Labor Cases Finals.docx

SECOND DIVISION While G.R. No. 67125 was pending, the Monetary Board issued Resolution No. 612, dated June 7, 1985, ordering

G.R. No. 156761 October 17, 2006

the liquidation of the Bank. The Monetary Board then appointed a liquidator who, pursuant to the authority

LADY LYDIA CORNISTA-DOMINGO, Petitioners,

vested by the same Board, terminated the employment of all the employees of the Bank effective June 15, 1985.

- versus -

Thereafter, the liquidator commenced payment of

NATIONAL LABOR RELATIONS COMMISSION, Respondents. x-----------------------------------------------------------------------------------x

separation pay and other benefits to the terminated employees. Although a number of the Bank employees accepted their separation pay and other benefits and executed

DECISION GARCIA, J.:

quitclaims and releases therefor in favor of the Bank, others chose to question their termination. Thus,

By this petition for review on

certiorari,[1]

petitioners

on September 25, 1985, the Unionfiled a supplemental

seek the review and reversal of the consolidated

petition for prohibition with preliminary injunction in

Decision[2]

G.R. No. 67125 opposing Monetary Board Resolution

dated December 21, 2001 of the Court of

Appeals (CA) in CA-G.R. SP No. 51218, CA-G.R. SP No.

No. 612.

51219 and CA-G.R. SP No. 51220 declaring as null and void the September 14, 1993 decision and the

On August

November 22, 1993 resolution of the National Labor

consolidated[3] en banc Decision[4] in G.R. No. 67125

Relations Commission (NLRC) and reinstating the

upholding the authority of the Monetary Board to place

decision dated March 31, 1993 of Labor Arbiter Eduardo

the respondent Bank under liquidation as well as the

J. Carpio. Likewise, assailed is the CA Resolution

legality of the termination of all the Banks employees,

of January 8, 2003, denying the petitioners motion for

including the members of the Union. The Court also

reconsideration.

rejected the dismissed employees claim for back wages

24,

1990, the Court

promulgated

a

as it held that they were not illegally dismissed but The ultimate facts material to the resolution of the case

lawfully separated as a result of the Banks liquidation

are as follows:

upon order of the Monetary Board. On January 2, 1992, Congress enacted Republic Act

On April 10, 1983, by virtue of Resolution No. 334 of the

(R.A.) No. 7169,[5] authorizing the Central Bank to

Central Banks Monetary Board, the Philippine Veterans

reopen the Bank.

Bank (Bank, hereafter) was placed under receivership. To facilitate the implementation of R.A. No. 7169, a In consequence, the Bank adopted a retrenchment and

Rehabilitation Committee was created by the Monetary

reorganization program which was challenged before

Board. The committee thus created was given the

this Court by the Philippine Veterans Bank Employees

power to select and to organize an initial manning force

Union (Union, hereafter) on the ground that the

headed by a management team to be staffed by a

program allegedly violated the security of tenure of the

trained workforce. Hiring preference was given the

Banks employees, in G.R. No. 67125 entitled Philippine

veterans and their dependents, other qualifications

Veterans Bank Employees Union-NUBE v. Philippine

being equal.[6]

Veterans Bank.

In time, the Union appealed the Labor Arbiters decision At this juncture, several employees of the Bank initiated

to the NLRC proper.

a series of cases claiming that the enactment of R.A. No. 7169 nullified Monetary Board Resolution No. 612

On September 14, 1993, the NLRC rendered a

placing respondent Bank under liquidation and, in

Decision[8] reversing and setting aside that of the Labor

effect, also nullified the liquidators termination of the

Arbiter. Additionally, the NLRC directed the immediate

Banks employees.

reinstatement of all Union members subject to the operational requirements of the Bank which it likewise

On January 20, 1992, the Union filed a petition with the

ordered to cease and desist from further hiring new

Secretary of Labor and Employment charging the Bank

employees. More specifically, the fallo of the NLRC

with unfair labor practices and praying that the

decision reads:

Rehabilitation Committee be directed to cease and desist from screening and hiring new employees and to immediately

reinstate

the

Banks

former

employees. The petition, docketed as NLRC NCR No. 0002426-92, also sought payment of the accrued collective bargaining agreement benefits and back wages of the employees from the time they were terminated from employment in 1985 up to the time of their actual reinstatement. Several other petitions seeking essentially the same relief were consolidated with NLRC NCR No. 00-02426-92. In the meantime, on August 3, 1992, the respondent Bank resumed operations. On March 31, 1993, Labor Arbiter Eduardo J. Carpio rendered a decision[7] dismissing NLRC NCR No. 0002426-92 and all cases consolidated therewith for lack of merit. The dispositive portion of said decision reads: Wherefore, premises considered, the claim of the Union for reinstatement of the individual complainants it represents as well as the claims for payment of backwages, other benefits and damages are hereby, as they should be, dismissed for lack of merit. The charge for unfair labor practice filed by the Union against the respondent Bank is likewise dismissed for lack of factual and legal basis. SO ORDERED.

ACCORDINGLY, the decision of the Labor Arbiter is hereby SET ASIDE and a new one entered, finding the claim for reinstatement of the appellant to be legal and proper. Accordingly, Appellee bank therefore is hereby ordered to immediately reinstate all members of the appellant union inclusive of those who have executed their quitclaims and release and all the rest of the PVBEU members, who will signify their intention to be reinstated from the date of this Decision. In the meanwhile, however, that the bank has not fully reopened and activated all its operational departments, offices and branches, the employees reinstatement shall be conditioned to actual personnel requirement of the department branch office to be reopened, for which reason, preference shall be given to employees formerly occupying the position being reinstated or reactivated or at the prerogative and discretion of management, to any position in the office provided the latter is of equivalent rank and at least has the same rate of pay. For this purpose, appellee is hereby ordered to temporarily cease and desist from further hiring new employees which might affect the full compliance to this Decision. The claim for backwages and other CBA benefits are hereby denied for lack merit. The claim for unfair labor practice is also hereby denied for lack of merit. SO ORDERED.

terms and conditions of the Compromise Agreement.

On October 1, 1993, the Bank sought a reconsideration of the said decision. Six days later, or on October 7, 1993,

the Union also

moved

for

its

SO ORDERED.

partial

reconsideration. Both motions, however, were denied by the NLRC in its resolution of November 22, 1993. A number of the employees, in separate appeals to the Therefrom,

the

Bank

and

the Union interposed

separate petitions to this Court.

to

nullify

the

NLRC

decision

of September 14, 1993, reinstating the members of the Union, and its Resolution of November 22, 1993, denying the Banks motion for reconsideration. While in its

petition, docketed

as

G.R.

No.

115421,[10] the Union sought a modification of the same decision so as to include the award of backwages.

115421 were pending before the Court, the Union, through its duly authorized officers, and the Bank entered into a Compromise Agreement[11] for the amicable settlement of all other cases and claims then pending with the NLRC and/or other tribunals arising from the employment of the individual complainants with the Bank. substantial

On February 29, 1996, the Bank and the Union filed before the Court their Joint Motion to Dismiss Petition in G.R. Cases No. 113423 and 115421. In a Resolution dated June 17, 1996, the Court denied said Joint Motion. In the same resolution, the Court gave due course to an Urgent Motion for Leave to Intervene and to Oppose Motion to Dismiss Petition

On January 26, 1996, while G.R. Nos. 113423 and

A

Arbiter. They argued that the compromise agreement is contrary to law and jurisprudence.

The Bank, in its petition, docketed as G.R. No. 113423,[9] sought

NLRC, contested the foregoing Order of the Labor

filed by the bank employees led by a certain Nestor Garcia and the Urgent Motion With Leave of Court for Individual Union Members Petitioners to Intervene and to Participate in Their Individual Capacities And To Oppose Joint Motion to Dismiss Petition filed by the herein petitioners Lady Lydia Domingo, et al. On October

2,

1996,

the

NLRC

decided

the

aforementioned separate appeals from the Labor majority

of

the

members

of

the Union ratified the compromise agreement.

Arbiters Order of February 16, 1996 approving the compromise agreement. The NLRC ruled that those who received and acknowledged receipt of the first

On February 16, 1996, Labor Arbiter Eduardo J. Carpio

payment,

approved the compromise agreement and issued an

Compromise Agreement, and who executed the

Order[12]which reads:

corresponding Quitclaim, Waiver and Release were bound

WHEREFORE, finding the terms and conditions set forth in the Compromise Agreement to be not contrary to law, morals and public policy, the same is hereby approved and considered as in complete and full satisfaction of the Decision in the aboveentitled case dated September 14, 1993. The parties are hereby enjoined to comply strictly and faithfully with the

by

as

agreed

the

same

upon

in

the

Compromise

questioned

Agreement.

The decision dispositively reads: WHEREFORE, in the interest of substantial justice and fair play, the order appealed from is hereby partially vacated and Set Aside in that: a) For those union members who received and acknowledged receipt of the first payment as agreed upon in the Compromise Agreement dated January

26, 1996 and who executed the corresponding Quitclaim, Waiver and Release will be bound by the said Compromise Agreement which was made the basis of the Order dated February 16, 1996 appealed from and they shall continue to receive the money due them on the second and third payments due on December 15, 1996 and December 15, 1997, respectively.

reiterated the March 31, 1993 decision of the Labor Arbiter, to wit: PREMISES CONSIDERED, the assailed NLRC decision dated September 14, 1993 as well as its Resolution dated November 22, 1993 (CA-G.R. SP No. 51218) are both declared NULL and VOID and SET ASIDE. The Decision dated March 31, 1993 of the Labor Arbiter Eduardo J. Carpio is hereby ordered REINSTATED.

b) For those union members who signified their opposition and those who are similarly situated who did not receive and acknowledge receipt of the money, let the case be remanded to the Arbitration Branch of origin for further proceedings. The Labor Arbiter so designated to hear is hereby ordered to proceed with dispatch so as not to prejudice the parties as the disposition hereof has been duly delayed.

Accordingly, the other two (2) petitions, CA-G.R. SP No. 51219 and CA-G.R. SP No. 51220 are hereby DISMISSED for lack of merit. SO ORDERED.

Partly says the CA in its decision:

SO ORDERED.

Separate petitions were then filed with the Court by the Bank, the Union and the petitioners. The Bank assailed the

reinstatement

the Union questioned

of the

union lack

members of

award

while for

backwages. For their part, the petitioners questioned the validity of the compromise agreement. On December 7, 1998, the Court issued a Resolution referring the three aforesaid petitions to the CA for appropriate action and disposition, pursuant to St. Martin Funeral Homes v. NLRC.[13] In the CA, the Banks petition, PVB v. NLRC, et al., was docketed as CA-G.R. SP No. 51218, that of the Union, PVBEU-NUBE v. NLRC, et al., was docketed as CA-G.R. SP No. 51219, and that of herein petitioners Lady Lydia Cornista Domingo, et al. v. NLRC, et al., was docketed as CA-G.R. SP No. 51220. The three (3) petitions were thereafter consolidated. On December 21, 2001, the CA rendered the herein challenged consolidated decision declaring that the NLRC gravely abused its discretion in ordering the reinstatement of the union members and accordingly declared null and void its September 14, 1993 decision and the November 22, 1993 resolution, and instead

1. The Supreme Court said in G.R. No. 67125 (189 SCRA 14) that the PVB employees were not illegally dismissed but lawfully separated. This is a pronouncement, as categorical as can be, that the employment relationship between the Bank and the separated employees had definitely ceased to exist as of that time; xxx xxx xxxx

4. It is a well-settled doctrine that reinstatement is proper only in cases of illegal dismissal. The pronouncement of the Supreme Court that the PVB employees were not illegally dismissed forecloses any right of reinstatement under any circumstance. While the PVB employees concerned should be given priority in hiring, they cannot demand it as a matter of right. xxx xxx xxx Evidently, Domingo, et al. ratified the Compromise Agreement and even voluntarily received the first payment under that agreement, executing the corresponding Quitclaim, Waiver and Release in the process. Having done that, they are deemed bound by the Compromise Agreement under the previously discussed principle of res judicata and/or estoppel. xxx xxx xxx

rehabilitation Petitioners are now before the Court via the present recourse essentially arguing that the CA committed reversible error in foreclosing their right to be reinstated to their former employment with the Bank upon its rehabilitation and in upholding the validity of the Compromise Agreement entered into by the Bank and the Union. Petitioners argue that the passage of R.A. No. 7169,[14] which reopened and rehabilitated the Bank, gave them the right to be reinstated and entitled them to the payment of back wages and other benefits. They call the Courts attention to Congress Resolution No. 1104 expressing the sentiments of some congressmen to give preference to veterans and their dependents in

affect

the

Courts

pronouncement

in Philippine Veterans Bank Employees Union-NUBE v. Philippine Veterans Bank[15] that the actions of the Monetary Board and its duly appointed liquidator were valid and that the former employees claim for back wages must be rejected as they were lawfully separated. Reinstatement is a relief accorded only to an employee who was illegally dismissed.[16] To reiterate, the forcible closure of the Bank by operation of law permanently severed the employeremployee relationship between it and its employees when

it

ceased

1983 to August

3,

operations 1992.

Thus,

from April

10,

the

for

claim

reinstatement and payment of back wages and other benefits, having no leg to stand on, must necessarily fall.

the employment with the Bank. This resolution, according to petitioners, strengthens their claim for reinstatement.

Whilst

House

Resolution

No.

1104

expressed

sentiments of some congressmen that preferential right to employment be given to veterans and their

We are not persuaded.

dependents under Section 7(b) of R.A. No. 7169, without more, such sentiments did not operate as a

As we see it, upon implementation of Monetary Board Resolution No. 612 and prior to the passage of R.A. No. 7169, the Bank ceased to exist. Its subsequent rehabilitation was not an ordinary rehabilitation. R.A. No. 7169 had to be passed as a legislative fiat to breathe life into the Bank. While it is true that the Bank used its old name, a new law had to be enacted to restructure its outstanding liabilities. As it is, the Banks present state

compulsion to the newly opened Bank to accept an employee earlier separated from work as a result of its closure. If at all, such sentiments only provide that all things being equal, preference shall be given to veterans and their dependents in the hiring of new employees. While the employees concerned should be given priority in hiring, they cannot demand it as a matter of right.

of finances, the enormous cost of backwages and other benefits that have to be paid its employees seeking to be reinstated would surely put an end to the economic viability of the Bank.

Verily, the clear wordings of Section 7 of R.A. No. 7169 gave the rehabilitation committee created thereunder a free hand in the selection and appointment of the Banks new employees. We quote Section 7 of the law:

The enactment of R.A. No. 7169 did not nullify Monetary Board Resolution No. 612 which earlier placed the Bank under liquidation and caused the termination of employment of the petitioners. The Banks subsequent rehabilitation did not, by any test of reason, revive what was already a dead relationship between the petitioners and the Bank. Neither did such

Sec. 7. Rehabilitation Committee. To facilitate the implementation of the provisions this Act, there is hereby created a rehabilitation committee which shall have a term of three (3) months from the date of the approval of this Act composed of the following: the Executive Secretary, as Chairman, and the Administrator of the Philippine

Veterans Affairs Office, the President of the Veterans Federation of the Philippines, a representative from the executive board of the Veterans Federation of the Philippines and a representative from the Board of Trustees of the Veterans of World War II or their respective representatives, as members.

in the hiring of new employees, it would have clearly stated this in R.A. No. 7169. The fact that it did not only shows its clear legislative intent to give the new bank a free hand in the selection and hiring of its new staff. We have to acknowledge the sad reality that giving in to petitioners demand of wholesale reinstatement with

Specifically, the committee shall:

back wages, bonuses, holiday pay, vacation and sick

(a) Prepare, finalize and submit a viable rehabilitation plan to the Monetary Board of the Central Bank;

leave benefits would be a fatal blow to the very

(b) Select and organize an initial manning force headed by a management team to be composed of competent, experienced and professional managers who must possess all qualifications and none of the disqualifications provided under Central Bank rules and regulations. The management team shall be staffed by a trained workforce: Provid ed, That preference shall be given to the veterans and their dependents, other qualifications being equal;

barely making a profit under the weight of its present

intention of R.A. No. 7169 to rehabilitate the Bank. The payment of such substantial amounts would definitely further dissipate the remaining assets of the Bank and cripple its finances even as, at this point, the Bank is liabilities, and ultimately make impossible its desired rehabilitation. This clearly contravenes the intent and spirit of R.A. No. 7169. Petitioners fault the CA in upholding the validity of the Compromise

Agreement. They

claim

that

said

agreement is not binding on employees who did not ratify it and even to those who were allegedly tricked and/or deceived by the Union into accepting the first payment under the same agreement. The argument is utterly baseless. A labor unions function is to represent its members. It can file an action or enter into compromise agreements on behalf of its members. Here, majority of the Banks employees authorized the Union to enter into a compromise agreement with the Bank on their behalves. Union members were bound by the resulting compromise agreement when they affixed their signatures thereon, thereby giving their individual assent thereto, and when they accepted the benefits due them under that agreement. As it is, the Compromise Agreement in

The mandate given the Banks rehabilitation committee to select and organize an initial manning force shows that the lawmakers recognize the fact that the new bank is entirely without any working force. Congress, therefore, gave the Bank full authority and discretion to recruit and form a new staff. Had Congress intended that separated employees be rehired and given priority

question detailed the amounts to be received by each employee. Petitioners and other employees of the Bank knew exactly what they were ratifying when they affixed their signatures in the said compromise agreement.

Further, respondent Union is a closed shop union. For

the Bank.[18] We, thus, quote with approval the

this reason, it was the only one with legal authority to

following observation of the CA in its challenged

negotiate, transact, and enter into any agreement with

Decision of December 21, 2001:

the Bank. The Compromise Agreement was ratified by 282 Union members representing a majority of its entire 529 membership. The ratification of the Compromise Agreement by the majority of the Union members necessarily binds the minority. The general rule that the Labor Arbiter must be present during the signing of the compromise agreement is not immune to certain exceptions. Here, the submission of

As regards the third petition for certiorari filed by Lady Lydia Cornista Domingo, et. al. (CA-G.R. SP No. 51220), the position taken by the petitioners is that NLRC committed grave abuse of discretion by: a) ordering petitioners who received the first payment under the Compromise Agreement to be bound by it, and b) resolving to remand the case to the Labor Arbiter for further proceedings insofar as those who did not receive payment are concerned.

the Compromise Agreement on joint motion of the parties for approval by the Labor Arbiter cured whatever defect the signing of the agreement in the absence of the Labor Arbiter would have caused. So it is that in Santiago v. De Guzman,[17] the Court ruled: A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him, if after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was entered into freely and voluntarily by them. It is incumbent upon the Labor Arbiter not only to persuade the parties to settle amicably, but equally to ensure the compromise agreement is a fair one and that the same was forged freely, voluntarily with full understanding of the terms and conditions embodies therein as well as the consequences thereof. It is likewise noteworthy that as of March 31, 2004, thirty (30) of the herein thirty-seven (37) petitioners already received payment under the same Compromise Agreement. The acceptance by said petitioners of the benefits

bars

them

from

repudiating

the

agreement. They cannot be allowed to adopt an inconsistent

position

at

the

expense

of

the

Bank. Petitioners cannot belatedly reject or repudiate their acts of accepting the monetary consideration under the compromise agreement, to the prejudice of

Petitioners Domingo et. al. allege that (a)s found out by the respondent NLRC, the Compromise Agreement was not entered into in the presence of the labor Arbiter and it (NLRC) faulted the latter in not calling the parties especially the complainants, to a conference and satisfy himself that they (complainants) understand the terms and conditions of the settlement; and that the agreement was entered into freely and voluntarily (Rollo of SP No. 51218-20, p. 886) as called for under Section 2, Rule V of the New Rules of Procedure of the NLRC. Further, petitioners contend that (h)ad the respondents NLRC and Labor Arbiter Carpio followed the rules, they would have found out that those who received the first payment were only tricked and deceived in(to) receiving the payment; that had the respondents Labor Arbiter and NLRC been more circumspect in their solemn duties, they should have required the respondent union officers to present a special power of attorney as required under Article 1878(3) of the Civil Code. (Ibid., pp. 886887). We are not convinced. Evidently, Domingo, et. al. ratified the Compromise Agreement and even voluntarily received the first payment under that agreement, executing the corresponding Quitclaim, Waiver and Release in the process. Having done that, they are deemed bound by the Compromise Agreement under the previously

discussed principle of res judicata and/or estoppel.

Records reveal that when the Bank offered termination or separation pay to its remaining employees by way of

We find that the subsequent decision of petitioners Domingo, et. al. to repudiate the Compromise Agreement was merely an afterthought, whatever would be the reason for their subsequent change of mind. Since they had entered into a binding contract on their own volition and received benefits therefrom, they are therefore estopped from questioning the validity of said contract later on. Parenthetically, it is interesting to note that while the petitioners try to impugn the Compromise Agreement that they themselves entered into, they have not made any offer or effort to return the money they received as first payment under said agreement.

a compromise agreement, a great majority of them

The other allegation of the petitioners that those who received the first payment were only tricked and deceived in(to) receiving the payment deserves scant consideration. Said petitioners are not only ordinary laborers but mature, educated and intelligent people with college degrees, and considering the size of their group, it is unbelievable that they could have been easily duped into doing something against their will and selfinterest. Absent a showing that they were indeed victims of trickery and deception, outside of their own selfserving affidavits, the petitioners allegation does not hold water.

binding upon all the 529 employees of the Bank. In fine,

accepted the amount as justifiable settlement of their claims.[21] Like these quitclaims and releases, there are voluntary agreements which represent reasonable settlements and are considered binding on the parties.[22] Petitioners, therefore, cannot renege on the compromise agreement they entered into after accepting benefits earlier simply because they may have felt that they committed a mistake in accepting their termination/separation pay. As no proof was presented to show that the compromise agreement in dispute was entered into through fraud, misrepresentation or coercion, the same must be recognized as valid and the petitioners and the other employees are estopped from questioning the validity of the Compromise Agreement. In law, a compromise agreement, once approved, has the effect of res judicata between the parties and should not be disturbed except for vices of consent, forgery, fraud, misrepresentation and coercion,[23] none of which exists in this case. The Compromise Agreement between the Union and the Bank binds the minority Union members. All told, the Court finds and so holds that the CA committed no reversible error in rendering its

Here, the petitioners and other employees legally

challenged

separated were in fact given termination or separation

Resolution of January 8, 2003.

decision

of December

21,

2001 and

pay despite the staggering loss sustained by the Bank. They were given a very good bargain in the

IN VIEW WHEREOF, the instant petition is DENIED.

compromise agreement. They, therefore, have no reason to complain. Without the subject compromise

No pronouncement as to costs.

agreement, they would not have received any separation pay in light of our ruling in State Investment House,

Inc.

v.

CA,[19] and North Davao

Mining

Corporation v. NLRC,[20] where we held that in cases of serious losses or financial reverses, the Labor Code does not impose any obligation upon the employer to pay separation benefits, for obvious reasons.

SO ORDERED.

G.R. No. 158075

June 30, 2006

PHILIPPINE DIAMOND HOTEL AND RESORT, INC. (MANILA DIAMOND HOTEL), Petitioner, vs. MANILA DIAMOND HOTEL EMPLOYEES UNION, Respondent. DECISION CARPIO MORALES, J.: The Court of Appeals, by the assailed decision of November 21, 2002,1 declared the strike staged by respondent, Manila Diamond Hotel Employee’s Union (the union), illegal and its officers to have lost their employment status. It ordered, however, among other things, the reinstatement and payment of backwages to its members. On November 11, 1996, the union, which was registered on August 19, 1996 before the Department of Labor and Employment (DOLE),2 filed a Petition for Certification Election3 before the DOLE-National Capital Region (NCR) seeking certification as the exclusive bargaining representative of its members.4 The DOLE-NCR denied the union’s petition as it failed to comply with legal requirements, specifically Section 2, Rule V, Book V of the Rules and Regulations Implementing the Labor Code, and was seen to fragment the employees of petitioner.5 On June 2, 1997, Francis Mendoza (Mendoza), one of the Hotel’s outlet cashiers, was discovered to have failed to remit to the Hotel the amount of P71,692.50 at the end of his May 31, 1997 duty.6 On being directed to explain such failure, Mendoza claimed that after accomplishing his daily cash remittance report, the union president Jose Leonardo B. Kimpo (Kimpo) also an outlet cashier, who signed the same and dropped his remittances.7 Kimpo, who was thus directed to explain why no administrative sanction should be imposed on him for violating the standard procedure for remitting cash collections, informed that he was not aware of any such procedure. Mendoza was subsequently suspended for one week, it being "the responsibility of the cashier to personally drop-off his remittances in the presence of a witness."8 In the meantime or on July 14, 1997,9 he was re-assigned to the Hotel’s Cost Control Department.10 Through its president Kimpo, the union later notified petitioner of its intention to negotiate, by Notice to Bargain,11 a Collective Bargaining Agreement (CBA) for its members.

Acting on the notice, the Hotel, through its Human Resource Development Manager Mary Anne Mangalindan, advised the union that since it was not certified by the DOLE as the exclusive bargaining agent, it could not be recognized as such.12 The union clarified that it sought to bargain "for its members only," and declared that "[the Hotel’s] refusal to bargain[would prompt] the union to engage in concerted activities to protect and assert its rights under the Labor Code."13 By Notice14 to its members dated September 18, 1997, the union announced that its executive officers as well as its directors decided to go on strike in view of the management’s refusal to bargain collectively, and thus called for the taking of strike vote. Petitioner thereupon issued a Final Reminder and Warning15 to respondent against continuing misinformation campaign and activities which confused the Hotel employees and disturbed their work performance. The union went on to file a Notice of Strike16 on September 29, 1997 with the National Conciliation and Mediation Board (NCMB) due to unfair labor practice (ULP) in that the Hotel refused to bargain with it and the rank-and-file employees were being harassed and prevented from joining it.17 Conciliation conferences were immediately conducted by the NCMB on October 6, 13, and 20, 1997 during which the union insisted on the adoption of a CBA for its members.18 In the meantime, or on or about November 7, 1997, Kimpo filed before the Arbitration Branch a complaint for ULP against petitioner.19 More conferences took place between petitioner and the union before the NCMB. In the conference held on November 20, 1997, the union demanded the holding of a consent election to which the Hotel interposed no objection, provided the union followed the procedure under the law. Petitioner then requested that the election be held in January 1998.20 The parties agreed to meet again on December 1, 1997.21 In the early morning of November 29, 1997, however, the union suddenly went on strike. The following day, the National Union of Workers in the Hotel, Restaurant and Allied Industries (NUWHRAIN) joined the strike and openly extended its support to the union.22 At about this time, Hotel supervisors Vicente T. Agustin (Agustin) and Rowena Junio (Rowena) failed to report for work and were, along with another supervisor, Mary Grace U.

de Leon (Mary Grace), seen participating in and supporting the strike.23 Petitioner thus filed on December 1, 1997 a petition for injunction before the National Labor Relations Commission (NLRC) to enjoin further commission of illegal acts by the strikers.24 Mary Grace, who was directed to explain her participation in the strike, alleged that she was merely trying "to pacify the group."25 Petitioner, finding her explanation "arrogant" and unsatisfactory as her active participation in the strike was confirmed by an eye witness, terminated her services, by communication sent on December 9, 1997, drawing her to file a complaint for illegal dismissal against 26 petitioner. Agustin, who was also terminated, filed a similar complaint against the Hotel.27 An NLRC representative who conducted an ocular inspection of the Hotel premises confirmed in his Report that the strikers obstructed the free ingress to and egress from the Hotel.28 By Order of December 8, 1998, the NLRC thus issued a Temporary Restraining Order (TRO) directing the strikers to immediately "cease and desist from obstructing the free ingress and egress from the Hotel premises."29 The service upon the strikers of the TRO notwithstanding, they refused to dismantle the tent they put up at the employee’s entrance to the Hotel, prompting the Hotel’s security guards to, on December 10, 1997, dismantle the same during which the strikers as well as the guards were hit by rocks coming from the direction of the construction site at the nearby Land Bank Plaza, resulting to physical injuries to some of them.30 Despite the efforts of the NCMB, which was joined by the Department of Tourism, to conciliate the parties, the same proved futile. On January 14, 1998, Rowena, whose services were terminated, also filed a complaint against petitioner for illegal dismissal. For its part, petitioner filed on January 28, 1998 a petition to declare the strike illegal. As then DOLE Secretary Cresenciano Trajano’s attempts to conciliate the parties failed, he, acting on the union’s Petition for Assumption of Jurisdiction, issued on April 15, 1998 an order certifying the dispute to the NLRC for compulsory arbitration, and directing the striking officers and members to return to work within 24 hours and the Hotel to accept them back under the same terms and conditions prevailing before the strike.31

On petitioner’s motion for reconsideration, then DOLE Acting Secretary Jose Español, Jr., by Order of April 30, 1998, modified the April 15, 1998 Order of Secretary Trajano by directing the Hotel to just reinstate the strikers to itspayroll, and ordering that all cases between the parties arising out of the labor disputes which were pending before different Labor Arbiters be consolidated with the case earlier certified to the NLRC for compulsory arbitration.32 It appears that the said order of the Acting Secretary directing the reinstatement of the strikers to the Hotel’s payroll was carried out. By Resolution of November 19, 1999, the NLRC declared that the strike was illegal and that the union officers and members who were reinstated to the Hotel’s payroll were deemed to have lost their employment status. And it dismissed the complaints filed by Mary Grace, Agustin, and Rowena as well as the union’s complaint for ULP.33 On appeal by the union, the Court of Appeals affirmed the NLRC Resolution dismissing the complaints of Mary Grace, Agustin and Rowena and of the union. It modified the NLRC Resolution, however, by ordering the reinstatement with back wages of union members. Thus it disposed: WHEREFORE, in view of the foregoing, the petition is granted only insofar as the dismissal of the union members is concerned. Consequently, the ruling of the public respondent NLRC to the effect that the union members lost their employment status with the Hotel is hereby reversed and set aside. Private respondent Hotel is hereby ordered to immediately reinstate the members with backwage s from the time they were terminated. The Court finds no grave abuse of discretion on the part of the NLRC, and therefore affirms the ruling of the NLRC as follows: (1) that the strike is illegal; (2) that the union officers lost their employment status when they formed the illegal strike; and (3) That the dismissal of Ms. Mary Grace U. de Leon, Vicente C. Agustin and Rowena Junio is valid. SO ORDERED.34 (Underscoring supplied) In so ruling, the appellate court noted that petitioner failed to establish by convincing and substantial evidence that the union members who participated in the illegal strike committed illegal acts, and although petitioner presented photographs of the striking employees, the strikers who allegedly committed illegal acts were not named or identified.35 Hence, the present appeal by petitioner faulting the appellate court:

I IN ORDERING THE REINSTATEMENT AND THE PAYMENT OF BACKWAGES OF THE INDIVIDUAL RESPONDENTS WHOSE EMPLOYMENT STATUS WERE PREVIOUSLY DECLARED TO HAVE BEEN LOST BY THE NATIONAL LABOR RELATIONS COMMISSION, THE COURT OF APPEALS HAS IN EFFECT DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW WHICH HAS NOT YET BEFORE BEEN DETERMINED BY THIS HONORABLE COURT, [AND] II IN [THUS] DEVIAT[ING] FROM ESTABLISHED DOCTRINES LONG SETTLED BY CONSISTENT JURISPRUDENCE ENUNCIATED BY THIS HONORABLE 36 COURT. (Underscoring supplied) Petitioner argues that: IT WAS THE NLRC WHICH DECLARED THAT THE UNION OFFICERS AND MEMBERS HAVE LOST THEIR EMPLOYMENT AS A CONSEQUENCE OF THEIR STRIKE WHICH IT ALSO DECLARED AND FOUND TO BE ILLEGAL. SUCH BEING THE CASE, IN THE EVENT THE NLRC’s DECISION IS NOT UPHELD AS FAR AS THE UNION MEMBERS’ LOSING THEIR EMPLOYMENT IS CONCERNED, PETITIONER SHOULD NOT BE HELD LIABLE TO PAY THEIR BACKWAGES. UNDER THE CIRCUMSTANCES, NEITHER CAN PETITIONER BE VALIDLY DIRECTED TO REINSTATE THEM.37(Emphasis and underscoring supplied) Respondents, upon the other hand, pray for the dismissal of the petition, they arguing that: A. Respondent [union members] must be reinstated and paid full backwages because their strike was legal and done in good faith. B. Even assuming arguendo, that the strike started as an illegal strike, the union’s unconditional offer to return to work, coupled with the hotel’s unfair labor practices during the strike, transformed the strike into a legal strike. C. Even assuming arguendo, that the strike is illegal, the reinstatement of the strikers and the payment of full backwages is consistent with the ruling in Telefunken Semiconductors Employees Union-FFW v. Secretary, 283 SCRA 145 which states that the individual liability of each of the union officers and members determines whether or not strikers should be reinstated. D. Even assuming arguendo, that the strike is illegal, Article 264 of the Labor Code directs the reinstatement of and payment of full backwages to the respondents.38 (Underscoring supplied)

As did the NLRC and the Court of Appeals, this Court finds the strike illegal. Article 255 of the Labor Code provides: ART. 255. EXCLUSIVE BARGAINING REPRESENTATION AND WORKERS’ PARTICIPATION IN POLICY AND DECISION-MAKING The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decisionmaking process of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labor management councils shall be elected by at least the majority of all employees in said establishment. (Emphasis and underscoring supplied) As the immediately quoted provision declares, only the labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit is the exclusive representative of the employees in such unit for the purpose of collective bargaining. The union (hereafter referred to as respondent) is admittedly not the exclusive representative of the majority of the employees of petitioner, hence, it could not demand from petitioner the right to bargain collectively in their behalf. Respondent insists, however, that it could validly bargain in behalf of "its members," relying on Article 242 of the Labor Code.39 Respondent’s reliance on said article, a general provision on the rights of legitimate labor organizations, is misplaced, for not every legitimate labor organization possesses the rights mentioned therein.40Article 242 (a) must be read in relation to above-quoted Article 255. On respondent’s contention that it was bargaining in behalf only of its members, the appellate court, affirming the NLRC’s observation that the same would only "fragment the employees" of petitioner,41 held that "what [respondent] will be achieving is to divide the employees, more particularly, the rank-and-file employees of [petitioner] . . . the other workers who are not members are at a serious disadvantage, because

if the same shall be allowed, employees who are nonunion members will be economically impaired and will not be able to negotiate their terms and conditions of work, thus defeating the very essence and reason of collective bargaining, which is an effective safeguard against the evil schemes of employers in terms and conditions of work."42 This Court finds the observation well-taken. It bears noting that the goal of the DOLE is geered towards "a single employer wide unit which is more to the broader and greater benefit of the employees working force."43 The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees’ bargaining power with the management. To veer away from such goal would be contrary, inimical and repugnant to the objectives of a strong and dynamic unionism.44 Petitioner’s refusal to bargain then with respondent can not be considered a ULP to justify the staging of the strike. The second ground alleged by respondent to justify the staging of the strike – that petitioner prevented or intimidated some workers from joining the union before, during or after the strike – was correctly discredited by the appellate court in this wise: . . . a careful study of the allegations of petitioners in their petition reveals that it contained general allegations that the Management of the Hotel committed unfair labor practices by refusing to bargain with the union and by alleged acts of union interference, coercion and discrimination tantamount to union-busting. Since it is the union who alleges that unfair labor practices were committed by the Hotel, the burden of proof is on the union to prove its allegations by substantial evidence. Moreover, while petitioner Union continues to accuse the private respondent Hotel of violating their constitutional right to organize by busting the Union, this Court cannot overlook the events that transpired prior to the strike that the Union staged on November 29, 1997. It is beyond argument that a conciliatory meeting was still scheduled to be held on December 1, 1997 before the NCMB. In this conciliatory meeting, petitioner Union could have substantiated and presented additional evidences. Thus, as held by the Supreme Court in the case of Tiu vs. National Labor Relations Commission: "The Court is not unmindful of this rule, but in the case at bar the facts and the evidence did not establish events [sic] least a rational basis why the union would [wield] a strike based on alleged unfair labor practices it did not even bother to substantiate during the conciliation proceedings. It is not enough that the union

believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie [showing to] warrant [such a] belief." It is also evident from the records of the instant petition, specifically from the Notice of Strike, that their principal ground for the strike was the "refusal of the Hotel Management to bargain collectively with the Union for the benefit of the latter’s members." In the instant case, it is not disputed that the petitioner UNION is not a certified bargaining unit to negotiate a collective bargaining agreement (CBA) with private respondent Hotel . . . 45 (Underscoring supplied) On top of the foregoing observations, this Court notes that respondent violated Article 264 which proscribes the staging of a strike on the ground of ULP during the pendency of cases involving the same grounds for the strike. Further, the photographs taken during the strike, as well as the Ocular Inspection Report of the NLRC representative, show that the strikers, with the use of ropes and footed placards, blockaded the driveway to the Hotel’s points of entrance and exit,46 making it burdensome for guests and prospective guests to enter the Hotel, thus violating Article 264 (e) of the Labor Code which provides: ART. 264 (e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer’s premises for lawful purposes, or obstruct public thoroughfares. (Emphasis supplied) Furthermore, the photographs indicate that indeed the strikers held noise barrage47 and threatened guests with bodily harm.48 Finally, the police reports mention about the strikers’ exploding of firecrackers, causing the guests to panic and transfer to other areas of the Hotel.49 It is doctrinal that the exercise of the right of private sector employees to strike is not absolute. Thus Section 3 of Article XIII of the Constitution, provides: SECTION 3. x x x It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. (Emphasis and underscoring supplied) Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal.

Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which are injurious to the rights to property renders a strike illegal. And so is picketing or the obstruction to the free use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion as to constitute nuisance.50 As the appellate court correctly held, the union officers should be dismissed for staging and participating in the illegal strike, following paragraph 3, Article 264(a) of the Labor Code which provides that ". . .[a]ny union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during strike may be declared to have lost his employment status . . ." An ordinary striking worker cannot, thus be dismissed for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike, unlike a union officer who may be dismissed by mere knowingly participating in an illegal strike and/or committing an illegal act during a strike.51 The appellate court found no convincing and substantial proof, however, that the strikers-members of respondent who participated in the illegal strike committed illegal acts. In the present case, private respondent Hotel failed to established [sic] by convincing and substantial evidence that these union members who participated in the illegal strike committed illegal acts. Consequently, they cannot be terminated from service for their participation in an illegal strike. Moreover, private respondent Hotel presented as evidence photographs of the striking employees, the question that comes to our mind is: why were these strikers who allegedly participated in illegal acts not identified or named? Instead the arbitral tribunal found it worthy of credence to summarily dismiss all the union members without them being named or identified . . . 52 This Court finds otherwise. As reflected above, the photographs show that some of the workers-strikers who joined the strike indeed committed illegal acts – blocking the free ingress to and egress from the Hotel, holding noise barrage, threatening guests, and the like. The strikers were, in a list53 attached to petitioner’s Position Paper54 filed with the NLRC, named. The list failed to specifically identify the ones who actually committed illegal acts, however. Such being the case, a remand of the case to the Labor Arbiter, through the NLRC, is in order for the purpose only of determining the respective liabilities of the strikers listed by petitioner. Those proven to have committed illegal acts during the course of the strike are deemed

to have lost their employment, unless they have been readmitted by the Hotel, whereas those not clearly shown to have committed illegal acts should be reinstated. Whether those ordered reinstated are entitled to backwages is, however, another matter. For the general rule is that backwages shall not be awarded in an economic strike on the principle that "a fair day’s wage" accrues only for a "fair day’s labor."55 Even in cases of ULP strikes, award of backwages rests on the court’s discretion and only in exceptional instances.56 Thus, J.P. Heilbronn Union,57 instructs:

Co.

v.

National

Labor

When in case of strikes, and according to the C[ourt of] I[ndustrial] R[elations] even if the strike is legal, strikers may not collect their wages during the days they did not go to work, for the same reasons if not more, laborers who voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove and establish their demands against the company, the legality and propriety of which demands is not yet known, should lose their pay during the period of such absence from work. The age-old rule governing the relation between labor and capital or management and employee is that of a "fair day’s wage for a fair day’s labor." If there is no work performed by the employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer’s time. (Emphasis and underscoring supplied) This Court must thus hearken to its policy that "when employees voluntarily go on strike, even if in protest against unfair labor practices," no backwages during the strike is awarded. In Cromwell Commercial Employees and Laborers Union (PTUC) v. Court of Industrial Relations,58 this Court made a distinction between two types of employees involved in a ULP: those who are discriminatorily dismissed for union activities, and those who voluntarily go on strike even if it is in protest of an ULP. Discriminatorily dismissed employees were ordered entitled to backpay from the date of the act of discrimination, that is, from the day of their discharge, whereas employees who struck as a voluntary act of protest against what they considered a ULP of their employer were held generally not entitled to backpay.59 Jurisprudential law, however, recognizes several exceptions to the "no backwages rule," to wit: when the employees were illegally locked to thus compel them to stage a strike;60 when the employer is guilty of the

grossest form of ULP;61 when the employer committed discrimination in the rehiring of strikers refusing to readmit those against whom there were pending criminal cases while admitting nonstrikers who were also criminally charged in court;62 or when the workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them.63 Not any of these or analogous instances is, however, present in the instant case. Respondent urges this Court to apply the exceptional rule enunciated in Philippine Marine Officers’ Guild v. Compañia Maritima64 and similar cases where the employees unconditionally offered to return to work, it arguing that there was such an offer on its part to return to work but the Hotel screened the returning strikers and refused to readmit those whom it found to have perpetrated prohibited acts during the strike. It must be stressed, however, that for the exception in Philippine Marine Officers’ Guild to apply, it is required that the strike must be legal.65 Reinstatement without backwages of striking members of respondent who did not commit illegal acts would thus suffice under the circumstances of the case. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order.66 WHEREFORE, the Decision dated November 21, 2002 of the Court of Appeals is, in light of the foregoing ratiocinations, AFFIRMED with MODIFICATION in that only those members of the union who did not commit illegal acts during the course of the illegal strike should be reinstated but without backwages. The case is, therefore, REMANDED to the Labor Arbiter, through the NLRC, which is hereby directed to, with dispatch, identify said members and to thereafter order petitioner to reinstate them, without backwages or, in the alternative, if reinstatement is no longer feasible, that they be given separation pay at the rate of One (1) Month pay for every year of service. SO ORDERED. SECOND DIVISION

ELECTROMAT MANUFACTURING and RECORDING CORPORATION, Petitioner,

G. R. No. 172699

- versus -

Present:

HON. CIRIACO LAGUNZAD, in his capacity as Regional Director, National Capital Region, Department of Labor and Employment; and HON. HANS LEO J. CACDAC, in his capacity as Director of Bureau of Labor Relations, Department of Labor and Employment, Public Respondents.

CARPIO, J., Chairperson, LEONARDO-DE CASTRO,* BRION, PERALTA,** and PEREZ, JJ. Promulgated: July 27, 2011

NAGKAKAISANG SAMAHAN NG MANGGAGAWA NG ELECTROMAT-WASTO, Private Respondent. x---------------------------------------------------------------------------------------x

DECISION BRION, J.: We resolve the present petition for review on certiorari[1] assailing the decision[2] and the [3] resolution of the Court of Appeals (CA) dated February 3, 2006 and May 11, 2006, respectively, rendered in CA G.R. SP No. 83847. The Antecedents The private respondent Nagkakaisang Samahan ng Manggagawa ng Electromat-Wasto (union), a charter affiliate of the Workers Advocates for Struggle, Transformation and Organization (WASTO), applied for registration with the Bureau of Labor Relations (BLR). Supporting the application were the following documents: (1) copies of its ratified constitution and bylaws (CBL); (2) minutes of the CBLs adoption and ratification; (3) minutes of the organizational meetings; (4) names and addresses of the union officers; (5) list of union members; (6) list of rank-and-file employees in the company; (7) certification of non-existence of a

collective bargaining agreement (CBA) in the company; (8) resolution of affiliation with WASTO, a labor federation; (9) WASTOs resolution of acceptance; (10) Charter Certificate; and (11) Verification under oath. The BLR thereafter issued the union a Certification of Creation of Local Chapter (equivalent to the certificate of registration of an independent union), pursuant to Department Order No. (D.O.) 40-03.[4] On October 1, 2003, the petitioner Electromat Manufacturing and Recording Corporation (company) filed a petition for cancellation of the unions registration certificate, for the unions failure to comply with Article 234 of the Labor Code. It argued that D.O. 40-03 is an unconstitutional diminution of the Labor Codes union registration requirements under Article 234. On November 27, 2003, Acting Director Ciriaco A. Lagunzad of the Department of Labor and Employment (DOLE)-National Capital Region dismissed the petition.[5] In the appeal by the company, BLR Director Hans Leo J. Cacdac affirmed the dismissal.[6] The company thereafter sought relief from the CA through a petition for certiorari, contending that the BLR committed grave abuse of discretion in affirming the unions registration despite its non-compliance with the requirements for registration under Article 234 of the Labor Code. It assailed the validity of D.O. 40-03 which amended the rules of Book V (Labor Relations) of the Labor Code. It posited that the BLR should have strictly adhered to the union registration requirements under the Labor Code, instead of relying on D.O. 40-03 which it considered as an invalid amendment of the law since it reduced the requirements under Article 234 of the Labor Code. It maintained that the BLR should not have granted the unions registration through the issuance of a Certification of Creation of Local Chapter since the union submitted only the Charter Certificate issued to it by WASTO. The CA Decision In its decision rendered on February 3, 2006,[7] the CA Tenth Division dismissed the petition and affirmed the assailed BLR ruling. It brushed aside the companys objection to D.O. 40-03, and its submission that D.O. 40-

03 removed the safety measures against the commission of fraud in the registration of unions. It noted that there are sufficient safeguards found in other provisions of the Labor Code to prevent the same.[8] In any event, it pointed out that D.O. 40-03 was issued by the DOLE pursuant to its rule-making power under the law.[9] The company moved for reconsideration, arguing that the unions registration certificate was invalid as there was no showing that WASTO, the labor federation to which the union is affiliated, had at least ten (10) locals or chapters as required by D.O. 40-03. The CA denied the motion,[10] holding that no such requirement is found under the rules. Hence, the present petition. The Case for the Petitioner The company seeks a reversal of the CA rulings, through its submissions (the petition[11] and the memorandum[12]), on the ground that the CA seriously erred and gravely abused its discretion in affirming the registration of the union in accordance with D.O. 40-03. Specifically, it assails as unconstitutional Section 2(E), Rule III of D.O. 40-03 which provides: The report of creation of a chartered local shall be accompanied by a charter certificate issued by the federation or national union indicating the creation or establishment of the chartered local.

The company points out that D.O. 40-03 delisted some of the requirements under Article 234 of the Labor Code for the registration of a local chapter. Article 234 states: ART. 234. Requirements of [13] Registration. Any applicant labor organization, association or group of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the

principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings; (c) The names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; (d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and (e) Four (4) copies of the constitution and bylaws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it.

The company contends that the enumeration of the requirements for union registration under the law is exclusive and should not be diminished, and that the same requirements should apply to all labor unions whether they be independent labor organizations, federations or local chapters. It adds that in making a different rule for local chapters, D.O. 40-03 expanded or amended Article 234 of the Labor Code, resulting in an invalid exercise by the DOLE of its delegated rulemaking power. It thus posits that the unions certificate of registration which was issued in violation of the letters of Article 234 of the Labor Code[14] is void and of no effect, and that the CA committed grave abuse of discretion when it affirmed the unions existence. The Case for the Union In a Resolution dated January 16, 2008,[15] the Court directed union board member Alex Espejo, in lieu of union President Roberto Beltran whose present address could not be verified, to furnish the Court a copy of the union comment/opposition to the companys motion for

reconsideration dated February 22, 2006 in CA G.R. SP No. 83847, which the union adopted as its comment on the present petition.[16] Through this comment/opposition,[17] the union submits that the company failed to show that the CA committed reversible error in upholding the registration certificate issued to it by the BLR. Citing Castillo v. National Labor Relations Commission,[18] it stressed that the issuance of the certificate by the DOLE agencies was supported by substantial evidence, which should be entitled to great respect and even finality. The Courts Ruling We resolve the core issue of whether D.O. 40-03 is a valid exercise of the rule-making power of the DOLE. We rule in the affirmative. Earlier in Progressive Development Corporation v. Secretary, Department of Labor and Employment,[19] the Court encountered a similar question on the validity of the old Section 3, Rule II, Book V of the Rules Implementing the Labor Code[20] which stated: Union affiliation; direct membership with a national union. - The affiliate of a labor federation or national union may be a local or chapter thereof or an independently registered union. a)

The labor federation or national union concerned shall issue a charter certificate indicating the creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of Labor Relations within thirty (30) days from issuance of such charter certificate.

xxxx e) The local or chapter of a labor federation or national union shall have and maintain a constitution and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the reporting of independently registered

unions, federations national unions shall observed.

or be

Interpreting these provisions of the old rules, the Court said that by force of law,[21] the local or chapter of a labor federation or national union becomes a legitimate labor organization upon compliance with Section 3, Rule II, Book V of the Rules Implementing the Labor Code, the only requirement being the submission of the charter certificate to the BLR. Further, the Court noted that Section 3 omitted several requirements which are otherwise required for union registration, as follows: 1)

The requirement that the application for registration must be signed by at least 20% of the employees in the appropriate bargaining unit;

2)

The submission of officers addresses, principal address of the labor organization, the minutes of organization meetings and the list of the workers who participated in such meetings;

3)

The submission of the minutes of the adoption or ratification of the constitution and by-laws and the list of the members who participated in it.[22]

Notwithstanding these omissions, the Court upheld the governments implementing policy expressed in the old rules when it declared in Progressive Development Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or local of a registered federation or national union is to encourage the affiliation of a local union with a federation or national union in order to increase the local unions bargaining powers respecting terms and conditions of labor.[23]

governments implementing policy on the registration of locals or chapters of labor federations or national unions. The company now assails this particular amendment as an invalid exercise of the DOLEs rulemaking power. We disagree. As in the case of D.O. 9 (which introduced the above-cited Section 3 of the old rules) in Progressive Development, D.O. 40-03 represents an expression of the governments implementing policy on trade unionism. It builds upon the old rules by further simplifying the requirements for the establishment of locals or chapters. As in D.O. 9, we see nothing contrary to the law or the Constitution in the adoption by the Secretary of Labor and Employment of D.O. 40-03 as this department order is consistent with the intent of the government to encourage the affiliation of a local union with a federation or national union to enhance the locals bargaining power. If changes were made at all, these were those made to recognize the distinctions made in the law itself between federations and their local chapters, and independent unions; local chapters seemingly have lesser requirements because they and their members are deemed to be direct members of the federation to which they are affiliated, which federations are the ones subject to the strict registration requirements of the law. In any case, the local union in the present case has more than satisfied the requirements the petitioner complains about; specifically, the union has submitted: (1) copies of the ratified CBL; (2) the minutes of the CBLs adoption and ratification; (3) the minutes of the organizational meetings; (4) the names and addresses of the union officers; (5) the list of union members; (6) the list of rank-and-file employees in the company; (7) a certification of non-existence of a CBA in the company; (8) the resolution of affiliation with WASTO and the latters acceptance; and (9) their Charter Certificate. These submissions were properly verified as required by the rules. In sum, the petitioner has no factual basis for questioning the unions registration, as even the requirements for registration as an independent local have been substantially complied with. We, thus, find no compelling justification to nullify D.O. 40-03. Significantly, the Court declared in another case:[24]

It was this same Section 3 of the old rules that D.O. 4003 fine-tuned when the DOLE amended the rules on Book V of the Labor Code, thereby modifying the

Pagpalain cannot also allege that Department Order No. 9 is violative of

public policy. x x x [T]he sole function of our courts is to apply or interpret the laws. It does not formulate public policy, which is the province of the legislative and executive branches of government. It cannot, thus, be said that the principles laid down by the Court in Progressive and Protection Technologyconstitute public policy on the matter. They do, however, constitute the Courts interpretation of public policy, as formulated by the executive department through its promulgation of rules implementing the Labor Code. However, this public policy has itself been changed by the executive department, through the amendments introduced in Book V of the Omnibus Rules by Department Order No. 9. It is not for us to question this change in policy, it being a well-established principle beyond question that it is not within the province of the courts to pass judgments upon the policy of legislative or executive action.

This statement is as true then as it is now. In light of the foregoing, we find no merit in the

[G.R.

No.

169717,

March

16

2011]

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO - UNION PRESIDENT, PETITIONER,VS. CHARTER CHEMICAL AND COATING CORPORATION, RESPONDENT. DECISION DEL CASTILLO, J.: The right to file a petition for certification election is accorded to a labor organization provided that it complies with the requirements of law for proper registration. The inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor organization. We apply these principles to this case. This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeal's March 15, 2005 Decision[1] in CA-G.R. SP No. 58203, which annulled and set aside the January 13, 2000 Decision[2] of the Department of Labor and Employment (DOLE) in OS-A6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005 Resolution[3] denying petitioner union's motion for reconsideration.

appeal.

Factual

WHEREFORE, premises considered, we DENY the petition for lack of merit. The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against the petitioner Electromat Manufacturing and Recording Corporation.

On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, National Capital Region.

SO ORDERED.

Antecedents

On April 14, 1999, respondent company filed an Answer with Motion to Dismiss[4] on the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union.[5] Med-Arbiter's

Ruling

On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision[6] dismissing the petition for certification election. The Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president as

required by Section 235 of the Labor Code[7] in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration was, thus, fatally defective. The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and leadman who performed supervisory functions. Under Article 245 of the Labor Code, said supervisory employees are prohibited from joining petitioner union which seeks to represent the rank-and-file employees of respondent company. As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election for the purpose of collective bargaining. Department of Labor and Employment's Ruling On July 16, 1999, the DOLE initially issued a Decision[8] in favor of respondent company dismissing petitioner union's appeal on the ground that the latter's petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the MedArbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent company's claim that some members of petitioner union were holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory on September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a certification election in an unorganized establishment should be filed prior to the finality of the decision calling for a certification election. Considering that petitioner union filed its petition only on February 14, 1999, the same was filed out of time. On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner union's petition for certification election, viz: WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999 is MODIFIED to allow the certification

election among the regular rank-and-file employees of Charter Chemical and Coating Corporation with the following choices: 1. Samahang Manggagawa sa Charter ChemicalSolidarity of Unions in the Philippines for Empowerment and Reform (SMCC-SUPER); and 2.

No

Union.

Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference. SO DECIDED.[9] Court

of

Appeal's

Ruling

On March 15, 2005, the CA promulgated the assailed Decision, viz: WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET ASIDE. SO ORDERED.[10] In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation requirements under the Labor Code. It, likewise, upheld the Med-Arbiter's finding that petitioner union consisted of both rank-and-file and supervisory employees. Moreover, the CA held that the issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the infirmity in the membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union.[11] Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to file a petition for certification election. Issues I Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in granting the respondent [company's] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of the respondent company['s] petition was already settled with finality and barred from being re-litigated. II

Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file and supervisory employee[s] of petitioner [union's] membership is [a] ground for the cancellation of petitioner [union's] legal personality and dismissal of [the] petition for certification election. III Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of the union membership attending the organizational meeting [is a ground] for the cancellation of petitioner [union's] legal personality as a labor organization and for the dismissal of the petition for certification election.[12] Petitioner

Union's

Arguments

Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did not move for reconsideration, thus, this issue must be deemed settled. Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a union's registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local union's secretary or treasurer and attested to by the local union's president are limited to the union's constitution and by-laws, statement of the set of officers, and the books of accounts.

precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration. On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath. It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union[14] continues to be good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as was done here. Our Ruling The

petition

is

meritorious.

The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE. A review of the records indicates that the issue as to petitioner union's legal personality has been timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company.

Arguments

Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject petition for certification election because its previous decision was based on a mistaken appreciation of facts.[15] From this adverse decision, respondent company timely moved for reconsideration by reiterating its previous arguments before the MedArbiter that petitioner union has no legal personality to file the subject petition for certification election.

Respondent company asserts that it cannot be

The July 16, 1999 Decision of the DOLE, therefore, never

Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.[13] Respondent

Company's

attained finality because the parties timely moved for reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court. The charter certificate need not be certified under oath by the local union's secretary or treasurer and attested to by its president. Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 9481[16] which took effect on June 14, 2007.[17] This law introduced substantial amendments to the Labor Code. However, since the operative facts in this case occurred in 1999, we shall decide the issues under the pertinent legal provisions then in force (i.e., R.A. No. 6715,[18] amending Book V of the Labor Code, and the rules and regulations[19] implementing R.A. No. 6715, as amended by D.O. No. 9,[20] series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.[21] In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article 235 of the Labor Code and its implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Sama-samang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor organization. We

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. As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPPSMAMRFU-FFW),[22] which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it was not necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapter's officers x x x certify or attest to a document which they had no hand in the preparation of.[23] (Emphasis supplied)

disagree.

The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides: Section 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 [are] the same as [those] of the federation or national union, this fact shall be indicated accordingly.

In accordance with this ruling, petitioner union's charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate,[24] (2) the names of its officers, their addresses, and its principal office,[25] and (3) its constitution and by-laws[26]-- the last two requirements having been executed under oath by the proper union officials as borne out by the records. The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization. The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However, petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 245[27] of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate court ruled that petitioner union cannot

be considered a legitimate labor organization pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union[28] (hereinafter Toyota). Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in evidence the job descriptions[29] of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory employees under Article 212(m)[30] of the Labor Code. For this reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and supervisory employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate court's reliance on Toyota is misplaced in view of this Court's subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.[31] (hereinafter Kawashima). In Kawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz: R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-and-file employees] 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-andfile 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, 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." (Emphasis supplied) In Dunlop, 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 rankand-file employees among its members. 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 Certification Elections x

x

XI

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. In Pagpalain Haulers, Inc. v. Trajano, 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: "Section. 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-PGTWO 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. Thus, 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. In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rankand-File Union-FFW, 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. More to the point is Air Philippines Corporation v. Bureau of Labor Relations, 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: 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. 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.[32] [Underline supplied] The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashima applies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election. The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings.

Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election proceedings. As we explained in Kawashima: Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is nonadversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer. 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; 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. The employer's only right in the proceeding is to be notified or informed thereof. The amendments to the Labor Code and its implementing rules have buttressed that policy even more.[33] WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED. No

pronouncement

SO ORDERED.

as

to

costs.