G.R. No.

116194 February 2, 2000

SUGBUANON RURAL BANK, INC., petitioner,

vs.
HON. UNDERSECRETARY BIENVENIDO E. LAGUESMA, DEPARTMENT OF LABOR AND
EMPLOYMENT, MED-ARBITER ACHILLES MANIT, DEPARTMENT OF LABOR AND EMPLOYMENT,
REGIONAL OFFICE NO. 7, CEBU CITY, AND SUGBUANON RURAL BANK, INC. — ASSOCIATION
OF PROFESSIONAL, SUPERVISORY, OFFICE, AND TECHNICAL EMPLOYEES UNION-TRADE
UNIONS CONGRESS OF THE PHILIPPINES,respondents.

QUISUMBING, J.:

In this special civil action for certiorari and prohibition, petitioner seeks the annulment of the April 27,
1994 Resolution of the Department of Labor and Employment, affirming the order of the Med-Arbiter,
dated December 9, 1993, which denied petitioner's motion to dismiss respondent union's petition for
certification election.

Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking institution with
principal office in Cebu City and a branch in Mandaue City. Private respondent SRBI Association of
Professional, Supervisory, Office, and Technical Employees Union (APSOTEU) is a legitimate labor
organization affiliated with the Trade Unions Congress of the Philippines (TUCP).1âwphi1.nêt

On October 8, 1993, the DOLE Regional Office in Cebu City granted Certificate of Registration No.
R0700-9310-UR-0064 to APSOTEU-TUCP, hereafter referred to as the union.

On October 26, 1993, the union filed a petition for certification election of the supervisory employees of
SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a labor organization duly-registered with
the Labor Department; (2) SRBI employed 5 or more supervisory employees; (3) a majority of these
employees supported the petition: (4) there was no existing collective bargaining agreement (CBA)
between any union and SRBI; and (5) no certification election had been held in SRBI during the past 12
months prior to the petition.

On October 28, 1993, the Med-Arbiter gave due course to the petition. The pre-certification election
conference between SRBI and APSOTEU-TUCP was set for November 15, 1993.

On November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the
holding of a certification election on two grounds. First, that the members of APSOTEU-TUCP were in fact
managerial or confidential employees. Thus, following the doctrine in Philips Industrial Development
Corporation v. National Labor Relations Commission,1 they were disqualified from forming, joining, or
assisting any labor organization. Petitioner attached the job descriptions of the employees concerned to
its motion. Second, the Association of Labor Unions-Trade Unions Congress of the Philippines or ALU-
TUCP was representing the union. Since ALU-TUCP also sought to represent the rank-and-file
employees of SRBI, there was a violation of the principle of separation of unions enunciated in Atlas
Lithographic Services, Inc. v. Laguesma.2

The union filed its opposition to the motion to dismiss on December 1, 1993. It argued that its members
were not managerial employees but merely supervisory employees. The members attached their
affidavits describing the nature of their respective duties. The union pointed out that Article 245 of the
Labor Code expressly allowed supervisory employees to form, join, or assist their own unions.

On December 9, 1993, the Med-Arbiter denied petitioner's motion to dismiss. He scheduled the inclusion-
exclusion proceedings in preparation for the certification election on December 16, 1993.
SRBI appealed the Med-Arbiter's decision to the Secretary of Labor and Employment. The appeal was
denied for lack of merit. The certification election was ordered.

On June 16, 1994, the Med-Arbiter scheduled the holding of the certification election for June 29, 1994.
His order identified the following SRBI personnel as the voting supervisory employees in the election: the
Cashier of the Main Office, the Cashier of the Mandaue Branch, the Accountant of the Mandaue Branch,
and the Acting Chief of the Loans Department.

On June 17, 1994, SRBI filed with the Med-Arbiter an urgent motion to suspend proceedings. The Med-
Arbiter denied the same on June 21, 1994. SRBI then filed a motion for reconsideration. Two days later,
the Med-Arbiter cancelled the certification election scheduled for June 29, 1994 in order to address the
motion for reconsideration.

The Med-Arbiter later denied petitioner's motion for reconsideration, SRBI appealed the order of denial to
the DOLE Secretary on December 16, 1993..

On December 22, 1993, petitioner proceeded to file a petition with the DOLE Regional Office seeking the
cancellation of the respondent union's registration. It averred that the APSOTEU-TUCP members were
actually managerial employees who were prohibited by law from joining or organizing unions.

On April 22, 1994, respondent DOLE Undersecretary denied SRBI's appeal for lack of merit. He ruled that
APSOTEU-TUCP was a legitimate labor organization. As such, it was fully entitled to all the rights and
privileges granted by law to a legitimate labor organization, including the right to file a petition for
certification election. He also held that until and unless a final order is issued cancelling APSOTEU-
TUCP's registration certificate, it had the legal right to represent its members for collective bargaining
purposes. Furthermore, the question of whether the APSOTEU-TUCP members should be considered as
managerial or confidential employees should not be addressed in the proceedings involving a petition for
certification election but best threshed out in other appropriate proceedings.

On May 25, 1994, SRBI moved for reconsideration of the Undersecretary's decision which was denied on
July 7, 1994. The Med-Arbiter scheduled the holding of certification elections on August 12, 1994.

Hence the instant petition grounded on the following assignments of error:

RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION

AND PALPABLY ERRED:

A: IN HOLDING THAT ART. 257 OF THE LABOR CODE REQUIRES THE MED-ARBITER TO
CONDUCT A CERTIFICATION ELECTION IN ANY UNORGANIZED ESTABLISHMENT EVEN WHEN
THE PETITIONING UNION DOES NOT POSSESS THE QUALIFICATION FOR AN APPROPRIATE
BARGAINING AGENT; AND

B. IN REFUSING TO ASSUME JURISDICTION OVER THE PETITIONER'S APPEAL AND TO DISMISS

THE RESPONDENT UNION'S PETITION FOR CERTIFICATION ELECTION.

II

RESPONDENT UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION

AND PALPABLY ERRED IN DENYING THE PETITIONER'S APPEAL DESPITE THE FACT THAT:
A. THE ALLEGED MEMBERS OF RESPONDENT UNION ARE MANAGERIAL EMPLOYEES WHO ARE
LEGALLY DISQUALIFIED FROM JOINING ANY LABOR ORGANIZATION.

B. AT THE VERY LEAST, THE ALLEGED MEMBERS OF RESPONDENT UNION ARE OCCUPYING
HIGHLY CONFIDENTIAL POSITIONS IN PETITIONER AND, THUS, THE LEGAL DISQUALIFICATION
OF MANAGERIAL EMPLOYEES EQUALLY APPLY TO THEM.

III

IN ANY EVENT, THE CONCLUSIONS REACHED IN THE SUBJECT RESOLUTIONS ARE CONTRARY
TO LAW AND ARE DIAMETRICALLY OPPOSED TO RESPONDENT UNION'S RECORDED
ADMISSIONS AND REPRESENTATIONS.

Considering petitioner's assigned errors, we find two core issues for immediate resolution:

(1) Whether or not the members of the respondent union are managerial employees and/or
highly-placed confidential employees, hence prohibited by law from joining labor organizations
and engaging in union activities?

(2) Whether or not the Med-Arbiter may validly order the holding of a certification election upon
the filing of a petition for certification election by a registered union, despite the petitioner's appeal
pending before the DOLE Secretary against the issuance of the union's registration?

The other issues based on the assigned errors could be resolved easily after the core issues are settled.

Respecting the first issue, Article 212 (m) of the Labor Code defines the terms "managerial employee"
and "supervisory employees" as follows:

Art. 212. Definitions —

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

Petitioner submitted detailed job descriptions to support its contention that the union members are
managerial employees and/or confidential employees proscribed from engaging in labor
activities.3 Petitioner vehemently argues that the functions and responsibilities of the employees involved
constitute the "very core of the bank's business, lending of money to clients and borrowers, evaluating
their capacity to pay, approving the loan and its amount, scheduling the terms of repayment, and
endorsing delinquent accounts to counsel for collection."4 Hence, they must be deemed managerial
employees. Petitioner cites Tabacalera Insurance Co. v. National Labor Relations
Commission,5 and Panday v. National Labor Relations Commission,6 to sustain its submission.
In Tabacalera, we sustained the classification of a credit and collection supervisor by management as a
managerial/supervisory personnel. But in that case, the credit and collection supervisor "had the power to
recommend the hiring and appointment of his subordinates, as well as the power to recommend any
promotion and/or increase."7 For this reason he was deemed to be a managerial employee. In the present
case, however, petitioner failed to show that the employees in question were vested with similar powers.
At best they only had recommendatory powers subject to evaluation, review, and final decision by the
bank's management. The job description forms submitted by petitioner clearly show that the union
members in question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees. Moreover, the forms also do not show that the Cashiers, Accountants, and Acting Chiefs of
the Loans Department formulate and execute management policies which are normally expected of
management officers.

Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a
managerial employee because the said employee had managerial powers, similar to the supervisor
in Tabaculera. Their powers included recommending the hiring and appointment of his subordinates, as
well as the power to recommend any promotion and/or increase.8

Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the petitioner
did not possess managerial powers and duties. We are, therefore, constrained to conclude that they are
not managerial employees.

Now may the said bank personnel be deemed confidential employees? Confidential employees are those
who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and
effectuate management policies [specifically in the field of labor relations]. 9 The two criteria are
cumulative, and both must be met if an employee is to be considered a confidential employee — that is,
the confidential relationship must exist between the employee and his superior officer; and that officer
must handle the prescribed responsibilities relating to labor relations. 10

Art. 245 of the Labor Code11 does not directly prohibit confidential employees from engaging in union
activities. However, under the doctrine of necessary implication, the disqualification of managerial
employees equally applies to confidential employees.12 The confidential-employee rule justifies exclusion
of confidential employees because in the normal course of their duties they become aware of
management policies relating to labor relations.13 It must be stressed, however, that when the employee
does not have access to confidential labor relations information, there is no legal prohibition against
confidential employees from forming, assisting, or joining a union.14

Petitioner contends that it has only 5 officers running its day-to-day affairs. They assist in confidential
capacities and have complete access to the bank's confidential data. They form the core of the bank's
management team. Petitioner explains that:

. . . Specifically: (1) the Head of the Loans Department initially approves the loan applications
before they are passed on to the Board for confirmation. As such, no loan application is even
considered by the Board and approved by petitioner without his stamp of approval based upon
his interview of the applicant and determination of his (applicant's) credit standing and financial
capacity. The same holds true with respect to renewals or restructuring of loan accounts. He
himself determines what account should be collected, whether extrajudicially or judicially, and
settles the problems or complaints of borrowers regarding their accounts;

(2) the Cashier is one of the approving officers and authorized signatories of petitioner. He
approves the opening of accounts, withdrawals and encashment, and acceptance of check
deposits. He deals with other banks and, in the absence of the regular Manager, manages the
entire office or branch and approves disbursements of funds for expenses; and

(3) the Accountant, who heads the Accounting Department, is also one of the authorized
signatories of petitioner and, in the absence of the Manager or Cashier, acts as substitute
approving officer and assumes the management of the entire office. She handles the financial
reports and reviews the debit/credit tickets submitted by the other departments. 15

Petitioner's explanation, however, does not state who among the employees has access to information
specifically relating to its labor to relations policies. Even Cashier Patricia Maluya, who serves as the
secretary of the bank's Board of Directors may not be so classified. True, the board of directors is
responsible for corporate policies, the exercise of corporate powers, and the general management of the
business and affairs of the corporation. As secretary of the bank's governing body. Patricia Maluya serves
the bank's management, but could not be deemed to have access to confidential information specifically
relating to SRBI's labor relations policies, absent a clear showing on this matter. Thus, while petitioner's
explanation confirms the regular duties of the concerned employees, it shows nothing about any duties
specifically connected to labor relations.

As to the second issue. One of the rights of a legitimate labor organization under Article 242(b) of the
Labor Code is the right to be certified as the exclusive representative of all employees in an appropriate
bargaining unit for purposes of collective bargaining. Having complied with the requirements of Art. 234, it
is our view that respondent union is a legitimate labor union. Article 257 of the Labor Code mandates that
a certification election shall automatically be conducted by the Med-Arbiter upon the filing of a petition by
a legitimate labor organization.16Nothing is said therein that prohibits such automatic conduct of the
certification election if the management appeals on the issue of the validity of the union's registration. On
this score, petitioner's appeal was correctly dismissed.

Petitioner argues that giving due course to respondent union's petition for certification election would
violate the separation of unions doctrine.17 Note that the petition was filed by APSOTEU-TUCP, a
legitimate labor organization. It was not filed by ALU. Nor was it filed by TUCP, which is a national labor
federation of with which respondent union is affiliated. Petitioner says that respondent union is a mere
alter ego of ALU. The records show nothing to this effect. What the records instead reveal is that
respondent union was initially assisted by ALU during its preliminary stages of organization. A local union
maintains its separate personality despite affiliation with a larger national federation.18 Petitioner alleges
that ALU seeks to represent both respondent union and the rank-and-file union. Again, we find nothing in
the records to support this bare assertion.

The law frowns on a union where the membership is composed of both supervisors and rank-and-file
employees, for fear that conflicts of interest may arise in the areas of discipline, collective bargaining, and
strikes.19 However, in the present case, none of the members of the respondent union came from the
rank-and-file employees of the bank.

Taking into account the circumstances in this case, it is our view that respondent Undersecretary
committed no reversible error nor grave abuse of discretion when he found the order of the Med-Arbiter
scheduling a certification election in order. The list of employees eligible to vote in said certification
election was also found in order, for none was specifically disqualified from union
membership.1âwphi1.nêt

WHEREFORE, the instant petition is hereby DISMISSED. No pronouncement as to costs.

SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

G.R. No. 99395 June 29, 1993

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

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

Sofronio A. Ona for petitioner.

Edgar R. Martir for respondent union.

MELO, J.:

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

PUBLIC RESPONDENT HON. SECRETARY OF LABOR ACTED IN EXCESS OF

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

II

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

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

III

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE

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

IV

FINALLY, PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION

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

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

In the meantime, relative to the interpleader case (NCR-00-M-90-05-070) initiated by petitioner to settle
the question as to who between Del Prado and Diwa was authorized to collect federation dues assessed
from hospital employees, the Med-Arbiter recognized Del Prado's right (p. 423, Rollo). This resolution of
July 31, 1990 was elevated to the Labor Secretary.

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

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

On September 17, 1990, private respondent wrote petitioner for the resumption of their negotiations
concerning the union's proposed CBA. Petitioner reacted by writing a letter on September 20, 1990
expressing willingness to negotiate a new CBA for the rank and file employees who are not occupying
confidential positions. Negotiations thus resumed. However, a deadlock on issues, especially that bearing
on across-the-board monthly and meal allowances followed and to pre-empt the impending strike as
voted upon by a majority of private respondent's membership, petitioner lodged the petition below. The
Secretary of Labor immediately assumed jurisdiction and the parties submitted their respective pleadings.

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

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

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

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

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

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

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

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

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

Non-Economic Issues:

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

Economic Issue

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

First Year — P900 (P700.00 basic + P200.00 food allowance) for an over
all total food allowance of P320.00.

Second Year — P400

Third Year — P400

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

The wage increase as proposed shall be credited to whatever increases in the minimum
wage or to any across the board increases that may be mandated by the government or
the DOLE. (pp. 20-21, Rollo.)

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

YR I
A. P1,40 added to basic pay

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

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

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

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

e) Sick leave — 855,000

f) Funeral, Paternity, Maternity leaves, retirement

pay — 820,000

B. P230 added to meal allowance

a) P230 x 1,500 x 12 — 4,140,000

C. One day added to sick leave

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

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

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

E. Retirement benefits adjustment — 500,000

—————

FIRST YEAR ADDITIONAL COST P 36,561,000

YR II

A. Yr I increase except sick leave cash conversion

from 60 to 45 — P33,897,000

B. P700 added to monthly basic pay

a) P700 x 1,500 x 12 — 2,600,000

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

SECOND YEAR ADDITIONAL COST P51,726,000

 YR III

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

B. P700 added to basic pay

a) P700 x 1,500 x 12 — 12,600,000

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

THIRD YEAR ADDITIONAL COST — 106,116,000

TOTAL THREE-YEAR ADDITIONAL

BENEFIT/WAGES — 194,403,000

(pp. 14-16, Rollo).

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

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

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

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

xxx xxx xxx

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

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

July 30, 1990 Expiration

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

(6 months and 2 days)

(p. 34, Rollo.)

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

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

Second, the remaining P630.00 CBA across the board monthly salary increase takes
effect on November 1, 1990 up to January 7, 1991 only following the January 8, 1991
effectivity of WAGE ORDER NO. NCR-02 which mandated P12.00 daily wage increase
or P630.00 monthly, hence, reducing the P630.00 CBA monthly salary increase to
P270.00 CBA monthly salary increase effective January 8, 1991 and onwards till July 31,
1991 (Annexes "22" and "23" hereof);
 Third, that out of an estimated workforce of 1,264 regular employees inclusive of about
209 supervisors, unit, junior area, division department managers and top level
executives, all occupying permanent positions, and approximately 55 regular but highly
confidential employees, only 1,000 rank-and-file regular/permanent employees (casuals,
contractuals, probies and security guards excluded) are entitled to the CBA benefits for
three (3) years (1990-1993) (as private respondent SLMCEA-AFW gathered and
analyzed from the petitioner's Personnel Strength Report hereto attached as Annex "28"
hereof) vis-a-vis the generalized and inflated 1,500 employees as total workforce
purportedly entitled to CBA benefits per its self-serving and incredible computation;

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

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

The net result is that the first year award of P1,140.00 monthly salary increase of which
P510.00 monthly salary increase is made in compliance with the P510.00 monthly wage
increase at P17.00 daily wage increase effective November 1, 1990 under Wage Order
No. NCR-01 (Annex "13" hereof) or with the intended P630.00 CBA monthly salary
increase is further reduced by P360.00 monthly wage increase at P12.00 daily wage
increase effective January 8, 1991 under Wage Order No.
NCR-02 (Annex "22" hereof), thereby leaving a downgraded or watered down CBA
monthly increase of P270.00 only.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the
previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A
cannot be property applied to herein case. As correctly stated by public respondent in his assailed Order
of April 12, 1991 dismissing petitioner's Motion for Reconsideration —

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

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

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

SO ORDERED.
Feliciano, Bidin and Davide, JJ., concur.
G.R. No. 111836 February 1, 1996

PAMBANSANG KAPATIRAN NG MGA ANAK PAWIS SA FORMEY PLASTIC NATIONAL WORKERS

BROTHERHOOD, petitioner,
vs.
SECRETARY OF LABOR, SECRETARY BIENVENIDO LAGUESMA, FORMEY PLASTIC, INC.,
KALIPUNAN NG MANGGAGAWANG PILIPINO (KAMAPI) and MED-ARBITER RASIDALI C.
ABDULLAH, respondents.

DECISION

BELLOSILLO, J.:

The rank and file workers of Formey Plastic, Inc. (FORMEY), formed a local union known
as Pambansang Kapatiran ng mga Anak Pawis sa Formey Plastic (KAPATIRAN) under the auspices of
the National Workers Brotherhood (NWB). They ratified their Constitution and By-Laws on 4 April 1993.

On 22 April 1993 KAPATIRAN filed a Petition for Certification Election 1 with the Department of Labor
and Employment Med-Arbiter Division alleging that there was no existing and effective Collective
Bargaining Agreement (CBA) between FORMEY and any union; neither was there any recognized union
within the company.

FORMEY moved to dismiss the petition 2 while Kalipunan ng Manggagawang Pilipino (KAMAPI)
intervened and likewise moved to dismiss3 on the ground that there was already a duly registered CBA
covering the period 1 January 1992 to 31 December 1996 hence the "contract bar rule" 4 would apply.
KAPATIRAN opposed both motions to dismiss 5 with an Addendum 6 thereto claiming that the CBA
executed between FORMEY and KAMAPI was fraudulently registered with the Department of Labor and
Employment and that it was defective since what was certified as bargaining agent was KAMAPI which,
as a federation, only served as mere agent of the local union hence without any legal personality to sign
in behalf of the latter.

Med-Arbiter Rasidali C. Abdullah found that a valid and existing CBA between FORMEY and KAMAPI
effectively barred the filing of the petition for certification election. 7

KAPATIRAN appealed 8 imputing grave abuse of discretion to the Med-Arbiter in applying the "contract
bar rule" and in not adopting the case of Progressive Development Corporation v. Secretary, Department
of Labor and Employment, 9 as authority to disregard the CBA between FORMEY and KAMAPI. The
Secretary of Labor acting through Undersecretary Bienvenido E. Laguesma upheld the decision of the
Med-Arbiter. 10 The Motion for Reconsideration having been denied 11 KAPATIRAN now files this Petition
for Certiorari 12 charging the Secretary of Labor with grave abuse of discretion in applying the "contract
bar rule" literally and in ruling that the Progressive Development Corporation 13 case could not be invoked.

Pending resolution of the petition KAMAPI filed an Urgent Motion to Dismiss 14 the instant petition
contending that it had become moot and academic due to the cancellation of NWB's 15 certificate of
registration and its delisting from the roll of labor federations. 16 KAPATIRAN opposed the
motion 17 claiming that the cancellation and delisting were not yet final and executory considering that it
had filed a motion for reconsideration 18 with the Bureau of Labor Relations.

The rule is that findings of facts of quasi-judicial agencies will not be disturbed unless there is a showing
of grave abuse of discretion. We find none in the case at bench. We therefore affirm that there is a validly
executed collective bargaining agreement between FORMEY and KAMAPI.
Art. 253-A of the Labor Code provides that "(n)o 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 (60) day period immediately before the date of expiry of
such five-year term of the collective bargaining agreement." Sec. 3, Rule V, Book V of the Omnibus Rules
Implementing the Labor Code provides that ". . . (i)f a collective bargaining agreement has been duly
registered in accordance with Article 231 of the Code, a petition for certification election or a motion for
intervention can only be entertained within sixty (60) days prior to the expiry date of such agreement."

The subject agreement was made effective 1 January 1992 and is yet to expire on 31 December 1996.
The petition for certification election having been filed on 22 April 1993 it is therefore clear that said
petition must fail since it was filed before the so-called 60-day freedom' period. KAPATIRAN insists that
the CBA was a fake it having been surreptitiously registered with the Department of Labor and
Employment..

The resolution of this issue hinges on the determination of factual matters which certainly is not within the
ambit of the present petition for certiorari. Besides, the contention is without any legal basis at all; it is
purely speculative and bereft of any documentary support. Petitioner itself even admitted the existence of
an agreement but argued that its provisions were not being implemented nor adhered to at all. Suffice it to
mention that the filing of the petition for certification election is not the panacea to this allegedly
anomalous situation. Violations of collective bargaining agreements constitute unfair labor practice as
provided for under Art. 248, par. (i), of the Labor Code. In consonance thereto, Art. 261 equips petitioner
with the proper and appropriate recourse

Art. 261. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation
or implementation of the Collective Bargaining Agreement . . . . Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved under the Collective Bargaining Agreement.
For purposes of this article, gross violations of Collective Bargaining Agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The CBA entered into between FORMEY and KAMAPI stipulates among others

Article IX GRIEVANCE PROCEDURE

Sec. 1. Any complaint, grievance, difficulty, disagreement or dispute arising out of any section
taken (sic) by the Company and/or by the Union concerning the interpretation of the terms and
conditions of the agreement and/or which may arise regarding (sic) the terms and conditions of
employment shall be settled in the manner provided for under this Article.

Sec. 2. The Company and the Union agree to create and establish a Grievance Committee
composed of two (2) representatives from the Company and two (2) from the Union to receive
complaint, grievance or dispute from the workers and/or from the Company with the view to settle
it amicably.

Sec. 3. In case a complaint or grievance has been filed by either the Union or the Company, the
grievance committee shall discuss the same and have (sic) to settle it. If after the meeting of the
grievance committee no satisfactory settlement is reached the matter shall be referred to the top
officers of the Union and the Company for the settlement of the said grievance or dispute.

Sec. 4. Within five (5) days from the time the top officers of the Union and the Company has (sic)
failed to reach an amicable settlement of the grievance or dispute, the same shall be submitted
for voluntary arbitration. The arbitrator or arbitrators shall be chosen by lottery and the union and
the Company shall avail (sic) the list of arbitrators of the Honorable Bureau of Labor Relations.
 Sec. 5. The mutually agreed or chosen arbitrator shall proceed to try and hear the case and for
(sic) the reception of evidence and to call witnesses to testify and after the submission of the case
by both parties an award or order shall be issued in accordance with the rules and guidelines
promulgated by the Honorable Department of Labor and Employment based on the pertinent laws
and established jurisprudence. The expenses of the arbitration proceedings shall be borned (sic)
equally by the Company and the Union. 19

By filing the petition for certification election it is clear that KAPATIRAN did not avail of the
abovementioned grievance procedure.

It is further argued that the CBA has no binding force since it was entered into by KAMAPI as a federation
and not by the local union. Perusal of the agreement proves the contention flawed. The signatories for
KAMAPI consisted of its national president and of the duly elected officers of the local union. Thus the
fact that KAMAPI was particularly mentioned as the bargaining party without specifying the local union
cannot strip it of its authority to participate in the bargaining process. The local union maintains its
separate personality despite affiliation with a larger national federation. 20

The doctrine laid down in Progressive Development Corporation 21 is a mere clarification of the principle
enunciated in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc. 22 Both cases have provided
that "the mother union acting for and in behalf of its affiliate ha(s) the status of an agent while the local
union remained the basic unit of the association free to serve the common interest of all its members
subject only to the restraints imposed by the Constitution and By-Laws of the association." Nonetheless,
the facts and principles laid down in both cases do not jibe squarely with the case at bench. The
controversy in Progressive Development Corporation 23 centered on the requirements before a local or
chapter of a federation may file a petition for certification election and be certified as the sole and
exclusive bargaining agent, while in Liberty Cotton Mills Workers 24 the issue involved was the
disaffiliation of the local union from the federation. The question of whether there was a valid and existing
CBA, which is the question being resolved in the case at bench, was never raised in the two cited cases
since it was already an accepted fact that the CBA was validly executed and existing.

Anent the Urgent Motion to Dismiss 25 filed by KAMAPI on the ground that the instant petition had become
moot and academic due to the cancellation by the Bureau of Labor Relations of NWB's certificate of
registration and its consequent delisting from the roll of labor federations, suffice it to state that at this
juncture we cannot .properly rule on the issue considering that KAMAPI has not proven that the decision
of the Bureau of Labor Relations has become final and executory taking into account KAPATIRAN's filing
of a motion for reconsideration with the Bureau. This notwithstanding, Sec. 9, Rule II, Book V of
the Omnibus Rules Implementing the Labor Code requires that an appeal be filed with the Bureau, or in
case of cancellation by the Bureau, with the Secretary of Labor and Employment whose decision shall
become final and no longer subject of appeal.

WHEREFORE, the petition is DENIED. The decision of the Secretary of Labor and Employment dated 15
August 1993 sustaining the order of the Med-Arbiter dated 31 May 1993 is AFFIRMED.

SO ORDERED.

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

G.R. No. 113907 February 28, 2000

Malayang Samahan v Ramos

GR No 113907 Feb 28, 2000

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the
National Labor Relations Commission in an unfair labor practice case instituted by a local union against
its employer company and the officers of its national federation.

The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter
referred to as the "local union", is an affiliate of the private respondent, United Lumber and General
Workers of the Philippines (ULGWP), referred to as the "federation". The collective bargaining agreement
between MSMG and M. Greenfield, Inc., names the parties as follows:

This agreement made and entered into by and between:

M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the
Republic of the Philippines with office address at Km. 14, Merville Road, Parañaque, Metro
Manila, represented in this act by its General manager, Mr. Carlos T. Javelosa, hereinafter
referred to as the Company;

-and-

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED

LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor
organization with address at Suite 404, Trinity Building, T. M. Kalaw Street, Manila, represented
in this act by a Negotiating Committee headed by its National President, Mr. Godofredo Paceno,
Sr., referred to in this Agreement as the UNION.1

The CBA includes, among others, the following pertinent provisions:

Art. II-Union Security

Sec. 1. Coverage and Scope. All employees who are covered by this Agreement and presently
members of the UNION shall remain members of the UNION for the duration of this Agreement
as a condition precedent to continued employment with the COMPANY.

xxx xxx xxx

Sec. 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his
membership in the UNION for non-payment of UNION dues, for resignation and for violation of
UNION's Constitution and By-Laws and any new employee as defined in Section 2 of this Article
shall upon written notice of such failure to join or to maintain membership in the UNION and upon
written recommendation to the COMPANY by the UNION, be dismissed from the employment by
the COMPANY; provided, however, that the UNION shall hold the COMPANY free and blameless
from any and all liabilities that may arise should the dismissed employee question, in any manner,
his dismissal; provided, further that the matter of the employee's dismissal under this Article may
be submitted as a grievance under Article XIII and, provided, finally, that no such written
recommendation shall be made upon the COMPANY nor shall COMPANY be compelled to act
 upon any such recommendation within the period of sixty (60) days prior to the expiry date of this
Agreement conformably to law.

Art. IX

Sec. 4. Program Fund — The Company shall provide the amount of P10,000.00 a month for a
continuing labor education program which shall be remitted to the Federation . . .2

On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the
herein petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners.
Minutes of the said election were duly filed with the Bureau of Labor Relations on September 29, 1986.

On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the
defeated candidates in the aforementioned election.

On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not
yield any unfavorable result and the local union officers were cleared of the charges of anomaly in the
custody, handling and disposition of the union funds.1âwphi1.nêt

The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with the
DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was
dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and
to present evidence in support of the allegations.

On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in Pasig.
Several union members failed to attend the meeting, prompting the Executive Board to create a
committee tasked to investigate the non-attendance of several union members in the said assembly,
pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of the union, which read:

Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon
ng sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa
ng hindi hihigit sa P50.00 sa bawat araw na nagkulang.

Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na
pagliban at maparusahan itong alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino
mang kasapi o pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay
magmumulta ng P25.00 at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa
isang oras ng pagdating ng huli ay ituturing na pagliban.3

On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union
fines from the wages/salaries of those union members who failed to attend the general membership
meeting. A portion of the said letter stated:

xxx xxx xxx

In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please
deduct the amount of P50.00 from each of the union members named in said annexes on the
payroll of July 2-8, 1988 as fine for their failure to attend said general membership meeting. 4

In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo
Paceño, Jr. disapproved the resolution of the local union imposing the P50.00 fine. The union officers
protested such action by the Federation in a Reply dated July 4, 1988.
On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct the
fifty-peso fine from the salaries of the union members requesting that:

. . . any and all future representations by MSMG affecting a number of members be first cleared
from the federation before corresponding action by the Company.5

The following day, respondent company sent a reply to petitioner union's request in a letter, stating that it
cannot deduct fines from the employees' salary without going against certain laws. The company
suggested that the union refer the matter to the proper government office for resolution in order to avoid
placing the company in the middle of the issue.

The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and the
local union culminating in the latter's declaration of general autonomy from the former through Resolution
No. 10 passed by the local executive board and ratified by the general membership on July 16, 1988.

In retaliation, the national federation asked respondent company to stop the remittance of the local
union's share in the education funds effective August 1988. This was objected to by the local union which
demanded that the education fund be remitted to it in full.

The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory
Relief with the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case
No. OD-M-8-435-88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an
Order, disposing thus:

WHEREFORE, premises considered, it is hereby ordered:

1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local
union officers shall administer the collective bargaining agreement (CBA).

2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to
the ULGWP subject to the condition that it shall use the said amount for its intended purpose.

3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the
amount of P50.00 as penalty for their failure to attend the general membership assembly on April
17, 1988.

However, if the MSMG Officers could present the individual written authorizations of the 356
union members, then the company is obliged to deduct from the salaries of the 356 union
members the P50.00 fine.6

On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in
part the earlier disposition, to wit:

WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that
the company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00
monthly labor education program fund to ULGWP and the other P5,000.00 to MSMG, both unions
to use the same for its intended purpose.7

Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph
International, General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of the
federation and education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on
December 25, 1988 in an Order which directed the audit and examination of the books of account of
ULGWP.
On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at
Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and
appointing respondent Cesar Clarete as administrator.

On October 27, 1988, the said administrator wrote the respondent company informing the latter of its
designation of a certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent
union officers from representing the employees. This action by the national federation was protested by
the petitioners in a letter to respondent company dated November 11, 1988.

On November 13, 1988, the petitioner union officers received identical letters from the administrator
requiring them to explain within 72 hours why they should not be removed from their office and expelled
from union membership.

On November 26, 1988, petitioners replied:

(a) Questioning the validity of the alleged National Executive Board Resolution placing their union
under trusteeship;

(b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the
latter's inability to give proper educational, organizational and legal services to its affiliates and
the pendency of the audit of the federation funds;

(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of
ULGWP;

(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of
coercion, intimidation and harassment.8

However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination
letter read:

Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND
GENERAL WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or
acts inimical to the interest and violative to the Constitution and by-laws of your federation.

You failed and/or refused to offer an explanation inspite of the time granted to you.

Since you are no longer a member of good standing, ULGWP is constrained to recommend for
your termination from your employment, and provided in Article II Section 4, known as UNION
SECURITY, in the Collective Bargaining agreement.9

On the same day, the federation advised respondent company of the expulsion of the 30 union officers
and demanded their separation from employment pursuant to the Union Security Clause in their collective
bargaining agreement. This demand was reiterated twice, through letters dated February 21 and March 4,
1989, respectively, to respondent company.

Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to
compel the company to effect the immediate termination of the expelled union officers.

On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30
union officers from employment, serving them identical copies of the termination letter reproduced below:
 We received a demand letter dated 21 November 1988 from the United Lumber and General
Workers of the Philippines (ULGWP) demanding for your dismissal from employment pursuant to
the provisions of Article II, Section 4 of the existing Collective Bargaining Agreement (CBA). In
the said demand letter, ULGWP informed us that as of November 21, 1988, you were expelled
from the said federation "for committing acts of disloyalty and/or acts inimical to the interest of
ULGWP and violative to its Constitution and By-laws particularly Article V, Section 6, 9, and 12,
Article XIII, Section 8.

In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for
your dismissal, pointing out that notwithstanding your expulsion from the federation, you have
continued in your employment with the company in violation of Sec. 1 and 4 of Article II of our
CBA, and of existing provisions of law.

In view thereof, we are left with no alternative but to comply with the provisions of the Union
Security Clause of our CBA. Accordingly, we hereby serve notice upon you that we are
dismissing you from your employment with M. Greenfield, Inc., pursuant to Sections 1 and 4,
Article II of the CBA effective immediately.10

On that same day, the expelled union officers assigned in the first shift were physically or bodily brought
out of the company premises by the company's security guards. Likewise, those assigned to the second
shift were not allowed to report for work. This provoked some of the members of the local union to
demonstrate their protest for the dismissal of the said union officers. Some union members left their work
posts and walked out of the company premises.

On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed with
the NCMB.

On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as
Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike:

(a) Discrimination

(b) Interference in union activities

(c) Mass dismissal of union officers and shop stewards

(d) Threats, coercion and intimidation

(e) Union busting

The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union
members who cast their votes, 2,086 members voted to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case No.
NCMB-NCR-NS-03-216-89, with the Office of the Secretary of the Department of Labor and Employment
praying for the suspension of the effects of their termination from employment. However, the petition was
dismissed by then Secretary Franklin Drilon on April 11, 1989, the pertinent portion of which stated as
follows:

At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No
mass lay-off is evident as the terminations have been limited to those allegedly leading the
secessionist group leaving MSMG-ULGWP to form a union under the KMU. . . .
 xxx xxx xxx

WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary

authority under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby
DISMISSED for lack of merit.

SO ORDERED.11

On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension
by respondent company. This prompted the union members to again stage a walk-out and resulted in the
official declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was attended
with violence, force and intimidation on both sides resulting to physical injuries to several employees, both
striking and non-striking, and damage to company properties.

The employees who participated in the strike and allegedly figured in the violent incident were placed
under preventive suspension by respondent company. The company also sent return-to-work notices to
the home addresses of the striking employees thrice successively, on March 27, April 8 and April 31,
1989, respectively. However, respondent company admitted that only 261 employees were eventually
accepted back to work. Those who did not respond to the return-to-work notice were sent termination
letters dated May 17, 1989, reproduced below:

M. Greenfield Inc., (B)

Km. 14, Merville Rd., Parañaque, M.M.

May 17, 1989

xxx xxx xxx

On March 14, 1989, without justifiable cause and without due notice, you left your work
assignment at the prejudice of the Company's operations. On March 27, April 11, and April 21,
1989, we sent you notices to report to the Company. Inspite of your receipt of said notices, we
have not heard from you up to this date.

Accordingly, for your failure to report, it is construed that you have effectively abandoned your
employment and the Company is, therefore, constrained to dismiss you for said cause.

Very truly yours,

M. GREENFIELD, INC., (B)

By:

WENZEL STEPHEN LIGOT

Asst. HRD Manager12

On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National Capital
Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents of
unfair labor practice which consists of union busting, illegal dismissal, illegal suspension, interference in
union activities, discrimination, threats, intimidation, coercion, violence, and oppression.
After the filing of the complaint, the lease contracts on the respondent company's office and factory at
Merville Subdivision, Parañaque expired and were not renewed. Upon demand of the owners of the
premises, the company was compelled to vacate its office and factory.

Thereafter, the company transferred its administration and account/client servicing department at AFP-
RSBS Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for
relocation of its factory and manufacturing operations, the company was constrained to move the said
departments to Tacloban, Leyte. Hence, on April 16, 1990, respondent company accordingly notified its
employees of a temporary shutdown in operations. Employees who were interested in relocating to
Tacloban were advised to enlist on or before April 23, 1990.

The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was thereafter
reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from acting on the
case.

On December 15, 1992, finding the termination to be valid in compliance with the union security clause of
the collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.

Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from
the service, leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman
Bartolome Carale in the First Division. When Commissioner Veloso inhibited himself from the case,
Commissioner Joaquin Tanodra of the Third Division was temporarily designated to sit in the First
Division for the proper disposition of the case.

The First Division affirmed the Labor Arbiter's disposition. With the denial of their motion for
reconsideration on January 28, 1994, petitioners elevated the case to this Court, attributing grave abuse
of discretion to public respondent NLRC in:

I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY

AS VALID;

II. HOLDING THAT THE STRIKE STAGED BY THE PETITIONERS AS ILLEGAL;

III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED
THEIR WORK AND HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY; AND

IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS

GUILTY OF ACTS OF UNFAIR LABOR PRACTICE.

Notwithstanding the several issues raised by the petitioners and respondents in the voluminous pleadings
presented before the NLRC and this Court, they revolve around and proceed from the issue of whether or
not respondent company was justified in dismissing petitioner employees merely upon the labor
federation's demand for the enforcement of the union security clause embodied in their collective
bargaining agreement.

Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be
resolved.

Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because
Commissioner Tanodra, who is from the Third Division, did not have any lawful authority to sit, much less
write the ponencia, on a case pending before the First Division. It is claimed that a commissioner from
one division of the NLRC cannot be assigned or temporarily designated to another division because each
division is assigned a particular territorial jurisdiction. Thus, the decision rendered did not have any legal
effect at all for being irregularly issued.

Petitioners' argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the
Chairman of the National Labor Relations Commission provides that:

The concurrence of two (2) Commissioners of a division shall be necessary for the
pronouncement of a judgment or resolution. Whenever the required membership in a division is
not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution
cannot be obtained, the Chairman shall designate such number of additional Commissioners from
the other divisions as may be necessary.

It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the
three commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and
Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case
because the counsel for the petitioners was his former classmate in law school. The First Division was
thus left with only one commissioner. Since the law requires the concurrence of two commissioners to
arrive at a judgment or resolution, the Commission was constrained to temporarily designate a
commissioner from another division to complete the First Division. There is nothing irregular at all in such
a temporary designation for the law empowers the Chairman to make temporary assignments whenever
the required concurrence is not met. The law does not say that a commissioner from the first division
cannot be temporarily assigned to the second or third division to fill the gap or vice versa. The territorial
divisions do not confer exclusive jurisdiction to each division and are merely designed for administrative
efficiency.

Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the
petitioners against respondent company which charges union busting, illegal dismissal, illegal
suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and
oppression actually proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the union security clause
embodied in their collective bargaining agreement.

Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and
illegal manner because it was undertaken by the respondent company without any prior administrative
investigation; that, had respondent company conducted prior independent investigation it would have
found that their expulsion from the union was unlawful similarly for lack of prior administrative
investigation; that the federation cannot recommend the dismissal of the union officers because it was not
a principal party to the collective bargaining agreement between the company and the union; that public
respondents acted with grave abuse of discretion when they declared petitioners' dismissals as valid and
the union strike as illegal and in not declaring that respondents were guilty of unfair labor practice.

Private respondents, on the other hand, maintain that the thirty dismissed employees who were former
officers of the federation have no cause of action against the company, the termination of their
employment having been made upon the demand of the federation pursuant to the union security clause
of the CBA; the expelled officers of the local union were accorded due process of law prior to their
expulsion from their federation; that the strike conducted by the petitioners was illegal for noncompliance
with the requirements; that the employees who participated in the illegal strike and in the commission of
violence thereof were validly terminated from work; that petitioners were deemed to have abandoned their
employment when they did not respond to the three return to work notices sent to them; that petitioner
labor union has no legal personality to file and prosecute the case for and on behalf of the individual
employees as the right to do so is personal to the latter; and that, the officers of respondent company
cannot be liable because as mere corporate officers, they acted within the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and
legally terminated because the dismissal was effected in compliance with the union security clause of the
CBA which is the law between the parties. And this was affirmed by the Commission on appeal.
Moreover, the Labor Arbiter declared that notwithstanding the lack of a prior administrative investigation
by respondent company, under the union security clause provision in the CBA, the company cannot look
into the legality or illegality of the recommendation to dismiss by the union nd the obligation to dismiss is
ministerial on the part of the company.13

This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied
in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may
likewise be valid, this does not erode the fundamental requirement of due process. The reason behind the
enforcement of union security clauses which is the sanctity and inviolability of contracts 14 cannot override
one's right to due process.

In the case of Cariño vs. National Labor Relations Commission,15 this Court pronounced that while the
company, under a maintenance of membership provision of the collective bargaining agreement, is bound
to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking
should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without
giving him the benefit of a hearing.

The power to dismiss is a normal prerogative of the employer. However, this is not without
limitation. The employer is bound to exercise caution in terminating the services of his employees
especially so when it is made upon the request of a labor union pursuant to the Collective
Bargaining Agreement, . . . Dismissals must not be arbitrary and capricious. Due process must be
observed in dismissing an employee because it affects not only his position but also his means of
livelihood. Employers should respect and protect the rights of their employees, which include the
right to labor.

In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly
committing acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution
and By-laws. Upon demand of the federation, the company terminated the petitioners without conducting
a separate and independent investigation. Respondent company did not inquire into the cause of the
expulsion and whether or not the federation had sufficient grounds to effect the same. Relying merely
upon the federation's allegations, respondent company terminated petitioners from employment when a
separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling
the union officers. Respondent company's allegation that petitioners were accorded due process is belied
by the termination letters received by the petitioners which state that the dismissal shall be immediately
effective.

As held in the aforecited case of Cariño, "the right of an employee to be informed of the charges against
him and to reasonable opportunity to present his side in a controversy with either the company or his own
union is not wiped away by a union security clause or a union shop clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards his rights
but also from his own union the leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job.

While respondent company may validly dismiss the employees expelled by the union for disloyalty under
the union security clause of the collective bargaining agreement upon the recommendation by the union,
this dismissal should not be done hastily and summarily thereby eroding the employees' right to due
process, self-organization and security of tenure. The enforcement of union security clauses is authorized
by law provided such enforcement is not characterized by arbitrariness, and always with due
process.16 Even on the assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by respondent company.
In its decision, public respondent also declared that if complainants (herein petitioners) have any recourse
in law, their right of action is against the federation and not against the company or its officers, relying on
the findings of the Labor Secretary that the issue of expulsion of petitioner union officers by the federation
is a purely intra-union matter.

Again, such a contention is untenable. While it is true that the issue of expulsion of the local union officers
is originally between the local union and the federation, hence, intra-union in character, the issue was
later on converted into a termination dispute when the company dismissed the petitioners from work
without the benefit of a separate notice and hearing. As a matter of fact, the records reveal that the
termination was effective on the same day that the termination notice was served on the petitioners.

In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.17, the Court held the
company liable for the payment of backwages for having acted in bad faith in effecting the dismissal of
the employees.

. . . Bad faith on the part of the respondent company may be gleaned from the fact that the
petitioner workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for
which it must assume solidary liability, since it apparently chose to summarily dismiss the workers
at the union's instance secure in the union's contractual undertaking that the union would hold it
"free from any liability" arising from such dismissal.

Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it
undertook to hold the company free from any liability resulting from such a dismissal, the company may
still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be
heard on the matter.

Anent petitioners contention that the federation was not a principal party to the collective bargaining
agreement between the company and the union, suffice it to say that the matter was already ruled upon in
the Interpleader case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:

After a careful examination of the facts and evidences presented by the parties, this Officer
hereby renders its decision as follows:

1.) It appears on record that in Collective Bargaining Agreement (CBA) which took effect on July
1, 1986, the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga
Manggagawa sa M. Greenfield, Inc. (B) (MSMG)/United Lumber and General Workers of the
Philippines (ULGWP). However, MSMG was not yet registered labor organization at the time of
the signing of the CBA. Hence, the union referred to in the CBA is the ULGWP. 18

Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:

It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all
the regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the
records).

It has been established also that the company and ULGWP signed a 3-year collective bargaining
agreement effective July 1, 1986 up to June 30, 1989.19

Although the issue of whether or not the federation had reasonable grounds to expel the petitioner union
officers is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations, being an
intra-union conflict, this Court deems it justifiable that such issue be nonetheless ruled upon, as the Labor
Arbiter did, for to remand the same to the Bureau of Labor Relations would be to intolerably delay the
case.
The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for
committing acts of disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP
with failure to provide any legal, educational or organizational support to the local. . . . and declared
autonomy, wherein they prohibit the federation from interfering in any internal and external affairs of the
local union."20

It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding
on this Court, but it is equally well-settled that the Court will not uphold erroneous conclusions of the
NLRC as when the Court finds insufficient or insubstantial evidence on record to support those factual
findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced
from the bare or incomplete facts appearing of record.21

In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by the
local union was part of its "plan to take over the respondent federation." This is purely conjecture and
speculation on the part of public respondent, totally unsupported by the evidence.

A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union,
being a separate and voluntary association, is free to serve the interests of all its members including the
freedom to disaffiliate or declare its autonomy from the federation to which it belongs when circumstances
warrant, in accordance with the constitutional guarantee of freedom of association. 22

The purpose of affiliation by a local union with a mother union or a federation.

. . . is to increase by collective action the bargaining power in respect of the terms and conditions
of labor. Yet the locals remained the basic units of association, free to serve their own and the
common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the
Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down
in the agreement which brought it into existence.23

Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and
such disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation's
constitution prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate
with its parent union.24

The evidence on hand does not show that there is such a provision in ULGWP's constitution.
Respondents' reliance upon Article V, Section 6, of the federation's constitution is not right because said
section, in fact, bolsters the petitioner union's claim of its right to declare autonomy:

Sec. 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it
pertains to its internal affairs, except as provided elsewhere in this Constitution.

There is no disloyalty to speak of, neither is there any violation of the federation's constitution because
there is nothing in the said constitution which specifically prohibits disaffiliation or declaration of
autonomy. Hence, there cannot be any valid dismissal because Article II, Section 4 of the union security
clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain membership in
the union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of the union's
Constitution and By-Laws.

To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989,
the petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through
an election and filed a petition for the registration of UWP as a national federation. It should be pointed
out, however, that these occurred after the federation had already expelled the union officers. The
expulsion was effective November 21, 1988. Therefore, the act of establishing a different federation,
entirely separate from the federation which expelled them, is but a normal retaliatory reaction to their
expulsion.

With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike was
illegal for the following reasons: (1) it was based on an intra-union dispute which cannot properly be the
subject of a strike, the right to strike being limited to cases of bargaining deadlocks and unfair labor
practice (2) it was made in violation of the "no strike, no lock-out" clause in the CBA, and (3) it was
attended with violence, force and intimidation upon the persons of the company officials, other employees
reporting for work and third persons having legitimate business with the company, resulting to serious
physical injuries to several employees and damage to company property.

On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the
intra-union conflict between the federation and the local union, it bears reiterating that when respondent
company dismissed the union officers, the issue was transformed into a termination dispute and brought
respondent company into the picture. Petitioners believed in good faith that in dismissing them upon
request by the federation, respondent company was guilty of unfair labor practice in that it violated the
petitioner's right to self-organization. The strike was staged to protest respondent company's act of
dismissing the union officers. Even if the allegations of unfair labor practice are subsequently found out to
be untrue, the presumption of legality of the strike prevails.25

Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no
lockout provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only
be invoked when the strike is economic in nature, i.e. to force wage or other concessions from the
employer which he is not required by law to grant.26 Such a provision cannot be used to assail the legality
of a strike which is grounded on unfair labor practice, as was the honest belief of herein petitioners.
Again, whether or not there was indeed unfair labor practice does not affect the strike.

On the allegation of violence committed in the course of the strike, it must be remembered that the Labor
Arbiter and the Commission found that "the parties are agreed that there were violent incidents . . .
resulting to injuries to both sides, the union and management."27 The evidence on record show that the
violence cannot be attributed to the striking employees alone for the company itself employed hired men
to pacify the strikers. With violence committed on both sides, the management and the employees, such
violence cannot be a ground for declaring the strike as illegal.

With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to heed
respondent's recall to work notice is a clear indication that they were no longer interested in continuing
their employment and is deemed abandonment. It is admitted that three return to work notices were sent
by respondent company to the striking employees on March 27, April 11, and April 21, 1989 and that 261
employees who responded to the notice were admitted back to work.

However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee
must have failed to report for work or must have been absent without valid or justifiable reason; and (2)
that there must have been a clear intention to sever the employer-employee relationship manifested by
some overt acts.28 Deliberate and unjustified refusal on the part of the employee to go back to his work
post amd resume his employment must be established. Absence must be accompanied by overt acts
unerringly pointing to the fact that the employee simply does not want to work anymore. 29 And the burden
of proof to show that there was unjustified refusal to go back to work rests on the employer.

In the present case, respondents failed to prove that there was a clear intention on the part of the striking
employees to sever their employer-employee relationship. Although admittedly the company sent three
return to work notices to them, it has not been substantially proven that these notices were actually sent
and received by the employees. As a matter of fact, some employees deny that they ever received such
notices. Others alleged that they were refused entry to the company premises by the security guards and
were advised to secure a clearance from ULGWP and to sign a waiver. Some employees who responded
to the notice were allegedly told to wait for further notice from respondent company as there was lack of
work.

Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said to
have abandoned his work.30 The filing of a complaint for illegal dismissal is inconsistent with the allegation
of abandonment. In the case under consideration, the petitioners did, in fact, file a complaint when they
were refused reinstatement by respondent company.

Anent public respondent's finding that there was no unfair labor practice on the part of respondent
company and federation officers, the Court sustains the same. As earlier discussed, union security
clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and binding.
Corollary, dismissals pursuant to union security clauses are valid and legal subject only to the
requirement of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an
employee by the company pursuant to a labor union's demand in accordance with a union security
agreement does not constitute unfair labor practice.31

However, the dismissal was invalidated in this case because of respondent company's failure to accord
petitioners with due process, that is, notice and hearing prior to their termination. Also, said dismissal was
invalidated because the reason relied upon by respondent Federation was not valid. Nonetheless, the
dismissal still does not constitute unfair labor practice.

Lastly, the Court is of the opinion, and so holds, that respondent company officials cannot be held
personally liable for damages on account of the employees' dismissal because the employer corporation
has a personality separate and distinct from its officers who merely acted as its agents.

It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of
employees has been repeatedly violated and the sanction imposed for such violation enunciated
in Wenphil Corporation vs. NLRC32 has become an ineffective deterrent. Thus, the Court recently
promulgated a decision to reinforce and make more effective the requirement of notice and hearing, a
procedure that must be observed before termination of employment can be legally effected.

In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the
Court ruled that an employee who is dismissed, whether or not for just or authorized cause but without
prior notice of his termination, is entitled to full backwages from the time he was terminated until the
decision in his case becomes final, when the dismissal was for cause; and in case the dismissal was
without just or valid cause, the backwages shall be computed from the time of his dismissal until his
actual reinstatement. In the case at bar, where the requirement of notice and hearing was not complied
with, the aforecited doctrine laid down in the Serrano case applies.

WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in
Case No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby
ordered to immediately reinstate the petitioners to their respective positions. Should reinstatement be not
feasible, respondent company shall pay separation pay of one month salary for every year of service.
Since petitioners were terminated without the requisite written notice at least 30 days prior to their
termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations
Commission and Isetann Department Store, the respondent company is hereby ordered to pay full
backwages to petitioner-employees while the Federation is also ordered to pay full backwages to
petitioner-union officers who were dismissed upon its instigation. Since the dismissal of petitioners was
without cause, backwages shall be computed from the time the herein petitioner employees and union
officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their
backwages shall be computed from the time petitioners were terminated until the finality of this decision.
Costs against the respondent company.1âwphi1.nêt

SO ORDERED.
G.R. No. 96566 January 6, 1992

ATLAS LITHOGRAPHIC SERVICES, INC., petitioner,

vs.
UNDERSECRETARY BIENVENIDO E. LAGUESMA (Department of Labor and Employment) and
ATLAS LITHOGRAPHIC SERVICES, INC. SUPERVISORY, ADMINISTRATIVE, PERSONNEL,
PRODUCTION, ACCOUNTING AND CONFIDENTIAL EMPLOYEES ASSOCIATION-KAISAHAN NG
MANGGAWANG PILIPINO (KAMPIL-KATIPUNAN), respondents.

Romero, Lagman, Valdecantos & Arreza Law Offices for petitioner.

Esteban M. Mendoza for private respondent.

GUTIERREZ, JR., J.:p

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the modification of the Order
dated 14 December 1990 and the Resolution dated 21 November 1990 issued by the public respondents.

The antecedent facts of the case as gathered from the records are as follows:

On July 16, 1990, the supervisory, administrative personnel, production, accounting and confidential
employees of the petitioner Atlas Lithographic Services, Inc. (ALSI) affiliated with private respondent
Kaisahan ng Manggagawang Pilipino, a national labor organization. The local union adopted the name
Atlas Lithographic Services, Inc. Supervisory, Administrative, Personnel, Production, Accounting and
Confidential Employees Association or ALSI-SAPPACEA-KAMPIL in short and which we shall hereafter
refer to as the "supervisors" union.

Shortly thereafter, private respondent Kampil-Katipunan filed on behalf of the "supervisors" union a
petition for certification election so that it could be the sole and exclusive bargaining agent of the
supervisory employees.

The petitioners opposed the private respondent's petition claiming that under Article 245 of the Labor
bode the private respondent cannot represent the supervisory employees for collective bargaining
purposeless because the private respondent also represents the rank-and-file employees' union.

On September 18, 1990, the Med-Arbiter issued an order in favor of the private respondent, the
dispositive portion of which provides:

WHEREFORE, premises considered, a certification election among the supervisory

employees belonging to the Administrative, Personnel, Production, Accounting
Departments as well as confidential employees performing supervisory functions of Atlas
Lithographic Services, Incorporated is hereby ordered conducted within 20 days from
receipt hereof, subject to usual pre-election conference, with the following choices:

1. KAMPIL (KATIPUNAN);

2. No union.

SO ORDERED. (Rollo, pp. 39-40)

The petitioners, as expected, appealed for the reversal of the above order. The public respondent,
however, issued a resolution affirming the Med-Arbiter's order.

The petitioners, in turn, filed a motion for reconsideration but the same was denied. Hence, this petition
for certiorari.

The sole issue to be resolved in this case is whether or not, under Article 245 of the Labor Code, a local
union of supervisory employees may be allowed to affiliate with a national federation of labor
organizations of rank-and-file employees and which national federation actively represents its affiliates in
collective bargaining negotiations with the same employer of the supervisors and in the implementation of
resulting collective bargaining agreements.

The petitioner argues that KAMPIL-KATIPUNAN already represents its rank-and-file employees and,
therefore, to allow the supervisors of those employees to affiliate with the private respondent is
tantamount to allowing the circumvention of the principle of the separation of unions under Article 245 of
the Labor Code.

It further argues that the intent of the law is to prevent a single labor organization from representing
different classes of employees with conflicting interests.

The public respondent, on the other hand, contends that despite affiliation with a national federation, the
local union does not lose its personality which is separate, and distinct from the national federation. It
cites as its legal basis the case of Adamson & Adamson, Inc. v. CIR (127 SCRA 268 [1984]).

It maintains that Rep. Act No. 6715 contemplates the principle laid down by this Court in
the Adamson case interpreting Section 3 of Rep. Act No. 875 (the Industrial Peace Act) on the right of a
supervisor's union to affiliate. The private respondent asserts that the legislature must have noted
the Adamson ruling then prevailing when it conceived the reinstatement in the present Labor Code of a
similar provision on the right of supervisors to organize.

Under the Industrial Peace Act of 1953, employees were classified into three groups, namely: (1)
managerial employees; (2) supervisors; and (3) rank-and file employees. Supervisors, who were
considered employees in relation to their employer could join a union but not a union of rank-and-file
employees.

With the enactment in 1974 of the Labor Code (Pres Decree No. 442), employees were classified into
managerial and rank-and-file employees. Neither the category of supervisors nor their right to organize
under the old statute were recognized. So that, in Bulletin Publishing Corporation v. Sanchez (144 SCRA
628 [1986]), the Court interpreted the superseding labor law to have removed from supervisors the right
to unionize among themselves. The Court ruled:

In the light of the factual background of this case, We are constrained to hold that the
supervisory employees of petitioner firm may not, under the law, form a supervisors
union, separate and distinct from the existing bargaining unit (BEU), composed of the
rank-and-file employees of the Bulletin Publishing Corporation. It is evident that most of
the private respondents are considered managerial employees. Also, it is distinctly stated
in Section 11, Rule II, of the Omnibus Rules Implementing the Labor Code, that
supervisory unions are presently no longer recognized nor allowed to exist and operate
as such. (pp. 633, 634)

In Section 11, Rule II, Book V of the Omnibus Rules implementing Pres. Decree No. 442, the supervisory
unions existing since the effectivity of the New Code in January 1, 1975 ceased to operate as such and
the members who did not qualify as managerial employees under this definition in Article 212 (k) therein
became eligible to form, to join or assist a rank-and-file union.
A revision of the Labor Code undertaken by the bicameral Congress brought about the enactment of Rep.
Act No. 6715 in March 1989 in which employees were reclassified into three groups, namely: (1) the
managerial employees; (2) supervisors; and (3) the rank and file employees. Under the present law, the
category of supervisory employees is once again recognized. Hence, Art. 212 (m) states:

(m) . . . Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. . . .

The rationale for the amendment is the government's recognition of the right of supervisors to organize
with the qualification that they shall not join or assist in the organization of rank-and-file employees. The
reason behind the Industrial Peace Act provision on the same subject matter has been adopted in the
present statute. The interests of supervisors on the one hand, and the rank-and-file employees on the
other, are separate and distinct. The functions of supervisors, being recommendatory in nature, are more
identified with the interests of the employer. The performance of those functions may, thus, run counter to
the interests of the rank-and-file.

This intent of the law is made clear in the deliberations of the legislators on then Senate Bill 530 now
enacted as Rep. Act No. 6715.

The definition of managerial employees was limited to those having authority to hire and fire while those
who only recommend effectively the hiring or firing or transfers of personnel would be considered as
closer to rank-and-file employees. The exclusion, therefore, of middle level executives from the category
of managers brought about a third classification, the supervisory employees. These supervisory
employees are allowed to form their own union but they are not allowed to join the rank-and-file union
because of conflict of interest (Journal of the Senate, First Regular Session, 1987, 1988, Volume 3,
p. 2245).

In terms of classification, however, while they are more closely identified with the rank-and-file they are
still not allowed to join the union of rank-and-file employees. To quote the Senate Journal:

In reply to Sen. Guingona's query whether "supervisors" are included in the term
"employee", Sen. Herrera stated that while they are considered as rank-and-file
employees, they cannot join the union and they would have to form their own supervisors'
union pursuant to Rep. Act 875. (supra, p. 2288)

The peculiar role of supervisors is such that while they are not managers, when they recommend action
implementing management policy or ask for the discipline or dismissal of subordinates, they identify with
the interests of the employer and may act contrary to the interests of the rank-and-file.

We agree with the petitioner's contention that a conflict of interest may arise in the areas of discipline,
collective bargaining and strikes.

Members of the supervisory union might refuse to carry out disciplinary measures against their co-
member rank-and-file employees.

In the area of bargaining, their interests cannot be considered identical. The needs of one are different
from those of the other. Moreover, in the event of a strike, the national federation might influence the
supervisors' union to conduct a sympathy strike on the sole basis of affiliation.

More important, the factual issues in the Adamson case are different from the present case. First, the
rank-and-file employees in the Adamson case are not directly under the supervisors who comprise the
supervisors' union. In the case at bar, the rank-and file employees are directly under the supervisors
organized by one and the same federation.

The contemplation of the law in Sec. 3 of the Industrial Peace Act is to prohibit supervisors from joining a
labor organization of employees under their supervision. Sec. 3 of the Industrial Peace Act provides:

Sec. 3 — Employees' Right to Self Organization. Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing and to
engage in concerted activities for the purpose of collective bargaining and other mutual
aid or protection. Individuals employed as supervisors shall not be eligible for
membership in a labor organization of employees under their supervision but may form
separate organizations of their own (Emphasis supplied).

This was not the consideration in the Adamson case because as mentioned earlier, the rank-and-file
employees in the Adamson case were not under the supervision of the supervisors involved.

Meanwhile, Article 245 of the Labor Code as amended by Rep. Act No. 6715 provides:

Art. 245. Ineligibility of managerial employees to join any labor organization: right of
supervisory employees. — Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own.

The Court construes Article 245 to mean that, as in Section 3 of the Industrial Peace Act, supervisors
shall not be given an occasion to bargain together with the rank-and-file against the interests of the
employer regarding terms and conditions of work

Second, the national union in the Adamson case did not actively represent its local chapters. In the
present case, the local union is actively represented by the national federation. In fact, it was the national
federation, the KAMPIL-KATIPUNAN, which initially filed a petition for certification in behalf of the
respondent union.

Thus, if the intent of the law is to avoid a situation where supervisors would merge with the rank and-file
or where the supervisors' labor organization would represent conflicting interests, then a local supervisors'
union should not be allowed to affiliate with the national federation of union of rank-and-file employees
where that federation actively participates in union activity in the company.

The petitioner further contends that the term labor organization includes a federation considering that Art.
212 (g) mentions "any union or association of employees."

The respondent, however, argues that the phrase refers to a local union only in which case, the
prohibition in Art. 245 is inapplicable to the case at bar.

The prohibition against a supervisors' union joining a local union of rank-and-file is replete with
jurisprudence. The Court emphasizes that the limitation is not confined to a case of supervisors wanting
to join a rank-and-file local union. The prohibition extends to a supervisors' local union applying for
membership in a national federation the members of which include local unions of rank-and-file
employees. The intent of the law is clear especially where, as in the case at bar, the supervisors will be
co-mingling with those employees whom they directly supervise in their own bargaining unit.
Technicalities should not be allowed to stand in the way of equitably and completely resolving the rights
and obligations of the parties. (Rapid Manpower Consultants, Inc. v. NLRC, 190 SCRA 747 [1990]) What
should be paramount is the intent behind the law, not its literal construction. Where one interpretation
would result in mischievous consequences while another would bring about equity, justice, and the
promotion of labor peace, there can be no doubt as to what interpretation shall prevail.

Finally, the respondent contends that the law prohibits the employer from interfering with the employees'
right to self-organization.

There is no question about this intendment of the law. There is, however, in the present case, no violation
of such a guarantee to the employee. Supervisors are not prohibited from forming their own union. What
the law prohibits is their membership in a labor organization of rank-and-file employees (Art. 245, Labor
Code) or their joining a national federation of rank-and-file employees that includes the very local union
which they are not allowed to directly join.

In a motion dated November 15, 1991 it appears that the petitioner has knuckled under to the
respondents' pressures and agreed to let the national federation KAMPIL-KATIPUNAN represent its
supervisors in negotiating a collective bargaining agreement. Against the advise of its own counsel and
on the basis of alleged "industrial peace", the petitioner expressed a loss of interest in pursuing this
action. The petitioner is, of course, free to grant whatever concessions it wishes to give to its employees
unilaterally or through negotiations but we cannot allow the resulting validation of an erroneous ruling and
policy of the Department of Labor and Employment (DOLE) to remain on the basis of the petitioner's loss
of interest. The December 14, 1990 order and the November 21, 1990 resolution of DOLE are contrary to
law and must be declared as such.

WHEREFORE, the petition is hereby GRANTED. The private respondent is disqualified from affiliating
with a national federation of labor organizations which includes the petitioner's rank-and-file employees.

SO ORDERED.
G.R. No. L-35120 January 31, 1984

ADAMSON & ADAMSON, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and ADAMSON & ADAMSON SUPERVISORY UNION
(FFW), respondents.

Sycip, Salazar, Luna & Feliciano for petitioner.

Jaime D. Lauron for respondents.

GUTIERREZ, JR., J.:

Adamson and Adamson, Inc., filed this petition to set aside orders of the respondent Court of Industrial
Relations (CIR) holding that the Adamson and Adamson, Inc. supervisory Union (FFW) can legally
represent supervisors of the petitioner corporation notwithstanding the affiliation of the lank and file union
of the same company with the same labor federation, the Federation of Free Workers.

The Adamson and Adamson, Inc. Supervisory Union (FFW) informed the petitioner about its having
organized on the same date that the Adamson and Adamson, Inc. Salesmen Association (FFW) advised
the petitioner that the rank and file salesmen had formed their own union.

The CIR dismissed the petition in CIR Case No. 3267-MC entitled "In the Matter of Representation of the
Supervisory Employees of Adamson and Adamson, Inc., Petitioner " thus prompting the filing of this
petition for review on certiorari.

Subsequently and during the pendency of the present petition, the rank and file employees formed their
own union, naming it Adamson and Adamson Independent Workers (FFW).

The petitioner made a lone assignment of error, to wit:

THE RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN SUSTAINING THE ELIGIBILITY

OF THE RESPONDENT UNION TO REPRESENT THE PETITIONER'S SUPERVISORY EMPLOYEES
NOT-WITHSTANDING THE AFFILIATION OF THE SAID UNION WITH THE SAME NATIONAL
FEDERATION WITH WHICH THE UNIONS OF NON-SUPERVISORS IN THE PETITIONER COMPANY
ARE ALSO AFFILIATED.

The petitioner argues that the affiliation of the respondent union of supervisors, the salesmen's
association, and the Adamson and Adamson independent Workers Union of rank and file personnel with
the same national federation (FFW) violates Section 3 of the Industrial Peace Act, as amended, because
— (1) it results in the indirect affiliation Of supervisors and rank-and-file employees with one labor
organization; (2) since respondent union and the unions of non-supervisors in the same company are
governed by the same constitution and by-laws of the national federation, in practical effect, there is but
one union; and (3) it would result in the respondent union's losing its independence because it becomes
the alter ego of the federation.

The petitioner also submits that should affiliation be allowed, this would violate the requirement of
separateness of bar units under Section 12 of the Act because only one union will in fact represent both
supervisors and rank-and-file employees of the petitioner.
The respondents on the other hand argue that the supervisory employees of an employer may validly join
an organization of the rank-and-file employees so long as the said rank and file employees are not under
their supervision. They submit that Adamson and Adamson Supervisory Union (FFW) is not composed of
sales supervisors and, therefore, the salesmen of the company are not under the supervision of the
supervisory employees forming the union. Respondents also argue that even if the salesmen of the
petitioner company are under the supervision of the members of the supervisory union, the prohibition
would not apply because the salesmen and the supervisory employees of the company have their
separate and distinct labor organizations, and, as a matter of fact, their respective unions sent separate
proposal for collective bargaining agreements. They contend that their respective labor organizations, not
the FFW, will represent their members in the negotiations as well as in the signing of their respective
contracts. Respondents further argue that the Federation of Free Workers has, as its affiliates,
supervisory as well as rank-and-file employees, and should both the supervisory and the rank-and-file
employees of a certain employer who have separate certificates of registration affiliate with the same
federation, the prohibition does not apply as the federation is not the organization of the supervisory
employees contemplated in the law.

The issue presented involves the correct interpretation of Section 3 of Republic Act No. 875, the Industrial
Peace Act, as amended, which states:

Employees shall have the right to self-organization and to form join or assist labor organizations of their
own choosing for the purpose 6f collective bargaining through representatives of their own and to engage
in concerted activities for the purpose of collective bargaining and other mutual aid or protection.
Individuals employed as supervisors shall not be eligible for membership in a labor organization of
employees under their supervision but may form separate organizations of their own.

The right of employees to self-organization and to form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining and to engage in concerted activities for mutual aid or
protection is a fundamental right of labor that derives its existence from the Constitution. It is recognized
and implemented through the abovecited Section 3 of the Industrial Peace Act as amended.

In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws or
rules and regulations implementing the constitutional mandates, we have always adopted the liberal
approach which favors the exercise of labor rights.

In deciding this case, we start with the recognized rule that the right of supervisory employees to organize
under the Industrial Peace Act carries certain restrictions but the right itself may not be denied or unduly
abridged. The supervisory employees of an employer cannot join any labor organization of employees
under their supervision but may validly form a separate organization of their own. As stated in Caltex
Filipino Managers and Supervisors Association v. Court of Industrial Relations (47 SCRA 112), it would
be to attach unorthodoxy to, not to say an emasculation of, the concept of law if managers as such were
precluded from organization. Thus, if Republic Act 875, in its Section 3, recognizes the right of
supervisors to form a separate organization of their own, albeit they cannot be members of a labor
organization of employees under their supervision, that authority of supervisors to form a separate labor
union carries with it the right to bargain collectively with the employer. (Government Service Insurance
System v. Government Service Insurance System Supervisors' Union, 68 SCRA 418).

The specific issue before us is whether or not a supervisor's union may affiliate with a federation with
which unions of rank and-file employees of the same employer are also affiliated. We find without merit
the contentions of petitioner that if affilation will be allowed, only one union will in fact represent both
supervisors and rank-and-file employees of the petitioner; that there would be an indirect affiliation of
supervisors and rank-and-file employees with one labor organization; that there would be emerging of two
bargaining units ; and that the respondent union will loose its independence because it becomes an alter
ego of the federation.
In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80 SCRA 681) and Liberty Cotton Mills Workers Union v.
Liberty Cotton Mills, Inc. (66 SCRA 512), we held :

xxx xxx xxx

... the court expressly cited and affirmed the basic principle that '(T)he locals are separate
and distinct units primarily designed to secure and maintain the equality of bargaining
power between the employer and their employee-member in the economic struggle for
the fruits of the joint productive effort of labor and capital; and the association of the
locals into the national union (as PAFLU) was in the furtherance of the same end. These
association are concensual entities capable of entering into such legal relations with their
members. The essential purpose was the affiliation of the local unions into a common
enterprise to increase by collective action the common bargaining power in respect of the
terms and conditions of labor. Yet the locals remained the basic units of association; free
to serve their own and the common-interest of all, subject to the restraints imposed by the
Constitution and By-laws of the Association; and free also to renounce the affiliation for
mutual welfare upon the terms laid down in the agreement which brought it into
existence.

We agree with the Court of Industrial Relations when it ruled that:

xxx xxx xxx

The confusion seems to have stemmed from the prefix of FFW after the name of the local
unions in the registration of both. Nonetheless, the inclusion of FWW in the registration is
merely to stress that they are its affiliates at the time of registrations. It does not mean
that said local unions cannot stand on their own Neither can it be construed that their
personalities are so merged with the mother federation that for one difference or another
they cannot pursue their own ways, independently of the federation. This is borne by the
fact that FFW, like other federation is a legitimate labor organization separate and distinct
from its locals and affiliates and to construe the registration certificates of the aforecited
unions, along the line of the Company's argument. would tie up any affiliates to the shoe
string of the federation. ...

The Adamson and Adamson Supervisory Union and the Adamson and Adamson, Inc., Salesmen
Association (FFW), have their own respective constitutions and by-laws. They are separately and
independently registered of each other. Both sent their separate proposals for collective bar agreements
with their employer. There could be no employer influence on rank-and-file organizational activities nor
their could be any rank and file influence on the supervisory function of the supervisors because of the
representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED for lack of merit. The questioned order and the
resolution en bancof the respondent Court of Industrial Relations are AFFIRMED.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana and Relova, JJ., concur.

G.R. No. L-45824 June 19, 1985

VOLKSCHEL LABOR UNION, petitioner,

vs.
BUREAU OF LABOR RELATIONS, ASSOCIATED LABOR UNION FOR METAL, WORKERS, DMG,
INC., PEOPLE'S CAR, INC., KARBAYAN INC., and RTC TRADING, INC., respondents.

Ignacio P. Lacsina for petitioner.

William D. Dichoso for respondent DMG, Inc.

Abraham B. Drapiza for private respondent.

CUEVAS, J.:

Petition for certiorari to review the Resolutions dated January 25, 1977 and March 14, 1977 of the Bureau
of Labor Relations.

On April 25. 1977, however, a Supplemental Petition was filed seeking the issuance of —

(1) A preliminary mandatory injunction commanding respondents to return to petitioner

the union dues amounting to about P55,000.00 lawfully pertaining to it but illegally levied
upon, collected and handed over by respondent Bureau, acting through the NLRC sheriff,
to respondent Associated Labor Union for Metal workers, with the collusion of
respondents DMG, Inc., Karbayan, Inc. and RTC Machineries, Inc.;

(2) A preliminary restraining order prohibiting respondents from making further delivery to
respondent Associated Labor Union for Metal workers of Union dues collected or to be
collected through check-off from the wages of petitioner's members by respondents,
DMG, Inc., Karbayan, Inc., RTC Machineries, Inc., and People's Car, Inc., under or by
virtue of the questioned writ of execution issued by respondent Bureau, dated April 4,
1977.

Petitioner was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL for short).
On August 1, 1975, both unions, using the name Volkschel Labor Union Associated Labor Union for
Metal Workers, jointly entered into a collective bargaining agreement with respondent companies. One of
the subjects dealt with is the payment of union dues which is provided for in Section 3, Article 1, of the
CBA, which reads:

Section 3. CHECK-OFF. — The COMPANY agrees to make payroll deductions not

softener than twice a month of UNION membership dues and such special assessments
fees or fines as may be duly authorized by the UNION, provided that the same is covered
by the individual check-off authorization of the UNION members. All said deductions shall
be promptly transmitted within five (5) days by the COMPANY to the UNION Treasurer.
The COMPANY shall prepare two (2) checks. One (1) check will be under the name of
the local union as their local fund including local special assessment funds and the other
check will be for the ALU Regional Office regarding the remittance of the UNION dues
deduction.
On March 10, 1976, a majority of petitioner's members decided to disaffiliate from respondent federation
in order to operate on its own as an independent labor group pursuant to Article 241 (formerly Article 240)
of the Labor Code of the Philippines, the pertinent portion of which reads:

Incumbent affiliates of existing federations or national unions may disaffiliate only for the
purpose of joining a federation or national union in the industry or region in which it
properly belongs or for the purpose of operating as an independent labor group.

Accordingly, a resolution was adopted and signed by petitioner's members revoking their check-off
authorization in favor of ALUMETAL and notices thereof were served on ALUMETAL and respondent
companies.

Confronted with the predicament of whether or not to continue deducting from employees' wages and
remitting union dues to respondent, ALUMETAL which wrote respondent companies advising them to
continue deducting union dues and remitting them to said federation, respondent companies sought the
legal opinion of the respondent Bureau as regards the controversy between the two unions. On
November 11, 1976, Med-Arbiter George A. Eduvalla of respondent Bureau rendered a Resolution which
in effect found the disaffiliation legal but at the same time gave the opinion that, petitioner's members
should continue paying their dues to ALUMETAL in the concept of agency fees. 1

From the said Resolution, of the Med-Arbiter both petitioner and respondent ALUMETAL appealed to the
Director of respondent Bureau. Petitioner' contended that the Med-Arbiter's opinion to the effect that
petitioner's members remained obligated to pay dues to respondent ALUMETAL was inconsistent with the
dispositive finding that petitioner's disaffiliation from ALUMETAL was valid. ALUMETAL, on the other
hand, assailed the Resolution in question asserting that the disaffiliation should have been declared
contrary to law.

On January 25, 1977, respondent Bureau, through its Acting Director, Francisco L. Estrella, REVERSED
the Med-Arbiter's Resolution., and declared that the Bureau recognized "the continued affiliation of
Volkschel Labor Union with the Associated Labor Union for Metal Workers." 2

Petitioner appealed the Acting Director's Resolution to the Secretary of Labor know Minister of Labor and
Employment) who, treating the appeal as a Motion for Reconsideration referred the same back to
respondent Bureau On March 14, 1977, the Bureau denied the appeal for lack of merit.

Hence, the instant petition.

Meanwhile, on April 4, 1977, on motion of ALUMETAL, the then Acting Secretary of Labor, Amado Gat
Inciong, issued a of execution commanding the Sheriff of the National Labor Relations Commission to
enforce and execute the order of January 25, 1977, which has become final and executory. 3 Pursuant
thereto, the NLRC Sheriff enforced and implemented the Order of January 25, 1977, as a result of which
respondent companies turned over and handed to respondent federation the union dues and other
assessments in accordance with the check-off provision of the CBA,

From the pleadings filed and arguments of counsel, the following issues present themselves for this
Court's resolution.

Is petitioner union's disaffiliation from respondent federation valid?

II
 Do respondent companies have the right to effect union dues collections despite
revocation by the employees of the check-off authorization? and

III

Is respondent federation entitled to union dues payments from petitioner union's

members notwithstanding their disaffiliation from said federation?

We resolve the first issue in the affirmative.

The right of a local union to disaffiliate from its mother union is well-settled. In previous cases, it has been
repeatedly held that a local union, being a separate and voluntary association, is free to serve the interest
of all its members including the freedom to disaffiliate when circumstances warrant. 4 This right is
consistent with the Constitutional guarantee of freedom of association (Article IV, Section 7, Philippine
Constitution).

Petitioner contends that the disaffiliation was not due to any opportunists motives on its part. Rather it
was prompted by the federation's deliberate and habitual dereliction of duties as mother federation
towards petitioner union. Employees' grievances were allegedly left unattended to by respondent
federation to the detriment of the employees' rights and interests.

In reversing the Med-Arbiter's resolution, respondent Bureau declared: the Department of Labor is set on
a task to restructure the labor movement to the end that the workers will unite themselves along industry
lines. Carried to its complete fruition, only one union for every industry will remain to bargain collectively
for the workers. The clear policy therefore even now is to conjoin workers and worker groups, not to
dismember them. 5 This policy is commendable. However, we must not lose sight of the constitutional
mandate of protecting labor and the workers' right to self-organization. In the implementation and
interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's
welfare should be the primordial and paramount consideration. In the case at bar, it would go against the
spirit of the labor law to restrict petitioner's right to self-organization due to the existence of the CBA. We
agree with the Med-Arbiter's opinion that "A disaffiliation does not disturb the enforceability and
administration of a collective agreement; it does not occasion a change of administrators of the contract
nor even an amendment of the provisions thereof." 6 But nowhere in the record does it appear that the
contract entered into by the petitioner and ALUMETAL prohibits the withdrawal of the former from the
latter.

This now brings us to the second issue. Under Section 3, Article I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to ALUMETAL is conditioned on the individual check-off
authorization of petitioner's members, In other words, ALUMETAL is entitled to receive the dues from
respondent companies as long as petitioner union is affiliated with it and respondent companies are
authorized by their employees (members of petitioner union) to deduct union dues. Without said
affiliation, the employer has no link to the mother union. The obligation of an employee to pay union dues
is coterminous with his affiliation or membership. "The employees' check-off authorization, even if
declared irrevocable, is good only as long as they remain members of the union concerned." 7 A contract
between an employer and the parent organization as bargaining agent for the employees is terminated by
the disaffiliation of the local of which the employees are members. 8 Respondent companies therefore
were wrong in continuing the check-off in favor of respondent federation since they were duly notified of
the disaffiliation and of petitioner's members having already rescinded their check-off authorization.

With the view we take on those two issues, we find no necessity in dwelling further on the last issue.
Suffice it to state that respondent federation is not entitled to union dues payments from petitioner's
members. "A local union which has validly withdrawn from its affiliation with the parent association and
which continues to represent the employees of an employer is entitled to the check-off dues under a
collective bargaining contract." 9
WHEREFORE, the Resolutions of the Bureau of Labor Relations of January 25, 1977 and March 14,
1977 are REVERSED and SET ASIDE. Respondent ALUMETAL is ordered to return to petitioner union
all the union dues enforced and collected through the NLRC Sheriff by virtue of the writ of execution
dated April 4, 1977 issued by respondent Bureau.

No costs.

SO ORDERED.
G.R. No. 100898 July 5, 1993

ALEX FERRER, RAFAEL FERRER HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, and
FEDERATION OF DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION), HUI KAM CHANG (In his
capacity as General Manager of Occidental Foundry Corporation), OCCIDENTAL FOUNDRY
CORPORATION, MACEDONIO S. VELASCO (In his capacity as representative of the Federation of
Free Workers), GENARO CAPITLE, JESUS TUMAGAN, ERNESTO BARROGA, PEDRO LLENA,
GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE IGNAS, PIO DOMINGO, and JAIME
BAYNADO, respondents.

Genrosa P. Jacinto and Raymundo D. Mallilin for private respondents.

MELO, J.:

The petition for certiorari before us seeks to annul and set aside: (a) the decision dated June 20, 1991 of
the Second Division of the National Labor Relations Commission (NLRC) (Penned by Commissioner
Rustico L. Diokno and concurred in by Presiding Commissioner Edna Bonto-Perez and Commissioner
Domingo H. Zapanta) which affirmed in toto the decision of April 5, 1990 of Labor Arbiter Eduardo J.
Carpio dismissing the complaint for illegal dismissal and unfair labor practice on the ground that both the
company and the union merely complied with the collective bargaining agreement provision sanctioning
the termination of any employee who fails to retain membership in good standing with the union; and (b)
the NLRC resolution denying the motion for the reconsideration of said decision (NLRC NCR Case No.
00-10-04855-89).

Petitioners were regular and permanent employees of the Occidental Foundry Corporation (OFC) in
Malanday, Valenzuela, Metro Manila which was under the management of Hui Kam Chang. As piece
workers, petitioners' earnings ranged from P110 to P140 a day. They had been in the employ of OFC for
about ten years at the time of their dismissal in 1989 (p. 38, Rollo).

On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry Corporation-FFW (SAMAHAN)

and the OFC entered into a collective bargaining agreement (CBA) which would be effective for the three-
year period between October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui Kam
Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause thus:

Sec. 1 — The company agrees that all permanent and regular factory workers in the
company who are members in good standing of the union or who thereafter may become
members, shall as a condition of continued employment, maintain their membership in
the union in good standing for the duration of the agreement.

xxx xxx xxx

Sec. 3 — The parties agree that failure to retain membership in good standing with the
UNION shall be ground for the operation of paragraph 1 hereof and the dismissal by the
company of the aforesaid employee upon written request by the union. The aforesaid
request shall be accompanied by a verified carbon original of the Board of (sic)
Resolution by the UNION signed by at least a majority of its officers/directors. (p.
562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the Department of Labor and
Employment (DOLE), a complaint for the expulsion from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-president), Godofredo Pacheco (auditor), and Marcelino
Pacheco (board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on said officers'
alleged inattentiveness to the economic demands of the workers. However, on September 4, 1989,
petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo).

On September 10, 1989, petitioners conducted a special election of officers of the SAMAHAN (pp. 205 &
583, Rollo). Said election was, however, later questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union dues to the officers led by Capitle who were allied
with the FFW. Later, however, Romulo Erlano, one of the officers elected at the special election,
manifested to the DOLE that he was no longer objecting to the remittance of union dues to the officers led
by Capitle. Petitioners' move to stage a strike based on economic demands was also later disowned by
members of the SAMAHAN.

The intraunion squabble came to a head when, on September 11, 1989, a resolution expelling petitioners
from the SAMAHAN was issued by the aforesaid union officials headed by Capitle, together with board
members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The following day,
Capitle sent OFC the following letter:

1
2

S
e
p
t
e
m
b
e
r

1
9
8
9

Mr. Hui Kam Chang

General Manager
Malanday, Valenzuela
Metro Manila

Dear Mr. Chang:

In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in our
Collective Bargaining Agreement, I would like you to dismiss the following employees on
the ground of failure to retain membership in good standing:

1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
 Attached herewith is the verified carbon original of the Board Resolution of the union
signed by the majority of its officers/directors.

Thank you very much.

Very
truly
yours,

(Sgd.)
GENARO CAPITLE
President

(p. 66, Rollo.)

Although petitioners received this letter weeks after its date, it appears that on that same date, they had
learned about their dismissal from employment as shown by the letter also dated September 13, 1989
which they sent the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to be
admitted as members of the FEDLU and requested that they be represented ("katawanin") by said
federation before the DOLE in the complaint which they intended to file against the union (SAMAHAN),
the FFW and the company for illegal dismissal, reinstatement, and other benefits in accordance with law
(p. 74, Rollo).

Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang professing innocence of
the charges levelled against them by the SAMAHAN and the FFW and pleading that they be reinstated
(pp. 69-73, Rollo). Their letters appear to have elicited no response.

Thus, contending that their dismissal was without cause and in utter disregard of their right to due
process of law, petitioners, through the FEDLU, filed a complaint for illegal dismissal and unfair labor
practice before the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the
FFW) the FFW, and the SAMAHAN officers headed by Capitle (p. 75, Rollo).

In due course, after the case was ventilated through position papers and other documents, the labor
arbiter rendered a decision dismissing petitioners' complaint (pp. 79-89, Rollo). He found that in
dismissing petitioners, OFC was "merely complying with the mandatory provisions of the CBA — the law
between it and the union." He added:

To register compliance with the said covenant, all that is necessary is a written request of
the union requesting dismissal of the employees who have failed to retain membership in
good standing with the union. The matter or question, therefore of determining why and
how did complainants fail to retain membership in good standing is not for the company
to inquire via formal investigation. By having the request of the union, a legal presumption
that the request was born out of a formal inquiry by the union that subject employees
failed to exist. This means generally that where a valid closed shop or similar agreement
is in force with respect to a particular bargaining unit as in the case a quo, the employer
shall refuse to employ any person unless he is a member of the majority union and the
employer shall dismiss employees who fail to retain their membership in the majority
union. This must be deemed a just cause recognized by law and jurisprudence. The
effect is discrimination to encourage membership in other unions. (pp. 86-87, Rollo.)

Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise of legitimate
management prerogative which cannot be considered as an unfair labor practice. On whether the
SAMAHAN and the FFW could be held liable for illegal dismissal and unfair labor practice, the arbiter
opined that since there was no employer-employee relationship between petitioners and respondent
unions, the complaint against the latter has no factual and legal bases, because petitioners "should not
have confused expulsion from membership in the union as one and the same incident to their subsequent
employment termination."

Consequently, petitioners appealed to the NLRC on the grounds that there was prima facie evidence of
abuse of discretion on the part of the labor arbiter and that he committed serious errors in his findings of
facts.

On June 20, 1991, the NLRC rendered the herein questioned decision affirming in toto the decision of the
arbiter. Petitioners motion for the reconsideration of the NLRC decision having been denied, they resorted
to the instant petition for certiorari which presents the issue of wether or not respondent Commision
gravely abused its discretion in affirming the decision of the labor arbiter which is allegedly in defiance of
the elementary principles of procedural due process as the petitioners were summarily dismissed from
employment without an investigation having been conducted by the OFC on the veracity of the allegation
of the SAMAHAN-FFW that they violated the CBA.

A CBA is the law between the company and the union and compliance therewith is mandated by the
express policy to give protection to labor. Said policy should be given paramount consideration unless
otherwise provided for by law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]. A CBA provision for
a closed shop is a valid form of union security and it is not a restriction on the right or freedom of
association guaranteed by the Constitution (Lirag Textile Mill, Inc. vs. Blanco, 109 SCRA 87 [1981].
However, in the implementation of the provisions of the CBA, both parties thereto should see to it that no
right is violated or impaired. In the case at bar, while it is true that the CBA between OFC and the
SAMAHAN provided for the dismissal of employees who have not maintained their membership in the
union, the manner in which the dismissal was enforced left much to be desired in terms of respect for the
right of petitioners to procedural due process.

In the first place, the union has a specific provision for the permanent or temporary "expulsion" of its
erring members in its constitution and by-laws ("saligang batas at alituntunin"). Under the heading
membership and removal ("pag-aanib at pagtitiwalag"), it states:

Sec. 4. Ang sinumang kasapi ay maaring itwalag (sic) ng Samahan pangsamantala o

tuluyan sa pamamagitan (sic) ng tatlo't ikaapat (¾) na bahagi ng dami ng bilang ng
Pamunuang Tagapagpaganap. Pagkaraan lamang sa pandinig sa kanyang kaso. Batay
sa sumusunod:

(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran ng Samahan.

(b) Sinumang gumawa ng mga bagay na maaaring ikabuwag ng Samahan.

(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o Doctor's
Certificate.

(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.

(e) Sinumang kasapi na natanggal sa kapisanan at gustong, sumapi uli ay

magpapanibago ng bilang, mula sa taon ng kanyang pagsapi uli sa Samahan. (Emphasis
supplied; Ibid., p. 177).

No hearing ("pandinig") was ever conducted by the SAMAHAN to look into petitioners' explanation of their
moves to oust the union leadership under Capitle, or their subsequent affiliation with FEDLU. While it is
true that petitioners' actions might have precipitated divisiveness and, later, showed disloyalty to the
union, still, the SAMAHAN should have observed its own constitution and by-laws by giving petitioners an
opportunity to air their side and explain their moves. If, after an investigation the petitioners were found to
have violated union rules, then and only then should they be subjected to proper disciplinary measures.

Here lies the distinction between the facts of this case and that of Cariño vs. NLRC (185 SCRA 177
[1990]) upon which the Solicitor General heavily relies in supporting the stand of petitioners. In Cariño,
the erring union official was given the chance to answer the complaints against him before an
investigating committee created for that purpose. On the other, hand, herein petitioners were not given
even one opportunity to explain their side in the controversy. This procedural lapse should not have been
overlooked considering the union security provision of the CBA.

What aggravated the situation in this case is the fact that OFC itself took for granted that the SAMAHAN
had actually conducted an inquiry and considered the CBA provision for the closed shop as self-operating
that, upon receipt of a notice that some members of the SAMAHAN had failed to maintain their
membership in good standing in accordance with the CBA, it summarily dismissed petitioners. To make
matters worse, the labor arbiter and the NLRC shared the same view in holding that "(t)he matter or
question, therefore, of determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation" (pp. 87 & 135, Rollo). In this regard,
the following words of my learned brother, Mr. Justice Feliciano, in the Resolution in Cariño are apt:

4. Turning now to the involvement of the Company in the dismissal of petitioner Cariño,
we note that the Company upon being formally advised in writing of the expulsion of
petitioner Cariño from the Union, in turn simply issued a termination letter to Cariño, the
termination being made effective the very next day. We believe that the Company should
have given petitioner Cariño an opportunity to explain his side of the controversy with the
Union. Notwithstanding the Union's Security Clause in the CBA, the Company should
have reasonably satisfied itself by its own inquiry that the Union had not been merely
acting arbitrarily and capriciously in impeaching and expelling petitioner Cariño . . .

xxx xxx xxx

5. We conclude that the Company had failed to accord to petitioner Cariño the latter's
right to procedural due process. The right of an employee to be informed of the charges
against him and to reasonable opportunity to present his side in a controversy with either
the Company or his own Union, is not wiped away by a Union Security Clause or a Union
Shop Clause in a CBA. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own Union the leadership of which could
yield to the temptation of swift and arbitrary expulsion from membership and hence
dismissal from his job. (pp. 186 & 189.)

The need for a company investigation is founded on the consistent ruling of this Court that the twin
requirements of notice and hearing which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be notified of the employer's intent to
dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords the employee
an opportunity to answer the charge or charges against him and to defend himself therefrom before
dismissal is effected (Kwikway Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC,
202 SCRA 7 [1991]). Observance to the letter of company rules on investigation of an employee about to
be dismissed is not mandatory. It is enough that there is due notice and hearing before a decision to
dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 (1991]). But even if no hearing is conducted, the
requirement of due process would have been met where a chance to explain a party's side of the
controversy had been accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA 748 [1991]).

If an employee may be considered illegally dismissed because he was not accorded fair investigation
(Hellenic Philippine Shipping vs. Siete, 195 SCRA 179 (1991]), the more reason there is to strike down as
an inexcusable and disdainful rejection of due process a situation where there is no investigation at all
(See: Colegio del Sto. Niño vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187
SCRA 611 [1990]). The need for the observance of an employee's right to procedural due process in
termination cases cannot be overemphasized. After all, one's employment, profession, trade, or calling is
a "property right" and the wrongful interference therewith gives rise to an actionable wrong (Callanta vs.
Carnation Philippines, Inc., 145 SCRA 268 (1986]). Verily, a man's right to his labor is property within the
meaning of constitutional guarantees which he cannot be deprived of without due process (Batangas
Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).

While the law recognizes the right of an employer to dismiss employees in warranted cases, it frowns
upon arbitrariness as when employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651
[1990]). Thus, the prerogatives of the OFC to dismiss petitioners should not have been whimsically done
for it unduly exposed itself to a charge of unfair labor practice for dismissing petitioners in line with the
closed shop provision of the CBA, without a proper hearing (Tropical Hut Employees' Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co.,
Inc. (BISCOM) vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither
can the manner of dismissal be considered within the ambit of managerial prerogatives, for while
termination of employment is traditionally considered a management prerogative, it is not an absolute
prerogative subject as it is to limitations founded in law, the CBA, or general principles of fair play and
justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).

Under Rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa Blg. 130, the OFC and
the SAMAHAN should solidarity indemnify petitioners for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694[1990], citing Wenphil vs.
NLRC, 170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be imposed only
where the termination of employment is justified and not when the dismissal is illegal as in this case
where the damages are in the form of back wages.

As earlier discussed, petitioners' alleged act of sowing disunity among the members of the SAMAHAN
could have been ventilated and threshed out through a grievance procedure within the union itself. But
resort to such procedure was not pursued. What actually happened in this case was that some members,
including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle due to the latter's
alleged inattention to petitioners' demands for the implementation of the P25-wage increase which took
effect on July 1, 1989. The intraunion controversy was such that petitioners even requested the FFW to
intervene to facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55, Rollo).

Petitioners sought the help of the FEDLU only after they had learned of the termination of their
employment upon the recommendation of Capitle. Their alleged application with federations other than
the FFW (Labor Arbiter's Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the
federation to which it belonged. Neither may it, be inferred that petitioners sought disaffiliation from the
FFW for petitioners had not formed a union distinct from that of the SAMAHAN. Parenthetically, the right
of a local union to disaffiliate from a federation in the absence of any provision in the federation's
constitution preventing disaffiliation of a local union is legal (People's Industrial and Commercial
Employees and Worker's Org. (FFW) vs. People's Industrial and Commercial Corp., 112 SCRA 440
(1982]). Such right is consistent with the constitutional guarantee of freedom of association (Tropical Hut
Employees Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]).

Hence, while petitioners' act of holding a special election to oust Capitle, et al. may be considered as an
act of sowing disunity among the SAMAHAN members, and, perhaps, disloyalty to the union officials,
which could have been dealt with by the union as a disciplinary matter, it certainly cannot be considered
as constituting disloyalty to the union. Faced with a SAMAHAN leadership which they had tried to remove
as officials, it was but a natural act of self-preservation that petitioners fled to the arms of the
FEDLU after the union and the OFC had tried to terminate their employment. Petitioners should not be
made accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:

Security of Tenure. — In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.

and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years "without deduction or qualification" to obviate the need for further proceedings
in the course of execution, is no longer applicable.

A legally dismissed employee may now be paid his back wages, allowances, and other benefits for
the entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA
521 [1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of the
1990 new Rules of Procedure of the National Labor Relations Commission.

Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such a
scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug Rule
depending, of course, on when the employer will reinstate the employees.

It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to a
cost-saving measure in terms of overhead expense plus incremental productivity to the company which
lies in the hands of the employer.

WHEREFORE, the decision appealed from is hereby SET ASIDE and private respondents are hereby
ordered to reinstate petitioners to their former or equivalent positions without loss of seniority rights and
with full back wages, inclusive of allowances and other benefits or their monetary equivalent, pursuant to
Article 279 of the Labor Code, as amended by Republic Act No. 6715.

SO ORDERED.
G.R. No. L-33987 September 4, 1975

LIBERTY COTTON MILLS WORKERS UNION, RAFAEL NEPOMUCENO, MARIANO CASTILLO,

NELLY ACEVEDO, RIZALINO CASTILLO and RAFAEL COMBALICER, petitioners,
vs.
LIBERTY COTTON MILLS, INC., PHILIPPINE ASSOCIATION OF FREE LABOR UNION (PAFLU) and
the COURT OF INDUSTRIAL RELATIONS, respondents.

Carlos E. Santiago for petitioners.

Paredes, Poblador, Nazareno, Azada, Tomacuz & Paredes for respondent Liberty Cotton Mills, Inc.
Ernesto D. Llaguno for respondent Union.

Jose K. Manguiat, Jr. for respondent Court.

ESGUERRA, J.:

Petition for Certiorari to review the decision dated March 30, 1971 of the Court of Industrial Relations in
Case No. 4216, dismissing petitioners' complaint for unfair labor practice.

The factual background of this case is as follows:

The Liberty Cotton Mills Workers Union, hereinafter referred to as the Union, adopted its Constitution and
By-laws on January 1, 1959.1 Among other things, the said Constitution provided:

ARTICLE I — NAME AND DOMICILE.

Section 1. The name of this organization shall be Liberty Cotton Mills Workers Union-
PAFLU.

Section 2. This Union shall have its office at l233 Tecson, Tindalo, Tondo, Manila.

xxx xxx xxx

ARTICLE X — UNION AFFILIATION

Section 1. The Liberty Cotton Mills Workers Union-Paflu shall be affiliated with the
Philippine Association of Free Labor Unions, otherwise known as PAFLU, and shall
remain an affiliate as long as ten or more of its members evidence their desire to
continue the said local union's affiliation, in accordance with the Paflu Constitution, Article
XI-Paragraph 11:15 thereof;

ARTICLE XIII — CHARGES, TRIALS, AND IMPEACHMENT OF OFFICERS

AND MEMBERS: APPEALS.

Section 1. Any member or officer of the Liberty Cotton Mills Workers Union-Paflu may be
charged, tried or impeached if an officer, in accordance with this and the PAFLU
CONSTITUTION.
On October 1, 1959, a Collective Bargaining Agreement2 was entered into by and between the Company
and the Union represented by PAFLU. Said Agreement contained these clear and unequivocal
provisions:

This Agreement, made and entered into this 1st day of October, 1959, in the City of
Manila, by and between

The LIBERTY COTTON MILLS INC., a corporation duly organized and

existing under the laws of the Philippines, with principal office at 549 San
Francisco Street, Karuhatan, Polo, Bulacan, hereinafter referred to as
the COMPANY, represented in this Act by its President, Mr. RAFAEL
GOSINGCO:

AND

THE PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS, a

legitimate labor organization existing and operating under the laws of the
Philippines, with postal address at 1233 Tecson, Tindalo, Tondo, Manila,
hereinafter referred to as the UNION, represented in this Act by its
National Treasurer and duly authorized representative, Mr. CATALINO
G. LUZANO, herein acting for and in behalf of its affiliate the LIBERTY
COTTON MILLS WORKERS UNION-PAFLU, and the employees of the
Company in the appropriate bargaining unit hereinafter defined:

WITNESSETH:

I. UNION RECOGNITION

The COMPANY recognizes the UNION as the sole bargaining agent for
all of its employees, other than supervisors ... consonant with the
certification of the said UNION by the Court of Industrial Relations in
Case No. 627-MC, entitled" In re Petition for Certification Election,
Liberty Cotton Mills, Inc., petitioner."

III. UNION SECURITY

All employees who, at the time of the signing of this Agreement are
members of the UNION, or who, at any time during the effectivity of this
Agreement, may join the UNION, shall as a condition for continued
employment, remain members of the UNION while this agreement
remains in force; any employee, who, at any time during the life of this
agreement shall resign from the UNION or be expelled, therefrom in
accordance with its Constitution and By-Laws for non-payment of union
dues or other duly approved union assessments or for disloyalty to the
UNION shall be dismissed from employment by the COMPANY upon
request in writing by the UNION which shall hold the COMPANY free
from any liability arising from or caused by such dismissal.

XI. TERM

This Agreement shall be effective from October 1, 1959 to September

30, 1961, during which time it shall be binding upon the parties hereto
and all the employees of COMPANY comprised within the appropriate
 bargaining unit defined above, and may not be modified by court action,
by concerted activities or by any other means. ... Should, either party fail
to give written notice to the other of its desire to amend or discontinue
this Agreement at least thirty (30) days from the expiry date set forth
above, this Agreement shall be continued in force for one (1) year, and
thereafter for yearly terms unless written notice is given at least thirty
(30) days from the expiration of the contract.

The above Collective Bargaining Agreement was amended on February 28, 1964, thus: 3

Article III. UNION SECURITY

Additional Clause

The Company agrees to encourage casual workers and non-union

members to join the Union which is the sole and exclusive agent for all
the employees covered by this Agreement.

Article XI. DURATION

The Duration of this Agreement shall be for two (2) years, that is from
November 2, 1963 up to November, 1965.

The Agreements aforementioned bore the signatures of representatives of both the Company and the
PAFLU, and the incumbent President of the local union.

On March 13, 1964, while the Collective Bargaining Agreement was in full force, Marciano Castillo and
Rafael Nepomuceno, President and Vice-President, respectively, of the local union, wrote PAFLU, its
mother federation, complaining about the legal counsel assigned by the PAFLU to assist them in a ULP
case (Case No. 4001) they filed against the Company. In said letter, the local union expressed its
dissatisfaction and loss of confidence in the PAFLU lawyers, claiming that PAFLU never lifted a finger
regarding this particular complaint.

On May 17, 1964, thirty two (32) out of the 36 members of the local union disaffiliated themselves from
respondent PAFLU pursuant to their local union's Constitution and By-Laws, specifically Article X thereof,
supra (p. 12 Record). A copy of the signed resolution of disaffiliation was furnished the Company as well
as the Bureau of Labor Relations. The following day, the local union wrote the Company and required the
turn-over of the checked-off dues directly to its Treasurer.

On May 27, 1964, PAFLU, thru its National Secretary wrote the Company this letter:

This is to inform your good office that sometime last May 25, 1964, our federation was in
receipt of a letter signed by 32 persons and informing us of their desire to disaffiliate the
local union from the mother federation — PAFLU. The members and officers who made
the letter have no right to do the same under our existing contract and under the PAFLUs
Constitution and By-Laws.

We wish to make it clear with the management that the contractural union in our contract
which was signed a few months ago is the Philippine Association of Free Labor Union
(PAFLU). The actuation made by the supposed union members is inconsistent with the
present contract we have and under the provisions of "Maintenance of Union
Membership" they can an be dismissed. Under the PAFLUs Constitution that is null and
 void. And in view of the disloyalty shown by those members, the mother federation will
take over the administration of the Union in dealing with the management especially.

We inform your goodself that the mother federation is not honoring the said letter and we
request you do the same under the circumstances.

Hence, all the communications pertaining to union business and other relative matters be
coursed to the mother federation for prompt action.

And on May 29,1964, PAFLU wrote the Company again, this time quoting en toto Article III of the
Collective Bargaining Agreement on "Union Security" and requesting the termination of the employment
of Rafael Nepomuceno, Marciano Castillo, Nelly Acevedo, Enrique Managan, Rizalino Castillo and Rafael
Combalicer, all petitioners herein. PAFLU at the same time expelled the aforementioned workers from
their' union membership in the mother federation for allegedly "instigating union disaffiliation.".

On May 30,1964, the Company terminated the employment of the members expelled by the PAFLU
(Exhs. "D", "D-1" to "D-3" pp. 14-17 Record). On the last day of May, 1964, counsel for the ousted
workers wrote the Company requesting their reinstatement. This was denied by the Company; hence the
complaint for unfair labor practice filed with the Court of Industrial Relations.

After due hearing, the Court rendered its decision dismissing the complaint, but with a strong'
recommendation for the reinstatement of complainant workers in respondent Company. The workers
(petitioners herein) being unsatisfied with the decision, appealed to this Court and raised the following
questions:

1. Under the Collective Bargaining Agreement, who between the PAFLU and the local
union is the sole bargaining agent of the workers of the Company?

2. Was the disaffiliation of the local union from the PAFLU valid and justified under the
Constitution and By-laws of the Union?

3. Was the disaffiliation of the Union from the PAFLU an act of disloyalty of the petitioners
(workers) which could be a valid ground for their expulsion from their own union and their
dismissal from the Company?

4. Does the PAFLU as the mother federation of the union possess the power to expel the
officers and members of the union under the Constitution and By-Laws? And assuming it
has such powers, were the petitioner workers validly expelled from the Union in
accordance with the Constitution and By-Laws?

5. May the workers be summarily dismissed by the Company under the Collective
Bargaining Agreement even without valid proof of their valid expulsion from their own
union?

6. Did not the dismissal of only the five (5) petitioner workers constitute discrimination,
considering that the disaffiliation was signed by more than the majority of the union
members?

All these questions boil down to the single issue of whether or not the dismissal of the complaining
employees, petitioners herein, was justified or not. The resolution of this question hinges on a precise and
careful analysis of the Collective Bargaining Agreements. (Exhs. "H' and "I") In these contracts it appears
that PAFLU has been recognized as the sole bargaining agent for all the employees of the Company
other than its supervisors and security guards. Moreover it likewise appears that "PAFLU, represented in
this Act by its National Treasurer, and duly authorized representative, ... (was) acting for and in behalf of
its affiliate, the Liberty Cotton Mills Workers Union and the employees of the Company, etc.' In other
words, the PAFLU, acting for and in behalf of its affiliate, had the status of an agent while the local union
remained the basic unit of the association free to serve the common interest of all its members including
the freedom to disaffiliate when the circumstances warrant. This is clearly provided in its Constitution and
By-Laws, specifically Article X on Union Affiliation, supra. At this point, relevant is the ruling in an
American case:4

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

This brings Us to the question of disaffiliation which was the root cause of the dismissal. It is claimed by
PAFLU that the local union could not have validly disaffiliated from it as the Union Security Clause so
provided. We have meticulously read the provision of the supposed union security clause and We cannot
agree with both the stand of PAFLU and the respondent court. For while it is correct to say that a union
security clause did exist, this clause was limited by the provision in the Unions' Constitution and By-Laws,
which states:

That the Liberty Cotton Mills Workers Union-PAFLU shall be affiliated with the PAFLU,
and shall remain an affiliate as long as ten (10) or more of its members evidence their
desire to continue the said local unions affiliation.

Record shows that only four (4) out of its members remained for 32 out of the 36 members of the Union
signed the resolution of disaffiliation on May 17, 1964, triggered by the alleged negligence of PAFLU in
attending to the needs of its local union, particularly its failure to assign a conscientious lawyer to the local
to attend to the ULP case they filed against the Company. The disaffiliation was, therefore, valid under
the local's Constitution and By-Laws which, taken together with the Collective Bargaining Agreement, is
controlling. The Court of Industrial Relations likewise held in its decision that the act of disaffiliation did
not have any effect as the workers retracted from such act. As stated by the respondent court —

... it is believed that the effect of their retraction obliterates their participation in the
resolution. Hence, under Article X of the said Constitution and By-Laws, complainant
union remained affiliated with respondent union at the time termination of the services of
complainant workers was requested and when they were dismissed by the Company on
May 30, 1964.

Although the fact of retraction is true, We find that the respondent court failed to notice the fact that not all
signatories to the resolution of disaffiliation dated May 17, 1964, took part in the retraction. Only a number
of employees, 16 to be exact, retracted. Also, and this is a significant factor, the retraction is dated June
3, 1964, or four days after the petitioners herein had been dismissed. There is no use in saying that the
retraction obliterated the act of disaffiliation when they were already out of the service when it was done.
The disaffiliation, coming as it did from the greater majority of its members, is more than enough to show
the collective desire of the members of the Liberty Cotton Mills Workers Union to sever their relations
from the mother federation. The right of disaffiliation is inherent in the compact and such act should not
have been branded as an act of disloyalty, especially considering the cause which impelled the union to
take such a step.

Lastly, we will take up the process by which the workers were dismissed. We find that it was hastily and
summarily done. The PAFLU received the resolution to disaffiliate on or about May 25, 1964, after which
it wrote the Company about its stand, first on the 27th of May followed by its letter of the 29th requesting
for the termination of petitioners herein for 'disloyalty in having instigated disaffiliation'. The Company the
acting on the request of the mother federation sent notices of termination to the officers of the local union
immediately on the day following, or on May 30, 1964, heavily relying on the Collective Bargaining
Agreement, viz:

... for disloyalty to the union shall be dismissed from employment by the Company upon
request in writing by the Union, which shall hold the COMPANY free from any liability
arising from or caused by such dismissal.

While the above quoted provision may have been the basis for the Company's actuation, as in fact it was
alleged by the Company in its Brief, We are of the opinion that such stipulation does not bind the courts
much less released the Company from liability should a finding for unfair labor practice be positive. In the
case at bar, however, considering that the dispute revolved around the mother federation and its local,
with the company dismissing the workers at the instance of the mother federation, We believe that the
Company's liability should be limited to the immediate reinstatement of the workers.

Considering, however, that their dismissal was effected without previous hearing, and at the instance of
PAFLU, this mother federation should be, as it is hereby, held liable to the petitioners for the payment of
their back wages. Following the precedent of Mercury Drug Co. vs. CIR,5 of fixing an amount of net
backwages and doing away with the protracted process of determining the complainants-workers'
earnings elsewhere during the period of their illegal dismissal, the Court fixes the amount of backwages
to be paid under this decision to the complainants-workers at three (3) years backwages without
deduction or qualification.

WHEREFORE, the decision appealed from is reversed and set aside and the company is hereby ordered
to immediately reinstate complainant workers, within thirty (30) days from notice of this decision and
failure to so reinstate the workers without valid and just cause shall make respondent company liable to
the workers for the payment of their wages from and after the expiration of such thirty-day period. The
mother federation respondent PAFLU is sentenced to pay complainants-workers the equivalent of three
(3) years backwages without deduction or qualification.

In view of the length of time that this dispute has been pending, this decision shall be immediately
executory upon promulgation and notice to the parties. Without pronouncement as to costs.

Castro (Chairman), Teehankee, Makasiar, Muñoz Palma and Martin, JJ., concur.
G.R. No. L-41288 January 31, 1977

PHILIPPINES LABOR ALLIANCE COUNCIL (PLAC), petitioner,

vs.
BUREAU OF LABOR RELATIONS, FEDERATION OF FREE WORKERS-ORION CHAPTER,
GERARDO ROSANA and ORION MANILA, INC. respondents.

Fortunato Gupit, Jr. for petitioner.

Solicitor General Estelito P Mendoza, Assistant Solicitor General Reynato S. Puno and Solicitor Romeo
C. de la Cruz for respondent Bureau of Labor Relations.

F. F. Bonifacio, Jr. for respondent Union and Gerardo Rosana.

Cesar C. Cruz & Associates for respondent Orion Manila,

FERNANDO, J:

It would be to frustrate the hopes that inspired the present Labor Code 1 to minimize judicial participation
in the solution of employer- employee disputes resort to the courts would remain unabated. Nevertheless,
in view of the certiorari jurisdiction of this Tribunal, 2 a grave abuse of discretion may be alleged as a
grievance thus calling for remedial action. So petitioner Philippine Labor Alliance Council did hope to
achieve in this certiorari and prohibition proceeding against respondent Bureau of Labor Relations. 3 It
would indict an order 4 for a certification election by respondent Bureau as tainted by a jurisdictional
infirmity in view of what is contended to be an existing duly certified collective bargaining contract
between it and private respondent Orion Manila, Inc., the employer. It would thus ignore the withdrawal in
the same order of such certification based on a finding that there was a failure on the part of the majority
of the employees in the bargaining unit to ratify the collective contract, renewed nine months before the
termination of the previous agreement. Apparently, the difficulty confronting it was due to the disaffiliation
of many of its members. The order complained of recognized that there was such a sentiment on the part
of sizable number of employees in the collective bargaining unit, thus making patent the desirability of
conducting a certification election. That was the method to determine the exclusive bargaining
representative followed even under the previous labor legislation . 5 It would thus appear rather obvious
that the attempt to impute arbitrariness to respondent Bureau cannot be attended with success. The
petition must be dismissed.

It was a detailed narration of facts set forth in the petition, starting with the allegation that there was a
renewal of the collective bargaining agreement with a union shop clause on March 9,1974 between
petitioner union and respondent company to last for another period of three (3) years incorporating
therein new economic benefits to expire on December 31, 1977. 6 The claim was that at that time it was
the only bargaining agent of the respondent company unchallenged by any labor organization. 7 Then
came the assertion that on May 27, 1974, with due notice to all the members of the petitioner union, and
with more than 1,500 of them present, such collective bargaining agreement was ratified by a unanimous
vote .8 It was then so certified by the former National Labor Relations Commission on June 4, 1974. 9 It
was further alleged that at the time of such certification, there was no pending request for union
recognition by any other labor organization with management.10 Thereafter, on June 20, 1974,
respondent Federation of Free Workers, setting forth that its members represent more than 60% out of
1,500 members, more or less, rank-and-file employees of respondent company, sought a certification
election. 11 Petitioner union, as could be expected, opposed such a move as in its view the collective
bargaining agreement entered into with the respondent company had been certified. 12 It was sustained,
the Secretary of Labor to whom an appeal was taken concurring with the former National Labor Relations
Commission affirming the dismissal of such petition for certification, on the ground of the existence of a
certified collective bargaining agreement.13That did not end the dispute, " respondent Federation on
January 15, 1975, filed a complaint with the respondent Bureau of Labor Relations, the present Labor
Code having become effective, alleging that some employees, numbering 848 in all, in a resolution
attached to the complaint disaffiliated from petitioner union and affiliated with it, characterizing the
certified agreement as having been entered into allegedly to thwart such disaffiliation and seeking a
declaration of the nullity thereof. 14 After both petitioner union and respondent Federation of Free Workers
had filed their pleadings, 15 the Med-Arbiter, on March 20, 1975, dismissed the complaint.16 There was a
motion for reconsideration, then an opposition.17 On April 8, 1975, respondent Bureau of Labor Relations
issued an order setting aside the certification of the collective bargaining agreement and ordering a
certification election within 20 days from receipt of the order, upon the following declaration: "In the instant
case, it is not disputed that the collective bargaining agreement certified by the National Labor Relations
Commission was not ratified by the majority of the employees within the bargaining unit. This is defective.
It is blatant non- observance of the basic requirement necessary to certification. ... With respect to the
complaint of the confirmation of disaffiliation of the members of respondent Philippine Labor Alliance
Council, the same should be resolved in the most expedient and simple method of determining the
exclusive bargaining representative—the holding of a certification election"18 There was a motion for
reconsideration as well as a verified urgent petition filed with the Secretary of Labor by respondent
Company, but the order was affirmed on July 31, 1975, the motion to consider being denied. 19

From the very petition with its annexes, it is undisputed that there was a finding in the challenged order by
respondent Bureau of Labor Relations of the non-ratification by the majority of the employees of the
certified collective bargaining agreement, thus calling for its decertification. It is also noteworthy that in the
comment of respondent labor union, considered as its answer, the allegation that there was such a
ratification was specifically denied. It cannot be taken as having proven. There is nothing in the
exhaustive memorandum of petitioner either that would justify the imputation that respondent Bureau, in
ordering decertification of the collective bargaining agreement with petitioner to be followed by a
certification election, committed a transgression of the present Labor Code, much less one of such
grievous character as to taint its actuation with a jurisdictional infirmity. It is quite apparent therefore that
with due recognition of the ability and scholarship evident in the pleadings of Attorney Fortunate Gupit, Jr.
for the petitioner, the attempt to invoke our certiorari jurisdiction cannot succeed.. 20 So it was noted at the
outset.

1. It is indisputable that the present controversy would not have arisen if there were no mass disaffiliation
from petitioning Union. Such a phenomenon is nothing new in the Philippine labor movement. 21 Nor is it
open to any legal objection. It is implicit in the freedom of association explicitly ordained by the
Constitution.22 There is then the incontrovertible right of any individual to join an organization of his
choice. That option belongs to him. A workingman is not to be denied that liberty. 23 He may be, as a
matter of fact, more in need of it if the institution of collective bargaining as an aspect of industrial
democracy is to succeed. No obstacle that may possible thwart the desirable objective of militancy in
labor's struggle for better terms and conditions is then to be placed on his way. Once the fact of
disaffiliation has been demonstrated beyond doubt, as in this case, a certification election is the most
expeditious way of determining which labor organization is to be the exclusive bargaining representative.
It is as simple as that. There is relevance to this excerpt from a recent decision, Philippine Association of
Free Labor Unions v. Bureau of Labor Relations: 24 "Petitioner thus appears to be woefully lacking in
awareness of the significance of a certification election for the collective bargaining process. It is the
fairest and most effective way of determining which labor organization can truly represent the working
force. It is a fundamental postulate that the will of the majority, if given expression in an honest election
with freedom on the part of the voters to make their choice, is controlling. No better device can assure the
institution of industrial democracy with the two parties to a business enterprise, managment and labor,
establishing a regime of self-rule. As was pointed out by Chief Justice Castro in Rivera v. San Miguel
Brewery Corporation, Inc., "a collective bargaining agreement is the law of the plant." To the same effect
is this explicit pronouncement in Mactan Workers Union v. Aboitiz: 'The terms and conditions of a
collective bargaining contract constitute the law between the parties.' What could be aptly stressed then,
as was done in Compania Maritima v. Compania Maritima Labor Union, is "the primacy to which the
decision reached by the employees themselves is entitled." Further, it was therein stated: 'That is in the
soundest tradition of industrial democracy. For collective bargaining implies that instead of a unilateral
imposition by management, the terms and conditions of employment should be the subject of negotiation
between it and labor. Thus the two parties indispensable to the economy are supposed to take care of
their respective interests. Moreover, the very notion of industrial self-rule negates the assumption that
what is good for either party should be left to the will of the other. On the contrary, there is an awareness
that labor can be trusted to promote its welfare through the bargaining process. To it then must be left the
choice of its agent for such purpose.' To paraphrase an observation of the recently retired Chief
Justice Makalintal in Seno v. Mendoza, it is essential that there be an agreement to govern the relations
between labor marked by confusion, with resulting breaches of the law by either party. There is, it would
appear, a decidedly unsympathetic approach to the institution of collective bargaining at war with what
has so often and so consistently decided by this Tribunal." 25

2. A different conclusion could have been reached had there been no qqqdecertification The contract-bar
rule could then be invoked by petitioner. It is, as pointed out by Justice Fernandez in Confederation of
Citizens Labor Unions v. National Labor Relations Commission, 26 "a principle in labor law that a
collective bargaining agreement of reasonable duration is, in the interest of the stability of industrial
relations, a bar to certification elections." 27 Even then, as was pointed out in the just-cited Philippine
Association of Free Labor Unions decision, it "is not to be applied with rigidity. ... The element of flexibility
in its operation cannot be ignored." 28 In this controversy, however, such a principle is not applicable. The
collective bargaining agreement entered into by petitioner with management on March 9, 1974 was
decertified in the chiallenged order of April 8, 1975 .29 The power to decertify by respondent Bureau is not
disputed. It was the exercise thereof that is now assailed. If done arbitrarily, there is valid ground for
complaint. The due process clause is a guarantee against any actuation of that sort. lt stands for fairness
and justice, That standard was not ignored. It suffices to read the petition to disprove any allegation of
such failing, whether in its procedural or substantive aspect. Petitioner was heard by respondent Bureau
before the order of decertification was issued on April 8, 1975. The denial of its motion for reconsideration
came also after it had an opportunity to present its side. Procedural due process was thus observed. Nor
was there any denial of substantive due process in the sense of such decertification being an act of
arbitrariness and caprice.

In the order of April 8, 1975, it was specifically pointed out; "In the instant case, it is not disputed that the
collective bargaining agreement certified by the National Labor Relations Commission was not ratified by
the majority of the employees within the bargaining unit. This is defective. It is blatant non-observance of
the basic requirement necessary to certification. To allow it to remain uncorrected would allow
circumvention of what the law specifically ordained. We cannot countenance irregularities of the highest
order to exist in our very own eyes to be perpetuated. With respect to the complaint of the confirmation of
disaffiliation of the members of respondent Philippine Labor Alliance counsel the same should be
resolved in the most expedient and simple method of determining the exclusive bargaining representative
— the holding of a certification election." 30 In the order denying the motion for reconsideration dated July
31, 1975, it was first noted: "On January 20, 1975, FFW and 848 Orion employees filed with the Bureau a
petition for the annulment of the 1974 collective bargaining agreement and for the confirmation of the
disaffiliation of the 848 employees from PLAC and their affiliation with FFW. The petition alleged among
others, that the new agreement was concluded about ten months before the expiry date of the old
purposely to defeat the right of the covered employees to choose their bargaining representative at the
proper time appointed by law. It appears, indeed, that there qqqas no urgency. for the premature
renegotiations considering that the new agreement provides for a 50-centavo salary increase effective yet
on January 1, 1976." 31 Then, there was further clarification of the decision reached as to the holding of a
certification election being the appropriate mode of solving the dispute: "With the decertification of the
collective agreement, the representation issue comes back to the fore. Petitioner wants this resolved by
ruling on the affiliation and disaffiliation of the union, The Bureau holds, however, that certification election
can better reolve the issue. parenthetically, it should be stated that a certification election can still be held
even if the collective agreement were certified, considering the peculiar facts of the case. Good policy and
equity demand that when an agreement is renegotiated before the appointed 60-day period, its
certification must still give way to any representation issue that may be raised within 60-day period so that
the right of employees to choose a bargaining unit agent and the right, of unions to be chosen shall be
preserved." 32

3. There is, finally, another insuperable obstacle success of this petition. There is no need for a citation of
authorities to show how well-settled and firmly-rooted is the doctrine of the well- nigh conclusive respect
for the findings of facts of administrative tribunals, leaving to the judiciary, in the ultimate analysis, this
Tribunal, to set forth the correct legal norm applicable to the controversy. With specific reference to the
agencies at present dealing with labor relations, there is this excerpt from Justice Aquino's opinion
in Antipolo Highway Lines, Inc. v. Inciong: 33 "A dispassionate scrutiny of the proceedings in the NLRC
does not sustain petitioners' view that they were denied due process and that the NLRC committed a
grave abuse of discretion. (See Maglasang v. Ople, L-38813, April 29, 1975 per Justice Fernando). We
found no justification for setting aside the factual findings of the NLRC, which like those of any other
administrative agency, are generally binding on the courts (Timbancaya v. Vicente. 62 O.G. 9424, 9
SCRA 852). " 34

WHEREFORE, this petition for certiorari and prohibition is dismissed. The restraining order issued by this
Court in its resolution of September 8, 1975 is hereby lifted. No costs.

Antonio, Aquino and Concepcion, Jr., JJ., concur.

G.R. No. 118562 July 5, 1996

ALLIANCE OF NATIONALIST AND GENUINE LABOR ORGANIZATION (ANGLO-KMU), petitioner,

vs.
SAMAHAN NG MGA MANGGAGAWANG NAGKAKAISA SA MANILA BAY SPINNING MILLS AT J.P.
COATS (SAMANA BAY), GILBERT SUNGAYANN, FERNANDO MELARPIS, ET AL), respondents.

RESOLUTION

FRANCISCO, J.:p

Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO for brevity) is a duly registered
labor organization while respondent union Samahan Ng Mga Manggagawang Nagkakaisa sa Manila Bay
Spinning Mills and J.P. Coats (SAMANA BAY for brevity) is its affiliate. In representation of SAMANA
BAY, ANGLO entered and concluded a Collective Bargaining Agreement (CBA) with Manila Bay Spinning
Mills and J.P. Coats Manila Bay, Inc. (hereinafter referred to as the corporations) on November 1, 1991.
On December 4, 1993, the Executive Committee of SAMANA BAY decided to disaffiliate from ANGLO in
view of the latter's dereliction of its duty to promote and advance the welfare of SAMANA BAY and the
alleged cases of corruption involving the federation officers. Said disaffiliation was unanimously confirmed
by the members of SAMANA BAY.

On April 4, 1994, a petition to stop remittance of federation dues to ANGLO was filed by SAMANA BAY
with the Bureau of Labor Relations on the ground that the corporations, despite having been furnished
copies of the union resolution relating to said disaffiliation, refused to honor the same. ANGLO counter-
acted by unseating all officers and board members of SAMANA BAY and appointing, in their stead, a new
set of officers who were duly recognized by the corporations.

In its position paper, ANGLO contended that the disaffiliation was void considering that a collective
bargaining agreement is still existing and the freedom period has not yet set in. The Med-Arbiter resolved
that the disaffiliation was void but upheld the illegality of the ouster of the officers of SAMANA BAY. Both
parties filed their respective appeals with the Department of Labor and Employment. In a resolution dated
September 23, 1994, herein public respondent modified the order and ruled in favor of respondent union,
disposing as follows:

WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack of merit while
the appeal of petitioners is hereby granted. Accordingly, the order of the Med-Arbiter is
modified by:

1) declaring the disaffiliation of petitioner union from respondent ANGLO as valid;

2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to stop remitting to
ANGLO federation dues and instead to remit the whole amount of union dues to the
treasurer of petitioner union; and

3) enjoining ANGLO-KMU from interfering in the affairs of petitioner union.

SO ORDERED.1

ANGLO filed a motion for reconsideration but the same was denied for lack of merit. Hence, this petition
for certiorari under Rule 65.
The petition calls upon us to resolve two issues, to wit:

1) whether the disaffiliation was valid; and

2) whether petitioner can validly oust individual private respondents from their positions.

We rule for the respondents.

For clarity, we shall first consider the issue respecting the validity of the disaffiliation.

Petitioner ANGLO wants to impress on us that the disaffiliation was invalid for two reasons,
namely: that the procedural requirements for a valid disaffiliation were not followed; and that it
was made in violation of P.D 1391.

Anent the first ground, we reiterate the rule that all employees enjoy the right to self-organization
and to form and join labor organizations of their own choosing for the purpose of collective
bargaining. This is a fundamental right of labor and derives its existence from the Constitution. In
interpreting the protection to labor and social justice provisions of the Constitution and the labor
laws, rules or regulations, we have always adopted the liberal approach which favors the exercise
of labor rights. 2

This Court is not ready to bend this principle to yield to a mere procedural defect, to wit: failure to
observe certain procedural requirements for a valid disaffiliation. Non-compliance with the
procedure on disaffiliation, being premised on purely technical grounds cannot rise above the
fundamental right of self-organization. 3

We quote, with approval, the findings of herein public respondent, that:

. . . the resolution of the general membership ratifying the disaffiliation action initiated by
the Board, substantially satisfies the procedural requirements for disaffiliation. No doubt
was raised on the support of the majority of the union members on the decision to
disaffiliate. 4

This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts inimical to the
interests of respondent union have not been sufficiently rebutted. It is clear under the facts that
respondent union's members have unanimously decided to disaffiliate from the mother federation
and ANGLO has nothing to offer in dispute other than the law prohibiting the disaffiliation outside
the freedom period.

In the same wise, We find no ground for ruling against the validity of the disaffiliation in the light of
recent jurisprudential rules.

Although P.D. 1391 provides:

Item No. 6. No petition for certification election, for intervention and disaffiliation shall be
entertained or given due course except within the 60-day freedom period immediately
preceeding the expiration of a collective bargaining agreement,

said law is definitely not without exceptions. Settled is the rule that a local union has the right to
disaffiliate from its mother union when circumstances warrant. 5 Generally, a labor union may
disaffiliate from the mother union to form a local or independent union only during the 60-day
freedom period immediately preceding the expiration of the CBA. However, even before the onset
 of the freedom period, disaffiliation may be carried out when there is a shift of allegiance on the
part of the majority of the members of the union. 6

Coming now to the second issue, ANGLO contends that individual private respondents were
validly ousted as they have ceased to be officers of the incumbent union (ANGLO-KMU) at the
time of disaffiliation. In order to fill the vacuum, it was deemed proper to appoint the individual
replacements so as not to put in disarray the organizational structure and to prevent chaos and
confusion among the general membership and within the company.

The contention is bereft of merit. A local labor union is a separate and distinct unit primarily
designed to secure and maintain an equality of bargaining power between the employer and their
employee-members. A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the will of its
members. 7 The mere act of affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently of the local union. It
only gives rise to a contract of agency 8 where the former acts in representation of the latter.

By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously bound the two entities
was completely severed. ANGLO was divested of any and all power to act in representation of
SAMANA BAY. Thus, any act performed by ANGLO affecting the interests and affairs of
SAMANA BAY, including the ouster of herein individual private respondent, is rendered without
force and effect.

WHEREFORE, premises considered, the petition is hereby DISMISSED.

Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.