Professional Documents
Culture Documents
Effect of Legal Personality: Sofronio A. Ona For Petitioner. Edgar R. Martir For Respondent Union
Effect of Legal Personality: Sofronio A. Ona For Petitioner. Edgar R. Martir For Respondent Union
MELO, J.:
In response to the mandate under Article 263(g) of the Labor Code and amidst the labor controversy
between petitioner St. Luke's Medical Center and private respondent St. Luke's Medical Center
Employees Association-Alliance of Filipino Workers (SLMCEA-AFW), then Secretary of Labor
Ruben D. Torres, issued the Order of January 28, 1991 requiring the parties to execute and finalize
their 1990-1993 collective bargaining agreement (CBA) to retroact to the expiration of the anterior
CBA. The parties were also instructed to incorporate in the new CBA the disposition on economic
and non-economic issues spelled out in said Order (p. 48, Rollo). Separate motions for re-evaluation
from the parties were to no avail; hence, the petition at bar premised on the following ascriptions of
error, to wit:
II
III
IV
When the collective bargaining agreement for the period August 1, 1987 to July 30, 1990 was forged
between petitioner and private respondent, the incumbent national president of AFW, the federation
to which the local union SLMCEA is affiliated, was Gregorio del Prado.
Before the expiration of the 1987-90 CBA, the AFW was plagued by internal squabble splitting its
leadership between Del Prado and Purita Ramirez, resulting in the filing by AFW and Del Prado of a
petition later docketed before the Department of Labor as NCR-00-M-90-05-077, where a
declaration was sought on the legitimacy of Del Prado's faction as bona fide officers of the
federation. Pending resolution of said case, herein private respondent SLMCEA-AFW brought to the
attention of petitioner via a letter dated July 4, 1990 that the 1987-1990 was about to expire, and
manifested in the process that private respondent wanted to renew the CBA. This development
triggered round-table talks on which occasions petitioner proposed, among other items, a maximum
across-the-board monthly salary increase of P375.00 per employee, to which proposal private
respondent demanded a P1,500.00 hike or 50% increase based on the latest salary rate of each
employee, whichever is higher.
That talks that then ensued between petitioner and private respondent were disturbed anew when
the other wing in the AFW headed by Purita Ramirez, expressed its objections to the on-going
negotiations, and when a petition for certification election was filed by the Association of Democratic
Labor Organization of petitioner. However, private respondent emerged victorious after the elections
and was thus certified as the exclusive bargaining entity of petitioner's rank and file employees.
Following the decision dated September 14, 1990 in NCR-00-M-90-05-077 (pp. 444-445, Rollo)
which upheld the legitimacy of Del Prado's
status including the other officers, Bayani Diwa of the Ramirez Wing
appealed; the two cases — NCR-00-M-90-05-070 for interpleader and NCR-00-90-05-077 — were
consolidated.
On September 17, 1990, private respondent wrote petitioner for the resumption of their negotiations
concerning the union's proposed CBA. Petitioner reacted by writing a letter on September 20, 1990
expressing willingness to negotiate a new CBA for the rank and file employees who are not
occupying confidential positions. Negotiations thus resumed. However, a deadlock on issues,
especially that bearing on across-the-board monthly and meal allowances followed and to pre-empt
the impending strike as voted upon by a majority of private respondent's membership, petitioner
lodged the petition below. The Secretary of Labor immediately assumed jurisdiction and the parties
submitted their respective pleadings.
On January 22, 1991, a resolution was issued in the consolidated cases which eventually declared
Gregorio del Prado and his group as the legitimate officials of the AFW and the acknowledged group
to represent AFW (pp. 320-321, Rollo).
On January 28, 1991, public respondent Secretary of Labor issued the Order now under challenge.
Said Order contained a disposition on both the economic and non-economic issues raised in the
petition. On the economic issues, he thus ruled:
First year — P1,140.00 broken down as follows: P510.00 in compliance with the
government mandated daily salary increase of P17.00; and P630.00 CBA across the
board monthly salary increase.
It is understood that the second and third year salary increases shall not be
chargeable to future government mandated wage increases. (p. 47, Rollo.)
As earlier stated, both parties moved for reconsideration of the above order, but both motions were
denied. Consequently, petitioner St. Luke's filed the instant petition, a special civil action
on certiorari.
In assailing the Order of January 28, 1991, petitioner St. Luke's focuses on public respondent's
disposition of the economic issues.
First, petitioner finds highly questionable the very basis of public respondent's decision to award
P1,140.00 as salary and meal allowance increases for the first year and P700.00 across-the-board
monthly salary increases for the succeeding second and third years of the new CBA. According to
petitioner, private respondent SLMCEA-AFW misled public respondent into believing that said
amounts were the last offer of petitioner St. Luke's immediately prior to the deadlock. Petitioner
vehemently denies having made such offer, claiming that its only offer consists of the following:
Non-Economic Issues:
St. Luke's submits that it is adopting the non-economic issues proposed and agreed
upon in its Collective Bargaining Agreement with SLMCEA-AFW for the period
covering 1987, 1990. Copy of the CBA is attached as Annex "F" hereof.
Economic Issue
St. Luke's respectfully offers to give an increase to all its rank and file employees
computed as follows:
Petitioner charges that public respondent, in making such award, erroneously relied on the
extrapolated figures provided by respondent SLMCEA-AFW, which grossly inflated petitioner St.
Luke's net income. Petitioner contends that if the disputed award are sustained, the wage increases
and benefits shall total approximately P194,403,000.00 which it claims is excessive and
unreasonable, considering that said aggregate amount is more than its projected income for the next
three years. To illustrate its point, petitioner submits the following computation:
YR I
—————
FIRST YEAR ADDITIONAL COST P 36,561,000
YR II
from 60 to 45 — P33,897,000
YR III
BENEFIT/WAGES — 194,403,000
On the basis of the foregoing, petitioner St. Luke's concludes that it would be in a very poor position
to even produce the resources necessary to pay the wage increases of its rank and file employees.
Petitioner also impugns public respondent's awards on grounds of prematurity, emphasizing that the
awards in question even preceded collective bargaining negotiations which have to take place first
between both litigants. It denies entering into a round of negotiations with private respondent
SLMCEA-AFW on the theory that the meetings referred to by the latter were merely informal ones,
without any binding effect on the parties because AFW is torn between two factions vying for the
right to represent it. Thus, petitioner maintains that nothing conclusive on the terms and conditions of
the proposed CBA could be arrived at when the other party, private respondent SLMCEA-AFW is
confronted with an unresolved representation issue.
Petitioner argues further that since no formal negotiations were conducted, it could not have possibly
made an offer of P1,140.00 as salary and meal allowance increases for the first year and an
increase of P700.00 across-the-board monthly salary for the second and third years of the new CBA.
It raises doubts on the veracity of the minutes presented by private respondent SLMCEA-AFW to
prove that negotiations were held, particularly on October 26, 1990, when petitioner allegedly made
said offer as its last ditch effort for a compromise prior to the deadlock. According to petitioner, these
minutes, unsigned by petitioner, were merely concocted by private respondent SLMCEA-AFW.
Finally, petitioner attacks the Order of January 28, 1991 for being violative of Article 253-A of the
Labor Code, particularly its provisions on retroactivity. Said Article pertinently provides:
Petitioner argues that in granting retroactive effect to the enforceability of the CBA, public
respondent committed an act contrary to the above provision of law, pointing out that the old CBA
expired on July 30, 1990 and the questioned order was issued on January 28, 1991. Petitioner
theorizes that following Article 13 of the Civil Code which provides that there are 30 days in one
month, the questioned Order of January 28, 1991 was issued beyond the six-month period,
graphically shown thus:
July 31 = 1 day
August 1-31, 1990 = 31 days
September 1-30, 1990 = 30 days
October 1-31, 1990 = 31 days
November 1-30, 1990 = 30 days
December 1-31, 1990 = 31 days
January 1-28, 1991 = 28 days
—————————
TOTAL = 182 days
Traversing petitioner's arguments, private respondent SLMCEA-AFW contends that the formulation
of the terms and conditions of the CBA awards is well supported by the factual findings of public
respondent which established that petitioner failed to refute private respondent's allegation that
during their last meeting on October 26, 1990, petitioner stood pat on its offer of P1,140.00 as salary
and meal allowance increases for the first year of the new CBA and P700.00 across-the-board
salary increases for the second and third years thereof. Said awards, it said, are well within the
means of petitioner because its reported net income of P15 million, P11 million, and 13 million for
1987, 1988, and 1989, respectively, have been actually understated. Moreover, private respondent
claims that petitioner, in actual terms, does not have to pay the alleged amount of P194,403,000.00
for wages and benefits in favor of its employees. Such amount, according to private respondent, is
bloated and excessive. Private respondent in substantiating such claim made the following analysis:
First P1,140.00 total salary increase for the first year (1990-1991) of the new CBA is
divided into: P510.00 in compliance with the government mandated daily salary
increase of P17.00 and P630.00 CBA across the board monthly salary increase,
thus, the whole P1,140.00 salary increase is payable only beginning August 1, 1990
(reckoned from the CBA July 30, 1990 expiry date) up to October 31, 1990 only
following the November 1, 1990 effectivity of WAGE ORDER NO. NCR-01 which
granted the said P17.00 daily wage increase or P510.00 monthly of
which herein petitioner promptly complied with and paid to its employees and
therefore deductible from P1,140.00 total monthly salary increase (Annex "A" —
Petitioner and Annex "13" hereof);
Second, the remaining P630.00 CBA across the board monthly salary increase takes
effect on November 1, 1990 up to January 7, 1991 only following the January 8, 1991
effectivity of WAGE ORDER NO. NCR-02 which mandated P12.00 daily wage
increase or P630.00 monthly, hence, reducing the P630.00 CBA monthly salary
increase to P270.00 CBA monthly salary increase effective January 8, 1991 and
onwards till July 31, 1991 (Annexes "22" and "23" hereof);
Fourth, the petitioner's computed 20% overtime pay of the basic salary is unrealistic
and overstated in view of its extreme cost-cutting/ savings measures on all
expenditures, most specially, on overtime work adopted since last year and a
continuing management priority project up to the present; and
Fifth, due to the above consideration, the total real award of wages and fringe
benefits is far less than the true annual hefty operating net income of the petitioner.
The net result is that the first year award of P1,140.00 monthly salary increase of
which P510.00 monthly salary increase is made in compliance with the P510.00
monthly wage increase at P17.00 daily wage increase effective November 1, 1990
under Wage Order No. NCR-01 (Annex "13" hereof) or with the intended P630.00
CBA monthly salary increase is further reduced by P360.00 monthly wage increase
at P12.00 daily wage increase effective January 8, 1991 under Wage Order No.
NCR-02 (Annex "22" hereof), thereby leaving a downgraded or watered down CBA
monthly increase of P270.00 only.
Private respondent concludes that petitioner's version that it will have to pay P194,403,000.00 is not
true because this will be drastically reduced by 40% to 60% in real terms due to a smaller number of
employees covered. It is further explained that the government-decreed wage increases
abovementioned already form part of the P1,140.00 wage and meal allowance increases, not to
mention the strict cost-cutting measures and practices on overtime and expense items adopted by
petitioner since 1990.
With respect to public respondent's ruling that the CBA awards should be given retroactive effect,
private respondent agrees with the Labor Secretary's view that Article 253-A of the Labor Code does
not apply to arbitral awards such as those involved in the instant case. According to private
respondent, Article 253-A of the Labor Code is clear and plain on its face as referring only to
collective bargaining agreements entered into by management and the certified exclusive bargaining
agent of all rank-and-file employees therein within six (6) months from the expiry of the old CBA.
These foregoing contentions and arguments of private respondent have been similarly put forward
by the Office of the Solicitor General in its Consolidated Comment filed on November 23, 1991. The
Solicitor General share a the views of private respondent SLMCEA-AFW.
We are now tasked to rule on the petition. Do petitioner's evidence and arguments provide adequate
basis for the charge of alleged grave abuse of discretion committed by public respondent in his
Order of January 28, 1991 as to warrant its annulment by this Court? This is the sole issue in the
case at bar. Consequently, this Court would apply the following yardstick in resolving the aforestated
issue: that public respondent, in the exercise of his power to assume over subject labor dispute,
acted whimsically, capriciously, or in an arbitrary, despotic manner by reason of passion or personal
hostility which was so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform a duty enjoined or to act at all in contemplation of law (San Sebastian College vs.
Court of Appeals, 197 SCRA 138 [1991]).
Subjected to and measure by this test, the challenged Order, we believe, can withstand even the
most rigorous scrutiny.
We rule that the Order, particularly in its disposition on the economic issues, was not arbitrarily
imposed by public respondent. A perusal of the Order shows that public respondent took into
consideration the parties' respective contentions, a clear indication that he was keenly aware of their
contrary positions. Both sides having been heard, they were allowed to present their respective
evidence. The due process requirement was thus clearly observed. Considering public respondent's
expertise on the subject and his observance of the cardinal principles of due process, the assailed
Order deserves to be accorded great respect by this Court.
Equally worth mentioning is the fact that in resolving the economic issues, public respondent merely
adopted in toto petitioner's proposals. Consequently, petitioner cannot now claim that the awards are
unreasonable and baseless. Neither can it deny having made such proposals, as it attempted to do
in its Motion for Reconsideration of the challenged Order before public respondent and which it
continues to pursue in the instant petition. It is too late in the day for such pretense, especially so
because petitioner failed to controvert private respondent's allegation contained in its Comment to
the petition before the Labor Secretary that petitioner had offered as its last proposal said salary and
meal allowance increases. As correctly pointed out by public respondent, petitioner failed, when it
had the chance, to rebut the same in its Reply to said Comment, considering that the resolution of
the labor dispute at that was still pending. Any objection on this point is thus deemed waived.
We do not see merit in petitioner's theory that the awards were granted prematurely. In its effort to
persuade this Court along this point, petitioner denies having negotiated with private respondent
SLMCEA-AFW. Petitioner collectively refers to all the talks conducted with private respondent as
mere informal negotiations due to the representation issue involving AFW. Petitioner thus argues
that in the absence of any formal negotiations, no collective bargaining could have taken place.
Public respondent, petitioner avers, should have required the parties instead to negotiate rather than
prematurely issuing his order.
We cannot agree with this line of reasoning. It is immaterial whether the representation issue within
AFW has been resolved with finality or not. Said squabble could not possibly serve as a bar to any
collective bargaining since AFW is not the real party-in-interest to the talks; rather, the negotiations
were confined to petitioner and the local union SLMCEA which is affiliated to AFW. Only the
collective bargaining agent, the local union SLMCEA in this case, possesses legal standing to
negotiate with petitioner. A duly registered local union affiliated with a national union or federation
does not lose its legal personality or independence (Adamson and Adamson, Inc. vs. The Court of
Industrial Relations and Adamson and Adamson Supervising Union (FFW), 127 SCRA 268 [1984]).
In Elisco-Elirol Labor Union (NAFLU) vs. Noriel (180 SCRA 681 [1977]), then Justice Teehankee re-
echoed the words of Justice Esguerra in Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills,
Inc. (66 SCRA 512 [1975]), thus:
(T)he locals are separate and distinct units primarily designed to secure and maintain
an equality of bargaining power between the employer and their employee-members
in the economic struggle for the fruits of the joint productive effort of labor and
capital; and the association of the locals into the national union (as PAFLU) was in
furtherance of the same end. These associations are consensual entities capable of
entering into such legal relations with their members. The essential purpose was the
affiliation of the local unions into a common enterprise to increase by collective action
the common bargaining power in respect of the terms and conditions of labor. Yet the
locals remained the basic units of association, free to serve their own and the
common interest of all, subject to the restraints imposed by the Constitution and By-
Laws of the Association, and free also to renounce the affiliation for mutual welfare
upon the terms laid down in the agreement which brought it into existence. (at p. 688;
emphasis in the original.)
Appending "AFW" to the local union's name does not mean that the federation absorbed the latter.
No such merger can be construed. Rather, what is conveyed is the idea of affiliation, with the local
union and the larger national federation retaining their separate personalities.
Petitioner cannot pretend to be unaware of these legal principles since they enjoy the benefit of legal
advice from their distinguished counsel. Thus, we are constrained to agree with the position of the
Solicitor General that petitioner conveniently used the representation issue within AFW to skirt
entering into bargaining negotiations with the private respondent.
Too, petitioner is in error in contending that the order was prematurely issued. It must be recalled
that immediately after the deadlock in the talks, it was petitioner which filed a petition with the
Secretary of Labor for the latter to assume jurisdiction over the labor dispute. In effect, petitioner
submitted itself to the public respondent's authority and recognized the latter's power to settle the
labor dispute pursuant to article 263(g) of the Labor Code granting him the power and authority to
decide the dispute. It cannot, therefore, be said that public respondent's decision to grant the awards
is premature and pre-emptive of the parties' right to collectively bargain, simply because the Order of
January 28, 1991 was unfavorable to one or the other party, for as we held in Saulog Transit,
Inc. vs. Lazaro, (128 SCRA 591 [1984]):
It is a settled rule that a party cannot invoke the jurisdiction of a court to secure
affirmative relief against his opponent and after failing to obtain such relief, repudiate
or question that same jurisdiction. A party cannot invoke jurisdiction at one time and
reject it at another time in the same controversy to suit its interests and convenience.
The Court frowns upon and does not tolerate the undesirable practice of same
litigants who submit voluntarily a cause and then accepting the judgment when
favorable to them and attacking it for lack of jurisdiction when adverse. (Tajonera v.
Lamaroxa, 110 SCRA 447, citing Tijam v. Sibonghanoy, 23 SCRA 35). (at p. 601.)
Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of
the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article
253-A cannot be property applied to herein case. As correctly stated by public respondent in his
assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration —
Anent the alleged lack of basis for the retroactivity provisions awarded, we would
stress that the provision of law invoked by the Hospital, Article 253-A of the Labor
Code, speak of agreements by and between the parties, and not arbitral awards . . .
(p. 818, Rollo.)
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such
as herein involved, public respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.
SO ORDERED.
GUERRERO, J.:
Petition for review by certiorari to set aside the Order dated February 15, 1979 of respondent Deputy
Minister Amado G. Inciong affirming the Decision of the OIC of Regional Office No. 4 dated October
14, 1978 which jointly resolved RO4-Case No. T-IV-3549-T and RO4-Case No. RD 4-4088-77-T.
Petitioners were members of the Amigo Employees Union-PAFLU, a duly registered labor
organization which, at the time of the present dispute, was the existing bargaining agent of the
employees in private respondent Amigo Manufacturing, Inc. (hereinafter referred to as Company).
The Company and the Amigo Employees Union-PAFLU had a collective bargaining agreement
governing their labor relations, which agreement was then about to expire on February 28, 1977.
Within the last sixty (60) days of the CBA, events transpired giving rise to the present dispute.
On January 5, 1977, upon written authority of at least 30% of the employees in the company,
including the petitioners, the Federation of Unions of Rizal (hereinafter referred to as FUR) filed a
petition for certification election with the Med-Arbiter's Office, Regional Office No. 4 of the Ministry of
Labor and Employment. The petition was, however, opposed by the Philippine Association of Free
Labor Unions (hereinafter referred to as PAFLU) with whom, as stated earlier, the Amigo Employees
Union was at that time affiliated. PAFLU's opposition cited the "Code of Ethics" governing inter-
federation disputes among and between members of the Trade Unions Congress of the Philippines
(hereinafter referred to as TUCP). Consequently, the Med-Arbiter indorsed the case to TUCP for
appropriate action but before any such action could be taken thereon, the petitioners disauthorized
FUR from continuing the petition for certification election for which reason FUR withdrew the petition.
On February 7, 1977, the same employees who had signed the petition filed by FUR signed a joint
resolution reading in toto as follows:
Sama-Samang Kapasiyahan
5. BIGYAN ng kopya nito ang bawa't kinauukulan at ang mga kapasiyahang ito ay
magkakabisa sa oras na matanggap ng mga kinauukulan ang kani-kanilang sipi nito.1
Finding that the petition involved the same parties and causes of action as the case previously
indorsed to the TUCP, the Med-Arbiter dismiss the petition filed by herein petitioner Villar, which
dismissal is still pending appeal before the Bureau of Labor Relations.
In the meantime, on February 14, 1977, the Amigo Employees Union- PAFLU called a special
meeting of its general membership. A Resolution was thereby unanimously approved which called
for the investigation by the PAFLU national president, pursuant to the constitution and by-laws of the
Federation, of all of the petitioners and one Felipe Manlapao, for "continuously maligning, libelling
and slandering not only the incumbent officers but even the union itself and the federation;"
spreading 'false propaganda' that the union officers were 'merely appointees of the management',
and for causing divisiveness in the union.
Pursuant to the Resolution approved by the Amigo Employees Union- PAFLU, the PAFLU, through
its national President, formed a Trial Committee to investigate the local union's charges against the
petitioners for acts of disloyalty inimical to the interest of the local union, as well as directing the Trial
Committee to subpoena the complainants (Amigo Employees Union-PAFLU) and the respondents
(herein petitioners) for investigation, to conduct the said investigation and to submit its findings and
recommendations for appropriate action.
And on the same date of February 15, 1977, the Amigo Employees Union- PAFLU and the Company
concluded a new CBA which, besides granting additional benefits to the workers, also
reincorporated the same provisions of the existing CBA, including the union security clause reading,
to wit:
ARTICLE III
UNION SECURITY WITH RESPECT TO PRESENT MEMBERS
All members of the UNION as of the signing of this Agreement shall remain members
thereof in good standing. Therefore, any members who shall resign, be expelled, or
shall in any manner cease to be a member of the UNION, shall be dismissed from
his employment upon written request of the UNION to the Company. 2
1. Disaffiliating from PAFLU and affiliating with the Federation of Unions of Rizal
(FUR).
2. Filling petition for certification election with the Bureau of Labor Relations and
docketed as Case No. R04-MED-830-77 and authorizing a certain Dolores Villar as
your authorized representative without the official sanction of the mother Federation-
PAFLU.
3. Maligning, libelling and slandering the incumbent officers of the union as well as of
the PAFLU Federation.
All these charges were formalized in a resolution of the incumbent officers of the
Amigo Employees Union-PAFLU dated February 14, 1977. 3
Not recognizing PAFLU's jurisdiction over their case, petitioners again refused to participate in the
investigation rescheduled and conducted on March 9, 1979. Instead, petitioners merely appeared to
file their Answer to the charges and moved for a dismissal.
Petitioners contend in their Answer that neither the disaffiliation of the Amigo Employees Union from
PAFLU nor the act of filing the petition for certification election constitute disloyalty as these are in
the exercise of their constitutional right to self-organization. They further contended that PAFLU was
without jurisdiction to investigate their case since the charges, being intra-union problems within the
Amigo Employees Union-PAFLU, should be conducted pursuant to the provisions of Article XI,
Sections 2, 3, 4 and 5 of the local union's constitution and by-laws.
The complainants, all of whom were the then incumbent officers of the Amigo Employees Union-
PAFLU, however, appeared and adduced their evidence supporting the charges against herein
petitioners.
Based on the findings and recommendations of the PAFLU trial committee, the PAFLU President, on
March 15, 1977, rendered a decision finding the petitioners guilty of the charges and disposing in the
last paragraph thereof, to wit,
Excepting Felipe Manlapao, the expulsion from the AMIGO EMPLOYEES UNION of
all the other nine (9) respondents, Dionisio Ramos, Recitation Bernus, Dolores Villar,
Romeo Dequito, Rolando de Guzman, Anselma Andan, Rita Llagas, Benigno
Mamaradlo and Orlando Acosta is hereby ordered, and as a consequence the
Management of the employer, AMIGO MANUFACTURING, INC. is hereby requested
to terminate them from their employment in conformity with the security clause in the
collective bargaining agreement. Further, the Trial Committee is directed to
investigate Felipe Manlapao when he shall have reported back for duty. 4
Petitioners appealed the Decision to the PAFLU, citing the same grounds as before, and in addition
thereto, argued that the PAFLU decision cannot legally invoke a CBA which was unratified, not
certified, and entered into without authority from the union general membership, in asking the
Company to terminate them from their employment. The appeal was, likewise, denied by PAFLU in a
Resolution dated March 28, 1977.
After denying petitioner's appeal, PAFLU on March 28, 1977 sent a letter to the Company stating, to
wit,
We are furnishing you a copy of our Resolution on the Appeal of the respondent in
Administrative Case No. 2, Series of 1977, Amigo Employees Union-PAFLU vs.
Dionisio Ramos, et al.
In view of the denial of their appeal and the Decision of March 15, 1977 having
become final and executory we would appreciate full cooperation on your part by
implementing the provision of our CBA on security clause by terminating the
respondents concerned from their employment.5
This was followed by another letter from PAFLU to the Company dated April 25, 1977, reiterating the
demand to terminate the employment of the petitioners pursuant to the security clause of the CBA,
with a statement absolving the Company from any liability or damage that may arise from petitioner's
termination.
Acting on PAFLU's demand, the Company informed PAFLU that it will first secure the necessary
clearances to terminate petitioners. By letter dated April 28, 1977, PAFLU requested the Company
to put petitioners under preventive suspension pending the application for said clearances to
terminate the petitioners, upon a declaration that petitioners' continued stay within the work premises
will "result in the threat to the life and limb of the other employees of the company."6
Hence, on April 29, 1977, the Company filed the request for clearance to terminate the petitioners
before the Department of Labor, Regional Office No. 4. The application, docketed as RO4-Case No.
7-IV-3549-T, stated as cause therefor, "Demand by the Union Pursuant to the Union Security
Clause," and further, as effectivity date, "Termination-upon issuance of clearance; Suspension-upon
receipt of notice of workers concerned." 7 Petitioners were then informed by memorandum dated
April 29, 1977 that the Company has applied for clearance to terminate them upon demand of
PAFLU, and that each of them were placed under preventive suspension pending the resolution of
the said applications. The security guard was, likewise, notified to refuse petitioners entry into the
work premises. 8
In an earlier development, on April 25, 1977, or five days before petitioners were placed under
preventive suspension, they filed a complaint with application for preliminary injunction before the
same Regional Office No. 4, docketed as RO4-Case No. RD-4-4088-77-T, praying that after due
notice and hearing, "(1) A preliminary injunction be issued forthwith to restrain the respondents from
doing the act herein complained of, namely: the dismissal of the individual complainants from their
employment; (2) After due hearing on the merits of the case, an Order be entered denying and/or
setting aside the Decision dated March 15, 1977 and the Resolution dated March 28, 1977, issued
by respondent Onofre P. Guevara, National President of respondent PAFLU; (3) The Appeal of the
individual complainants to the General Membership of the complainant AMIGO EMPLOYEES
UNION, dated March 22, 1977, pursuant to Sections 2, 3, 4 & 5, Article XI in relation of Section 1,
Article XII of the Union Constitution and By-Laws, be given due course; and (4) Thereafter, the said
preliminary injunction be made permanent, with costs, and with such further orders/reliefs that are
just and equitable in the premises."9
In these two cases filed before the Regional Office No. 4, the parties adopted their previous
positions when they were still arguing before the PAFLU trial committee.
On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of Regional Office No. 4, rendered a
decision jointly resolving said two cases, the dispositive portion of which states, to wit,
Not satisfied with the decision, petitioners appealed to the Office of the Secretary of Labor. By Order
dated February 15, 1979, the respondent Amado G. Inciong, Deputy Minister of Labor, dismissed
their appeal for lack of merit. 11
Hence, the instant petition for review, raising the following issues:
A. Is it not error in both constitutional and statutory law by the respondent Minister
when he affirmed the decision of the RO4-Officer-in-Charge allowing the preventive
suspension and subsequent dismissal of petitioners by reason of the exercise of their
right to freedom of association?
B. Is it not error in law by the respondent Minister when he upheld the decision of the
RO4 OIC which sustained the availment of the respondent PAFLU's constitution over
that of the local union constitution in the settlement of intra-union dispute?
The main thrust of the petition is the alleged illegality of the dismiss of the petitioners by private
respondent Company upon demand of PAFLU which invoked the security clause of the collective
bargaining agreement between the Company and the local union, Amigo Employees Union-PAFLU.
Petitioners contend that the respondent Deputy Minister acted in grave abuse of discretion when he
affirmed the decision granting the clearance to terminate the petitioners and dismissed petitioners'
complaint, and in support thereof, allege that their constitutional right to self-organization had been
impaired. Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not open to legal objection. It is implicit in the freedom
of association ordained by the Constitution. 13 But this Court has laid down the ruling that a closed
shop is a valid form of union security, and such provision in a collective bargaining agreement is not
a restriction of the right of freedom of association guaranteed by the Constitution. 14
In the case at bar, it appears as an undisputed fact that on February 15, 1977, the Company and the
Amigo Employees Union-PAFLU entered into a Collective Bargaining Agreement with a union
security clause provided for in Article XII thereof which is a reiteration of the same clause in the old
CBA. The quoted stipulation for closed-shop is clear and unequivocal and it leaves no room for
doubt that the employer is bound, under the collective bargaining agreement, to dismiss the
employees, herein petitioners, for non- union membership. Petitioners became non-union members
upon their expulsion from the general membership of the Amigo Employees Union-PAFLU on March
15, 1977 pursuant to the Decision of the PAFLU national president.
We reject petitioners' theory that their expulsion was not valid upon the grounds adverted to earlier in
this Decision. That PAFLU had the authority to investigate petitioners on the charges filed by their
co-employees in the local union and after finding them guilty as charged, to expel them from the roll
of membership of the Amigo Employees Union-PAFLU is clear under the constitution of the PAFLU
to which the local union was affiliated. And pursuant to the security clause of the new CBA,
reiterating the same clause in the old CBA, PAFLU was justified in applying said security clause. We
find no abuse of discretion on the part of the OIC of Regional Office No. 4 in upholding the validity of
the expulsion and on the part of the respondent Deputy Minister of Labor in sustaining the same. We
agree with the OIC's decision, pertinent portion of which reads:
Stripped of non-essentials, the basic and fundamental issue in this case tapers down
to the determination of WHETHER OR NOT PAFLU HAD THE AUTHORITY TO
INVESTIGATE OPPOSITORS AND, THEREAFTER, EXPEL THEM FROM THE
ROLL OF MEMBERSHIP OF THE AMIGO EMPLOYEES UNION-PAFLU.
Recognized and salutary is the principle that when a labor union affiliates with a
mother union, it becomes bound by the laws and regulations of the parent
organization. Thus, the Honorable Secretary of Labor, in the case of Amador Bolivar,
et al. vs. PAFLU, et al., NLRC Case No. LR-133 & MC-476, promulgated on
December 3, 1973, declared-
When a labor union affiliates with a parent organization or mother union, or accepts a
charter from a superior body, it becomes subject to the laws of the superior body
under whose authority the local union functions. The constitution, by-laws and rules
of the parent body, together with the charter it issues pursuant thereto to the
subordinate union, constitute an enforceable contract between the parent body and
the subordinate union, and between the members of the subordinate union inter se.
(Citing Labor Unions, Dangel and Shriber, pp. 279-280).
PAFLU, therefore, correctly and legally acted when, pursuant to its Constitution and
By-Laws, it conducted and proceeded with the investigation of the charges against
the oppositors and found them guilty of acts prejudicial and inimical to the interests of
the Amigo Employees Union- PAFLU, to wit: that of falsely and maliciously
slandering the officers of the union; spreading false propaganda among the members
of the Amigo Employees Union-PAFLU; calling the incumbent officers as mere
appointees and robots of management; calling the union company-dominated or
assisted union; committing acts unbecoming of the members of the union and
destructive of the union and its members.
Inherent in every labor union, or any organization for that matter, is the right of self-
preservation. When members of a labor union, therefore, sow the seeds of
dissension and strife within the union; when they seek the disintegration and
destruction of the very union to which they belong, they thereby forfeit their rights to
remain as members of the union which they seek to destroy. Prudence and equity,
as well as the dictates of law and justice, therefore, compelling mandate the adoption
by the labor union of such corrective and remedial measures in keeping with its laws
and regulations, for its preservation and continued existence; lest by its folly and
inaction, the labor union crumble and fall.
Correctly and legally, therefore, the PAFLU acted when, after proper investigation
and finding of guilt, it decided to remove the oppositors from the list of members of
the Amigo Employees Union-PAFLU, and thereafter, recommended to the Amigo
Manufacturing, Inc.; the termination of the employment of the oppositors. 15
The contention of petitioners that the charges against them being intra-union problems, should have
been investigated in accordance with the constitution and by-laws of the Amigo Employees Union-
PAFLU and not of the PAFLU, is not impressed with merit. It is true that under the Implementing
Rules and Regulations of the Labor Code, in case of intra-union disputes, redress must first be
sought within the organization itself in accordance with its constitution and by-laws. However, it has
been held that this requirement is not absolute but yields to exception under varying circumstances.
Thus, in Kapisanan ng mga Manggagawa sa MRR vs. Hernandez, 20 SCRA 109, We held:
In the case at bar, noteworthy is the fact that the complaint was filed against the
union and its incumbent officers, some of whom were members of the board of
directors. The constitution and by-laws of the union provide that charges for any
violations thereof shall be filed before the said board. But as explained by the lower
court, if the complainants had done so the board of directors would in effect be acting
as respondent investigator and judge at the same time. To follow the procedure
indicated would be a farce under the circumstances, where exhaustion of remedies
within the union itself would practically amount to a denial of justice or would be
illusory or vain, it will not be insisted upon, particularly where property rights of the
members are involved, as a condition to the right to invoke the aid of a court.
The facts of the instant petition stand on all fours with the aforecited case that the principle therein
enunciated applies here as well. In the case at bar, the petitioners were charged by the officers of
the Amigo Employees Union- PAFLU themselves who were also members of the Board of Directors
of the Amigo Employees Union-PAFLU. Thus, were the petitioners to be charged and investigated
according to the local union's constitution, they would have been tried by a trial committee of three
(3) elected from among the members of the Board who are themselves the accusers. (Section 2,
Article 11, Constitution of the Local Union). Petitioners would be in a far worse position had this
procedure been followed. Nonetheless, petitioners admit in their petition that two (2) of the six (6)
charges, i.e. disaffiliation and filing a petition for certification election, are not intra-union matters
and, therefore, are cognizable by PAFLU.
Petitioners insist that their disaffiliation from PAFLU and filing a petition for certification election are
not acts of disloyalty but an exercise of their right to self-organization. They contend that these acts
were done within the 60-day freedom period when questions of representation may freely be raised.
Under the peculiar facts of the case, We find petitioners' insistence untenable.
In the first place, had petitioners merely disaffiliated from the. Amigo Employees Union-PAFLU,
there could be no legal objections thereto for it was their right to do so. But what petitioners did by
the very clear terms of their "Sama-Samang Kapasiyahan" was to disaffiliate the Amigo Employees
Union-PAFLU from PAFLU, an act which they could not have done with any effective consequence
because they constituted the minority in the Amigo Employees Union-PAFLU.
Extant from the records is the fact that petitioners numbering ten (10), were among the ninety-six
(96) who signed the "Sama-Samang Kapasiyahan" whereas there are two hundred thirty four (234)
union members in the Amigo Employees Union-PAFLU. Hence, petitioners constituted a small
minority for which reason they could not have successfully disaffiliated the local union from PAFLU.
Since only 96 wanted disaffiliation, it can be inferred that the majority wanted the union to remain an
affiliate of PAFLU and this is not denied or disputed by petitioners. The action of the majority must,
therefore, prevail over that of the minority members. 16
Neither is there merit to petitioners' contention that they had the right to present representation
issues within the 60-day freedom period. It is true, as contended by petitioners, that under Article
257 of the Labor Code and Section 3, Rule 2, Book 2 of its Implementing Rules, questions of
exclusive bargaining representation are entertainable within the sixty (60) days prior to the expiry
date of an existing CBA, and that they did file a petition for certification election within that period.
But the petition was filed in the name of the Amigo Employees Union which had not disaffiliated from
PAFLU, the mother union. Petitioners being a mere minority of the local union may not bind the
majority members of the local union.
Moreover, the Amigo Employees Union, as an independent union, is not duly registered as such with
the Bureau of Labor Relations. The appealed decision of OIC Leogardo of Regional Office No. 4
states as a fact that there is no record in the Bureau of Labor Relations that the Amigo Employees
Union (Independent) is registered, and this is not disputed by petitioners, notwithstanding their
allegation that the Amigo Employees Union is a duly registered labor organization bearing Ministry of
Labor Registration Certification No. 5290-IP dated March 27, 1967. But the independent union
organized after the "Sama-Samang Kapasiyahan" executed February 7, 1977 could not have been
registered earlier, much less March 27, 1967 under Registration Certificate No. 5290-IP. As such
unregistered union, it acquires no legal personality and is not entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the certificate of registration.
Article 234 of the New Labor Code specifically provides:
In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA 40, We had occasion to
interpret Section 23 of R.A. No. 875 (Industrial Peace Act) requiring of labor unions registration by
the Department of Labor in order to qualify as "legitimate labor organization," and We said:
The theory to the effect that Section 23 of Republic Act No. 875 unduly curtails the
freedom of assembly and association guaranteed in the Bill of Rights is devoid of
factual basis. The registration prescribed in paragraph (b) of said section 17 is not a
limitation to the right of assembly or association, which may be exercised with or
without said registration. The latter is merely a condition sine qua non for the
acquisition of legal personality by labor organizations, associations or unions and the
possession of the 'rights and privileges granted by law to legitimate labor
organizations.' The Constitution does not guarantee these rights and privileges,
much less said personality, which are mere statutory creations, for the possession
and exercise of which registration is required to protect both labor and the public
against abuses, fraud, or impostors who pose as organizers, although not truly
accredited agents of the union they purport to represent. Such requirement is a valid
exercise of the police power, because the activities in which labor organizations,
associations and union or workers are engaged affect public interest, which should
be protected.
Simply put, the Amigo Employees Union (Independent) Which petitioners claim to represent, not
being a legitimate labor organization, may not validly present representation issues. Therefore, the
act of petitioners cannot be considered a legitimate exercise of their right to self-organization.
Hence, We affirm and reiterate the rationale explained in Phil Association of Free Labor Unions vs.
Sec. of Labor case, supra, in order to protect legitimate labor and at the same time maintain
discipline and responsibility within its ranks.
The contention of petitioners that the new CBA concluded between Amigo Employees Union-PAFLU
and the Company on February 15, 1977 containing the union security clause cannot be invoked as
against the petitioners for offenses committed earlier than its conclusion, deserves scant
consideration. We find it to be the fact that the union security clause provided in the new CBA merely
reproduced the union security clause provided in the old CBA about to expire. And since petitioners
were expelled from Amigo Employees Union-PAFLU on March 28, 1982 upon denial of their Motion
for Reconsideration of the decision expelling them, the CBA of February 15, 1977 was already
applicable to their case. The "closed-shop provision" in the CBA provides:
All members of the UNION as of the signing of this Agreement shall remain members
thereof in good standing. Therefore, any members who shall resign, be expelled, or
shall in any manner cease to be a member of the UNION, shall be dismissed from
his employment upon written request of the UNION to the Company. (Art. III)
A closed-shop is a valid form of union security, and a provision therefor in a collective bargaining
agreement is not a restriction of the right of freedom of association guaranteed by the Constitution.
(Manalang, et al. vs. Artex Development Co., Inc., et al., L-20432, October 30, 1967, 21 SCRA 561).
Where in a closed-shop agreement it is stipulated that union members who cease to be in good
standing shall immediately be dismissed, such dismissal does not constitute an unfair labor practice
exclusively cognizable by the Court of Industrial Relations. (Seno vs. Mendoza, 21 SCRA 1124).
Finally, We reject petitioners' contention that respondent Minister committed error in law amounting
to grave abuse of discretion when he affirmed the conclusion made by the RO4 OIC, upholding the
legal applicability of the security clause of a CBA over alleged offenses committed earlier than its
conclusion and within the 60-day freedom period of an old CBA. In the first place, as We stated
earlier, the security clause of the new CBA is a reproduction or reiteration of the same clause in the
old CBA. While petitioners were charged for alleged commission of acts of disloyalty inimical to the
interests of the Amigo Employees Union-PAFLU in the Resolution of February 14, 1977 of the Amigo
Employees Union- PAFLU and on February 15, 1977 PAFLU and the Company entered into and
concluded a new collective bargaining agreement, petitioners may not escape the effects of the
security clause under either the old CBA or the new CBA by claiming that the old CBA had expired
and that the new CBA cannot be given retroactive enforcement. To do so would be to create a gap
during which no agreement would govern, from the time the old contract expired to the time a new
agreement shall have been entered into with the union. As this Court said in Seno vs. Mendoza, 21
SCRA 1124, "without any agreement to govern the relations between labor and management in the
interim, the situation would well be productive of confusion and result in breaches of the law by
either party. "
The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously needs further citation of the
facts and the opinion of the Court, speaking through Justice Makalintal who later became Chief
Justice, and We quote:
It appears that petitioners other than Januario T. Seno who is their counsel, were
members of the United Seamen's Union of the Philippines. Pursuant to a letter-
request of the Union stating that they 'had ceased to be members in good standing'
and citing a closed shop clause in its bargaining agreement with respondent Carlos
A. Go Thong & Co., the latter dismissed said petitioners. Through counsel,
petitioners requested that they be reinstated to their former positions and paid their
backwages, otherwise they would picket respondents' offices and vessels. The
request was denied on the ground that the dismissal was unavoidable under the
terms of the collective bargaining agreement. ...
We, therefore, hold and rule that petitioners, although entitled to disaffiliate from their union and form
a new organization of their own, must, however, suffer the consequences of their separation from
the union under the security clause of the CBA.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order appealed from affirming the joint
decision of the OIC of Regional Office No. 4 in RO4-Case No. T-IV-3549-T and RO4 Case No. RD-
4-4088-77-T granting clearance to terminate petitioners as well as dismissing their complaint with
application for preliminary injunction, is hereby AFFIRMED. No costs.
SO ORDERED.