SECOND DIVISION

[G.R. No. 109002. April 12, 2000]

DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA) and BUENAVENTURA MAGSALIN, respondents.

[G.R. No. 110072. April 12, 2000]

DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION-NATIONAL FEDERATION OF TEACHERS AND EMPLOYEES UNION (DLSUEA-NAFTEU), petitioner, vs. DELA SALLE UNIVERSITY and BUENAVENTURA MAGSALIN, respondents.

D E C I S I O N

BUENA, J.:

Filed with this Court are two petitions for certiorari,[1] the first petition with preliminary injunction and/or temporary restraining order,[2] assailing the decision of voluntary arbitrator Buenaventura Magsalin, dated January 19, 1993, as having been rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. These two petitions have been consolidated inasmuch as the factual antecedents, parties involved and issues raised therein are interrelated.[3] Missc

The facts are not disputed and, as summarized by the voluntary arbitrator, are as follows. On December 1986, Dela Salle University (hereinafter referred to as UNIVERSITY) and Dela Salle University Employees Association - National Federation of Teachers and Employees Union (DLSUEA-NAFTEU), which is composed of regular non-academic rank and file employees,[4] (hereinafter referred to as UNION) entered into a collective bargaining agreement with a life span of three (3) years, that is, from December 23, 1986 to December 22, 1989.[5] During the freedom period, or 60 days before the expiration of the said collective bargaining agreement, the Union initiated negotiations with the University for a new collective bargaining agreement[6] which, however, turned out to be unsuccessful, hence, the Union filed a Notice of Strike with the National Conciliation and Mediation Board, National Capital Region.[7] After several conciliation-mediation meetings, five (5) out of the eleven (11) issues raised in the Notice of Strike were resolved by the parties. A partial collective bargaining agreement was thereafter executed by the parties.[8] On March 18, 1991, the parties entered into a Submission Agreement, identifying the remaining six (6) unresolved issues for arbitration, namely: "(1) scope of the bargaining unit, (2) union security clause, (3) security of tenure, (4) salary increases for the third and fourth years [this should properly read second and third years][9] of the collective bargaining agreement, (5) indefinite union leave, reduction of the union president’s workload, special leave, and

finally, (6) duration of the agreement."[10] The parties appointed Buenaventura Magsalin as voluntary arbitrator.[11] On January 19, 1993, the voluntary arbitrator rendered the assailed decision.[12] Spped

In the said decision, the voluntary arbitrator, on the first issue involving the scope of the bargaining unit, ruled that "…the Computer Operators assigned at the CSC [Computer Services Center], just like any other Computer Operators in other units, [should be] included as members of the bargaining unit,"[13] after finding that "[e]vidently, the Computer Operators are presently doing clerical and routinary work and had nothing to do with [the] setting of management policies for the University, as [may be] gleaned from the duties and responsibilities attached to the position and embodied in the CSC [Computer Services Center] brochure. They may have, as argued by the University, access to vital information regarding the University’s operations but they are not necessarily confidential."[14] Regarding the discipline officers, the voluntary arbitrator "…believes that this type of employees belong (sic) to the rank-and-file on the basis of the nature of their job."[15] With respect to the employees of the College of St. Benilde, the voluntary arbitrator found that the College of St. Benilde has a personality separate and distinct from the University and thus, held "…that the employees therein are outside the bargaining unit of the University’s rank-and-file employees."[16]

On the second issue regarding the propriety of the inclusion of a union shop clause in the collective bargaining agreement, in addition to the existing maintenance of membership clause, the voluntary arbitrator opined that a union shop clause "…is not a restriction on the employee’s right of (sic) freedom of association but rather a valid form of union security while the CBA is in force and in accordance with the Constitutional policy to promote unionism and collective bargaining and negotiations. The parties therefore should incorporate such union shop clause in their CBA."[17]

On the third issue with respect to the use of the "last-in-first-out" method in case of retrenchment and transfer to other schools or units, the voluntary arbitrator upheld the "…elementary right and prerogative of the management of the University to select and/or choose its employees, a right equally recognized by the Constitution and the law. The employer, in the exercise of this right, can adopt valid and equitable grounds as basis for lay-off or separation, like performance, qualifications, competence, etc. Similarly, the right to transfer or reassign an employee is an employer’s exclusive right and prerogative."[18]

Regarding the fourth issue concerning salary increases for the second and third years of the collective bargaining agreement, the voluntary arbitrator opined that the "…proposed budget of the University for SY 1992-93 could not sufficiently cope up with the demand for increases by the Union. xxx xxx. With the present financial condition of the University, it cannot now be required to grant another round of increases through collective bargaining without exhausting its coffers for other legitimate needs of the University as an institution,"[19] thus, he ruled that "…the University can no longer be required to grant a second round of increase for the school years under consideration and charge the same to the incremental proceeds."[20] Misspped

On the fifth issue as to the Union’s demand for a reduction of the workload of the union president, special leave benefits and indefinite union leave with pay, the voluntary arbitrator rejected the same, ruling that unionism "…is no valid reason for the reduction of the workload of its President,"[21] and that there is "…no sufficient justification to grant an indefinite leave."[22] Finding that the Union and the Faculty Association are not similarly situated, technically and professionally,[23] and that "[w]hile professional growth is highly encouraged on the part of the rank-and-file employees, this educational advancement would not serve in the same degree as demanded of the faculty members,"[24]the voluntary arbitrator denied the Union’s demand for special leave benefits.

On the last issue regarding the duration of the collective bargaining agreement, the voluntary arbitrator ruled that "…when the parties forged their CBA and signed it on 19 November 1990, where a provision on duration was explicitly included, the same became a binding agreement between them. Notwithstanding the Submission Agreement, thereby reopening this issue for resolution, this Voluntary Arbitrator is constrained to respect the original intention of the parties, the same being not contrary to law, morals or public policy."[25] As to the economic aspect of the collective bargaining agreement, the voluntary arbitrator opined that the "…economic provisions of the CBA shall be re-opened after the third year in compliance with the mandate of the Labor Code, as amended."[26]

Subsequently, both parties filed their respective motions for reconsideration which, however, were not entertained by the voluntary arbitrator "pursuant to existing rules and jurisprudence governing voluntary arbitration cases."[27]Josp-ped

On March 5, 1993, the University filed with the Second Division of this Court, a petition for certiorari with temporary restraining order and/or preliminary injunction assailing the decision of the voluntary arbitrator, as having been rendered "in excess of jurisdiction and/or with grave abuse of discretion."[28] Subsequently, on May 24, 1993, the Union also filed a petition for certiorari with the First Division.[29] Without giving due course to the petition pending before each division, the First and Second Divisions separately resolved to require the respondents in each petition, including the Solicitor General on behalf of the voluntary arbitrator, to file their respective Comments.[30] Upon motion by the Solicitor General dated July 29, 1993, both petitions were consolidated and transferred to the Second Division.[31]

In his consolidated Comment[32] filed on September 9, 1993 on behalf of voluntary arbitrator Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary arbitrator’s assailed decision on all points except that involving the employees of the College of St. Benilde. According to the Solicitor General, the employees of the College of St. Benilde should have been included in the bargaining unit of the rank-and-file employees of the University.[33] The Solicitor General came to this conclusion after finding "…sufficient evidence to justify the Union’s proposal to consider the University and the CSB [College of St. Benilde] as only one entity because the latter is but a mere integral part of the University," to wit:[34]

"1. One of the duties and responsibilities of the CSB’s Director of Academic Services is to coordinate with the University’s Director of Admissions regarding the admission of freshmen, shiftees and transferees (Annex "3" of the University’s Reply);

"2. Some of the duties and responsibilities of the CSB’s Administrative Officer are as follows:

‘A. xxx xxx xxx.

‘4. Recommends and implements personnel policies and guidelines (in accordance with the Staff Manual) as well as pertinent existing general policies of the university as a whole. xxx.

‘12. Conducts and establishes liaison with all the offices concerned at the Main Campus as well (sic) with other government agencies on all administrative-related matters. xxx Spp-edjo

‘B. xxx xxx xxx

‘7. Handles processing, canvassing and direct purchasing of all requisitions worth more than P10,000 or less. Coordinates and canvasses with the Main Campus all requisitions worth more than P10,000. xxx

‘C. xxx xxx xxx

‘7. Plans and coordinates with the Security and Safety Committee at the Main Campus the development of a security and safety program during times of emergency or occurrence of fire or other natural calamities. xxx (Annex "4" of the University’s Reply).’

"3. The significant role which the University assumes in the admission of students at the CSB is revealed in the following provisions of the CSB’s Bulletin for Arts and Business Studies Department for the schoolyear 1992-1993, thus:

‘Considered in the process of admission for a (sic) high school graduate applicants are the following criteria: results of DLSU College Entrance Examination xxx.

‘Admission requirements for transferees are: xxx and an acceptable score in the DLSU admission test. xxx

‘Shiftees from DLSU who are still eligible to enroll may be admitted in accordance with the DLSU policy on shifting. Considering that there sometimes exist exceptional cases where a very difficult but temporary situation renders a DLSU student falling under this category a last chance to be re-admitted provided he meets the cut-off scores required in the qualifying examination administered by the university. xxx

‘He may not be remiss in his study obligations nor incur any violation whatsoever, as such will be taken by the University to be an indication of his loss of initiative to pursue further studies at DLSU. In sch (sic) a case, he renders himself ineligible to continue studying at DLSU. DLSU thus reserves the right to the discontinuance of the studies of any enrolee whose presence is inimical to the objectives of the CSB/DLSU. xxx Mi-so

‘As a college within the university, the College of St. Benilde subscribes to the De La Salle Mission." (Annexes "C-1," "C-2," and "C-3" of the Union’s Consolidated Reply and Rejoinder)’

"4. The academic programs offered at the CSB are likewise presented in the University’s Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of the Union’s Consolidated Reply and Rejoinder).

"5. The Leave Form Request (Annex "F" of the Union’s Position Paper) at the CSB requires prior permission from the University anent leaves of CSB employees, to wit:

‘AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR PERMISSION FROM THE UNIVERSITY OR WHO OVEREXTENDS THE PERIOD OF HIS APPROVED LEAVE WITHOUT SECURING AUTHORITY FROM THE UNIVERSITY, OR WHO REFUSE TO BE RECALLED FROM AN APPROVED LEAVE SHALL BE CONSIDERED ABSENT WITHOUT LEAVE AND SHALL BE SUBJECT TO DISCIPLINARY ACTION.’

"6. The University officials themselves claimed during the 1990 University Athletic Association of the Philippines (UAAP) meet that the CSB athletes represented the University since the latter and the CSB comprise only one entity."

On February 9, 1994, this Court resolved to give due course to these consolidated petitions and to require the parties to submit their respective memoranda.[35]

In its memorandum filed on April 28, 1994,[36] pursuant to the above-stated Resolution,[37] the University raised the following issues for the consideration of the Court:[38] Ne-xold

I.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE BARGAINING UNIT COMPRISING THE UNIVERSITY’S RANK-AND-FILE EMPLOYEES, THE COMPUTER OPERATORS ASSIGNED AT THE UNIVERSITY’S COMPUTER SERVICES CENTER AND THE UNIVERSITY’S DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE COLLEGE OF SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT.

II.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNION’S DEMAND FOR THE INCLUSION OF A UNION SHOP CLAUSE IN THE PARTIES’ COLLECTIVE BARGAINING AGREEMENT.

III.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION’S PROPOSAL FOR THE "LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN CASES OF RETRENCHMENT. Sc

IV.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE UNIVERSITY CAN NO LONGER BE REQUIRED TO GRANT A SECOND ROUND OF WAGE INCREASES FOR THE SCHOOL YEARS 1991-92 AND 1992-93 AND CHARGE THE SAME TO THE INCREMENTAL PROCEEDS.

V.

"WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION’S PROPOSALS ON THE DELOADING OF THE UNION PRESIDENT, IMPROVED LEAVE BENEFITS AND INDEFINITE UNION LEAVE WITH PAY."

The Union, on the other hand, raised the following issues, in its memorandum,[39] filed pursuant to Supreme Court Resolution dated February 9, 1994,[40] to wit; that the voluntary arbitrator committed grave abuse of discretion in:

"(1)......FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE FICTION OF THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE PRESENCE OF SUFFICIENT BASIS TO DO SO AND IN FINDING THAT THE EMPLOYEES THEREAT ARE OUTSIDE OF THE BARGAINING UNIT OF THE DLSU’S RANK-AND-FILE EMPLOYEES. HE ALSO ERRED IN HIS INTERPRETATION OF THE APPLICATION OF THE DOCTRINE; x-sc

"(2)......DENYING THE PETITIONER’S PROPOSAL FOR THE ‘LAST-IN FIRST-OUT’ METHOD OF LAY-OFF IN CASE OF RETRENCHMENT AND IN UPHOLDING THE ALLEGED MANAGEMENT PREROGATIVE TO SELECT AND CHOOSE ITS EMPLOYEES DISREGARDING THE BASIC TENETS OF SOCIAL JUSTICE AND EQUITY UPON WHICH THIS PROPOSAL WAS FOUNDED;

"(3)......FINDING THAT THE MULTISECTORAL COMMITTEE IN THE RESPONDENT UNIVERSITY IS THE LEGITIMATE GROUP WHICH DETERMINES AND SCRUTINIZES ANNUAL SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES;

"(4)......HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS IS THE ONLY SOURCE OF SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES;

"(5)......FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT UNIVERSITY’S FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE FORMER’S CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES OVER AND ABOVE THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS AND IN GIVING WEIGHT AND CONSIDERATION TO THE RESPONDENT UNIVERSITY’S PROPOSED BUDGET WHICH IS MERELY AN ESTIMATE.

"(6)......FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE UNION PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY ASSOCIATION WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION AND IN SPECULATING THAT THE PRESIDENT OF THE FACULTY ASSOCIATION SUFFERS A CORRESPONDING REDUCTION IN SALARY ON THE ACCOUNT OF THE REDUCTION OF HIS WORKLOAD; IN FAILING TO APPRECIATE THE EQUAL RIGHTS OF THE MEMBERS OF THE UNION AND OF THE FACULTY FOR PROFESSIONAL ADVANCEMENT AS WELL AS THE

DESIRABLE EFFECTS OF THE INSTITUTIONALIZATION OF THE SPECIAL LEAVE AND WORKLOAD REDUCTION BENEFITS."[41] xl-aw

The question which now confronts us is whether or not the voluntary arbitrator committed grave abuse of discretion in rendering the assailed decision, particularly, in resolving the following issues: (1) whether the computer operators assigned at the University’s Computer Services Center and the University’s discipline officers may be considered as confidential employees and should therefore be excluded from the bargaining unit which is composed of rank and file employees of the University, and whether the employees of the College of St. Benilde should also be included in the same bargaining unit; (2) whether a union shop clause should be included in the parties’ collective bargaining agreement, in addition to the existing maintenance of membership clause; (3) whether the denial of the Union’s proposed "last-in-first-out" method of laying-off employees, is proper; (4) whether the ruling that on the basis of the University’s proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, is correct; (5) whether the denial of the Union’s proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, is proper; (6) whether the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, is correct; and (7) whether the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, is proper.

Now, before proceeding to the discussion and resolution of the issues raised in the pending petitions, certain preliminary matters call for disposition. As we reiterated in the case of Caltex Refinery Employees Association (CREA) vs. Jose S. Brillantes,[42] the following are the well-settled rules in a petition for certiorari involving labor cases. "First, the factual findings of quasi-judicial agencies (such as the Department of Labor and Employment), when supported by substantial evidence, are binding on this Court and entitled to great respect, considering the expertise of these agencies in their respective fields. It is well-established that findings of these administrative agencies are generally accorded not only respect but even finality.[43] Man-ikx

"Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable mind will accept as adequate to justify a conclusion.[44]

"Third, in Flores vs. National Labor Relations Commission,[45] we explained the role and function of Rule 65 as an extraordinary remedy:

"It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases — those wherein the action of an inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being

wholly void on grounds of jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great respect but even finality.

"No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which is certainly beyond the province of the extraordinary writ of certiorari. Such demand is impermissible for it would involve this Court in determining what evidence is entitled to belief and the weight to be assigned it. As we have reiterated countless times, judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction." (emphasis supplied).

With the foregoing rules in mind, we shall now proceed to discuss the merit of these consolidated petitions.

We affirm in part and modify in part. Scl-aw

On the first issue involving the classification of the computer operators assigned at the University’s Computer Services Center and discipline officers, the University argues that they are confidential employees and that the Union has already recognized the confidential nature of their functions when the latter agreed in the parties’ 1986 collective bargaining agreement to exclude the said employees from the bargaining unit of rank-and-file employees. As far as the said computer operators are concerned, the University contends that "… the parties have already previously agreed to exclude all positions in the University’s Computer Services Center (CSC), which include the positions of computer operators, from the collective bargaining unit. xxx xxx."[46] The University further contends that "…the nature of the work done by these Computer Operators is enough justification for their exclusion from the coverage of the bargaining unit of the University’s rank-and-file employees. xxx xxx."[47] According to the University, the Computer Services Center, where these computer operators work, "…processes data that are needed by management for strategic planning and evaluation of systems. It also houses the University’s confidential records and information [e.g. student records, faculty records, faculty and staff payroll data, and budget allocation and expenditure related data] which are contained in computer files and computer-generated reports. xxx xxx. Moreover, the Computer Operators are in fact the repository of the University’s confidential information and data, including those involving and/or pertinent to labor relations. xxx xxx."[48]

As to the discipline officers, the University maintains that "…they are likewise excluded from the bargaining unit of the rank-and-file employees under the parties’ 1986 CBA. The Discipline Officers are clearly alter egos of management as they perform tasks which are inherent in management [e.g. enforce discipline, act as peace officers, secure peace and safety of the students inside the campus, conduct investigations on violations of University regulations, or of existing criminal laws, committed within the University or by University employees] xxx xxx."[49] The University also alleges that "the Discipline Officers are privy to highly confidential information ordinarily accessible only to management."[50] Manik-s

With regard to the employees of the College of St. Benilde, the Union, supported by the Solicitor General at this point, asserts that the veil of corporate fiction should be pierced, thus, according to the Union, the University and the College of St. Benilde should be considered as only one entity because the latter is but a mere integral part of the University.[51]

The University’s arguments on the first issue fail to impress us. The Court agrees with the Solicitor General that the express exclusion of the computer operators and discipline officers from the bargaining unit of rank-and-file employees in the 1986 collective bargaining agreement does not bar any re-negotiation for the future inclusion of the said employees in the bargaining unit. During the freedom period, the parties may not only renew the existing collective bargaining agreement but may also propose and discuss modifications or amendments thereto. With regard to the alleged confidential nature of the said employees’ functions, after a careful consideration of the pleadings filed before this Court, we rule that the said computer operators and discipline officers are not confidential employees. As carefully examined by the Solicitor General, the service record of a computer operator reveals that his duties are basically clerical and non-confidential in nature.[52] As to the discipline officers, we agree with the voluntary arbitrator that based on the nature of their duties, they are not confidential employees and should therefore be included in the bargaining unit of rank-and-file employees.

The Court also affirms the findings of the voluntary arbitrator that the employees of the College of St. Benilde should be excluded from the bargaining unit of the rank-and-file employees of Dela Salle University, because the two educational institutions have their own separate juridical personality and no sufficient evidence was shown to justify the piercing of the veil of corporate fiction.[53] Man-ikan

On the second issue involving the inclusion of a union shop clause in addition to the existing maintenance of membership clause in the collective bargaining agreement, the University avers that "…it is in the spirit of the exercise of the constitutional right to self-organization that every individual should be able to freely choose whether to become a member of the Union or not. The right to join a labor organization should carry with it the corollary right not to join the same. This position of the University is but in due recognition of the individual’s free will and capability for judgment."[54] The University assails the Union’s demand for a union shop clause as "…definitely unjust and amounts to oppression. Moreover, such a demand is repugnant to democratic principles and the

constitutionally guaranteed freedom of individuals to join or not to join an association as well as their right to security of tenure, particularly, on the part of present employees." [55]

The Union, on the other hand, counters that the Labor Code, as amended, recognizes the validity of a union shop agreement in Article 248 thereof which reads:

"ART. 248. Unfair labor practices of employers. –

xxx......xxx......xxx

(e) To discriminate in regard to hire or tenure of employment or any term or condition of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement. xxx xxx." (emphasis supplied) Ol-dmiso

We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in addition to the existing maintenance of membership clause in the collective bargaining agreement. As the Solicitor General asserted in his consolidated Comment, the University’s reliance on the case of Victoriano vs. Elizalde Rope Workers’ Union[56] is clearly misplaced. In that case, we ruled that "…the right to join a union includes the right to abstain from joining any union. xxx xxx. The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. xxx xxx." [57]

On the third issue regarding the Union’s proposal for the use of the "last-in-first-out" method in case of lay-off, termination due to retrenchment and transfer of employees, the Union relies on social justice and equity to support its proposition, and submits that the University’s prerogative to select and/or choose the employees it will hire is limited, either by law or agreement, especially where the exercise of this prerogative might result in the loss of employment.[58] The Union further insists that its proposal is "…in keeping with the avowed State policy ‘(q) To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare’ (Art. 211, Labor Code, as amended)."[59]

On the other hand, the University asserts its management prerogative and counters that "[w]hile it is recognized that this right of employees and workers to ‘participate in policy and decision-making processes affecting their rights and benefits as may be provided by law’ has been enshrined in the Constitution (Article III, [should be Article XIII],

Section 3, par. 2), said participation, however, does not automatically entitle the Union to dictate as to how an employer should choose the employees to be affected by a retrenchment program. The employer still retains the prerogative to determine the reasonable basis for selecting such employees."[60] Nc-m

We agree with the voluntary arbitrator that as an exercise of management prerogative, the University has the right to adopt valid and equitable grounds as basis for terminating or transferring employees. As we ruled in the case of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. National Labor Relations Commission,[61] "[a] valid exercise of management prerogative is one which, among others, covers: work assignment, working methods, time, supervision of workers, transfer of employees, work supervision, and the discipline, dismissal and recall of workers. Except as provided for, or limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment." (emphasis supplied)

On the fourth issue involving the voluntary arbitrator’s ruling that on the basis of the University’s proposed budget, the University can no longer be required to grant a second round of wage increases for the school years 1991-92 and 1992-93 and charge the same to the incremental proceeds, we find that the voluntary arbitrator committed grave abuse of discretion amounting to lack or excess of jurisdiction. As we ruled in the case of Caltex Refinery Employees Association (CREA) vs. Jose S. Brillantes,[62] "xxx xxx. [w]e believe that the standard proof of a company's financial standing is its financial statements duly audited by independent and credible external auditors."[63]Financial statements audited by independent external auditors constitute the normal method of proof of profit and loss performance of a company.[64] The financial capability of a company cannot be based on its proposed budget because a proposed budget does not reflect the true financial condition of a company, unlike audited financial statements, and more importantly, the use of a proposed budget as proof of a company’s financial condition would be susceptible to abuse by scheming employers who might be merely feigning dire financial condition in their business ventures in order to avoid granting salary increases and fringe benefits to their employees.

On the fifth issue involving the Union’s proposals on the deloading of the union president, improved leave benefits and indefinite union leave with pay, we agree with the voluntary arbitrator’s rejection of the said demands, there being no justifiable reason for the granting of the same. Nc-mmis

On the sixth issue regarding the finding that the multi-sectoral committee in the University is the legitimate group which determines and scrutinizes the annual salary increases and fringe benefits of the employees of the University, the Court finds that the voluntary arbitrator did not gravely abuse his discretion on this matter. From our reading of the assailed decision, it appears that during the parties’ negotiations for a new collective bargaining agreement, the Union demanded for a 25% and 40% salary increase for the second and third years, respectively, of the collective bargaining agreement.[65] The University’s counter-proposal was for a 10% increase for the third year.[66] After the meeting of the multi-sectoral committee on budget, which is composed

of students, parents, faculty, administration and union, the University granted across-the-board salary increases of 11.3% and 19% for the second and third years, respectively.[67] While the voluntary arbitrator found that the said committee "…decided to grant the said increases based on the University’s viability which were exclusively sourced from the tuition fees. xxx xxx.," no finding was made as to the basis of the committee’s decision. Be that as it may, assuming for the sake of argument that the said committee is the group responsible for determining wage increases and fringe benefits, as ruled by the voluntary arbitrator, the committee’s determination must still be based on duly audited financial statements following our ruling on the fourth issue.

On the seventh and last issue involving the ruling that the 70% share in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the employees, the Court deems that any determination of this alleged error is unnecessary and irrelevant, in view of our rulings on the fourth and preceding issues and there being no evidence presented before the voluntary arbitrator that the University held incremental tuition fee proceeds from which any wage increase or fringe benefit may be satisfied.

WHEREFORE, premises considered, the petitions in these consolidated cases, G.R. No. 109002 and G.R. No. 110072 are partially GRANTED. The assailed decision dated January 19, 1993 of voluntary arbitrator Buenaventura Magsalin is hereby AFFIRMED with the modification that the issue on salary increases for the second and third years of the collective bargaining agreement be REMANDED to the voluntary arbitrator for definite resolution within one month from the finality of this Decision, on the basis of the externally audited financial statements of the University already submitted by the Union before the voluntary arbitrator and forming part of the records. Scnc-m

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur. 6/2/00 2:18 PM

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 160352               July 23, 2008

REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and Employment (DOLE),Petitioner, vs.KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

The Republic of the Philippines assails by way of Petition for Review on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002 Decision1 of the Court of Appeals (CA), which reversed the August 18, 2000 Decision2 of the Department of Labor and Employment (DOLE), and reinstated the May 17, 2000 Order3 of Med-Arbiter Anastacio L. Bactin, dismissing the petition of Kawashima Free Workers Union-PTGWO Local Chapter No. 803 (KFWU) for the conduct of a certification election in Kawashima Textile Mfg. Phils., Inc. (respondent); and the October 7, 2003 CA Resolution4 which denied the motion for reconsideration.

The relevant facts are of record.

On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for Certification Election to be conducted in the bargaining unit composed of 145 rank-and-file employees of respondent.5 Attached to its petition are a Certificate of Creation of Local/Chapter6 issued on January 19, 2000 by DOLE Regional Office No. IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by the national federation Phil. Transport & General Workers Organization (PTGWO), and a Report of Creation of Local/Chapter.7

Respondent filed a Motion to Dismiss8 the petition on the ground that KFWU did not acquire any legal personality because its membership of mixed rank-and-file and supervisory employees violated Article 245 of the Labor Code, and its failure to submit its books of account contravened the ruling of the Court in Progressive Development Corporation v. Secretary, Department of Labor and Employment.9

In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWU’s legal personality defective and dismissed its petition for certification election, thus:

We scrutinize the facts and evidences presented by the parties and arrived at a decision that at least two (2) members of [KFWU], namely: Dany I. Fernandez and Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under them. Being supervisory employees, they are prohibited under Article 245 of the Labor Code, as amended, to join the union of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr., Chief Engineers of the Maintenance and Manufacturing Department, respectively, act as foremen to the line engineers, mechanics and other non-skilled workers and responsible [for] the preparation and organization of maintenance shop fabrication and schedules, inventory and control of materials and supplies and tasked to implement training plans on line engineers and evaluate the performance of their subordinates. The above-stated actual functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that they are supervisory employees.

x x x x

Since petitioner’s members are mixture of rank and file and supervisory employees, petitioner union, at this point [in] time, has not attained the status of a legitimate labor organization. Petitioner should first exclude the supervisory employees from it membership before it can attain the status of a legitimate labor organization. The above judgment is supported by the decision of the Supreme Court in the Toyota Case10 wherein the High Tribunal ruled:

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

x x x x

Furthermore, the commingling of rank and file and supervisory employees in one (1) bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-election conference. The above ruling is supported by the Decision of the Supreme Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and Employment, et al., G.R. No. 131248 dated December 11, 199811 x x x.

x x x x

WHEREFORE, premises considered, the petition for certification election is hereby dismissed for lack of requisite legal status of petitioner to file this instant petition.

SO ORDERED.12 (Emphasis supplied)

On the basis of the aforecited decision, respondent filed with DOLE Regional Office No. IV a Petition for Cancellation of Charter/Union Registration of KFWU,13 the final outcome of which, unfortunately, cannot be ascertained from the records.

Meanwhile, KFWU appealed14 to the DOLE which issued a Decision on August 18, 2000, the dispositive portion of which reads:

WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be remanded to the office of origin for the immediate conduct of certification election, subject to the usual pre-election conference, among the rank-and-file employees of Kawashima Textile Manufacturing Philippines, Inc. with the following choices:

1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and

2. No union.

Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is hereby directed to submit to the office of origin the certified list of current employees in the bargaining unit for the last three months prior to the issuance of this decision.

SO DECIDED.15

The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor Union16 and Dunlop Slazenger, Inc. v. Secretary of Labor and Employment17 was misplaced, for while Article 245 declares supervisory employees ineligible for membership in a labor organization for rank-and-file employees, the provision did not state the effect of such prohibited membership on the legitimacy of the labor organization and its right to file for certification election. Neither was such mixed membership a ground for cancellation of its registration. Section 11, Paragraph II, Rule XI of Department Order No. 9 "provides for the dismissal of a petition for certification election based on lack of legal personality of a labor organization only on the following grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal personality has been revoked or canceled with finality."18 The DOLE noted that neither ground existed; on the contrary, KFWU's legal personality was well-

established, for it held a certificate of creation and had been listed in the registry of legitimate labor organizations.

As to the failure of KFWU to file its books of account, the DOLE held that such omission was not a ground for revocation of union registration or dismissal of petition for certification election, for under Section 1, Rule VI of Department Order No. 9, a local or chapter like KFWU was no longer required to file its books of account.19

Respondent filed a Motion for Reconsideration20 but the DOLE denied the same in its September 28, 2000 Resolution.21

However, on appeal by respondent, the CA rendered the December 13, 2002 Decision assailed herein, reversing the August 18, 2000 DOLE Decision, thus:

Since respondent union clearly consists of both rank and file and supervisory employees, it cannot qualify as a legitimate labor organization imbued with the requisite personality to file a petition for certification election. This infirmity in union membership cannot be corrected in the inclusion-exclusion proceedings during the pre-election conference.

Finally, contrary to the pronouncement of public respondent, the application of the doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Corporation Labor Union was not construed in a way that effectively denies the fundamental right of respondent union to organize and seek bargaining representation x x x.

For ignoring jurisprudential precepts on the matter, the Court finds that the Undersecretary of Labor, acting under the authority of the Secretary of Labor, acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of the Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of the Med-Arbiter dismissing the petition for certification election filed by Kawashima Free Workers Union-PTGWO Local Chapter No. 803 is REINSTATED.

SO ORDERED.22 (Emphasis supplied)

KFWU filed a Motion for Reconsideration23 but the CA denied it.

The Republic of the Philippines (petitioner) filed the present petition to seek closure on two issues:

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

Second, whether the legitimacy of a duly registered labor organization can be collaterally attacked in a petition for a certification election through a motion to dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc.24

The petition is imbued with merit.

The key to the closure that petitioner seeks could have been Republic Act (R.A.) No. 9481.25 Sections 8 and 9 thereof provide:

Section 8. Article 245 of the Labor Code is hereby amended to read as follows:

"Art. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors' union operating within the same establishment may join the same federation or national union."

Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows:

"Art. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union." (Emphasis supplied)

Moreover, under Section 4, a pending petition for cancellation of registration

will not hinder a legitimate labor organization from initiating a certification election, viz:

Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to read as follows:

"Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election.

In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts." (Emphasis supplied)

Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to interfere with or thwart a petition for certification election filed by a legitimate labor organization, to wit:

Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read as follows:

"Art. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer's participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition." (Emphasis supplied)

However, R.A. No. 9481 took effect only on June 14, 2007;26 hence, it applies only to labor representation cases filed on or after said date.27 As the petition for certification election subject matter of the present petition was filed by KFWU on January 24, 2000,28 R.A. No. 9481 cannot apply to it. There may have been curative labor legislations29 that were given retrospective effect,30 but not the aforecited provisions of R.A. No. 9481, for otherwise, substantive rights and interests already vested would be impaired in the process.31

Instead, the law and rules in force at the time of the filing by KFWU of the petition for certification election on January 24, 2000 are R.A. No. 6715,32 amending Book V of Presidential Decree (P.D.) No. 442 (Labor Code),33as amended, and the Rules and Regulations Implementing R.A. No. 6715,34 as amended by Department Order No. 9, series of 1997.35

It is within the parameters of R.A. No. 6715 and the Implementing Rules that the Court will now resolve the two issues raised by petitioner.

If there is one constant precept in our labor laws – be it Commonwealth Act No. 213 (1936),36 R.A. No. 875 (1953),37 P.D. No. 442 (1974), Executive Order (E.O.) No. 111 (1986)38 or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may exercise the right to be certified as the exclusive representative of all the employees in an appropriate collective bargaining unit for purposes of collective bargaining.39 What has varied over the years has been the degree of enforcement of this precept, as reflected in the shifting scope of administrative and judicial scrutiny of the composition of a labor organization before it is allowed to exercise the right of representation.

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

It was in R.A. No. 875, under Section 3, that such questioned mingling was first prohibited,40 to wit:

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

Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect the legitimacy of the labor organization. Under Section 15, the only instance when a labor organization loses its legitimacy is when it violates its duty to bargain collectively; but there is no word on whether such mingling would also result in loss of legitimacy. Thus, when the issue of whether the membership of two supervisory employees impairs the legitimacy of a rank-and-file labor organization came before the Court En Banc in Lopez v. Chronicle Publication Employees Association,41 the majority pronounced:

It may be observed that nothing is said of the effect of such ineligibility upon the union itself or on the status of the other qualified members thereof should such prohibition be disregarded. Considering that the law is specific where it intends to divest a legitimate labor union of any of the rights and privileges granted to it by law, the absence of any provision on the effect of the disqualification of one of its organizers upon the legality of the union, may be construed to confine the effect of such ineligibility only upon the membership of the supervisor. In other words, the invalidity of membership of one of the organizers does not make the union illegal, where the requirements of the law for the organization thereof are, nevertheless, satisfied and met.42 (Emphasis supplied)

Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No. 875. The provision in the Labor Code closest to Sec. 3 is Article 290,43 which is deafeningly silent on the prohibition against supervisory employees mingling with rank-and-file employees in one labor organization. Even the Omnibus Rules Implementing Book V of the Labor Code44 (Omnibus Rules) merely provides in Section 11, Rule II, thus:

Sec. 11. Supervisory unions and unions of security guards to cease operation. – All existing supervisory unions and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their registration certificates shall be deemed automatically cancelled. However, existing collective agreements with such unions, the life of which extends beyond the date of effectivity of the Code shall be respected until their expiry date insofar as the economic benefits granted therein are concerned.

Members of supervisory unions who do not fall within the definition of managerial employees shall become eligible to join or assist the rank and file organization. The determination of who are managerial employees and who are not shall be the subject of negotiation between representatives of supervisory union and the employer. If no agreement s reached between the parties, either or both of them ma bring the issue to the nearest Regional Office for determination. (Emphasis supplied)

The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to declare in Bulletin v. Sanchez45 that supervisory employees who do not fall under the category of managerial employees may join or assist in the formation of a labor organization for rank-and-file employees, but they may not form their own labor organization.

While amending certain provisions of Book V of the Labor Code, E.O. No. 111 and its implementing rules46continued to recognize the right of supervisory employees, who do not fall under the category of managerial employees, to join a rank-and-file labor organization.47

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

Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to read as follows

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

Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition would bring about on the legitimacy of a labor organization.

It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions):

Sec. 1. Who may join unions. – x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied)

and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz:

Sec. 1. Where to file. – A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath.

Sec. 2. Who may file. – Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition.

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

x x x x

(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied)

By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election.

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

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

x x x x

In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election.49 (Emphasis supplied)

In Dunlop,50 in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members.51

It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases.

But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules - that the petition for certification

election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees - was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus:

Rule XICertification Elections

x x x x

Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit.52

In Pagpalain Haulers, Inc. v. Trajano,53 the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit:

Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapter’s officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter’s constitution and by-laws; provided that where the local/chapter’s constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly.

All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President.

which does not require that, for its creation and registration, a local or chapter submit a list of its members.

Then came Tagaytay Highlands Int’l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO54 in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlop and reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof.55Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code.56

In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW,57 the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members.58

More to the point is Air Philippines Corporation v. Bureau of Labor Relations,59 which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership:60 the Court therein reiterated its ruling in

Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.61

lavvphil

All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.

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

Now to the second issue of whether an employer like respondent may collaterally attack the legitimacy of a labor organization by filing a motion to dismiss the latter’s petition for certification election.

Except when it is requested to bargain collectively,62 an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer.63 The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it;64 not even a mere allegation that some employees participating in a petition for certification election are actually managerial employees will lend an employer legal personality to block the certification election.65 The employer's only

right in the proceeding is to be notified or informed thereof.66

The amendments to the Labor Code and its implementing rules have buttressed that policy even more.

WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and October 7, 2003 Resolution of the Court of Appeals and the May 17, 2000 Order of Med-Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE,while the August 18, 2000 Decision and September 28, 2000 Resolution of the Department of Labor and Employment are REINSTATED.

No costs.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZAssociate Justice

WE CONCUR:

FIRST DIVISION 

ST. JAMES SCHOOL OF QUEZON CITY,                 G.R. No. 151326                                                   Petitioner,

                                                   Present:                                                                                               Davide, Jr., C.J.,                                                                                                   Chairman,                                                                                               Quisumbing,                  - versus -                                                              Ynares-Santiago,                                                                                               Carpio, and

                                                      Azcuna, JJ.                                                         SAMAHANG MANGGAGAWA SA                            Promulgated:ST. JAMES SCHOOL OF QUEZON CITY,                                                                Respondent.          November 23, 2005 

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x         

DECISION 

CARPIO, J.: 

The Case 

          Before the Court is a petition for review[1] assailing the 5 September 2001

Decision and 3 January 2002 Resolution of the Court of Appeals[2] in CA-G.R. SP

No. 60197.  The Court of Appeals sustained the Decision of the Department of

Labor and Employment (“DOLE”) directing the opening of the challenged ballots

cast during the certification election.  

The Antecedent Facts 

          The Samahang Manggagawa sa St. James School of Quezon City

(“Samahang Manggagawa”) filed a petition for certification election to determine

the collective bargaining representative of the motor pool, construction and

transportation employees of St. James School of Quezon City (“St. James”).  On

26 June 1999, the certification election was held at the DOLE office in Intramuros,

Manila.  There were 149 eligible voters and 84 voters cast their votes.  St. James

filed a certification election protest challenging the 84 votes.  St. James alleged that

it had 179 rank and file employees, none of whom voted in the certification

election.  St. James argued that those who voted were not its regular employees but

construction workers of an independent contractor, Architect Conrado Bacoy

(“Architect Bacoy”). 

          In an Order dated 6 January 2000,[3] Med-Arbiter Tomas F. Falconitin

(“Med-Arbiter Falconitin”) ruled that at the time of the certification election, the

84 voters were no longer working at St. James.  Med-Arbiter Falconitin supported

his ruling using the roster of rank and file employees submitted by St. James,

which did not include the names of the 84 voters.  Med-Arbiter Falconitin also

ruled that since the construction projects have ceased, some of the workers were no

longer entitled to vote in the certification election.  Finally, Med-Arbiter Falconitin

ruled that even if the 84 workers were to be included in the 179 rank and file

employees of St. James, the total number of voters would be 263.  Thus, the 84

votes cast would not be sufficient to constitute a majority of all eligible voters to

have a valid certification election.  The dispositive portion of the Order reads: 

WHEREFORE, premises considered, the certification election protest is hereby given due course.

 Accordingly, judgment is hereby rendered, declaring the certification

election for the rank and file employees of respondent/protestant St. James School of Quezon City conducted on June 26, 1999, a failure; and null and void ab initio.

 SO ORDERED.[4]

 

 

          Samahang Manggagawa appealed to the Secretary of Labor. In its

Decision[5] dated 5 May 2000, the DOLE[6] reversed the ruling of Med-Arbiter

Falconitin.  The DOLE ruled that Samahang Manggagawa seeks to represent the

non-academic personnel or the rank and file employees from the motor pool,

construction and transportation departments, and not all the rank and file

employees of St. James.  According to the DOLE, Med-Arbiter Falconitin erred in

including all the rank and file employees of St. James, whether teaching or non-

teaching personnel, in the computation of the total number of employees.  The

DOLE ruled that the list submitted by St. James contained only the administrative,

teaching and office personnel of the school.  The dispositive portion of the

Decision reads: WHEREFORE, the appeal is hereby GRANTED and the order dated 06

January 2000 of the Med-Arbiter is REVERSED and SET ASIDE.  In lieu thereof, an order is hereby issued directing the Election Officer, Lilibeth Cagara, DOLE-National Capital Region to open and canvass the 84 challenged ballots within ten (10) days from receipt hereof, subject to usual notice and representation by the parties and thereafter to issue the corresponding certification of the results.

 SO DECIDED.[7]

 

 

          St. James filed a motion for reconsideration.  The DOLE[8] denied the motion

in its 19 June 2000 Resolution.[9]  St. James filed a special civil action before the

Court of Appeals.  

          In a Decision[10] dated 5 September 2001, the Court of Appeals dismissed the

petition and ruled that the DOLE did not commit grave abuse of discretion in

reversing the ruling of Med-Arbiter Falconitin.  In its 3 January 2002 Resolution,

[11] the Court of Appeals denied St. James’ motion for reconsideration.

          Hence, the petition before this Court.

 

The Issues 

St. James questions the validity of the formation of the labor union and the

validity of the certification election.[12]

  

The Ruling of the Court 

          The petition has no merit.

 

The Validity of the Formation of the Labor Union 

          St. James argues that majority of the members of Samahang Manggagawa

are not its employees but employees of Architect Bacoy, an independent

contractor.  

 

St. James may no longer question the validity of the formation of the labor

union. 

The records[13] show that prior to the holding of the certification election, St.

James filed a petition for cancellation of Samahang Manggagawa’s union

registration.  Among the grounds cited in the petition was the lack of employer-

employee relationship between St. James and Samahang Manggagawa’s members. 

The Med-Arbiter recommended the cancellation of the union registration.  DOLE

Regional Director IV Romeo Young (“Director Young”) adopted the Med-

Arbiter’s recommendation and cancelled Samahang Manggagawa’s union

registration.  Samahang Manggagawa filed an appeal before the Bureau of Labor

Relations (“BLR”). In its Decision[14] dated 22 January 1998, the BLR[15] reversed

Director Young’s Decision.  In its Resolution[16] of 12 February 1998, the BLR

denied St. James’ motion for reconsideration.  St. James filed a special civil action

before the Court of Appeals.  The case was docketed as CA-G.R. SP        No.

50918.  In its 9 February 2001 Decision,[17] the Court of Appeals dismissed St.

James’ petition and affirmed the BLR’s Decision.  The Court of Appeals ruled that

the construction workers are actually St. James’ regular employees in its motor

pool, construction and transportation departments.  The Court of Appeals also

ruled that Architect Bacoy is a labor-only contractor and thus an agent of St.

James, which is the real employer.    

St. James filed a petition for certiorari before this Court.  The case was

docketed as G.R. No. 149648.  In a Resolution dated 10 October 2001, this Court

denied the petition for St. James’ error in the choice or mode of appeal. [18]  The

Court’s 10 October 2001 Resolution closed any issue on the validity of the

formation of the labor union.

 

The Validity of the Certification Election 

          Section 13, Rule XII, Book V of the Omnibus Rules Implementing the Labor

Code (“Omnibus Rules”) provides: 

            Section 13. Proclamation and certification of results by election officer; when proper. – Upon completion of the canvass there being a valid election, the election officer shall proclaim and certify as winner the union which obtained a majority of the valid votes cast under any of the following conditions: 

a)      No protest had been filed or, even if one was filed, the same was not perfected within the five-day period for perfection of the protest;

 b)      No challenge of eligibility issue was raised or even if one was raised,

the resolution of the same will not materially change the result. 

For this purpose, the election officer shall immediately issue the corresponding certification, copy furnished all parties, which shall form part of the records of the case.  The winning union shall have the rights, privileges and obligations of a duly certified collective bargaining representative from the time the certification is issued.  The proclamation and certification so issued shall not be appealable.

   

According to St. James, the certification election was conducted without

quorum.  St. James alleges that it has 179 rank and file employees in its Quezon

City Campus.  When the certification election was held, none of these qualified

rank and file employees cast their votes because they were all on duty in the school

premises.  The 84 voters who cast their votes are employees of Architect Bacoy. 

St. James also alleges that it has 570 rank and file employees in all its campuses. 

Even if the 84 voters are its employees, the votes do not constitute a majority vote

of its rank and file employees because the quorum should be based on its 570 rank

and file employees. 

          We cannot sustain the argument. 

          St. James has five campuses – the Philamlife and Scout Alcaraz, Quezon

City campuses which are pre-schools; the Parañaque City and Calamba, Laguna

campuses which offer elementary, secondary and college education; and the

Tandang Sora, Quezon City campus which offers elementary and secondary

education.[19]

 

          The members of Samahang Manggagawa are employees in the Tandang

Sora campus.  Under its constitution and by-laws, Samahang Manggagawa seeks to

represent the motor pool, construction and transportation employees of the

Tandang Sora campus.[20]  Thus, the computation of the quorum should be based on

the rank and file motor pool, construction and transportation employees of the

Tandang Sora campus and not on all the employees in St. James’ five campuses. 

Section 2, Rule XII, Book V of the Omnibus Rules provides: 

Section 2. Qualification of voters; inclusion-exclusion proceedings. – All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the certification or consent election shall be qualified to vote.  A dismissed employee whose dismissal is being contested in a pending case shall be allowed to vote in the election.

 In case of disagreement over the voters’ list or over the eligibility of

voters, all contested voters shall be allowed to vote.  However, their votes shall be segregated and sealed in individual envelopes in accordance with Section 9 of these Rules.

   

          The motor pool, construction and transportation employees of the Tandang

Sora campus had 149 qualified voters at the time of the certification election. 

Hence, the 149 qualified voters should be used to determine the existence of a

quorum. Since a majority or 84 out of the 149 qualified voters cast their votes, a

quorum existed in the certification election.   

          St. James further alleges that the names of the 84 voters are not on the list of

its rank and file employees.  On this score, we sustain the factual finding of the

DOLE that the list submitted by St. James consists of its administrative, teaching

and office personnel.  These administrative, teaching and office personnel are not

members of Samahang Manggagawa.  They do not belong to the bargaining unit

that Samahang Manggagawa seeks to represent.  Hence, the list submitted by St.

James may not be used as basis to determine the members of Samahang

Manggagawa.

 

          WHEREFORE, we DENY the petition.  We AFFIRM the                5

September 2001 Decision and the 3 January 2002 Resolution of the Court of

Appeals in CA-G.R. SP No. 60197. 

          SO ORDERED.

                                                                            ANTONIO T. CARPIO

                                                                          Associate Justice  WE CONCUR:

[G.R. No. 152094.  July 22, 2004]

DHL PHILIPPINES CORPORATION UNITED RANK AND FILE ASSOCIATION-FEDERATION OF FREE WORKERS (DHL-URFA-FFW), petitioner, vs. BUKLOD NG MANGGAGAWA NG DHL PHILIPPINES CORPORATION, respondent.

D E C I S I O N

PANGANIBAN, J.:

False statements made by union officers before and during a certification election -- that the union is independent and not affiliated with a national federation -- are material facts likely to influence the election results.  This principle finds application in the present case in which the majority of the employees clearly wanted an independent union to represent them.  Thus, after the members learned of the misrepresentation, and after a majority of them disaffiliated themselves from the union and formed another one, a new certification election should be held to enable them to express their true will.

The late filing of the Petition for a new election can be excused under the peculiar facts of this case, considering that the employees concerned did not sleep on their rights, but promptly acted to protect their prerogatives. Petitioner should not be permitted to use legal technicalities to perpetrate the betrayal foisted by its officers upon

the majority of the employees.  Procedural technicalities should not be allowed to suppress the welfare of labor.

The Case

Before us is a Petition for Review [1] under Rule 45 of the Rules of Court, seeking to annul the December 17, 1999 Decision[2] and the January 30, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 53270.  The assailed Decision disposed as follows:

“WHEREFORE, the petition is hereby given due course.  Accordingly, the decision of Rosalinda Dimapilis-[B]aldoz, Undersecretary of Labor, in behalf of [the] Secretary of Labor and Employment, is hereby ANNULED and SET ASIDE and DECLAREDto have NO EFFECT whatsoever.

“Public respondent and its representatives are hereby enjoined to refrain and desist from implementing the said decision.”[4]

The challenged Resolution denied petitioner’s Motion for Reconsideration.

The Facts

On November 25, 1997, a certification election was conducted among the regular rank and file employees in the main office and the regional branches of DHL Philippines Corporation.  The contending choices were petitioner and “no union.”

On January 19, 1998, on the basis of the results of the certification election, with petitioner receiving 546 votes and “no union” garnering 348 votes, the election officer certified the former as the sole and exclusive bargaining agent of the rank and file employees of the corporation.[5]

Meanwhile, on December 19, 1997, Respondent Buklod ng Manggagawa ng DHL Philippines Corporation (BUKLOD) filed with the Industrial Relations Division of the Department of Labor and Employment (DOLE) a Petition for the nullification of the certification election.  The officers of petitioner were charged with committing fraud and deceit in the election proceedings, particularly by misrepresenting to the voter-employees that it was an independent union, when it was in fact an affiliate of the Federation of Free Workers (FFW).

This misrepresentation was supposedly the basis for their selection of petitioner in the certification election.  Allegedly supporting this claim was the fact that those whom it had misled allegedly withdrew their membership from it and subsequently formed themselves into an independent union.  The latter union, BUKLOD, was issued a Certificate of Registration by DOLE on December 23, 1997.

On May 18, 1998, Med-Arbiter Tomas F. Falconitin nullified the November 25, 1997 certification election and ordered the holding of another one with the following contending choices:  petitioner, respondent, and “no choice.”

Setting aside the Decision of Med-Arbiter Falconitin, DOLE Undersecretary Rosalinda Dimapilis-Baldoz held on appeal that the issue of representation had already been settled with finality in favor of petitioner, and that no petitions for certification election would be entertained within one year from the time the election officer had issued the Certification Order.

Ruling of the Court of Appeals

The CA held that the withdrawal of a great majority of the members of petitioner -- 704 out of 894 of them -- provided a compelling reason to conduct a certification election anew in order to determine, once and for all, which union reflected their choice.  Under the circumstances, the issue of representation was not put to rest by the mere issuance of a Certification Order by the election officer.

According to the appellate court, broader considerations should be accorded the disaffiliating member-employees and a new election held to finally ascertain their will, consistent with the constitutional and labor law policy of according full protection to labor’s right to self-organization.  The CA added that the best forum to determine the veracity of the withdrawal or retraction of petitioner’s former members was another certification election.

The appellate court also held that the election officer’s issuance of a Certification Order on January 19, 1998 was precipitate because, prior thereto, respondent had filed with the med-arbiter a Petition for nullification of the election.  Furthermore, the Certification was not in accordance with Department Order No. 9 (DO 9), Series of 1997. The charges of fraud and deceit, lodged immediately after the election by petitioner’s former members against their officers, should have been treated as protests or issues of eligibility within the meaning of Section 13 of DO 9.

Hence, this Petition.[6]

Issues

In its Memorandum, petitioner submits the following issues for our consideration:

“I

Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction when it ‘annul[l]ed, set aside, and declared to have no effect whatsoever’, the Decision of Undersecretary Rosalinda Dimapilis-Baldoz, which in effect, reinstated and affirmed the Decision of

the Med-Arbiter, nullifying the result of the certification election as well as ordering the conduct of a new certification election at DHL Philippines Corporation, considering that:

(A)          The Court of Appeals, as well as the Med-Arbiter, ignored the undisputed fact that petitioner a quo (herein respondent) has not yet existed before, during and shortly after the conduct of certification election on November 25, 1997, and not yet even registered at the time of the filing of its Petition a quo on December 19, 1997, therefore, has no legal personality to institute an action.

(B)          The Court of Appeals, as well as the Med-Arbiter ignored and unjustifiably refused to apply Section 13, Rule XII of Department Order No. 9, there being no protest nor challenge raised before, during and even after five (5) days have lapsed from the conduct of the certification election on November 25, 1997, as the Petition a quo was only filed on December 19, 1997 – a week before herein respondent was able to obtain its Certificate of Registration.

(C)         The Court of Appeals ignored and unjustifiably refused to apply Section 3, Rule V of Department Order No. 9, or commonly know[n] as the ‘Certification-Year Rule’, which means that no certification election should be entertained within one (1) year from the time the Election Officer issued the Certification Order.

“II

Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion, amounting to lack and/or excess of jurisdiction in rendering the assailed Decision promulgated on December 17, 1999, as the same was rendered without the [Office of the] Solicitor General having filed its comment on the Petition a quo, despite having filed a Manifestation with Motion to the effect of not having received the Petition filed by petitioner a quo, which [h]as remained unacted upon; as well as the Resolution promulgated on January 30, 2002, which denied herein petitioner’s Motion for Reconsideration, which was rendered without the required comment thereon by the Petitioner a quo, thus, due process was violated.

“III

Whether or not the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in holding that the ‘resignation, withdrawal, retraction of the great majority of the former members of United DHL should be treated as disaffiliation from such union.’

“IV

Whether or not, the Court of Appeals seriously erred and committed grave abuse of discretion amounting to lack and/or excess of jurisdiction in declaring that ‘x x x while in the February 28, 1996 x x x decision of Med-Arbiter Tomas Falconitin provides for a certification election among two (2) specific choices: the private respondent (then as petitioner), and No Union ‘as the contending choices’, what was conducted on November 25, 1996 (sic) was a referendum on a choice of yes or no and not certification order of the Election Officer reflecting the results in the number of yes votes and no votes, without indicating the name of the contending choices.

“V

Whether or not the Court of Appeals placed both parties in ‘Limbo’, as the dispositive portion of the Decision or the fallo, which x x x actually constitutes the judgment or resolution of the court, failed to specify what should be done by the parties after the rendition of the said Decision and Resolution, thus, there can be no subject of execution.”[7]

In simpler terms, the issues being raised are as follows: 1) the validity of the CA Decision and Resolution; and 2) the validity of the certification election.

The Court’s Ruling

The Petition lacks merit.

First Issue:Validity of the CA Decision and Resolution

Petitioner assails the validity of the CA Decision for having been  rendered  without  receipt  of  the  required  comment  of  the Office  of  the  Solicitor  General  (OSG) on respondent’s Petition; and the CA  Resolution for having  been  issued  without  receipt of respondent’s comment on petitioner’s Motion for Reconsideration.

This contention is untenable.

The applicable provision is Section 8 of Rule 65 of the Rules of Court, which provides:

“SECTION 8.  Proceedings after comment is filed. -- After the comment or other pleadings required by the court are filed, or the time for the filing thereof has expired, the court may hear the case or require the parties to submit memoranda.  If after such hearing or submission of memoranda or the expiration of the period for the filing

thereof the court finds that the allegations of the petition are true, it shall render judgment for the relief prayed for or to which the petitioner is entitled. x x x”. (Italics supplied)

From the foregoing provision, it is clear that the Petition may be resolved, notwithstanding the failure of the adverse party to file a comment.  Its failure to do so despite due notice is its own lookout.  Indeed, when a respondent fails to file its comment within the given period, the court may decide the case on the basis of the records before it, specifically the petition and its attachments.[8]

Petitioner insists that the failure of the OSG to receive a copy of the Petition filed before the CA was the reason for the OSG’s failure to file a Comment thereon.  Be that as it may, as correctly pointed out by respondent, petitioner is not the proper party to invoke such failure.

At any rate, it is the duty of petitioner to defend its position, as well as those that upheld it -- the tribunal, the board and the officer -- because it is the party that is ultimately interested in sustaining the correctness of the disposition or the validity of the proceedings.[9]

Petitioner further assails the validity of the CA Decision, on the ground that its dispositive portion or fallo failed to specify what should be done by the parties after its promulgation.

All that the law requires is that the judgment must be definitive.  That is, the rights of the parties must be stated with finality by the decision itself, which must thus specifically deny or grant the remedy sought by the action. [10] For review by the CA was Undersecretary Dimapilis-Baldoz’s Resolution reversing the Decision of Med-Arbiter Falconitin.

Parenthetically, the ultimate question presented before the appellate court was whether a new certification election should be conducted among the employees of DHL Philippines Corporation.   As correctly pointed out by respondent, in reversing the undersecretary’s Resolution, the CA necessarily reinstated the med-arbiter’s earlier Decision to conduct a new certification election.

A judgment is not confined to what appears on the face of the decision; it encompasses matters necessarily included in or are necessary to such judgment. [11] The Decision of Med-Arbiter Falconitin and Undersecretary Dimapilis-Baldoz should be read in the context of and in relation to the assailed Decision of the CA.  The setting aside of the undersecretary’s Resolution necessarily implies the holding of a new certification election by the med-arbiter upon receipt of the records of the case and the motion of the interested party.

Second Issue:Validity of the Certification Election

Under Section 13 of the Rules Implementing Book V (Labor Relations) of the Labor Code,[12] as amended, the election officer’s authority to certify the results of the election is limited to situations in which there has been no protest filed; or if there has been any, it has not been perfected or formalized within five days from the close of the election proceedings.

Further, Section 14 of the same Rules provides that when a protest has been perfected, only the med-arbiter can proclaim and certify the winner.  Clearly, this rule is based on the election officer’s function, which is merely to conduct and supervise certification elections.[13] It is the med-arbiter who is authorized to hear and decide representation cases.[14] Consequently, the decision whether to certify the results of an election or to set them aside due to incidents occurring during the campaign is within the med-arbiter’s discretion.

Petitioner argues that the CA gravely erred in rendering its assailed Decision, considering that no protest or challenge had been formalized within five days, or raised during the election proceedings and entered in the minutes thereof.  Petitioner adds that respondent did not file any protest, either, against the alleged fraud and misrepresentation by the former’s officers during the election.

We disagree.  When the med-arbiter admitted and gave due course to respondent’s Petition for nullification of the election proceedings, the election officer should have deferred issuing the Certification of the results thereof. Section 13 of the Implementing Rules cannot strictly be applied to the present case.

Respondent’s contention is that a number of employees were lured by their officers into believing that petitioner was an independent union.  Since the employees had long desired to have an independent union that would represent them in collective bargaining, they voted “yes” in favor of petitioner.  Having been misled, a majority of them eventually disaffiliated themselves from it and formed an independent union, respondent herein, which thereafter protested the conduct of the election.  Having been formed just after such exercise by the defrauded employees who were former members of petitioner, respondent could not have reasonably filed its protest within five days from the close of the election proceedings.

Notably, after it had applied for registration with the Bureau of Labor Relations (BLR), respondent filed its Petition to nullify the certification election.  Petitioner insistently opposed the Petition, as respondent had not yet been issued a certificate of registration at the time.  Because such certificate was issued in favor of the latter four days after the filing of the Petition, on December 23, 1997, the misgivings of the former were brushed aside by the med-arbiter.  Indeed, the fact that respondent was not yet a duly registered labor organization when the Petition was filed is of no moment, absent any fatal defect in its application for registration.

The circumstances in the present case show that the employees did not sleep on their rights.  Hence, their failure to follow strictly the procedural technicalities regarding the period for filing their protest should not be taken against them.  Mere technicalities should not be allowed to prevail over the welfare of the workers.[15] What is essential is that they be accorded an opportunity to determine freely and intelligently which labor

organization shall act on their behalf. [16] Having been denied this opportunity by the betrayal committed by petitioner’s officers in the present case, the employees were prevented from making an intelligent and independent choice.

False Statements of Union Officers

The making of false statements or misrepresentations that interfere with the free choice of the employees is a valid ground for protest.  A certification election may be set aside for misstatements made during the campaign, where 1) a material fact has been misrepresented in the campaign; 2) an opportunity for reply has been lacking; and 3) the misrepresentation has had an impact on the free choice of the employees participating in the election.[17]A misrepresentation is likely to have an impact on their free choice, if it comes from a party who has special knowledge or is in an authoritative position to know the true facts.  This principle holds true, especially when the employees are unable to evaluate the truth or the falsity of the assertions. [18]

The fact that the officers of petitioner especially its president, misrepresented it to the voting employees as an independent union constituted a substantial misrepresentation of material facts of vital concern to those employees.  The materiality of such misrepresentation is self-evident.  The employees wanted an independent union to represent them in collective bargaining, free from outside interference.  Thus, upon knowing that petitioner was in fact an affiliate of the FFW, the members disaffiliated from petitioner and organized themselves into an independent union. Additionally, the misrepresentation came from petitioner’s recognized representative, who was clearly in a position to hold himself out as a person who had special knowledge and was in an authoritative position to know the true facts.

We are not easily persuaded by the argument of petitioner that the employees had sufficient time between the misrepresentation and the election to check the truth of its claims.  They could hardly be expected to verify the accuracy of any statement regarding petitioner, made to them by its officers.  No less than its president stated that it was an independent union.  At the time, the employees had no reason to doubt him.

We sustain the following findings of Med-Arbiter Falconitin:

“x x x It must be noted at the outset that [respondent] has charged [petitioner’s] officers, agents and representative with fraud or deception in encouraging its members to form or join and vote for DHL Philippines Corporation United Rank-and-File Association which they represented as an independent labor union not affiliated with any labor federation or national union.  Such serious allegations, supported with affidavits under oath executed by no less than seven hundred four (704) DHL Philippines Corporation’s employees nationwide, cannot just be ignored.

”x x x                         x x x                             x x x

“Notwithstanding the fact that [petitioner] union was duly furnished copy of the petition and the affidavits as its attachments, it surprisingly failed to question, much less contest, the veracity of the allegations contained in such affidavits, more than just harping in general terms that the allegations are simply incredible and [interposing] vehement denial.   Being  unassailed and unrefuted, the allegations in the affidavits  which  are  considered  as x x x  official  documents  must  be  given  weight  and  consideration by this Office.  Furthermore, with the failure of [petitioner] to rebut the affidavits, more than just denying the allegations, they give rise to the presumption that [petitioner] has admitted such allegations in the affidavit and with the admission, it is inescapable that indeed there was fraud or machination committed by the [petitioner] that seriously affected the validity and legitimacy of the certification election conducted on November 25, 1997 which gives rise to a ground to annul or void the said election, having been marred by fraud, deceptions and machinations.”[19]

This finding of fact of a quasi-judicial agency of DOLE is persuasive upon the courts.[20]

Although petitioner won in the election, it is now clear that it does not represent the majority of the bargaining employees, owing to the affiliation of its members with respondent.  The present uncertainty as to which union has their support to represent them for collective bargaining purposes is a salient factor that this Court has seriously considered.

The bargaining agent must be truly representative of the employees. [21]  At the time of the filing by respondent of the Petition for nullification, allegiances and loyalties of the employees were like shifting sands that radically affected their choice of an appropriate bargaining representative.  The polarization of a good number of them followed their discovery of the fraud committed by the officers of petitioner.  At any rate, the claim that 704 of the employees are affiliated with respondent is not sufficiently rebutted by any evidence on record.

The purpose of a certification election is precisely to ascertain the majority of the employees’ choice of an appropriate bargaining unit -- to be or not to be represented by a labor organization and, in the affirmative case, by which one.[22]

Once disaffiliation has been demonstrated beyond doubt, a certification election is the most expeditious way of determining which union should be the exclusive bargaining representative of the employees.[23]

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED.  Costs against petitioner.

SO ORDERED.

Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.Corona, J., on leave.

STA. LUCIA EAST COMMERCIAL CORPORATION,

Petitioner,                                   - versus -  HON. SECRETARY OF LABOR AND EMPLOYMENT andSTA. LUCIA EAST COMMERCIALCORPORATION WORKERS ASSOCIATION (CLUP LOCAL CHAPTER),

Respondents.

    G.R. No. 162355    Present:   PUNO, C.J., Chairperson,  CARPIO,  CORONA,  CHICO-NAZARIO,* and  LEONARDO-DE CASTRO, JJ.    Promulgated:   August 14, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  x 

D E C I S I O N

 

CARPIO, J.:

 

The Case

 

          This   is   a   petition   for   review[1] assailing   the  Decision[2] promulgated  on   14 August 2003 as well as the Resolution[3] promulgated on 24 February 2004 of the Court of Appeals (appellate court) in CA-G.R. SP No. 77015.  The appellate court denied Sta.  Lucia East  Commercial  Corporation’s   (SLECC) petition for  certiorari with   prayer   for   writ   of   preliminary   injunction   and   temporary   restraining order.  The   appellate   court   further   ruled   that   the   Secretary   of   Labor   and Employment   (Secretary)   was   correct   when   she   held   that   the   subsequent negotiations and registration of a collective bargaining agreement (CBA) executed by SLECC with Samahang Manggagawa sa Sta. Lucia East Commercial (SMSLEC) 

could   not   bar   Sta.   Lucia   East   Commercial   Corporation  Workers   Association’s (SLECCWA) petition for direct certification.

 

 

The Facts

 

          The Secretary narrated the facts as follows:

                     On 27 February 2001, Confederated Labor Union of the Philippines (CLUP), in behalf of its chartered local, instituted a petition for certification election among the regular rank-and-file employees of Sta. Lucia East Commercial Corporation and its Affiliates, docketed as Case No. RO400-0202-RU-007.  The affiliate companies included in the petition were SLE Commercial, SLE Department Store, SLE Cinema, Robsan East Trading, Bowling Center, Planet Toys, Home Gallery and Essentials.             On 21 August 2001, Med-Arbiter Bactin ordered the dismissal of the petition due to inappropriateness of the bargaining unit.  CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union appealed the order of dismissal to this Office on 14 September 2001.  On 20 November 2001, CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union [CLUP-SLECC and its Affiliates Workers Union]  moved for the withdrawal of the appeal.  On 31 January 2002, this Office granted the motion and affirmed the dismissal of the petition.             In the meantime, on 10 October 2001, [CLUP-SLECC and its Affiliates Workers Union] reorganized itself and re-registered as CLUP-Sta. Lucia East Commercial Corporation Workers Association (herein appellant CLUP-SLECCWA), limiting its membership to the rank-and-file employees of Sta. Lucia East Commercial Corporation.  It was issued Certificate of Creation of a Local Chapter No. RO400-0110-CC-004.              On the same date, [CLUP-SLECCWA] filed the instant petition.  It alleged that [SLECC] employs about 115 employees and that

more than 20% of employees belonging to the rank-and-file category are its members.  [CLUP-SLECCWA] claimed that no certification election has been held among them within the last 12 months prior to the filing of the petition, and while there is another union registered with DOLE-Regional Office No. IV on 22 June 2001 covering the same employees, namely [SMSLEC], it has not been recognized as the exclusive bargaining agent of [SLECC’s] employees.             On 22 November 2001, SLECC filed a motion to dismiss the petition.  It averred that it has voluntarily recognized [SMSLEC] on 20 July 2001 as the exclusive bargaining agent of its regular rank-and-file employees, and that collective bargaining negotiations already commenced between them. SLECC argued that the petition should be dismissed for violating the one year and negotiation bar rules under pars. (c) and (d), Section 11, Rule XI, Book V of the Omnibus Rules Implementing the Labor Code.             On 29 November 2001, a CBA between [SMSLEC] and [SLECC] was ratified by its rank-and-file employees and registered with DOLE-Regional Office No. IV on 9 January 2002.             In the meantime, on 19 December 2001, [CLUP-SLECCWA] filed its Opposition and Comment to [SLECC’S] Motion to Dismiss.  It assailed the validity of the voluntary recognition of [SMSLEC] by [SLECC] and their consequent negotiations and execution of a CBA.  According to [CLUP-SLECCWA], the same were tainted with malice, collusion and conspiracy involving some officials of the Regional Office.  Appellant contended that Chief LEO Raymundo Agravante, DOLE Regional Office No. IV, Labor Relations Division should have not approved and recorded the voluntary recognition of [SMSLEC]  by [SLECC] because it violated one of the major requirements for voluntary recognition, i.e., non-existence of another labor organization in the same bargaining unit. It pointed out that the time of the voluntary recognition on 20 July 2001, appellant’s registration as [CLUP-SLECC and its Affiliates Workers Union], which covers the same group of employees covered by Samahang Manggagawa sa Sta. Lucia East Commercial, was existing and has neither been cancelled or abandoned. [CLUP-SLECCWA] also accused Med-Arbiter Bactin of malice, collusion and conspiracy with appellee company when he dismissed the petition for certification election filed by [SMSLEC] for being moot and academic because of its voluntary recognition, when

he was fully aware of the pendency of [CLUP-SLECCWA’s] earlier petition for certification election.             Subsequent pleadings filed by [CLUP-SLECCWA] and [SLECC] reiterated their respective positions on the validity and invalidity of the voluntary recognition.  On 29 July 2002, Med-Arbiter Bactin issued the assailed Order.[4]    

The Med-Arbiter’s Ruling

 

 

In his Order dated 29 July 2002, Med-Arbiter Anastacio L. Bactin dismissed CLUP-SLECCWA’s petition for direct certification on the ground of contract bar rule.  The prior voluntary recognition of SMSLEC and the CBA between SLECC and SMSLEC bars   the  filing  of  CLUP-SLECCWA’s  petition   for  direct   certification.   SMSLEC   is entitled to enjoy the rights, privileges, and obligations of an exclusive bargaining representative   from   the   time   of   the   recording   of   the   voluntary recognition.  Moreover, the duly registered CBA bars the filing of the petition for direct certification.

 

CLUP-SLECCWA filed a Memorandum of Appeal of the Med-Arbiter’s Order before the Secretary. 

 

 

The Ruling of the Secretary of Labor and Employment

 

 

In her Decision promulgated on 27 December 2002, the Secretary found merit in CLUP-SLECCWA’s  appeal.  The  Secretary  held   that   the  subsequent  negotiations 

and registration of a CBA executed by SLECC with SMSLEC could not bar CLUP-SLECCWA’s petition.  CLUP-SLECC and its Affiliates Workers Union constituted a registered   labor   organization   at   the  time  of   SLECC’s   voluntary   recognition  of SMSLEC.  The dispositive portion of the Secretary’s Decision reads:

 

          WHEREFORE, the appeal is hereby  GRANTED and the Order of the Med-Arbiter dated 29 July 2002 is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference, among the regular rank-and-file employees of [SLECC], with the following choices:             1.  Sta. Lucia East Commercial Corporation Workers’ Association – CLUP Local Chapter;            2.  Samahang Manggagawa sa Sta. Lucia East Commercial; and            3.  No Union.                   Pursuant to Rule XI, Section II.1 of Department Order No. 9, appellee corporation is hereby directed to submit to the office of origin, within ten (10) days from receipt hereof, the certified list of its employees in the bargaining unit or when necessary a copy of its payroll covering the same employees for the last three (3) months preceding the issuance of this Decision.             Let a copy of this Decision be furnished the Bureau of Labor Relations and Labor Relations Division of Regional Office No. IV for the cancellation of the recording of voluntary recognition in favor of Samahang Manggagawa sa Sta. Lucia East Commercial and the appropriate annotation of re-registration of CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union to Sta. Lucia East Commercial Corporation Workers Association-CLUP Local Chapter. 

            SO DECIDED.[5]

 SLECC filed a motion for reconsideration which the Secretary denied for 

lack of merit in a Resolution dated 27 March 2003.  SLECC then filed a petition for certiorari before the appellate court. 

 

 

The Ruling of the Appellate Court

 

          The   appellate   court   affirmed   the   ruling   of   the   Secretary   and   quoted extensively from the Secretary’s decision.  The appellate court agreed with the Secretary’s finding that the workers sought to be represented by CLUP-SLECC and its  Affiliates  Workers  Union  included the  same workers   in   the bargaining  unit represented by SMSLEC.  SMSLEC was not the only legitimate labor organization operating   in   the   subject   bargaining   unit   at   the   time   of   SMSLEC’s   voluntary recognition on 20 July 2001.  Thus, SMSLEC’s voluntary recognition was void and could not bar CLUP-SLECCWA’s petition for certification election.

  

The Issue

 

SLECC raised  only  one   issue   in   its  petition.  SLECC asserted   that   the  appellate court commited a reversible error when it affirmed the Secretary’s finding that SLECC’s   voluntary   recognition   of   SMSLEC  was   done  while   a   legitimate   labor organization was in existence in the bargaining unit.

 

The Ruling of the Court

          The petition has no merit.  We see no reason to overturn the rulings of the Secretary and of the appellate court. 

 

Legitimate Labor Organization

 

            Article 212(g) of the Labor Code defines a labor organization as “any union or association   of   employees  which   exists   in  whole   or   in   part   for   the   purpose   of collective bargaining or of dealing with employers concerning terms and conditions of   employment.”  Upon   compliance  with   all   the   documentary   requirements,   the Regional Office or Bureau shall issue in favor of the applicant labor organization a certificate indicating that it is included in the roster of legitimate labor organizations.[6]  Any   applicant   labor   organization   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.[7] 

Bargaining Unit

        

            The concepts of a union and of a legitimate labor organization are different from, but related to, the concept of a bargaining unit.  We explained the concept of a bargaining unit in San Miguel Corporation v. Laguesma,[8] where we stated that: 

             A bargaining unit is a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicated to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.”             The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine);        (2) affinity and unity of the employees’ interest, such as

substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 

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

 

However, employees in two corporations cannot be treated as a single bargaining unit even if the businesses of the two corporations are related.[9]

A Legitimate Labor Organization Representing

An Inappropriate Bargaining Unit

 

            CLUP-SLECC and its Affiliates Workers Union’s initial problem was that they constituted   a   legitimate   labor   organization   representing   a   non-appropriate bargaining unit.  However, CLUP-SLECC and its Affiliates Workers Union subsequently re-registered   as   CLUP-SLECCWA,   limiting   its   members   to   the   rank-and-file   of SLECC.  SLECC cannot ignore that CLUP-SLECC and its Affiliates Workers Union was a legitimate   labor   organization   at   the   time   of   SLECC’s   voluntary   recognition   of SMSLEC. SLECC and SMSLEC cannot, by themselves, decide whether CLUP-SLECC and its Affiliates Workers Union represented an appropriate bargaining unit. 

            The inclusion in the union of disqualified employees is not among the grounds for cancellation of registration,  unless such  inclusion  is  due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) to (c) of Article 239 of the Labor Code.[10] THUS, CLUP-SLECC AND ITS AFFILIATES WORKERS UNION, HAVING BEEN VALIDLY ISSUED A CERTIFICATE OF REGISTRATION, SHOULD BE CONSIDERED AS HAVING ACQUIRED JURIDICAL PERSONALITY WHICH MAY NOT BE ATTACKED COLLATERALLY. THE PROPER PROCEDURE FOR SLECC IS TO FILE A PETITION FOR CANCELLATION OF CERTIFICATE OF REGISTRATION[11] OF CLUP-SLECC

AND ITS AFFILIATES WORKERS UNION AND NOT TO IMMEDIATELY COMMENCE VOLUNTARY RECOGNITION PROCEEDINGS WITH SMSLEC.

SLECC’s Voluntary Recognition of SMSLEC

 

            The employer may voluntarily recognize the representation status of a union in unorganized establishments.[12] SLECC WAS NOT AN UNORGANIZED ESTABLISHMENT WHEN IT VOLUNTARILY RECOGNIZED SMSLEC AS ITS EXCLUSIVE BARGAINING REPRESENTATIVE ON 20 JULY 2001. CLUP-SLECC AND ITS AFFILIATES WORKERS UNION FILED A PETITION FOR CERTIFICATION ELECTION ON 27 FEBRUARY 2001 AND THIS PETITION REMAINED PENDING AS OF 20 JULY 2001. THUS, SLECC’S VOLUNTARY RECOGNITION OF SMSLEC ON 20 JULY 2001, THE SUBSEQUENT NEGOTIATIONS AND RESULTING REGISTRATION OF A CBA EXECUTED BY SLECC AND SMSLEC ARE VOID AND CANNOT BAR CLUP-SLECCWA’S PRESENT PETITION FOR CERTIFICATION ELECTION.

EMPLOYER’S PARTICIPATION IN A PETITION FOR CERTIFICATION ELECTION

 

            We   find   it   strange   that   the   employer   itself,   SLECC,   filed   a   motion   to oppose  CLUP-SLECCWA’s   petition   for   certification   election.  In   petitions   for certification  election,   the  employer   is   a  mere  bystander  and  cannot  oppose   the petition  or  appeal   the  Med-Arbiter’s  decision.  The  exception   to   this   rule,  which happens when the employer is requested to bargain collectively, is not present in the case before us.[13]

          WHEREFORE, we DENY the petition.  We AFFIRM the Decision  promulgated on 14 August 2003 as well as the Resolution promulgated on 24 February 2004  of the Court of Appeals in CA-G.R. SP No. 77015.

         

SO ORDERED.

 

FIRST DIVISION

 

SAMAHAN NG MGA G.R. No. 167141

MANGGAGAWA SA

SAMMA–LAKAS SA Present:

INDUSTRIYA NG

KAPATIRANG HALIGI YNARES-SANTIAGO, J.,*

NG ALYANSA (SAMMA– CARPIO, Acting Chairperson,**

LIKHA), CORONA,

Petitioner, LEONARDO-DE CASTRO and

BRION, JJ.***

 

                                  

                                                                   

  - v e r s u s -                    

          

SAMMA CORPORATION,

                      Respondent.                          Promulgated:

                                                                  

March 13, 2009

 

x - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

 

D E C I S I O N

 

          This   is   a   petition   for   review   on   certiorari[1] of   the   August   31,   2004 

decision[2] and February 15, 2005 resolution[3] of the Court of Appeals (CA) in CA-

G.R. SP No. 77156.

 

          Petitioner Samahan ng mga Manggagawa sa Samma– Lakas sa Industriya ng 

Kapatirang  Haligi   ng   Alyansa   (SAMMA-LIKHA)   filed   a   petition   for   certification 

election on July 24, 2001 in the Department of Labor and Employment (DOLE), 

Regional  Office   IV.[4]  It   claimed   that:   (1)   it  was   a   local   chapter   of   the   LIKHA 

Federation, a legitimate labor organization registered with the DOLE; (2) it sought 

to represent all the rank-and-file employees of respondent Samma Corporation; 

(3) there was no other legitimate labor organization representing these rank-and-

file   employees;   (4)   respondent  was   not   a   party   to   any   collective   bargaining 

agreement and (5) no certification or consent election had been conducted within 

the employer unit for the last 12 months prior to the filing of the petition.

         

Respondent moved for the dismissal of the petition arguing that (1) LIKHA 

Federation failed to establish its legal personality; (2) petitioner failed to prove its 

existence as a local chapter; (3) it  failed to attach the certificate of non-forum 

shopping  and  (4)   it  had a  prohibited  mixture  of  supervisory  and rank-and-file 

employees.[5]

 

In   an   order   dated   November   12,   2002,  med-arbiter   Arturo   V.   Cosuco 

ordered the dismissal of the petition on the following grounds: (1) lack of legal 

personality for failure to attach the certificate of registration purporting to show 

its   legal   personality;   (2)   prohibited  mixture   of   rank-and-file   and   supervisory 

employees and (3) failure to submit a certificate of non-forum shopping.[6]

 

          Petitioner moved for reconsideration on November 29, 2001.  The Regional 

Director   of   DOLE   Regional  Office   IV   forwarded   the   case   to   the   Secretary   of 

Labor.  Meanwhile,   on   December   14,   2002,   respondent   filed   a   petition   for 

cancellation of petitioner’s union registration in the DOLE Regional Office IV.[7]

 

          On January 17, 2003, Acting Secretary Manuel G. Imson, treating the motion 

for reconsideration as an appeal, rendered a decision reversing the order of the 

med-arbiter.  He ruled that the legal personality of a union cannot be collaterally 

attacked but may only be questioned in an independent petition for cancellation 

of registration.  Thus, he directed the holding of a certification election among the 

rank-and-file   employees   of   respondent,   subject   to   the   usual   pre-election 

conference and inclusion-exclusion proceedings.[8]

           

          On   January   23,   2003   or   six   days   after   the   issuance   of   said   decision, 

respondent filed  its comment on the motion for reconsideration of petitioner, 

asserting that the order of  the med-arbiter  could only be reviewed by way of 

appeal and not by a motion for reconsideration pursuant to Department Order 

(D.O.) No. 9, series of 1997.[9]

         

On February 6, 2003, respondent filed its motion for reconsideration of the 

January 17, 2003 decision.  In a resolution dated April 3, 2003, Secretary Patricia 

A. Sto. Tomas denied the motion.[10] 

         

Meanwhile,   on   April   14,   2003,   Crispin   D.   Dannug,   Jr., 

Officer-in-Charge/Regional Director of DOLE Regional Office IV, issued a resolution 

revoking the charter certificate of petitioner as local chapter of LIKHA Federation 

on the ground of prohibited mixture of supervisory and rank-and-file employees 

and non-compliance with the attestation clause under paragraph 2 of Article 235 

of the Labor Code.[11]  On May 6, 2003, petitioner moved for the reconsideration 

of this resolution.[12]

         

Respondent filed a petition for certiorari[13] in the CA assailing the January 

17,  2003 decision and April  3,  2003 resolution of the Secretary of  Labor.  In a 

decision   dated   August   31,   2004,   the   CA   reversed   the   same.[14] It   denied 

reconsideration   in   a   resolution   dated   February   15,   2005.   It   held   that 

Administrative Circular No. 04-94 which required the filing of a certificate of non-

forum shopping applied to petitions for certification election.  It also ruled that 

the Secretary of Labor erred in granting the appeal despite the lack of proof of 

service on respondent.  Lastly, it found that petitioner had no legal standing to file 

the  petition  for   certification election because   its  members  were  a  mixture  of 

supervisory and rank-and-file employees.[15]

 

Hence, this petition. 

The  issues  for  our  resolution  are  the  following:       (1)   whether   a 

certificate   for   non-forum   shopping   is   required   in   a   petition   for   certification 

election; (2) whether petitioner’s motion for reconsideration which was treated 

as an appeal by the Secretary of Labor should not have been given due course for 

failure to attach proof of service on respondent and (3) whether petitioner had 

the legal personality to file the petition for certification election.

 REQUIREMENT OF CERTIFICATE

OF NON-FORUM SHOPPING

IS NOT REQUIRED IN A PETITION

FOR CERTIFICATION ELECTION

 

In   ruling   against   petitioner,   the   CA   declared   that   under   Administrative 

Circular   No.   04-94,[16] a   certificate   of   non-forum   shopping  was   required   in   a 

petition for certification election.  The circular states: 

The   complaint   and   other   initiatory   pleadings   referred   to   and subject  of   this  Circular  are the original  civil  complaint,  counterclaim, cross-claim,   third   (fourth,   etc.)   party   complaint,   or   complaint-in-intervention, petition, or application wherein a party asserts his claim for relief.  (Emphasis supplied)

 

According to the CA, a petition for certification election asserts a claim, i.e., the 

conduct of a certification election.  As a result, it is covered by the circular.[17]

           

We disagree. 

The   requirement   for   a   certificate   of   non-forum   shopping   refers   to 

complaints,   counter-claims,   cross-claims,   petitions   or   applications   where 

contending parties litigate their respective positions regarding the claim for relief 

of the complainant, claimant, petitioner or applicant.  A certification proceeding, 

even though initiated by a “petition,” is not a litigation but an investigation of a 

non-adversarial and fact-finding character.[18]  

Such   proceedings   are not predicated upon an allegation of

misconduct requiring relief, but, rather, are merely of an inquisitorial

nature. The Board's functions are not judicial in nature, but are merely 

of an investigative character. The object of the proceedings is not the 

decision of any alleged commission of wrongs nor asserted deprivation 

of rights but is merely the determination of proper bargaining units and 

the ascertainment of the will and choice of the employees in respect of 

the selection of a bargaining representative. The determination of the 

proceedings  does  not  entail   the entry  of   remedial  orders   to  redress 

rights, but culminates solely in an official designation of bargaining units 

and an affirmation of the employees'  expressed choice of bargaining 

agent.[19]  (Emphasis supplied) 

          In Pena v. Aparicio,[20] we   ruled   against   the   necessity   of   attaching   a 

certification against forum shopping to a disbarment complaint.  We looked into 

the rationale of the requirement and concluded that the evil sought to be avoided 

is not present in disbarment proceedings. 

…  [The] rationale for the requirement of a certification against forum 

shopping is to apprise the Court of the pendency of another action or 

claim   involving   the   same   issues   in  another   court,   tribunal  or  quasi-

judicial   agency,   and   thereby   precisely   avoid   the   forum   shopping 

situation.  Filing multiple petitions or  complaints  constitutes  abuse of 

court processes, which tends to degrade the administration of justice, 

wreaks   havoc   upon   orderly   judicial   procedure,   and   adds   to   the 

congestion   of   the   heavily   burdened   dockets   of   the 

courts.  Furthermore,   the   rule   proscribing   forum   shopping   seeks   to 

promote candor and transparency among lawyers and their clients in 

the  pursuit  of   their   cases  before   the courts   to  promote   the  orderly 

administration of justice, prevent undue inconvenience upon the other 

party, and save the precious time of the courts. It also aims to prevent 

the embarrassing situation of two or more courts or agencies rendering 

conflicting resolutions or decisions upon the same issue.

 

            It is in this light that we take a further look at the necessity of 

attaching   a   certification   against   forum   shopping   to   a   disbarment 

complaint. It would seem that the scenario sought to be avoided, i.e.,

the filing of multiple suits and the possibility of conflicting decisions,

rarely happens in disbarment complaints considering   that   said 

proceedings are either "taken by the Supreme Court motu proprio, or 

by   the   Integrated   Bar   of   the   Philippines   (IBP)   upon   the   verified 

complaint  of  any  person."  Thus,   if   the  complainant   in  a  disbarment 

case fails to attach a certification against forum shopping, the pendency 

of another disciplinary action against the same respondent may still be 

ascertained with ease.[21] (Emphasis supplied)

 

The same situation holds true for a petition for certification election.  Under 

the omnibus rules implementing the Labor Code as amended by D.O. No. 9,[22] it is 

supposed   to   be   filed   in   the   Regional   Office  which   has   jurisdiction   over   the 

principal   office   of   the   employer   or   where   the   bargaining   unit   is   principally 

situated.[23]  The rules further provide that where two or more petitions involving 

the   same  bargaining  unit   are  filed   in  one  Regional  Office,   the   same  shall  be 

automatically   consolidated.[24]  Hence,   the   filing   of   multiple   suits   and   the 

possibility of conflicting decisions will rarely happen in this proceeding and, if it 

does, will be easy to discover.          

          Notably, under the Labor Code and the rules pertaining to the form of the 

petition for certification election, there is no requirement for a certificate of non-

forum shopping either in D.O. No. 9, series of 1997 or in D.O. No. 40-03, series of 

2003 which replaced the former.[25]  

          Considering the nature of a petition for certification election and the rules 

governing   it,  we therefore  hold that  the requirement   for  a  certificate of  non-

forum shopping is inapplicable to such a petition. 

TREATMENT OF MOTION FOR

RECONSIDERATION AS AN APPEAL

 

          The CA ruled that petitioner’s motion for reconsideration, which was treated 

as an appeal by the Secretary of Labor, should not have been given due course for 

lack of proof of service in accordance with the implementing rules as amended by 

D.O. No. 9: 

            Section  12.  Appeal;  finality  of  decision.  –  The  decision  of   the 

Med-Arbiter  may  be  appealed   to   the   Secretary   for   any   violation  of 

these Rules.  Interloculory orders issued by the Med-Arbiter prior to the 

grant  or  denial  of   the  petition,   including  order  granting motions   for 

intervention  issued after  an order  calling   for  a  certification election, 

shall not be appealable.  However, any issue arising therefrom may be 

raised in the appeal on the decision granting or denying the petition.

 

            The   appeal   shall   be   under   oath   and   shall   consist   of   a 

memorandum of appeal specifically stating the grounds relied upon by 

the appellant with the supporting arguments and evidence.  The appeal

shall be deemed not filed unless accompanied by proof of service

thereof to appellee.[26]  (Emphasis supplied)

 

   

          In accepting the appeal, the Secretary of Labor stated: 

            [Petitioner’s]  motion   for   reconsideration  of   the  Med-Arbiter’s 

Order   dated   November   12,   2002   was verified under oath by 

[petitioner’s] president Gil Dispabiladeras before Notary Public Wilfredo 

A. Ruiz on 29 November 2002, and recorded in the Notarial  Register 

under Document No. 186, Page No. 38, Book V, series of 2002.  On page 

7 of the said motion also appears the notation “copy of respondent to 

be  delivered  personally  with   the  name and   signature  of  one  Rosita 

Simon,   11/29/02.”  The   motion contained the grounds and

arguments relied upon by [petitioner] for the reversal of the assailed 

Order.  Hence,  the motion for reconsideration has complied with the

formal requisites of an appeal.

 

            The signature of Rosita Simon appearing on the last page of the motion can be considered as compliance with the required proof of service upon respondent.  Rosita   Simon’s   employment   status  was   a matter   that   should   have   been   raised   earlier   by   [respondent].  But [respondent] did not question the same and slept on its right to oppose or   comment   on   [petitioner’s]  motion   for   reconsideration.  It cannot claim that it was unaware of the filing of the appeal by [petitioner], because a copy of the indorsement of the entire records of the petition to the Office of the Secretary “in view of the memorandum of appeal filed by Mr. Jesus B. Villamor” was served upon the employer and legal 

counsels   Atty.   Ismael   De  Guzman   and  Atty.   Anatolio   Sabillo   at   the Samma   Corporation  Office,  Main   Avenue,   PEZA,   Rosario,   Cavite   on December 5, 2002.[27]  (Emphasis supplied)

         

          The motion for reconsideration was properly treated as an appeal because it 

substantially complied with the formal requisites of the latter.  The lack of proof 

of   service  was   not   fatal   as   respondent   had   actually   received   a   copy   of   the 

motion.  Consequently, it had the opportunity to oppose the same.   Under these 

circumstances, we find that the demands of substantial justice and due process 

were satisfied. 

          We stress that rules of procedure are interpreted liberally to secure a just, 

speedy and inexpensive disposition of every action.  They should not be applied if 

their   application   serves   no   useful   purpose   or   hinders   the   just   and   speedy 

disposition   of   cases.  Specifically,   technical   rules   and   objections   should   not 

hamper the holding of a certification election wherein employees are to select 

their bargaining representative.  A contrary rule will defeat the declared policy of 

the State 

to   promote   the   free   and   responsible   exercise   of   the   right   to   self-

organization through the establishment of a simplified mechanism for 

the   speedy   registration   of   labor   organizations   and   workers’ 

associations, determination of representation status, and resolution of 

intra and inter-union disputes.[28] xxx (Emphasis supplied)

LEGAL PERSONALITY OF PETITIONER

 

            Petitioner argues that the erroneous inclusion of one supervisory employee 

in the union of rank-and-file employees was not a ground to impugn its legitimacy 

as   a   legitimate   labor   organization  which   had   the   right   to   file   a   petition   for 

certification election. 

          We agree.         

LIKHA was granted  legal  personality  as  a   federation under  certificate  of 

registration no. 92-1015-032-11638-FED-LC.  Subsequently, petitioner as its local 

chapter   was   issued   its   charter   certificate   no.   2-01.[29] With   certificates   of 

registration   issued   in   their   favor,   they   are   clothed  with   legal   personality   as 

legitimate labor organizations:  

Section   5.  Effect of registration.   –   The   labor   organization   or 

workers’ association shall be deemed registered and 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.[30]

 

- 0 -

 

Section 3.  Acquisition of legal personality by local chapter. -  A local/chapter constituted in accordance with 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   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 organizations.[31]

 

Such legal personality cannot thereafter be subject to collateral attack, but 

may be questioned only in an independent petition for cancellation of certificate 

of   registration.[32] Unless   petitioner’s   union   registration   is   cancelled   in 

independent proceedings, it shall continue to have all the rights of a legitimate 

labor organization, including the right to petition for certification election. 

Furthermore,   the   grounds   for   dismissal   of   a   petition   for   certification 

election based on the  lack of   legal  personality  of  a  labor organization are the 

following: (a) petitioner is not listed by the Regional Office or the Bureau of Labor 

Relations in its registry of legitimate labor organizations or (b) its legal personality 

has been revoked or cancelled with finality in accordance with the rules.[33] 

As   mentioned,   respondent   filed   a   petition   for   cancellation   of   the 

registration of petitioner on December 14, 2002.  In a resolution dated April 14, 

2003, petitioner’s charter certificate was revoked by the DOLE.  But on May 6, 

2003, petitioner moved for the reconsideration of this resolution.  Neither of the 

parties alleged that this  resolution revoking petitioner’s  charter  certificate had 

attained   finality.  However,   in   this   petition,   petitioner   prayed   that   its   charter 

certificate   be   “reinstated   in   the   roster   of   active   legitimate   labor 

[organizations].”[34]  This cannot be granted here.  To repeat, the proceedings on a 

petition for cancellation of registration are independent of those of a petition for 

certification  election.  This   case  originated   from  the   latter.  If   it   is   shown   that 

petitioner’s   legal   personality   had   already   been   revoked   or   cancelled with

finality in   accordance  with   the   rules,   then   it   is   no   longer   a   legitimate   labor 

organization with the right to petition for a certification election.

 A FINAL NOTE

 

Respondent,  as  employer,  had been  the  one  opposing   the  holding  of  a 

certification election among its rank-and-file employees.  This should not be the 

case.  We have already declared that, in certification elections, the employer is a 

bystander; it has no right or material interest to assail the certification election.[35]

 

[This] Court notes that it is petitioner, the employer, which has 

offered the most tenacious resistance to the holding of a certification 

election among its monthly-paid rank-and-file employees. This must not 

be so, for the choice of a collective bargaining agent is the sole concern 

of the employees. The only exception to this rule is where the employer 

has to file the petition for certification election pursuant to Article 258 

of   the  Labor  Code because   it  was   requested   to  bargain  collectively, 

which exception finds no application in the case before us. Its role in a 

certification election has aptly been described in Trade Unions of the

Philippines and Allied Services (TUPAS) v. Trajano,  as   that  of  a  mere 

bystander. It has no legal standing in a certification election as it cannot 

oppose   the   petition   or   appeal   the   Med-Arbiter's   orders   related 

thereto. .  .[36] 

WHEREFORE, the petition is hereby GRANTED.  Let the records of the case 

be remanded to the office of origin, the Regional Office IV of the Department of 

Labor   and   Employment,   for   determination   of   the   status   of   petitioner’s   legal 

personality.  If  petitioner is still a legitimate labor organization, then said office 

shall   conduct   a   certification   election   subject   to   the   usual   pre-election 

conference.  

 

SO ORDERED.

CHRIS GARMENTS CORPORATION,

                             Petitioner,

     G.R. No. 167426

 

 

 

- versus -

 

     Present:

 

       QUISUMBING, J., Chairperson,

       CARPIO,*

     CARPIO MORALES,

 

 

HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS WORKERS UNION-PTGWO LOCAL CHAPTER No. 832,

                            Respondents.

     TINGA, and

     VELASCO, JR., JJ.

 

     Promulgated:

 

     January 12, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

Petitioner assails the Resolutions dated February 22, 2005[1] and March 16, 2005[2] of   the  Court  of  Appeals   in  CA-G.R.   SP  No.  88444,  which  dismissed   its petition for certiorari due to its failure to file a motion for reconsideration from the  Decision[3] of   the   Secretary  of   the  Department  of   Labor  and  Employment before filing the petition.

The relevant facts are as follows:

Petitioner Chris Garments Corporation is engaged in the manufacture and export of quality garments and apparel.

On February 8, 2002, respondent Chris Garments Workers Union–PTGWO, Local  Chapter No. 832, filed a petition for certification election with the Med-Arbiter.  The union sought to represent petitioner’s rank-and-file employees not covered by its Collective Bargaining Agreement (CBA) with the Samahan Ng Mga Manggagawa sa Chris   Garments   Corporation–Solidarity   of Union in the Philippinesfor   Empowerment   and   Reforms   (SMCGC-SUPER),   the   certified bargaining agent of the rank-and-file employees.  The union alleged that it   is a legitimate labor organization with a Certificate of Creation of Local/Chapter No. PTGWO-832[4] dated January 31, 2002 issued by the Bureau of Labor Relations.[5]

Petitioner moved to dismiss the petition.  It argued that it has an existing CBA from July 1, 1999 to June 30, 2004 with SMCGC-SUPER which bars any petition for certification election prior to the 60-day freedom period.  It also contended that the union members are not its regular employees since they are direct employees of qualified and independent contractors.[6]

The union countered that its members are regular employees of petitioner since:  (1)   they   are   engaged   in   activities   necessary   and   desirable   to   its  main business although they are called agency employees; (2) their length of service have   spanned   an   average   of   four   years;   (3)   petitioner   controlled   their  work attitude and performance; and (4) petitioner paid their salaries.  The union added that while there is an existing CBA between petitioner and SMCGC-SUPER, there are   other   rank-and-file   employees   not   covered   by   the   CBA   who   seek representation   for   collective   bargaining   purposes.   It   also   contended   that   the contract bar rule does not apply.[7]

The Med-Arbiter dismissed the petition.  The Med-Arbiter ruled that there was  no  employer-employee   relationship  between   the  parties   since   the  union itself  admitted that   its  members  are agency employees.  The Med-Arbiter  also held   that   even   if   the   union   members   are   considered   direct   employees   of petitioner, the petition for certification election will still fail due to the contract bar rule under Article 232[8] of the Labor Code.  Hence, a petition could only be filed during the 60-day freedom period of the CBA or from May 1, 2004 to June 30, 2004.  Nevertheless, the Med-Arbiter ruled that the union may avail of the CBA benefits by paying agency fees to SMCGC-SUPER.[9]

In  a  Resolution[10] dated December  27,  2002,   the Secretary  of  Labor  and Employment affirmed the decision of the Med-Arbiter.  She ruled that petitioner failed   to   prove   that   the   union   members   are   employees   of   qualified   and independent contractors with substantial capital or investment and added that petitioner   had   the   right   to   control   the   performance   of   the   work   of   such employees.  She also noted that the union members are garment workers who performed   activities   directly   related   to   petitioner’s  main   business.  Thus,   the union members  may be considered part  of   the bargaining  unit  of  petitioner’s rank-and-file   employees.  However,   she   held   that   the   petition   could   not   be entertained except during the 60-day freedom period.  She also found no reason to split petitioner’s bargaining unit.

On May   16,   2003,   the   union   filed   a   second   petition   for   certification election.  The Med-Arbiter dismissed the petition on the ground that it was barred by a prior judgment.  On appeal, the Secretary of Labor and Employment affirmed the decision of the Med-Arbiter.[11]

On June 4, 2004, the union filed a third petition for certification election.[12]  The Med-Arbiter  dismissed the petition on the grounds   that  no employer-employee relationship exists between the parties and that the case was barred by a prior judgment.  On appeal, the Secretary of Labor and Employment granted the petition in a Decision[13] dated January 18, 2005.  Thus:

WHEREFORE,  the appeal filed by Chris  Garment[s]  Workers Union–PTGWO is hereby GRANTED.  The 7   July   2004 Order   of   Med-Arbiter   Tranquilino   B.   Reyes   is hereby REVERSED and SET ASIDE.  Accordingly,   let   the  entire   records  of   the   case  be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference, among the regular rank-and-file employees of Chris Garments Corporation, with the following choices:

1.      Chris Garments Workers Union – PTGWO Local Chapter No. 832;

2.      Samahan ng Manggagawa sa Chris Garments Corp. – SUPER; and

3.      No Union.

Pursuant   to   Section   13(e),   Rule   VIII   of   Department   Order   No.   40-03,   the employer is hereby directed to submit to the office of origin, within ten (10) days from receipt   hereof,   the   certified   list   of   its   employees   in   the   bargaining   unit   or   when necessary  a   copy  of   its  payroll   covering   the   same employees   for   the   last   three   (3) months preceding the issuance of this Decision.

SO DECIDED.[14]

Petitioner   received   a   copy   of   the   decision   on January   25, 2005.  On February 4, 2005, petitioner filed a petition for certiorari with the Court of   Appeals   which   was   dismissed   due   to   its   failure   to   file   a   motion   for reconsideration of the decision before filing the petition.

Incidentally, a certification election was conducted on June 21, 2005 among petitioner’s   rank-and-file   employees   where   SMCGC-SUPER   emerged   as   the winning union.  On January 20, 2006, the Med-Arbiter certified SMCGC-SUPER as 

the   sole  and  exclusive  bargaining  agent  of   all   the   rank-and-file  employees  of petitioner.[15]

Petitioner now comes before us arguing that:

I.

THE   COURT   OF   APPEALS   SERIOUSLY   ERRED   AND   COMMITTED   GRAVE   ABUSE   OF DISCRETION IN DISMISSING THE PETITION [FOR CERTIORARI]  ON THE SOLE GROUND THAT THE COMPANY DID NOT FILE A MOTION FOR RECONSIDERATION DESPITE SECTION 21,   RULE   VIII   OF  DEPARTMENT  ORDER  NO.   43-03,   .   .   .   SERIES  OF   2003,   [WHICH] PROHIBITS THE FILING OF A MOTION FOR RECONSIDERATION FROM A DECISION OF THE SECRETARY OF LABOR.

II.

THE   COURT   OF   APPEALS   SERIOUSLY   ERRED   AND   COMMITTED   GRAVE   ABUSE   OF DISCRETION IN REFUSING TO RESOLVE THE MERITS OF THE PETITION AS IT DISMISSED THE SAME BY MERE, ALBEIT, BASELESS TECHNICALITY WHICH ONLY FRUSTRATED RATHER THAN PROMOTED SUBSTANTIAL JUSTICE . . .

III.

PUBLIC   RESPONDENT   SERIOUSLY   ERRED   AND   COMMITTED   GRAVE   ABUSE   OF DISCRETION  IN  REVERSING THE DECISION OF THE  MED-ARBITER  AND GIVING  [DUE] COURSE   TO   THE   PETITION   FOR   CERTIFICATION   ELECTION   FILED   BY   PRIVATE RESPONDENT   CGWU-PTGWO  DESPITE   THE   ABSENCE  OF   ANY   EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE COMPANY AND ITS MEMBERS.

IV.

PUBLIC   RESPONDENT   SERIOUSLY   ERRED   AND   COMMITTED   GRAVE   ABUSE   OF DISCRETION IN REVERSING THE FINDINGS OF THE MED-ARBITER THAT THE PETITION FOR CERTIFICATION ELECTION WAS BARRED BY RES JUDICATA AND/OR THE PRINCIPLE OF CONCLUSIVENESS OF JUDGMENT.

V.

PUBLIC   RESPONDENT   SERIOUSLY   ERRED   AND   COMMITTED   GRAVE   ABUSE   OF DISCRETION IN NOT DISMISSING OUTRIGHT THE APPEAL OF PRIVATE RESPONDENT FOR FAILURE TO SUBMIT A CERTIFICATION AGAINST FORUM SHOPPING.[16]

The   principal   issues   are:  (1)   Is   a  motion   for   reconsideration   necessary before a party can file a petition for certiorari from the decision of the Secretary of Labor and Employment?  (2) Is the case barred byres judicata or conclusiveness of   judgment?  and   (3)   Is   there   an   employer-employee   relationship   between petitioner and the union members?

First.  It   is   settled   that   the   filing   of   a  motion   for   reconsideration   is   a prerequisite to the filing of a special civil action for certiorari to give the lower court   the   opportunity   to   correct   itself.[17]  This   rule,   however,   admits   of exceptions, such as when a motion for reconsideration would be useless under the circumstances.[18]

Under Department Order No. 40-03, Series of 2003,[19] the decision of the Secretary of Labor and Employment shall be final and executory after ten days from receipt thereof by the parties and that it shall not be subject of a motion for reconsideration.

In this case, the Decision dated January 18, 2005 of the Secretary of Labor and Employment was received by petitioner on January 25, 2005.  It would have become final and executory on February 4, 2005, the tenth day from petitioner’s receipt of the decision.  However, petitioner filed a petition for certiorari with the Court of Appeals on even date.  Clearly, petitioner availed of the proper remedy since Department Order No. 40-03 explicitly prohibits the filing of a motion for reconsideration.  Such motion becomes dispensable and not at all necessary.

Second.  The   doctrine   of res judicata provides   that   a   final   judgment   or decree on the merits  by a court of competent  jurisdiction is conclusive of the rights   of   the   parties   or   their   privies   in   all   later   suits   on   points   and  matters determined   in   the   former   suit.[20]  The   elements   of res judicata are:  (1)   the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a  court  having  jurisdiction over  the subject  matter  and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action.[21]

Res judicata has   a   dual   aspect:  first,   “bar   by   prior   judgment”  which   is provided  in  Rule 39,  Section 47(b)[22] of   the 1997 Rules of  Civil  Procedure and 

second, “conclusiveness of judgment” which is provided in Section 47(c)[23] of the same Rule.

There is “bar by prior judgment” when, as between the first case where the judgment was rendered, and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action.[24]  In this instance, the judgment   in   the   first   case   constitutes   an   absolute   bar   to   the   second action.  Otherwise   put,   the   judgment   or   decree   of   the   court   of   competent jurisdiction on the merits concludes the litigation between the parties, as well as their  privies,  and constitutes a bar to a new action or suit   involving the same cause of action before the same or any other tribunal.[25]

On the other hand, the doctrine of “conclusiveness of judgment” provides that issues actually and directly resolved in a former suit cannot again be raised in any   future   case   between   the   same   parties   involving   a   different   cause   of action.  Under this doctrine, identity of causes of action is not required but merely identity   of   issues.  Otherwise   stated,   conclusiveness   of   judgment   bars   the relitigation of particular facts or  issues  in another  litigation between the same parties on a different claim or cause of action.[26]

In the instant case, there is no dispute as to the presence of the first three elements   of res judicata.  The   Resolution   dated December   27,   2002 of   the Secretary of Labor and Employment on the first petition for certification election became final and executory.  It was rendered on the merits and the Secretary of Labor and Employment had jurisdiction over the case.  Now, is the fourth element – identity of parties, subject matter, and causes of action between the first and third petitions for certification election – present?  We hold in the negative.

The Secretary of Labor and Employment dismissed the first petition as it was filed outside the 60-day freedom period.  At that time therefore, the union has no cause of  action since they are not  yet   legally  allowed to challenge openly  and formally the status of SMCGC-SUPER as the exclusive bargaining representative of the bargaining unit.  Such dismissal, however, has no bearing in the instant case since the third petition for certification election was filed well within the 60-day freedom period.  Otherwise stated, there is no identity of causes of action to speak of since in the first petition, the union has no cause of action while in the third, a cause of action already exists for the union as they are now legally allowed to challenge the status of SMCGC-SUPER as exclusive bargaining representative.

Third.  The matter  of  employer-employee  relationship  has  been resolved with   finality   by   the   Secretary   of   Labor   and   Employment   in   the   Resolution dated December 27,  2002.  Since petitioner  did not  appeal   this   factual  finding, then,   it  may be considered as   the final   resolution of  such  issue.  To reiterate, “conclusiveness of judgment” has the effect of preclusion of issues.[27]

WHEREFORE, the instant petition is DENIED for lack of merit.

SO ORDERED.

G.R. No. 160828               August 9, 2010

PICOP RESOURCES, INCORPORATED (PRI), Petitioner, vs.ANACLETO L. TAÑECA, GEREMIAS S. TATO, JAIME N. CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B. BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN, MARGARITO G. ALICANTE, JERRY ROMEO T. AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y. ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT, CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J. TRIMIDAL, and NAMAPRI-SPFL, Respondents.

D E C I S I O N

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 dated July 25, 2003 and Resolution2 dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8, 20013 and April 29, 20024 of the National Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision5 dated March 16, 2001 of the Labor Arbiter.

The facts, as culled from the records, are as follows:

On February 13, 2001, respondents Anacleto Tañeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.6 (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang Mamumuo saPRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are members of the UNION at the time of the signing of this AGREEMENT shall, as a condition of continued employment by the COMPANY, maintain their membership in the UNION in good standing during the effectivity of this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position covered by the bargaining unit shall be advised by the COMPANY that they are required to file an application for membership with the UNION within thirty (30) days from the date his appointment shall have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after compliance with the requirements of the New Labor Code, shall give notice of termination of services of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to believe either that membership in the UNION was not available to the employee on the same terms and conditions generally applicable to other members, or that membership was denied or terminated for reasons other than voluntary resignation or non-payment of regular union dues. Separation under the Section is understood to be for cause, consequently, the dismissed employee is not entitled to separation benefits provided under the New Labor Code and in this AGREEMENT."7

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate those union members who signed the Petition for Certification Election of FFW during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names and signatures of employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a memorandum addressed to the concerned employees to explain in writing within 72 hours why their employment should not be terminated due to acts of disloyalty as alleged by their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served "explanation memorandum" submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty. Fuentes for evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the ground of "acts of disloyalty" committed against it when respondents allegedly supported and signed the Petition for Certification Election of FFW before the "freedom period" during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of Labor and Employment Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of one’s disloyalty would have been the explicit resignation or withdrawal of membership from the Union accompanied by an advice to management to discontinue union dues and check-off deductions. They insisted that mere affixation of signature on such authorization to file a petition for certification election was not per se an act of disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of the freedom period.

Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition for Certification Election of FFW was merely prompted by their desire to have a certification election among the rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union members who supported the Petition for Certification Election of FFW. Respondents claimed that they should have been summoned individually, confronted with the accusation and investigated accordingly and from where the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for causes. 1avvphi1

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22, 2000. Hence, there could be no justification in PRI’s act of dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion of respondents’ exercise of their right to self-organization. The act indirectly required petitioners to support and maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL, Atty. Fuentes and Trujillo

amounted to actual restraint and coercion of the petitioners in the exercise of their rights to self-organization and constituted acts of unfair labor practice.

In a Decision8 dated March 16, 2001, the Labor Arbiter declared the respondents’ dismissal to be illegal and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1. Declaring complainants’ dismissal illegal; and

2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the said Annex "A" plus damages in the amount ofP10,000.00 each, or a total of P210,000.00 and attorney’s fees equivalent to 10% of the total monetary award.

SO ORDERED.9

PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondent’s motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

I

WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.

II

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.10

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling within the ambit of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.11 This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.12 Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg . 129 as amended, known as the   Judiciary Reorganization Act of 1980), the Court of Appeals – pursuant to the exercise of its original jurisdiction over Petitions for Certiorari – is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. 13

We now come to the main issue of whether there was just cause to terminate the employment of respondents.

PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the instance of the incumbent union pursuant to the Union Security Clause of the CBA.

Citing Article 253 of the Labor Code,14 PRI contends that as parties to the CBA, they are enjoined to keep thestatus quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day period and/or until a new agreement is reached by the parties.

Petitioner's argument is untenable.

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.15

However, in terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.16

As to the first requisite, there is no question that the CBA between PRI and respondents included a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed terminate the employment of the employee who failed to maintain its good standing as a union member.

Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of disloyalty to the Union.

However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000.17 Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period.18 This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents’ right to self-organization.

Moreover, PRI anchored their decision to terminate respondents’ employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.19

Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative.20 The provision for statusquo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them.21

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.22 Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the statusquo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented,23 or compromised.1avvphi

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.24

We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor.25

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorney’s fees equivalent to 10% of the total monetary award.26

WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M-006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded full backwages and other allowances, without qualifications and diminutions, computed from the time they were illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as possible.

SO ORDERED.

DIOSDADO M. PERALTAAssociate Justice

WE CONCUR:

LEGEND INTERNATIONAL RESORTS LIMITED,

  G.R. No. 169754

Petitioner,        Present:     

- versus -   CORONA, C.J., Chairperson,    VELASCO, JR.,    NACHURA, ⃰

    DEL CASTILLO, andKILUSANG MANGGAGAWA

  PEREZ, JJ.

NG LEGENDA (KML-    

INDEPENDENT),   Promulgated:Respondent.   February 23, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

 D E C I S I O N

 DEL CASTILLO, J.:             This Petition for Review on Certiorari assails the September 18, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 72848 which found no grave abuse of discretion on the part of the Office of the Secretary of the Department of Labor and Employment (DOLE) which ruled in favor of Kilusang Manggagawa ng Legenda (KML).  Also assailed is the September 14, 2005 Resolution denying petitioner’s motion for reconsideration. Factual Antecedents             On June 6, 2001, KML filed with the Med-Arbitration Unit of the DOLE, San Fernando, Pampanga, a Petition for Certification Election[1] docketed as Case No. RO300-0106-RU-001.  KML alleged that it is a legitimate labor organization of the rank and file employees of Legend International Resorts Limited (LEGEND).  KML claimed that it was issued its Certificate of Registration No. RO300-0105-UR-002 by the DOLE on May 18, 2001.               LEGEND moved to dismiss[2] the petition alleging that KML is not a legitimate labor organization because its membership is a mixture of rank and file and supervisory employees in violation of Article 245 of the Labor Code.  LEGEND also claimed that KML committed acts of fraud and misrepresentation when it made it appear that certain employees attended its general membership meeting on April 5, 2001 when in reality some of them were either at work; have already resigned as of March 2001; or were abroad.               In its Comment,[3] KML argued that even if 41 of its members are indeed supervisory employees and therefore excluded from its membership, the certification

election could still proceed because the required number of the total rank and file employees necessary for certification purposes is still sustained.  KML also claimed that its legitimacy as a labor union could not be collaterally attacked in the certification election proceedings but only through a separate and independent action for cancellation of union registration. Finally, as to the alleged acts of misrepresentation, KML asserted that LEGEND failed to substantiate its claim. Ruling of the Med-Arbiter             On September 20, 2001, the Med-Arbiter[4] rendered judgment[5] dismissing for lack of merit the petition for certification election.  The Med-Arbiter found that indeed there were several supervisory employees in KML’s membership.  Since Article 245 of the Labor Code expressly prohibits supervisory employees from joining the union of rank and file employees, the Med-Arbiter concluded that KML is not a legitimate labor organization.  KML was also found to have fraudulently procured its registration certificate by misrepresenting that 70 employees were among those who attended its organizational meeting on April 5, 2001 when in fact they were either at work or elsewhere.              KML thus appealed to the Office of the Secretary of the DOLE. Ruling of the Office of the Secretary of DOLE             On May 22, 2002, the Office of the Secretary of DOLE rendered its Decision[6] granting KML’s appeal thereby reversing and setting aside the Med-Arbiter’s Decision.  The Office of the Secretary of DOLE held that KML’s legitimacy as a union could not be collaterally attacked, citing Section 5,[7] Rule V of Department Order No. 9, series of 1997.             The Office of the Secretary of DOLE also opined that Article 245 of the Labor Code merely provides for the prohibition on managerial employees to form or join a union and the ineligibility of supervisors to join the union of the rank and file employees and vice versa.  It declared that any violation of the provision of Article 245 does not ipso facto render the existence of the labor organization illegal.  Moreover, it held that Section 11, paragraph II of Rule XI which provides for the grounds for dismissal of a petition for certification election does not include mixed membership in one union.    

             The dispositive portion of the Office of the Secretary of DOLE’s Decision reads:

                WHEREFORE, the appeal is hereby GRANTED and the order of the Med-Arbiter dated 20 September 2001 is REVERSED and SET ASIDE.                 Accordingly, let the entire record of the case be remanded to the regional office of origin for the immediate conduct of the certification election, subject to the usual pre-election conference, among the rank and file employees of LEGEND INTERNATIONAL RESORTS LIMITED with the following choices: 

1.              KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT); and 

2.              NO UNION. 

Pursuant to Rule XI, Section II.1 of D.O. No. 9, the employer is hereby directed to submit to the office of origin, within ten days from receipt of the decision, the certified list of employees in the bargaining unit for the last three (3) months prior to the issuance of this decision.

 SO DECIDED.[8]

  

LEGEND filed its Motion for Reconsideration[9] reiterating its earlier arguments.  It also alleged that on August 24, 2001, it filed a Petition[10] for Cancellation of Union Registration of KML docketed as Case No. RO300-0108-CP-001 which was granted[11] by the DOLE Regional Office No. III of San Fernando, Pampanga in its Decision[12] dated November 7, 2001.

 In a Resolution[13] dated August 20, 2002, the Office of the Secretary of DOLE

denied LEGEND’s motion for reconsideration. It opined that Section 11, paragraph II(a), Rule XI of Department Order No. 9 requires a final order of cancellation before a petition for certification election may be dismissed on the ground of lack of legal personality.  Besides, it noted that the November 7, 2001 Decision of DOLE Regional Office No. III of San Fernando, Pampanga in Case No. RO300-0108-CP-001 was reversed by the Bureau of Labor Relations in a Decision dated March 26, 2002.

 

Ruling of the Court of Appeals             Undeterred, LEGEND filed a Petition for Certiorari[14] with the Court of Appeals docketed as CA-G.R. SP No. 72848.  LEGEND alleged that the Office of the Secretary of DOLE gravely abused its discretion in reversing and setting aside the Decision of the Med-Arbiter despite substantial and overwhelming evidence against KML. 

 For its part, KML alleged that the Decision dated March 26, 2002 of the Bureau of

Labor Relations in Case No. RO300-0108-CP-001 denying LEGEND’s petition for cancellation and upholding KML’s legitimacy as a labor organization has already become final and executory, entry of judgment having been made on August 21, 2002.[15]              The Office of the Secretary of DOLE also filed its Comment [16] asserting that KML’s legitimacy cannot be attacked collaterally.  Finally, the Office of the Secretary of DOLE stressed that LEGEND has no legal personality to participate in the certification election proceedings.             On September 18, 2003, the Court of Appeals rendered its Decision[17] finding no grave abuse of discretion on the part of the Office of the Secretary of DOLE.  The appellate court held that the issue on the legitimacy of KML as a labor organization has already been settled with finality in Case No. RO300-0108-CP-001.  The March 26, 2002 Decision of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization had long become final and executory for failure of LEGEND to appeal the same.  Thus, having already been settled that KML is a legitimate labor organization, the latter could properly file a petition for certification election. There was nothing left for the Office of the Secretary of DOLE to do but to order the holding of such certification election.             The dispositive portion of the Decision reads: 

WHEREFORE, in view of the foregoing, and finding that no grave abuse of discretion amounting to lack or excess of jurisdiction has been committed by the Department of Labor and Employment, the assailed May 22, 2002 Decision and August 20, 2002 Resolution in Case No. RO300-106-

RU-001 are UPHELD and AFFIRMED.  The instant petition is DENIED due course and, accordingly, DISMISSED for lack of merit.[18]

  

            LEGEND filed a Motion for Reconsideration[19] alleging, among others, that it has appealed to the Court of Appeals the March 26, 2002 Decision in Case No. RO300-0108-CP-001 denying its petition for cancellation and that it is still pending resolution.              On September 14, 2005, the appellate court denied LEGEND’s motion for reconsideration.             Hence, this Petition for Review on Certiorari raising the lone assignment of error, viz: 

WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN THE APPLICATION OF LAW IN DENYING THE PETITIONER’S PETITION FOR CERTIORARI.[20]

  Petitioner’s Arguments             LEGEND submits that the Court of Appeals grievously erred in ruling that the March 26, 2002 Decision denying its Petition for Cancellation of KML’s registration has already become final and executory.  It asserts that it has seasonably filed a Petition for Certiorari[21] before the CA docketed as CA-G.R. SP No. 72659 assailing said Decision.  In fact, on June 30, 2005, the Court of Appeals granted the petition, reversed the March 26, 2002 Decision of the Bureau of Labor Relations and reinstated the November 7, 2001 Decision of the DOLE Regional Office III ordering the cancellation of KML’s registration.             Finally, LEGEND posits that the cancellation of KML’s certificate of registration should retroact to the time of its issuance.[22]  It thus claims that the petition for certification election and all of KML’s activities should be nullified because it has no legal personality to file the same, much less demand collective bargaining with LEGEND.[23]

 

            LEGEND thus prays that the September 20, 2001 Decision of the Med-Arbiter dismissing KML’s petition for certification election be reinstated.[24]  

 Respondent’s Arguments             In its Comment filed before this Court dated March 21, 2006, KML insists that the Decision of the Bureau of Labor Relations upholding its legitimacy as a labor organization has already attained finality[25] hence there was no more hindrance to the holding of a certification election.  Moreover, it claims that the instant petition has become moot because the certification election sought to be prevented had already been conducted. 

Our Ruling             The petition is partly meritorious.  LEGEND has timely appealed the March 26, 2002 Decision of the Bureau of Labor Relations to the Court of Appeals. 

We cannot understand why the Court of Appeals totally disregarded LEGEND’s allegation in its Motion for Reconsideration that the March 26, 2002 Decision of the Bureau of Labor Relations has not yet attained finality considering that it has timely appealed the same to the Court of Appeals and which at that time is still pending resolution.   The Court of Appeals never bothered to look into this allegation and instead dismissed outright LEGEND’s motion for reconsideration.  By doing so, the Court of Appeals in effect maintained its earlier ruling that the March 26, 2002 Decision of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization has long become final and executory for failure of LEGEND to appeal the same.

 This is inaccurate.  Records show that (in the cancellation of registration case)

LEGEND has timely filed on September 6, 2002 a petition for certiorari[26] before the Court of Appeals which was docketed as CA-G.R. SP No. 72659 assailing the March 26, 2002 Decision of the Bureau of Labor Relations.   In fact, KML received a copy of said petition on September 10, 2002[27] and has filed its Comment thereto on December 2,

2002.[28]  Thus, we find it quite interesting for KML to claim in its Comment (in the certification petition case) before this Court dated March 21, 2006[29] that the Bureau of Labor Relations’ Decision in the petition for cancellation case has already attained finality.   Even in its Memorandum[30] dated March 13, 2007 filed before us, KML is still insisting that the Bureau of Labor Relations’ Decision has become final and executory.   

 Our perusal of the records shows that on June 30, 2005, the Court of Appeals

rendered its Decision[31] in CA-G.R. SP No. 72659 reversing the March 26, 2002 Decision of the Bureau of Labor Relations and reinstating the November 7, 2001 Decision of the Med-Arbiter which canceled the certificate of registration of KML.[32]  On September 30, 2005, KML’s motion for reconsideration was denied for lack of merit.[33]  On November 25, 2005, KML filed its Petition for Review on Certiorari[34] before this Court which was docketed as G.R. No. 169972.  However, the same was denied in a Resolution[35] dated February 13, 2006 for having been filed out of time.  KML moved for reconsideration but it was denied with finality in a Resolution[36] dated June 7, 2006.  Thereafter, the said Decision canceling the certificate of registration of KML as a labor organization became final and executory and entry of judgment was made on July 18, 2006.[37]

 The cancellation of KML’s certificate of registration should not retroact to the time of its issuance.  

Notwithstanding the finality of the Decision canceling the certificate of registration of KML, we cannot subscribe to LEGEND’s proposition that the cancellation of KML’s certificate of registration should retroact to the time of its issuance.  LEGEND claims that KML’s petition for certification election filed during the pendency of the petition for cancellation and its demand to enter into collective bargaining agreement with LEGEND should be dismissed due to KML’s lack of legal personality.

 This issue is not new or novel.  In Pepsi-Cola Products Philippines, Inc. v.

Secretary of Labor,[38] we already ruled that: 

Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial question to the petition for certification election, the

following ruling in the case of Association of the Court of Appeals Employees (ACAE) v. Hon. Pura Ferrer-Calleja, x x x is in point, to wit:

 x x x It is well-settled rule that ‘a certification

proceedings is not a litigation in the sense that the term is ordinarily understood, but an investigation of a non-adversarial and fact finding character.’ (Associated Labor Unions (ALU) v. Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 [1990].  Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other documents.

 At any rate, the Court applies the established rule

correctly followed by the public respondent that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union.  The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing the cancellation.[39] (Emphasis supplied.)

  In Capitol Medical Center, Inc. v. Hon. Trajano,[40] we also held that “the

pendency of a petition for cancellation of union registration does not preclude collective bargaining.”[41]  Citing the Secretary of Labor, we held viz:

 That there is a pending cancellation proceedings against the

respondent Union is not a bar to set in motion the mechanics of collective bargaining.  If a certification election may still be ordered despite the pendency of a petition to cancel the union’s registration certificate x x x more so should the collective bargaining process continue despite its pendency. [42] (Emphasis supplied.)

  

In Association of Court of Appeals Employees v. Ferrer-Calleja,[43] this Court was tasked to resolve the issue of whether “the certification proceedings should be suspended pending [the petitioner’s] petition for the cancellation of union registration of the

UCECA[44].”[45]  The Court resolved the issue in the negative holding that “an order to hold a certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent union.  The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order directing a cancellation.” [46]  We reiterated this view in Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma[47] where we declared that “a certification election can be conducted despite pendency of a petition to cancel the union registration certificate.  For the fact is that at the time the respondent union filed its petition for certification, it still had the legal personality to perform such act absent an order directing its cancellation.”[48]

 Based on the foregoing jurisprudence, it is clear that a certification election may be

conducted during the pendency of the cancellation proceedings.  This is because at the time the petition for certification was filed, the petitioning union is presumed to possess the legal personality to file the same.  There is therefore no basis for LEGEND’s assertion that the cancellation of KML’s certificate of registration should retroact to the time of its issuance or that it effectively nullified all of KML’s activities, including its filing of the petition for certification election and its demand to collectively bargain.   The legitimacy of the legal personality of KML cannot be collaterally attacked in a petition for certification election.  

We agree with the ruling of the Office of the Secretary of DOLE that the legitimacy of the legal personality of KML cannot be collaterally attacked in a petition for certification election proceeding.  This is in consonance with our ruling in Laguna Autoparts Manufacturing Corporation v. Office of the Secretary, Department of Labor and Employment[49] that “such legal personality may not be subject to a collateral attack but only through a separate action instituted particularly for the purpose of assailing it.”[50]  We further held therein that:

 This is categorically prescribed by Section 5, Rule V of the Implementing Rules of Book V, which states as follows: 

SEC. 5.[51]  Effect of registration. – The labor organization or worker’s association shall be deemed registered

and 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. Hence, to raise the issue of the respondent union’s legal personality is

not proper in this case.  The pronouncement of the Labor Relations Division Chief, that the respondent union acquired a legal personality x x x cannot be challenged in a petition for certification election. 

 The discussion of the Secretary of Labor and Employment on this point

is also enlightening, thus: 

. . . Section 5, Rule V of D.O. 9 is instructive on the matter.  It provides that the legal personality of a union cannot be the subject of collateral attack in a petition for certification election, but may be questioned only in an independent petition for cancellation of union registration.  This has been the rule since NUBE v. Minister of Labor, 110 SCRA 274 (1981).  What applies in this case is the principle that once a union acquires a legitimate status as a labor organization, it continues as such until its certificate of registration is cancelled or revoked in an independent action for cancellation.

 Equally important is Section 11, Paragraph II, Rule IX of

D.O. 9, which provides for the dismissal of a petition for certification election based on the lack of legal personality of a labor organization only in the following instances: (1) appellant is not listed by the Regional Office or the BLR in its registry of legitimate labor organizations; or (2) appellant’s legal personality has been revoked or cancelled with finality.  Since appellant is listed in the registry of legitimate labor organizations, and its legitimacy has not been revoked or cancelled with finality, the granting of its petition for certification election is proper.[52]

        “[T]he legal personality of a legitimate labor organization x x x cannot be subject

to a collateral attack.  The law is very clear on this matter. x x x The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal

personality on the date of issuance of its certificate of registration.  Once a certificate of registration is issued to a union, its legal personality cannot be subject to a collateral attack.  In may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules.”[53]  

WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED.  The Decision of the Court of Appeals dated September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms the May 22, 2002 Decision and August 20, 2002 Resolution of the Office of the Secretary of Department of Labor and Employment is AFFIRMED.  The Decision of the Court of Appeals insofar as it declares that the March 26, 2002 Decision of the Bureau of Labor Relations in Case No. RO300-0108-CP-001 upholding that the legitimacy of KML as a labor organization has long become final and executory for failure of LEGEND to appeal the same, isREVERSED and SET ASIDE.

 SO ORDERED.

  STA. LUCIA EAST COMMERCIAL CORPORATION,

Petitioner,                                   - versus -  HON. SECRETARY OF LABOR AND EMPLOYMENT andSTA. LUCIA EAST COMMERCIALCORPORATION WORKERS ASSOCIATION (CLUP LOCAL CHAPTER),

Respondents.

    G.R. No. 162355    Present:   PUNO, C.J., Chairperson,  CARPIO,  CORONA,  CHICO-NAZARIO,* and  LEONARDO-DE CASTRO, JJ.    Promulgated:   August 14, 2009

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D E C I S I O N

 

CARPIO, J.:

 

The Case

 

          This   is   a   petition   for   review[1] assailing   the  Decision[2] promulgated  on   14 August 2003 as well as the Resolution[3] promulgated on 24 February 2004 of the Court of Appeals (appellate court) in CA-G.R. SP No. 77015.  The appellate court denied Sta.  Lucia East  Commercial  Corporation’s   (SLECC) petition for  certiorari with   prayer   for   writ   of   preliminary   injunction   and   temporary   restraining order.  The   appellate   court   further   ruled   that   the   Secretary   of   Labor   and Employment   (Secretary)   was   correct   when   she   held   that   the   subsequent negotiations and registration of a collective bargaining agreement (CBA) executed by SLECC with Samahang Manggagawa sa Sta. Lucia East Commercial (SMSLEC) could   not   bar   Sta.   Lucia   East   Commercial   Corporation  Workers   Association’s (SLECCWA) petition for direct certification.

 

 

The Facts

 

          The Secretary narrated the facts as follows:

                     On 27 February 2001, Confederated Labor Union of the Philippines (CLUP), in behalf of its chartered local, instituted a petition for certification election among the regular rank-and-file employees of Sta. Lucia East Commercial Corporation and its Affiliates, docketed as Case No. RO400-0202-RU-007.  The affiliate companies included in the petition were SLE Commercial, SLE Department Store, SLE Cinema, Robsan East Trading, Bowling Center, Planet Toys, Home Gallery and Essentials.             On 21 August 2001, Med-Arbiter Bactin ordered the dismissal of the petition due to inappropriateness of the bargaining unit.  CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union appealed the order of dismissal to this Office on 14 September 2001.  On 20 November 2001, CLUP-

Sta. Lucia East Commercial Corporation and its Affiliates Workers Union [CLUP-SLECC and its Affiliates Workers Union]  moved for the withdrawal of the appeal.  On 31 January 2002, this Office granted the motion and affirmed the dismissal of the petition.             In the meantime, on 10 October 2001, [CLUP-SLECC and its Affiliates Workers Union] reorganized itself and re-registered as CLUP-Sta. Lucia East Commercial Corporation Workers Association (herein appellant CLUP-SLECCWA), limiting its membership to the rank-and-file employees of Sta. Lucia East Commercial Corporation.  It was issued Certificate of Creation of a Local Chapter No. RO400-0110-CC-004.              On the same date, [CLUP-SLECCWA] filed the instant petition.  It alleged that [SLECC] employs about 115 employees and that more than 20% of employees belonging to the rank-and-file category are its members.  [CLUP-SLECCWA] claimed that no certification election has been held among them within the last 12 months prior to the filing of the petition, and while there is another union registered with DOLE-Regional Office No. IV on 22 June 2001 covering the same employees, namely [SMSLEC], it has not been recognized as the exclusive bargaining agent of [SLECC’s] employees.             On 22 November 2001, SLECC filed a motion to dismiss the petition.  It averred that it has voluntarily recognized [SMSLEC] on 20 July 2001 as the exclusive bargaining agent of its regular rank-and-file employees, and that collective bargaining negotiations already commenced between them. SLECC argued that the petition should be dismissed for violating the one year and negotiation bar rules under pars. (c) and (d), Section 11, Rule XI, Book V of the Omnibus Rules Implementing the Labor Code.             On 29 November 2001, a CBA between [SMSLEC] and [SLECC] was ratified by its rank-and-file employees and registered with DOLE-Regional Office No. IV on 9 January 2002.             In the meantime, on 19 December 2001, [CLUP-SLECCWA] filed its Opposition and Comment to [SLECC’S] Motion to Dismiss.  It assailed the validity of the voluntary recognition of [SMSLEC] by [SLECC] and their consequent negotiations and execution of a CBA.  According to [CLUP-SLECCWA], the same were tainted with malice, collusion and conspiracy involving some officials of the Regional Office.  Appellant contended that Chief LEO Raymundo Agravante, DOLE Regional Office No. IV, Labor Relations Division should have not approved and recorded the voluntary recognition of [SMSLEC]  by [SLECC] because it violated one of the major requirements for voluntary recognition, i.e., non-existence of another labor organization in the same bargaining unit. It pointed out that the time of the voluntary recognition on 20 July 2001, appellant’s registration as [CLUP-SLECC and its Affiliates Workers Union], which covers the same group of employees covered by

Samahang Manggagawa sa Sta. Lucia East Commercial, was existing and has neither been cancelled or abandoned. [CLUP-SLECCWA] also accused Med-Arbiter Bactin of malice, collusion and conspiracy with appellee company when he dismissed the petition for certification election filed by [SMSLEC] for being moot and academic because of its voluntary recognition, when he was fully aware of the pendency of [CLUP-SLECCWA’s] earlier petition for certification election.             Subsequent pleadings filed by [CLUP-SLECCWA] and [SLECC] reiterated their respective positions on the validity and invalidity of the voluntary recognition.  On 29 July 2002, Med-Arbiter Bactin issued the assailed Order.[4]    

The Med-Arbiter’s Ruling

 

 

In his Order dated 29 July 2002, Med-Arbiter Anastacio L. Bactin dismissed CLUP-SLECCWA’s petition for direct certification on the ground of contract bar rule.  The prior voluntary recognition of SMSLEC and the CBA between SLECC and SMSLEC bars   the  filing  of  CLUP-SLECCWA’s  petition   for  direct   certification.   SMSLEC   is entitled to enjoy the rights, privileges, and obligations of an exclusive bargaining representative   from   the   time   of   the   recording   of   the   voluntary recognition.  Moreover, the duly registered CBA bars the filing of the petition for direct certification.

 

CLUP-SLECCWA filed a Memorandum of Appeal of the Med-Arbiter’s Order before the Secretary. 

 

 

The Ruling of the Secretary of Labor and Employment

 

 

In her Decision promulgated on 27 December 2002, the Secretary found merit in CLUP-SLECCWA’s  appeal.  The  Secretary  held   that   the  subsequent  negotiations and registration of a CBA executed by SLECC with SMSLEC could not bar CLUP-SLECCWA’s petition.  CLUP-SLECC and its Affiliates Workers Union constituted a registered   labor   organization   at   the  time  of   SLECC’s   voluntary   recognition  of SMSLEC.  The dispositive portion of the Secretary’s Decision reads:

 

          WHEREFORE, the appeal is hereby  GRANTED and the Order of the Med-Arbiter dated 29 July 2002 is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference, among the regular rank-and-file employees of [SLECC], with the following choices:             1.  Sta. Lucia East Commercial Corporation Workers’ Association – CLUP Local Chapter;            2.  Samahang Manggagawa sa Sta. Lucia East Commercial; and            3.  No Union.                   Pursuant to Rule XI, Section II.1 of Department Order No. 9, appellee corporation is hereby directed to submit to the office of origin, within ten (10) days from receipt hereof, the certified list of its employees in the bargaining unit or when necessary a copy of its payroll covering the same employees for the last three (3) months preceding the issuance of this Decision.             Let a copy of this Decision be furnished the Bureau of Labor Relations and Labor Relations Division of Regional Office No. IV for the cancellation of the recording of voluntary recognition in favor of Samahang Manggagawa sa Sta. Lucia East Commercial and the appropriate annotation of re-registration of CLUP-Sta. Lucia East Commercial Corporation and its Affiliates Workers Union to Sta. Lucia East Commercial Corporation Workers Association-CLUP Local Chapter.             SO DECIDED.[5]

 

SLECC filed a motion for reconsideration which the Secretary denied for lack of merit in a Resolution dated 27 March 2003.  SLECC then filed a petition for certiorari before the appellate court. 

 

 

The Ruling of the Appellate Court

 

          The   appellate   court   affirmed   the   ruling   of   the   Secretary   and   quoted extensively from the Secretary’s decision.  The appellate court agreed with the Secretary’s finding that the workers sought to be represented by CLUP-SLECC and its  Affiliates  Workers  Union  included the  same workers   in   the bargaining  unit represented by SMSLEC.  SMSLEC was not the only legitimate labor organization operating   in   the   subject   bargaining   unit   at   the   time   of   SMSLEC’s   voluntary recognition on 20 July 2001.  Thus, SMSLEC’s voluntary recognition was void and could not bar CLUP-SLECCWA’s petition for certification election.

  

The Issue

 

SLECC raised  only  one   issue   in   its  petition.  SLECC asserted   that   the  appellate court commited a reversible error when it affirmed the Secretary’s finding that SLECC’s   voluntary   recognition   of   SMSLEC  was   done  while   a   legitimate   labor organization was in existence in the bargaining unit.

 

The Ruling of the Court

          The petition has no merit.  We see no reason to overturn the rulings of the Secretary and of the 

appellate court. 

 

Legitimate Labor Organization

 

            Article 212(g)  of the Labor Code defines a  labor organization as “any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers   concerning   terms   and   conditions   of   employment.”  Upon   compliance   with   all   the documentary requirements,  the Regional Office or Bureau shall   issue in favor of the applicant labor organization a certificate indicating that it  is  included in the roster of legitimate labor organizations.[6]  Any applicant labor organization 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.[7] 

Bargaining Unit

        

            The concepts of a union and of a legitimate labor organization are different from, but related to, the   concept   of   a   bargaining   unit.  We   explained   the   concept   of   a   bargaining   unit   in San Miguel Corporation v. Laguesma,[8] where we stated that: 

             A bargaining unit is a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicated to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.”             The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine);        (2) affinity and unity of the employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 

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

 

However,  employees   in  two corporations  cannot  be treated as  a  single  bargaining  unit  even  if   the 

businesses of the two corporations are related.[9]

A Legitimate Labor Organization Representing

An Inappropriate Bargaining Unit

 

            CLUP-SLECC   and   its   Affiliates  Workers   Union’s   initial   problem  was   that   they   constituted   a legitimate   labor  organization  representing  a  non-appropriate  bargaining  unit.  However,  CLUP-SLECC and its Affiliates Workers Union subsequently re-registered as CLUP-SLECCWA, limiting its members to the rank-and-file of SLECC.  SLECC cannot ignore that CLUP-SLECC and its Affiliates Workers Union was a legitimate labor organization at the time of SLECC’s voluntary recognition of SMSLEC. SLECC and SMSLEC cannot,  by themselves,  decide whether CLUP-SLECC and its Affiliates Workers Union represented an appropriate bargaining unit. 

            The inclusion in the union of disqualified employees is not among the grounds for cancellation of registration,  unless   such   inclusion   is  due   to  misrepresentation,   false   statement  or   fraud  under   the circumstances enumerated in Sections (a) to (c) of Article 239 of the Labor Code.[10] THUS, CLUP-SLECC AND ITS AFFILIATES WORKERS UNION, HAVING BEEN VALIDLY ISSUED A CERTIFICATE OF REGISTRATION, SHOULD BE CONSIDERED AS HAVING ACQUIRED JURIDICAL PERSONALITY WHICH MAY NOT BE ATTACKED COLLATERALLY. THE PROPER PROCEDURE FOR SLECC IS TO FILE A PETITION FOR CANCELLATION OF CERTIFICATE OF REGISTRATION[11] OF CLUP-SLECC AND ITS AFFILIATES WORKERS UNION AND NOT TO IMMEDIATELY COMMENCE VOLUNTARY RECOGNITION PROCEEDINGS WITH SMSLEC.

SLECC’s Voluntary Recognition of SMSLEC

 

            The   employer   may   voluntarily   recognize   the   representation   status   of   a   union in unorganized establishments.[12] SLECC WAS NOT AN UNORGANIZED ESTABLISHMENT WHEN IT VOLUNTARILY RECOGNIZED SMSLEC AS ITS EXCLUSIVE BARGAINING REPRESENTATIVE ON 20 JULY 2001. CLUP-SLECC AND ITS AFFILIATES WORKERS UNION FILED A PETITION FOR CERTIFICATION ELECTION ON 27 FEBRUARY 2001 AND THIS PETITION REMAINED PENDING AS OF 20 JULY 2001. THUS, SLECC’S VOLUNTARY RECOGNITION OF SMSLEC ON 20 JULY 2001, THE SUBSEQUENT NEGOTIATIONS

AND RESULTING REGISTRATION OF A CBA EXECUTED BY SLECC AND SMSLEC ARE VOID AND CANNOT BAR CLUP-SLECCWA’S PRESENT PETITION FOR CERTIFICATION ELECTION.

EMPLOYER’S PARTICIPATION IN A PETITION FOR CERTIFICATION ELECTION

 

            We find it strange that the employer itself,  SLECC, filed a motion to oppose  CLUP-SLECCWA’s petition   for   certification   election.  In   petitions   for   certification   election,   the   employer   is   a   mere bystander and cannot oppose the petition or appeal the Med-Arbiter’s decision.  The exception to this rule, which happens when the employer is requested to bargain collectively, is not present in the case before us.[13]

          WHEREFORE, we DENY the petition.  We AFFIRM the Decision  promulgated on 14 August 2003 as well as the Resolution promulgated on 24 February 2004  of the Court of Appeals in CA-G.R. SP No. 77015.

         

SO ORDERED.