however, limited.

The legal protection granted to such right to

fRight to Self-Organization refrain from joining is withdrawn by operation of law, where a
labor union and an employer have agreed on a closed
The right to self-organization includes the right to: shop, by virtue of which the employer may employ only
1. Form, join, or assist labor organizations of their own member of the collective bargaining union, and the employees
choosing for purposes of collective bargaining. (Art. must continue to be members of the union for the duration of
253 Labor Code) the contract in order to keep their jobs.

Art. 253 [243]. Coverage and employees’ right to self- Thus Section 4 (a) (4) of the Industrial Peace Act, before its
organization. All persons employed in commercial, amendment by Republic Act No. 3350, provides that although it
industrial and agricultural enterprises and in religious, would be an unfair labor practice for an employer to
charitable, medical, or educational institutions, whether discriminate in regard to hire or tenure of employment or any
operating for profit or not, shall have the right to self- term or condition of employment to encourage or discourage
organization and to form, join, or assist labor organizations membership in any labor organization the employer is,
of their own choosing for purposes of collective however, not precluded from making an agreement with a
bargaining. labor organization to require as a condition of employment
membership therein, if such labor organization is the
2. Not to join any union. representative of the employees".

Victoriano vs. Elizalde Rope Workers’ Union By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless
Freedom of association of his religious beliefs, wishes to be employed or to keep his
Both the Constitution and Republic Act No. 875 (Repealed by employment, he must become a member of the collective
P.D 442 or the Labor Code) recognize freedom of association. bargaining union. Hence, the right of said employee not to
Section 1 (6) of Article III of the Constitution of 1935, as well as join the labor union is curtailed and withdrawn.
Section 7 of Article IV of the Constitution of 1973, provide that
the right to form associations or societies for purposes not To that all-embracing coverage of the closed shop
contrary to law shall not be abridged. arrangement, Republic Act No. 3350 introduced an exception,
when it added to Section 4 (a) (4) of the Industrial Peace Act
Right to self-organization the following proviso: "but such agreement shall not cover
Section 3 of Republic Act No. 875 provides that employees members of any religious sects which prohibit affiliation of their
shall have the right to self-organization and to form, join of members in any such labor organization".
assist labor organizations of their own choosing for the purpose
of collective bargaining and to engage in concerted activities Exception to the closed shop agreement
for the purpose of collective bargaining and other mutual aid or Republic Act No. 3350 merely excludes ipso jure from the
protection. application and coverage of the closed shop agreement
the employees belonging to any religious sects which
What the Constitution and the Industrial Peace Act recognize prohibit affiliation of their members with any labor
and guarantee is the "right" to form or join associations. organization. What the exception provides, therefore, is that
Notwithstanding the different theories propounded by the members of said religious sects cannot be compelled or
different schools of jurisprudence regarding the nature and coerced to join labor unions even when said unions have
contents of a "right", it can be safely said that whatever theory closed shop agreements with the employers; that in spite of
one subscribes to, a right comprehends at least two broad any closed shop agreement, members of said religious sects
notions, namely: first, liberty or freedom, i.e., the absence cannot be refused employment or dismissed from their jobs on
of legal restraint, whereby an employee may act for himself the sole ground that they are not members of the collective
without being prevented by law; and second, power, whereby bargaining union.
an employee may, as he pleases, join or refrain from
Joining an association. It is clear, therefore, that the assailed Act, far from infringing
the constitutional provision on freedom of association, upholds
It is, therefore, the employee who should decide for and reinforces it. It does not prohibit the members of said
himself whether he should join or not an association; and religious sects from affiliating with labor unions. It still
should he choose to join, he himself makes up his mind as to leaves to said members the liberty and the power to
which association he would join; and even after he has joined, affiliate, or not to affiliate, with labor unions. If,
he still retains the liberty and the power to leave and cancel his notwithstanding their religious beliefs, the members of said
membership with said organization at any time. religious sects prefer to sign up with the labor union, they can
do so.
It is clear, therefore, that the right to join a union includes
the right to abstain from joining any union. Inasmuch as If in deference and fealty to their religious faith, they refuse to
what both the Constitution and the Industrial Peace Act have sign up, they can do so; the law does not coerce them to join;
recognized, and guaranteed to the employee, is the "right" to neither does the law prohibit them from joining; and neither
join associations of his choice, it would be absurd to say that may the employer or labor union compel them to join. Republic
the law also imposes, in the same breath, upon the employee Act No. 3350, therefore, does not violate the constitutional
the duty to join associations. The law does not enjoin an provision on freedom of association.
employee to sign up with any association.
Abo, et. al vs. PHILAME (KG) Employees Union
Close shop agreement
The right to refrain from joining labor organizations It should be noted in this connection that Section 3 of our
recognized by Section 3 of the Industrial Peace Act is, Industrial Peace Act was taken from Section 7 of the Wagner

Erika Cristel Diaz | LABOR RELATIONS

 Act. This Wagner Act provision was amended in 1947 by the is due to misrepresentation, false statement or fraud under
Taft-Hartley Act, so that, as it now stands, Section 7 reads: the circumstances enumerated in Sections (a) and (c) of Article
23915 of the Labor Code.
Employees shall have the right to self-organization, to form,
join, or assist labor organizations to bargain collectively Clearly then, for the purpose of de-certifying a union, it is not
through representatives of their own choosing, and to engage enough to establish that the rank-and-file union includes
in concerted activities for the purpose of collective bargaining ineligible employees in its membership. Pursuant to Article
or other mutual aid or protection, and shall also have the 239(a) and (c) of the Labor Code, it must be shown that there
right to refrain from any or all of such activities except to was misrepresentation, false statement or fraud in connection
the extent that such right may be affected by an with the adoption or ratification of the constitution and by-laws
agreement requiring membership in a labor organization or amendments thereto, the minutes of ratification, or in
as a condition of employment as authorized in section connection with the election of officers, minutes of the election
8(a). of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected-appointed
The italicized portions represent the amendment. According to officers and their postal addresses to the BLR.
Teller, the amendment as to refraining from joining activities is
nothing more than a statement of what the National Labor In its Petition for De-certification and Cancellation of Union
Relations Board should have held under the original law. Registration, APC did not impute on APFLAA such
misrepresentation of the character necessitated under Article
According to Rothenberg, although the latter right of 239 (a) and (c) of the Labor Code. APC merely argued that
abstention from union affiliation was not contained in the APFLAA was not qualified to become a legitimate labor
original Act and was newly introduced in the legislative form by organization by reason of its mixed composition of rank-
the amended Act, this right was freely recognized by the and-file and supervisory employees; and that APFLAA
courts prior to the enactment of the amended Act. It has committed misrepresentation by making it appear that its
long been held that in making their choice, whatever it be, composition was composed purely of rank-and-file employees.
whether to join an existing affiliated or unaffiliated union, or to
form a new union, or in choosing to abstain from joining or Such misrepresentation (if it can be called as such) as alleged
aiding any union, the employees are entitled to the full by APC, is not conformable to Article 239 (a) and (c) of the
protection of the Act. Labor Code. Indeed, it appears from the record that APC
instead devoted the bulk of its arguments in establishing that
3. Vote by 2/3 majority of the general membership to supervisory employees comprised part of the membership of
cancel the registration of its union in a meeting duly APFLAA, a ground which is not sufficient to cause the
called for the purpose. (Art. 248 Labor Code) cancellation of union registration.

Art. 248. [239-A]. Voluntary Cancellation of Registration. And this is of course all under the assumption that Lead Cabin
The registration of a legitimate labor organization may be Attendants are indeed supervisory employees, a claim
cancelled by the organization itself: Provided, That at least consistently denied by APFLAA and which was not confirmed
2/3 of its general membership votes, in a meeting duly by either the DOLE-NCR or the BLR.
called for that purpose to dissolve the organization:
Provided, further, That an application to cancel registration There may be remedies available to enforce the proscription
is thereafter submitted by the board of the organization, set forth in Article 245 of the Labor Code on supervisory
attested to by the president thereof. employees joining the union of rank-and-file employees. But
consistent with jurisprudence, the rule under Article 245
- The cancellation of registration is with or without just barring supervisory employees from joining the union of
cause by 2/3 general membership votes. rank-and-file employees is not a ground for cancellation of
union registration. Accordingly, we see no error on the part of
4. File a petition for cancellation of union registration the DOLE-NCR and the BLR in having dismissed APC’s
and or/de-certification of the union on the grounds petition, and thus no cause to compel the Court of Appeals to
provided by law. (Art. 247 Labor Code) disregard APC’s procedural errors and accept the petition for
certiorari.
Art. 247. [239] Grounds for Cancellation of Union
Registration. The following may constitute grounds for Employees in the Private Sector
cancellation of union registration:
a. Misrepresentation, false statement or fraud in 1. Managerial employees;
connection with the adoption or ratification of the 2. Supervisory employees;
constitution and by-laws or amendments thereto, the 3. Confidential employees; and
minutes of ratification, and the list of members who took 4. Rank-and-File employees.
part in the ratification;
b. Misrepresentation, false statements or fraud in
connection with the election of officers, minutes of the
Managerial employees
election of officers, and the list of voters; Art. 255. [245] Ineligibility of Managerial Employees to
c. Voluntary dissolution by the members. Join any Labor Organization; Right of Supervisory
Employees. – Managerial employees are not eligible to join,
Air Phils Corporation vs. BLR assist or form any labor organization.

Supervisory employees shall not be eligible for membership

The inclusion in a union of disqualified employees is not
in the collective bargaining unit of the rank-and-file
among the grounds for cancellation, unless such inclusion
employees but may join, assist or form separate collective

Erika Cristel Diaz | LABOR RELATIONS

 bargaining units and/or legitimate labor organizations of
their own. Significantly, the Industrial Peace Act did not define a
manager or managerial employee. It defined a
The rank and file union and the supervisors' union operating "supervisor" but not a "manager." Thus:
within the same establishment may join the same federation
or national union. Sec. 2. (k) "Supervisor" means any person having authority
in the interest of an employer, to hire, transfer, suspend, lay-
Managerial employees in labor standards law off, recall, discharge, assign, recommend, or discipline other
Art. 82. Coverage. – The provisions of this Title shall apply employees, or responsibly to direct them, and to adjust their
to employees in all establishments and undertakings grievances, or effectively to recommend such acts, if, in
whether for profit or not, but not to government employees, connection with the foregoing, the exercise of such authority is
managerial employees, field personnel, members of the not of a merely routinary or clerical nature but requires the use
family of the employer who are dependent on him for of independent judgment.
support, domestic helpers, persons in the personal service
of another, and workers who are paid by results as The Industrial Peace Act was repealed in 1975 by P.D. 442,
determined by the Secretary of Labor in appropriate the Labor Code of the Philippines. The Labor Code changed
regulations. existing jurisprudence when it prohibited supervisory and
managerial employees from joining labor organizations.
As used herein, "managerial employees” refer to those Supervisory unions were no longer recognized nor allowed to
whose primary duty consists of the management of the exist and operate as such.
establishment in which they are employed or of a
department or subdivision thereof, and to other officers or Article 246 of the Labor Code expressly prohibited
members of the managerial staff. xxx managerial employees from forming, assisting and joining
labor organizations, to wit:
Managerial employee in labor relations vis-a-vis in Art. 246. Ineligibility of managerial employees to join any
labor standards labor organization. — Managerial employees are not eligible
- In labor standards laws, supervisors are included in the to join, assist or form any labor organization.
category of managerial employee. They are not entitled to
overtime pay. They are not entitled to the different benefits In the same Bulletin case, the Court applied Article 246 and
that are proper to a rank-and-file employee. held that managerial employees are the very type of
- In labor relations, a managerial employee is much employees who, by the nature of their positions and functions,
narrower. A managerial employee cannot exercise right to have been decreed disqualified from bargaining with
self-organization. management.
- Whereas supervisory employees in labor relations may
exercise a limited right to self-organization. This prohibition is based on the rationale that if managerial
- They can form their own union and belong to that limited employees were to belong or be affiliated with a union, the
bargaining unit composed only of supervisors. They union might not be assured of their loyalty in view of
cannot join the union of rank and file employees. evident conflict of interest or that the union can be
company-dominated with the presence of managerial
United Pepsi Cola Supervisory Union vs. Laguesma employees in the union membership.

Historical development of the Labor Relations In the collective bargaining process, managerial employees
Labor-management relations in the Philippines were first are supposed to be on the side of the employer, to act as
regulated under the Industrial Peace Act which took effect in its representative, and to see to it that its interests are well
1953. Hailed as the Magna Carta of Labor, it was modelled protected. The employer is not assured of such protection if
after the NLRA and LMRA of the United States. Most of the these employees themselves become union members.
basic principles of the NLRA have been carried over to the
Industrial Peace Act and the Labor Code. This is significant The prohibition on managerial employees to join, assist or form
because we have ruled that where our labor statutes are based labor organizations was retained in the Labor Code despite
on statutes in foreign jurisdiction, the decisions of the high substantial amendments made in 1989 by R.A. 6715, the
courts in those jurisdictions construing and interpreting the Act Herrera-Veloso Law. R.A. 6715 was passed after the effectivity
are given persuasive effects in the application of Philippine law. of the 1987 Constitution and this law did not abrogate, much
less amend the prohibition on managerial employees to join
The Industrial Peace Act did not carry any provision labor organizations.
prohibiting managerial employees from joining labor
organizations. Section 3 of said law merely provided: The express prohibition in Article 246 remained. However, as
an addendum to this same Article, R.A. 6715 restored to
Sec. 3. Employees' Right to Self-Organization. — Employees supervisory employees the right to join labor
shall have the right to self-organization and to form, join or organizations of their own.
assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of Article 246 now reads:
their own choosing and to engage in concerted activities for Art. 246. Ineligibility of managerial employees to join any
the purpose of collective bargaining and other mutual aid and labor organization; right of supervisory employees. —
protection. Individuals employed as supervisors shall not be Managerial employees are not eligible to join, assist or form
eligible for membership in a labor organization of employees any labor organization. Supervisory employees shall not be
under their supervision but may form separate organizations of eligible for membership in a labor organization of the
their own.

Erika Cristel Diaz | LABOR RELATIONS

 rank-and-file employees but may join, assist or form In the collective bargaining process, managerial employees are
separate labor organizations of their own. supposed to be on the side of the employer, to act as its
representatives, and to see to it that its interests are well
Right of association reiterated in the Labor Code protected. The employer is not assured of such protection if
The right of association flows from freedom of expression. Like these employees themselves are union members. Collective
the right of expression, the exercise of the right of association bargaining in such a situation can become one-sided.
is not absolute. It is subject to certain limitations.
It is the same reason that impelled this Court to consider the
Article 243 of the Labor Code reiterates the right of association position of confidential employees as included in the
of people in the labor sector. Article 243 provides: disqualification found in Article 245 as if the disqualification of
confidential employees were written in the provision. If
Art. 243. Coverage of employees' right to self- confidential employees could unionize in order to bargain for
organization. — All persons employed in commercial, advantages for themselves, then they could be governed by
industrial and agricultural enterprises and in religious, their own motives rather than the interest of the employers.
charitable, medical, or educational institutions whether
operating for profit or not, shall have the right to self- Moreover, unionization of confidential employees for the
organization and to form, join, or assist labor organizations of purpose of collective bargaining would mean the extension of
their own choosing for purposes of collective bargaining. the law to persons or individuals who are supposed to act "in
Ambulant, intermittent and itinerant workers, self-employed the interest of" the employers. It is not farfetched that in the
people, rural workers and those without any definite employers course of collective bargaining, they might jeopardize that
may form labor organizations for their mutual aid and interest which they are duty-bound to protect.
protection.
The disqualification of managerial employees extends only
Exceptions to the right to self-organization to labor organizations
Article 243 guarantees the right to self-organization and It must be noted that Article 245 of the Labor Code deprives
association to "all persons." This seemingly all-inclusive managerial employees of their right to join "labor
coverage of "all persons," however, actually admits of organizations."
exceptions:
A labor organization is defined under the Labor Code as:
1. Article 244 of the Labor Code mandates that all Art. 212 (g). "Labor organization" means any union or
employees in the civil service, i.e, those not employed in association of employees which exists in whole or in part for
government corporations established under the the purpose of collective bargaining or of dealing with the
Corporation Code, may only form associations but may employer concerning terms and conditions of employment.
not collectively bargain on terms and conditions fixed
by law. A labor organization has two broad rights:
(1) to bargain collectively; and
2. An employee of a cooperative who is a member and (2) to deal with the employer concerning terms and conditions
co-owner thereof cannot invoke the right of collective of employment.
bargaining and negotiation vis-a-vis the cooperative. An
owner cannot bargain with himself or his co-owners. To bargain collectively is a right given to a labor organization
once it registers itself with the Department of Labor and
3. Employees in foreign embassies or consulates or in Employment (DOLE).
foreign international organizations granted international
immunities are also excluded from the right to form labor Dealing with the employer, on the other hand, is a generic
organizations. description of interaction between employer and employees
concerning grievances, wages, work hours and other terms
International organizations are organized mainly as a and conditions of employment, even if the employees' group is
means for conducting general international business in not registered with the DOLE.
which the member-states have an interest and the
immunities granted them shield their affairs from political Any labor organization which may or may not be a union may
pressure or control by the host country and assure the deal with the employer. This explains why a workers'
unimpeded performance of their functions. Organization does not always have to be a labor union and
why employer-employee collective interactions are not always
4. Confidential employees have also been denied the right collective bargaining.
to form labor-organizations. Confidential employees do not
constitute a distinct category for purposes of In the instant case, it may be argued that managerial
organizational right. Confidentiality may attach to a employees' labor organization will merely deal with the
managerial or non-managerial position. employer concerning terms and conditions of employment
especially when top management is composed of aliens,
We have, however, excluded confidential employees from following the circumstances in the Caltex case.
joining labor organizations following the rationale behind
the disqualification of managerial employees in Article 245. Although the labor organization may exist wholly for the
purpose of dealing with the employer concerning terms and
conditions of employment, there is no prohibition in the Labor
In the case of National Association of Trade Unions- Code for it to become a legitimate labor organization and
Republic Planters' Bank Supervisors we held: engage in collective bargaining.
Once a labor organization registers with the DOLE and
becomes legitimate, it is entitled to the rights accorded under

Erika Cristel Diaz | LABOR RELATIONS

 Articles 242 and 263 (b) of the Labor Code. And these include members, huge amounts of money due to them or to the
the right to strike and picket. organization.

Notably, however, Article 245 does not absolutely disqualify For the same reasons, said Section 23 does not impinge upon
managerial employees from exercising their right of the right of organization guaranteed in the Declaration of
association. What it prohibits is merely the right to join Human Rights, or run counter to Articles 2, 4, 7 and Section 2
labor organizations. Managerial employees may form of Article 8 of the ILO-Convention No. 87, which provide that
associations or organizations so long as they are not labor workers and employers, shall have the right to establish
organizations. The freedom of association guaranteed under and ..join organizations of their own choosing, without previous
the Constitution remains and has not been totally abrogated by authorization; that workers and employers organizations shall
Article 245. not be liable to be dissolved or suspended by administrative
authority"; that "the acquisition of legal personality by workers'
Article 245 of the Labor Code is constitutional and employers' organizations shall not be made subject to
To declare Article 245 of the Labor Code unconstitutional cuts conditions of such a character as to restrict the application of
deep into our existing industrial life and will open the floodgates the provisions" above mentioned; and that "the guarantees
to unionization at all levels of the industrial hierarchy. Such a provided for in" said Convention shall not be impaired by the
ruling will wreak havoc on the existing set-up between law of the land.
management and labor.
There is no incompatibility between Republic Act No. 875 and
If all managerial employees will be allowed to unionize, then all the Universal Declaration of Human Rights. Upon the other
who are in the payroll of the company, starting from the hand, the cancellation of the SSSEA's registration
president, vice-president, general managers and everyone, certificate would not entail a dissolution of said
with the exception of the directors, may go on strike or picket association or its suspension. The existence of the SSSEA
the employer. would not be affected by said cancellation, although its juridical
personality and its statutory rights and privileges — as
Company officers will join forces with the supervisors and rank- distinguished from those conferred by the Constitution —
and-file. Management and labor will become a solid phalanx would be suspended thereby.
with bargaining rights that could be enforced against the owner
of the company. The basic opposing forces in the industry will Franklin Baker vs. Trajano
not be management and labor but the operating group on the
one hand and the stockholder and bondholder group on the Test of supervisory or managerial status
other. The industrial problem defined in the Labor Code comes The test of supervisory or managerial status depends on
down to a contest over a fair division of the gross receipts of whether a person possesses authority to act in the interest
industry between these two groups. And this will certainly bring of his employer in the matter specified in Article 212(k) of the
ill-effects on our economy. Labor Code and Section 1(m) of its Implementing Rules and
whether such authority is not merely routinary or clerical in
PAFLU vs. Secretary nature but requires the use of independent judgment.

Freedom of assembly and association may be exercised Thus, where such recommendatory powers as in the case at
without registration bar, are subject to evaluation, review and final action by the
The theory to the effect that Section 23 of Republic Act No. 875 department heads and other higher executives of the company,
unduly curtails the freedom of assembly and association the same, although present, are not effective and not an
guaranteed in the Bill of Rights is devoid of factual basis. The exercise of independent judgment as required by law.
registration prescribed in paragraph (b) of said section 1 is not
a limitation to the right of assembly or association, which may It will be noted, however, that in the performance of their duties
be exercised with or without said registration. and functions and in the exercise of their recommendatory
powers, subject employees may only recommend, as the
The latter is merely a condition sine qua non for the acquisition ultimate power to hire, fire or suspend as the case may be,
of legal personality by labor organizations, associations or rests upon the plant personnel manager.
unions and the possession of the rights and privileges granted
by law to legitimate labor organizations. The Constitution does Furthermore, in line with the ruling of this Court, subject
not guarantee these rights and privileges, much less said employees are not managerial employees because as borne
personality, which are mere statutory creations, for the by the records, they do not participate in policy making but
possession and exercise of which registration is required to are given ready policies to execute and standard practices
protect both labor and the public against abuses, fraud, or to observe, thus having little freedom of action.
impostors who pose as organizers, although not truly
accredited agents of the union they purport to represent. Petitioner's contention that the Director of the Bureau of Labor
Relations acted with abuse of discretion amounting to lack of
Such requirement is a valid exercise of the police power, jurisdiction in holding that the 76 employees are not managerial
because the activities in which labor organizations, employees and must be included in the certification election
associations and union of workers are engaged affect public has no basis in fact and in law.
interest, which should be protected.
Neither is its contention that the use of the word's "and/or"
Furthermore, the obligation to submit financial statements, as a categorically shows that performance of the functions
condition for the non-cancellation of a certificate of registration, enumerated in the law qualifies an employee as a managerial
is a reasonable regulation for the benefit of the members of the employee.
organization, considering that the same generally solicits funds
or membership, as well as oftentimes collects, on behalf of its

Erika Cristel Diaz | LABOR RELATIONS

 Even if We regard the employees concerned as "managerial Neither do the Branch Managers, Cashiers and Controllers
employees," they can still join the union of the rank and file have the power to hire, transfer, suspend, lay off, recall,
employees. They cannot however form their own exclusive discharge, assign or discipline employees. The Senior
union as "managerial employees". Manager of the Human Resource Management Department of
respondent Bank stated that the power to hire, fire, suspend,
Managerial employee transfer, assign or otherwise impose discipline among
A managerial employee is defined as one who is vested with subordinates within their respective jurisdictions is lodged with
powers or prerogatives to lay down and execute management the heads of the various departments, the branch managers
policies and/or to hire, transfer, suspend, lay-off, recall, and officers-in-charge, the branch cashiers and the branch
discharge, assign or discipline employees, or to effectively controllers.
recommend such managerial actions.
Inherent as it is in the aforementioned positions, the authority
Confidential employees to hire, fire, suspend, transfer, assign or otherwise discipline
employees within their respective domains was deemed
Republic Planters Bank Supervisors Chapter vs. unnecessary to be incorporated in their individual job
Secretary descriptions. Clearly, those officials or employees possess only
recommendatory powers subject to evaluation, review and final
Art. 212, par.(m), of the Labor Code is explicit. A managerial action by higher officials.
employee is (a) one who is vested with powers or prerogatives
to lay down and execute management policies, or to hire, We analyzed the evidence submitted by respondent Bank in
transfer, suspend, lay off, recall, discharge, assign or discipline support of its claim that Department Managers are managerial
employees; or (b) one who is vested with both powers or employees and concluded that they are not. Like Branch
prerogatives. Managers, Cashiers and Controllers, Department Managers
do not possess the power to lay down policies nor to hire,
transfer, suspend, lay off, recall, discharge, assign or
A supervisory employee is different from a managerial discipline employees.
employee in the sense that the supervisory employee, in the
interest of the employer, effectively recommends such They occupy supervisory positions, charged with the duty
managerial actions, if the exercise of such managerial authority among others to recommend proposals to improve and
is not routinary in nature but requires the use of independent streamline operations. With respect to Assistant Managers,
judgment. there is absolutely no evidence submitted to substantiate public
respondent's finding that they are managerial employees;
Branch Managers, Cashiers and Controllers of respondent understandably so, because this position is not included in the
Bank are not managerial employees but supervisory appeal of respondent Bank.
employees. The finding of public respondent that bank policies
are laid down and/or executed through the collective action of Confidential employees are disqualified to join any labor
these employees is simply erroneous. His discussion on the organization by doctrine of necessary implication
division of their duties and responsibilities does not logically As regards the other claim of respondent Bank that Branch
lead to the conclusion that they are managerial employees, as Managers/OICs, Cashiers and Controllers are confidential
the term is defined in Art. 212, par.(m). employees, having control, custody and/or access to
confidential matters, e.g., the branch's cash position,
Among the general duties and responsibilities of a Branch statements of financial condition, vault combination, cash
Manager is to discharge his duties and authority with a high codes for telegraphic transfers, demand drafts and other
sense of responsibility and integrity and shall at all times be negotiable instruments, pursuant to Sec. 116 of the Central
guided by prudence like a good father of the family, and sound Bank Manual regarding joint custody, this claim is not even
judgment in accordance with and within the limitations of the disputed by petitioner.
policy/policies promulgated by the Board of Directors and
implemented by the Management until suspended, A confidential employee is one entrusted with confidence on
superseded, revoked or modified. delicate matters, or with the custody, handling, or care and
protection of the employer's property. While Art. 245 of the
Similarly, the job summary of a Controller states: "Supervises Labor Code singles out managerial employees as ineligible to
the Accounting Unit of the branch; sees to the compliance by join, assist or form any labor organization, under the doctrine of
the Branch with established procedures, policies, rules and necessary implication, confidential employees are similarly
regulations of the Bank and external supervising authorities; disqualified. This doctrine states that what is implied in a
sees to the strict implementation of control procedures. statute is as much a part thereof as that which is expressed.

The job description of a Cashier does not mention any In applying the doctrine of necessary implication, we took into
authority on his part to lay down policies, either. On the basis consideration the rationale behind the disqualification of
of the foregoing evidence, it is clear that subject employees do managerial employees. If these managerial employees would
not participate in policy-making but are given approved belong to or be affiliated with a Union, the latter might not be
and established policies to execute and standard practices assured of their loyalty to the Union in view of evident conflict
to observe, leaving little or no discretion at all whether to of interests.
implement said policies or not. It is the nature of the
employee's functions, and not the nomenclature or title given to The Union can also become company-dominated with the
his job, which determines whether he has rank-and-file, presence of managerial employees in Union membership."
supervisory or managerial status. Stated differently, in the collective bargaining process,
managerial employees are supposed to be on the side of the
employer, to act as its representatives, and to see to it that its

Erika Cristel Diaz | LABOR RELATIONS

 interests are well protected. The employer is not assured of Earlier, in Pier Arrastre & Stevedoring Services, Inc. v. Roldan-
such protection if these employees themselves are union Confesor, we declared that legal secretaries who are tasked
members. Collective bargaining in such a situation can with, among others, the typing of legal documents, memoranda
become one-sided. and correspondence, the keeping of records and files, the
giving of and receiving notices, and such other duties as
It is the same reason that impelled this Court to consider the required by the legal personnel of the corporation, fall under
position of confidential employees as included in the the category of confidential employees and hence excluded
disqualification found in Art. 245 as if the disqualification of from the bargaining unit composed of rank-and-file employees.
confidential employees were written in the provision. If
confidential employees could unionize in order to bargain for Also considered having access to "vital labor information" are
advantages for themselves, then they could be governed by the executive secretaries of the General Manager and the
their own motives rather than the interest of the employers. executive secretaries of the Quality Assurance Manager,
Product Development Manager, Finance Director,
Moreover, unionization of confidential employees for the Management System Manager, Human Resources Manager,
purpose of collective bargaining would mean the extension of Marketing Director, Engineering Manager, Materials Manager
the law to persons or individuals who are supposed to act in and Production Manager.
the interest of the employers. It is not farfetched that in the
course of collective bargaining, they might jeopardize that As can be gleaned from the above listing, it is rather curious
interest which they are duty-bound to protect. that there would be several secretaries/clerks for just one (1)
department/division performing tasks which are mostly routine
Confidential employees such as accounting personnel, radio and clerical. Respondent insisted they fall under the
and telegraph operators who, having access to confidential "Confidential and Executive Secretaries" expressly excluded by
information, may become the source of undue advantage. Said the CBA from the rank-and-file bargaining unit.
employees may act as spy or spies of either party to a
collective bargaining agreement. Secretaries and clerks
However, perusal of the job descriptions of these
In fine, only the Branch Managers/OICs, Cashiers and secretaries/clerks reveals that their assigned duties and
Controllers of respondent Bank, being confidential responsibilities involve routine activities of recording and
employees, are disqualified from joining or assisting monitoring, and other paper works for their respective
petitioner Union, or joining, assisting or forming any other departments while secretarial tasks such as receiving
labor organization. But this ruling should be understood to telephone calls and filing of office correspondence appear to
apply only to the present case based on the evidence of the have been commonly imposed as additional duties.
parties, as well as to those similarly situated. It should not be Respondent failed to indicate who among these numerous
understood in any way to apply to banks in general. secretaries/clerks have access to confidential data relating
to management policies that could give rise to potential
Tunay na Pagkakaisa ng Mangggawa sa Asia Brewery conflict of interest with their Union membership. Clearly,
vs. Asia Brewery Inc. the rationale under our previous rulings for the exclusion of
executive secretaries or division secretaries would have little or
Although Article 245 of the Labor Code limits the ineligibility to no significance considering the lack of or very limited access to
join, form and assist any labor organization to managerial confidential information of these secretaries/clerks.
employees, jurisprudence has extended this prohibition to
confidential employees or those who by reason of their It is not even farfetched that the job category may exist only on
positions or nature of work are required to assist or act in a paper since they are all daily-paid workers. Quite
fiduciary manner to managerial employees and hence, are understandably, petitioner had earlier expressed the view that
likewise privy to sensitive and highly confidential records. the positions were just being "reclassified" as these employees
actually discharged routine functions. We thus hold that the
Confidential employees are thus excluded from the rank-and- secretaries/clerks, numbering about 40 are rank-and-file
file bargaining unit. The rationale for their separate category employees and not confidential employees.
and disqualification to join any labor organization is similar to
the inhibition for managerial employees because if allowed to Quality control staff
be affiliated with a Union, the latter might not be assured of With respect to the Sampling Inspectors/Inspectresses and
their loyalty in view of evident conflict of interests and the the Gauge Machine Technician, there seems no dispute that
Union can also become company-denominated with the they form part of the Quality Control Staff who, under the
presence of managerial employees in the Union membership. express terms of the CBA, fall under a distinct category. But we
disagree with respondent’s contention that the 20 checkers are
Having access to confidential information, confidential similarly confidential employees being "quality control staff"
employees may also become the source of undue advantage. entrusted with the handling and custody of company properties
Said employees may act as a spy or spies of either party to a and sensitive information.
collective bargaining agreement.16
Again, the job descriptions of these checkers assigned in the
In Philips Industrial Development, Inc. v. NLRC, this Court held storeroom section of the Materials Department, finishing
that petitioner’s "division secretaries, all Staff of General section of the Packaging Department, and the decorating and
Management, Personnel and Industrial Relations Department, glass sections of the Production Department plainly showed
Secretaries of Audit, EDP and Financial Systems" are that they perform routine and mechanical tasks preparatory
confidential employees not included within the rank-and-file to the delivery of the finished products.
bargaining unit.
While it may be argued that quality control extends to post-
production phase -- proper packaging of the finished products

Erika Cristel Diaz | LABOR RELATIONS

 -- no evidence was presented by the respondent to prove that organization, nor have thereby demonstrated an anti-union
these daily-paid checkers actually form part of the company’s stance.
Quality Control Staff who as such were exposed to sensitive,
vital and confidential information about company’s products" Supervisory employees
or "have knowledge of mixtures of the products, their defects,
and even their formulas" which are considered ‘trade secrets’. Toyota Motors vs. TMPCLU
Such allegations of respondent must be supported by
evidence. Appropriate bargaining unit
According to Rothenberg, an appropriate bargaining unit is a
Consequently, we hold that the 20 checkers may not be group of employees of a given employer, composed of all or
considered confidential employees under the category of less than the entire body of employees, which the collective
Quality Control Staff who were expressly excluded from the interests of all the employees, consistent with equity to the
CBA of the rank-and-file bargaining unit. employer indicate to be best suited to serve reciprocal rights
and duties of the parties under the collective bargaining
Confidential employees are defined as those who: provisions of law.
(1) assist or act in a confidential capacity;
(2) to persons who formulate, determine, and effectuate We defined the bargaining unit as the legal collectivity for
management policies in the field of labor relations. collective bargaining purposes whose members have
substantially mutual bargaining interests in terms and
The 2 criteria are cumulative, and both must be met if an conditions of employment as will assure to all employees their
employee is to be considered a confidential employee – that is, collective bargaining rights. This in mind, the Labor Code has
the confidential relationship must exist between the employee made it a clear statutory policy to prevent supervisory
and his supervisor, and the supervisor must handle the employees from joining labor organizations consisting of rank-
prescribed responsibilities relating to labor relations. and-file employees as the concerns which involve members of
either group are normally disparate and contradictory.
Confidential employee rule
The exclusion from bargaining units of employees who, in the Article 245 provides:
normal course of their duties, become aware of management
policies relating to labor relations is a principal objective sought Art. 245. Ineligibility of managerial employees to join any
to be accomplished by the "confidential employee rule. labor organization; right of supervisory employees. —
Managerial Employees are not eligible to join, assist or form
There is no showing in this case that the secretaries/clerks and any labor organization. Supervisory employees shall not be
checkers assisted or acted in a confidential capacity to eligible for membership in a labor organization of the rank-and-
managerial employees and obtained confidential information file employees but may join, assist or form separate labor
relating to labor relations policies. And even assuming that they organizations of their own.
had exposure to internal business operations of the company,
respondent claimed, this is not per se ground for their Clearly, based on this provision, a labor organization
exclusion in the bargaining unit of the daily-paid rank-and-file composed of both rank-and-file and supervisory employees is
employees. no labor organization at all. It cannot, for any guise or purpose,
be a legitimate labor organization. Not being one, an
Not being confidential employees, the secretaries/clerks and organization which carries a mixture of rank-and-file and
checkers are not disqualified from membership in the Union of supervisory employees cannot possess any of the rights of a
respondent’s rank-and-file employees. legitimate labor organization, including the right to file a petition
for certification election for the purpose of collective bargaining.
Unfair labor practice
Petitioner argues that respondent’s act of unilaterally stopping It becomes necessary, therefore, anterior to the granting of an
the deduction of union dues from these employees constitutes order allowing a certification election, to inquire into the
unfair labor practice as it restrained the workers’ exercise of composition of any labor organization whenever the status of
their right to self-organization, as provided in Article 248(a) of the labor organization is challenged on the basis of Article 245
the Labor Code. of the Labor Code.
Unfair labor practice refers to acts that violate the workers’ right While there may be a genuine divergence of opinion as to
to organize. The prohibited acts are related to the workers’ whether or not union members occupying Level 4 positions are
right to self-organization and to the observance of a CBA. For a supervisory employees, it is fairly obvious, from a reading of
charge of unfair labor practice to prosper, it must be shown that the Labor Code's definition of the term that those occupying
ABI was motivated by ill will, bad faith, or fraud, or was Level 5 positions are unquestionably supervisory employees.
oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy, and, of course, that social Supervisory employees
humiliation, wounded feelings or grave anxiety resulted from Supervisory employees, as defined above, are those who, in
ABI’s act in discontinuing the union dues deduction from those the interest of the employer, effectively recommend managerial
employees it believed were excluded by the CBA. actions if the exercise of such authority is not merely routinary
or clerical in nature but require the use of independent
Considering that the herein dispute arose from a simple judgment.
disagreement in the interpretation of the CBA provision on
excluded employees from the bargaining unit, respondent Under the job description for level five employees, such
cannot be said to have committed unfair labor practice that personnel — all engineers — having a number of personnel
restrained its employees in the exercise of their right to self- under them, not only oversee production of new models but

Erika Cristel Diaz | LABOR RELATIONS

 also determine manpower requirements, thereby influencing employees of a given employer, composed of all or less than
important hiring decisions at the highest levels. This the entire body of employees, which the collective interests of
determination is neither routine nor clerical but involves the all the employees, consistent with equity to the employer,
independent assessment of factors affecting production, which indicate to be best suited to serve reciprocal rights and duties
in turn affect decisions to hire or transfer workers. The use of of the parties under the collective bargaining provisions of law.
independent judgment in making the decision to hire, fire or
transfer in the identification of manpower requirements would Otherwise stated, it is a legal collectivity for collective
be greatly impaired if the employee's loyalties are torn between bargaining purposes whose members have substantially
the interests of the union and the interests of management. mutual bargaining interests in terms and conditions of
employment as will assure to all employees their collective
A supervisory employee occupying a level five position would bargaining rights. A unit to be appropriate must effect a
therefore find it difficult to objectively identify the exact grouping of employees who have substantial, mutual interests
manpower requirements dictated by production demands. in wages, hours, working conditions and other subjects of
collective bargaining.
This is precisely what the Labor Code, in requiring separate
unions among rank-and-file employees on one hand, and Determining the status of supervisory and rank-and-file
supervisory employees on the other, seeks to avoid. The employees is not a hard row to hoe in labor law. The test of
rationale behind the Code's exclusion of supervisors from supervisory status as we have repeatedly ruled is whether an
unions of rank-and-file employees is that such employees, employee possesses authority to act in the interest of his
while in the performance of supervisory functions, become the employer, which authority should not be merely routinary or
alter ego of management in the making and the implementing clerical in nature but requires the use of independent judgment.
of key decisions at the sub-managerial level. Corrollarily, what determines the nature of employment is
not the employee's title, but his job description.
Certainly, it would be difficult to find unity or mutuality of
interests in a bargaining unit consisting of a mixture of rank- In the instant case, the list of monthly paid employees
and-file and supervisory employees. And this is so because the submitted by the petitioner company contains the names of
fundamental test of a bargaining unit's acceptability is whether about 27 supervisory employees, 6 managerial employees, 1
or not such a unit will best advance to all employees within the confidential employee and 26 office and technical employees
unit the proper exercise of their collective bargaining rights. holding various positions.
The Code itself has recognized this, in preventing supervisory
employees from joining unions of rank-and-file employees. The list reveals that the positions occupied by the 26 office and
technical employees are in fact rank-and-file positions, i.e., A/C
In the case at bar, as respondent union's membership list mechanic, draftsmen, storemen, motorpool mechanic,
contains the names of at least twenty-seven (27) supervisory secretaries, accounts clerk, company nurses, industrial
employees in Level Five positions. the union could not, prior to mechanic, boiler men, laboratory technicians, payroll clerk;
purging itself of its supervisory employee members, attain the welder, purchasing clerk, company drivers and electricians.
status of a legitimate labor organization. Not being one, it It is fairly obvious that these positions cannot be considered as
cannot possess the requisite personality to file a petition for supervisory positions for they do not carry the authority to act
certification election. in the interest of the employer or to recommend managerial
actions. It is not decisive that these employees are monthly
The foregoing discussion, therefore, renders entirely irrelevant, paid employees. Their mode of compensation is usually a
the technical issue raised as to whether or not respondent matter of convenience and does not necessarily determine the
union was in possession of the status of a legitimate labor nature and character of their job.
organization at the time of filing, when, as petitioner vigorously
claims, the former was still at the stage of processing of its We also do not agree with the ruling of the respondent
application for recognition as a legitimate labor organization. Secretary of Labor that the infirmity in the membership of
The union's composition being in violation of the Labor the respondent union can be remedied in "the pre-election
Code's Prohibition of unions composed of supervisory conference thru the exclusion-inclusion proceedings
and rank-and-file employees, it could not possess the wherein those employees who are occupying rank-and-file
requisite personality to file for recognition as a legitimate positions will be excluded from the list of eligible voters.
labor organization.
Public respondent gravely misappreciates the basic antipathy
The holding of a certification election is based on clear between the interest of supervisors and the interest of rank-
statutory policy which cannot be circumvented. Its rules, strictly and-file employees. Due to the irreconcilability of their interests
construed by this Court, are designed to eliminate fraud and we held in Toyota Motor Philippines v. Toyota Motors
manipulation. The Court's conclusion should not be interpreted Philippines Corporation Labor Union viz:
as impairing any union's right to be certified as the employees'
bargaining agent in the petitioner's establishment. Workers of Clearly, based on this provision [Article 245, Labor Code], a
an appropriate bargaining unit must be allowed to freely labor organization composed of both rank-and-file and
express their choice in an election where everything is open to supervisory employees is no labor organization at all. It cannot,
sound judgment and the possibility for fraud and for any guise or purpose, be a legitimate labor organization.
misrepresentation is absent. Not being one, an organization which carries a mixture of rank-
and-file and supervisory employees cannot possess any of the
Dunlop Slazenger (Phils) vs. Secretary rights of a legitimate labor organization, including the right to
file appetition for certification election for the purpose of
We agree with the public respondent that supervisors can be collective bargaining.
an appropriate bargaining unit. This is in accord with our
repeated ruling that an appropriate bargaining unit is a group of

Erika Cristel Diaz | LABOR RELATIONS

 It becomes necessary, therefore, anterior to the granting of an 26, 1992 and September 15, 1995, respectively; hence, the
order allowing a certification election, to inquire into the 1989 Rules was applied in both cases.
composition of any labor organization whenever the status of
the labor organization is challenged on the basis of Article 245 But then, on June 21, 1997, the 1989 Amended Omnibus
of the Labor Code. Rules was further amended by Department Order No. 9,
series of 1997 (1997 Amended Omnibus Rules).
Needless to stress, the respondent union has no legal right to
file a certification election to represent a bargaining unit Specifically, the requirement under Sec. 2(c) of the 1989
composed of supervisors for so long as it counts rank-and-file Amended Omnibus Rules – that the petition for certification
employees among its members. election indicate that the bargaining unit of rank-and-file
employees has not been mingled with supervisory
The new provision of Art. 255 (245-A) (RA 9481) employees – was removed. Instead, what the 1997 Amended
overturned the ruling in Toyota Motors vs. TMPCLU: Omnibus Rules requires is a plain description of the bargaining
unit, thus:
Samahang Manggagawa sa Charter Chemical Solidarity
of Unions in the Philippines for Empowerment and Rule XI
Reforms (SMCC-SUPER) vs. Charter Chemical and Certification Elections
Coating Corporation
Sec. 4. Forms and contents of petition. - The petition shall
The mixture of rank-and-file and supervisory employees in be in writing and under oath and shall contain, among others,
petitioner union does not nullify its legal personality as a the following: (c) The description of the bargaining unit.
legitimate labor organization.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion
The right to file a petition for certification election is accorded to to uphold the validity of the 1997 Amended Omnibus Rules,
a labor organization provided that it complies with the although the specific provision involved therein was only Sec.
requirements of law for proper registration. The inclusion of 1, Rule VI, to wit:
supervisory employees in a labor organization seeking to
represent the bargaining unit of rank-and-file employees does Section. 1. Chartering and creation of a local/chapter.- A
not divest it of its status as a legitimate labor organization. We duly registered federation or national union may directly create
apply these principles to this case. a local/chapter by submitting to the Regional Office or to the
Bureau two (2) copies of the following: a) a charter certificate
The appellate court’s reliance on Toyota is misplaced in view of issued by the federation or national union indicating the
this Court’s subsequent ruling in Republic v. Kawashima creation or establishment of the local/chapter; (b) the names of
Textile Mfg., Philippines, Inc. (hereinafter Kawashima). In the local/chapter's officers, their addresses, and the principal
Kawashima, we explained at length how and why the office of the local/chapter; and (c) the local/ chapter's
Toyota doctrine no longer holds sway under the altered constitution and by-laws; provided that where the
state of the law and rules applicable to this case, viz: local/chapter's constitution and by-laws is the same as that of
the federation or national union, this fact shall be indicated
R.A. No. 6715 omitted specifying the exact effect any accordingly.
violation of the prohibition on the co-mingling of
supervisory and rank-and-file employees would bring All the foregoing supporting requirements shall be certified
about on the legitimacy of a labor organization. under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President which does not
It was the Rules and Regulations Implementing R.A. No. 6715 require that, for its creation and registration, a local or chapter
(1989 Amended Omnibus Rules) which supplied the deficiency submit a list of its members.
by introducing the following amendment to Rule II (Registration
of Unions): Then came Tagaytay Highlands Int'l. Golf Club, Inc. v.
Tagaytay Highlands Employees Union-PGTWO in which the
"Sec. 1. Who may join unions. - x x x Supervisory employees core issue was whether mingling affects the legitimacy of a
and security guards shall not be eligible for membership in a labor organization and its right to file a petition for certification
labor organization of the rank-and-file employees but may join, election.
assist or form separate labor organizations of their own;
This time, given the altered legal milieu, the Court abandoned
Provided, that those supervisory employees who are the view in Toyota and Dunlop and reverted to its
included in an existing rank-and-file bargaining unit, upon pronouncement in Lopez that while there is a prohibition
the effectivity of Republic Act No. 6715, shall remain in that against the mingling of supervisory and rank-and-file
unit. employees in one labor organization, the Labor Code does
not provide for the effects thereof.
In Dunlop, in which the labor organization that filed a petition
for certification election was one for supervisory employees, Thus, the Court held that after a labor organization has been
but in which the membership included rank-and-file employees, registered, it may exercise all the rights and privileges of a
the Court reiterated that such labor organization had no legal legitimate labor organization. Any mingling between
right to file a certification election to represent a bargaining unit supervisory and rank-and-file employees in its
composed of supervisors for as long as it counted rank-and-file membership cannot affect its legitimacy for that is not
employees among its members. among the grounds for cancellation of its registration, unless
such mingling was brought about by misrepresentation, false
It should be emphasized that the petitions for certification statement or fraud under Article 239 of the Labor Code.
election involved in Toyota and Dunlop were filed on November

Erika Cristel Diaz | LABOR RELATIONS

 In San Miguel Corp. (Mandaue Packaging Products Plants) v. relation to their employer could join a union but not a union of
Mandaue Packing Products Plants-San Miguel Packaging rank-and-file employees.
Products-San Miguel Corp. Monthlies Rank-and-File Union-
FFW, the Court explained that since the 1997 Amended With the enactment in 1974 of the Labor Code (Pres Decree
Omnibus Rules does not require a local or chapter to No. 442), employees were classified into managerial and
provide a list of its members, it would be improper for the rank-and-file employees. Neither the category of supervisors
DOLE to deny recognition to said local or chapter on nor their right to organize under the old statute were
account of any question pertaining to its individual recognized. So that, in Bulletin Publishing Corporation v.
members. Sanchez, the Court interpreted the superseding labor law to
have removed from supervisors the right to unionize among
More to the point is Air Philippines Corporation v. Bureau of themselves. The Court ruled:
Labor Relations, which involved a petition for cancellation of
union registration filed by the employer in 1999 against a rank- In the light of the factual background of this case, We are
and-file labor organization on the ground of mixed constrained to hold that the supervisory employees of
membership: the Court therein reiterated its ruling in Tagaytay petitioner firm may not, under the law, form a supervisors
Highlands that the inclusion in a union of disqualified union, separate and distinct from the existing bargaining unit
employees is not among the grounds for cancellation, (BEU), composed of the rank-and-file employees of the Bulletin
unless such inclusion is due to misrepresentation, false Publishing Corporation. It is evident that most of the private
statement or fraud under the circumstances enumerated in respondents are considered managerial employees.
Sections (a) and (c) of Article 239 of the Labor Code.
Also, it is distinctly stated in Section 11, Rule II, of the Omnibus
All said, while the latest issuance is R.A. No. 9481, the 1997 Rules Implementing the Labor Code, that supervisory unions
Amended Omnibus Rules, as interpreted by the Court in are presently no longer recognized nor allowed to exist and
Tagaytay Highlands, San Miguel and Air Philippines, had operate as such.
already set the tone for it. Toyota and Dunlop no longer hold
sway in the present altered state of the law and the rules. In Section 11, Rule II, Book V of the Omnibus Rules
implementing Pres. Decree No. 442, the supervisory unions
The applicable law and rules in the instant case are the same existing since the effectivity of the New Code in January 1,
as those in Kawashima because the present petition for 1975 ceased to operate as such and the members who did not
certification election was filed in 1999 when D.O. No. 9, qualify as managerial employees under this definition in Article
series of 1997, was still in effect. Hence, Kawashima applies 212 (k) therein became eligible to form, to join or assist a rank-
with equal force here. As a result, petitioner union was not and-file union.
divested of its status as a legitimate labor organization
even if some of its members were supervisory employees; A revision of the Labor Code undertaken by the bicameral
it had the right to file the subject petition for certification Congress brought about the enactment of Rep. Act No. 6715
election. in March 1989 in which employees were reclassified into three
groups, namely: (1) the managerial employees; (2)
Doctrine of Separation of Unions is overturned by Art. 254 supervisors; and (3) the rank and file employees. Under the
of the Labor Code as amended present law, the category of supervisory employees is once
again recognized. Hence, Art. 212 (m) states:
Article 254[245] as amended by R.A 9481
Article 245 of the Labor Code is hereby amended to (m) Supervisory employees are those who, in the interest of
read as follows: the employer, effectively recommend such managerial actions
if the exercise of such authority is not merely routinary or
ART. [254]245. Ineligibility of Managerial Employees to clerical in nature but requires the use of independent
Join any Labor Organization; Right of Supervisory judgment.
Employees. - Managerial employees are not eligible to join,
assist or form any labor organization. The rationale for the amendment is the government's
recognition of the right of supervisors to organize with the
Supervisory employees shall not be eligible for qualification that they shall not join or assist in the
membership in the collective bargaining unit of the rank- organization of rank-and-file employees. The reason behind
and-file employees but may join, assist or form separate the Industrial Peace Act provision on the same subject matter
collective bargaining units and/or legitimate labor has been adopted in the present statute.
organizations of their own.
The interests of supervisors on the one hand, and the
The rank and file union and the supervisors' union rank-and-file employees on the other, are separate and
operating within the same establishment may join the distinct. The functions of supervisors, being recommendatory
same federation or national union. in nature, are more identified with the interests of the employer.
The performance of those functions may, thus, run counter to
Cases prior to amendment: Doctrine of Separation the interests of the rank-and-file.
of Unions This intent of the law is made clear in the deliberations of the
Atlas Lithographic vs. Laguesma legislators on then Senate Bill 530 now enacted as Rep. Act
No. 6715.
Under the Industrial Peace Act of 1953, employees were
classified into three groups, namely: (1) managerial The definition of managerial employees was limited to those
employees; (2) supervisors; and (3) rank-and file having authority to hire and fire while those who only
employees. Supervisors, who were considered employees in recommend effectively the hiring or firing or transfers of

Erika Cristel Diaz | LABOR RELATIONS

 personnel would be considered as closer to rank-and-file In the present case, the local union is actively represented by
employees. the national federation. In fact, it was the national federation,
the KAMPIL-KATIPUNAN, which initially filed a petition for
The exclusion, therefore, of middle level executives from the certification in behalf of the respondent union.
category of managers brought about a third classification, the
supervisory employees. These supervisory employees are Thus, if the intent of the law is to avoid a situation where
allowed to form their own union but they are not allowed supervisors would merge with the rank and-file or where the
to join the rank-and-file union because of conflict of supervisors' labor organization would represent conflicting
interest. interests, then a local supervisors' union should not be
allowed to affiliate with the national federation of union of
In terms of classification, however, while they are more closely rank-and-file employees where that federation actively
identified with the rank-and-file they are still not allowed to join participates in union activity in the company.
the union of rank-and-file employees.
The prohibition against a supervisors' union joining a local
The peculiar role of supervisors is such that while they are not union of rank-and-file is replete with jurisprudence. The Court
managers, when they recommend action implementing emphasizes that the limitation is not confined to a case of
management policy or ask for the discipline or dismissal of supervisors wanting to join a rank-and-file local union. The
subordinates, they identify with the interests of the employer prohibition extends to a supervisors' local union applying
and may act contrary to the interests of the rank-and-file. for membership in a national federation the members of
which include local unions of rank-and-file employees. The
We agree with the petitioner's contention that a conflict of intent of the law is clear especially where, as in the case at bar,
interest may arise in the areas of discipline, collective the supervisors will be co-mingling with those employees
bargaining and strikes. Members of the supervisory union whom they directly supervise in their own bargaining unit.
might refuse to carry out disciplinary measures against their
co-member rank-and-file employees. Technicalities should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of
In the area of bargaining, their interests cannot be considered the parties. What should be paramount is the intent behind the
identical. The needs of one are different from those of the law, not its literal construction. Where one interpretation would
other. Moreover, in the event of a strike, the national federation result in mischievous consequences while another would bring
might influence the supervisors' union to conduct a sympathy about equity, justice, and the promotion of labor peace, there
strike on the sole basis of affiliation. can be no doubt as to what interpretation shall prevail.

The contemplation of the law in Sec. 3 of the Industrial Peace Finally, the respondent contends that the law prohibits the
Act is to prohibit supervisors from joining a labor employer from interfering with the employees' right to self-
organization of employees under their supervision. organization.

Sec. 3 of the Industrial Peace Act provides: There is no question about this intendment of the law. There is,
however, in the present case, no violation of such a guarantee
Sec. 3 — Employees' Right to Self Organization. to the employee. Supervisors are not prohibited from forming
Employees shall have the right to self-organization and to their own union. What the law prohibits is their membership
form, join or assist labor organizations of their own choosing in a labor organization of rank-and-file employees (Art. 245,
for the purpose of collective bargaining through Labor Code) or their joining a national federation of rank-
representatives of their own choosing and to engage in and-file employees that includes the very local union which
concerted activities for the purpose of collective bargaining and they are not allowed to directly join.
other mutual aid or protection.
The petitioner has knuckled under to the respondents'
Individuals employed as supervisors shall not be eligible for pressures and agreed to let the national federation KAMPIL-
membership in a labor organization of employees under their KATIPUNAN represent its supervisors in negotiating a
supervision but may form separate organizations of their own. collective bargaining agreement. Against the advise of its own
counsel and on the basis of alleged "industrial peace", the
Meanwhile, Article 245 of the Labor Code as amended by petitioner expressed a loss of interest in pursuing this action.
Rep. Act No. 6715 provides:
The petitioner is, of course, free to grant whatever concessions
Art. 245. Ineligibility of managerial employees to join any it wishes to give to its employees unilaterally or through
labor organization: right of supervisory employees. — negotiations but we cannot allow the resulting validation of an
Managerial employees are not eligible to join, assist or form erroneous ruling and policy of the Department of Labor and
any labor organization. Supervisory employees shall not be Employment (DOLE) to remain on the basis of the petitioner's
eligible for membership in a labor organization of the rank-and- loss of interest. The December 14, 1990 order and the
file employees but may join, assist or form separate labor November 21, 1990 resolution of DOLE are contrary to law and
organizations of their own. must be declared as such.

The Court construes Article 245 to mean that, as in Section 3 WHEREFORE, the petition is hereby GRANTED. The private
of the Industrial Peace Act, supervisors shall not be given an respondent is disqualified from affiliating with a national
occasion to bargain together with the rank-and-file against the federation of labor organizations which includes the
interests of the employer regarding terms and conditions of petitioner's rank-and-file employees.
work.
De La Salle University vs. Laguesma

Erika Cristel Diaz | LABOR RELATIONS

 Supervisory employees have the right to self-organization as capital; and the association of locals into the national union
do other classes of employees save only managerial ones. The was in furtherance of the same end.
Constitution states that the right of the people, including those
employed in the public and private sectors, to form unions, These associations are consensual entities capable of entering
associations or societies for purposes not contrary to law, shall into such legal relations with their members. The essential
not be abridged. purpose was the affiliation of the local unions into a common
enterprise to increase by collective action the common
Conformably with the constitutional mandate, Art. 245 of the bargaining power in respect of the terms and conditions of
Labor Code now provides for the right of supervisory labor. Yet the locals remained the basic units of association,
employees to self-organization, subject to the limitation free to serve their own and the common interest of all, and free
that they cannot join an organization of rank-and-file also to renounce the affiliation for mutual welfare upon the
employees: terms laid down in the agreement which brought it to existence.

Supervisory employees shall not be eligible for membership in Although private respondent FFW-DLSUMCCMSUC and
a labor organization of the rank-and-file employees but may another union composed of rank-and-file employees of
join, assist or form separate labor organizations of their own. petitioner DLSUMCCM are indeed affiliated with the same
national federation, the FFW, petitioner DLSUMCCM has not
The reason for the segregation of supervisory and rank-and-file presented any evidence showing that the rank-and-file
employees of a company with respect to the exercise of the employees composing the other union are directly under the
right to self-organization is the difference in their interests. authority of the supervisory employees.

Supervisory employees are more closely identified with the The fact that the two groups of workers are employed by the
employer than with the rank-and-file employees. If supervisory same company and the fact that they are affiliated with a
and rank-and-file employees in a company are allowed to form common national federation are not sufficient to justify the
a single union, the conflicting interests of these groups impair conclusion that their organizations are actually just one. Their
their relationship and adversely affect discipline, collective immediate professional relationship must be established.
bargaining and strikes.
We find without merit the contention of petitioner that if
These consequences can obtain not only in cases where affiliation will be allowed, only one union will in fact represent
supervisory and rank-and-file employees in the same company both supervisors and rank-and-file employees of the petitioner;
belong to a single union but also where unions formed that there would be an indirect affiliation of supervisors and
independently by supervisory and rank-and-file employees of a rank-and-file employees with one labor organization; that there
company are allowed to affiliate with the same national would be a merging of the two bargaining units; and that the
federation. respondent union will lose its independence because it
becomes an alter ego of the federation.
Consequently, this Court has held in Atlas Lithographic
Services Inc. v. Laguesma that— Employees in the Public Sector/Government
To avoid a situation where supervisors would merge with the employees
rank-and-file or where the supervisors' labor organization
would represent conflicting interests, then a local supervisors' Executive Order no. 180
union should not be allowed to affiliate with a national Sec. 1. This Executive Order applies to all employees of all
federation of unions of rank-and-file employees where that branches, subdivisions, instrumentalities, and agencies, of
federation actively participates in union activities in the the Government, including government-owned or controlled
company. corporations with original charters. For this purpose,
employees, covered by this Executive Order shall be
As we explained in that case, however, such a situation referred to as "government employees".
would obtain only where two conditions concur: First, the
rank-and-file employees are directly under the authority of Sec. 2. All government employees can form, join or
supervisory employees. Second, the national federation is assist employees' organizations of their own choosing
actively involved in union activities in the company. for the furtherance and protection of their interests. They
can also form, in conjunction with appropriate government
The affiliation of two local unions in a company with the same authorities, labor-management committees, works councils
national federation is not by itself a negation of their and other forms of workers' participation schemes to
independence since in relation to the employer, the local achieve the same objectives.
unions are considered as the principals, while the federation is
deemed to be merely their agent. Sec. 3. High-level employees whose functions are
normally considered as policy-making or managerial or
This conclusion is in accord with the policy that any limitation whose duties are of a highly confidential nature shall not be
on the exercise by employees of the right to self-organization eligible to join the organization of rank-and-file government
guaranteed in the Constitution must be construed strictly. employees.
Workers should be allowed the practice of this freedom to the
extent recognized in the fundamental law. Sec. 4. The Executive Order shall not apply to the
members of the Armed Forces of the Philippines,
The locals are separate and distinct units primarily designed to including police officers, policemen, firemen and jail
secure and maintain an equality of bargaining power between guards.
the employer and their employee members in the economic
struggle for the fruits of the joint productive effort of labor and

Erika Cristel Diaz | LABOR RELATIONS

 Employees in the public sector not eligible to join, shall be observed, subject to any legislation that may be
enacted by Congress.
form or assist in a labor union:
1. High-level employees whose functions are normally Public Sector Labor-Management Council
considered as:
Sec. 15. A Public Sector Labor Management Council,
- Policy-making;
hereinafter referred to as the Council, is hereby constituted
- Managerial; or
to be composed of the following:
- Highly confidential.
1. Chairman – Civil Service Commission Chairman;
2. Vice-chairman – Secretary of Labor;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
Members
4. Policemen;
Secretaries of:
5. Firemen; and
3. Department of Finance;
6. Jail guards.
4. Department of Justice; and
5. Department of Budget and Management.
Registration of Employees' Organization
Sec. 7. Government employees' organizations shall register The Council shall implement and administer the provisions
with the Civil Service Commission and the Department of this Executive Order. For this purpose, the Council shall
of Labor and Employment. The application shall be filed promulgate the necessary rules and regulations to
with the Bureau of Labor Relations of the Department which implement this Executive Order.
shall process the same in accordance with the provisions of
the Labor Code of the Philippines, as amended.
Jurisdiction of Public Sector Labor Management
Applications may also be filed with the Regional Offices of Council (PLMC) over violations of government
the Department of Labor and Employment which shall employees’ right to self-organization
immediately transmit the said applications to the Bureau of
Labor Relations within three (3) days from receipt thereof.
Pamantasan ng Lungsod ng Maynila v. Civil Service
Commission
Sec. 8. Upon approval of the application, a registration
certificate be issued to the organization recognizing it as a
Petitioner stresses that the CSC and the PSLMC both exercise
legitimate employees' organization with the right to
quasi-judicial functions but not on identical issues and subject
represent its members and undertake activities to further
matter; that the PSLMC possesses jurisdiction only over the
and defend its interest.
unfair labor practice aspect of private respondents' complaint
but that it is the CSC which alone can take cognizance over the
The corresponding certificates of registration shall be
question of illegal dismissal; and that, therefore, when the CSC
jointly approved by the Chairman of the Civil Service
has simply adopted the recommendations of the PSLMC in the
Commission and Secretary of Labor and Employment.
unfair labor practice case in resolving the issue of illegal
dismissal and ordering the reinstatement of private
Sole and Exclusive Employees' Representatives respondents without conducting further proceedings of its own,
Sec. 9. The appropriate organizational unit shall be the it has effectively denied petitioner of its right to due process.
employers unit consisting of rank-and-file employees
unless circumstances otherwise require. PSLMC's jurisdiction over the unfair labor practice case
filed by private respondents against petitioner is not disputed.
Sec. 10. The duly registered employees' organization The PSLMC has conducted its proceedings in accordance
having the support of the majority of the employees in the with its legal mandate. The proceedings before Med-Arbiter
appropriate organizational unit shall be designated as the Valenzuela, who had been deputized to so act as the hearing
sole and exclusive representative of the employees. officer, conform with the Rules and Regulations to Govern
the Exercise of the Right of Government Employees to Self
Sec. 11. A duly registered employees' organization shall Organization:
be accorded voluntary recognition upon a showing that no
other employees' organization is registered or is Sec. 3. The Council may call on any officer or agency for
seeking registration, based on records of the Bureau of assistance. It may deputize officers to hear and recommend
Labor Relations, and that the said organizations has the action on complaints or grievances filed with the council.
majority support of the rank-and-file employees in the
organizational unit. Sec. 4. The procedure in the Council shall be non-adversarial
in nature. The parties may be required to submit their
Terms and Conditions of Employment in Government respective position papers, together with all evidences
Services available in support of their respective positions within 15 days
Sec. 13. Terms and conditions of employment or from receipt of notices.
improvements thereof, except those that are fixed by
law, may be the subject of negotiations between duly Sec. 5. The decision of the Council shall be final.
recognized employees' organizations and appropriate
government authorities. The conclusion of the PSLMC regarding petitioner's
alleged commission of unfair labor practice against private
Peaceful Concerted Activities and Strikes respondents can no longer be considered a proper issue either
Sec. 14. The Civil Service laws and rules governing before the CSC or in this instance since this particular matter
concerted activities and strikes in the government service

Erika Cristel Diaz | LABOR RELATIONS

 has already been adjudged with finality in accordance with this case for the reason that the latter involves an intra-union
Court's resolution. conflict. This, we cannot do because the law is very clear on
this matter.
Petitioner insists that when CSC has ruled on the matter of
illegal dismissal without conducting any further hearing of Executive Order No. 180 (1987), particularly Section 16
its own, relying, instead, on PSLMC's finding of unfair labor thereof, is completely lucid as to the settlement of disputes
practice on the part of petitioner, the latter has thereby been involving government employees, viz:
denied due process.
SEC. 16. The Civil Service and labor laws and procedures,
Unfortunately for petitioner, however, the two supposed whenever applicable, shall be followed in the resolution of
independent issues, the unfair labor practice charge and the complaints, grievances and cases involving government
complaint for illegal dismissal both filed by private respondents, employees.
are, in fact, here unavoidably interlinked. The non-renewal of
an employment contract with a term, it is true, is ordinarily a Since Article 226 of the Labor Code has declared that the BLR
valid mode of removal at the end of each shall have original and exclusive authority to act on all inter-
period. union and intra-union conflicts, then there should be no more
doubt as to its jurisdiction.
This rule, however, must yield to the superior constitutional
right of employees, permanent or temporary, to self- Republic of the Philippines cannot be covered by
organization. While, a temporary employment may be ended
with or without cause, it certainly may not, however, be the general term “Employer”
terminated for an illegal cause.
Alliance of Government Workers vs. Minister of Labor
and Employment
Bureau of Labor Relations (BLR) has jurisdiction
over all all inter-union and intra-union conflicts According to the petitioners, P.D. No. 851 requires all
employers to pay the 13th-month pay to their employees with
Bautista vs. CA one sole exception found in Section 2 which states that
“Employers already paying their employees a 13th month pay
The BLR has jurisdiction to call for and conduct the or its equivalent are not covered by this Decree.”
election of officers of an employee’s association in the
public sector The petitioners contend that Section 3 of the Rules and
The authority of the BLR in assuming jurisdiction over a Regulations Implementing Presidential Decree No. 851
certification election, or any inter-union or intra-union conflicts, included other types of employers not exempted by the decree.
is found in Article 226 of the Labor Code of the Philippines, They state that nowhere in the decree is the secretary, now
which reads: Minister of Labor and Employment, authorized to exempt other
types of employers from the requirement.
Art. 226. BUREAU OF LABOR RELATIONS. – The Bureau
of Labor Relations and the Labor Relations Division in the The Republic of the Philippines, as sovereign, cannot be
regional offices of the Department of Labor shall have covered by a general term like "employer" unless the
original and exclusive authority to act, at their own initiative language used in the law is clear and specific to that effect.
or upon request of either or both parties, on all inter-union
and intra-union conflicts, and all disputes, grievances or Government employees not covered by P.D 851
problems arising from or affecting labor-management What the P.D. No. 851 intended to cover, as explained in the
relations in all workplaces whether agricultural or prefatory statement of the Decree, are only those in the private
nonagricultural, except those arising from the implementation sector whose real wages require protection from world-wide
or interpretation of collective bargaining agreements which inflation. This is emphasized by the "whereas" clause which
shall be the subject of grievance procedure and/or voluntary states that 'there has been no increase in the legal minimum
arbitration. wage rates since 1970'.

The Bureau shall have 15 working days to act on labor cases This could only refer to the private sector, and not to those in
before it, subject to extension by agreement of the parties. the government service because at the time of the enactment
of Presidential Decree No. 851 in 1975, only the employees in
It is quite clear from this provision that BLR has the original and the private sector had not been given any increase in their
exclusive jurisdiction on all inter-union and intra-union conflicts. minimum wage. The employees in the government service had
An intra-union conflict would refer to a conflict within or already been granted in 1974 a ten percent across-the-board
inside a labor union, and an inter-union controversy or increase on their salaries as stated in P.D. No. 525, Section 4.
dispute, one occurring or carried on between or among
unions. The workers in the respondent institutions have not directly
petitioned the heads of their respective offices nor their
The subject of the case at bar, which is the election of the representatives in the Batasang Pambansa. They have acted
officers and members of the board of KMKK-MWSS, is, clearly, through a labor federation and its affiliated unions. In other
an intra-union conflict, being within or inside a labor union. It is words, the workers and employees of these state firms,
well within the powers of the BLR to act upon. college, and university are taking collective action through a
labor federation which uses the bargaining power of organized
The petitioner is asking us to make an illogical edict by labor to secure increased compensation for its members.
declaring that our ruling in the ACAE case, considering that it
involved an inter-union conflict, should not apply to the instant

Erika Cristel Diaz | LABOR RELATIONS

 The general rule in the past and up to the present is that the payments must be pursuant to law or regulation. Presidential
terms and conditions of employment in the Government, Decree No. 985 as amended provides:
including any political subdivision or instrumentality
thereof are governed by law (Section 11, the Industrial Peace SEC. 2. Declaration of Policy.- It is hereby declared to be the
Act, R.A. No. 875, as amended and Article 277, the Labor policy, of the national government to provide equal pay for
Code, P.D. No. 442, as amended). substantially, equal work and to base differences in pay upon
substantive differences in duties and responsibilities, and
On the Right to self-organization qualification requirements of the positions. In determining rates
Since the terms and conditions of government employment of pay, due regard shall be given to, among others, prevailing
are fixed by law, government workers cannot use the same rates in private industry for comparable work.
weapons employed by workers in the private sector to
secure concessions from their employers. The principle For this purpose, there is hereby established a system of
behind labor unionism in private industry is that industrial compensation standardization and position classification in the
peace cannot be secured through compulsion by law. national government for all departments, bureaus, agencies,
and officers including government-owned or controlled
Relations between private employers and their employees rest corporations and financial institutions: Provided, That
on an essentially voluntary basis. Subject to the minimum notwithstanding a standardized salary system established for
requirements of wage laws and other labor and welfare all employees, additional financial incentives may be
legislation, the terms and conditions of employment in the established by government corporations and financial
unionized private sector are settled through the process of institutions for their employees to be supported fully from their
collective bargaining. corporate funds and for such technical positions as may be
approved by the President in critical government agencies.
In government employment, however, it is the legislature and,
where properly given delegated power, the administrative The Solicitor-General correctly points out that to interpret P.D.
heads of government which fix the terms and conditions of No. 851 as including government employees would upset
employment. And this is effected through statutes or the compensation levels of government employees in
administrative circulars, rules, and regulations, not through violation of those fixed according to P.D. No. 985.
collective bargaining agreements.
Presidential Decree No. 807, the Civil Service Decree of the
The very Labor Code, P.D. No. 442 as amended, which Philippines has implemented the 1973 Constitutional
governs the registration and provides for the rights of legitimate amendment. It is categorical about the inclusion of personnel
labor organizations states: of government-owned or controlled corporations in the
civil service and their being subject to civil service
ART. 277. Government employees. The terms and requirements:
conditions of employment of all government employees,
including employees of government-owned and controlled SECTION 56. Government-owned or Controlled
corporations, shall be governed by the Civil Service Law, rules Corporations Personnel. All permanent personnel of
and regulations. government- owned or controlled corporations whose positions
are now embraced in the civil service shall continue in the
Their salaries shall be standardized by the National Assembly service until they have been given a chance to qualify in an
as provided for in the new constitution. However, there shall be appropriate examination, but in the meantime, those who do
no reduction of existing wages, benefits, and other terms and not possess the appropriate civil service eligibility shall not be
conditions of employment being enjoyed by them at the time of promoted until they qualify in an appropriate civil service
the adoption of this code. examination. Services of temporary personnel may be
terminated any time.
Section 6, Article XII-B of the Constitution gives added
reasons why the government employees represented by the Personnel of government-owned or controlled
petitioners cannot expect treatment in matters of salaries corporations are now part of the civil service. It would not
different from that extended to all others government be fair to allow them to engage in concerted activities to wring
personnel. The provision states: higher salaries or fringe benefits from Government even as
other civil service personnel such as the hundreds of
SEC. 6. The National Assembly shall provide for the thousands of public school teachers, soldiers, policemen,
standardization of compensation of government officials and health personnel, and other government workers are denied
employees, including those in government-owned or controlled the right to engage in similar activities.
corporations, taking into account the nature of the
responsibilities pertaining to, and the qualifications required for To say that the words "all employers" in P.D. No. 851 includes
the positions concerned. the Government and all its agencies, instrumentalities, and
government-owned or controlled corporations would also result
It is the legislature or, in proper cases, the administrative heads in nightmarish budgetary problems.
of government and not the collective bargaining process nor
the concessions wrung by labor unions from management that Government employees have no right to strike
determine how much the workers in government-owned or It is the stand, therefore, of this Commission that by reason of
controlled corporations may receive in terms of salaries, 13th the nature of the public employer and the peculiar character of
month pay, and other conditions or terms of employment. the public service, it must necessarily regard the right to strike
given to unions in private industry as not applying to public
There are government institutions which can afford to pay two employees and civil service employees.
weeks, three weeks, or even 13th-month salaries to their
personnel from their budgetary appropriations. However, these

Erika Cristel Diaz | LABOR RELATIONS

 It has been stated that the Government, in contrast to the fruits of production and the right of enterprises to reasonable
private employer, protects the interests of all people in the returns on investments, and to expansion and growth.
public service, and that accordingly, such conflicting interests
as are present in private labor relations could not exist in the The right to self-organization is not limited to private
relations between government and those whom they employ. employees and encompasses all workers in both the
Moreover, determination of employment conditions as well as public and private sectors, as shown by the clear declaration
supervision of the management of the public service is in the in Article IX(B), Section 2(5) that "the right to self-organization
hands of legislative bodies. It is further emphasized that shall not be denied to government employees."
government agencies in the performance of their duties have a Article III, Section 8 of the Bill of Rights likewise states, the
right to demand undivided allegiance from their workers and right of the people, including those employed in the public and
must always maintain a pronounced esprit de corps or firm private sectors, to form unions, associations, or societies for
discipline among their staff members. purposes not contrary to law shall not be abridged.

It would be highly incompatible with these requirements of the While the right to self-organization is absolute, the right of
public service, if personnel took orders from union leaders or government employees to collective bargaining and negotiation
put solidarity with members of the working class above is subject to limitations.
solidarity with the Government. This would be inimical to the
public interest. Collective bargaining is a series of negotiations between an
employer and a representative of the employees to regulate
Moreover, it is asserted that public employees by joining labor the various aspects of the employer-employee relationship
unions may be compelled to support objectives which are such as working hours, working conditions, benefits, economic
political in nature and thus jeopardize the fundamental principle provisions, and others.
that the governmental machinery must be impartial and non-
political in the sense of party politics. Relations between private employers and their employees are
subject to the minimum requirements of wage laws, labor, and
GSIS Family Bank Employees Union vs. Villanueva welfare legislation. Beyond these requirements, private
employers and their employees are at liberty to establish the
terms and conditions of their employment relationship. In
Officers and employees of government-owned or controlled
contrast with the private sector, the terms and conditions of
corporations without original charters are covered by the Labor
employment of government workers are fixed by the
Code, not the Civil Service Law. However, non-chartered
legislature; thus, the negotiable matters in the public sector are
government-owned or controlled corporations are limited by
limited to terms and conditions of employment that are not
law in negotiating economic terms with their employees. This is
fixed by law.
because the law has provided the Compensation and Position
Classification System, which applies to all government-owned
When it comes to collective bargaining agreements and
or controlled corporations, chartered or non-chartered.
collective negotiation agreements in government-owned or
controlled corporations, Executive Order No. 203 unequivocally
In March 22, 2016, President Aquino issued Executive Order
stated that while it recognized the right of workers to organize,
No. 203, which approved the compensation and classification
bargain, and negotiate with their employers, "the Governing
standards and the Index of Occupational Services Framework
Boards of all covered [government-owned or controlled
developed and submitted by the Governance Commission.
corporations], whether Chartered or Non-chartered, may not
negotiate with their officers and employees the economic terms
On the right to self-organization
of their collective bargaining agreements.
The right of workers to self-organization, collective
bargaining, and negotiations is guaranteed by the
Thus, considering the existing law at the time, GSIS Family
Constitution under Article XIII, Section 3:
Bank could not be faulted for refusing to enter into a new
collective bargaining agreement with petitioner as it lacked the
SECTION 3. The State shall afford full protection to labor, local
authority to negotiate economic terms with its employees.
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, Charter Test
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. Art. IX-B Sec. 2(1), 1987 Constitution
They shall be entitled to security of tenure, humane conditions Section 2(1) The civil service embraces all branches,
of work, and a living wage. subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled
They shall also participate in policy and decision-making corporations with original charters.
processes affecting their rights and benefits as may be
provided by law.
Camporedondo vs. NLRC
The State shall promote the principle of shared responsibility
At issue in this case is whether the Philippine National Red
between workers and employers and the preferential use of
Cross (PNRC) is a government owned and controlled
voluntary modes in settling disputes, including conciliation, and
corporation or it has been impliedly converted to a private
shall enforce their mutual compliance therewith to foster
organization subject to the jurisdiction of labor tribunals in a
industrial peace.
complaint filed by petitioner, a former PNRC chapter
The State shall regulate the relations between workers and
administrator in Surigao del Norte, for illegal dismissal and
employers, recognizing the right of labor to its just share in the
damages, as he was forced to "retire" after he was required to

Erika Cristel Diaz | LABOR RELATIONS

 restitute shortages and unremitted collections in the total sum
of P135,927.78.
1. Petitioner claims that the VFP does not possess the
We rule that the Philippine National Red Cross (PNRC) is a elements which would qualify it as a public office,
government owned and controlled corporation, with an particularly the possession/delegation of a portion of
original charter under Republic Act No. 95, as amended. The sovereign power of government to be exercised for the
test to determine whether a corporation is government benefit of the public:
owned or controlled, or private in nature is simple:
1. Is it created by its own charter for the exercise of a public In the case at bar, the functions of petitioner corporation
function, or by incorporation under the general corporation enshrined in Section 4 of Rep. Act No. 2640 should most
law? certainly fall within the category of sovereign functions. The
2. Those with special charters are government corporations protection of the interests of war veterans is not only meant
subject to its provisions, and its employees are under the to promote social justice, but is also intended to reward
jurisdiction of the Civil Service Commission, and are patriotism.
compulsory members of the Government Service
Insurance System. All of the functions in Section 4 concern the well-being of war
veterans, our countrymen who risked their lives and lost their
The PNRC was not impliedly converted to a private limbs in fighting for and defending our nation. It would be
corporation" simply because its charter was amended to vest in injustice of catastrophic proportions to say that it is beyond
it the authority to secure loans, be exempted from payment of sovereignty’s power to reward the people who defended her.
all duties, taxes, fees and other charges of all kinds on all
importations and purchases for its exclusive use, on donations Like the holding of the National Centennial Celebrations, the
for its disaster relief work and other services and in its benefits functions of the VFP are executive functions, designed to
and fund raising drives, and be alloted one lottery draw a year implement not just the provisions of Rep. Act No. 2640, but
by the Philippine Charity Sweepstakes Office for the support of also, and more importantly, the Constitutional mandate for the
its disaster relief operation in addition to its existing lottery State to provide immediate and adequate care, benefits
draws for blood program. and other forms of assistance to war veterans and
veterans of military campaigns, their surviving spouses
Having served in the Philippine National Red Cross for a and orphans.
number of years since his initial employment, he must know
that it is a government corporation with its own charter and that 2. Petitioner claims that its funds are not public funds
he was covered by compulsory membership in the Government because no budgetary appropriations or government funds
Service Insurance System, which is why he could apply, as he have been released to the VFP directly or indirectly from
did, for "early" retirement from the service under Presidential the DBM, and because VFP funds come from membership
Decree No. 1146 or Republic Act No. 1616. dues and lease rentals earned from administering
government lands reserved for the VFP.
Veterans Federation of the Philippines vs. Reyes
The fact that no budgetary appropriations have been released
Veterans Federation of the Philippines is a Public to the VFP does not prove that it is a private corporation. The
Corporation DBM indeed did not see it fit to propose budgetary
Having in their possession public funds, the officers of the VFP, appropriations to the VFP, having itself believed that the VFP is
especially its fiscal officers, must indeed share in the fiscal a private corporation.
responsibility to the greatest extent.
If the DBM, however, is mistaken as to its conclusion regarding
As to petitioner’s allegation that VFP was intended as a self- the nature of VFP’s incorporation, its previous assertions will
governing autonomous body with a Supreme Council as not prevent future budgetary appropriations to the VFP. The
governing authority, we find that the provisions of Rep. Act No. erroneous application of the law by public officers does not bar
2640 concerning the control and supervision of the Secretary a subsequent correct application of the law.
of National Defense clearly withholds from the VFP complete
autonomy. To say, however, that such provisions render the Nevertheless, funds in the hands of the VFP from whatever
VFP inutile is an exaggeration. source are public funds, and can be used only for public
purposes. This is mandated by the following provisions of Rep.
An office is not rendered inutile by the fact that it is placed Act No. 2640.
under the control of a higher office. These subordinate offices,
such as the executive offices under the control of the In the case at bar, some of the funds were raised by even more
President, exercise discretion at the first instance. While their special means, as the contributions from affiliate organizations
acts can be altered or even set aside by the superior, these of the VFP can hardly be regarded as enforced contributions
acts are effective and are deemed the acts of the superior until as to be considered taxes. They are more in the nature of
they are modified. Surely, we cannot say that the offices of all donations which have always been recognized as a source of
the Department Secretaries are worthless positions. public funding.

In sum, the assailed DND Department Circular No. 04 does not Affiliate organizations of the VFP cannot complain of their
supplant nor modify and is, on the contrary, perfectly in contributions becoming public funds upon the receipt by the
consonance with Rep. Act No. 2640. Petitioner VFP is a public VFP, since they are presumed aware of the provisions of Rep.
corporation. As such, it can be placed under the control and Act No. 2640 which not only specifies the exclusive purposes
supervision of the Secretary of National Defense, who for which VFP funds can be used, but also provides for the
consequently has the power to conduct an extensive regulation of such funds by the national government through
management audit of petitioner corporation. the Secretary of National Defense.

Erika Cristel Diaz | LABOR RELATIONS

 (PSPCA) vs. COA
3. Petitioner claims that the Secretary of National
Defense historically did not indulge in the direct or Prospective application of the Charter Test
‘micromanagement’ of the VFP precisely because it is The petitioner is correct in stating that the charter test is
essentially a civilian organization where membership is predicated, at best, on the legal regime established by the
voluntary. 1935 Constitution, Section 7, Article XIII, which states:

Neither is the civilian nature of VFP relevant in this case. The Sec. 7. The National Assembly shall not, except by general
Constitution does not contain any prohibition, express or law, provide for the formation, organization, or regulation of
implied, against the grant of control and/or supervision to the private corporations, unless such corporations are owned or
Secretary of National Defense over a civilian organization. controlled by the Government or any subdivision or
instrumentality thereof.
The Office of the Secretary of National Defense is itself a
civilian office, its occupant being an alter ego of the civilian The foregoing proscription has been carried over to the 1973
Commander-in-Chief. This set-up is the manifestation of the and the 1987 Constitutions. Section 16 of Article XII of the
constitutional principle that civilian authority is, at all times, present Constitution provides:
supreme over the military. There being no such constitutional
prohibition, the creation of a civilian public organization by Rep. Sec. 16. The Congress shall not, except by general law,
Act No. 2640 is not rendered invalid by its being placed under provide for the formation, organization, or regulation of private
the control and supervision of the Secretary of National corporations. Government-owned or controlled corporations
Defense. may be created or established by special charters in the
interest of the common good and subject to the test of
Petitioner’s stand that the VFP is a private corporation because economic viability.
membership thereto is voluntary is likewise erroneous. As
stated above, the membership of the VFP is not the individual Section 16 is essentially a re-enactment of Section 7 of Article
membership of the affiliate organizations, but merely the XVI of the 1935 Constitution and Section 4 of Article XIV of the
aggregation of the heads of such affiliate organizations. These 1973 Constitution.
heads forming the VFP then elect the Supreme Council and
the other officers, of this public corporation. During the formulation of the 1935 Constitution, the Committee
on Franchises recommended the foregoing proscription to
4. Petitioner claims that the Administrative Code of 1987 prevent the pressure of special interests upon the lawmaking
does not provide that the VFP is an attached agency, body in the creation of corporations or in the regulation of the
and nor does it provide that it is an entity under the control same.
and supervision of the DND in the context of the provisions
of said code. To permit the lawmaking body by special law to provide for the
organization, formation, or regulation of private corporations
The Administrative Code, by giving definitions of the various would be in effect to offer to it the temptation in many cases to
entities covered by it, acknowledges that its enumeration is not favor certain groups, to the prejudice of others or to the
exclusive. The Administrative Code could not be said to have prejudice of the interests of the country.
repealed nor enormously modified Rep. Act No. 2640 by
implication, as such repeal or enormous modification by And since the underpinnings of the charter test had been
implication is not favored in statutory construction. introduced by the 1935 Constitution and not earlier, it
follows that the test cannot apply to the petitioner, which
5. Petitioner offers as evidence the DBM opinion that the was incorporated by virtue of Act No. 1285, enacted on
VFP is a non-government organization in its January 19, 1905. Settled is the rule that laws in general have
certification that the VFP "has not been a direct recipient no retroactive effect, unless the contrary is provided.
of any funds released by the DBM."
All statutes are to be construed as having only a prospective
On this score, though, we disagree with respondents and hold operation, unless the purpose and intention of the legislature to
that the DBM’s appraisal is considered persuasive. The DBM give them a retrospective effect is expressly declared or is
opinion furthermore suffers from its lack of explanation and necessarily implied from the language used. In case of doubt,
justification in the "certification of non-receipt" where said the doubt must be resolved against the retrospective effect.
opinion was given. The DBM has not furnished, in said
certification or elsewhere, an explanation for its opinion that There are a few exceptions. Statutes can be given retroactive
VFP is a non-government organization. effect in the following cases: (1) when the law itself so
expressly provides; (2) in case of remedial statutes; (3) in case
Exceptions to the charter test: GOCCs with original of curative statutes; (4) in case of laws interpreting others; and
(5) in case of laws creating new rights. None of the exceptions
charters within the coverage of the Labor Code is present in the instant case.
1. Philippine Society for the Prevention of Cruelty to
Animals (PSPCA); PSPCA is declared a private domestic corporation subject
2. Government Security Insurance Services (GSIS); and to the jurisdiction of the Securities and Exchange
3. Philippine National Red Cross (PNRC). Commission. COA is enjoined from investigating, examining
and auditing the petitioner's fiscal and financial affairs.
1. Philippine Society for the Prevention of Cruelty to
Animals (PPSCA); A reading of petitioner’s charter shows that it is not subject
to control or supervision by any agency of the State, unlike
Phil. Society for the Prevention of Cruelty to Animals government-owned and controlled corporations. No

Erika Cristel Diaz | LABOR RELATIONS

 government representative sits on the board of trustees of criminality of such corporation as a refusal to produce its
the petitioner. Like all private corporations, the successors of books.
its members are determined voluntarily and solely by the
petitioner in accordance with its by-laws, and may exercise To state this proposition is to answer it. While an individual
those powers generally accorded to private corporations, such may lawfully refuse to answer incriminating questions unless
as the powers to hold property, to sue and be sued, to use a protected by an immunity statute, it does not follow that a
common seal, and so forth. corporation vested with special privileges and franchises may
refuse to show its hand when charged with an abuse of such
The employees of the petitioner are registered and privileges.
covered by the Social Security System at the latter’s
initiative, and not through the Government Service Insurance 2. Government Security Insurance Services (GSIS)
System, which should be the case if the employees are
considered government employees. This is another indication GSIS vs. NLRC
of petitioner’s nature as a private entity.
Government agencies & corporations, even if with original
The fact that a certain juridical entity is impressed With charters are covered by Art. 106-107 on the Joint & Several
public interest does not, by that circumstance alone make liability of the contractor
the entity a public corporation
The respondents contend that the petitioner is a body politic The GSIS avers that it cannot twice be held liable for
because its primary purpose is to secure the protection and complainants' salary differentials since it fully paid
welfare of animals which, in turn, redounds to the public good. complainants' salaries by incorporating in the Security Service
This argument, is, at best, specious. Contract the salary rate increases mandated by Wage Order
Nos. 1 and 2; otherwise, it would be unjust enrichment on the
A corporation may be private although its charter contains part of complainants and/or LSWA at its expense. It submits
provisions of a public character, incorporated solely for the that Articles 106 and 107 of the Labor Code were not
public good. This class of corporations may be considered contemplated by its framers to cover principals or clients of
quasi-public corporations, which are private corporations that service contractors who had already paid for the wages of the
render public service. contractor or subcontractor.

The true criterion, therefore, to determine whether a LSWA maintains that the GSIS is jointly and severally liable
corporation is public or private is found in the totality of the with LSWA because Articles 106 and 107 of the Labor Code
relation of the corporation to the State. If the corporation is provide so and these provisions were intended to ensure that
created by the State as the latter’s own agency or employees are paid the wages due them in case of violation of
instrumentality to help it in carrying out its governmental the Labor Code of either the contractor or the principal; that the
functions, then that corporation is considered public; otherwise, GSIS cannot claim that holding it jointly and severally liable
it is private. with LSWA would result in grave injustice since the law did not
leave it without recourse as the GSIS has the right of
The respondents argue that since the charter of the reimbursement from its co-debtor under Article 1217 of the
petitioner requires the latter to render periodic reports to Civil Code.
the Civil Governor, whose functions have been inherited
by the President, the petitioner is, therefore, a government Articles 106 and 107 of the Labor Code provide:
instrumentality. ART. 106. Contractor or subcontractor. - Whenever an
employer enters into contract with another person for the
This contention is inconclusive. By virtue of the fiction that all performance of the former's work, the employees of the
corporations owe their very existence and powers to the State, contractor and of the latter's subcontractor, if any, shall be paid
the reportorial requirement is applicable to all in accordance with the provisions of this Code.
corporations of whatever nature, whether they are public,
quasi-public, or private corporations as creatures of the In the event that the contractor or subcontractor fails to pay the
State. wage of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor
The corporation is a creature of the state. It is presumed to be or subcontractor to such employees to the extent of the work
incorporated for the benefit of the public. It received certain performed under the contract, in the same manner and extent
special privileges and franchises, and holds them subject to the that he is liable to employees directly employed by him.
laws of the state and the limitations of its charter. Its powers
are limited by law. It can make no contract not authorized by its ART. 107 Indirect employer. - The provisions of the
charter. immediately preceding Article shall likewise apply to any
person, partnership, association or corporation which, not
Its rights to act as a corporation are only preserved to it so long being an employer, contracts with an independent contractor
as it obeys the laws of its creation. There is a reserve[d] right in for the performance of any work, task, job or project.
the legislature to investigate its contracts and find out whether
it has exceeded its powers. It would be a strange anomaly to In this case, the GSIS cannot evade liability by claiming that it
hold that a state, having chartered a corporation to make use had fully paid complainants' salaries by incorporating in the
of certain franchises, could not, in the exercise of sovereignty, Security Service Contract the salary rate increases mandated
inquire how these franchises had been employed, and whether by Wage Order Nos. 1 and 2 by increasing the contract price
they had been abused, and demand the production of the from P3,000.00 to P3,176.07 per guard per month effective
corporate books and papers for that purpose. The defense November 1, 1990 to January 7, 1991, and P4,200.00 effective
amounts to this, that an officer of the corporation which is January 8, 1991 to May 31, 1991.
charged with a criminal violation of the statute may plead the

Erika Cristel Diaz | LABOR RELATIONS

 The joint and several liability of the employer or principal effective, and compassionate humanitarian assistance for the
was enacted to ensure compliance with the provisions of most vulnerable without consideration of nationality, race,
the Code, principally those on statutory minimum wage. religion, gender, social status, or political affiliation.
The contractor or subcontractor is made liable by virtue of his
or her status as a direct employer, and the principal as the So must this Court recognize too the country’s adherence
indirect employer of the contractor's employees. to the Geneva Convention and respect the unique status
of the PNRC in consonance with its treaty obligations. The
This liability facilitates, if not guarantees, payment of the Geneva Convention has the force and effect of law.
workers' compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. This is not Under the Constitution, the Philippines adopts the generally
unduly burdensome to the employer. Should the indirect accepted principles of international law as part of the law of the
employer be constrained to pay the workers, it can recover land. This constitutional provision must be reconciled and
whatever amount it had paid in accordance with the terms of harmonized with Article XII, Section 16 of the Constitution,
the service contract between itself and the contractor. instead of using the latter to negate the former.

Thus, the Court does not agree with the GSIS's claim that a By requiring the PNRC to organize under the Corporation Code
double burden would be imposed upon the latter because it just like any other private corporation, the Decision of July 15,
would be paying twice for complainants' services. Such fears 2009 lost sight of the PNRC’s special status under international
are unfounded. Under Article 1217 of the Civil Code, if the humanitarian law and as an auxiliary of the State, designated
GSIS should pay the money claims of complainants, it has the to assist it in discharging its obligations under the Geneva
right to recover from LSWA whatever amount it has paid in Conventions.
accordance with the terms of the service contract between the
LSWA and the GSIS. Although the PNRC is called to be independent under its
Fundamental Principles, it interprets such independence as
Joint and solidary liability is simply meant to assure aggrieved inclusive of its duty to be the government’s humanitarian
workers of immediate and sufficient payment of what is due partner. To be recognized in the International Committee, the
them. This is in line with the policy of the State to protect and PNRC must have an autonomous status, and carry out its
alleviate the plight of the working class. humanitarian mission in a neutral and impartial manner.

GSIS must pay security guards for pay differential arising from However, in accordance with the Fundamental Principle of
the wage order even if GSIS has already paid the increase to Voluntary Service of National Societies of the Movement, the
the security agency which did not pass on the increase to the PNRC must be distinguished from private and profit-making
security guards. Joint & solidary liability is for guards benefit entities. It is the main characteristic of National Societies that
and is paramount notwithstanding GSIS being government. they are not inspired by the desire for financial gain but by
This payment is without prejudice to reimbursement from the individual commitment and devotion to a humanitarian purpose
security agency. freely chosen or accepted as part of the service that National
Societies through its volunteers and/or members render to the
3. Philippine National Red Cross (PNRC) Community.

Liban vs. Gordon The PNRC, as a National Society of the International Red
Cross and Red Crescent Movement, can neither be
The auxiliary status of Red Cross Society means that it is at classified as an instrumentality of the State, so as not to
one and the same time a private institution and a public lose its character of neutrality as well as its independence,
service organization because the very nature of its work nor strictly as a private corporation since it is regulated by
implies cooperation with the authorities, a link with the international humanitarian law and is treated as an auxiliary of
State. In carrying out their major functions, Red Cross the State.
Societies give their humanitarian support to official bodies, in Based on the above, the sui generis status of the PNRC is now
general having larger resources than the Societies, working sufficiently established. Although it is neither a subdivision,
towards comparable ends in a given sector. agency, or instrumentality of the government, nor a
government-owned or controlled corporation or a
It is in recognition of this sui generis character of the subsidiary thereof, as succinctly explained in the Decision of
PNRC that R.A. No. 95 has remained valid and effective from July 15, 2009, so much so that respondent, under the Decision,
the time of its enactment in March 22, 1947 under the 1935 was correctly allowed to hold his position as Chairman thereof
Constitution and during the effectivity of the 1973 Constitution concurrently while he served as a Senator, such a conclusion
and the 1987 Constitution. does not ipso facto imply that the PNRC is a private
corporation within the contemplation of the provision of the
The purpose of the constitutional provision prohibiting Constitution, that must be organized under the Corporation
Congress from creating private corporations was to Code.
prevent the granting of special privileges to certain
individuals, families, or groups, which were denied to other The sui generis character of PNRC requires us to approach
groups. Based on the above discussion, it can be seen that the controversies involving the PNRC on a case-to-case basis. In
PNRC Charter does not come within the spirit of this sum, the PNRC enjoys a special status as an important ally
constitutional provision, as it does not grant special and auxiliary of the government in the humanitarian field in
privileges to a particular individual, family, or group, but creates accordance with its commitments under international law. This
an entity that strives to serve the common good. Court cannot all of a sudden refuse to recognize its existence,
especially since the issue of the constitutionality of the PNRC
The PNRC is a non-profit, donor-funded, voluntary, Charter was never raised by the parties.
humanitarian organization, whose mission is to bring timely,

Erika Cristel Diaz | LABOR RELATIONS

 It bears emphasizing that the PNRC has responded to almost charter" and as an "instrumentality" of the Government
all national disasters since 1947, and is widely known to within the meaning of Article IX (B) (2) (1) of the Constitution.
provide a substantial portion of the country’s blood
requirements. Its humanitarian work is unparalleled. The Court It follows that the employees of petitioner BSP are
should not shake its existence to the core in an untimely and embraced within the Civil Service and are accordingly
drastic manner that would not only have negative governed by the Civil Service Law and Regulations.
consequences to those who depend on it in times of disaster
and armed hostilities but also have adverse effects on the The Civil Service embraces every branch, agency, subdivision
image of the Philippines in the international community. The and instrumentality of the Government, including every
sections of the PNRC Charter that were declared void must government-owned or controlled corporation. The 1935
therefore stay. Constitution had a similar provision in its Section 1,
Article XII which stated:
The constitutionality of R.A. No. 95, as amended, the charter of A Civil Service embracing all branches and subdivisions of the
the Philippine National Red Cross, was not raised by the Government shall be provided by law.
parties as an issue and should not have been passed upon by
this Court. The structure of the PNRC is sui generis¸ being The inclusion of "government-owned or controlled
neither strictly private nor public in nature. R.A. No. 95 corporations" within the embrace of the civil service shows a
remains valid and constitutional in its entirety. The deliberate effort of the framers to plug an earlier loophole which
dispositive portion of the Decision should therefore be allowed government-owned or controlled corporations to avoid
MODIFIED by deleting the second sentence, to now read as the full consequences of the all encompassing coverage of the
follows: civil service system.

WHEREFORE, we declare that the office of the Chairman The same explicit intent is shown by the addition of "agency"
of the Philippine National Red Cross is not a government and "instrumentality" to branches and subdivisions of the
office or an office in a government-owned or controlled Government. All offices and firms of the government are
corporation for purposes of the prohibition in Section 13, covered. The amendments introduced in 1973 are not idle
Article VI of the 1987 Constitution. exercises or meaningless gestures.

Examples of government corporations covered by They carry the strong message that civil service coverage is
broad and all-embracing insofar as employment in the
Civil Service Laws: government in any of its governmental or corporate arms is
1. Boy Scouts of the Philippines (BSP); concerned.
2. Local Water Districts;
3. Philippine Amusement Gaming Corporation The complaint in NLRC Case No. 1637-84 having been filed on
(PAGCOR); 13 November 1984, when the 1973 Constitution was still in
4. Philippine International Trading Corporation (PITC). force, our ruling in Juco applies in the case at bar.

1. Boy Scouts of the Philippines (BSP) In view of the foregoing, we hold that both the Labor Arbiter
and public respondent NLRC had no jurisdiction over the
Boy Scouts of the Philippines vs. NLRC complaint filed by private respondents in NLRC Case No.
1637-84; neither labor agency had before it any matter which
Examining the relevant statutory provisions and the arguments could validly have been passed upon by it in the exercise of
outlined above, the Court considers that the following need to original or appellate jurisdiction.
be considered in arriving at the appropriate legal
characterization of the BSP for purposes of determining 2. Local Water Districts
whether its officials and staff members are embraced in the
Civil Service. Tanjay vs. Gabaton

While the BSP may be seen to be a mixed type of entity, Petitioner Josefino Datuin filed a complaint for illegal dismissal
combining aspects of both public and private entities, we against respondent Tarlac Water District in the Department of
believe that considering the character of its purposes and its Labor and Employment (DOLE) which decided in his favor.
functions, the statutory designation of the BSP as "a public However, upon respondent's motion for reconsideration, the
corporation" and the substantial participation of the National Labor Relations Commission (NLRC) reversed the
Government in the selection of members of the National decision and dismissed the complaint for lack of jurisdiction,
Executive Board of the BSP, the BSP, as presently holding that as the respondent Tarlac Water District is a
constituted under its charter, is a government-controlled corporation created by a special law (PD No. 198), its officers
corporation within the meaning of Article IX. (B) (2) (1) of and employees belong to the civil service and their separation
the Constitution. from office should be governed by Civil Service Rules and
Regulations.
We are fortified in this conclusion when we note that the
Administrative Code of 1987 designates the BSP as one of the The only question here is whether or not local water districts
attached agencies of the Department of Education, Culture and are government owned or controlled corporations whose
Sports ("DECS"). We believe that the BSP is appropriately employees are subject to the provisions of the Civil Service
regarded as "a government instrumentality" under the 1987 Law.
Administrative Code.
The Labor Arbiter failed to take into account the provisions of
It thus appears that the BSP may be regarded as both a Presidential, Decree No. 1479, which went into effect on 11
"government controlled corporation with an original June 1978. P.D. No. 1479 wiped away Section 25 of P.D.

Erika Cristel Diaz | LABOR RELATIONS

 198 quoted above, and Section 26 of P.D. 198 was plaintiffs have not alleged any unfair labor practice. Theirs is a
renumbered as Section 25 in the following manner: simple action for damages for tortious acts allegedly committed
by the defendants. Such being the case, the governing statute
Section 26. of the same decree P.D. 198 is hereby is the Civil Code and not the Labor Code. It results that the
amended to read as Section 25 as follows: orders under review are based on a wrong premise.

Section 25. Authorization. — The district may exercise all the A similar exception is applicable to the Civil Service authorities.
powers which are expressly granted by this Title or which are There are also instances when the Merit System Protection
necessarily implied from or incidental to the powers and Board and the Civil Service Commission have to yield
purposes herein stated. For the purpose of carrying out the jurisdiction to the civil courts even if the conflict involves civil
objectives of this Act, a district is hereby granted the power of servants.
eminent domain, the exercise thereof shall, however, be
subject to review by the Administration. Following the doctrine laid down in the above-mentioned
cases, which we here apply by analogy, the Civil Service
Thus, Section 25 of P.D. 198 exempting the employees of authorities will have jurisdiction over a case involving civil
water districts from the application of the Civil Service servants only if it can be regarded as equivalent to a labor
Law was removed from the statute books. dispute resoluble under the Labor Code. Conversely, the
regular courts will have jurisdiction if the case can be decided
The hiring and firing of employees of government-owned or under the general laws, as where the complaint is, say, for the
controlled corporations are governed by the Civil Service Law recovery of private debts, as in Molave; or for damages due to
and Civil Service Rules and Regulations. the slanderous remarks of the employer, as in Medina; or for
malicious prosecution of the employees, as in Pepsi Cola.
Our determination in the earlier cases that water districts are
government instrumentalities and that their employees The mere fact that the parties are members of the Civil Service
belong to the civil service, disposes of Datuin's petition in does not remove such controversies from the general
G.R. No. 84300. The National Labor Relations Commission jurisdiction of the courts of justice and place them under the
has no jurisdiction over his complaint for illegal dismissal. special jurisdiction of the Board and the Commission.

3. Philippine Amusements and Gaming Corporation Even as the labor authorities have original jurisdiction to
(PAGCOR) interpret and apply the Labor Code, so too have the Civil
Service authorities the original jurisdiction to resolve questions
PAGCOR vs. CA coming under PD 1869. The civil courts are excluded from
either case because the general civil and criminal laws are not
On May 3, 1988, the Philippine Amusement & Gaming involved. Obviously, the same rule applied to workers in the
Corporation (PAGCOR) terminated the services of private private sector should also apply to civil servants, for what is
respondent Joel Montoya as Table Supervisor at Casino sauce for the goose is sauce for the gander.
Filipino on the ground of loss of confidence.
Whether such loss of confidence had really been
The movant contended that, being a money claim arising from established is a matter that we believe should be
the plaintiff’s alleged illegal dismissal, the complaint was determined in the first instance by the Civil Service
cognizable only by the labor arbiter and the National Labor authorities. Absent such a determination, the question of
Relations Commission. Montoya insisted, however, that damages cannot be resolved as the two issues are
PAGCOR was a government-controlled corporation created inseparable. The trial court cannot make an independent
under PD 1869 and therefore not covered by the Labor Code. finding that the private respondent is entitled to damages
unless it is first ascertained that he was arbitrarily separated.
It is now settled that, conformably to Article IX-B, Section 2(1), This is a factual question best examined by the Civil Service
government-owned or controlled corporations shall be authorities. Moreover, even if it be assumed that the Regional
considered part of the Civil Service only if they have Trial Court of Angeles City has or may eventually exercise
original charters, as distinguished from those created under jurisdiction over the question of damages, the Solicitor General
general law. would still be correct in pointing out that the doctrine of
exhaustion of administrative remedies has not been observed.
PAGCOR belongs to the Civil Service because it was There would be no cause of action before it at this time.
created directly by PD 1869 on July 11, 1983. Consequently,
controversies concerning the relations of the employees with Our conclusion is that the trial court erred in denying the
the management of PAGCOR should come under the motion to dismiss and that the respondent court also erred in
jurisdiction of the Merit System Protection Board and the Civil sustaining it. The issue raised by the private respondent, to wit,
Service Commission, conformably to the Administrative Code the correct interpretation and application of PD 1869,
of 1987. properly comes under the jurisdiction of the Merit System
Protection Board, subject to appeal to the Civil Service
Applying this rule, we have upheld the jurisdiction of the Civil Commission, and ultimately to review by this Court.
Service authorities, as against that of the labor authorities, in
controversies involving the terms of employment, and other 4. Philippine International Trading Corporation (PITC)
related issues, of the Civil Service officials and employees.
Philippine International Trading Corporation vs. COA
We have held in a number of cases that labor arbiters exercise
original and exclusive jurisdiction over conflicts between The PITC is a government-owned and controlled
employees and their employers but not when the Labor Code corporation created under Presidential Decree (PD) No.
is not involved. It is obvious from the complaint that the 252 on July 21, 1973, primarily for the purpose of promoting

Erika Cristel Diaz | LABOR RELATIONS

 and developing Philippine trade in pursuance of national This issue has already been laid to rest in the case of PNOC-
economic development. EDC vs. Leogardo, involving the same petitioner and the same
issue, where this Court ruled that the doctrine that employees
According to the COA in its Decision No. 98-048 dated January of government-owned and controlled corporations, whether
27, 1998, the exemption granted to the PITC has been created by special law or formed as subsidiaries under the
repealed and revoked by the repealing provisions of RA 6758, General Corporation law are governed by the Civil Service Law
particularly: and not by the Labor Code, has been supplanted by the
present Constitution.
Section 16 thereof which provides:
Sec. 16. Repeal of Special Salary Laws and Regulations. - 1987 Constitution applies
All laws, decrees, executive orders, corporate charters, and Thus, under the present state of the law, the test in
other issuances or parts thereof, that exempt agencies from determining whether a government-owned or controlled
the coverage of the System, or that authorize and fix position corporation is subject to the Civil Service Law are the
classifications, salaries, pay rates or allowances of specified manner of its creation, such that government corporations
positions, or groups of officials, and employees or of agencies, created by special charter are subject to its provisions while
which are inconsistent with the System, including the proviso those incorporated under the General Corporation Law are not
under Section 2 and Section 16 of PD No. 985 are hereby within its coverage.
repealed.
Specifically, the PNOC-EDC having been incorporated
PITC argues that RA 6758 which is a law of general application under the General Corporation Law was held to be a
cannot repeal provisions of the Revised Charter of PITC and its government owned or controlled corporation whose employees
amendatory laws expressly exempting PITC from OCPC are subject to the provisions of the Labor Code.
coverage being special laws.
The fact that the case arose at the time when the 1973
In the case at bar, the repeal by Section 16 of RA 6758 of “all Constitution was still in effect, does not deprive the NLRC of
corporate charters that exempt agencies from the coverage of jurisdiction on the premise that it is the 1987 Constitution
the System” was clear and expressed necessarily to achieve that governs because it is the Constitution in place at the
the purposes for which the law was enacted, that is, the time of the decision. In the case at bar, the decision of the
standardization of salaries of all employees in government NLRC was promulgated on July 3, 1987. Accordingly, this case
owned and / or controlled corporations to achieve "equal falls squarely under the rulings of the aforementioned cases.
pay for substantially equal work.
2. Food Terminal Inc. (FTC)
Henceforth, PITC should now be considered as covered by
laws prescribing a compensation and position classification Lumanta vs. NLRC & Food Terminal, Inc.
system in the government including RA 6758. This is without
prejudice, however, as discussed above, to the non-diminution On 20 March 1987, petitioner Luz Lumanta, joined by 54 other
of pay of incumbents as of July 1, 1989 as provided in Sections retrenched employees, filed a complaint for unpaid 'd
12 and 17 of said law. retrenchment or separation pay against private respondent
Food Terminal, Inc. ("FTI") with the Department of Labor and
Examples of government corporations NOT covered Employment. The complaint was later amended to include
charges of underpayment of wages and non-payment of
by Civil Service Laws: emergency cost of living allowances (ECOLA).
1. Philippine National Oil Company-Energy Development
Corporation (PNOC-EDC); Private respondent FTI moved to dismiss the complaint on the
2. Food Terminal Inc. (FTC); and ground of lack of jurisdiction. It argued that being a
3. National Housing Corporation (NHC) government-owned and controlled corporation, its employees
are governed by the Civil Service Law not by the Labor Code,
1. Philippine National Oil Company-Energy Development and that claims arising from employment fall within the
Corporation (PNOC-EDC) jurisdiction of the Civil Service Commission and not the
Department of Labor and Employment.
PNOC-Energy Development Corp. vs. NLRC
The only question raised in the present Petition is whether or
Rule under the 1973 Constitution not a labor law claim against a government-owned and
Petitioner PNOC-EDC argued that since Labor Arbiter Minoria controlled corporation, such as private respondent FTI, falls
rendered the decision at the time when the 1973 Constitution within the jurisdiction of the Department of Labor and
was in force, said decision is null and void because under the Employment.
1973 Constitution, government-owned and controlled
corporations were governed by the Civil Service Law. Comparison between the provisions under the 1973 and
1987 Constitution:
Even assuming that PNOC-EDC has no original or special
charter and Section 2(i), Article IX-B of the 1987 Constitution 1973 Constitution, Article II-B, Section 1(1) of which
provides that: provided:
The civil service embraces every branch, agency, subdivision,
The Civil Service embraces all branches, subdivision, and instrumentality of the Government, including every
instrumentalities and agencies of the Government, including government-owned or controlled corporation.
government-owned or controlled corporations with original
charters.

Erika Cristel Diaz | LABOR RELATIONS

 The 1987 Constitution which took effect on February 2, (100%) owned by the Government from its incorporation under
1987, has on this point a notably different provision which Act 459, the former corporation law.
reads:
The government entities that own its shares of stock are the
The civil service embraces all branches, subdivisions, Government Service Insurance System, the Social Security
instrumentalities, and agencies of the Government, including System, the Development Bank of the Philippines, the National
government-owned or controlled corporations with original Investment and Development Corporation and the People's
charter. (Article IX-B, Section 2 [1]). Homesite and Housing Corporation. 1 Petitioner Trade Unions
of the Philippines and Allied Services (TUPAS, for brevity) is a
Meaning of “with original charter” legitimate labor organization with a chapter in NHC.
The intent and meaning of the new phrase "with original
charter, in effect held that government-owned and controlled In retrospect, it will be recalled that in a former case of illegal
corporations with original charter refer to corporations dismissal involving the same respondent corporation, We had
chartered by special law as distinguished from corporations ruled that the employees of NHC and of other government
organized under our general incorporation statute-the owned or controlled corporations were governed by civil
Corporation Code. service laws, rules and regulations pursuant to the 1973
Constitution which provided that "the civil service embraces
It is the 1987 Constitution, and not the case law embodied every branch, agency, subdivision and instrumentality of the
in Juco, which applies in the case at bar, under the principle government, including government-owned or controlled
that jurisdiction is determined as of the time of the filing of the corporations."
complaint. At the time the complaint against private
respondent FTI was filed (i.e., 20 March 1987), and at the time It was therein stressed that to allow subsidiary corporations to
the decisions of the respondent Labor Arbiter and National be excluded from the civil service laws would be to permit the
Labor Relations Commission were rendered (i.e., 31 August circumvention or emasculation of the above-quoted
1987 and 18 March 1988, respectively), the 1987 Constitution constitutional provision. As perceptively analyzed therein, it
had already come into effect. would be possible for a regular ministry of government to
create a host of subsidiary corporations under the Corporation
Letter of Instruction No. 1013, dated 19 April 1980, included Code funded by a willing legislature.
Food Terminal, Inc. in the category of government-owned
or controlled corporations. Since then, FTI served as the A government-owned corporation could create several
marketing arm of the National Grains Authority (now known as subsidiary corporations. These subsidiary corporation rations
the National Food Authority). would enjoy the best of two worlds. Their officials and
employees would be privileged individuals, free from the strict
The pleadings show that FTI was previously a privately accountability required by the Civil Service Decree and the
owned enterprise, created and organized under the regulations of the Commission on Audit. Their incomes would
general incorporation law, with the corporate name Greater not be subject to the competitive restraints of the open market
Manila Food Terminal Market, Inc. The record does not nor to the terms and conditions of civil service employment.
indicate the precise amount of the capital stock of FM that is
owned by the government; the petitioners' claim, and this has The rule, however, was modified in the 1987 Constitution, the
not been disputed, that FTl is not hundred percent (100%) corresponding provision whereof declares that the civil service
government-owned and that it has some private embraces all branches, subdivisions, instrumentalities and
shareholders. agencies of the government, including government-owned or
controlled corporations with original charters.
We conclude that because respondent FTI is government-
owned and controlled corporation without original charter, Consequently, the civil service now covers only
it is the Department of Labor and Employment, and not the government owned or controlled corporations with
Civil Service Commission, which has jurisdiction over the original or legislative charters, that is those created by an
dispute arising from employment of the petitioners with private act of Congress or by special law, and not those
respondent FTI, and that consequently, the terms and incorporated under and pursuant to a general legislation.
conditions of such employment are governed by the Labor
Code and not by the Civil Service Rules and Regulations. The situations sought to be avoided by the 1973 Constitution
and expressed by this Court in the National Housing
Public respondent National Labor Relations Commission acted Corporation case ... appear relegated to relative insignificance
without or in excess of its jurisdiction in dismissing petitioners by the 1987 Constitutional provision that the Civil Service
complaint. embraces government-owned controlled corporations with
original charters and therefore, by clear implication, the Civil
3. National Housing Corporation (NHC) Service does not include government-owned or controlled
corporations which are organized as subsidiaries of
government-owned or controlled corporations under the
TUCP vs. National Housing Corporation general corporation law.

The workers or employees of NHC undoubtedly have the right

Respondent National Housing Corporation (hereinafter referred to form unions or employees' organizations. The right to
to as NHC) is a corporation organized in 1959 in accordance unionize or to form organizations is now explicitly recognized
with Executive Order No. 399, otherwise known as the Uniform and granted to employees in both the governmental and the
Charter of Government Corporations, dated January 1, 1951. private sectors.
Its shares of stock are and have been one hundred percent There is, therefore, no impediment to the holding of a
certification election among the workers of NHC for it is clear

Erika Cristel Diaz | LABOR RELATIONS

 that they are covered by the Labor Code, the NHC being a SSS VS. COA
government-owned and/or controlled corporation without
an original charter.
On 18 February 1997 the Department of Budget and
Management (DBM) declared as illegal the contract signing
Statutory implementation of the last cited section of the
bonus which the CNA authorized to be distributed among the
Constitution is found in Article 244 of the Labor Code, as
personnel of the SSS.4 On 1 July 1997 the SSS Corporate
amended by Executive Order No. 111, thus:
Auditor disallowed fund releases for the signing bonus since it
was "an allowance in the form of additional compensation
Right of employees in the public service — Employees of
prohibited by the Constitution.
the government corporations established under the
Corporation Code shall have the right to organize and to
Indeed we find no merit in the claim that the employees and
bargain collectively with their respective employers. All other
officers of SSS are entitled to the signing bonus provided for in
employees in the civil service shall have the right to form
the CNA. In the first place, the process of collective
associations for purposes not contrary to law.
negotiations in the public sector does not encompass
terms and conditions of employment requiring the
For, whether the employees of NHC are covered by the Labor
appropriation of public funds:
Code or by the civil service laws, a certification election may be
conducted.
Sec. 13. Terms and conditions of employment or
improvements thereof, except those that are fixed by law,
For employees in corporations and entities covered by the
may be the subject of negotiations between duly recognized
Labor Code, the determination of the exclusive bargaining
employees’ organizations and appropriate government
representative is particularly governed by Articles 255 to 259 of
authorities.
said Code. Article 256 provides for the procedure when there is
a representation issue in organized establishments, while
Sec. 3. Those that require appropriation of funds, such as
Article 257 covers unorganized establishments. These Labor
the following, are not negotiable:
Code provisions are fleshed out by Rules V to VII, Book V of
(a) Increase in salary emoluments and other allowances not
the Omnibus Implementing Rules.
presently provided for by law;
(b) Facilities requiring capital outlays;
With respect to other civil servants, that is, employees of all
(c) Car plan;
branches, subdivisions, instrumentalities and agencies of the
(d) Provident fund;
government including government-owned or controlled
(e) Special hospitalization, medical and dental services;
corporations with original charters and who are, therefore,
(f) Rice/sugar/other subsidies;
covered by the civil service laws, the guidelines for the
(g) Travel expenses;
exercise of their right to organize is provided for under
(h) Increase in retirement benefits.
Executive Order No. 180. Chapter IV thereof, consisting of
Sections 9 to 12, regulates the determination of the "sole and
Sec. 4. Matters that involve the exercise of management
exclusive employees representative";
prerogatives, such as the following, are likewise not
subject to negotiation:
Under Section 12, where there are two or more duly registered
(a) Appointment;
employees' organizations in the appropriate organization unit,
(b) Promotion;
the Bureau of Labor Relations shall, upon petition order the
(c) Assignment/Detail;
conduct of certification election and shall certify the winner as
(d) Reclassification/ upgrading of position;
the exclusive representative of the rank-and-file employees in
(e) Revision of compensation structure;
said organizational unit.
(f) Penalties imposed as a result of disciplinary actions;
(g) Selection of personnel to attend seminar, trainings, study
Distinction between Right to Self-Organization and grants;
Right of Association (h) Distribution of work load;
(i) External communication linkages.
Right to self- Right to On this issue, we have to explain the relevant amendments to
organization association the SSS charter in relation to the passage of RA 6758 (1989)
ER-EE YES NO entitled “An Act Prescribing a Revised Compensation and
relationship Position Classification in the Government and for other
Collective YES. Must be the NO. Lawful Purposes.”
bargaining purpose in whole purpose need not
or in part include CB We have no doubt that RA 6758 modified, if not repealed, Sec.
Separate YES NO 3, par. (c), of RA 1161 as amended, at least insofar as it
personality concerned the authority of SSC to fix the compensation of SSS
Abridgment by YES NO employees and officers. This means that whatever salaries and
state other financial and non-financial inducements that the SSC
Legal basis Labor Code Constitution (Bill was minded to fix for them, the compensation must comply
of Rights) with the terms of RA 6758.
Who can Private sector Both private and
exercise employees public sector Consequently, only the remuneration which was being offered
employees as of 1 July 1989, and which was then being enjoyed by
incumbent SSS employees and officers, could be availed of
exclusively by the same employees and officers separate from

Erika Cristel Diaz | LABOR RELATIONS

 and independent of the prescribed standardized salary rates. Lastly, while it is true that just like any other corporation
Unfortunately, however, the signing bonus in question did not organized under the Corporation Code, Corregidor Foundation,
qualify under Secs. 12 and 17 of RA 6758. Inc. may determine voluntarily and solely the successors of its
members in accordance with its own by-laws, this does not
It was non-existent as of 1 July 1989 as it accrued only in 1996 change the public character of its functions and the control the
when the CNA was entered into by and between SSC and government has over it.
ACCESS. The signing bonus therefore could not have been
included in the salutary provisions of the statute nor would it be
legal to disburse to the intended recipients. As discussed, the promotion and development of tourism is a
public function and, as provided in its Articles of Incorporation,
the members of Corregidor Foundation, Inc. must be
government officials who shall hold their membership by
Jurisdiction of the Commission on Audit (COA) reason of their office. In sum, Corregidor Foundation, Inc. is
a government-owned or controlled corporation. Thus, it is
under the audit jurisdiction of the Commission on Audit.

Oriondo et. al vs. COA

Others who can exercise the Right to Self-
Corregidor Foundation Inc. is a GOCC without original Organization
charter under the audit jurisdiction of the COA

A corporation, whether with or without an original charter, Aliens

is under the audit jurisdiction of the Commission on Audit
so long as the government owns or has controlling ART. 284. [269] Prohibition Against Aliens; Exceptions.
interest in it. All aliens, natural or juridical, as well as foreign
organizations are strictly prohibited from engaging directly or
It is immaterial whether a corporation is private or public for indirectly in all forms of trade union activities without
purposes of exercising the audit jurisdiction of the Commission prejudice to normal contacts between Philippine labor
on Audit. So long as the government owns or controls the unions and recognized international labor centers: Provided,
corporation, as in this case, the Commission on Audit may however, That aliens working in the country with valid
audit the corporation's accounts. permits issued by the Department of Labor and
Employment, may exercise the right to self-organization
The constitutional criterion on the exercise of the Commission and join or assist labor organizations of their own
on Audit's audit jurisdiction depends on the government's choosing for purposes of collective bargaining: Provided,
ownership or control of a corporation. The nature of the further, That said aliens are nationals of a country which
corporation, whether it is private, quasi-public, or public is grants the same or similar rights to Filipino workers.
immaterial.

The Constitution vests in the Commission on Audit, audit Requisites for an alien employee to exercise his right to
jurisdiction over government-owned and controlled self-organize:
corporations with original charters, as well government- (1) He should have a valid working permit issued by the
owned or controlled corporations without original DOLE; and
charters. (2) He is a national of a country which grants the same or
similar rights to Filipino workers or which has ratified either
Government-owned or controlled corporations with ILO Convention No. 874 or ILO Convention No. 98, as
original charters are subject to the Commission's pre- certified by the Philippine Department of Foreign Affairs
audit, while government-owned or controlled corporations (DFA).
without original charters are subject to the Commission's
post-audit. Employees of a cooperative
Employees of a cooperative are entitled to exercise their right
Government-owned or controlled corporations without to self-organization except those members of the cooperatives.
original charters refer to corporations created under the Such members are considered owners, and owners cannot
Corporation Code but are owned or controlled by the bargain with himself or his co-owners.
government. The nature or purpose of the corporation is not
material in determining the Commission's audit jurisdiction.
Neither is the manner of creation of a corporation, whether
under a general or special law.

Just because the employees of Corregidor Foundation, Inc. Cooperative Rural Bank of Davao City vs. Calleja et. al
are not under the jurisdiction of the Civil Service
Commission does not mean that Corregidor Foundation,
Inc. is not government-owned or controlled. Article IX-B, Definition of cooperative
Section 2(1) of the Constitution is clear that the jurisdiction of Under Section 2 of P.D. No. 175, a cooperative is defined to
the Civil Service Commission is over government-owned or mean organizations composed primarily of small producers
controlled corporations with original charters, not over those and of consumers who voluntarily join together to form
without original charters like Corregidor Foundation, Inc. business enterprises which they themselves own, control, and
patronize."

Erika Cristel Diaz | LABOR RELATIONS

 The right of the employees to self-organization is a
Its creation and growth were declared as a policy of the State compelling reason why their withdrawal from the
as a means of increasing the income and purchasing power of cooperative must be allowed. As pointed out by CURE, the
the low-income sector of the population in order to attain a resignation of the member-employees is an expression of
more equitable distribution of income and wealth. their preference for union membership over that of
membership in the cooperative.
A cooperative, therefore, is by its nature different from an
ordinary business concern, being run either by persons, The avowed policy of the State to afford fall protection to labor
partnerships, or corporations. Its owners and/or members and to promote the primacy of free collective bargaining
are the ones who run and operate the business while the mandates that the employees' right to form and join unions for
others are its employees. purposes of collective bargaining be accorded the highest
consideration.
As above stated, irrespective of the number of shares owned
by each member they are entitled to cast one vote each in Membership in an electric cooperative which merely vests in
deciding upon the affairs of the cooperative. Their share capital the member a right to vote during the annual meeting becomes
earn limited interests. They enjoy special privileges as — too trivial and insubstantial vis-a-vis the primordial and more
exemption from income tax and sales taxes, preferential right important constitutional right of an employee to join a union of
to supply their products to State agencies and even exemption his choice.
from the minimum wages laws.

An employee therefore of such a cooperative who is a Negros Oriental Electric Cooperative (NORECO) vs.
member and co-owner thereof cannot invoke the right to Secretary
collective bargaining for certainly an owner cannot bargain
with himself or his co-owners. Employees of cooperatives who
are themselves members of the cooperative have no right to The petitioner is indeed correct in stating that employees of a
form or join labor organizations for purposes of collective cooperative who are members-consumers or members-
bargaining for being themselves co-owners of the cooperative. owners, are not qualified to form, join or assist labor
organizations for purposes of collective bargaining, because of
However, in so far as it involves cooperatives with the principle that an owner cannot bargain with himself.
employees who are not members or co-owners thereof,
certainly such employees are entitled to exercise the However, the petitioner failed to mention that the Supreme
rights of all workers to organization, collective bargaining, Court has also declared that in so far as it involves
negotiations and others as are enshrined in the Constitution cooperatives with employees who are not members or co-
and existing laws of the country. owners thereof, certainly such employees are entitled to
exercise the rights of all workers to organization, collective
bargaining, negotiations and others as are enshrined in the
Constitution and existing laws of the country.
Central Negros Electric Cooperative vs. Secretary
The public respondent found that petitioner failed to show any
Employees who withdraw their membership from the proof that any member of the private respondent was also a
cooperative may join a labor union member or co-owner of the petitioner-cooperative. Hence the
The argument of CENECO that the withdrawal was merely to members of the private respondent could validly form a labor
subvert the ruling of this Court in the BATANGAS case is organization.
without merit. The case referred to merely declared that
employees who are at the same time members of the Petitioner failed to show any proof that any member of the
cooperative cannot join labor unions for purposes of collective private respondent was also a member or co-owner of the
bargaining. However, nowhere in said case is it stated that petitioner cooperative. Finally, the instant petition ambiguously
member-employees are prohibited from withdrawing their states that "NORECO1 is an electric cooperative and all the
membership in the cooperative in order to join a labor union. employees of the subject union are members of the
cooperative", but submitted a certified list of employees who
The alleged board resolutions relied upon by petitioner in are members-co-owners of the petitioner electric cooperative.
denying the withdrawal of the members concerned were never
presented nor their contents disclosed either before the med- Impliedly, there are rank-and-file employees of the petitioner
arbiter or the Secretary of Labor if only to prove the who are not themselves members-co-owners, or who are the
ratiocination for said denial. ones qualified to form or join a labor organization.

Furthermore, CENECO never averred non-compliance with the

terms and conditions for withdrawal, if any. It appears that the Republic vs. Asiapro Cooperative
Articles of Incorporation of CENECO do not provide any
ground for withdrawal from membership which accordingly
gives rise to the presumption that the same may be done at Employee-employer relationship can exist between the
any time and for whatever reason. In addition, membership in cooperative and the owner-member
the cooperative is on a voluntary basis. The situation in Cooperative Rural Bank of Davao City, Inc. v.
Hence, withdrawal therefrom cannot be restricted Ferrer-Calleja is very much different from the present case.
unnecessarily. The right to join an organization necessarily The declaration made by the Court in the aforesaid case was
includes the equivalent right not to join the same. made in the context of whether an employee who is also an
owner-member of a cooperative can exercise the right to

Erika Cristel Diaz | LABOR RELATIONS

 bargain collectively with the employer who is the cooperative and invoked against the principal but only against the
wherein he is an owner-member. independent contractor which employed them.

Obviously, an owner-member cannot bargain collectively with XPN: When there is labor-only contracting
the cooperative of which he is also the owner because an In which case, there is no indirect employer and the seconded
owner cannot bargain with himself. employees exercise the right to self-organization vis-a-vis the
“indirect” employer who becomes the only employer.
In the instant case, there is no issue regarding an owner-
member’s right to bargain collectively with the cooperative. The Homeworkers
question involved here is whether an employer-employee Sec. 3, D.O No. 5 (1992)
relationship can exist between the cooperative and an
owner-member.
Homeworkers have the right to form, join or assist
In fact, a closer look at Cooperative Rural Bank of Davao City, organizations of their own choosing in accordance with law.
Inc. will show that it actually recognized that an owner-member The registration of homeworkers’ organizations or
of a cooperative can be its own employee. It bears stressing, associations following the requirements prescribed by law
too, that a cooperative acquires juridical personality upon its will vest legal personality thereto.
registration with the Cooperative Development Authority.
Single-employee workplace
It has its Board of Directors, which directs and supervises its
The lone employee can simply affiliate with a Labor federation
business; meaning, its Board of Directors is the one in charge
which, in turn, will represent him in a collective bargaining with
in the conduct and management of its affairs. With that, a
the employer. The Labor Code does not require a minimum
cooperative can be likened to a corporation with a personality
number of employees for the exercise of the right to self-
separate and distinct from its owners-members. Consequently,
organization. If it did, then it would be discriminatory to
an owner-member of a cooperative can be an employee of the
employees in workplaces that do not meet the required number
latter and an employer-employee relationship can exist
for union formation.
between them.

Minors Kasambahay
Rule IV, Sec. 1(j) of the IRR of R.A 10361 or the Domestic
The Child and Youth Welfare Code
Workers Act or Batas Kasambahay is ultra-vires:
P.D 603 as amended by P.D 1179

SECTION 1. Rights and Privileges of Kasambahay. – The

Article 111. Right to Self-Organization. - Working
rights and privileges of the Kasambahay, are as follows:
children shall have the same freedoms as adults to join
(a) Minimum wage;
the collective bargaining union of their own choosing in
(b) Other mandatory benefits, such as the daily and weekly
accordance with existing law.
rest periods, service incentive leave, and 13th month
pay;
Neither management nor any collective bargaining union
(c) Freedom from employers’ interference in the disposal
shall threaten or coerce working children to join, continue or
of wages;
withdraw as members of such union.
(d) Coverage under the SSS, PhilHealth and Pag-IBIG
laws;
Employees of Contractors/Sub-contractors (e) Standard of treatment;
Sec. 8(d) D.O No. 18-02, Series of 2002 (f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
Section 8. Rights of Contractual Employees. Consistent (i) Access to education and training;
with Section 7 of these Rules, the contractual employee (j) Right to form, join, or assist labor organization;
shall be entitled to all the rights and privileges due a regular (k) Right to be provided a copy of the employment contract
employee as provided for in the Labor Code, as amended, as required in Section 7, Rule II;
to include the following: (l) Right to certificate of employment as required in
(a) Safe and healthful working conditions; Section 5, Rule VII;
(b) Labor standards such as service incentive leave, rest (m) Right to terminate the employment as provided in
days, overtime pay, holiday pay, 13th month pay and Section 2, Rule VII; and (n) Right to exercise their own
separation pay; religious beliefs and cultural practices.
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and
peaceful concerted action; and
(e) Security of tenure. - The above stated provision of the IRR is ultra vires as the
right is not expressly conferred by R.A 10361.
- The provision is not only conceptually ridiculous but the
exercise of such right by domestic workers is not
GR: An employee of a legitimate job contractor is entitled to all amendable to implementation under any circumstance.
the rights and privileges due a regular employee as provided in - In the context of the labor provisions of the Constitution
the Labor Code, such as the right to self-organization, and as implemented by Article 252 [243] of the Labor
collective bargaining and peaceful concerted activities, Code, the right to self-organization is granted only to all
including the right to strike. But this right cannot be exercised persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable,

Erika Cristel Diaz | LABOR RELATIONS

 medical or educational institutions whether operating for federation, national union or industry or trade union
profit or not. center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon
issuance of the certificate of registration based on the
following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal

Unions address of the labor organization, the minutes of the
organizational meetings and the list of the workers who
participated in such meetings;
Definition
Union refers to any labor organization in the private sector (c) In case the applicant is an independent union, the
organized for collective bargaining and for other legitimate names of all its members comprising at least twenty
purposes. (Rules Implementing Book V of the Labor Code, percent (20%) of all the employees in the bargaining
Sec. 1[ccc]) unit where it seeks to operate;
Note: Definition should be “or” instead of “and”. (d) If the applicant union has been in existence for one or
more years, copies of its annual financial reports; and

Classification of Unions (e) Four copies of the constitution and by-laws of the
applicant union, minutes of its adoption or ratification, and
the list of the members who participated in it."
Basic classification of unions as to purpose
Art. 253(243) of the Labor Code

1. Labor organization
Takata Philippines Corp. vs. BLR
All persons employed in commercial, industrial and
agricultural enterprises and in religious, charitable, The 20% minimum requirement under Art. 240[234]
medical, or educational institutions, whether operating for pertains to employees membership in the union and not
profit or not, shall have the right to self-organization and to the list of workers who participate in the organizational
form, join, or assist labor organizations of their own choosing meeting
for purposes of collective bargaining. [1st par]
It does not appear in Article 234 (b) of the Labor Code that the
2. Worker’s organization attendees in the organizational meeting must comprise 20% of
Ambulant, intermittent and itinerant workers, self- employed the employees in the bargaining unit. In fact, even the
people, rural workers and those without any definite employers Implementing Rules and Regulations of the Labor Code does
may form labor organizations for their mutual aid and not so provide.
protection. [2nd par]
It is only under Article 234 (c) that requires the names of all its
Distinction members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate.
Clearly, the 20% minimum requirement pertains to the
Labor Worker’s employees’ membership in the union and not to the list of
organization association workers who participated in the organizational meeting.
Existence of ER- YES NO
EE relationship Indeed, Article 234 (b) and (c) provide for separate
Purpose Collective Mutual aid and requirements, which must be submitted for the union's
bargaining in protection registration, and which respondent did submit. Here, the total
whole or in part number of employees in the bargaining unit was 396, and 20%
Formation Art. 240 & Art. Book V, Rule IV of which was about 79.
241 Labor Code and Rule III, Sec.
2 (c) and (d) Respondent submitted a document entitled "Pangalan ng Mga
Petition for YES NO Kasapi ng Unyon" showing the names of 119 employees as
certification union members, thus respondent sufficiently complied even
election beyond the 20% minimum membership requirement.

Respondent also submitted the attendance sheet of the

Classification of labor organization as to how organizational meeting which contained the names and
formed signatures of the 68 union members who attended the meeting.
1. Independent union
Considering that there are 119 union members which are more
than 20% of all the employees of the bargaining unit, and since
Art. 240[234] Requirements of Registration. - A the law does not provide for the required number of members

Erika Cristel Diaz | LABOR RELATIONS

 to attend the organizational meeting, the 68 attendees which the exclusive representative of the employees in such unit for
comprised at least the majority of the 119 union members the purpose of collective bargaining, as provided in Art. 255.
would already constitute a quorum for the meeting to proceed
and to validly ratify the Constitution and By-laws of the union. NAMA-MCCH-NFL is not the labor organization certified or
designated by the majority of the rank-and-file hospital
There is, therefore, no basis for petitioner to contend that employees to represent them in the CBA negotiations but the
grounds exist for the cancellation of respondent's union NFL, as evidenced by CBAs concluded in 1987, 1991 and
registration. For fraud and misrepresentation to be grounds for 1994.
cancellation of union registration under Article 239 of the Labor
Code, the nature of the fraud and misrepresentation must be While it is true that a local union has the right to disaffiliate from
grave and compelling enough to vitiate the consent of a the national federation, NAMA-MCCH-NFL has not done so as
majority of union members. there was no any effort on its part to comply with the legal
requisites for a valid disaffiliation during the "freedom period" or
2. Chartered local the last 60 days of the last year of the CBA, through a majority
vote in a secret balloting in accordance with Art. 241 (d).

Art. 241 [234-A]. Chartering and Creation of a Local Nava and her group simply demanded that MCCHI directly
Chapter. - A duly registered federation or national union negotiate with the local union which has not even registered as
may directly create a local chapter by issuing a charter one.
certificate indicating the establishment of the local chapter.
To prove majority support of the employees, NAMA-MCCH-
The chapter shall acquire legal personality only for NFL presented the CBA proposal allegedly signed by 153
purposes of filing a petition for certification election union members. However, the petition signed by said members
from the date it was issued a charter certificate. showed that the signatories endorsed the proposed terms and
conditions without stating that they were likewise voting for or
The chapter shall be entitled to all other rights and designating the NAMA-MCCH-NFL as their exclusive
privileges of a legitimate labor organization only upon bargaining representative.
the submission of the following documents in addition to
its charter certificate: In any case, NAMA-MCCH-NFL at the time of submission of
said proposals was not a duly registered labor organization,
(a) The names of the chapter's officers, their addresses, and hence it cannot legally represent MCCHI’s rank-and-file
the principal office of the chapter; and employees for purposes of collective bargaining.

(b) The chapter's constitution and by-laws: Provided, That Hence, even assuming that NAMA-MCCH-NFL had validly
where the chapter's constitution and by-laws are the same disaffiliated from its mother union, NFL, it still did not
as that of the federation or the national union, this fact shall possess the legal personality to enter into CBA
be indicated accordingly. negotiations.

The additional supporting requirements shall be certified A local union which is not independently registered
under oath by the secretary or treasurer of the chapter and cannot, upon disaffiliation from the federation, exercise
attested by its president. the rights and privileges granted by law to legitimate labor
organizations; thus, it cannot file a petition for certification
election.

Besides, the NFL as the mother union has the right to

Abaria vs. NLRC investigate members of its local chapter under the federation’s
Constitution and By-Laws, and if found guilty to expel such
members.
Records of the NCMB and DOLE Region 7 confirmed that
NAMA-MCCH-NFL had not registered as a labor organization, MCCHI therefore cannot be faulted for deferring action on the
having submitted only its charter certificate as an affiliate or CBA proposal submitted by NAMA-MCCH-NFL in view of the
local chapter of NFL. union leadership’s conflict with the national federation. We
have held that the issue of disaffiliation is an intra-union
Not being a legitimate labor organization, NAMA-MCCH-NFL is dispute which must be resolved in a different forum in an action
not entitled to those rights granted to a legitimate labor at the instance of either or both the federation and the local
organization under Art. 242, specifically: union or a rival labor organization, not the employer.

(a) To act as the representative of its members for the Not being a legitimate labor organization nor the certified
purpose of collective bargaining; exclusive bargaining representative of MCCHI’s rank-and-file
(b) To be certified as the exclusive representative of all the employees, NAMA-MCCH-NFL cannot demand from MCCHI
employees in an appropriate collective bargaining unit for the right to bargain collectively in their behalf. Hence, MCCHI’s
purposes of collective bargaining; refusal to bargain then with NAMA-MCCH-NFL cannot be
considered an unfair labor practice to justify the staging of the
Aside from the registration requirement, it is only the labor strike.
organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit which is
Samahang Manggawa sa Charter Chemical Solidarity of

Erika Cristel Diaz | LABOR RELATIONS

 Unions in the Philippines for Empowerment and Sec. 1(b). Affiliate refers to an independent union
Reforms (SMCC-SUPER) vs. Charter Chemical and affiliated with a federation, national union or a chartered
Coating Corporation local which was subsequently granted independent
registration but did not disaffiliate from its federation,
The charter certificate need not be certified under oath by reported to the Regional Office and the Bureau in
the local union's secretary or treasurer and attested to by accordance with Rule III, Sections 6 and 7 of these Rules.
its president.

The then prevailing Section 1, Rule VI of the Implementing

Rules of Book V, as amended by D.O. No. 9, series of 1997, Pambansang Kapatiran ng mga Anak Pawis sa Formey
provides: Plastic National Workers Brotherhood vs. Laguesma
Section 1. Chartering and creation of a local chapter -- A
duly registered federation or national union may directly create It is further argued that the CBA has no binding force since it
a local/chapter by submitting to the Regional Office or to the was entered into by KAMAPI as a federation and not by the
Bureau two (2) copies of the following: local union. Perusal of the agreement proves the contention
flawed. The signatories for KAMAPI consisted of its national
(a) A charter certificate issued by the federation or national president and of the duly elected officers of the local union.
union indicating the creation or establishment of the
local/chapter; Thus the fact that KAMAPI was particularly mentioned as
the bargaining party without specifying the local union
(b) The names of the local/chapter's officers, their addresses, cannot strip it of its authority to participate in the
and the principal office of the local/chapter; and bargaining process. The local union maintains its separate
personality despite affiliation with a larger national
(c) The local/chapter's constitution and by-laws provided that federation.
where the local/chapter's constitution and by-laws [are] the
same as [those] of the federation or national union, this fact The doctrine laid down in Progressive Development
shall be indicated accordingly. Corporation is a mere clarification of the principle enunciated in
Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.
All the foregoing supporting requirements shall be Both cases have provided that the mother union acting for
certified under oath by the Secretary or the Treasurer of the and in behalf of its affiliate has the status of an agent while
local/chapter and attested to by its President. the local union remained the basic unit of the association
free to serve the common interest of all its members
As readily seen, the Sama-samang Pahayag ng Pagsapi at subject only to the restraints imposed by the Constitution and
Authorization and Listahan ng mga Dumalo sa Pangkalahatang By-Laws of the association.
Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas
are not among the documents that need to be submitted to the Nonetheless, the facts and principles laid down in both cases
Regional Office or Bureau of Labor Relations in order to do not jibe squarely with the case at bench. The controversy in
register a labor organization. As to the charter certificate, the Progressive Development Corporation centered on the
above-quoted rule indicates that it should be executed under requirements before a local or chapter of a federation may file
oath. a petition for certification election and be certified as the sole
and exclusive bargaining agent, while in Liberty Cotton Mills
The Court ruled that it was not necessary for the charter Workers the issue involved was the disaffiliation of the local
certificate to be certified and attested by the local/chapter union from the federation. The question of whether there was a
officers. While this ruling was based on the interpretation of the valid and existing CBA, which is the question being resolved in
previous Implementing Rules provisions which were the case at bench, was never raised in the two cited cases
supplanted by the 1997 amendments, we believe that the since it was already an accepted fact that the CBA was validly
same doctrine obtains in this case. executed and existing.

Considering that the charter certificate is prepared and

issued by the national union and not the local/chapter, it Insular Hotel Employees Union-NFL vs. Waterfront
does not make sense to have the local/chapter's officers Insular Hotel Davao
certify or attest to a document which they had no hand in
the preparation of.
Pursuant to Article 260 of the Labor Code, the parties to a
In accordance with this ruling, petitioner union's charter CBA shall name or designate their respective representatives
certificate need not be executed under oath. Consequently, it to the grievance machinery and if the grievance is unsettled in
validly acquired the status of a legitimate labor organization that level, it shall automatically be referred to the voluntary
upon submission of (1) its charter certificate, (2) the names of arbitrators designated in advance by parties to a CBA.
its officers, their addresses, and its principal office, and (3) its
constitution and by-laws the last two requirements having been Consequently, only disputes involving the union and the
executed under oath by the proper union officials as borne out company shall be referred to the grievance machinery or
by the records. voluntary arbitrators.

If the individual members of the Union have no authority

Affiliate to file the case, does the federation to which the local
Rules Implementing Book V of the Labor Code union is affiliated have the standing to do so? On this note,

Erika Cristel Diaz | LABOR RELATIONS

 Coastal Subic Bay Terminal, Inc. v. Department of Labor and the Association, and free also to renounce the affiliation for
Employment is enlightening, thus: mutual welfare upon the terms laid down in the agreement
which brought it into existence.
A local union does not owe its existence to the federation
with which it is affiliated. It is a separate and distinct Thus, a local union which has affiliated itself with a
voluntary association owing its creation to the will of its federation is free to sever such affiliation anytime and
members. such disaffiliation cannot be considered disloyalty. In the
absence of specific provisions in the federation's constitution
Mere affiliation does not divest the local union of its own prohibiting disaffiliation or the declaration of autonomy of a
personality, neither does it give the mother federation the local union, a local may dissociate with its parent union.
license to act independently of the local union. It only gives
rise to a contract of agency, where the former acts in The right of a local union to disaffiliate from its mother
representation of the latter. Hence, local unions are considered federation is not a novel thesis unillumined by case law. The
principals while the federation is deemed to be merely their right of local unions to separate from their mother
agent. federation on the ground that as separate and voluntary
associations, local unions do not owe their creation and
Based on the foregoing, this Court agrees with approval with existence to the national federation to which they are
the disquisition of the CA when it ruled that NFL had no affiliated but, instead, to the will of their members.
authority to file the complaint in behalf of the individual
employees, to wit: The sole essence of affiliation is to increase, by collective
action, the common bargaining power of local unions for
Anent the first issue, We hold that the voluntary arbitrator had the effective enhancement and protection of their
no jurisdiction over the case. Waterfront contents that the interests. Admittedly, there are times when without succor and
Notice of Mediation does not mention the name of the support local unions may find it hard, unaided by other support
Union but merely referred to the National Federation of groups, to secure justice for themselves.
Labor (NFL) with which the Union is affiliated.
Yet the local unions remain the basic units of association,
In the subsequent pleadings, NFL's legal counsel even free to serve their own interests subject to the restraints
confirmed that the case was not filed by the union but by imposed by the constitution and by-laws of the national
NFL and the individual employees named in the SPAs which federation, and free also to renounce the affiliation upon the
were not even dated nor notarized. terms laid down in the agreement which brought such affiliation
into existence.
Even granting that petitioner Union was affiliated with NFL, still
the relationship between that of the local union and the Under the rules implementing the Labor Code, a chartered
labor federation or national union with which the former local union acquires legal personality through the charter
was affiliated is generally understood to be that of agency, certificate issued by a duly registered federation or
where the local is the principal and the federation the national union, and reported to the Regional Office in
agency. accordance with the rules implementing the Labor Code.

Being merely an agent of the local union, NFL should have Hence, local unions are considered principals while the
presented its authority to file the Notice of Mediation. federation is deemed to be merely their agent. As such
While We commend NFL's zealousness in protecting the rights principals, the unions are entitled to exercise the rights
of lowly workers, We cannot, however, allow it to go beyond and privileges of a legitimate labor organization, including
what it is empowered to do. the right to seek certification as the sole and exclusive
bargaining agent in the appropriate employer unit.

National Union of Bank Employees (NUBE) vs. A local union may disaffiliate at any time from its mother
Philnabank Empoloyees Association (PEMA) federation, absent any showing that the same is prohibited
under its constitution or rule. Such, however, does not
result in it losing its legal personality altogether.
The right of the local union to exercise the right to
disaffiliate from its mother union is well settled in this A local labor union is a separate and distinct unit primarily
jurisdiction. designed to secure and maintain an equality of bargaining
power between the employer and their employee-
A local union has the right to disaffiliate from its mother union members.
or declare its autonomy. A local union, being a separate and
voluntary association, is free to serve the interests of all its A local union does not owe its existence to the federation with
members including the freedom to disaffiliate or declare its which it is affiliated. It is a separate and distinct voluntary
autonomy from the federation which it belongs when association owing its creation to the will of its members.
circumstances warrant, in accordance with the constitutional
guarantee of freedom of association. These and many more have consistently reiterated the earlier
view that the right of the local members to withdraw from
The purpose of affiliation by a local union with a mother the federation and to form a new local union depends
union or a federation is to increase by collective action the upon the provisions of the union's constitution, by-laws
bargaining power in respect of the terms and conditions of and charter and, in the absence of enforceable provisions
labor. Yet the locals remained the basic units of association, in the federation's constitution preventing disaffiliation of
free to serve their own and the common interest of all, subject a local union, a local may sever its relationship with its
to the restraints imposed by the Constitution and By-Laws of parent.

Erika Cristel Diaz | LABOR RELATIONS

 In the case at bar, there is nothing shown in the records nor is Also, in effect, NUBE loses it right to collect all union dues
it claimed by NUBE that PEMA was expressly forbidden to held in its trust by PNB. The moment that PEMA separated
disaffiliate from the federation nor were there any conditions from and left NUBE and exists as an independent labor
imposed for a valid breakaway. This being so, PEMA is not organization with a certificate of registration, the former is
precluded to disaffiliate from NUBE after acquiring the no longer obliged to pay dues and assessments to the
status of an independent labor organization duly latter; naturally, there would be no longer any reason or
registered before the DOLE. occasion for PNB to continue making deductions.

Also, there is no merit on NUBE’s contention that PEMA’s NUBE in this case is entitled to receive the dues from
disaffiliation is invalid for non-observance of the procedure that respondent companies as long as petitioner union is affiliated
union members should make such determination through with it and respondent companies are authorized by their
secret ballot and after due deliberation, conformably with employees (members of petitioner union) to deduct union dues.
Article 241 (d) of the Labor Code, as amended. Without said affiliation, the employer has no link to the mother
union.
Conspicuously, other than citing the opinion of a recognized
labor law authority, NUBE failed to quote a specific The obligation of an employee to pay union dues is
provision of the law or rule mandating that a local union coterminous with his affiliation or membership. The
disaffiliation from a federation must comply with Article employees' check-off authorization, even if declared
241 (d) in order to be valid and effective. irrevocable, is good only as long as they remain members of
the union concerned.
Granting, for argument’s sake, that Article 241 (d) is
applicable, still, We uphold PEMA’s disaffiliation from A contract between an employer and the parent organization
NUBE. as bargaining agent for the employees is terminated bv the
disaffiliation of the local of which the employees are members.
First, non-compliance with the procedure on disaffiliation,
being premised on purely technical grounds cannot rise On the other hand, it was entirely reasonable for PNB to enter
above the employees’s fundamental right to self- into a CBA with PEMA as represented by Serrana et al. Since
organization and to form and join labor organizations of PEMA had validly separated itself from NUBE, there would be
their own choosing for the purpose of collective no restrictions which could validly hinder it from collectively
bargaining. bargaining with PNB.

Second, the Article nonetheless provides that when the Classification as to components
nature of the organization renders such secret ballot 1. Federation
impractical, the union officers may make the decision in 2. National union
behalf of the general membership.
Rules Implementing Book V of the Labor Code
In this case, NUBE did not even dare to contest PEMA’s
representation that PNB employees, from where [PEMA]
[derives] its membership, are scattered from Aparri to Jolo, Sec. 1(ll). National Union or Federation refers to a group
manning more than 300 branches in various towns and cities of of legitimate labor unions in a private establishment
the country, hence, to gather the general membership of the organized for collective bargaining or for dealing with
union in a general membership to vote through secret balloting employers concerning terms and conditions of employment
is virtually impossible. for their member unions or for participating in the
formulation of social and employment policies, standards
It is understandable, therefore, why PEMA’s board of directors and programs, registered with the Bureau in accordance
merely opted to submit for ratification of the majority their with Rule III, Section 2-B of these Rules.
resolution to disaffiliate from NUBE.

Third, and most importantly, NUBE did not dispute the

existence of the persons or their due execution of the
ART. 244. [237] Additional Requirements for
document showing their unequivocal support for the
Federations or National Unions. – Subject to Article 238
disaffiliation of PEMA from NUBE.
[245] if the applicant for registration is a federation or a
national union, it shall, in addition to the requirements of
No evidence was presented that the union members’
the preceding Articles, submit the following:
ratification was obtained by mistake or through fraud, force or
intimidation. Surely, this is not a case where one or two
(a) Proof of the affiliation of at least ten (10) locals or
members of the local union decided to disaffiliate from the
chapters, each of which must be a duly recognized
mother federation, but one where more than a majority of the
collective bargaining agent in the establishment or industry
local union members decided to disaffiliate.
in which it operates, supporting the registration of such
applicant federation or national union; and
Consequently, by PEMA's valid disaffiliation from NUBE,
the vinculum that previously bound the two entities was
(b) The names and addresses of the companies where
completely severed. As NUBE was divested of any and all
the locals or chapters operate and the list of all the
power to act in representation of PEMA, any act performed by
members in each company involved.
the former that affects the interests and affairs of the latter,
including the supposed expulsion of Serrana et al., is rendered
without force and effect.

Erika Cristel Diaz | LABOR RELATIONS

 San Miguel Corporation Employees Union-PTGWO vs. Trade union center is not allowed to directly create a local
San Miguel Packaging Products Employees Union- or chapter through chartering
PDMP After an exhaustive study of the governing labor law provisions,
both statutory and regulatory, we find no legal justification to
support the conclusion that a trade union center is allowed to
Petitioner filed with the DOLE-NCR a petition seeking the
directly create a local or chapter through chartering.
cancellation of respondent's registration and its dropping from
the rolls of legitimate labor organizations. In its petition,
Culling from its definition as provided by Department Order No.
petitioner accused respondent of committing fraud and
9, a trade union center is any group of registered national
falsification, and non-compliance with registration requirements
unions or federations organized for the mutual aid and
in obtaining its certificate of registration.
protection of its members; for assisting such members in
collective bargaining; or for participating in the formulation of
It raised allegations that respondent violated Articles 239(a),
social and employment policies, standards, and programs, and
(b) and (c) and 234(c) of the Labor Code. Moreover, petitioner
is duly registered with the DOLE in accordance with Rule III,
claimed that PDMP is not a legitimate labor organization, but a
Section 2 of the Implementing Rules.
trade union center, hence, it cannot directly create a local or
chapter.
The same rule provides that the application for
registration of an industry or trade union center shall be
Anent the foregoing, as has been held in a long line of cases,
supported by the following:
the legal personality of a legitimate labor organization, such as
PDMP, cannot be subject to a collateral attack. The law is very
(a) The list of its member organizations and their respective
clear on this matter. Article 212(h) of the Labor Code, as
presidents and, in the case of an industry union, the industry
amended, defines a legitimate labor organization as any
where the union seeks to operate;
labor organization duly registered with the DOLE, and
includes any branch or local thereof.
(b) The resolution of membership of each member
organization, approved by the Board of Directors of such
On the other hand, a trade union center is any group of
union;
registered national unions or federations organized for the
mutual aid and protection of its members; for assisting such
(c) The name and principal address of the applicant, the
members in collective bargaining; or for participating in the
names of its officers and their addresses, the minutes of its
formulation of social and employment policies, standards, and
organizational meeting/s, and the list of member organizations
programs, and is duly registered with the DOLE in accordance
and their representatives who attended such meeting/s; and
with Rule III, Section 2 of the Implementing Rules.
(d) A copy of its constitution and by-laws and minutes of its
The Implementing Rules stipulate that a labor organization
ratification by a majority of the presidents of the member
shall be deemed registered and vested with legal
organizations, provided that where the ratification was done
personality on the date of issuance of its certificate of
simultaneously with the organizational meeting, it shall be
registration.
sufficient that the fact of ratification be included in the minutes
of the organizational meeting.
Once a certificate of registration is issued to a union, its legal
personality cannot be subject to collateral attack. It may be
Evidently, while a "national union" or "federation" is a labor
questioned only in an independent petition for cancellation in
organization with at least ten locals or chapters or affiliates,
accordance with Section 5 of Rule V, Book V of the
each of which must be a duly certified or recognized collective
Implementing Rules.
bargaining agent; a trade union center, on the other hand, is
composed of a group of registered national unions or
PDMP was registered as a trade union center and issued
federations.
Registration Certificate No. FED-11558-LC by the BLR on 14
February 1991. Until the certificate of registration of PDMP
Department Order No. 9 mentions two labor organizations
is cancelled, its legal personality as a legitimate labor
either of which is allowed to directly create a local or
organization subsists.
chapter through chartering – a duly registered federation
or a national union.
Once a union acquires legitimate status as a labor
organization, it continues to be recognized as such until
its certificate of registration is cancelled or revoked in an
Department Order No. 9 defines a "chartered local" as a
independent action for cancellation. It bears to emphasize
labor organization in the private sector operating at the
that what is being directly challenged is the personality of
enterprise level that acquired legal personality through a
respondent as a legitimate labor organization and not that of
charter certificate, issued by a duly registered federation or
PDMP. This being a collateral attack, this Court is without
national union and reported to the Regional Office in
jurisdiction to entertain questions indirectly impugning the
accordance with Rule III, Section 2-E of these Rules.
legitimacy of PDMP.
Republic Act No. 9481 or "An Act Strengthening the Workers'
Corollarily, PDMP is granted all the rights and privileges
Constitutional Right to Self-Organization, Amending for the
appurtenant to a legitimate labor organization, and continues to
Purpose Presidential Decree No. 442, As Amended, Otherwise
be recognized as such until its certificate of registration is
Known as the Labor Code of the Philippines" lapsed into law
successfully impugned and thereafter cancelled or revoked in
on 25 May 2007 and became effective on 14 June 2007. This
an independent action for cancellation.
law further amends the Labor Code provisions on Labor
Relations.

Erika Cristel Diaz | LABOR RELATIONS

 Article 234 now includes the term trade union center, but Sec. 1.(u). Exclusive Bargaining Representative refers to
interestingly, the provision indicating the procedure for a legitimate labor union duly recognized or certified as
chartering or creating a local or chapter, namely Article the sole and exclusive bargaining representative or
234-A, still makes no mention of a trade union center. agent of all the employees in a bargaining unit.

Also worth emphasizing is that even in the most recent

Bargaining representative
amendment of the implementing rules, there was no mention of
a trade union center as being among the labor organizations
allowed to charter. If its intent were otherwise, the law could Art. 219[212] (j). Bargaining representative means a
have so easily and conveniently included "trade union centers" legitimate labor organization or any officer or agent of
in identifying the labor organizations allowed to charter a such organization whether or not employed by the
chapter or local. employer.

Therefore, since under the pertinent status and applicable Collective bargaining agent
implementing rules, the power granted to labor
organizations to directly create a chapter or local through
chartering is given to a federation or national union, then a Art. 244 [237]. Additional requirements for Federations
trade union center is without authority to charter directly. or National Unions:

In sum, although PDMP as a trade union center is a (a). Proof of the affiliation of at least ten (10) locals or
legitimate labor organization, it has no power to directly chapters, each of which must be a duly recognized
create a local or chapter. Thus, SMPPEU-PDMP cannot be collective bargaining agent in the establishment or
created under the more lenient requirements for chartering, but industry in which it operates, supporting the registration of
must have complied with the more stringent rules for creation such applicant federation or national union.
and registration of an independent union, including the 20%
membership requirement. Note: The Labor Code has a variation of terminologies. Add to
this the use of “Exclusive Bargaining Agent” in decided cases:
Classification as to capacity to represent
1. Bargaining – Private sector
Maricalum Corporation vs. Brion
Legitimate labor organization
Article 256 of the Labor Code partly provides:
Art. 219 [212](h). Legitimate labor organization means
any labor organization duly registered with the REPRESENTATION ISSUE IN ORGANIZED
Department of Labor and Employment, and includes any ESTABLISHMENTS. - In organized establishments, when a
branch or local thereof. verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of
Rules Implementing Book V of the Labor Code Labor and Employment within the sixty-day period before the
expiration of the collective bargaining agreement, the Med-
Arbiter shall automatically order an election by secret ballot
Sec. 1(ff). Legitimate Labor Organization refers to any when the verified petition is supported by the written consent of
labor organization in the private sector registered or at least twenty-five (25%) percent of all the employees in the
reported with the Department in accordance with Rules III appropriate bargaining unit.
and IV of these Rules.
At the expiration of the freedom period, the employer shall
Rules Implementing Book V of the Labor Code continue to recognize the majority status of the incumbent
bargaining agent where no petition for certification
election is filed.
Sec. 1(dd). Labor Organization refers to any union or
association of employees in the private sector which
According to the foregoing provision, for a union to become
exists in whole or in part for the purpose of collective
an exclusive bargaining representative of a particular
bargaining, mutual aid, interest, cooperation,
establishment, it must emerge as winner in a certification
protection, or other lawful purposes.
election.

In the case at bar, there was no certification election held

Exclusive bargaining representative challenging the majority status of NAMAWU as the exclusive
bargaining representative of petitioner's employees. NAMAWU,
Article 251[242]. Rights of legitimate labor therefore, remains the exclusive bargaining representative of
organizations. - A legitimate labor organization shall petitioner's employees and possesses legal standing to
have the right: represent them.

(b) To be certified as the exclusive representative of all 2. Negotiation – Public sector

the employees in an appropriate collective bargaining
unit for purposes of collective bargaining; Employees Organization
E.O 180 – PROVIDING GUIDELINES FOR THE EXERCISE
OF THE RIGHT TO ORGANIZE OF GOVERNMENT
Rules Implementing Book V of the Labor Code

Erika Cristel Diaz | LABOR RELATIONS

 EMPLOYEES, CREATING A PUBLIC SECTOR LABOR- The requirement that books of account be submitted as a
MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES requisite for a registration can be found only in Book V of the
Omnibus Rules Implementing the Labor Code, prior to its
III. Registration of Employees' Organization amendment by Department Order No. 9, Series of 1997.

Specifically, the old Section 3(e), Rule II, of Book V provided

Sec. 7. Government employees' organizations shall that the local or chapter of a labor federation or national union
register with the Civil Service Commission and the shall have and maintain a constitution and by-laws, set of
Department of Labor and Employment. officers and books of accounts. For reporting purposes, the
procedure governing the reporting of independently registered
The application shall be filed with the Bureau of Labor unions, federations or national unions shall be observed.
Relations of the Department which shall process the same
in accordance with the provisions of the Labor Code of the Since the Department Order No. 9 has done away with the
Philippines, as amended. Applications may also be filed with submission of books of account as a requisite for registration,
the Regional Offices of the Department of Labor and Pagpalains only recourse now is to have said order declared
Employment which shall immediately transmit the said null and void.
applications to the Bureau of Labor Relations within three
(3) days from receipt thereof. Department Order No. 9 only dispenses with books of account
as a requirement for registration of a local or chapter of a
national union or federation. As provided by Article 241 (h) and
Legitimate Employees Organization (j), a labor organization must still maintain books of account,
but it need not submit the same as a requirement for
Sec. 8. Upon approval of the application, a registration registration. Given the foregoing disquisition, we find no cogent
certificate be issued to the organization recognizing it as a reason to declare Department Order No. 9 null and void, as
legitimate employees' organization with the right to well as to reverse the assailed resolution of the Secretary of
represent its members and undertake activities to further Labor.
and defend its interest.

The corresponding certificates of registration shall be Samahan ng mga Manggagawa Ng Samma

jointly approved by the Chairman of the Civil Service (Sammalikha) vs. Samma Corporation
Commission and Secretary of Labor and Employment.
LIKHA was granted legal personality as a federation under its
IV. Sole and Exclusive Employees' Representatives certificate of registration. Subsequently, petitioner as its local
chapter was issued its charter certificate. With certificates of
Sole and Exclusive Representative registration issued in their favor, they are clothed with
legal personality as legitimate labor organizations:
Sec. 10. The duly registered employees' organization
having the support of the majority of the employees in Section 5. Effect of registration. - The labor organization
the appropriate organizational unit shall be designated as or workers' association shall be deemed registered and
the sole and exclusive representative of the employees. vested with legal personality on the date of issuance of its
certificate of registration. Such legal personality cannot
thereafter be subject to collateral attack, but may be
questioned only in an independent petition for cancellation in
accordance with these Rules.
Effect of Registration
Section 3. Acquisition of legal personality by local
chapter.- A local/chapter constituted in accordance with
Rule IV, Sec. 8 in relation to Rule XIV: Section 1 of this Rule shall acquire legal personality from
the date of filing of the complete documents enumerated
therein. Upon compliance with all the documentary
Pagpalain Haulers, Inc. vs. Trajano requirements, the Regional Office or Bureau of Labor
Relations shall issue in favor of the local/chapter a certificate
indicating that it is included in the roster of legitimate labor
On July 10, 1997, Pagpalain filed a motion to dismiss the
organizations.
petition, alleging that ILO-PHILS was not a legitimate labor
organization due to its failure to comply with the requirements
Such legal personality cannot thereafter be subject to
for registration under the Labor Code. Specifically, it claimed
collateral attack, but may be questioned only in an
that the books of account submitted by ILO-PHILS were not
independent petition for cancellation of certificate of
verified under oath by its treasurer and attested to by its
registration.
president, a required by Rule II, Book V of the Omnibus Rules
Implementing the Labor Code.
Unless petitioner's union registration is cancelled in
independent proceedings, it shall continue to have all the rights
As can be gleaned from the Article 234, the Labor Code does
of a legitimate labor organization, including the right to petition
not require the submission of books of account in order
for certification election.
for a labor organization to be registered as a legitimate
labor organization.
Furthermore, the grounds for dismissal of a petition for
certification election based on the lack of legal personality

Erika Cristel Diaz | LABOR RELATIONS

 of a labor organization are the following: (a) petitioner is not It will be noted, however, that these employees whose votes
listed by the Regional Office or the Bureau of Labor Relations were challenged were hired on temporary or casual basis and
in its registry of legitimate labor organizations or (b) its legal had work of a different nature from those of the laborers
personality has been revoked or cancelled with finality in permitted to vote in the certification election.
accordance with the rules.
In the determination of the proper constituency of a collective
As mentioned, respondent filed a petition for cancellation of the bargaining unit, certain factors must be considered, among
registration of petitioner on December 14, 2002. In a resolution them, the employment status of the employees to be affected,
dated April 14, 2003, petitioner's charter certificate was that is to say, the positions and categories of work to which
revoked by the DOLE. But on May 6, 2003, petitioner moved they belong, and the unity of the employees' interest.
for the reconsideration of this resolution.
And this is so because the basic test of a bargaining unit's
Neither of the parties alleged that this resolution revoking acceptability is whether it will best assure to all employees is
petitioner's charter certificate had attained finality. However, in whether it will be assure to all employees the exercise of their
this petition, petitioner prayed that its charter certificate be collective bargaining rights.
reinstated in the roster of active legitimate labor organizations.
It appearing that the 242 stevedores and piece workers, whose
This cannot be granted here. To repeat, the proceedings on a votes have been challenged, were employed on casual or day
petition for cancellation of registration are independent of to day basis and have no reasonable basis for continued or
those of a petition for certification election. This case renewed employment for any appreciable substantial time —
originated from the latter. If it is shown that petitioner's legal not to mention the nature of work they perform — they cannot
personality had already been revoked or cancelled with be considered to have such mutuality of interest as to justify
finality in accordance with the rules, then it is no longer a their inclusion in a bargaining unit composed of permanent or
legitimate labor organization with the right to petition for a regular employees.
certification election.
Effect of incorporation under the Corporation Code
Proper remedy against Secretary of Labor for It is inconsequential as it does not make it a legitimate labor
refusal to register a labor organization organization. It has the effect only of giving it judicial
The proper remedy in case of refusal to register a labor personality before the regular courts of justice. It does not
organization which complies with all the requirements is not confer the rights and privileges accorded by law to legitimate
certiorari but Mandamus, since approval of application for labor organizations.
registration is not a judicial function.

Cebu Seamen’s Association Inc. vs. Calleja

Brillo vs. Buklatan
The determinative issue in this case is who is entitled to
The third cause of action is for certiorari against the the collection and custody of the union dues? Cebu
Secretary of Labor for having granted licenses to new Seamen's Association headed by Gabayoyo or Seamen's
unions, namely, the Leyte Stevedoring and Terminal Dock Association of the Philippines headed by Nacua.
Workers Union and the Visayan Workers Union, the
registration of which is alleged to be detrimental to Leyte On October 23, 1950, a group of deck officers organized the
United Workers. Cebu Seamen's Association, Inc., (CSAI), a non-stock
corporation and registered it with the Securities and Exchange
It is alleged that the new labor unions were organized by old Commission (SEC).
members of the Leyte United Workers, with the aid of the
employers, and the result may be the death of the Leyte United The same group registered the organization with the Bureau of
Workers. It is maintained that the action of the Secretary of Labor Relations (BLR) as Seamen's Association of the
Labor in approving the application of the said new labor Philippines (SAPI). It is the registration of the organization
unions constitutes an excess of jurisdiction and grave with the BLR are not with the SEC which made it a
abuse of discretion. legitimate labor organization with rights and privileges
granted under the Labor Code.
The petition for certiorari does not lie because the
Secretary of Labor did not exercise judicial function. Also, before the controversy, private respondent Dominica
Furthermore, there is no allegation that the new labor unions Nacua was elected president of the labor union, SAPI. It had
have the purpose of undermining or destroying the constituted an existing CBA with Aboitiz Shipping Corporation. Before the
Government or of violating any law or laws of the Philippines, end of the term of private respondent Nacua, some members
and therefore, they cannot be denied registration and of the union which included Domingo Machacon and petitioner
permission to operate under section 2, of Commonwealth Act Manuel Gabayoyo showed signs of discontentment with the
No. 213. leadership of Nacua.

The fourth claim alleged in the complaint is a petition for This break-away group revived the moribund corporation and
declaratory relief involving practically the same questions issued an undated resolution expelling Nacua from association.
raised in the third cause of action. Sometime in February, 1987, it held its own election of officers
supervised by the Securities and Exchange Commission.

The expulsion of Nacua from the corporation, of which she

Philippine Land-Sea-Air Labor Union [PLASLU] vs. CIR denied being a member, has however, not affected her

Erika Cristel Diaz | LABOR RELATIONS

 membership with the labor union. In fact, in the elections of Since the terms and conditions of government
officers for 1987-1989, she was re-elected as the president of employment are fixed by law, government workers cannot
the labor union. use the same weapons employed by workers in the private
sector to secure concessions from their employers.
In this connections, We cannot agree with the contention of
Gabayoyo that Nacua was already expelled from the union. The principle behind labor unionism in private industry is that
Whatever acts their group had done in the corporation do industrial peace cannot be secured through compulsion by law.
not bind the labor union. Moreover, Gabayoyo cannot claim Relations between private employers and their employees rest
leadership of the labor group by virtue of his having been on an essentially voluntary basis.
elected as a president of the dormant corporation CSAI.
Subject to the minimum requirements of wage laws and other
Under the principles of administrative law in force in this labor and welfare legislation, the terms and conditions of
jurisdiction, decisions of administrative officers shall not be employment in the unionized private sector are settled through
disturbed by courts, except when the former acted without or in the process of collective bargaining.
excess of their jurisdiction or with grave abuse of discretion.
Public respondent Bureau of Labor Relations correctly ruled on In government employment, however, it is the legislature
the basis of the evidence presented by the parties that SAPI, and, where properly given delegated power, the
the legitimate labor union, registered with its office, is not administrative heads of government which fix the terms
the same association as CSAI, the corporation, insofar as and conditions of employment. And this is effected through
their rights under the Labor Code are concerned. Hence, statutes or administrative circulars, rules, and regulations, not
the former and not the latter association is entitled to the through collective bargaining agreements.
release and custody of union fees with Aboitiz Shipping and
other shipping companies with whom it had an existing CBA.
Cancellation of registration
It is undisputed from the records that the election of the so-
called set of officers headed by Manuel Gabayoyo was
conducted under the supervision of the SEC, presumably in
accordance with its constitution and by-laws as well as the
ART. 245[238]. Cancellation of Registration. - The
articles of incorporation of respondent CSAI, and the
certificate of registration of any legitimate labor
Corporation Code.
organization, whether national or local, may be cancelled
by the Bureau, after due hearing, only on the grounds
That had been so precisely on the honest belief of the
specified in Article 239 hereof.
participants therein that they were acting in their capacity as
members of the said corporation. That being the case, the
aforementioned set of officers is of the respondent corporation Grounds for cancellation of registration
and not of the complainant union. It follows, then, that any
proceedings, and actions taken by said set of officers
cannot, in any manner, affect the union and its members. ART. 247 [239]. Grounds for Cancellation of Union
Registration. - The following may constitute grounds for
On the other hand, we rule and so hold that the other set of cancellation of union registration:
officers headed by Dominica C. Nacua is the lawful set of
officers of SAPI and therefore, is entitled to the release and (a) Misrepresentation, false statement or fraud in
custody of the union dues as well as the agency fees, if any, connection with the adoption or ratification of the
there be. constitution and by-laws or amendments thereto, the
minutes of ratification, and the list of members who took
A record check with the Labor Organizations (LOD), this part in the ratification;
Bureau, shows that SAPI has submitted to it for file the list of
this new set of officers, in compliance with the second (b) Misrepresentation, false statements or fraud in
paragraph of Article 242 (c) of the Labor Code. This list connection with the election of officers, minutes of the
sufficiently sustains the view that said officers were lawfully election of officers, and the list of voters;
elected, in the absence of clear and convincing proof to the
contrary. (c) Voluntary dissolution by the members.

There is NO collective bargaining in the public Fraud or misrepresentation deemed sufficient for
sector: the cancellation of registration: grave and
compelling enough to vitiate consent of the majority
of the members
Alliance of Government Workers vs. Minister of Labor &
Employment

The general rule in the past and up to the present is that the S.S Ventures International, Inc. vs. Ventures Labor
terms and conditions of employment in the Government, Union
including any political subdivision or instrumentality thereof are
governed by law. The right to form, join, or assist a union is specifically
protected by Art. XIII, Section 314 of the Constitution and such
right, according to Art. III, Sec. 8 of the Constitution and Art.

Erika Cristel Diaz | LABOR RELATIONS

 246 of the Labor Code, shall not be abridged. Once registered
with the DOLE, a union is considered a legitimate labor Prescinding from these considerations, the issuance to the
organization endowed with the right and privileges granted by Union of Certificate of Registration necessarily implies that its
law to such organization. application for registration and the supporting documents
thereof are prima facie free from any vitiating irregularities.
While a certificate of registration confers a union with
legitimacy with the concomitant right to participate in or ask for Second, Ventures draws attention to the inclusion of 82
certification election in a bargaining unit, the registration may individuals to the list of participants in the January 9, 2000
be canceled or the union may be decertified as the bargaining organizational meeting. Ventures submits that the 82, being no
unit, in which case the union is divested of the status of a longer connected with the company, should not have been
legitimate labor organization. counted as attendees in the meeting and the ratification
proceedings immediately afterwards.
Among the grounds for cancellation is the commission of any
of the acts enumerated in Art. 239(a)16 of the Labor Code, The assailed inclusion of the said 82 individuals to the meeting
such as fraud and misrepresentation in connection with the and proceedings adverted to is not really fatal to the Union's
adoption or ratification of the union's constitution and like cause for, as determined by the BLR, the allegations of
documents. falsification of signatures or misrepresentation with respect to
these individuals are without basis.
The Court, has in previous cases, said that to decertify a union,
it is not enough to show that the union includes ineligible The Court need not delve into the question of whether these 82
employees in its membership. It must also be shown that dismissed individuals were still Union members qualified to
there was misrepresentation, false statement, or fraud in vote and affix their signature on its application for registration
connection with the application for registration and the and supporting documents. The procedure for acquiring or
supporting documents, such as the adoption or ratification of losing union membership and the determination of who are
the constitution and by-laws or amendments thereto and the qualified or disqualified to be members are matters internal to
minutes of ratification of the constitution or by-laws, among the union and flow from its right to self-organization.
other documents.
To our mind, the relevancy of the 82 individuals' active
participation in the Union's organizational meeting and the
Essentially, Ventures faults both the BLR and the CA in finding signing ceremonies thereafter comes in only for purposes of
that there was no fraud or misrepresentation on the part of the determining whether or not the Union, even without the 82,
Union sufficient to justify cancellation of its registration. In this would still meet what Art. 234(c) of the Labor Code requires to
regard, Ventures makes much of, first, the separate hand- be submitted.
written statements of 82 employees who, in gist, alleged that
they were unwilling or harassed signatories to the attendance Whatever misgivings the petitioner may have with regard to the
sheet of the organizational meeting. 82 dismissed employees is better addressed in the inclusion-
exclusion proceedings during a pre-election conference. The
These mostly undated written statements submitted by issue surrounding the involvement of the 82 employees is a
Ventures on March 20, 2001, or seven months after it filed its matter of membership or voter eligibility. It is not a ground to
petition for cancellation of registration, partake of the nature of cancel union registration
withdrawal of union membership executed after the Union's
filing of a petition for certification election on March 21, 2000. The bare fact that three signatures twice appeared on the
list of those who participated in the organizational meeting
The employees' withdrawal from a labor union made would not, to our mind, provide a valid reason to cancel
before the filing of the petition for certification election is Certificate of Registration. As the Union tenably explained
presumed voluntary, while withdrawal after the filing of without rebuttal from Ventures, the double entries are no
such petition is considered to be involuntary and does not more than "normal human error," effected without malice.
affect the same.
The cancellation of a union's registration doubtless has an
Now then, if a withdrawal from union membership done after a impairing dimension on the right of labor to self-organization.
petition for certification election has been filed does not vitiate For fraud and misrepresentation to be grounds for
such petition, is it not but logical to assume that such cancellation of union registration under Article 239 of the
withdrawal cannot work to nullify the registration of the union? Labor Code, the nature of the fraud and misrepresentation
must be grave and compelling enough to vitiate the
Upon this light, the Court is inclined to agree with the CA that consent of a majority of union members.
the BLR did not abuse its discretion nor gravely err when it
concluded that the affidavits of retraction of the 82 Effect of filling a petition for certificate of
members had no evidentiary weight.
registration
After a labor organization has filed the necessary registration
documents, it becomes mandatory for the BLR to check if the ART. 246[238-A]. Effect of a Petition for Cancellation of
requirements under Art. 234 of the Labor Code have been Registration. - A petition for cancellation of union
sedulously complied with. registration shall not suspend the proceedings for
certification election nor shall it prevent the filing of a
If the union's application is infected by falsification and like petition for certification election.
serious irregularities, especially those appearing on the face of
the application and its attachments, a union should be denied In case of cancellation, nothing herein shall restrict the right
recognition as a legitimate labor organization. of the union to seek just and equitable remedies in the

Erika Cristel Diaz | LABOR RELATIONS

 Standard Cigarettes vs. CIR
appropriate courts.
On March 9, 1955, the respondent company moved to suspend
the hearings on the petition for certification election pending
final termination of the complaint for unfair labor practice. And
the court, expressing the opinion that the charges in the unfair
Itugon-Suyoc Mines vs. Sangilo-Itogon Workers labor practice case went into the root of the freedom of workers
to vote in a certification election, ordered the suspension of the
Petitioner's brief challenges Sañgilo's capacity to sue. Sañgilo, proceedings for certification election pending resolution of the
so petitioner says, ceased to be a legitimate labor union on unfair labor practice case.
March 31, 1960 when the Department of Labor cancelled the
former's registration permit for failure to comply with statutory It is the Standard Cigarette Manufacturing Co., Inc., which had
requirements. Contrariwise Sañgilo avers that at the time the asked for the suspension of the proceedings on the certification
complaint below was filed it was a legitimate labor election pending final determination of the unfair labor practice
organization, and continues to be so. complaint. In the usual course of things, the complainant union
would have been the one interested in the deferment of the
There is no order final in character cancelling Sañgilo's certification election, since the unfair practices of the employer
registration permit and dropping its name from the roster could result in the substantial reduction of its membership and
of legitimate labor unions. Sangilo's status does not appear its failure to get elected as the employees’ bargaining
in the record to have changed. Therefore, Sañgilo still enjoys representative.
all the rights accorded by law to a legitimate labor union. One
of those rights is the right to sue. But the complainant union did not ask for the suspension;
instead, it had strongly opposed the same in the court below
Even assuming that Sañgilo later lost its registration and has even come to this Court on certiorari against such
permit in the course of the present proceedings, still suspension. If the complainant union itself believes that it
Sañgilo may continue as a party without need of would not suffer prejudice in the election because of the
substitution of parties, subject however to the understanding employer’s alleged unfair labor practices, or is willing to
that whatever decision may be rendered therein will only be take the risks in said election, then we see no further
binding upon those members of the union who have not reason for the respondent court to suspend the holding of
signified their desire to withdraw from the case before its trial the election by the employees of their collective
and decision on the merits. bargaining agent.

Really, we perceive of no reason why the judgment in favor of The move of the company to suspend the certification
the fifteen individual respondent laborers should be overturned election proceedings, pending resolution of the unfair
simply because the union of which they were members ceased labor practice complaint against it, can be taken only as a
to be a legitimate labor union. maneuver to further delay such election and thereby favor
It cannot be disputed that CIR's prosecutor brought this case the intervenor-union, with whom it had already concluded
not merely for Sañgilo; it was also on behalf of the 107 a collective bargaining agreement.
employees enumerated therein. This accounts for the fact that
CIR's judgment for reinstatement and backpay was rendered in
favor of the fifteen respondent laborers. As a matter of fact, the records show that it was the intervenor-
union who had argued more strongly, first, against the petition
for certification election, and then for its suspension. And when
this petition for certiorari was filed before this Court, it was
Cebu Portland vs. CIR
again the intervenor-union who answered and argued against
the petition while the company (against whom the unfair labor
One of the most important questions raised in this appeal is the practice case was filed and at whose instance the certification
supposed lack of jurisdiction on the part of the Court of election proceedings were suspended), did not even bother to
Industrial Relations to consider the incidental case of answer in these proceedings, showing a lack of interest
respondent Valencia, for the reason that when his claim was whether this petition is sustained by us or not.
presented before the court on November 16, 1950 the
Philippine Land-Air-Sea Labor Union, to which he belonged,
had no longer any personality before the said court, because
Tablante vs. Noriel
its permit to continue as a labor organization had already
expired and the same was not renewed by the Secretary of
Labor. Case prior to amendment of Article 247[239] the Labor
Code:
In the first place, it must be remembered that the registration
required by Commonwealth Act No. 103 is not a Petitioner is quite insistent that private respondent labor union
prerequisite to the right of a labor organization to appear having engaged in an illegal strike, its registration permit must
and litigate a case before the Court of Industrial Relations. be cancelled. It based its contention on the relevant section of
In the second place, once the Court of Industrial Relations has Presidential Decree No. 823.
acquired jurisdiction over a case under the law of its creation, it
retains that jurisdiction until the case is completely decided, Petitioner, nonetheless, would seek to import a semblance of
including all the incidents related thereto. plausibility to its claim by the assertion that the Labor Code
itself provides, in another section, that cancellation of
registration follows from "any activity prohibited by law."

Erika Cristel Diaz | LABOR RELATIONS

 possibly serve as a bar to any collective bargaining since AFW
The argument is false and misleading according to the is not the real party-in-interest to the talks; rather, the
Comment of the Solicitor-General. Thus, by this amendatory negotiations were confined to petitioner and the local
law, it is evident that no cause of action exists which will union SLMCEA which is affiliated to AFW.
warrant the cancellation of Association of Democratic Labor
Organization's permit and registration. Only the collective bargaining agent, the local union SLMCEA
in this case, possesses legal standing to negotiate with
Of course, petitioner tried to evade said issue by relying on petitioner. A duly registered local union affiliated with a national
Article 240 (e) and Article 242 (p) of the Labor Code of the union or federation does not lose its legal personality or
Philippines, as amended. Let us examine its legal contention independence.
on this matter.
The locals are separate and distinct units primarily designed to
For expediency, we quote in entirety the aforesaid Article relied secure and maintain an equality of bargaining power between
upon by the petitioner for cancellation of the registration and the employer and their employee-members in the economic
permit of the union: struggle for the fruits of the joint productive effort of labor and
capital; and the association of the locals into the national union
Article 239. Ground for cancellation of union registration. The (as PAFLU) was in furtherance of the same end.
following shall constitute grounds for cancellation of union
registration: These associations are consensual entities capable of entering
(e) Acting as a labor contractor or engaging in the "cabo" into such legal relations with their members. The essential
system, or otherwise engaging in any activity prohibited by law. purpose was the affiliation of the local unions into a common
Suppletory to the above provision is Section 6 (c) of Rule II, enterprise to increase by collective action the common
Book V of the Rules and Regulations implementing the Labor bargaining power in respect of the terms and conditions of
Code of the Philippines, as amended, which reads as follows: labor.

Section 6. Denial of Registration of local unions-The Regional Yet the locals remained the basic units of association, free to
Office may deny the application for registration on any of the serve their own and the common interest of all, subject to the
following grounds: restraints imposed by the Constitution and By-Laws of the
(c) Engaging in the "cabo " system or other illegal practices. Association, and free also to renounce the affiliation for mutual
welfare upon the terms laid down in the agreement which
It is a fact that Association of Democratic Labor Organization is brought it into existence.
not a labor contractor or is it engaged in the 'cabo' system or is
it otherwise engaged in any activity of such nature which is Appending "AFW" to the local union’s name does not mean
prohibited by law. that the federation absorbed the latter. No such merger can be
construed. Rather, what is conveyed is the idea of affiliation,
The above-quoted article should not be interpreted or with the local union and the larger national federation retaining
construed to include an illegal strike engaged into by any their separate personalities.
union. This is so because the phrase or otherwise engaging
in any activity prohibited by law' should be construed to Rights of legitimate labor organization
mean such activity engaged into by a union that partakes - Not every legitimate labor organization possesses the
of the nature of a labor contractor or 'cabo' system. rights mentioned in Article 251 [242] of the Labor Code.
- Article 251(a) must be read in relation to Article 267[255]
The law does not intend to include in the said phrase of the Labor Code.
illegally declared strike simply because strike per se is
legal. Also, if the law intends to include illegally declared strike,
the same could have been expressly placed therein as had
been previously done in Presidential Decree No. 823. ART. 251[242]. Rights of legitimate labor organizations.
A legitimate labor organization shall have the right:
(a) To act as the representative of its members for the
purpose of collective bargaining;
St. Luke’s Medical Center vs. Torres (b) To be certified as the exclusive representative of all
the employees in an appropriate collective bargaining
We do not see merit in petitioner’s theory that the awards were unit for purposes of collective bargaining;
granted prematurely. In its effort to persuade this Court along
this point, petitioner denies having negotiated with private (c) To be furnished by the employer, upon written
respondent SLMCEA-AFW. Petitioner collectively refers to all request, with his annual audited financial statements,
the talks conducted with private respondent as mere informal including the balance sheet and the profit and loss
negotiations due to the representation issue involving AFW. statement, within thirty (30) calendar days from the date of
receipt of the request, after the union has been duly
Petitioner thus argues that in the absence of any formal recognized by the employer or certified as the sole and
negotiations, no collective bargaining could have taken place. exclusive bargaining representative of the employees in
Public respondent, petitioner avers, should have required the the bargaining unit, or within sixty (60) calendar days
parties instead to negotiate rather than prematurely issuing his before the expiration of the existing collective bargaining
order. agreement, or during the collective bargaining negotiation.

We cannot agree with this line of reasoning. It is immaterial (d) To own property, real or personal, for the use and
whether the representation issue within AFW has been benefit of the labor organization and its members;
resolved with finality or not. Said squabble could not

Erika Cristel Diaz | LABOR RELATIONS

 employees of petitioner, hence, it could not demand from
petitioner the right to bargain collectively in their behalf.
(e) To sue and be sued in its registered name; and
Respondent insists, however, that it could validly bargain in
(f) To undertake all other activities designed to benefit behalf of "its members, relying on Article 242 of the Labor
the organization and its members, including cooperative, Code. Respondent’s reliance on said article, a general
housing welfare and other projects not contrary to law. provision on the rights of legitimate labor organizations, is
misplaced, for not every legitimate labor organization
Notwithstanding any provision of a general or special law to possesses the rights mentioned therein. Article 242 (a)
the contrary, the income, and the properties of legitimate must be read in relation to above-quoted Article 255.
labor organizations, including grants, endowments,
gifts, donations and contributions they may receive from On respondent’s contention that it was bargaining in behalf
fraternal and similar organizations, local or foreign, which only of its members, the appellate court, affirming the NLRC’s
are actually, directly and exclusively used for their lawful observation that the same would only fragment the employees
purposes, shall be free from taxes, duties and other of petitioner, held that what [respondent] will be achieving is to
assessments. divide the employees, more particularly, the rank-and-file
employees of petitioner.
The exemptions provided herein may be withdrawn only by
a special law expressly repealing this provision. The other workers who are not members are at a serious
disadvantage, because if the same shall be allowed,
employees who are non-union members will be economically
impaired and will not be able to negotiate their terms and
conditions of work, thus defeating the very essence and reason
ART. [267]255. Exclusive bargaining representation and of collective bargaining, which is an effective safeguard against
workers’ participation in policy and decision-making.— the evil schemes of employers in terms and conditions of
The labor organization designated or selected by the work."
majority of the employees in an appropriate collective
bargaining unit shall be the exclusive representative of It bears noting that the goal of the DOLE is geered towards a
the employees in such unit for the purpose of collective single employer wide unit which is more to the broader and
bargaining. greater benefit of the employees working force. The philosophy
is to avoid fragmentation of the bargaining unit so as to
However, an individual employee or group of employees strengthen the employees’ bargaining power with the
shall have the right at any time to present grievances to their management.
employer.
To veer away from such goal would be contrary, inimical and
Any provision of law to the contrary notwithstanding, repugnant to the objectives of a strong and dynamic unionism.
workers shall have the right, subject to such rules and Petitioner’s refusal to bargain then with respondent cannot be
regulations as the Secretary of Labor and Employment considered a ULP to justify the staging of the strike.
may promulgate, to participate in policy and decision-
making processes of the establishment where they are
employed insofar as said processes will directly affect their Furusawa Rubber Phil., Inc. vs. Secretary
rights, benefits and welfare.

For this purpose, workers and employers may form labor- The main contention of petitioner is that FEU-IND is not a
management councils: Provided, That the representatives of legitimate labor organization so that, under the law, it could not
the workers in such labor-management councils shall be file a petition for certification election. The basis of this
elected by at least the majority of all employees in said argument is the failure of the petitioning union to submit an
establishment. original copy of its certificate of registration.

We cannot sustain petitioner. We agree with respondent

(a) and (b): To act as the representative of its Secretary of Labor and Employment that FEU-IND is a
members for the purpose of collective bargaining legitimate labor organization. As such, it enjoys all the rights
and privileges recognized by law. 2 The fact that FEU-IND has
been issued Certificate of Registration by DOLE is sufficient
proof of its legitimacy.

The presentation of the xerox copy of the certificate of

Philippine Diamond Hotel and Resort, Inc. vs. Manila
registration to support its claim of being a duly registered
Diamond Hotel Employees Union
labor organization instead of the submission of the
original certificate is not a fatal defect and does not in any
As Article 255 of the Labor Code declares, only the labor way affect its legitimate status as a labor organization
organization designated or selected by the majority of the conferred by its registration with DOLE. The issuance of the
employees in an appropriate collective bargaining unit is certificate of registration evidently shows that FEU-IND has
the exclusive representative of the employees in such unit complied with the requirements of Art. 234 of the Labor Code.
for the purpose of collective bargaining.
The requirements for registration being mandatory, they are
The union (hereafter referred to as respondent) is admittedly complied with before any labor organization, association or
not the exclusive representative of the majority of the group of unions or workers acquires legal personality and be

Erika Cristel Diaz | LABOR RELATIONS

 entitled to the rights and privileges granted by law to legitimate meeting dated May 18, 1993, requested the Bank to validate
labor organizations. its guestimates on the data of the rank and file. However,
Umali failed to put his request in writing as provided for in
One of the rights of a legitimate labor organization is to Article 242(c) of the Labor Code.
represent its members in collective bargaining
agreements; also, to be certified as the exclusive The Union, did not, as the Labor Code requires, send a written
representative of all employees in an appropriate unit for request for the issuance of a copy of the data about the Banks
purposes of collective bargaining. Hence the petition of rank and file employees. Thus, the employer cannot be held for
FEU-IND, as a legitimate labor organization, for unfair labor practice.
certification election may rightfully be granted.
(d) and (e): To own property and be sued in its
registered name
Caltex Refinery Employees Association vs. Brilantes
Note: These are inherent rights of a juridical person.
The matter of retirement benefits deserves a second look
considering that the concerned employees were already
previously granted the option to choose between the old and Lakas ng Manggagawang Makabayan vs. Marcelo
the new plan at the time the latter was initiated and they Enterprises
choose to be covered under the Old Plan.

To accede to the Unions demand to cover them under the new Concerted activities executed and carried into effect at the
plan entails a different arrangement under a new scheme and instigation and motivation of a labor organization not a
likewise requires the approval of a Board of Trustees. It is, bargaining agent constitute a violation of employer’s
therefore, understood that the new Retirement Plan does not basis right to bargain
apply to the more or less 40 employees being sought by the The clear facts of the case indisputably show that a legitimate
Union to be covered under the New Plan. representation issue confronted the respondent Marcelo
Companies. In the face of these facts and in conformity with
We hold that public respondent did not commit grave abuse of the existing jurisprudence, We hold that there existed no duty
discretion in respecting the free and voluntary decision of to bargain collectively with the complainant LAKAS on the part
the employees in regard to the Provident Plan and the of said companies.
irrevocable one-time option provided for in the New
Retirement Plan. And proceeding from this basis, it follows that all acts instigated
by complainant LAKAS such as the filing of the Notice of Strike
Although the union has every right to represent its on June 13, 1967 (although later withdrawn) and the two
members in the negotiation regarding the terms and strikes of September 4, 1967 and November 7, 1967 were
conditions of their employment, it cannot negate their calculated, designed and intended to compel the respondent
wishes on matters which are purely personal and Marcelo Companies to recognize or bargain with it
individual to them. notwithstanding that it was an uncertified union, or in the case
of respondent Marcelo Tire and Rubber Corporation, to bargain
In this case, the forty employees freely opted to be covered by with it despite the fact that the MUEWA of Paulino Lazaro was
the Old Plan; their decision should be respected. The company already certified as the sole bargaining agent in said
gave them every opportunity to choose, and they voluntarily respondent company.
exercised their choice. The union cannot pretend to know
better; it cannot impose its will on them. These concerted activities executed and carried into effect at
the instigation and motivation of LAKAS are all illegal and
violative of the employer’s basic right to bargain collectively
(c) To request for audited financial statements only with the representative supported by the majority of its
4 instances: employees in each of the bargaining units.
(1) After it has been voluntarily recognized by the employer as
the sole and exclusive bargaining representative of the This Court is not unaware of the present predicament of the
employees in the bargaining unit; or employees involved but much as we sympathize with those
(2) After it has been certified as the sole and exclusive who have been misled and so lost their jobs through hasty, ill-
bargaining representative by the DOLE; or advised and precipitate moves, We rule that the facts neither
(3) Within the 60-day freedom period prior to the expiration of substantiate nor support the finding that the respondent
the CBA; or Marcelo Companies are guilty of unfair labor practice.
(4) During and in the course of the collective bargaining
negotiations. Worker’s right to self-organization subject to employer’s
freedom to enforce rules and orders necessary to the
proper conduct of his business
Standard Chartered Bank Employees union NUBE vs. It was never the state policy nor our judicial pronouncement
Confessor that the employees’ rights to self-organization and to engage in
concerted activities for mutual aid and protection, are absolute
or be upheld under all circumstances.
We, likewise, find that the Union failed to substantiate its claim
that the Bank refused to furnish the information it needed.
The protection of workers’ right to self-organization in no way
While the refusal to furnish requested information is in
interfere with employer’s freedom to enforce such rules and
itself an unfair labor practice, and also supports the
orders as are necessary to proper conduct of his businesses,
inference of surface bargaining, in the case at bar, Umali, in a

Erika Cristel Diaz | LABOR RELATIONS

 so long as employer’s supervision is not for the purpose of This Court finds the quitclaims not valid. Firstly, said quitclaims
intimidating or coercing his employees with respect to their were secured on December 27, 1972 by petitioner after it lost
self-organization and representation. its case in the lower court when the latter profmulgated its
decision on the case on December 4, 1972. Obviously in its
It is the functions of the court to see that the rights of self- desire to deny what is due the sugar workers concerned
organization and collective bargaining guaranteed by the Act and frustrate the decision of the lower court awarding
are amply secured to the employee, but in its effort to prevent benefits to them, it used its moral ascendancy as
the prescribed unfair labor practice, the court must be mindful employer over said workers to secure said quitclaims.
of the welfare of the honest employer.
This Court rejects the allegation of petitioner to the effect that
A union has no right or personality to sue for and on the 53 agreements gave substance to the policy of the
behalf of non-members thereof Industrial Peace Act of encouraging the parties to make all
Firstly, LAKAS cannot bring any action for and in behalf of the reasonable efforts to settle their differences by mutual
employees who were members of MUEWA because, as agreement.
intimated earlier in this Decision, the said local union was
never an affiliate of LAKAS. Petitioner's contention and the case cited in support thereof
apply only where there is good faith on the part of the party
What appears clearly from the records is that it was Augusto litigants. In the case at bar, petitioner acted with evident bad
Carreon and his follow who joined LAKAS, but then Augusto faith and malice. Petitioner secured the 53 quitclaim
Carreon was not the recognized presidents of MUEWA and agreements individually with the 53 sugar workers without
neither he nor his followers can claims any legitimate the intervention of respondent's lawyer who was
representation of MUEWA. representing them before the lower court.

Apparently, it is this split faction of MUEWA. headed by, This subterfuge is tantamount to a sabotage of the interest
Augusto Carreon who, is being sought to be represented by of respondent association. Needless to say, the means
LAKAS. However, it cannot do so because the members employed by petitioner in dealing with the workers
constituting this split faction of MUEWA were still members of individually, instead of collectively through the union and
MUEWA which was on its own right a duly registered labor its counsel, violates good morals as they undermine the
unions. unity of respondent union and fuels industrial disputes,
contrary to the declared policy in the Industrial Peace Act.
Hence any suit to be brought for and in behalf of them can be
made only by MUEWA, and not LAKAS. It appearing then that This Court likewise rejects petitioner's allegation that the 53
Augusto Carreon and his cohorts did not disaffiliate from quitclaim agreements were in the nature of a compromise.
MUEWA nor signed any individual affiliation with LAKAS, Petitioner's allegations and citations apply only to compromises
LAKAS bears no legal interest in representing MUEWA or any between the party-litigants done in good faith. In the case at
of its members. bar, there was no compromise between the petitioner and the
respondent Sugar Workers Association.
A labor union would go beyond the limits of its legitimate
purposes if it is given the unrestrained liberty to prosecute any In respect of the 53 quitclaims, these are not compromise
case even for employees who are not members of any union at agreements between the petitioner and respondent union.
all. A suit brought by another in representation of a real party in They are separate documents of renunciation of individual
interest is defective. rights. Compromise involves the mutual renunciation of rights
by both parties on a parity basis. The quitclaims, however, bind
Under the uncontroverted facts obtaining herein, the the workers to renounce their rights while the petitioner not
aforestated ruling is applicable, the only difference being that, only does not renounce anything but also acquires exemption
here, a labor federation seeks to represent members of a from any legal liability in connection therewith.
registered local union never affiliated with it and members of
registered local unions which, in the course of the proceedings
before the industrial court, disaffiliated from it. Marquez vs. Secretary
This is not to say that the complaining employees were without
any venue for redress. Under the aforestated considerations, Money claims cannot be the object of settlement or
the respondent court should have directed the amendment of compromise without consent of each laborer concerned
the complaint by dropping LAKAS as the complainant and
allow the suit to be further prosecuted in the individual names On October 29, 1986, Minerva Peran signed an agreement
of those who had grievances. A class suit under Rule 3, with petitioner reducing their claims from a total amount of
Section 12 of the Rule of Court is authorized and should suffice P625,000 to only P80,000 to be paid in several installments.
for the purpose. Peran signed as president of the SAMAHAN which had
allegedly disaffiliated from respondent KAMPIL-KATIPUNAN.

However, Peran failed to show any evidence that SAMAHAN

Pampanga Sugar Development Co. Inc. vs. CIR had indeed disaffiliated from KAMPIL-KATIPUNAN. More
importantly, the employees denied giving Peran the authority to
The act of management in securing quitclaims individually enter into the amicable settlement and to move for the
with the workers without the intervention of the union has dismissal of the complaint.
been held to be evidently done in bad faith
Money claims due to laborers cannot be the object of
settlement or compromise effected by the union, union officers

Erika Cristel Diaz | LABOR RELATIONS

 or counsel without the specific individual consent of each While a party acting in a representative capacity, such as a
laborer concerned because the aggrieved parties are the union, may be permitted to intervene in a case, ordinarily,
individual complainants themselves. Their representative can a person whose interests are already represented will not
only assist but not decide for them. be permitted to do the same except when there is a
suggestion of fraud or collusion or that the representative
In the light of the categorical denial by the employees that will not act in good faith for the protection of all interests
Peran was authorized to enter into an amicable settlement as represented by him.
regards their claims, the Court holds that public respondent
Secretary of Labor ruled correctly in upholding the Regional Petitioners-appellants cite the dismissal of the case filed by
Director’s rejection of the agreement. ICTSI, first by the Labor Arbiter, and later by the Court of
Appeals. 3The dismissal of the case does not, however, by
itself show the existence of fraud or collusion or a lack of good
General Rubber and Footwear Corp. vs. Drilon faith on the part of APCWU. There must be clear and
convincing evidence of fraud or collusion or lack of good
faith independently of the dismissal. This, petitioners-
Union members who did not ratify a waiver of accrued appellants failed to proffer.
wage differentials are not bound by the ratification made
by a majority of the union members Petitioners-appellants likewise express their fear that APCWU
There is no dispute that private respondents had not ratified would not prosecute the case diligently because of its
the Return-to-Work Agreement. It follows, and we so hold, that "sweetheart relationship" with ICTSI. There is nothing on
private respondents cannot be held bound by the Return-to- record, however, to support this alleged relationship which
Work Agreement. allegation surfaces as a mere afterthought because it was
never raised early on.
The waiver of money claims, which in this case were
accrued money claims, by workers and employees must To reiterate, for a member of a class to be permitted to
be regarded as a personal right, that is, a right that must intervene in a representative action, fraud or collusion or lack
be personally exercised. For a waiver thereof to be legally of good faith on the part of the representative must be proven.
effective, the individual consent or ratification of the It must be based on facts borne on record. Mere assertions, as
workers or employees involved must be shown. what petitioners-appellants proffer, do not suffice.

Neither the officers nor the majority of the union had any
authority to waive the accrued rights pertaining to the
(f) To undertake all other activities designed to
dissenting minority members, even under a collective benefit the organization and its members, including
bargaining agreement which provided for a "union shop." cooperative, housing welfare and other projects not
The members of the union need the protective shield of this
contrary to law.
doctrine not only vis-a-vis their employer but also, at times, vis-
a-vis the management of their own union, and at other times Right to tax exemption of its income, property,
even against their own imprudence or impecuniousness. gifts, duties and assessments [last par]
Notwithstanding any provision of a general or special law to the
It is undisputed that the 100 members did not sign and ratify contrary, the income, and the properties of legitimate labor
the Return-to-Work Agreement and therefore they cannot be organizations, including grants, endowments, gifts,
bound by the waiver of benefits therein. Accordingly, the donations and contributions they may receive from fraternal
benefits under Wage Order No. 6 due them by virtue of the and similar organizations, local or foreign, which are actually,
final and executory Order of the National Wages Council dated directly and exclusively used for their lawful purposes, shall be
March 4, 1985 subsists in their favor and can be subject for free from taxes, duties and other assessments.
execution.

XPN: When the union was already a party to the

Rights and Conditions of Membership
suit

Acedrea vs. ICTSI

Art. 250[241]. Rights and Conditions of Membership in a
Labor Organization. – The following are the rights and
A labor union is one such party authorized to represent its conditions of membership in a labor organization:
members under Article 242(a) of the Labor Code which
provides that a union may act as the representative of its (a) No arbitrary or excessive initiation fees shall be
members for the purpose of collective bargaining. This required of the members of a legitimate labor organization
authority includes the power to represent its members for the nor shall arbitrary, excessive or oppressive fine and
purpose of enforcing the provisions of the CBA. forfeiture be imposed;
That APCWU acted in a representative capacity "for and in (b) The members shall be entitled to full and detailed
behalf of its Union members and other employees similarly reports from their officers and representatives of all
situated," the title of the case filed by it at the Labor Arbiter’s financial transactions as provided for in the constitution and
Office so expressly states. by-laws of the organization;

Erika Cristel Diaz | LABOR RELATIONS

 of the annual financial report to the Department of Labor
(c) The members shall directly elect their officers in the and Employment or from the date the same should have
local union, as well as their national officers in the been submitted as required by law, whichever comes
national union or federation to which they or their local earlier:
union is affiliated, by secret ballot at intervals of five (5)
years. Provided, That this provision shall apply only to a
legitimate labor organization which has submitted the
No qualification requirement for candidacy to any financial report requirements under this Code: Provided,
position shall be imposed other than membership in good further, That failure of any labor organization to comply
standing in subject labor organization. with the periodic financial reports required by law and
such rules and regulations promulgated thereunder six (6)
The secretary or any other responsible union officer shall months after the effectivity of this Act shall
furnish the Secretary of Labor and Employment with a list of automatically result in the cancellation of union
the newly-elected officers, together with the appointive registration of such labor organization;
officers or agents who are entrusted with the handling of
funds within thirty (30) calendar days after the election of (k) The officers of any labor organization shall not be
officers or from the occurrence of any change in the list of paid any compensation other than the salaries and
officers of the labor organization; expenses due to their positions as specifically provided for
in its constitution and by-laws, or in a written resolution
(d) The members shall determine by secret ballot, after duly authorized by a majority of all the members at a
due deliberation, any question of major policy affecting general membership meeting duly called for the purpose.
the entire membership of the organization, unless the
nature of the organization or force majeure renders such The minutes of the meeting and the list of participants and
secret ballot impractical, in which case, the board of ballots cast shall be subject to inspection by the Secretary of
directors of the organization may make the decision in Labor or his duly authorized representatives. Any
behalf of the general membership; irregularities in the approval of the resolutions shall be
a ground for impeachment or expulsion from the
(e) No labor organization shall knowingly admit as organization;
members or continue in membership any individual who
belongs to a subversive organization or who is engaged (l) The treasurer of any labor organization and every
directly or indirectly in any subversive activity; officer thereof who is responsible for the account of such
organization or for the collection, management,
(f) No person who has been convicted of a crime disbursement, custody or control of the funds, moneys
involving moral turpitude shall be eligible for election and other properties of the organization, shall render to
as a union officer or for appointment to any position in the the organization and to its members a true and correct
union; account of all moneys received and paid by him since he
assumed office or since the last day on which he rendered
(g) No officer, agent or member of a labor organization such account, and of all bonds, securities and other
shall collect any fees, dues, or other contributions in its properties of the organization entrusted to his custody or
behalf or make any disbursement of its money or funds under his control.
unless he is duly authorized pursuant to its constitution The rendering of such account shall be made:
and by-laws; (1) At least once a year within thirty (30) days after the
close of its fiscal year;
(h) Every payment of fees, dues or other contributions
by a member shall be evidenced by a receipt signed by (2) At such other times as may be required by a resolution
the officer or agent making the collection and entered into of the majority of the members of the organization; and
the record of the organization to be kept and maintained for
the purpose; (3) Upon vacating his office.

(i) The funds of the organization shall not be applied for The account shall be duly audited and verified by affidavit
any purpose or object other than those expressly and a copy thereof shall be furnished the Secretary of
provided by its constitution and by-laws or those Labor.
expressly authorized by written resolution adopted by
the majority of the members at a general meeting duly (m) The books of accounts and other records of the
called for the purpose; financial activities of any labor organization shall be
open to inspection by any officer or member thereof during
(j) Every income or revenue of the organization shall be office hours;
evidenced by a record showing its source, and every
expenditure of its funds shall be evidenced by a receipt from (n) No special assessment or other extraordinary fees
the person to whom the payment is made, which shall state may be levied upon the members of a labor organization
the date, place and purpose of such payment. Such record unless authorized by a written resolution of a majority of
or receipt shall form part of the financial records of the all the members in a general membership meeting duly
organization. called for the purpose.

Any action involving the funds of the organization shall The secretary of the organization shall record the minutes of
prescribe after three (3) years from the date of submission the meeting including the list of all members present, the

Erika Cristel Diaz | LABOR RELATIONS

 votes cast, the purpose of the special assessment or fees We likewise find untenable the argument of the petitioners that
and the recipient of such assessment or fees. The record the public respondent, in granting financial aid to the private
shall be attested to by the president. respondent, in effect, substituted the decision of the petitioner-
union to do otherwise and that in so doing, the public
(o) Other than for mandatory activities under the Code, no respondent gravely abused its discretion amounting to lack of
special assessments, attorney’s fees, negotiation fees jurisdiction.
or any other extraordinary fees may be checked off
from any amount due to an employee without an The union constitution is a covenant between the union
individual written authorization duly signed by the and its members and among the members. There is
employee. nothing in their constitution which leaves the legal
interpretation of its terms unilaterally to the union or its
The authorization should specifically state the amount, officers or even the general membership.
purpose and beneficiary of the deduction; and
The union constitution and by-laws clearly show that any
(p) It shall be the duty of any labor organization and its member who is suspended or terminated from employment
officers to inform its members on the provisions of its without reasonable cause is entitled to financial assistance
constitution and by-laws, collective bargaining from the union and its members. The problem, however, is
agreement, the prevailing labor relations system and all that the constitution does not indicate which body has the
their rights and obligations under existing labor laws. power to determine whether a suspension or dismissal is
for reasonable cause or not.
For this purpose, registered labor organizations may
assess reasonable dues to finance labor relations To our mind, the constitution's silence on this matter is a
seminars and other labor education activities. clear recognition of the labor arbiter's exclusive
Any violation of the above rights and conditions of jurisdiction over dismissal cases. After all, the union's
membership shall be a ground for cancellation of union constitution and by-laws is valid only insofar as it is not
registration or expulsion of officers from office, inconsistent with existing laws.
whichever is appropriate.
Right to vote
At least thirty percent (30%) of the members of a union or
any member or members specially concerned may Tancinco employees vs. Calleja
report such violation to the Bureau. The Bureau shall
have the power to hear and decide any reported violation to Submission of the employees names with the BLR as
mete the appropriate penalty. qualified members of the union is not a condition sine qua
non to enable said members to vote in the election of
Criminal and civil liabilities arising from violations of union's officers. It finds no support in fact and in law. Per
above rights and conditions of membership shall continue to public respondent's findings, the April 24, 1986 list consists of
be under the jurisdiction of ordinary courts. 158 union members only wherein 51 of the 56 challenged
voters' names do not appear.
Constitution and By-Laws interpretation
Adopting however a rough estimate of a total number of union
members who cast their votes of some 333 and excluding
therefrom the 56 challenged votes, if the list is to be the
Johnson (FFW) vs. Director basis as to who the union members are then public
respondent should have also disqualified some 175 of the
We find unmeritorious the contention of the petitioners that the 333 voters.
questioned decision and order are contrary to law for being
tantamount to compelling the union to disburse it funds without It is true that under article 242(c) of the Labor Code, as
the authority of the general membership and to collect from its amended, only members of the union can participate in the
members without the benefit of individual payroll authorization. election of union officers. The question however of
eligibility to vote may be determined through the use of
Section 5, Article XIII of the petitioner-union's constitution and the applicable payroll period and employee's status during
by-laws earlier aforequoted is self-executory. The financial aid the applicable payroll period. The payroll of the month next
extended to any suspended or terminated union member is preceding the labor dispute in case of regular employees 15
realized from the contributions declared to be compulsory and the payroll period at or near the peak of operations in case
under the said provision in the amount of seventy-five centavos of employees in seasonal industries.
due weekly from each union member.
In the case before us, considering that none of the parties
The nature of the said contributions being compulsory and the insisted on the use of the payroll period-list as voting list
fact that the purpose as stated is for financial aid clearly and considering further that the 51 remaining employees
indicate that individual payroll authorizations of the union were correctly ruled to be qualified for membership, their
members are not necessary. The petitioner-union's act of joining the election by casting their votes on May 26,
constitution and by-laws govern the relationship between 1986 after the May 10, 1986 agreement is a clear
and among its members. As in the interpretation of manifestation of their intention to join the union.
contracts, if the terms are clear and leave no doubt as to
the intention of the parties, the literal meaning of the They must therefore be considered ipso facto members
stipulations shall control. thereof. Said employees having exercised their right to

Erika Cristel Diaz | LABOR RELATIONS

 unionism by joining ITM-MEA their decision is paramount. Litton Mills employees vs. Calleja
Their names could not have been included in the list of
employee submitted on April 24, 1986 to the Bureau of Labor The controversy stems from respondent Umali's act of
for the agreement to join the union was entered into only on affiliating the petitioner-union with GATCORD, which caused
May 10, 1986. Indeed the election was supervised by the the union officers to impeach Umali for disloyalty to the union.
Department of Labor where said 56 members were allowed to The impeachment is anchored on a provision in the petitioner
vote. Private respondents never challenged their right to vote union's Constitution and By-Laws.
then.
As to the impeachment of a union officer, Section 2, Article XV
It is however the position of private respondents that since a of the petitioner-union's Constitution and By-Laws provides the
collective bargaining agreement (CBA) has been concluded procedures to be followed, to wit: (1) Impeachment should be
between the local union and ITM management the initiated by petition signed by at least 30% of all bona fide
determination of the legal question raised herein may not serve members of the union, and addressed to the Chairman of the
the purpose which the union envisions and may destroy the Executive Board; (b) A general membership meeting shall be
cordial relations existing between the management and the convened by the Board Chairman to consider the impeachment
union. of an officer; (c) Before any impeachment vote is finally taken,
the union officer against whom impeachment charges have
We do not agree. Existence of a CBA and cordial been filed shall be given ample opportunity to defend himself ,
relationship developed between the union and the and (d) A majority of all the members of the union shall be
management should not be a justification to frustrate the required to impeach or recall union officers.
decision of the union members as to who should properly
represent them in the bargaining unit. It clearly appears that the above cited procedure was not
followed by the petitioners when they impeached Umali.
Neither may the inclusion and counting of the 56 To be sure, there was difficulty on the part of the petitioners in
segregated votes serve to disturb the existing relationship complying with the required procedure for impeachment,
with management as feared by herein private respondents. considering that the petition to impeach had to be addressed to
Respondents themselves pointed out that petitioners joined the the Chairman of the Executive Board of the Union, and that the
negotiating panel in the recently concluded CBA. majority membership which would decide on the impeachment
had to be convened only upon call of the Chairman of the
This fact alone is conclusive against herein petitioners and Executive Board who, in the case at bar, happened to be
hence will estop them later if ever, from questioning the CBA respondent Umali himself.
which petitioners concurred with. Furthermore, the inclusion
and counting of the 56 segregated votes would not necessarily Nevertheless, despite the practical difficulties in complying
mean success in favor of herein petitioners as feared by with the said procedure, petitioners should have shown
private respondents herein. substantial compliance with said impeachment procedure,
by giving Umali ample opportunity to defend himself, as
Exhaustion of remedies contrasted to an outright impeachment, right after he
failed to appear before the first and only investigation
Villaor vs. Trajano scheduled on 27 August 1986 in the Litton Canteen.

Public respondent further opined that the COMELEC should The above conclusions notwithstanding, the Court believes that
have been allowed to discharge its functions without prejudice the union-members themselves know what is best for
to the right of petitioners to apply for relief from the Board of them, i.e., whether they still want respondent Umali as their
Directors. Union President, and whether they wish to affiliate their union
with GATCORD. And, the best and most appropriate means
He averred that under the union constitution, the Board has of ascertaining the will of the union members is through a
the power to remove or discipline, by three-fourths’ votes, certification election.
any union officer including the president himself or the
members of the COMELEC, and accordingly concluded that Consistent with the foregoing observations, it appears from
only after the remedy failed could the petitioners be from the record that a group of employees headed by
allowed to bring their case to the Med-Arbiter. In short, the petitioner Rogelio Abong broke away from the petitioner-
petitioners should first exhaust administrative remedies before union and formed a new union, called Litton Mills Workers
bringing their case to the Med-Arbiter. Union, and that in a certification election that followed, said
Litton Mills Workers Union, headed by petitioner Abong, was
Article 226 of the Labor Code and supplemented by Policy chosen as the collective bargaining agent.
Instruction No. 6 relating to the distribution of jurisdiction over
labor cases, it is safe to conclude that the freedom of the Because of this supervening event, it now appears clear
unions from interference from the government that the majority of the heretofore members of petitioner-
presupposes that there is no inter-union or intra-union union LMEAK do not wish respondent Umali to continue
conflict. as their president; neither do they wish their union to be
affiliated with the GATCORD federation. Consequently, the
In the instant case, there is no question that there is an intra- issues in this petition have become moot and academic.
union conflict. Accordingly, there is no question that the Med-
Arbiter rightly exercised jurisdiction over the case. The Manifestation of the petitioners after informing the Court of
the election of the Litton Mills Workers union headed by
petitioner Abong, as the collective bargaining representative in
Impeachment LMI, reiterates the prayer that respondent Umali be considered
and declared as impeached.

Erika Cristel Diaz | LABOR RELATIONS

 125 members only. It was not a contract with the general
This issue has, to the mind of the Court, likewise become membership, Only 14% of the total membership of 897 was
moot and academic for it is inconceivable that Umali will represented.
be retained as president of the new collective bargaining
agent, the Litton Mills Workers Union, while Umali's This violates Article 242 (d) of the Labor Code which
continued presidency of LMEAIC as a minority union if still provides:
existing in LMI, has ceased to be of any moment in the The members shall determine by secret ballot, after due
instant case. deliberation, any question of major policy affecting the entire
membership of the organization, unless the nature of the
Thirty-Percent Requirement of members to report organization or force majeure renders such secret ballot
impractical, in which case the board of directors of the
violations of the rights and conditions of organization may make the decision in behalf of the general
membership to the BLR membership.

Verceles vs. BLR Special Assessments

30% requirement is not mandatory ABS-CBN Supervisors vs. ABS-CBN et. al
On the matter concerning the 30% support requirement
needed to report violations of rights and conditions of Petitioners filed with the Bureau of Labor Relations, DOLE-
union membership, as found in the last paragraph of NCR, Quezon City, a Complaint against the Union Officers
Article 241 of the Labor Code, we likewise cannot sanction and ABS-CBN Broadcasting corporation, praying that (1) the
the petitioners. the 30% requirement is not mandatory. special assessment of ten percent (10%) of the sum total of all
salary increases and signing bonuses granted by respondent
The respondent Director’s ruling, however, that the assent of Company to the members of the Union be declared illegal for
30% of the union membership, mentioned in Article 242 of the failure to comply with the Labor Code, as amended, particularly
Labor Code, was mandatory and essential to the filing of a Article 241, paragraphs (g), (n), and (o); and in utter violation of
complaint for any violation of rights and conditions of the Constitution and By-Laws of the ABS-CBN Supervisors
membership in a labor organization (such as the arbitrary and Employees Union; (2) respondent Company be ordered to
oppressive increase of union dues here complained of), cannot suspend further deductions from petitioners’ salaries for their
be affirmed and will be reversed. shares thereof.
The very article relied upon militates against the proposition. It Noticeably, Article 241 speaks of three (3) requisites that
states that a report of a violation of rights and conditions of must be complied with in order that the special
membership in a labor organization may be made by at least assessment for Union’s incidental expenses, attorney’s
thirty percent (30%) of all the members of a union or any fees and representation expenses, as stipulated in Article
member or members specially concerned. XII of the CBA, be valid and upheld namely:
The use of the permissive "may" in the provision at once (1) authorization by a written resolution of the majority of
negates the notion that the assent of 30% of all the all the members at the general membership meeting duly
members is mandatory. More decisive is the fact that the called for the purpose;
provision expressly declares that the report may be made, (2) secretary’s record of the minutes of the meeting; and
alternatively by any member or members specially (3) individual written authorization for check-off duly signed
concerned. by the employee concerned.
And further confirmation that the assent of 30% of the union After a thorough review of the records on hand, we find that
members is not a factor in the acquisition of jurisdiction the three (3) requisites for the validity of the ten percent
by the Bureau of Labor Relations is furnished by Article 226 (10%) special assessment for Union’s incidental expenses,
of the same Labor Code, which grants original and exclusive attorney’s fees and representation expenses were met.
jurisdiction to the Bureau, and the Labor Relations Division in
the Regional Offices of the Department of Labor, over all inter- It can be gleaned that on July 14, 1989, the ABS-CBN
union and intra-union conflicts, and all disputes, Supervisors Employee Union held its general meeting,
grievances or problems arising from or affecting labor whereat it was agreed that a ten percent 10% special
management relations, making no reference whatsoever to assessment from the total economic package due to every
any such 30%-support requirement. member would be checked-off to cover expenses for
negotiation, other miscellaneous expenses and attorney’s fees.
Indeed, the officials mentioned are given the power to act
on all inter-union and intra-union conflicts (1) upon On May 24, 1991, said Union held its General Membership
request of either or both parties as well as (2) at their own Meeting, wherein majority of the members agreed that in as
initiative. much as the Union had already paid Atty. P. Pascual the
amount of P500,000.00, the same must be shared by all the
Major policy matters members until this is fully liquidated.

Halili vs. CIR Eighty-five (85) members of the same Union executed
individual written authorizations for check-off. Records do not
The alleged retainer's contract between Atty. Pineda and the indicate that the aforesaid check-off authorizations were
Union appears anomalous and even illegal as well as unethical executed by the eighty-five (85) Union members under the
considering that the contract was executed only between influence of force or compulsion. T
Atty. Pineda and the officers of the Union chosen by about

Erika Cristel Diaz | LABOR RELATIONS

 here is, then, the presumption that such check-off Laxity, permissiveness, neglect and apathy in supervising and
authorizations were executed voluntarily by the signatories regulating the activities of union officials would result in
thereto. Petitioner’s contention that the amount to be deducted corruption and oppression. Internal safeguards within the union
is uncertain is not persuasive because the check-off can easily be ignored or swept aside by abusive, arrogant and
authorization clearly stated that the sum to be deducted is unscrupulous union officials to the prejudice of the members.
equivalent to ten percent (10%) of all and whatever benefits
may accrue under the CBA. In other words, although the It is necessary and desirable that the Bureau of Labor
amount is not fixed, it is determinable. Relations and the Ministry of Labor should exercise close and
constant supervision over labor unions, particularly the
Petitioners further contend that Article 241 (n) of the Labor handling of their funds, so as to forestall abuses and venalities.
Code, as amended, on special assessments, contemplates a
general meeting after the conclusion of the collective Hence, the Director acted correctly in ordering an examination
bargaining agreement. of the books and records of the union. The examination should
include a verification of the charge that the petty loans
Subject Article does not state that the general membership extended by the union to its members were usurious and that
meeting should be called after the conclusion of a the fee for the issuance of cheeks is unwarranted since the
collective bargaining agreement. Even granting ex gratia loans were made in cash.
argumenti that the general meeting should be held after the
conclusion of the CBA, such requirement was complied with Kapisanan vs. Hernandez
since the May 24, 1991 General Membership Meeting was held
after the conclusion of the Collective Bargaining Agreement, Case prior to amendment:
which was signed and concluded on December 7, 1989.
Judicial interference in internal affairs of a labor union is
Considering that the three requisites aforesaid for the validity of sanctioned by Sec. 17 of Republic Act 875, otherwise known
a special assessment were observed or met, we uphold the as the Industrial Peace Act whi provides:
validity of the ten percent (10%) special assessment authorized
in Article XII of the CBA. SEC. 17. Rights and conditions of membership in labor
organizations. — It is hereby declared to be the public policy
Intra-union disputes of the Philippines to encourage the following internal labor
organization procedures. A minimum of ten percent of the
Duyag vs. Inciong members of a labor organization may report an alleged
violation of these procedures in their labor organization to
The Director held that resort to intra-union remedies is not the court. If the Court finds, upon investigation, evidence to
necessary and that the five complainants have the rights and substantiate the alleged violation and that effort to correct the
personality to institute the proceedings for the removal of the alleged violation through the procedures provided by the labor
respondents, to recover the amount illegally collected or organization’s constitution or by-laws have been exhausted the
withheld from them and to question illegal disbursements and court shall dispose of the complaint as in ‘unfair labor practice
expenditure of union funds. cases.

However, the Director ruled that the power to remove the union For the court to intervene, two requirements must be
officers rests in the members and that the Bureau of Labor satisfied:
Relations generally has nothing to do with the tenure of union (1) at least 10% of the union membership must concur to report
officers which "is a political question”. the alleged violation; and
(2) the procedures provided by the Union’s constitution or by-
Held: The Director of Labor Relations erred in holding that, as laws must first be exhausted.
a matter of policy, the tenure of union office being a "political
question is, generally, a matter outside his Bureau's jurisdiction It is true that under the statute redress must first be sought
and should be pa upon by the union members themselves. within the organization itself in accordance with its constitution
and by-laws. However, it has been held that this requirement is
After hearing and even without submitting the matter to not absolute, but yields to exceptions under varying
the union members, the union officials may be removed by circumstances. In the case at bar, noteworthy is the fact that
the Director of Labor decisions as clearly provided him. The the complaint was filed against the union and its
Director should apply the law and not make policy incumbent officers, some of whom were members of the
considerations prevail over its clear intent and meaning. board of directors.

The labor officials should not hesitate to enforcement The constitution and by-laws of the union provides that charges
strictly the law and regulations governing trade unions for any violation thereof shall be filed before the said board. But
even if that course of action would curtail the so-called as explained by the lower court, if the complainants had done
union autonomy and freedom from government so the board of directors would in effect be acting as
interference. respondent, investigator and judge at the same time. To follow
the procedure indicated would be a farce under the
For the protection of union members and in order that the circumstances. Where exhaustion of remedies within the
affairs of the union may be administered honestly, labor union itself would practically amount to a denial of justice,
officials should be vigilant and watchful in monitoring and or would be illusory or vain, it will not be insisted upon,
checking the administration of union affairs. particularly where property rights of the members are
involved, as a condition to the right to invoke the aid of a
court.

Erika Cristel Diaz | LABOR RELATIONS

 LITEX Employees vs. CIR respondents Babula and all other persons to cease acting as
officers of the union, and requiring them to turn over the union
The main ground of the Acting Chief Prosecutor in his motion funds to said director.
to dismiss is that petitioner Rances failed to comply with the
requirement of Section 17 of Republic Act No. 875, as Subsequently, the Court's aforesaid resolution of July 3, 1985
amended, which is the exhaustion of internal procedures as was modified on July 17, 1985 by providing that the special
provided by the union's constitution and by-laws to correct the election scheduled on July 20, 1985 shall be held under the
alleged violation, when he refused to submit for investigation to personal supervision of respondent Director Trajano, with the
the respondent officers of the union and to comment on the assistance of his staff, under the usual rules and applying
union's recommendation of dismissal as required by the suppletorily the union's 1978 constitution and by-laws.
respondent company.
After a careful consideration of the facts of this case, We are of
Petitioner Rances maintains that his submitting to the the considered view that the expiration of the terms of office
investigation called by the respondent union officers would of the union officers and the election of officers on
have resulted in farcical proceedings as the private November 28, 1988 have rendered the issues raised by
respondents would have acted as prosecutor, investigator, and petitioners in this case moot and academic. It is pointless
judge at the same time. and unrealistic to insist on annulling an election of officers
whose terms had already expired.
We find this claim of petitioner Rances meritorious. In
Kapisanan Ng Mga Manggagawa sa MRR v. Rafael We would have thereby a judgment on a matter which cannot
Hernandez, et al. this Court held: have any practical legal effect upon a controversy, even if
existing, and which, in the nature of things, cannot be
It is true that under the statute redress must first be enforced. We must consequently abide by our consistent ruling
sought within the organization itself in accordance that where certain events or circumstances have taken place
with its constitution and by-laws. However, it has been during the pendency of the case which would render the case
held that this requirement is not absolute, but yields moot and academic, the petition should be dismissed.
exception under varying circumstances. In the case at
bar, noteworthy is the fact that the complaint was filed SMC Employees vs. Calleja
against the union and its incumbent officers, some of
whom were members of the board of directors. The This is a special civil action of certiorari with a prayer for the
constitution and by-laws of the union provide that issuance of a writ of preliminary injunction to annul the orders
charges for any violation thereof shall be filed before dated February 22, 1988 and June 23, 1988, of the Med-
the said board. Arbiter and the Bureau of Labor Relations (BLR), respectively,
for the holding of a certification election in the Calasiao Beer
But as explained by the lower court, if the Region of the San Miguel Corporation.
complainants had done so, the board of directors
would in effect be acting as respondent, investigator The Union filed a motion to dismiss alleging that the petition for
and judge at the same time. To follow the procedure certification election was premature as it did not ask SMC to
indicated would be a farce under the circumstances. bargain collectively with it. It cited Article 258 of the Labor
Where exhaustion of remedies within the union itself Code which provides:
would practically amount to a denial of justice, or
would be illusory or vain, it will not be insisted upon, ART. 258. When an employer may file petition. — When
particularly where property rights of the members are requested to bargain collectively, an employer may petition the
involved, as a condition to the right to invoke the aid Bureau for an election. If there is no existing certified collective
of a court. bargaining agreement in the unit, the Bureau shall, after
hearing, order a certification election.
Kapisanan vs. Trajano
All certification cases shall be decided within twenty (20)
By and large, the holding of the referendum in question has working days.
become moot and academic. This is in line with Our ruling in
Pascual vs. Provincial Board of Nueva Ecija: The Bureau shall conduct a certification election within twenty
(20) days in accordance with the rules and regulations
The Court should never remove a public officer for acts prescribed by the Secretary of Labor.
done prior to his present term of office. To do otherwise
would be to deprive the people of their right to elect their Hence, this petition for certiorari alleging that the Director of the
officers. When the people have elected a man to office, it must BLR gravely abused her discretion in ordering the holding of a
be assumed that they did this with knowledge of his life and certification election. Parenthetically, the certification election
character, and that they disregarded or forgave his faults or was actually conducted on September 19, 1988 resulting in
misconduct, if he had been guilty of any. It is not for the court, "NO UNION" as the winner.
by reason of such faults or misconduct to practically overrule
the will of the people. The petition has no merit. Ordinarily, in an unorganized
establishment like the SMC Calasiao Beer Region, it is the
Manalad vs. Trajano union that files a petition for a certification election if there
is no certified bargaining agent for the workers in the
The Director of the Bureau of Labor Relations issued an order establishment.
on July 10, 1985 to the effect that he was taking over the
management of the affairs of said union, ordering private If a union asks the employer to voluntarily recognize it as
the bargaining agent of the employees, as the petitioner

Erika Cristel Diaz | LABOR RELATIONS

 did, it in effect asks the employer to certify it as the reconsideration is a condition sine qua non to afford an
bargaining representative of the employees — a opportunity for the correction of the error or mistake
certification which the employer has no authority to give, complained of.
for it is the employees' prerogative (not the employer's) to
determine whether they want a union to represent them, So also, considering that a decision of the Secretary of Labor is
and, if so, which one it should be. subject to judicial review only through a special civil action of
certiorari and, as a rule, cannot be resorted to without the
The petitioner's request for voluntary recognition as the aggrieved party having exhausted administrative remedies
bargaining representative of the employees was in effect a through a motion for reconsideration, the aggrieved party, must
request to bargain collectively, or the first step in that direction, be allowed to move for a reconsideration of the same so that
hence, the employer's request for a certification election was in he can bring a special civil action for certiorari before the
accordance with Article 258 of the Labor Code, and the public Supreme Court.
respondents did not abuse their discretion in granting the
request. Definition of terminologies
Cebu Seamen’s vs. Calleja
Bureau of Labor Relations (BLR)
There is no doubt that the controversy between the The Bureau of Labor Relations and the Labor Relations
aforesaid two sets of officers is an intra-union dispute. Divisions in the regional offices of the Department of Labor,
Both sets of officers claim to be entitled to the release of shall have original and exclusive authority to act, at their
the union dues collected by the company with whom it had own initiative or upon request of either or both parties, on all
an existing CBA. The controversy involves claims of different inter-union and intra-union conflicts, and all disputes,
members/officers to certain rights granted under the labor grievances or problems arising from or affecting labor-
code. management relations in all workplaces, whether agricultural
or non-agricultural, except those arising from the
Article 226 of the Labor Code vests upon the Bureau of implementation or interpretation of collective bargaining
Labor Relations and Labor Relations Division the original agreements which shall be the subject of grievance procedure
and exclusive authority and jurisdiction to act on all inter- and/or voluntary arbitration.
union and intra-union disputes. Therefore, the Med-Arbiter
originally, and the Director on appeal, correctly assumed The Bureau shall have fifteen (15) working days to act on labor
jurisdiction over the controversy. cases before it, subject to extension by agreement of the
parties. (Art. 232[226], LC)
ABS-CBN Supervisors vs. ABS-CBN et. al
Civil Service Commission (CSC)
Petitioners claim that the Decision of the Secretary of Labor The Civil Service Commission is the central personnel agency
and Employment dated July 1, 1991, affirming in toto the Order of the Philippine government. One of the three independent
of Med-Arbiter Rasidali Abdullah dated January 31, 1991, constitutional commissions with adjudicative responsibility in
cannot be a subject of a motion for reconsideration because it the national government structure, it is also tasked to render
is final and unappealable pursuant to Section 8, Rule VIII, Book final arbitration on disputes and personnel actions on Civil
V of the Omnibus Rule Implementing the Labor Code. It is Service matters.
further argued that the only remedy of the respondent Union
Officers’ is to file a petition for certiorari with this Court. Office of Personnel Relations
It is in the pursuit of this objective that the Commission
Section 8, Rule VIII, Book V of the Omnibus Rules restored on March 3, 2003 under CSC Resolution No. 03-0328
Implementing the Labor Code, provides: the Office for Personnel Relations (OPR) which was abolished
in 1994.
The Secretary shall have fifteen (15) calendar days within
which to decide the appeal from receipt of the records of the It was renamed Personnel Relations Office (PRO) and given
case. The decision of the Secretary shall be final and the challenging task of promoting responsive management and
unappealable. responsible public sector unionism as key partners to effective
governance.
The aforecited provision cannot be construed to mean that
the Decision of the public respondent cannot be The PRO handles all concerns on public sector unionism in
reconsidered since the same is reviewable by writ of National Government Agencies (NGAs), Local Government
certiorari under Rule 65 of the Rules of Court. As a rule, the Units (LGUs), State Universities and Colleges (SUCs) and
law requires a motion for reconsideration to enable the public Government-Owned or Controlled Corporations (GOCCs)
respondent to correct his mistakes, if any. nationwide.

Hence, the only way by which a labor case may reach the Composed of three (3) divisions - the Registration,
Supreme Court is through a petition for certiorari under Accreditation and CNA Division, Conciliation and Education
Rule 65 of the Rules of Court alleging lack or excess of Division and the Public Sector Labor Management Council
jurisdiction or grave abuse of discretion. Such petition may be (PSLMC) Concerns Division, the PRO is committed to the
filed within a reasonable time from receipt of the creation of harmonious working atmosphere between a
resolution denying the motion for reconsideration of the management and an employee’s organization which mutually
NLRC decision. respect each other’s rights.

Clearly, before a petition for certiorari under Rule 65 of the

Rules of Court may be availed of, the filing of a motion for
Department of Labor Regional Office

Erika Cristel Diaz | LABOR RELATIONS

 The Department of Labor and Employment (DOLE) started as Union refers to any labor organization in the private sector
a small bureau in 1908. It became a department on December organized for collective bargaining and for other legitimate
8, 1933 with the passage of Act 4121. The DOLE is the purposes.
national government agency mandated to formulate and
implement policies and programs, and serve as the policy- Labor Organization
advisory arm of the Executive Branch in the field of labor and Labor Organization refers to any union or association of
employment. employees in the private sector which exists in whole or in part
for the purpose of collective bargaining, mutual aid,
To carry out its mandate, the DOLE has 16 regional offices, 83 interest, cooperation, protection, or other lawful purposes.
Field Offices with four (4) Satellite Offices, 38 overseas posts,
6 bureaus, 7 staff services and 11 agencies attached to it for
policy and program supervision and/or coordination. Legitimate Labor Organization
Legitimate Labor Organization refers to any labor organization
in the private sector registered or reported with the
Public Sector Labor Management Council Department in accordance with Rules III and IV of these
(PSLMC) Rules.
A Public Sector Labor Management Council, hereinafter
referred to as the Council, is hereby constituted to be Exclusive Bargaining Agent/Representative
composed of the following: Exclusive Bargaining Representative refers to a legitimate
labor union duly recognized or certified as the sole and
1.) Chairman, Civil Service Commission Chairman; exclusive bargaining representative or agent of all the
2.) Secretary, Department of Labor and Employment Vice employees in a bargaining unit.
Chairman;
3.) Secretary, Department of Finance Member;
4.) Secretary, Department of Justice Member; Affiliate
5.) Secretary, Department of Budget and Management Affiliate refers to an independent union affiliated with a
Member federation, national union or a chartered local which was
subsequently granted independent registration but did not
The Council shall implement and administer the provisions of disaffiliate from its federation, reported to the Regional
this Executive Order. For this purpose, the Council shall Office and the Bureau in accordance with Rule III, Sections 6
promulgate the necessary rules and regulations to implement and 7 of these Rules.
this Executive Order. (E.O 180)
Chartered Local/Chapter
Employees Organization Chartered Local refers to a labor organization in the private
Employees’ Organization refers to any organization, union or sector operating at the enterprise level that acquired legal
association of employees in agencies of the national personality through registration with the Regional Office in
government and their regional offices, attached agencies accordance with Rule III, Section 2-E of these Rules.
and their regional offices, state universities and colleges,
government-owned and controlled corporations with Independent Union
original charters, and local government units, which exists in Independent Union refers to a labor organization operating at
whole or in part for the purpose of collective negotiations or the enterprise level that acquired legal personality through
for mutual aid, interest, cooperation and protection. independent registration under Article 234 of the Labor Code
and Rule III, Section 2-A of these Rules.
Registered Employees Organization
Registered Employees’ Organization refers to any National Union/Federation
organization, union, or association of employees defined under National Union or Federation refers to a group of legitimate
Section 1(t) hereof, which is registered with the DOLE and labor unions in a private establishment organized for
the CSC in accordance with these Rules. collective bargaining or for dealing with employers
concerning terms and conditions of employment for their
member unions or for participating in the formulation of social
and employment policies, standards and programs, registered
Accredited Employees Organization with the Bureau in accordance with Rule III, Section 2-B of
Accredited Employees’ Organization refers to a registered these Rules.
organization of rank-and-file employees as defined in these
Rules, which has been recognized and certified by the CSC Industry Union
as the sole and exclusive collective negotiating agent. Industry Union means any group of legitimate labor
organizations operating within an identified industry,
Sole and Exclusive Employees’ Representative organized for collective bargaining or for dealing with
The duly registered employees’ organization having the employers concerning terms and conditions of employment
support of the majority of the employees in the appropriate within an industry, or for participating in the formulation of
organizational unit shall be designated as the sole and social and employment policies, standards and programs in
exclusive representative of the employees. such industry, which is duly registered with the Department in
accordance with Rule IIII, Section 2 of these Rules.
Union
Trade Union Center
Trade Union Center means any group of registered national
unions or federations organized for the mutual aid and

Erika Cristel Diaz | LABOR RELATIONS

 protection of its members, for assisting such members in In the case at bar, the Adamson and Adamson Supervisory
collective bargaining, or for participating in the formulation of Union and the Adamson and Adamson, Inc., Salesmen
social and employment policies, standards and programs, Association (FFW), have their own respective constitutions and
which is duly registered with the Department in accordance by-laws.
with Rule III, Section 2 of these Rules.
They are separately and independently registered of each
Worker’s Association other. Both sent their separate proposals for collective
Workers’ Association refers to an association of workers bargaining agreements with their employer. There could be no
organized for the mutual aid and protection of its members employer influence on rank-in-file organizational activities nor
or for any legitimate purpose other than collective there could be any rank and file influence on the supervisory
bargaining. functions of the supervisors because of the representation
sought to be proscribed.
Legitimate Worker’s Association
Legitimate Workers’ Association refers to an association of  The local becomes subject to rules and
workers organized for mutual aid and protection of its members regulations of the Federation. The Federation
or for any legitimate purpose other than collective bargaining has a right to investigate and expel members of
registered with the Department in accordance with Rule III,
Sections 2-C and 2-D of these Rules. the local on the basis of the Constitution and by-
laws of the Federation.
Intra-Union Dispute
Intra-Union Dispute refers to any conflict between and Villar vs. Inciong
among union members, including grievances arising from any
violation of the rights and conditions of membership, The petitioners contended that PAFLU was without jurisdiction
violation of or disagreement over any provision of the to investigate their case since the charges, being intra-union
union’s constitution and by-laws, or disputes arising from problems within the Amigo Employees Union-PAFLU, should
chartering or affiliation of union. be conducted pursuant to the provisions of Article XI, Sections
2, 3, 4 and 5 of the local union's constitution and by-laws.
Inter-Union Dispute
It is true that disaffiliation from a labor union is not open to legal
Inter-Union Dispute refers to any conflict between and
objection. It is implicit in the freedom of association ordained by
among legitimate labor unions involving representation
the Constitution. But this Court has laid down the ruling that a
questions for purposes of collective bargaining or to any other
closed shop is a valid form of union security, and such
conflict or dispute between legitimate labor unions.
provision in a collective bargaining agreement is not a
restriction of the right of freedom of association guaranteed by
Effects of union becoming a local/chapter of a the Constitution.
federation
In the case at bar, it appears as an undisputed fact that on
February 15, 1977, the Company and the Amigo Employees
 If a local is an independently registered union, it Union-PAFLU entered into a Collective Bargaining Agreement
does not lose its independent legal personality with a union security clause provided for in Article XII thereof
since there is no such provision in the Labor which is a reiteration of the same clause in the old CBA.
Code. The quoted stipulation for closed-shop is clear and unequivocal
and it leaves no room for doubt that the employer is bound,
Adamson vs. CIR under the collective bargaining agreement, to dismiss the
employees, herein petitioners, for non-union membership.
The specific issue before us is whether or not a supervisor’s Petitioners became non-union members upon their expulsion
union may affiliate with a federation with which unions of rank- from the general membership of the Amigo Employees Union-
and-file employees of the same employer are also affiliated. PAFLU on March 15, 1977 pursuant to the Decision of the
PAFLU national president.
We find without merit the contentions of petitioner that if
affiliation will be allowed, only one union will in fact represent We reject petitioners' theory that their expulsion was not valid
both supervisors and rank-and-file employees of the petitioner; upon the grounds adverted to earlier in this Decision. That
that there would be an indirect affiliation of supervisors and PAFLU had the authority to investigate petitioners on the
rank-and-file employees with one labor organization; that there charges filed by their co-employees in the local union and
would be a merging of the two bargaining units; and that the after finding them guilty as charged, to expel them from
respondent union will lose its independence because it the roll of membership of the Amigo Employees Union-
becomes an alter ego of the federation. PAFLU is clear under the constitution of the PAFLU to
which the local union was affiliated.
There is nothing in the provisions of the Industrial Peace And pursuant to the security clause of the new CBA, reiterating
Act which provides that a duly registered local union the same clause in the old CBA, PAFLU was justified in
affiliating with a national union or federation loses its legal applying said security clause.
personality, or its independence. Notwithstanding affiliation,
the local union remained the basic unit free to serve the
common interest of all its members.  The contractual relation between the local &
federation from the CBA point of view is
principal and agent. The local is the principal.

Erika Cristel Diaz | LABOR RELATIONS

 The federation is the agent. The real party in the existence to the will of its members. The very essence of self-
organization is for the workers to form a group for the effective
CBA is the local. enhancement and protection of their common interests.
PICEWO vs. PICC Tropical Hut vs. Tropical Hut
The question to be resolved is whether or not the petitioners' The right of a local union to disaffiliate from its mother
act of disaffiliating themselves from the mother federation federation is well-settled. A local union, being a separate and
constitutes an act of disloyalty to the union which would voluntary association, is free to serve the interest of all its
warrant their expulsion and consequently their dismissal from members including the freedom to disaffiliate when
the company in pursuance to the union security clause circumstances warrant. This right is consistent with the
embodied in the CBA. constitutional guarantee of freedom of association.
While We are not convinced with the petitioners' argument that All employees enjoy the right to self-organization and to form
the only act that they have done was to change the name of and join labor organizations of their own choosing for the
their union for they have registered the new union and affiliated purpose of collective bargaining and to engage in concerted
it with the Federation of Free Workers, We rule that individual activities for their mutual aid or protection.
petitioners do not merit the dismissals meted by the company.
This is a fundamental right of labor that derives its existence
The locals are separate and distinct units primarily from the Constitution. In interpreting the protection to labor and
designed to secure and maintain an equality of bargaining social justice provisions of the Constitution and the labor laws
power between the employer and their employee-members or rules or regulations, We have always adopted the liberal
in the economic struggle for the fruits of the joint productive approach which favors the exercise of labor rights.
effort of labor and capital; and the association of the locals into
the national union was in furtherance of the same end. The inclusion of the word NATU after the name of the local
union THEU in the registration with the Department of Labor is
These associations are consensual entities capable of entering merely to stress that the THEU is NATU's affiliate at the time of
into such legal relations with their members. The essential the registration. It does not mean that the said local union
purpose was the affiliation of the local unions into a common cannot stand on its own. Neither can it be interpreted to mean
enterprise to increase by collective action the common that it cannot pursue its own interests independently of the
bargaining power in respect of the terms and conditions of federation. A local union owes its creation and continued
labor. existence to the will of its members and not to the
federation to which it belongs.
Yet the locals remained the basic units of association, free
to serve their own and the common interest of all, subject When the local union withdrew from the old federation to
to the restraints imposed by the Constitution and By-Laws join a new federation, it was merely exercising its primary
of the Association, and free also to renounce the affiliation right to labor organization for the effective enhancement
for mutual welfare upon the terms laid down in the and protection of common interests. In the absence of
agreement which brought it into existence. enforceable provisions in the federation's constitution
preventing disaffiliation of a local union a local may sever
The right of the local members to withdraw from the its relationship with its parent.
federation and to form a new local depends upon the
provisions of the union's constitution, by- laws and There is nothing in the constitution of the NATU or in the
charter. In the absence of enforceable provisions in the constitution of the THEU-NATU that the THEU was expressly
federation's constitution preventing disaffiliation of a local forbidden to disaffiliate from the federation. The alleged non-
union, a local may sever its relationship with its parent. compliance of the local union with the provision in the NATU
Constitution requiring the service of three months’ notice of
There is nothing shown in the records nor is it claimed by intention to withdraw did not produce the effect of nullifying the
respondent federation that the local union was expressly disaffiliation for the following grounds:
forbidden to disaffiliate from the federation. Except for the
union security clause, the federation claims no other ground in firstly, NATU was not even a legitimate labor organization, it
expelling four of the fifty-one who signed the certification. appearing that it was not registered at that time with the
Department of Labor, and therefore did not possess and
Fifty-one out of sixty employees is equivalent to eighty five acquire, in the first place, the legal personality to enforce its
percent (85%) of the total working force. This is not a case constitution and laws, much less the right and privilege under
where one or two members of the old union decided to the Labor Code to organize and affiliate chapters or locals
organize another union in order to topple down the former, but within its group, and secondly, the act of non-compliance with
it is a case where majority of the union members decided to the procedure on withdrawal is premised on purely technical
reorganize the union and to disaffiliate from the mother grounds which cannot rise above the fundamental right of self-
federation. organization.
There is no merit to the contention of the respondent federation
that the act of disaffiliation is disloyalty to the union. The  A local, contrary to the constitution & by-laws
federation and the union are two different entities and it was which allows disaffiliation only during sixty-day
the federation which actively initiated the dismissal of the freedom period, may disaffiliate from the
individual petitioners. A local union does not owe its existence
to the federation to which it is affiliated. It is a separate and federation at any time, provided such act is
distinct voluntary association owing its creation and continued

Erika Cristel Diaz | LABOR RELATIONS

 approved by the majority of all in the bargaining Under Section 3, Article I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to
unit. ALUMETAL is conditioned on the individual check-off
authorization of petitioner's members.
Associated Workers vs. NLRC
In other words, ALUMETAL is entitled to receive the dues
While it is true that AWUM as a local union, being an entity from respondent companies as long as petitioner union is
separate and distinct from AWU, is free to serve the interest of affiliated with it and respondent companies are authorized
all its members and enjoys the freedom to disaffiliate, such by their employees (members of petitioner union) to
right to disaffiliate may be exercised, and is thus considered a deduct union dues.
protected labor activity, only when warranted by
circumstances. Without said affiliation, the employer has no link to the
mother union. The obligation of an employee to pay union
Generally, a labor union may disaffiliate from the mother dues is coterminous with his affiliation or membership.
union to form a local or independent union only during the
60-day freedom period immediately preceding the The employees' check-off authorization, even if declared
expiration of the CBA. irrevocable, is good only as long as they remain members of
the union concerned. A contract between an employer and the
Even before the onset of the freedom period (and despite parent organization as bargaining agent for the employees is
the closed-shop provision in the CBA between the mother terminated by the disaffiliation of the local of which the
union and management) disaffiliation may still be carried employees are members.
out, but such disaffiliation must be effected by a majority
of the members in the bargaining unit. Respondent companies therefore were wrong in
continuing the check-off in favor of respondent federation
This happens when there is a substantial shift in allegiance since they were duly notified of the disaffiliation and of
on the part of the majority of the members of the union. In petitioner's members having already rescinded their
such a case, however, the CBA continues to bind the check-off authorization.
members of the new or disaffiliated and independent
union up to the CBA's expiration date. Suffice it to state that respondent federation is not entitled to
union dues payments from petitioner's members. A local union
The record does not show that individual respondents had which has validly withdrawn from its affiliation with the parent
disaffiliated during the freedom period. The record does, association and which continues to represent the employees of
however, show that only 11 members of AWU had decided to an employer is entitled to the check-off dues under a collective
disaffiliate from AWU and form AWUM. bargaining contract.

Respondent Metro had about 4,000 employees, and around

2,000 of these were members of AWU. It is evident that Substitutionary doctrine
individual respondents had failed to muster the necessary
majority in order to justify their disaffiliation. In fact, it was Benguet Consolidated vs. BCI Employees
only on December 5, 1985 that individual respondents
were finally able to register an independent union called Did the Collective Bargaining Contract executed between
Metroport Workers Union [MWU]. BENGUET and BBWU on June 23, 1959 and effective until
December 23, 1963 automatically bind UNION-PAFLU
Even then, in the absence of allegation by AWUM [MWU] upon its certification, on August 18, 1962, as sole
of the exact number of its members, the Court presumes bargaining representative of all BENGUET employees?
that only twenty percent [20%] of the employees of Metro
had joined MWU). Thus, in the referendum held on 7 In support of an affirmative answer to the first question,
January 1985 at the PTGWO compound (where BENGUET first invokes the so-called "Doctrine of
representatives of the Ministry of Labor and Employment Substitution" referred to in General Maritime Stevedores'
were present) to determine whether individual Union v. South Sea Shipping Lines:
respondents should be expelled from AWU, 1,229
members (out of 1,695 members present) voted for We also hold that where the bargaining contract is to
expulsion of individual respondents. run for more than two years, the principle of
substitution may well be adopted and enforced by the
In sum, the attempted disaffiliation of the eleven (11) private CIR to the effect that after two years of the life of a
respondents from the petitioner mother union and the effort to bargaining agreement, a certification election may be
organize either a new local of the mother union or an entirely allowed by the CIR; that if a bargaining agent other
new and separate union, did not, under the circumstances of than the union or organization that executed the
this case, constitute protected activities of the eleven (11) contract, is elected, said new agent would have to
individual respondents. respect said contract, but that it may bargain with
the management for the shortening of the life of
Obligation to check-off federation dues terminates the contract if it considers it too long, or refuse to
renew the contract pursuant to an automatic
with valid disaffiliation renewal clause.
Volkschel Labor Union vs. BLR The submission utterly fails to persuade Us. The above-
quoted pronouncement was obiter dictum. The only issue in
the General Maritime Stevedores' Union case was whether a

Erika Cristel Diaz | LABOR RELATIONS

 collective bargaining agreement which had practically run for 5 formally adopted the existing CONTRACT as its own and
years constituted a bar to certification proceedings. assumed all the liability ties imposed by the same upon BBWU.

We held it did not and accordingly directed the court a quo to  The local union and not the federation, is liable
order certification elections. With that, nothing more was
necessary for the disposition of the case. Moreover, the for damages arising from illegal strike even if it
pronouncement adverted to was rather premature. The was the federation who filed the notice to strike.
possible certification of a union different from that which signed
the bargaining contract was a mere contingency then since the Filipino Pipe Corp. vs. NLRC
elections were still to be held. Clearly, the Court was not called
upon to rule on possible effects of such proceedings on the Anent the responsibility for the damages allegedly sustained by
bargaining agreement. petitioner company on account of the illegal strike, the latter
theorized that the liability therefor should be borne by NLU-
But worse, BENGUET's reliance upon the Principle of TUCP and its national president, Atty. Eulogio Lerum, for
Substitution is totally misplaced. This principle, formulated having directly participated in aiding and abetting the illegal
by the NLRB as its initial compromise solution to the strike.
problem facing it when there occurs a shift in employees'
union allegiance after the execution of a bargaining It is argued that FPWU-NLU is a mere agent of respondent
contract with their employer, merely states that even during NLU-TUCP, because FPWU-NLU, which was formed by
the effectivity of a collective bargaining agreement respondent NLU-TUCP is not registered as a local unit or
executed between employer and employees thru their chapter but directly affiliated with the latter and therefore, could
agent, the employees can change said agent but the not have acted on its own. Otherwise stated, petitioner is of the
contract continues to bind them up to its expiration date. view that FPWU-NLU, a local union, cannot act as the principal
They may bargain however for the shortening of said of respondent NLU-TUCP, a mother federation, because it is
expiration date. not a legitimate labor organization.

In formulating the "substitutionary" doctrine, the only Evidently, in the case under scrutiny, whether or not FPWU,
consideration involved was the employees' interest in the the local chapter, complied with the procedural requirements
existing bargaining agreement. The agent's interest never that would make it a legitimate labor organization is immaterial.
entered the picture. It would not affect its status as the principal and basic unit of
the association. The requirement laid down in the Progressive
In fact, the justification for said doctrine was that the majority of Development case, that the local union must be a legitimate
the employees, as an entity under the statute, is the true party labor organization, pertains to the conditions before a union
in interest to the contract, holding rights through the agency of may file a petition for certification election and to be certified as
the union representative. Thus, any exclusive interest claimed sole and exclusive bargaining agent.
by the agent is defeasible at the will of the principal.
In the present case, there is no dispute that FPWU-NLU is the
Stated otherwise, the "substitutionary" doctrine only sole and exclusive bargaining representative of the rank and
provides that the employees cannot revoke the validly file employees of petitioner company. The union's status as a
executed collective bargaining contract with their legitimate labor organization is therefore of no moment in
employer by the simple expedient of changing their the resolution of the controversy here. As the local union,
bargaining agent. And it is in the light of this that the phrase it is considered as the principal; the entity which staged
"said new agent would have to respect said contract" must be the illegal strike and the one responsible for the resulting
understood. damages allegedly sustained by petitioner company.

It only means that the employees, thru their new bargaining Evidently, direct and primary responsibility for the
agent, cannot renege on their collective bargaining contract, damages allegedly caused by the illegal strike sued upon
except of course to negotiate with management for the fall on the local union FPWU, being the principal, and not
shortening thereof. on respondent NLU-TUCP, a mere agent of FPWU-NLU
which assisted the latter in filing the notice of strike.
The "substitutionary" doctrine, therefore, cannot be
invoked to support the contention that a newly certified Being just an agent, the notice of strike filed by Atty. Eulogio
collective bargaining agent automatically assumes all the Lerum, the national president of NLU-TUCP, is deemed to
personal undertakings — like the no-strike stipulation here — have been filed by its principal, the FPWU-NLU. Having thus
in the collective bargaining agreement made by the deposed dismissed the claim for damages against the principal, FPWU-
union. NLU, the action for damages against its agent, respondent
NLU-TUCP, and Atty. Lerum, has no more leg to stand on and
When BBWU bound itself and its officers not to strike, it should also be dismissed.
could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the -----------------------END OF FIRST EXAM COVERAGE----------------------
agent of the employees, not of the other unions which possess
distinct personalities. To consider UNION contractually bound
to the no-strike stipulation would therefore violate the legal
maxim that res inter alios nec prodest nec nocet.
Of course, UNION, as the newly certified bargaining agent,
could always voluntarily assume all the personal undertakings
made by the displaced agent. But as the lower court found,
there was no showing at all that, prior to the strike, UNION

Erika Cristel Diaz | LABOR RELATIONS

 Humility and
Perseverance ⚖️

Erika Cristel Diaz | LABOR RELATIONS