KIOK LOY vs.

NLRC and
KILUSAN DIGEST
D ECEM BER 19, 2016 ~ VBD IA Z

KIOK LOY vs. NLRC and PAMBANSANG KILUSAN NG PAGGAWA

(KILUSAN)

G.R. No. L-54334

January 22, 1986

FACTS: In a certification election, KILUSAN, a legitimate late labor federation, won

and was subsequently certified in a resolution by the BLR as the sole and exclusive
bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant
(Company).
Thereafter, the Union furnished the Company with copies of its proposed CBA. At the
same time, it requested the Company for its counter proposals. The request were ignored
and remained unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to the bargaining
table, the Union filed a “Notice of Strike”, with the BLR on ground of unresolved
economic issues in collective bargaining.
The NLRC rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent [company] is hereby declared guilty of unjustified
refusal to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D.
442, as amended. xx

ISSUE: Did the NLRC act with grave abuse of discretion?

HELD: NO

Collective bargaining which is defined as negotiations towards a collective agreement,

is one of the democratic frameworks under the New Labor Code, designed to stabilize
the relation between labor and management and to create a climate of sound and stable
industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor
Code makes it anunfair labor practice for an employer to refuse “to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such agreement, if requested by either
party.
We are in total conformity with respondent NLRC’s pronouncement that petitioner
Company is GUILTY of unfair labor practice. It has been indubitably established that
(1) respondent Union was a duly certified bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy of the proposed CBA, to the Company not
only once but twice which were left unanswered and unacted upon; and (3) the
Company made no counter proposal whatsoever all of which conclusively indicate lack
of a sincere desire to negotiate. A Company’s refusal to make counter proposal if
considered in relation to the entire bargaining process, may indicate bad faith and this
is specially true where the Union’s request for a counter proposal is left
unanswered. Even during the period of compulsory arbitration before the NLRC,
petitioner Company’s approach and attitude-stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is unwilling
to negotiate and reach an agreement with the Union.
From the over-all conduct of petitioner company in relation to the task of negotiation,
there can be no doubt that the Union has a valid cause to complain against its
(Company’s) attitude, the totality of which is indicative of the latter’s disregard of, and
failure to live up to, what is enjoined by the Labor Code — to bargain in good faith.
NOTES: While it is a mutual obligation of the parties to bargain, the employer,
however, is not under any legal duty to initiate contract negotiation. The mechanics of
collective bargaining is set in motion only when the following jurisdictional
preconditions are present, namely,
(1) possession of the status of majority representation of the employees’ representative
in accordance with any of the means of selection or designation provided for by the
Labor Code;
(2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . … all of
which preconditions are undisputedly present in the instant case.
 G.R. No. 211145, October 14, 2015

SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY ITS

PRESIDENT, ALFIE ALIPIO, Petitioner, v. BUREAU OF LABOR
RELATIONS, HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO.,
LTD. (HHIC-PHIL.), Respondents.

DECISIO N

MENDOZA, J.:

The right to self-organization is not limited to unionism. Workers may also

form or join an association for mutual aid and protection and for other
legitimate purposes.

This is a petition for review on certiorari seeking to reverse and set aside the
July 4, 2013 Decision1 and the January 28, 2014 Resolution 2 of the Court of
Appeals (CA) in CA-G.R. SP No. 123397, which reversed the November 28,
2011 Resolution3 of the Bureau of Labor Relations (BLR) and reinstated the
April 20, 2010 Decision4 of the Department of Labor and Employment
(DOLE) Regional Director, cancelling the registration of Samahan ng
Manggagawa sa Hanjin Shipyard (Samahan) as a worker's association under
Article 243 (now Article 249) of the Labor Code.

The Facts

On February 16, 2010, Samahan, through its authorized representative, Alfie

F. Alipio, filed an application for registration 5 of its name "Samahan ng Mga
Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the application
were the list of names of the association's officers and members, signatures
of the attendees of the February 7, 2010 meeting, copies of their
Constitution and By-laws. The application stated that the association had a
total of 120 members.

On February 26, 2010, the DOLE Regional Office No. 3, City of San
Fernando, Pampanga (DOLE-Pampanga), issued the corresponding certificate
of registration6 in favor of Samahan.

On March 15, 2010, respondent Hanjin Heavy Industries and Construction

Co., Ltd. Philippines (Hanjin), with offices at Greenbeach 1, Renondo
Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay Freeport Zone, filed a
petition7 with DOLE-Pampanga praying for the cancellation of registration of
Samahan's association on the ground that its members did not fall under
any of the types of workers enumerated in the second sentence of Article
243 (now 249).

Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self -
employed, and those without definite employers may form a workers'
association. It further posited that one third (1/3) of t he members of the
association had definite employers and the continued existence and
registration of the association would prejudice the company's goodwill.

On March 18, 2010, Hanjin filed a supplemental petition, 8 adding the

alternative ground that Samahan committed a misrepresentation in
connection with the list of members and/or voters who took part in the
ratification of their constitution and by-laws in its application for registration.
Hanjin claimed that Samahan made it appear that its members were all
qualified to become members of the workers' association.

On March 26, 2010, DOLE-Pampanga called for a conference, wherein

Samahan requested for a 10-day period to file a responsive pleading. No
pleading, however, was submitted. Instead, Samahan filed a motion to
dismiss on April 14, 2010. 9

The Ruling of the DOLE Regional Director

On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of
Hanjin. He found that the preamble, as stated in the Constitution and By-
Laws of Samahan, was an admission on its part that all of its members were
employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay
naglalayong na isulong ang pagpapabuti ng kondisyon sa paggawa at
katiyakan sa hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng
kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng
aming mga angking lakas, kaalaman at kasanayan ay anting maitataguyod
at makapag-aambag sa kaunlaran ng isang lipunan. Na mararating at
makakamit ang antas ng pagkilala, pagdakila at pagpapahalaga sa mga
tulad naming mga manggagawa.

x x x10
The same claim was made by Samahan in its motion to dismiss, but it failed
to adduce evidence that the remaining 63 members were also employees of
Hanjin. Its admission bolstered Hanjin's claim that Samahan committed
misrepresentation in its application for registration as it made an express
representation that all of its members were employees of the former. Having
a definite employer, these 57 members should have formed a labor union for
collective bargaining. 11 The dispositive portion of the decision of the Dole
Regional Director, reads:
WHEREFORE, premises considered, the petition is hereby GRANTED.
Consequently, the Certificate of Registration as Legitimate Workers
Association (LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA
HANJIN SHIPYARD (SAMAHAN) with Registration Numbers R0300-1002-WA-
009 dated February 26, 2010 is hereby CANCELLED, and said association is
dropped from the roster of labor organizations of this Office.

SO DECIDED.12
The Ruling of the Bureau of Labor Relations

Aggrieved, Samahan filed an appeal 13 before the BLR, arguing that Hanjin
had no right to petition for the cancellation of its registration. Samahan
pointed out that the words "Hanjin Shipyard," as used i n its application for
registration, referred to a workplace and not as employer or company. It
explained that when a shipyard was put up in Subic, Zambales, it became
known as Hanjin Shipyard. Further, the remaining 63 members signed
the Sama-Samang Pagpapatunay which stated that they were either working
or had worked at Hanjin. Thus, the alleged misrepresentation committed by
Samahan had no leg to stand on. 14

In its Comment to the Appeal, 15 Hanjin averred that it was a party-in-

interest. It reiterated that Samahan committed misrepresentation in its
application for registration before DOLE Pampanga. While Samahan insisted
that the remaining 63 members were either working, or had at least worked
in Hanjin, only 10 attested to such fact, thus, leaving its 53 members
without any workplace to claim.

On September 6, 2010, the BLR granted Samahan's appeal and reversed the
ruling of the Regional Director. It stated that the law clearly afforded the
right to self-organization to all workers including those without definite
employers.16 As an expression of the right to self-organization, industrial,
commercial and self-employed workers could form a workers' association if
they so desired but subject to the limitation that it was only for mutual aid
and protection.17 Nowhere could it be found that to form a workers'
association was prohibited or that the exercise of a workers' right to self -
organization was limited to collective bargaining. 18

The BLR was of the opinion that there was no misrepresentation on the part
of Samahan. The phrase, "KAMI, ang mga Manggagawa sa Hanjin Shipyard"
if translated, would be: "We, the workers at Hanjin Shipyard." The use of the
preposition "at" instead of "of " would indicate that "Hanjin Shipyard" was
intended to describe a place. 19 Should Hanjin feel that the use of its name
had affected the goodwill of the company, the remedy was not to seek the
cancellation of the association's registration. At most, the use by Samahan
of the name "Hanjin Shipyard" would only warrant a change in the name of
the association.20 Thus, the dispositive portion of the BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III
Director Ernesto C. Bihis dated 20 April 2010 is REVERSED and SET ASIDE.

Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain

in the roster of legitimate workers' association. 21
On October 14, 2010, Hanjin filed its motion for reconsideration. 22

In its Resolution, 23 dated November 28, 2011, the BLR affirmed its
September 6, 2010 Decision, but directed Samahan to remove the words
"Hanjin Shipyard" from its name. The BLR explained that the Labor Code had
no provision on the use of trade or business name in the naming of a
worker's association, such matters being governed by the Corporation Code.
According to the BLR, the most equitable relief that would strike a balance
between the contending interests of Samahan and Hanjin was to direct
Samahan to drop the name "Hanjin Shipyard" without delisting it from the
roster of legitimate labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated 6 September 2010 is
hereby AFFIRMED with a DIRECTIVE for SAMAHAN to remove "HANJIN
SHIPYARD" from its name.

SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari 25 under Rule 65 before the
CA, docketed as CA-G.R. SP No. 123397.

In its March 21, 2012 Resolution, 26 the CA dismissed the petition because of
Samahan's failure to file a motion for reconsideration of the assailed
November 28, 2011 Resolution.

On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July
18, 2012, Hanjin filed its comment 28 to oppose the same. On October 22,
2012, the CA issued a resolution granting Samahan's motion for
reconsideration and reinstating the petition. Hanjin was directed to file a
comment five (5) days from receipt of notice. 29

On December 12, 2012, Hanjin filed its comment on the petition, 30 arguing
that to require Samahan to change its name was not tantamount to
interfering with the workers' right to self-organization.31 Thus, it prayed,
among others, for the dismissal of the petition for Samahan's failure to file
the required motion for reconsideration. 32

On January 17, 2013, Samahan filed its reply. 33

On March 22, 2013, Hanjin filed its memorandum. 34

The Ruling of the Court of Appeals

On July 4, 2013, the CA rendered its decision, holding that the registration
of Samahan as a legitimate workers' association was contrary to the
provisions of Article 243 of the Labor Code. 35 It stressed that only 57 out of
the 120 members were actually working in Hanjin while the phrase in the
preamble of Samahan's Constitution and By-laws, "KAMI, ang mga
Manggagawa sa Hanjin Shipyard" created an impression that all its members
were employees of HHIC. Such unqualified manifestation which was used in
its application for registration, was a clear proof of misrepresentation which
warranted the cancellation of Samahan's registration.

It also stated that the members of Samahan could not register it as a

legitimate worker's association because the place where Hanjin's industry
was located was not a rural area. Neither was there any evidence to show
that the members of the association were ambulant, intermittent or itinerant
workers.36

At any rate, the CA was of the view that dropping the words "Hanjin
Shipyard" from the association name would not prejudice or impair its right
to self-organization because it could adopt other appropriate names. The
dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering
that the words "Hanjin Shipyard" be removed from petitioner association's
name, is AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional
Director in Case No. R0300-1003-CP-001, which ordered the cancellation of
petitioner association's registration is REINSTATED.

SO ORDERED.37
Hence, this petition, raising the following
ISSUES

I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT

SAMAHAN CANNOT FORM A WORKERS' ASSOCIATION OF
EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE FORMED A
UNION, HENCE THEIR REGISTRATION AS A WORKERS' ASSOCIATION
SHOULD BE CANCELLED.

II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE

REMOVAL/DELETION OF THE WORD "HANJIN" IN THE NAME OF THE
UNION BY REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE
COMPANY NAME "HANJIN."38
Samahan argues that the right to form a workers' association is not
exclusive to intermittent, ambulant and itinerant workers. While the Labor
Code allows the workers "to form, join or assist labor organizations of their
own choosing" for the purpose of collective bargaining, it does not prohibit
them from forming a labor organization simply for purposes of mutual aid
and protection. All members of Samahan have one common place of work,
Hanjin Shipyard. Thus, there is no reason why they cannot use "Hanjin
Shipyard" in their name. 39

Hanjin counters that Samahan failed to adduce sufficient basis that all its
members were employees of Hanjin or its legitimate contractors, and that
the use of the name "Hanjin Shipyard" would create an impression that all
its members were employess of HHIC. 40

Samahan reiterates its stand that workers with a definite employer can
organize any association for purposes of mutual aid and protection. Inherent
in the workers' right to self-organization is its right to name its own
organization. Samahan referred "Hanjin Shipyard" as their common place of
work. Therefore, they may adopt the same in their association's name. 41

The Court's Ruling

The petition is partly meritorious.

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

and labor management councils

More often than not, the right to self-organization connotes unionism.

Workers, however, can also form and join a workers' association as well as
labor-management councils (LMC). Expressed in the highest law of the land
is the right of all workers to self-organization. Section 3, Article XIII of the
1987 Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. It shall guarantee the rights of all
workers to self-organization,

collective bargaining and negotiations, and peaceful concerted activities,

including the right to strike in accordance with law. xxx

[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for purposes
not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford protection to
labor, promote full employment, ensure equal work opportunities regardless
of sex, race or creed and regulate the relations between workers and
employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and
humane conditions of work.

[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to self -
organization includes the right to form, join or assist labor organizations for
the purpose of collective bargaining through representatives of their own
choosing and to engage in lawful concerted activities for the same purpose
for their mutual aid and protection. This is in line with the policy of the State
to foster the free and voluntary organization of a strong and united labor
movement as well as to make sure that workers participate in policy and
decision-making processes affecting their rights, duties and welfare. 42

The right to form a union or association or to self-organization comprehends

two notions, to wit: (a) the liberty or freedom, that is, the absence of
restraint which guarantees that the employee may act for himself without
being prevented by law; and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association. 43

In view of the revered right of every worker to s elf-organization, the law

expressly allows and even encourages the formation of labor organizations.
A labor organization is defined as "any union or association of employees
which exists in whole or in part for the purpose of collective bargaining or of
dealing with employers concerning terms and conditions of
employment."44 A labor organization has two broad rights: (1) to bargain
collectively and (2) to deal with the employer concerning terms and
conditions of employment. To bargain collectively is a right given to a union
once it registers itself with the DOLE. Dealing with the employer, on the
other hand, is a generic description of interaction between employer and
employees concerning grievances, wages, work hours and other terms and
conditions of employment, even if the employees' group is not registered
with the DOLE.45

A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose, 46 while a workers'
association is an organization of workers formed for the mutual aid and
protection of its members or for any legitimate purpose other than collective
bargaining.47

Many associations or groups of employees, or even combinations of only

several persons, may qualify as a labor organization yet fall short of
constituting a labor union. While every labor union is a labor organization,
not every labor organization is a labor union. The difference is one of
organization, composition and operation. 48

Collective bargaining is just one of the forms of employee participation.

Despite so much interest in and the promotion of collective bargaining, it is
incorrect to say that it is the device and no other, which secures industrial
democracy. It is equally misleading to say that collective bargaining is the
end-goal of employee representation. Rather, the real aim is employee
participation in whatever form it may appear, bargaining or no bargaining,
union or no union. 49 Any labor organization which may or may not be a
union may deal with the employer. This explains why a workers' association
or organization does not always have to be a labor union and why employer-
employee collective interactions are not always collective bargaining. 50

To further strengthen employee participation, Article 255 (now 261)51 of the

Labor Code mandates that workers shall have the right to participate in
policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits
and welfare. For this purpose, workers and employers may form LMCs.

A cursory reading of the law demonstrates that a common element between

unionism and the formation of LMCs is the existence of an employer-
employee relationship. Where neither party is an employer nor an empl oyee
of the other, no duty to bargain collectively would exist. 52 In the same
manner, expressed in Article 255 (now 261) is the requirement that such
workers be employed in the establishment before they can participate in
policy and decision making processes.

In contrast, the existence of employer-employee relationship is not

mandatory in the formation of workers' association. What the law simply
requires is that the members of the workers' association, at the very least,
share the same interest. The very definition of a workers' association speaks
of "mutual aid and protection."

Right to choose whether to form or join a union or workers' association

belongs to workers themselves
In the case at bench, the Court cannot sanction the opinion of the CA that
Samahan should have formed a union for purposes of collective bargaining
instead of a workers' association because the choice belonged to it. The right
to form or join a labor organization necessarily includes the right to refuse or
refrain from exercising the said right. It is self-evident that just as no one
should be denied the exercise of a right granted by law, so also, no one
should be compelled to exercise such a conferred right. 53 Also inherent in the
right to self-organization is the right to choose whether to form a union for
purposes of collective bargaining or a workers' association for purposes of
providing mutual aid and protection.

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

provided by law. For instance, the Labor Code specifically disallows
managerial employees from joining, assisting or forming any labor union.
Meanwhile, supervisory employees, while eligible for membership in labor
organizations, are proscribed from joining the collective bargaining unit of
the rank and file employees. 54 Even government employees have the right to
self-organization. It is not, however, regarded as existing or available for
purposes of collective bargaining, but simply for the furtherance and
protection of their interests. 55

Hanjin posits that the members of Samahan have definite employers, hence,
they should have formed a union instead of a workers' association. The
Court disagrees. There is no provision in the Labor Code that states that
employees with definite employers may form, join or assist unions only.

The Court cannot subscribe either to Hanjin's position that Samahan's

members cannot form the association because they are not covered by the
second sentence of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to self-organization. All persons
employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical, or educational institutions, whether operating
for profit or not, shall have the right to self-organization and to form, join, or
assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection. (As amended by Batas Pambansa Bilang 70, May 1, 1980)

[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department
Order (D.O.) No. 40-03, Series of 2003, which provides:
 RULE II

COVERAGE OF THE RIGHT TO SELF-ORGANIZATION

Section 1. Policy. - It is the policy of the State to promote the free and
responsible exercise of the right to self-organization through the
establishment of a simplified mechanism for the speedy registration of labor
unions and workers associations, determination of representation status and
resolution of inter/intra-union and other related labor relations disputes.
Only legitimate or registered labor unions shall have the right to represent
their members for collective bargaining and other purposes. Workers'
associations shall have the right to represent their members for purposes
other than collective bargaining.

Section 2. Who may join labor unions and workers' associations. - All
persons employed in commercial, industrial and agricultural enterprises,
including employees of government owned or controlled corporations without
original charters established under the Corporation Code, as well as
employees of religious, charitable, medical or educational institutions
whether operating for profit or not, shall have the right to self-organization
and to form, join or assist labor unions for purposes of collective bargaining:
provided, however, that supervisory employees shall not be eligible for
membership in a labor union of the rank-and-file employees but may form,
join or assist separate labor unions of their own. Managerial employees shall
not be eligible to form, join or assist any labor unions for purposes of
collective bargaining. Alien employees with valid working permits issued by
the Department may exercise the right to self-organization and join or assist
labor unions for purposes of collective bargaining if they are nationals of a
country which grants the same or similar rights to Filipino workers, as
certified by the Department of Foreign Affairs.

For purposes of this section, any employee, whether employed for a definite
period or not, shall beginning on the first day of his/her service, be eligible
for membership in any labor organization.

All other workers, including ambulant, intermittent and other workers, the
self-employed, rural workers and those without any definite employers may
form labor organizations for their mutual aid and protection and other
legitimate purposes except collective bargaining.

[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides
that workers, with definite employers, cannot form or join a workers'
association for mutual aid and protection. Section 2 thereof even broadens
the coverage of workers who can form or join a workers' association. Thus,
the Court agrees with Samahan's argument that the right to form a workers'
association is not exclusive to ambulant, intermittent and itinerant workers.
The option to form or join a union or a workers' association lies with the
workers themselves, and whether they have definite employers or not.

No misrepresentation on the part of Samahan to warrant cancellation of

registration

In this case, Samahan's registration was cancelled not because its members
were prohibited from forming a workers' association but because they
allegedly committed misrepresentation for using the phrase, "KAMI, ang
mga Manggagawa sa HAN JIN Shipyard."

Misrepresentation, as a ground for the cancellation of registration of a labor

organization, is committed "in connection with the adoption, or ratification of
the constitution and by-laws or amendments thereto, the minutes of
ratification, the list of members who took part in the ratification of the
constitution and by-laws or amendments thereto, and those in connection
with the election of officers, minutes of the election of officers, and the list of
voters, xxx."56

In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director

granted the petition for the cancellation of certificate of registration of
Samahang Lakas Manggagawa sa Takata (Salamat) after finding that the
employees who attended the organizational meeting fell short of the 20%
union registration requirement. The BLR, however, reversed the ruling of the
DOLE Regional Director, stating that petitioner Takata Corporation (Takata)
failed to prove deliberate and malicious misrepresentation on the part of
respondent Salamat. Although Takata claimed that in the list of members,
there was an employee whose name appeared twice and another was merely
a project employee, such facts were not considered misrepresentations in
the absence of showing that the respondent deliberately did so for the
purpose of increasing their union membership. The Court ruled in favor of
Salamat.

In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition

for cancellation of certificate of registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious
irregularities, especially those appearing on the face of the application and
its attachments, a union should be denied recognition as a legitimate
labor organization. Prescinding from these considerations, the issuance to
the Union of Certificate of Registration No. RO300-00-02-UR-0003
necessarily implies that its application for registration and the supporting
documents thereof are prima facie free from any vitiating irregularities.
Another factor which militates against the veracity of the allegations in
the Sinumpaang Petisyon is the lack of particularities on how, when and
where respondent union perpetrated the alleged fraud on each
member. Such details are crucial for in the proceedings for
cancellation of union registration on the ground of fraud or
misrepresentation, what needs to be established is that the specific act or
omission of the union deprived the complaining employees -members of their
right to choose.

[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a
ground for the cancellation of the certificate of registration, must be done
maliciously and deliberately. Further, the mistakes appearing in the
application or attachments must be grave or refer to si gnificant matters. The
details as to how the alleged fraud was committed must also be indubitably
shown.

The records of this case reveal no deliberate or malicious intent to commit

misrepresentation on the part of Samahan. The use of such words "KAMI,
ang mga Manggagawa sa HANJIN Shipyard" in the preamble of the
constitution and by-laws did not constitute misrepresentation so as to
warrant the cancellation of Samahan's certificate of registration. Hanjin
failed to indicate how this phrase constitutes a malicious and deliberate
misrepresentation. Neither was there any showing that the alleged
misrepresentation was serious in character. Misrepresentation is a devious
charge that cannot simply be entertained by mere surmises and conjectures.

Even granting arguendo that Samahan's members misrepresented

themselves as employees or workers of Hanjin, said misrepresentation does
not relate to the adoption or ratification of its constitution and by-laws or to
the election of its officers.

Removal of the word "Hanjin Shipyard" from the association's name,

however, does not infringe on Samahan's right to self-organization

Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be
removed in the name of the association. A legitimate workers' associatio n
refers to an association of workers organized for mutual aid and protection
of its members or for any legitimate purpose other than collective bargaining
registered with the DOLE. 59 Having been granted a certificate of registration,
Samahan's association is now recognized by law as a legitimate workers'
association.
According to Samahan, inherent in the workers' right to self-organization is
its right to name its own organization. It seems to equate the dropping of
words "Hanjin Shipyard" from its name as a restraint in its exercise of the
right to self-organization. Hanjin, on the other hand, invokes that "Hanjin
Shipyard" is a registered trade name and, thus, it is within their right to
prohibit its use.

As there is no provision under our labor laws which speak of the use of name
by a workers' association, the Court refers to the Corporation Code, which
governs the names of juridical persons. Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the
corporate name is approved, the Commission shall issue an amended
certificate of incorporation under the amended name.

[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration of
a corporate name which is "identical or deceptively or confusingly similar" to
that of any existing corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance of fraud upon the
public which would have occasion to deal with the entity concerned, the
evasion of legal obligations and duties, and the reduction of difficulties of
administration and supervision over corporations. 60

For the same reason, it would be misleading for the members of Samahan to
use "Hanjin Shipyard" in its name as it could give the wrong impression that
all of its members are employed by Hanjin.

Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly

states:
The change of name of a labor organization shall not affect its legal
personality. All the rights and obligations of a labor organization under its
old name shall continue to be exercised by the labor organization under its
new name.
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no
abridgement of Samahan's right to self-organization was committed.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013

Decision and the January 28, 2014 Resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The September 6, 2010 Resolution of
the Bureau of Labor Relations, as modified by its November 28, 2011
Resolution, is REINSTATED.

SO ORDERED.c

G.R. No. 111262 September 19, 1996

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President

RAYMUNDO HIPOLITO, JR., petitioner,
vs.
HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN
MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN
MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents.

KAPUNAN, J.:

This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on
February 15, 1993 involving a labor dispute at San Miguel Corporation.

The facts are as follows:

On June 28, 1990, petitioner-union San Miguel Corporation Employees Union — PTGWO
entered into a Collective Bargaining Agreement (CBA) with private respondent San Miguel
Corporation (SMC) to take effect upon the expiration of the previous CBA or on June 30 ,
1989.

This CBA provided, among others, that:

ARTICLE XIV

DURATION OF AGREEMENT

Sec. 1. This Agreement which shall be binding upon the parties hereto and their
respective successors-in-interest, shall become effective and shall remain in force
and effect until June 30, 1992.

Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the term of
this Agreement insofar as the representation aspect is concerned, shall be for five (5)
years from July 1, 1989 to June 30, 1994. Hence, the freedom period for purposes of
such representation shall be sixty (60) days prior to June 30, 1994 .

Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of
all provisions of this Agreement, except insofar as the representation aspect is
concerned. If no agreement is reached in such negotiations, this Agreement shall
 nevertheless remain in force up to the time a subsequent agreement is reached by
the parties. 1

In keeping with their vision and long term strategy for business expansion, SMC
management informed its employees in a letter dated August 13, 1991 2 that the company
which was composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds
and Livestocks, (4) Magnolia and Agri-business would undergo a restructuring. 3

Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun -off and
became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and
effect.

After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and
Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two
parties submitting their respective proposals and counterproposals.

During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should
still include the employees of the spun-off corporations: Magnolia and SMFI; and that the
renegotiated terms of the CBA shall be effective only for the remaining period of two years or
until June 30, 1994.

SMC, on the other hand, contended that the members/employees who had moved to
Magnolia and SMFI, automatically ceased to be part of the bargaining unit at the SMC.
Furthermore, the CBA should be effective for three years in accordance with Art. 253 -A of
the Labor Code.

Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990.

On October 2, 1992, a Notice of Strike was filed against SMC.

In order to avert a strike, SMC requested the National Conciliation and Mediation Board
(NCMB) to conduct preventive mediation. No settlement was arrived at despite several
meetings held between the parties.

On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of
a strike.

On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital
industry.

As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on
November 10, 1992. 4Several conciliation meetings were held but still no
agreement/settlement was arrived at by both parties.

After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of
the CBA shall be effective for the period of three (3) years from June 30, 1992; and that such
CBA shall cover only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary
of Labor.

Subsequently, on March 30, 1995, 5 petitioner-union filed a Motion for Issuance of a

Temporary Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the
certification elections in the different companies, maintaining that the employees of Magnolia
and SMFI fall within the bargaining unit of SMC.

On March 29, 1995, the Court issued a resolution granting the temporary restraining order
prayed for. 6

Meanwhile, an urgent motion for leave to intervene 7 in the case was filed by the Samahan
ng Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-
SMC-FFW) through its authorized representative, Elmer S. Armando, alleging that it is one of
the contending parties adversely affected by the temporary restraining order.

The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma, 8 G.R.
No. 101766, March 5, 1993, where the Court recognized the separation of the employees of
Magnolia from the SMC bargaining unit. It then prayed for the lifting of the temporary
restraining order.

Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order
jeopardized the employees' right to conclude a new CBA. At the same time, he challenged
the legal personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president
when the latter was already officially dismissed from the company on October 4, 1994.

Amidst all these pleadings, the following primordial issues arise:

1) Whether or not the duration of the renegotiated terms o f the CBA is to be effective for
three years of for only two years; and

2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia
and SMFI.

Petitioner-union contends that the duration for the non-representation provisions of the CBA
should be coterminous with the term of the bargaining agency which in effect shall be for the
remaining two years of the current CBA, citing a previous decision of the Secretary of Labor
on December 14, 1992 in the matter of the labor dispute at Ph ilippine Refining Company.

However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.

We agree with the Secretary of Labor.

Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:

Art. 253-A. Terms of a Collective Bargaining Agreement. — Any Collective

Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
 entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date of
expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. 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 such 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.
(Emphasis supplied.)

Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No.
6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision
states that the CBA has a term of five (5) years instead of three years, before the
amendment of the law as far as the representation aspect is concerned. All other provisions
of the CBA shall be negotiated not later than three (3) years after its execution. The
"representation aspect" refers to the identity and majority status of the union that negotiated
the CBA as the exclusive bargaining representative of the appropriate bargaining unit
concerned. "All other provisions" simply refers to the rest of the CBA, economic as well as
non-economic provisions, except representation. 10

As the Secretary of Labor herself observed in the instant case, the law is clear and definite
on the duration of the CBA insofar as the representation aspect is concerned, but is quite
ambiguous with the terms of the other provisions of the CBA. It is a cardinal principle of
statutory construction that the Court must ascertain the legislative intent for the purpose of
giving effect to any statute. The history of the times and state of the things existing when the
act was framed or adopted must be followed and the conditions of the things at the time of
the enactment of the law should be considered to determine the legislative intent. 11 We look
into the discussions leading to the passage of the law:

THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as the economic provisions
are concerned . . .

THE CHAIRMAN (SEN. HERRERA): Maximum of three years?

THE CHAIRMAN (SEN. VELOSO): Maximum of three years.

THE CHAIRMAN (SEN. HERRERA): Present practice?

THE CHAIRMAN (REP. VELOSO): In other words, after three years pwede nang
magnegotiate in the CBA for the remaining two years.

THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or
three years but assuming three years which, I think, that's the likelihood. . .

THE CHAIRMAN (REP. VELOSO): Yes.

THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there
will be a change of agent, at least he has one year to administer and to adjust, to
develop rapport with the management. Yan ang importante.
You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when we
negotiate with somebody na hindi natin kilala, then, we are governed by our biases
na ito ay destroyer ng Labor; ang mga employer, ito bayaran ko lang ito okay na.

'Yan ang nangyayari, but let us give that allowance for the one year to let them know.

Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if
you encourage union to fight each other. 'Yan ang problema. 12

xxx xxx xxx

HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA
seem to provide some doubts later on in the implementation. Sabi kasi rito, insofar as
representation issue is concerned, seven years and lifetime. . .

HON. CHAIRMAN HERRERA: Five years.

HON. ISIDRO: Five years, all the others three years.

HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions,
not later than three years.

HON. ISIDRO: Not later than three years, so within three years you have to make a
new CBA.

HON. CHAIRMAN HERRERA: Yes.

HON. ISIDRO: That is again for purposes of renewing the terms, three years na
naman iyan — then, seven years. . .

HON. CHAIRMAN HERRERA: Not later than three years.

HON. ISIDRO: Assuming that they usually follow the period — three years nang
three years, but under this law with respect to representation — five years, ano?
Now, after three years, nagkaroon ng bagong terms, tapos na iyong term, renewed
na iyong terms, ang karapatan noon sa representation issue mayroon pang two
years left.

HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three
plus three.

HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang
natatapos. So, another CBA was formed and this CBA mayroon na naman siyang
bagong five years with respect to representation issue.

HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and
conditions for three years.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: One the third year you can start negotiating to change
the terms and conditions.

HON. ISIDRO: Yes.

HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .

HON. ISIDRO: Oo.

HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now
can be questioned, so baka puwedeng magkaroon ng certification election. If the
incumbent union loses, then the new union administers the contract for one year to
give him time to know his counterpart — the employer, before he can negotiate for a
new term. Iyan ang advantage.

HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the
terms and conditions and then, so you have to renew that in three years — you
renew for another three years, mayroon na naman another five years iyong ano . . .

HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.

HON. CHAIRMAN HERRERA: Two years na lang sa representation.

HON. ANIAG: So that if they changed the union, iyong last year . . .

HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract.
Then, voluntary arbitration na kayo and then mayroon ka nang probisyon "retroact on
the date of the expiry date". Pagnatalo ang incumbent unyon, mag -aassume ang
new union, administer the contract. As far as the term and condition, for one year,
and that will give him time and the employer to know each other .

HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification
election, it would not want to administer a CBA which has not been negotiated by the
union itself.

HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is
happening now in the country is that the term ng contract natin, duon din mage -
expire ang representation. Iyon ang nangyari. That is where you have the gulo.
Ganoon ang nangyari. So, ang nangyari diyan, pag-mayroon certification election,
expire ang contract, ano ang usual issue — company union. I can you (sic) give you
more what the incumbent union is giving. So ang mangyayari diyan, pag-negotiate
mo hardline na agad.

HON. CHAIRMAN VELOSO : Mon, for four years?

HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the
representation aspect — why do we have to distinguish between three and five?
What's wrong with having a uniform expiration period?

HON. CHAIRMAN HERRERA: Five years.

 HON. ISIDRO: Puro three years.

HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang
reality diyan, Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months,
that's the average, aabot pa minsan ng one year. Pagktapos ng negotiation mo,
signing kayo. There will be an allowed period of one year. Third year na, uumpisahan
naman ang organizations, papasok na ang ibang unyon because the reality in Trad e
Union committee, they organize, we organize. So, actually, you have only industrial
peace for one year, effective industrial peace. That is what we are trying to change.
Otherwise, we will continue to discourage the investors and the union will never gro w
because every other year it has to use its money for the certification election. Ang
grabe pang practice diyan, mag-a-advance ang federation for three years union dues
para panggastos lang sa certification election. That is what we are trying to avoid.

HON. JABAR: Although there are unions which really get advances.

HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal framework to
promote industrial peace and to develop responsible and fair labor movement.

HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . .
.

xxx xxx xxx

HON CHAIRMAN VELOSO. (continuing) . . . in other words, the longer the period of
effectivity of the CBA, the better for industrial peace.

HON. CHAIRMAN HERRERA: representation status.

HON. CHAIRMAN VELOSO: Only on —

HON. CHAIRMAN HERRERA: — the representations.

HON. CHAIRMAN VELOSO: But on the economic issues.

HON. CHAIRMAN HERRERA: You have to review that. The parties will have to
review that.

HON. CHAIRMAN VELOSO: At least on second year.

HON. CHAIRMAN HERRERA: Not later than 3 years, ang karamihan ng mga mag -
negotiate when the companyis (interrupted) 13

From the aforesaid discussions, the legislators were more inclined to have the period of
effectivity for three (3) years insofar as the economic as well as non -economic provisions are
concerned, except representation.

Obviously, the framers of the law wanted to maintain industrial peace and stability by having
both management and labor work harmoniously together without any disturbance. Thus, no
outside union can enter the establishment within five (5) years and challen ge the status of
the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of
employment (economic and non-economic) can not be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract between the
parties and the parties must respect the terms and conditions of the agreement. 14Notably,
the framers of the law did not give a fixed term as to the effectivity of the terms and
conditions of employment. It can be gleaned from their discussions that it was left to the
parties to fix the period.

In the instant case, it is not difficult to determine the period of effectivity for the non -
representation provisions of the CBA. Taking it from the history of their CBAs, SMC intended
to have the terms of the CBA effective for three (3) years reckoned from the expiration of the
old or previous CBA which was on June 30, 1989, as it provides:

Sec. 1. This Agreement which shall be binding upon the parties hereto and their
respective successors-in-interest, shall become effective and shall remain in force
and effect until June 30, 1992.

The argument that the PRC case is applicable is indeed misplaced. We quote with favor the
Order of the Secretary of Labor in the light of SMC's peculiar situation as compared with
PRC's company situation.

It is true that in the Philippine Refining Company case (OS-AJ-0031-91) (sic), Labor
Dispute at Philippine Refining Company), we ruled that the term of the renegotiated
provisions of the CBA should coincide with the remaining term of the agency. In
doing so, we placed premium on the fact that PRC has only two (2) unions and no
other union had yet executed a renewed term of 3 years. Nonetheless, in ruling for a
shortened term, we were guided by our considered perception that the said term
would improve, rather than ruin, the general welfare of both the workers and the
company. It is equally true that once the economic provisions of the CBA expire, the
residual representative status of the union is effective for only 2 more years.
However, if circumstances warrant that the contract duration which it is soliciting from
the company for the benefit of the workers, shall be a little bit longer than its lifespan,
then this Office cannot stand in the way of a more ideal situation. We must not lose
sight of the fact that the primordial purpose of a collective contract is to promote
industrial harmony and stability in the terms and conditions of employment. To our
mind, this objective cannot be achieved without giving due consideration to the
peculiarities and unique characteristics of the employer. In the case at bar, there is
no dispute that the mother corporation (SMC) spun-off two of its divisions and
thereby gave birth to two (2) other entities now known as Magnolia Corporation and
San Miguel Foods, Inc. In order to effect a smooth transition, the companies
concerned continued to recognize the existing unions as the bargaining agents of
their respective bargaining units. In the meantime, the other unions in these
companies eventually concluded their CBA negotiations on the remaining term and
all of them agreed on a 3-year cycle. Notably, the following CBAs were forged
incorporating a term of 3-years on the renegotiated provisions, to wit:

1. SMC — daily-paid employees union (IBM)

2. SMFI — monthly-paid employees and daily-paid employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition by the company of the
continuing representative status of the unions after the aforementioned spin -offs and
 the stand of the company for a 3-year renegotiated cycle when the economic
provisions of the existing CBAs expired, i.e., the maintain stability and avoid
confusion when the umbilical cord of the two divisions were severed from their
parent. These two cannot be considered independently of each other for they were
intended to reinforce one another. Precisely, the company conceded to face the
same union notwithstanding the spin-offs in order to preserve industrial peace during
the infancy of the two corporations. If the union would insist on a shorter renegotiated
term, then all the advantages gained by both parties in this regard, would have gone
to naught. With this in mind, this office feels that it will betray its mandate should we
order the parties to execute a 2-year renegotiated term for then chaos and confusion,
rather than tranquillity, would be the order of the day. Worse, there is a strong
likelihood that such a ruling might spawn discontent and possible mass actions
against the company coming from the other unions who had already agreed to a 3 -
year renegotiated terms. If this happens, the purpose of this Office's interven tion into
the parties' controversy would have been defeated. 15

The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February
24, 1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma
on January 16, 1995 in the certification election case involving the SMC employees. 16 In said
memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated
terms of the CBA vis-a-vis the term of the bargaining agent, to wit:

As a matter of policy the parties are encourages (sic) to enter into a renegotiated
CBA with a term which would coincide (sic) with the aforesaid five (5) year term of
the bargaining representative.

In the event however, that the parties, by mutual agreement, enter into a
renegotiated contract with a term of three (3) years or one which does not coincide
with the said 5-year term, and said agreement is ratified by majority of the members
in the bargaining unit, the subject contract is valid and legal a nd therefore, binds the
contracting parties. The same will however not adversely affect the right of another
union to challenge the majority status of the incumbent bargaining agent within sixty
(60) days before the lapse of the original five (5) year term of the CBA.

Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in
ruling that the effectivity of the renegotiated terms of the CBA shall be for three (3) years.

With respect to the second issue, there is, likewise, no merit in petitioner-union's assertion
that the employees of Magnolia and SMFI should still be considered part of the bargaining
unit of SMC.

Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with its vision and long term
strategy as it explained in its letter addressed to the employees dated August 13, 1991:

. . . As early as 1986, we announced the decentralization program and spoke of the

need for structures that can react fast to competition, a changing environment,
shorter product life cycles and shifts in consumer preference. We further stated in the
1987 Annual Report to Stockholders that San Miguel's businesses will be more
autonomous and self sufficient so as to better acquire and master new technologies,
cope with a labor force with different expertises and expectations, and master and
 satisfy the changing needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility, greater awareness of
operating results, and speedier, more responsive decision making.

xxx xxx xxx

We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since
this company was organized about ten years ago, to see the benefits that arise from
restructuring a division of San Miguel into a more competitive organization. As a
stand-alone enterprise, CCBPI engineered a dramatic turnaround and has sustained
its sales and market share leadership ever since.

We are confident that history will repeat itself, and the transformation of Magnolia
and FLD will be successful as that of CCBPI. 17

Undeniably, the transformation of the companies was a management prerogative and

business judgment which the courts can not look into unless it is contrary to law, public policy
or morals. Neither can we impute any bad faith on the part of SMC so as to justify the
application of the doctrine of piercing the corporate veil. 18Ever mindful of the employees'
interests, management has assured the concerned employees that they will be absorbed by
the new corporations without loss of tenure and retaining their present pay and benefits
according to the existing CBAs. 19 They were advised that upon the expiration of the CBAs,
new agreements will be negotiated between the management of the new corporations and
the bargaining representatives of the employees concerned. As a result of the spin -offs:

1. Each of the companies are run by, supervised and controlled by different
management teams including separate human resource/personnel managers.

2. Each Company enforces its own administrative and operational rules and policies
and are not dependent on each other in their operations.

3. Each entity maintains separate financial statements and are audited separately
from each other. 20

Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case
of Diatagon Labor Federation Local 110 of the ULGWP v. Ople. 21 We elucidate:

The fact that their businesses are related and that the 236 employees of the Georgia
Pacific International Corporation were originally employees of Lianga Bay Logging
Co., Inc. is not a justification for disregarding their separate personalities. Hen ce, the
236 employees, who are now attached to Georgia Pacific International Corporation,
should not be allowed to vote in the certification election at the Lianga Bay Logging
Co., Inc. They should vote at a separate certification election to determine the
collective bargaining representative of the employees of Georgia Pacific International
Corporation.

Petition-union's attempt to include the employees of Magnolia and SMFI in the SMC
bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid
ground.
Moreover, in determining an appropriate bargaining unit, the test of group ing 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 performed. 22 Considering the spin-offs, the
companies would consequently have their respective and distinctive concerns in terms of the
nature of work, wages, hours of work and other conditions of employment. Interests of
employees in the different companies perforce differ. SMC is engaged in the business of the
beer manufacturing. Magnolia is involved in the manufacturing and processing of diary
products 23 while SMFI is involved in the production of feeds and the processing of
chicken. 24 The nature of their products and scales of business may require different skills
which must necessarily be commensurated by different compensation packages. The
different companies may have different volumes of work and different working conditions. For
such reason, the employees of the different companies see the need to group themselves
together and organize themselves into distinctive and different groups. It would then be best
to have separate bargaining units for the different companies where the emp loyees can
bargain separately according to their needs and according to their own working conditions.

We reiterate what we have explained in the case of University of the Philippines v. Ferrer-
Calleja 25 that:

[T]here are various factors which must be satisfied and considered in determining the
proper constituency of a bargaining unit. No one particular factor is itself decisive of
the determination. The weight accorded to any particular factor varies in accorda nce
with the particular question or questions that may arise in a given case. What are
these factors? Rothenberg mentions a good number, but the most pertinent to our
case are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of
employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and probationary employees. . . .

xxx xxx xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is

given in the 10th Annual Report of the National Labor Relations Board wherein it is
emphasized that the factors which said board may consider and weigh in fixing
appropriate units are: the history, extent and type of organization of employees; 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 . . .

. . . In said report, it is likewise emphasized that the basic test in determining the
appropriate bargaining unit is that a unit, to be appropriate, must affect a grouping of
employees who have substantial, mutual interests in wages, hours, working
conditions and other subjects of collective bargaining (citing Smith on Labor Laws,
316-317; Francisco, Labor Laws, 162). . .

Finally, we take note of the fact that the separate interests of the employees of Magnolia an d
SMFI from those of SMC has been recognized in the case of Daniel Borbon
v. Laguesma. 26 We quote:
 Even assuming in gratia argumenti that at the time of the election they were regular
employees of San Miguel, nonetheless, these workers are no longer connected with
San Miguel Corporation in any manner because Magnolia has ceased to be a
division of San Miguel Corporation and has been formed into a separate corpor ation
with a personality of its own (p. 305, Rollo). This development, which was brought to
our attention by private respondents, necessarily renders moot and academic any
further discourse on the propriety of the elections which petitioners impugn via the
recourse (p. 319, Rollo).

In view of all the foregoing, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in rendering the assailed Order.

WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on March 29, 1995 is lifted.

SO ORDERED.

[G.R. No. 81883. September 23, 1992.]

KNITJOY MANUFACTURING, INC., Petitioner, v. PURA FERRER-

CALLEJA, Director of Bureau of Labor Relations, and KNITJOY
MONTHLY EMPLOYEES UNION, Respondents.

[G.R. No. 82111. September 23, 1992.]

CONFEDERATION OF FILIPINO WORKERS (CFW), Petitioner, v.

DIRECTOR PURA FERRER-CALLEJA and KNITJOY MONTHLY
EMPLOYEES UNION (KMEU), Respondents.

V.E. Del Rosario & Associates for petitioner in G.R. No. 81883.

Rogelio R. Udarbe for petitioner in G.R. No. 82111.

Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates

for Private Respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE

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

2. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO FROM UNION OR

ASSOCIATIONS; SCOPE. — The right to form a union or association or to self-
organization comprehends two (2) broad notions, to wit: (a) the liberty or
freedom, i.e., the absence of restraint which guarantees that the employee
may act for himself without being prevented by law, and (b) the power, by
virtue of which an employee may, as he pleases, join or refrain from joining
an association. (Victoriano v. Elizalde Rope Workers’ Union, 59 SCRA 54).

3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE

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

4. ID.; ID.; ID.; CERTIFICATION ELECTION; RESULTS THEREOF CONFINED

ONLY TO THE GROUP IT REPRESENTS; CBA ENTERED DOES NOT BAR
HOLDING OF ANOTHER CERTIFICATION ELECTION FOR THE OTHER GROUP;
CASE AT BAR. — Considering that (a) the TUPAS solicited certification election
was strictly confined to the rank-and-file employees who are paid on a daily
or piece-rate basis, (b) the results of the election must also necessarily confine
the certified union’s representation to the group it represents and (c) the issue
of the plight of the monthly-paid employees was still pending, KNITJOY and
CFW clearly acted with palpable bad faith and malice in including within the
scope of the new CBA these monthly-paid employees. Thus was effected a
conspiracy to defeat and suppress the right of the KMEU and its members to
bargain collectively and negotiate for themselves, to impos e upon the latter a
contract the negotiation for which they were not even given notice of,
consulted or allowed to participate in, and to oust from the BLR the pending
appeal on the certification issue. In the latter case, KNITJOY and CFW are
guilty of contumacious conduct. It goes without saying then that the new CBA
cannot validly include in its scope or coverage the monthly-paid rank-and-file
employees of KNITJOY. It does not bar the holding of a certification election
to determine their sole bargaining agent, and the negotiation for and the
execution of a subsequent CBA between KNITJOY and the eventual winner in
said election (Section 4, Rule V, Book V of the Rules Implementing the Labor
Code).

DECISIO N

DAVIDE, JR., J.:

These petitions have a common origin and raise identical issues. They were
ordered consolidated on 23 November 1988.
In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of
the Bureau of Labor Relations in BLR Case No. A-10-315-87, which reversed
the Order of Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September
1987 and ordered the holding of a certification election among the regular
rank-and-file monthly-paid employees of Knitjoy Manufacturing, Inc.
(KNITJOY), is assailed by the latter.

The Med-Arbiter’s order dismissed the petition of private respondent Knitjoy

Monthly Employees Union (KMEU) for such certification election and directed
the parties "to work out (sic) towards the formation of a single union in the
company."cralaw virtua1aw library

The antecedent material operative facts in these petitions are as

follows:chanrob1es virtual 1aw library

Petitioner KNITJOY had a collective bargaining agreement (CBA) with the

Federation of Filipino Workers (FFW). The bargaining unit covered only the
regular rank-and-file employees of KNITJOY paid on a daily or piece-rate
basis. It did not include regular rank-and-file office and production
employees paid on a monthly basis. The CBA expired on 15 June 1987. Prior
to its expiration, the FFW was split into two (2) factions — the Johnny Tan
and the Aranzamendez factions. The latter eventually became the
Confederation of Filipino Workers (CFW), herein petitioner in G.R. No.
82111.

Also prior to the expiration of the CBA, the Trade Union of the Philippines
and Allied Services (TUPAS) filed a petition for the holding of a certification
election among KNITJOY’s regular rank-and-file employees paid on a daily
and piece-rate basis. Excluded were the regular rank-and-file employees
paid on a monthly basis. In the certification election conducted on 10 June
1987, CFW emerged as the winner; thereafter, negotiations for a new CBA
between CFW and KNITJOY commenced.chanroblesvirtualawlibrary

On 24 June 1987, during the pendency of the said negotiations, private

respondent KMEU filed a petition for certification election among KNITJOY’s
regular rank-and-file monthly-paid employees with Regional Office No. IV of
the Department of Labor and Employment (DOLE) which docketed the same
as R-04-OD-M-6-75-87. The Knitjoy Monthly Employees Association and
Confederation of Citizens Labor Union (KMEA-CCLU), another union existing
in the said company, and petitioner CFW intervened therein.

The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter

Rolando S. de la Cruz, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the petition is hereby Dismissed, but
the parties are instructed to work out (sic) towards the formation of a single
union in the company." 1

KMEU filed a motion to reconsider this order, which was treated as an appeal
by the Bureau of Labor Relations (BLR).

On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the

BLR, handed down a Decision 2 reversing the order of Med-Arbiter de la
Cruz. The dispositive portion of the Decision reads:jgc:chanrobles.com.ph

"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly

Employees is hereby granted subject to the exclusion of the monthly paid
employees who are deemed managerial.

Let, therefore, the certification election proceed without delay, with the
following as choices:chanrob1es virtual 1aw library

1. Knitjoy Monthly Employees Union (KMEU); and

2. No Union.

The company’s latest payroll shall be the basis in determini ng the list of
eligible voters.

SO ORDERED."cralaw virtua1aw library

Respondent Director brushed aside KNITJOY’s arguments that the monthly-

paid employees have the same working incentives as their counterparts, the
daily-paid workers; that the existing collective bargaining agent (CFW) is
willing to include the monthly-paid employees, and that out of the 212
monthly-paid employees, 116 qualify as managerial employees while the
rest who are holding confidential or technical positions should likewise be
excluded. In finding for KMEU, said Director declared
that:jgc:chanrobles.com.ph

"As pointed out by the Supreme Court in the similar case of General Rubber
and Footwear Corporation v. Bureau of Labor Relations, Et Al., G.R. No.
74262, it is perhaps unusual for management to have to deal with two (2)
collective bargaining unions but there is no one to blame except
management for creating the situation it is in. From the beginning of the
existence of the CBA, management had sought to indiscriminately suppress
the members of the petitioners’ right (sic) to self-organization. Respondents’
argument that the incumbent collective bargaining agent is willing to
accommodate herein petitioner is of no moment since the option now rests
upon the petitioner as to whether or not they desire to join the existing
collective bargaining agent or remain as separate (sic) union." 3

KNITJOY and CFW separately moved to reconsider the said decision alleging,
as principal underpinning therefor, the conclusion and signing between
them, allegedly on 27 November 1987 — before the rendition of the
challenged decision — of a CBA which includes in its coverage the monthly-
paid rank-and-file employees. It is averred that said CBA has rendered the
case moot and academic; moreover, to remove the monthly-paid employees
from their present bargaining unit would lead to the fragmentation thereof,
contrary to existing labor policies favoring larger units.chanrobles virtual
lawlibrary

In her Decision of 8 February 1988, respondent Director denied for lack of

merit the motion for reconsideration on the principal ground that although
the monthly-paid rank-and-file employees were allegedly included within the
scope of the new CBA, they are not barred from forming a separate
bargaining unit considering that: (a) since the petition for certification
election was filed as early as 24 June 1987, there already existed a pending.
representation issue when KNITJOY and CFW commenced negotiations for a
new CBA; nevertheless, KMEU was not brought into the said negotiations
and was therefore not a privy to the CBA; (b) members of KMEU did not
participate in the ratification of the CBA; contrary to KNITJOY s claim that
the same was unanimously ratified by the members of the bargaining unit,
the CBA failed to mention even one monthly-paid employee who participated
in the ratification process, and (c) while it is true that the policy of the DOLE
is to favor a one company-one union scenario which finds basis in Section 2,
Rule V, Book V of the Rules Implementing the Labor Code, there are,
nonetheless, some exceptions thereto, as where the bargaining history
requires the formation of another bargaining unit. Besides, such a policy
must yield to an employee’s Constitutional right to form unions which
includes the freedom to join a union of one’s choice. 4

The new CBA, which KMEU claims to have been signed on 12 December
1987, and not on 27 November 1987 as both KNITJOY and CFW boldly
assert, defines the bargaining unit covered as follows:jgc:chanrobles.com.ph

"SECTION 2. The bargaining unit covered by this Agreement consists of all

regular and permanent rank-and-file employees of the COMPANY employed
in its production plants and paid on a daily or piece-rate basis and regular,
rank-and-file monthly paid office employees, excluding managerial,
supervisory, casual, temporary and probationary employees, and security
guards." 5

Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed
the instant petitions. The former imputes upon respondent Director grave
abuse of discretion in holding that (a) the scope of the bargaining unit
agreed upon in the new CBA does not bind KMEU because it is not a party
thereto, (b) the acceptance by all the members of KMEU of all benefits of the
CBA did not constitute an overt act of ratification and (c) the CBA was
concluded on 12 December 1987 and not on 27 November 1987. It further
contends that respondent Director contumaciously violated the one
company-one union policy of the Labor Code and disregarded the ruling of
this Court in Bulletin Publishing Corp. v. Hon. Sanchez, 6 reiterated in part in
General Rubber and Footwear Corp. v. Bureau of Labor Relations. 7 Upon
the other hand, CFW contends that respondent Director committed grave
abuse of discretion in (a) allowing the creation of a unit separate from the
existing bargaining unit defined in the new CBA thus abetting the
proliferation of unions, (b) disregarding the CBA provisions which consider
the CFW as the sole and exclusive bargaining agent of all rank-and-file
employees and (c) excluding CFW from the choices of unions to be voted
upon. 8

On 24 August 1988, 9 this Court gave due course to the petition in G.R. No.
81883 after both the public and private respondents filed their separate
comments and the petitioner filed its consolidated reply thereto. 10

On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No.
81883 and the petitioner in the former was ordered to file a consolidated
reply to the separate comments of both respondents. 11

The principal issues raised in these petitions are:chanrob1es virtual 1aw

library

1. Whether or not petitioner KNITJOY’s monthly-paid regular rank-and-file

employees can constitute an appropriate bargaining unit separate and
distinct from the existing unit composed of daily or piece-rate paid regular
rank-and-file employees, and

2. Whether or not the inclusion in the coverage of the new CBA between
KNITJOY and CFW of the monthly-paid rank-and-file employees bars the
holding of a certification election among the said monthly pai d employees.

We decide for the respondents.

1. The suggested bias of the Labor Code in favor of the one company-one
union policy, anchored on the greater mutual benefits which the parties
could derive, especially in the case of employees whose bargaining strength
could undeniably be enhanced by their unity and solidarity but diminished by
their disunity, division and dissension, is not without exceptions.

The present Article 245 of the Labor Code expressly allows supervisory
employees who are not performing managerial functions to join, assist or
form their separate union but bars them from membership in a labor
organization of the rank-and-file employees. It reads:jgc:chanrobles.com.ph

"ARTICLE 245. Ineligibility of managerial employees to join any labo r

organization; right of supervisory employees. — Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of the
rank-and-file employees but may join, assist or form separate labor
organizations of their own."cralaw virtua1aw library

This provision obviously allows more than one union in a company.

Even Section 2(c), Rule V, Book V of the Implementing Rules and

Regulations of the Labor Code, which seeks to implement the policy, also
recognizes exceptions. It reads:chanrobles virtual lawlibrary

"SECTION 2. Who may file. — Any legitimate labor organization or the

employer, when requested to bargain collectively, may file the petition.

The petition, when filed by a legitimate labor organization shall contain,

among others:chanrob1es virtual 1aw library

x x x

(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; . . . ." (Emphasis supplied)

The usual exception, of course, is where the employer unit has to give way to
the other units like the craft unit, plant unit, or a subdivision thereof, the
recognition of these exceptions takes into account the policy to assure
employees of the fullest freedom in exercising their rights. 12 Otherwise
stated, the one company-one union policy must yield to the right of the
employees to form unions or associations for purposes not contrary to law, to
self-organization and to enter into collective bargaining negotiations, among
others, which the Constitution guarantees. 13
The right to form a union or association or to self-organization comprehends
two (2) broad notions, to wit: (a) the liberty or freedom, i.e., the absence of
restraint which guarantees that the employee may act for himself without
being prevented by law, and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association. In Victoriano
v. Elizalde Rope Workers’ Union, 14 this Court stated:jgc:chanrobles.com.ph

". . . Notwithstanding the different theories propounded by the different

schools of jurisprudence regarding the nature and contents of a ‘right’, it can
be safely said that whatever theory one subscribes to, a right comprehends at
least two broad notions, namely: first, liberty or freedom, i.e., the absence of
legal restraint, whereby an employee may act for himself without being
prevented by law; and second, power, whereby an employee may, as he
pleases, join or refrain from joining an association. It is, therefore, the
employee who should decide for himself whether he should join or not an
association, and should he choose to join, he himself makes up his mind as to
which association he would join; and even after he has joi ned, he still retains
the liberty and the power to leave and cancel his membership with said
organization at any time [Pagkakaisa Samahang Manggagawa ng San Miguel
Brewery v. Enriquez, Et Al., 108 Phil., 1010, 1019]. It is clear, therefore, that
the right to join a union includes the right to abstain from joining any union
[Abo, Et. Al. v. PHILAME (KG) Employees Union, Et Al., L-19912, January 30,
1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations]. Inasmuch as
what both the Constitution and the Industrial Peace Act have recognized, and
guaranteed to the employee, is the ‘right’ to join associations of his choice, it
would be absurd to say that the law also imposes, in the same breath, upon
the employee the duty to join associations. The law does not enjoin an
employee to sign up with any association."cralaw virtua1aw library

Furthermore, it is not denied that in the bargaining history of KNITJOY, the

CBA has been consistently limited to the regular rank-and-file employees paid
on a daily or piece-rate basis. On the other hand, the rank-and-file employees
paid on a monthly basis were never included within its scope. Respondent
KMEU’s membership is limited to the latter class of employees, KMEU does not
seek to dislodge CFW as the exclusive bargaining representative for the
former. The records further disclose that in the certification solicited by TUPAS
and during the elections which followed thereafter, resulting in the certification
of CFW as the exclusive bargaining representative, the monthly-paid
employees were expressly excluded. Thus, the negotiations between CFW and
KNITJOY following such a certification could only logically refer to the rank-
and-file employees paid on a daily or piece-rate basis. Clearly therefore,
KNITJOY and CFW recognize that insofar as the monthly-paid employees are
concerned, the latter’s constituting a separate bargaining unit with the
appropriate union as sole bargaining representative, can neither be prevented
nor avoided without infringing on these employees’ rights to form a union and
to enter into collective bargaining negotiations. Stated differently, KNITJOY
and CFW recognize the fact that the existing bargaining unit in the former is
not — and has never been — the employer unit. Given this historical and
factual setting, KMEU had the unquestioned and undisputed right to seek
certification as the exclusive bargaining representative for the monthly-paid
rank-and-file employees; both KNITJOY and CFW cannot block the same on
the basis of this Court’s declaration in Bull etin Publishing Corp. v. Hon.
Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor
Relations 16 regarding the one company-one union concept. Petitioners have
obviously misread these cases. In the first, We stated that" [t]he crux of the
dispute . . . is whether or not supervisors in petitioner company therein may,
for purposes of collective bargaining, form a union separate and distinct from
the existing union organized by the rank-and-file employees of the same
company," 17 and ruled that the members of the Bulletin Supervisory Union,
wholly composed of supervisors, are not qualified to form a union of their own
under the law and rules then existing, considering that" [a] perusal of the job
descriptions corresponding to the private respondent s as outlined in the
petition, clearly reveals the private respondents to be managers, purchasing
officers, personnel officers, property officers, supervisors, cashiers, heads of
various sections and the like. The nature of their duties gives rise to the
irresistible conclusion that most of the herein private respondents are
performing managerial functions;" 18 hence, under Article 246 19 of the Labor
Code, they cannot form, join and assist labor organizations. It should be
stressed that the statement therein that supervisors "who do not assume any
managerial function may join or assist an existing rank-and-file union or if
none exists, to join or assist in the formation of such rank-and-file
organization" 20 is no longer legally feasible under existing laws . As earlier
noted, the present Article 245 of the Labor Code allows supervisory employees
who are not exercising managerial functions to join, assist or form separate
labor organizations of their own but prohibits them from joining a labor
organization composed of the rank-and-file employees.chanrobles lawlibrary
: rednad

The second case on the other hand, demolishes the stand of KNITJOY and
CFW for, as correctly contended by the respondents, it in fact recognizes an
exception to the one company-one union concept.
Thus:jgc:chanrobles.com.ph

"Perhaps it is unusual for the petitioner to have to deal with two (2) collective
bargaining unions but there is no one to blame except petitioner itself for
creating the situation it is in. From the beginning of the existence in 1963 of
a bargaining unit for the employees up to the present, petitioner had sought
to indiscriminately suppress the members of the private respondent’s right
(sic) to self-organization provided for by law. Petitioner, in justification of its
action, maintained that the exclusion of the members of the private
respondent from the bargaining union of the rank-and-file or from forming
their own union was agreed upon by petitioner corporation with the previous
bargaining representatives . . . Such posture has no leg to stand on. It has
not been shown that private respondent was privy to this agreement. And
even if it were so, it can never bind subsequent federations and unions
particularly private respondent-union because it is a curtailment of the right
to self-organization guaranteed by the labor laws. However, to prevent any
difficulty and to avoid confusion to all concerned and, more importantly, to
fulfill the policy of the New Labor Code as well as to be consistent with Our
ruling in the Bulletin case, supra, the monthly-paid rank-and-file employees
should be allowed to join the union of the daily-paid-rank-and-file employees
of petitioner so that they can also avail of the CBA benefits or to form their
own rank-and-file union, without prejudice to the certification election that
has been ordered." 21 (Emphasis supplied)

2. Regardless of the date when the new CBA was executed - whether on 27
November 1987 as contended by KNITJOY and CFW or 12 December 1967 as
claimed by the respondents — the fact remains that it was executed before
the resolution of KMEU’s petition for certification election among the monthly
paid employees became final. This Court, however, sustains the respondents’
claim for indeed if it was executed by the parties on 27 November 1987, both
KNITJOY and CFW would have immediately filed the appropriate pleading with
the BLR informing it of such execution and moving for the dismissal of the
appeal on the ground that it has been rendered moot and academic. Moreover,
public respondent’s finding on this point is supported by substantial evidence,
thus:jgc:chanrobles.com.ph

"The parties could not have signed the said CBA on 27 November 1987,
contrary to their allegation, because from 4:00 - 10:00 p.m. on the same day,
27 November 1987, the parties still attended a conciliation conference before
Assistant Director Maximo L. Lim of the NCR (see Annex "F" of respondent’s
Supplemental Motion for Reconsideration) and agreed in principle on nine (9)
items or provisions to be included in said CBA. Said minutes do not state that
these nine items are the remaining unresolved issues in the negotiation of the
CBA." 22 It was only in their motion for the reconsideration of public
respondent’s decision of 1 December 1987 that the existence of the new CBA
was made known.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

Considering that (a) the TUPAS solicited certification election was strictly
confined to the rank-and-file employees who are paid on a daily or piece-rate
basis, (b) the results of the election must also necessarily confine the certified
union’s representation to the group it represents and (c) the issue of the plight
of the monthly-paid employees was still pending, KNITJOY and CFW clearly
acted with palpable bad faith and malice in including within the scope of the
new CBA these monthly-paid employees. Thus was effected a conspiracy to
defeat and suppress the right of the KMEU and its members to bargain
collectively and negotiate for themselves, to impose upon the latter a contract
the negotiation for which they were not even given notice of, consulted or
allowed to participate in, and to oust from the BLR the pending appeal on the
certification issue. In the latter case, KNITJOY and CFW are guilty of
contumacious conduct. It goes without saying then that the new CBA cannot
validly include in its scope or coverage the monthly-paid rank-and-file
employees of KNITJOY. It does not bar the holding of a certification election
to determine their sole bargaining agent, and the negotiat ion for and the
execution of a subsequent CBA between KNITJOY and the eventual winner in
said election. Section 4, Rule V, Book V of the Rules Implementing the Labor
Code expressly provides:jgc:chanrobles.com.ph

"SECTION 4. Effects of early agreements. — The representation case shall not,

however, be adversely affected by a collective bargaining agreement
registered before or during the last 60 days of a subsisting agreement or
during the pendency of the representation case." (Emphasis supplied)

The public respondent then committed no abuse of discretion ordering a

certification election among the monthly-paid rank-and-file employees, except
managerial employees, of KNITJOY. The choice however, should not be, as
correctly contended by CFW, limited to merely (a) KMEU and (b) no union.
The records disclose that the intervenors in the petition for certification are
the KMEA-CCLU and CFW. They should be included as among the choices in
the certification election.cralawnad

WHEREFORE, the instant petitions are DISMISSED. However, the challenged

decision of public respondent of 1 December 1987 is modified to include in the
choices for the certification election petitioner Confederation of Filipino
Workers (CFW) and the Knitjoy Monthly Employees Association and
Confederation of Citizens Labor Unions (KMEU-CCLU).

Costs against petitioners.

SO ORDERED.

Bidin, Romero and Melo, JJ., concur.

Gutierrez, Jr., J., is on official leave.

G.R. No. 160352, July 23, 2008
REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and
Employment (DOLE),Petitioner,
vs.
KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., Respondent.
FACTS: KFWU filed with DOLE Regional Office No. IV, a Petition for
Certification Election to be conducted in the bargaining unit composed of 145
rank-and-file employees of respondent.
Respondent-company filed a Motion to Dismiss8 the petition on the ground
that KFWU did not acquire any legal personality because its membership of
mixed rank-and-file and supervisory employees violated Article 245 of the
Labor Code, and its failure to submit its books of account contravened the
ruling of the Court in Progressive Development Corporation v. Secretary,
Department of Labor and Employment.

Med-Arbiter Bactin found KFWU’s legal personality defective and dismissed

its petition for certification election, stating that, Since petitioner’s members
are mixture of rank and file and supervisory employees, petitioner union, at
this point [in] time, has not attained the status of a legitimate labor
organization. Petitioner should first exclude the supervisory employees from it
membership before it can attain the status of a legitimate labor organization.
Respondent filed with DOLE Regional Office No. IV a Petition for Cancellation
of Charter/Union Registration of KFWU,13 the final outcome of which,
unfortunately, cannot be ascertained from the records.

KFWU appealed to the DOLE which granted the appeal; ordered the case be
remanded to the office of origin for the immediate conduct of certification
election xxx CA reversed. MR denied. Hence, this petition.

ISSUE:
(1) whether a mixed membership of rank-and-file and supervisory employees
in a union is a ground for the dismissal of a petition for certification election in
view of the amendment brought about by D.O. 9, series of 1997, which deleted
the phraseology in the old rule that “[t]he appropriate bargaining unit of the
rank-and-file employee shall not include the supervisory employees and/or
security guards;” and

(2) whether the legitimacy of a duly registered labor organization can be

collaterally attacked in a petition for a certification election through a motion
to dismiss filed by an employer such as Kawashima Textile Manufacturing
Phils., Inc.

HELD: The petition is imbued with merit.

The key to the closure that petitioner seeks could have been Republic Act
(R.A.) No. 9481 [AN ACT STRENGTHENING THE WORKERS’
CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR
THE PURPOSE PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES]
Sections 8 and 9 (See NOTES)

However, R.A. No. 9481 took effect only on June 14, 2007;26 hence, it applies
only to labor representation cases filed on or after said date.27 As the petition
for certification election subject matter of the present petition was filed by
KFWU on January 24, 2000,28 R.A. No. 9481 cannot apply to it. There may
have been curative labor legislations29 that were given retrospective effect,30
but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive
rights and interests already vested would be impaired in the process.
Instead, the law and rules in force at the time of the filing by KFWU of the
petition for certification election on January 24, 2000 are R.A. No. 6715,32
amending Book V of Presidential Decree (P.D.) No. 442 (Labor Code),33as
amended, and the Rules and Regulations Implementing R.A. No. 6715,34 as
amended by Department Order No. 9, series of 1997.35

One area of contention has been the composition of the membership of a labor
organization, specifically whether there is a mingling of supervisory and rank-
and-file employees and how such questioned mingling affects its legitimacy.

Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz:

Sec. 18. Article 245 of the same Code, as amended, is hereby further amended
to read as follows
“Art. 245. Ineligibility of managerial employees to join any labor organization;
right of supervisory employees. Managerial employees are not eligible to join,
assist or form any labor organization. Supervisory employees shall not be
eligible for membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own.”
(Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the
exact effect any violation of the prohibition would bring about on the
legitimacy of a labor organization.

Thus, when the issue of the effect of mingling was brought to the fore in
Toyota,48 the Court, citing Article 245 of the Labor Code, as amended by R.A.
No. 6715, held:

Clearly, based on this provision, a labor organization composed of both rank-

and-file and supervisory employees is no labor organization at all. It cannot,
for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the purpose of
collective bargaining. It becomes necessary, therefore, anterior to the granting
of an order allowing a certification election, to inquire into the composition of
any labor organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code xxxx

In the case at bar, as respondent union’s membership list contains the names
of at least twenty-seven (27) supervisory employees in Level Five positions,
the union could not, prior to purging itself of its supervisory employee
members, attain the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for certification
election.

But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further
amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus
Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended
Omnibus Rules – that the petition for certification election indicate that the
bargaining unit of rank-and-file employees has not been mingled with
supervisory employees – was removed.

Consequently, the Court reverses the ruling of the CA and reinstates that of
the DOLE granting the petition for certification election of KFWU.

II. Now to the second issue of whether an employer like respondent may
collaterally attack the legitimacy of a labor organization by filing a motion to
dismiss the latter’s petition for certification election.
Except when it is requested to bargain collectively,62 an employer is a mere
bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer.63 The choice of their representative is the exclusive concern
of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to
dismiss or an appeal from it;64 not even a mere allegation that some
employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the
certification election.65 The employer’s only right in the proceeding is to be
notified or informed thereof.66
The amendments to the Labor Code and its implementing rules have
buttressed that policy even more.

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 Ap ril
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 ea rlier 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). <är e| |anº• 1
àw>

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 L abor
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, o n July 30, 1987 (Rollo, p. 435).

The issues raised in this petition are:

WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN APPROPRIAT E

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).<är e| |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 intere st,
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 a nother 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 ba rgaining 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 pro per 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 differen t 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 o rganization. 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 elec tion 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 Warrencio
<är e| |anº• 1à
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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 Agrari an 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 Labo r 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, on ce 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
<är e| |an
º •1àw>

the mass dismissal or retrenchment valid, the strikers cannot be denied participation in the certification
election notwithstanding, the vigorous condemnation of the strike and the fa ct 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 certificat ion 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 certif ication
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.