particular fields. The
term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:
The Charter, while it invests the United Nations with the general task of promoting
progress and international cooperation in economic, social, health, cultural,
educational and related matters, contemplates that these tasks will be mainly
fulfilled not by organs of the United Nations itself but by autonomous
international organizations established by inter-governmental agreements outside
the UN. There are now many such international agencies having functions in many
different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea
transport, civil aviation, meteorology, atomic energy, finance, trade, education and
culture, health and refugees. Some are virtually world-wide in their membership, some
are regional or otherwise limited in their membership. The Charter provides that those
agencies which have "wide international responsibilities" are to be brought into
relationship with the UN by agreements entered into between them and the ECOSOC,
are then to be known as "specialized agencies."
The rapid growth of international organizations under contemporary international law has paved
the way for the development of the concept of international immunities.
There are basically 3 propositions underlying the grant of international immunities to
international organizations. These principles, contained in the ILO Memorandum are stated thus:
1) international institutions should have a status which protects them against control or
interference by any one government in the performance of functions for the effective discharge
of which they are responsible to democratically constituted international bodies in which all the
nations concerned are represented; 2) no country should derive any national financial advantage
by levying fiscal charges on common international funds; and 3) the international organization
should, as a collectivity of States members, be accorded the facilities for the conduct of its
official business customarily extended to each other by its individual member States. The theory
behind all three propositions is said to be essentially institutional in character. "It is not
concerned with the status, dignity or privileges of individuals, but with the elements of
functional independence necessary to free international institutions from national control and
to enable them to discharge their responsibilities impartially on behalf of all their members.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by
their international character and respective purposes. The objective is to avoid the danger of
partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the DOL in these instances would defeat the very purpose of immunity,
which is to shield the affairs of international organizations from political pressure or control by
the host country to the prejudice of member States of the organization, and to ensure the
unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic
rights, which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII,
Section 3 of the 1987 Constitution; and implemented by Articles 243 and 246 LC, relied on by
the BLR Director and by Kapisanan.
For, ICMC employees are not without recourse whenever there are disputes to be settled.
Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of
the United Nations provides that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other disputes of private
character to which the specialized agency is a party." Moreover, pursuant to Article IV of the
MOA between ICMC the the Ph Government, whenever there is any abuse of privilege by ICMC,
the Government is free to withdraw the privileges and immunities accorded.
Neither are the employees of IRRI without remedy in case of dispute with management as,
in fact, there had been organized a forum for better management-employee relationship as
evidenced by the formation of the Council of IRRI Employees and Management (CIEM)
wherein "both management and employees were and still are represented for purposes of
maintaining mutual and beneficial cooperation between IRRI and its employees." The existence
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of this Union factually and tellingly belies the argument that PD 1620 deprives its employees of
the right to self-organization.
The immunity granted being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is inaccurate to state that a
certification election is beyond the scope of that immunity for the reason that it is not a
suit against ICMC. A certification election cannot be viewed as an independent or isolated
process. It could tugger off a series of events in the collective bargaining process
together with related incidents and/or concerted activities, which could inevitably involve
ICMC in the "legal process," which includes "any penal, civil and administrative proceedings."
The eventuality of Court litigation is neither remote and from which international organizations
are precisely shielded to safeguard them from the disruption of their functions.
SC is now estopped because of ICMC vs NLRC?
We take note of a Manifestation TUPAS calls attention to the case entitled "ICMC v. NLRC” and
claims that, having taken cognizance of that dispute (on the issue of payment of salary for the
unexpired portion of a six-month probationary employment), the Court is now estopped from
passing upon the question of DOLE jurisdiction petition over ICMC.
We find no merit. Not only did the facts of said controversy occur between 1983-1985, or before
the grant to ICMC on 15 July 1988 of the status of a specialized agency with corresponding
immunities, but also because ICMC in that case did not invoke its immunity and, therefore,
may be deemed to have waived it, assuming that during that period (1983-1985) it was tacitly
recognized as enjoying such immunity.
Singer Sewing Machine Company vs Labor Sec. Drilon, Med-Arbiter Chaguile, Singer
Machine Collectors Union-Baguio (SIMACUB)
SIMACUB filed a petition for direct certification as the SEBA of all collectors of the Singer
Sewing Machine Company (SSMC), Baguio City branch.
SSMC opposed the petition mainly on the ground that the union members are actually not
employees but are independent contractors as evidenced by the collection agency
agreement which they signed.
Med-Arbiter, finding that there exists an EER, granted the petition for certification election. On
appeal, SOL Drilon affirmed it. MR was denied.
Hence, this petition for Certiorari in which SSMC alleges that SOL & Med-Arbiter acted in excess
of jurisdiction and/or committed GAOD in that:
a) DOLE has no jurisdiction over the case since the existence of EER is at issue;
b) the right of SSMC to due process was denied when the evidence of the union
members' being commission agents was disregarded by the Labor Secretary;
c) the public respondents patently erred in finding that there exists an EER
d) the public respondents whimsically disregarded the well-settled rule that commission
agents are not employees but are independent contractors.
SIMACUB insist that the provisions of the Collection Agency Agreement belie the Company's
position that the union members are independent contractors. To prove that union members are
employees, it is asserted that they "perform the most desirable and necessary activities for
the continuous and effective operations of the business of SSMC".
They add that the termination of the agreement by SSMC pending the resolution of the case
before the DOLE "only shows the weakness of SSMC’s stand" and was "for the purpose of
frustrating the constitutionally mandated rights of the members of SIMACUB to self-organization
and collective organization." They also contend that under Section 8, Rule 8, Book No. III of the
Omnibus Rules Implementing the Labor Code, which defines job-contracting, they cannot
legally qualify as independent contractors who must be free from control of the alleged
employer, who carry independent businesses and who have substantial capital or
investment in the form of equipment, tools, and the like necessary in the conduct of the
business.
Issue: W/N EER exists so as to entitle SIMACUB to certification election? NO.
Ruling:
The following elements are generally considered in the determination of the EER; "(1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct — although the latter is the most
important element".
The Collection Agency Agreement defines the relationship between the Company and each of
the union members who signed a contract. SSMC relies on the following stipulations: (a) a
collector is designated as a collecting agent" who is to be considered at all times as an IC and
not employee of the Company; (b) collection of all payments on installment accounts are to be
made monthly or oftener; (c) an agent is paid his compensation for service in the form of a
commission of 6% of all collections made and turned over plus a bonus on said collections; (d)
an agent is required to post a cash bond of P3k to assure the faithful performance and
observance of the terms and conditions under the agreement; (e) he is subject to all the terms
and conditions in the agreement; (f) the agreement is effective for one year from the date of its
execution and renewable on a yearly basis; and (g) his services shall be terminated in case of
failure to satisfy the minimum monthly collection performance required, failure to post a cash
bond, or cancellation of the agreement at the instance of either party unless the agent has a
pending obligation or indebtedness in favor of the Company.
Meanwhile, SIMACUB rely on other features to strengthen their position that the collectors are
employees. They quote paragraph 2 which states that an agent shall utilize only receipt
forms authorized and issued by the Company. They also note paragraph 3 which states that
an agent has to submit and deliver at least once a week or as often as required a report of
all collections made using report forms furnished by the Company. Paragraph 4 on the monthly
 University of the Philippines College of Law
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collection quota required by the Company is deemed by them as a control measure over the
means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and
neither are all collecting agents independent contractors.
The Agreement confirms the status of the collecting agent in this case as an IC not only
because he is explicitly described as such but also because the provisions permit him to perform
collection services for the company without being subject to the control of the latter except only
as to the result of his work.
Required to use receipt forms and report forms proves control? NO.
The requirement that collection agents utilize only receipt forms and report forms issued by the
Company and that reports shall be submitted at least once a week is not necessarily an
indication of control over the means by which the job of collection is to be performed. The
agreement itself specifically explains that receipt forms shall be used for the purpose of
avoiding a co-mingling of personal funds of the agent with the money collected on behalf of
the Company.
Likewise, the use of standard report forms as well as the regular time within which to submit a
report of collection are intended to facilitate order in office procedures. Even if the report
requirements are to be called control measures, any control is only with respect to the end result
of the collection since the requirements regulate the things to be done after the performance of
the collection job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual
agreements and is so stipulated to encourage a collecting agent to report at least the minimum
amount of proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular
commission every time the quota is reached. As a requirement for the fulfillment of the
contract, it is subject to agreement by both parties. Hence, if the other contracting party does not
accede to it, he can choose not to sign it.
The respondents' contention that the union members are employees of the Company is based
on selected provisions of the Agreement but ignores the following circumstances which
SIMACUB never refuted either in the trial proceedings before the labor officials nor in its
pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to Singer's
office everyday except, naturally and necessarily, for the purpose of remitting their
collections.
2. The collection agents do not have to devote their time exclusively for SINGER.
There is no prohibition on the part of the collection agents from working elsewhere.
Nor are these agents required to account for their time and submit a record of their
activity.
3. The manner and method of effecting collections are left solely to the discretion
of the collection agents without any interference on the part of Singer.
4. The collection agents shoulder their transportation expenses incurred in the
collections of the accounts assigned to them.
5. The collection agents are paid strictly on commission basis. They do not receive
any commission if they do not effect any collection even if they put a lot of effort in
collecting.
6. The commissions earned by the collection agents are directly deducted by them
from the amount of collections they are able to effect. The net amount is what is
then remitted to Singer."
The grounds specified in the contract for termination of the relationship do not support the view
that control exists "for the causes of termination thus specified have no relation to the
means and methods of work that are ordinarily required of or imposed upon employees."
The last and most important element of the control test is not satisfied by the terms and
conditions of the contracts. There is nothing in the agreement which implies control by the
Company not only over the end to be achieved but also over the means and methods in
achieving the end.
Desirable and necessary? NOT determinative.
Any agreement may provide that one party shall render services for and in behalf of another for
a consideration (no matter how necessary for the latter's business) even without being hired
as an employee. This is precisely true in the case of an independent contractorship as well
as in an agency agreement. Article 280 is not the yardstick for determining the existence of an
EER because it merely distinguishes between two kinds of employees, i.e., regular employees
and casual employees, for purposes of determining the right of an employee to certain benefits,
to join or form a union, or to security of tenure. Article 280 does not apply where the existence of
an employment relationship is in dispute.
They can’t be an independent contractor because they don’t satisfy the elements? Doesn’t
apply.
There is no showing that a collection agent needs tools and machineries. Moreover, the
provision must be viewed in relation to Article 106 of the Labor Code.
It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in
determining whether the employer is solidarily liable to the employees of an alleged
contractor and/or sub-contractor for unpaid wages in case it is proven that there is a job-
contracting situation.
Since SIMACUB are not employees of SSMC, they are not entitled to the constitutional right
to join or form a labor organization for purposes of collective bargaining. Accordingly, there
is no constitutional and legal basis for their "union" to be granted their petition for direct
 University of the Philippines College of Law
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certification. La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations,
supra:
. . . The question of whether EER exists is a primordial consideration before extending
labor benefits under the workmen's compensation, social security, medicare,
termination pay and labor relations law. It is important in the determination of who
shall be included in a proposed bargaining unit because, it is the sine qua non, the
fundamental and essential condition that a bargaining unit be composed of
employees.
Party Protected
Mactan Workers Union, Ferrer (Pres. Of Union) vs Don Ramon Aboitiz (Pres. Of Cebu
Shipyard & Engineering Works, Lim (treasurer), Diago (superintendent), Viray (Resident
Mgr of CSEW), CSEW, Association Labor Union (ALU)
CSEW is employing laborers and employees belonging to two rival labor unions. 72 of these
employees or laborers whose names appear in the complaint are affiliated with the Mactan
Workers Union while the rest are members of the intervenor Associated Labor Union.
On November 28, 1964, CSEW and the ALU entered into a CBA the pertinent part of which,
Article XIII:
CSEW agrees to give a profit-sharing bonus to its employees and laborers to be
taken from 10% of its net profits or net income derived from the direct operation of its
shipyard and shop in Lapulapu City and after deducting the income tax and the
bonus annually given to its GM and the Superintendent and the members of the Board
of Directors and Secretary of the Corporation, to be payable in 2 installments, the first
installment being payable in March and the second installment in June, each year out
of the profits in agreement.
In the computation of said 10% to [be] distributed as a bonus among the employees
and laborers of the [Company] in proportion to their salaries or wages, only the income
derived by the [Company] from the direct operation of its shipyard and shop in
Lapulapu City, as stated herein-above-commencing from the earnings during the year
1964, shall be included.
Said profit-sharing bonus shall be paid by CSEW to ALU to be delivered by the
latter to the employees and laborers concerned and it shall be the duty of the ALU to
furnish and deliver to CSEW the corresponding receipts duly signed by the laborers
and employees entitled to receive the profit-sharing bonus within a period of 60 days
from the date of receipt by it from CSEW of the profit-sharing bonus.
If a laborer or employee does not want to accept the profit-sharing bonus, it shall be
the duty of the ALU to return the money to CSEW within a period of 60 days from the
receipt by ALU .
The decision went on to state: "In compliance with the said CBA, in March, 1965 CSEW
delivered to the ALU for distribution to the laborers or employees working with CSEW to the
profit-sharing bonus corresponding to the first installment for the year 1965. Again in June 1965
CSEW delivered to the ALU the profit-sharing bonus corresponding to the second installment for
1965. The members of the Mactan Workers Union failed to receive their shares in the
second installment of bonus because they did not like to go to the office of the ALU to
collect their shares.
In accordance with the terms of the collective bargaining after 60 days, the uncollected shares
of the MWU members was returned by the ALU to CSEW.
At the same time CSEW was advised by the ALU not to deliver the said amount to the members
of the MWU unless ordered by the Court, otherwise the ALU will take such step to protect the
interest of its members. Because this warning given by ALU the CSEW did not pay to MWU
the sum of P4,035.82 which was returned by the ALU, but instead, deposited the said amount
with the Labor Administrator.
MWU filed this case for the recovery of this amount in the CFI. CFI ruled for MWU ordering
CSEW to deliver to ALU the 4,035.82 for distribution to MWU.
Issue: W/N CFI erred? NO.
The terms and conditions of a collective bargaining contract constitute the law between the
parties. Those who are entitled to its benefits can invoke its provisions. Nor does it suffice as a
defense that the claim is made on behalf of non-members of ALU, for it is a well-settled doctrine
that the benefits of a CBA extend to the laborers and employees in the collective
bargaining unit, including those who do not belong to the chosen bargaining labor organization.
The labor union that gets the majority vote as the exclusive bargaining representative does not
act for its members alone. It is not to be indulged in any attempt on its part to disregard the rights
of non-members. Yet that is what ALU was guilty of, resulting in the complaint.
CFI did not require anything else other than that set forth in the CBA. All that was done was to
have the covenants therein contained as to the profit-sharing scheme carried out and respected.
Procedural attacks? No merit.
ALU, laboring under such a predicament had perforce to rely on what it considered procedural
lapses. It would assail the alleged lack of a cause of action, of jurisdiction of the City Court of
Lapulapu and of personality of the MWU to represent its members. There is no merit to such an
approach
How can the allegation of a lack of a cause of action be taken seriously when precisely there
was a right violated on the part of the members of MWU, a grievance that called for redress?
The assignment of error that the City Court of Lapulapu was bereft of jurisdiction is singularly
unpersuasive. The amount claimed by MWU was P4,035.82 and if the damages and attorney's
 University of the Philippines College of Law
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fees be added, the total sum was less than P10k. Section 88 of the Judiciary Act in providing for
the original jurisdiction of city courts in civil cases provides:

"In all civil actions, including those mentioned in Rules 59 and 62 (now Rules 57 and
60) of the Rules of Court, arising in his municipality or city, and not exclusively
cognizable by the CFI, the municipal judge and the judge of a city court shall have
exclusive original jurisdiction where the value of the subject matter or amount of the
demand does not exceed 10k, exclusive of interests and costs."

It is true that if an element of ULP may be discerned in a suit for the enforcement of a collective
bargaining contract, then the matter is solely cognizable by the CIR. 11 It is equally true that as
of the date the lower court decision was rendered, the question of such enforcement had been
held to be for the regular courts to pass upon.

MWU could not file the suit on behalf of its members? ALU devoted only half a page in its brief to
such an assertion. On its face, it certainly appeared to be oblivious of how far a labor union can
go, or is expected to, in the defense of the rights of its rank and file. There was an element of
surprise, considering that such a contention came from a labor organization, which under
normal condition should be the last to lay itself open to a charge that it is not averse to
denigrating the effectiveness of labor unions.

It is quite understandable that labor unions in their campaign for membership, for acquiring
ascendancy in any shop, plant, or industry would do what lies in their power to put down
competing groups. Nevertheless, it is not to be forgotten that what is entitled to
constitutional protection is labor, or more specifically the working men and women, not
labor organizations.

Labor Organizations are merely the instrumentalities through which their welfare may be
promoted and fostered. The utmost care should be taken then, lest injustice be committed
against opposing labor organizations.

In the final analysis, they alone are not the sole victims, but the labor movement itself,
which may well be the recipient of a crippling blow.