Affiliation and Disaffiliation G.R. No.

111836 February 1, 1996

PAMBANSANG KAPATIRAN NG MGA ANAK PAWIS SA FORMEY PLASTIC NATIONAL WORKERS BROTHERHOOD, petitioner, vs. SECRETARY OF LABOR, SECRETARY BIENVENIDO LAGUESMA, FORMEY PLASTIC, INC., KALIPUNAN NG MANGGAGAWANG PILIPINO (KAMAPI) and MED-ARBITER RASIDALI C. ABDULLAH, respondents. DECISION BELLOSILLO, J.: The rank and file workers of Formey Plastic, Inc. (FORMEY), formed a local union known as Pambansang Kapatiran ng mga Anak Pawis sa Formey Plastic (KAPATIRAN) under the auspices of the National Workers Brotherhood (NWB). They ratified their Constitution and By-Laws on 4 April 1993. On 22 April 1993 KAPATIRAN filed a Petition for Certification Election 1 with the Department of Labor and Employment Med-Arbiter Division alleging that there was no existing and effective Collective Bargaining Agreement (CBA) between FORMEY and any union; neither was there any recognized union within the company. FORMEY moved to dismiss the petition while Kalipunan ng Manggagawang Pilipino (KAMAPI) intervened and 3 likewise moved to dismiss on the ground that there was already a duly registered CBA covering the period 1 January 4 1992 to 31 December 1996 hence the "contract bar rule" would apply. KAPATIRAN opposed both motions to 5 6 dismiss with an Addendum thereto claiming that the CBA executed between FORMEY and KAMAPI was fraudulently registered with the Department of Labor and Employment and that it was defective since what was certified as bargaining agent was KAMAPI which, as a federation, only served as mere agent of the local union hence without any legal personality to sign in behalf of the latter. Med-Arbiter Rasidali C. Abdullah found that a valid and existing CBA between FORMEY and KAMAPI effectively 7 barred the filing of the petition for certification election. KAPATIRAN appealed imputing grave abuse of discretion to the Med-Arbiter in applying the "contract bar rule" and in not adopting the case of Progressive Development Corporation v. Secretary, Department of Labor and 9 Employment, as authority to disregard the CBA between FORMEY and KAMAPI. The Secretary of Labor acting 10 through Undersecretary Bienvenido E. Laguesma upheld the decision of the Med-Arbiter. The Motion for 11 12 Reconsideration having been denied KAPATIRAN now files this Petition for Certiorari charging the Secretary of Labor with grave abuse of discretion in applying the "contract bar rule" literally and in ruling that the Progressive 13 Development Corporation case could not be invoked. Pending resolution of the petition KAMAPI filed an Urgent Motion to Dismiss the instant petition contending that it 15 had become moot and academic due to the cancellation of NWB's certificate of registration and its delisting from 16 17 the roll of labor federations. KAPATIRAN opposed the motion claiming that the cancellation and delisting were 18 not yet final and executory considering that it had filed a motion for reconsideration with the Bureau of Labor Relations. The rule is that findings of facts of quasi-judicial agencies will not be disturbed unless there is a showing of grave abuse of discretion. We find none in the case at bench. We therefore affirm that there is a validly executed collective bargaining agreement between FORMEY and KAMAPI. Art. 253-A of the Labor Code provides that "(n)o petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty (60) day period immediately before the date of expiry of such five-year term of the collective bargaining agreement." Sec. 3, Rule V, Book V of the Omnibus Rules Implementing the Labor Code provides that ". . . (i)f a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the expiry date of such agreement."
14 8 2

The subject agreement was made effective 1 January 1992 and is yet to expire on 31 December 1996. The petition for certification election having been filed on 22 April 1993 it is therefore clear that said petition must fail since it was filed before the so-called 60-day freedom' period. KAPATIRAN insists that the CBA was a fake it having been surreptitiously registered with the Department of Labor and Employment.. The resolution of this issue hinges on the determination of factual matters which certainly is not within the ambit of the present petition for certiorari. Besides, the contention is without any legal basis at all; it is purely speculative and bereft of any documentary support. Petitioner itself even admitted the existence of an agreement but argued that its provisions were not being implemented nor adhered to at all. Suffice it to mention that the filing of the petition for certification election is not the panacea to this allegedly anomalous situation. Violations of collective bargaining agreements constitute unfair labor practice as provided for under Art. 248, par. (i), of the Labor Code. In consonance thereto, Art. 261 equips petitioner with the proper and appropriate recourse Art. 261. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement . . . . Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The CBA entered into between FORMEY and KAMAPI stipulates among others Article IX GRIEVANCE PROCEDURE Sec. 1. Any complaint, grievance, difficulty, disagreement or dispute arising out of any section taken ( sic) by the Company and/or by the Union concerning the interpretation of the terms and conditions of the agreement and/or which may arise regarding (sic) the terms and conditions of employment shall be settled in the manner provided for under this Article. Sec. 2. The Company and the Union agree to create and establish a Grievance Committee composed of two (2) representatives from the Company and two (2) from the Union to receive complaint, grievance or dispute from the workers and/or from the Company with the view to settle it amicably. Sec. 3. In case a complaint or grievance has been filed by either the Union or the Company, the grievance committee shall discuss the same and have (sic) to settle it. If after the meeting of the grievance committee no satisfactory settlement is reached the matter shall be referred to the top officers of the Union and the Company for the settlement of the said grievance or dispute. Sec. 4. Within five (5) days from the time the top officers of the Union and the Company has ( sic) failed to reach an amicable settlement of the grievance or dispute, the same shall be submitted for voluntary arbitration. The arbitrator or arbitrators shall be chosen by lottery and the union and the Company shall avail (sic) the list of arbitrators of the Honorable Bureau of Labor Relations. Sec. 5. The mutually agreed or chosen arbitrator shall proceed to try and hear the case and for ( sic) the reception of evidence and to call witnesses to testify and after the submission of the case by both parties an award or order shall be issued in accordance with the rules and guidelines promulgated by the Honorable Department of Labor and Employment based on the pertinent laws and established jurisprudence. The 19 expenses of the arbitration proceedings shall be borned (sic) equally by the Company and the Union. By filing the petition for certification election it is clear that KAPATIRAN did not avail of the abovementioned grievance procedure. It is further argued that the CBA has no binding force since it was entered into by KAMAPI as a federation and not by the local union. Perusal of the agreement proves the contention flawed. The signatories for KAMAPI consisted of its national president and of the duly elected officers of the local union. Thus the fact that KAMAPI was particularly mentioned as the bargaining party without specifying the local union cannot strip it of its authority to participate in the

bargaining process. The local union maintains its separate personality despite affiliation with a larger national 20 federation. The doctrine laid down in Progressive Development Corporation is a mere clarification of the principle enunciated 22 in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc. Both cases have provided that "the mother union acting for and in behalf of its affiliate ha(s) the status of an agent while the local union remained the basic unit of the association free to serve the common interest of all its members subject only to the restraints imposed by the Constitution and By-Laws of the association." Nonetheless, the facts and principles laid down in both cases do not 23 jibe squarely with the case at bench. The controversy in Progressive Development Corporation centered on the requirements before a local or chapter of a federation may file a petition for certification election and be certified as 24 the sole and exclusive bargaining agent, while in Liberty Cotton Mills Workers the issue involved was the disaffiliation of the local union from the federation. The question of whether there was a valid and existing CBA, which is the question being resolved in the case at bench, was never raised in the two cited cases since it was already an accepted fact that the CBA was validly executed and existing. Anent the Urgent Motion to Dismiss filed by KAMAPI on the ground that the instant petition had become moot and academic due to the cancellation by the Bureau of Labor Relations of NWB's certificate of registration and its consequent delisting from the roll of labor federations, suffice it to state that at this juncture we cannot .properly rule on the issue considering that KAMAPI has not proven that the decision of the Bureau of Labor Relations has become final and executory taking into account KAPATIRAN's filing of a motion for reconsideration with the Bureau. This notwithstanding, Sec. 9, Rule II, Book V of the Omnibus Rules Implementing the Labor Code requires that an appeal be filed with the Bureau, or in case of cancellation by the Bureau, with the Secretary of Labor and Employment whose decision shall become final and no longer subject of appeal. WHEREFORE, the petition is DENIED. The decision of the Secretary of Labor and Employment dated 15 August 1993 sustaining the order of the Med-Arbiter dated 31 May 1993 is AFFIRMED. SO ORDERED.
25 21

G.R. No. 115180 November 16, 1999 FILIPINO PIPE AND FOUNDRY CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL LABOR UNION TUCP, and EULOGIO LERUM,respondents.

PURISIMA, J.: At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court seeking to annul and set aside the 1 2 Decision of the National Labor Relations Commission, dated September 29, 1993, in NLRC NCR CA No. 0038063 4 92, which reversed the Decision of the Labor Arbiter, dated August 31, 1992, in NLRC Case No. 4-1309-86, disposing thus: WHEREFORE, premises considered, the appeal of complainant corporation is hereby dismissed for lack of merit; the appeal of Atty. Lerum and NLU is hereby granted, and the Decision dated August 31, 1992 is hereby annulled and set side, and a new judgment is hereby entered declaring the complaint below dismissed for lack of merit insofar as respondent NLU and Atty. Lerum are concerned. SO ORDERED.
5

The antecedent facts can be culled as follows:

On February 10, 1986, respondent National Labor Union-Trade Union Trade Union Congress of the Philippines (NLU-TUCP), a national federation of labor unions, filed with the then Ministry of Labor and Employment, in behalf of its local chapter, the Filipino Pipe Workers Union-National Labor Union (FPWU-NLU, hereinafter referred to as Union), a notice of strike signed by its national president, Atty. Eulogio R. Lerum, against the petitioner, Filipino Pipe and Foundry Corporation, alleging as grounds therefor union busting and non-implementation of the Collective 6 Bargaining Agreement. The initial conciliation conference was set on February 24, 1986 but due to lack of notice thereof to petitioner company, as well as the failure of FPWU-NLU to furnish the latter a copy of the notice of strike, the initial conciliation conference was re-set to March 3, 1986. In the early morning of March 3, 1986, however, without waiting for the outcome of the conciliation conference scheduled on said date, the FPWU-NLU staged the strike in question which lasted until June 13, 1986, when a return 7 to work agreement was reached by the union and petitioner company. On April 8, 1986, petitioner company interposed before the Arbitration Branch of the then Ministry of Labor and Employment, a petition to declare the strike illegal with prayer for damages against FPWU-NLU, NLU-TUCP and its national president, Atty. Eulogio Lerum. On December 23, 1988, petitioner company moved for the partial dismissal of the Complaint against forty-three (43) 8 officers and members of FPWU-NLU, but maintained the action against the NLU-TUCP and Atty. Eulogio Lerum. On August 31, 1992, the Labor Arbiter came out with a decision for petitioner company, ruling as follows: WHEREFORE, judgment is hereby rendered declaring that the strike staged by respondents from March 3, 1986 to June 13, 1986 was ILLEGAL. Accordingly and in conformity with the Return-toWork Agreement, respondent National Labor Union-TUCP is hereby directed to pay the complainant company the following: a) Actual damages in the form of loss of revenue during the duration of the strike which lasted for 100 days or in the amount of ONE MILLION PESOS (P1,000, 000. 00); b) Damages to the good business standing and commercial credit of the company in the amount of THREE HUNDRED FIFTY THOUSAND PESOS (P350,000.00); and c) Exemplary damages to deter others similarly inclined from committing similar acts and to serve as an example for the public good, in the amount of TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00). Further, respondent NLU is hereby directed to pay the attorney's fees equivalent to 10% of the actual damages, or the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00). For lack of showing that respondent Lerum acted in his personal capacity, he is hereby ABSOLVED from any liability. Pursuant to the Agreement, the complaint against all the other individual respondents are hereby DISMISSED. SO ORDERED.
9

Therefrom, both parties appealed to the NLRC which on September 29, 1993, rendered the assailed decision. Dissatisfied therewith, the petitioner company found its way to this Court via the present petition; theorizing that: I

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION ERRED IN LAW, CAPRICIOUSLY AND WHIMSICALLY DISREGARDED THE EVIDENCE SUBMITTED IN THE CASE AND GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT PRIVATE RESPONDENTS NATIONAL LABOR UNION (NLU)-TUCP AND ATTY. EULOGIO LERUM ARE NOT PRIMARILY RESPONSIBLE AND, THEREFORE, NOT LIABLE FOR DAMAGES SUFFERED BY PETITIONER ON ACCOUNT OF THE ILLEGAL STRIKE THEY HAD DIRECTLY AIDED, ASSISTED, ABETTED AND PARTICIPATED IN. II PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION AND ACTED CAPRICIOUSLY AND WHIMSICALLY IN TOTAL DISREGARD OF THE EVIDENCE PRESENTED IN THE CASE WHEN IT HELD THAT PRIVATE RESPONDENTS MERELY ASSISTED THE LOCAL CHAPTER AND ITS MEMBERS IN STAGING A STRIKE AGAINST PETITIONER AND THAT SUCH ASSISTANCE WAS NOT THE CAUSE NOR WAS IT AN INDESPENSABLE ELEMENT OF THE STRIKE. III PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ERRED IN LAW AND GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT CONCLUDED THAT PETITIONER LOST ITS CAUSE OF ACTION AGAINST PRIVATE RESPONDENTS AFTER THE LOCAL UNION HIRED A NEW COUNSEL AND PETITIONER MOVED FOR PARTIAL DISMISSAL OF ITS COMPLAINT AGAINST THE STRIKING WORKERS INASMUCH AS PRIVATE 10 RESPONDENTS ARE MERE THIRD PARTIES. Rule XXII, Book V, of the Rules Implementing the Labor Code, provides: Sec. 1. Grounds for strike and lockout. A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. Violations of collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on issues brought to voluntary or compulsory arbitration. xxx xxx xxx Sec. 3. Notice of strike or lockout. In cases of bargaining deadlocks, a notice of strike or lockout shall be filed with the regional branch of the Board at least thirty (30) days before the intended date thereof, a copy of said notice having been served on the other party concerned. . . . xxx xxx xxx Sec. 6. Conciliation. Upon receipt of the notice, the regional branch of the Board shall exert all efforts at mediation and conciliation to enable the parties to settle the dispute amicably. The regional branch of the Board may, upon consultation, recommend to the parties that the notice be treated as a preventive mediation case. It shall also encourage the parties to submit the dispute to voluntary arbitration. During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of the dispute. They are obliged as part of the duty to bargain collectively in good faith, to participate fully and promptly in the conciliation meetings called by the regional branch of the

board. The regional branch of the Board shall have the power to issue subpoenas requiring the attendance of the parties to the meetings. . . . Applying the aforecited provision of law in point to the case under consideration, the Court is of the finding and conclusion that the strike staged by FPWU-NLU was illegal for want of any legal basis. Contrary to the grounds advanced by the union in the notice of strike, it turned out during the March 3, 1986 conciliation conference that the purpose of the strike was to pressure the petitioner company to: 1) include in the salary of the strikers the P3.00 wage increase
11

effective March 1, 1986.

2) compute their backwages covering the period from December 1, 1980 to February 28, 1986, including vacation leave and sick leave. A thorough sifting of the pertinent records discloses that the alleged union busting was not substantiated and the supposed non-implementation of the collective bargaining agreement was groundless because the demands of FPWU-NLU, at the time the notice of strike was filed and at the time the by the union actually struck, were the subject of a pending application for a writ of execution filed by the union in Case No. AB12 7933-80 (NCR-CA-8-674-80), which application was granted on April 4, 1986 by the Labor Arbiter. Verily, the strike staged by FPWU-NLU was baseless since it was still pre-mature then for the union to insist on the implementation of the adverted provision of the collective bargaining agreement, which was the subject of a pending writ of execution. Then too, the failure of the union to serve petitioner company a copy of the notice of strike is a clear violation of Section 3 of the aforestated Rules. The constitutional precepts of due process mandate that the other party be notified of the adverse action of the opposing party. So also, the same Section provides for a mandatory thirty (30) day cooling-off period which the union ignored when it struck on March 3, 1986, before the 30th day from the time the notice of strike was filed on February 10, 1986. What is more, the same strike blatantly disregarded the prohibition on the doing of any act which may impede or disrupt the conciliation proceedings, when the union staged the strike in the early morning of March 3, 1986, the very same day the conciliation conference was scheduled by the former Ministry of Labor. In light of the foregoing, it is beyond cavil that subject strike staged by the union was illegal. Anent the responsibility for the damages allegedly sustained by petitioner company on account of the illegal strike, the latter theorized that the liability therefor should be borne by NLU-TUCP and its national president, Atty. Eulogio Lerum, for having directly participated in aiding and abetting the illegal strike. It is argued that FPWU-NLU is a mere agent of respondent NLU-TUCP, because FPWU-NLU, which was formed by respondent NLU-TUCP is not registered as a local unit or chapter but directly affiliated with the latter and therefore, could not have acted on its own. Otherwise stated, petitioner is of the view that FPWU-NLU, a local union, cannot act as the principal of 13 respondent NLU-TUCP, a mother federation, because it is not a legitimate labor organization. In support of this stance, petitioner cited the following letter of Atty. Lerum to the company, to wit: NATIONAL LABOR UNION An Affiliate of the Trade Union of the Philippines 3199 RAMON MAGSAYSAY BLVD., MANILA, PHILIPPINES Tel. 61-42-65 March 29, 1983 Dear Sirs: Please be informed that we have formed a local union in your company and the officers thereof are the following:

President Virgilio Bernal Vice-Pres. Ramon Alborte Secretary Ernesto Ballesteros Treasure Arsenio Agustin Auditor Genaro Gabule Board Members: 1. Eduardo Cenina 4. Felimon Simborio 2. Dante Canete 5. Joseph Olazo 3. Reynaldo Adelante 6. Virgilio Elnar Shop Stewards: 1. Pablito Fajardo 2. Ruperto Manlangit 3. Ruben Bongaos We have given them full authority to deal with you on all matters covered by our authority as sole collective bargaining representative of your rank and file workers. In Progressive Development Corporation vs. Secretary, Department of Labor and Employment, the nature of the relationship between a mother union/federation and a local union, thus:
15

the Court explained

At this juncture, it is important to clarify the relationship between the mother union and the local union. In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975], the Court held that the mother union, acting for and in behalf of its affiliate, had the status of an agent while the local union remained the basic unit of the association free to serve the common interest of all its members subject only to the restraints imposed by the constitution and by-laws of 16 the association. . . . The same is true even if the local union is not a legitimate labor organization. Conformably, in the abovecited case the Court ruled that the mother federation was a mere agent and the local chapter/union was the principal, notwithstanding the failure of the local union to comply with the procedural requirements that would make it a legitimate labor organization. Evidently, in the case under scrutiny, whether or not FPWU, the local chapter, complied with the procedural requirements that would make it a legitimate labor organization is immaterial. It would not affect its status as the principal and basic unit of the association. The requirement laid down in the Progressive Development case, that the local union must be a legitimate labor organization, pertains to the conditions before a union may file a petition for certification election and to be certified as sole and exclusive bargaining agent. In the present case, there is no dispute that FPWU-NLU is the sole and exclusive bargaining representative of the rank and file employees of petitioner company. The union's status as a legitimate labor organization is therefore of no moment in the resolution of the controversy here. As the local union, it is considered as the principal; the entity which staged the illegal strike and the one responsible for the resulting damages allegedly sustained by petitioner company. Furthermore, the petitioner company is now estopped from reneging on the recognition it extended to the FPUW -NLU as the bargaining representative of its rank and file workers, by belatedly attacking its status which petitioner

company had voluntarily recognized. It should be noted that even as early as 1981, when the collective bargaining agreement sought to be implemented by the union was entered into, the latter was already the bargaining representative of the employees concerned. It is not, therefore, true that it was respondent NLU-TUCP which formed FPWU. At most, the entry into the picture of the private respondent on March 23, 1983, merely affirmed the status of FPWU as the recognized bargaining representative of the rank and file employees of petitioner company. Evidently, direct and primary responsibility for the damages allegedly caused by the illegal strike sued upon fall on the local union FPWU, being the principal, and not on respondent NLU-TUCP, a mere agent of FPWU-NLU which assisted the latter in filing the notice of strike. Being just an agent, the notice of strike filed by Atty. Eulogio Lerum, the national president of NLU-TUCP, is deemed to have been filed by its principal, the FPWU-NLU. Having thus dismissed the claim for damages against the principal, FPWU-NLU, the action for damages against its agent, respondent NLU-TUCP, and Atty. Lerum, has no more leg to stand on and should also be dismissed. Premises studiedly considered, the Court is of the ineluctable conclusion, and so holds, that the National Labor Relations Commission did not act with grave abuse of discretion in reversing the Decision of the Labor Arbiter in NLRC CASE No. 4-1309-86. WHEREFORE, for lack of merit, the Petition is DISMISSED, and the Decision of the National Labor Relations Commission in NLRC NCR CA No. 003806-92 AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 157117

November 20, 2006

COASTAL SUBIC BAY TERMINAL, INC., Petitioner, vs. DEPARTMENT OF LABOR and EMPLOYMENT OFFICE OF THE SECRETARY, COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY UNION-APSOTEU, and COASTAL SUBIC BAY TERMINAL, INC. RANK-ANDFILE UNION-ALU-TUCP, Respondents. DECISION QUISUMBING, J.: For review on certiorari is the Court of Appeals Decision dated August 31, 2001, in CA-G.R. SP No. 54128 and the 2 Resolution dated February 5, 2003, denying petitioners motion for reconsideration. The Court of Appeals had 3 affirmed the Decision dated March 15, 1999 of the Secretary of the Department of Labor and Employment (DOLE) reversing the Mediator Arbiters dismissal of private respondents petitions for certification electio n. The facts are as follows: On July 8, 1998, private respondents Coastal Subic Bay Terminal, Inc. Rank-and-File Union (CSBTI-RFU) and Coastal Subic Bay Terminal, Inc. Supervisory Union (CSBTI-SU) filed separate petitions for certification election before Med-Arbiter Eladio de Jesus of the Regional Office No. III. The rank-and-file union insists that it is a legitimate labor organization having been issued a charter certificate by the Associated Labor Union (ALU), and the supervisory union by the Associated Professional, Supervisory, Office and Technical Employees Union (APSOTEU). Private respondents also alleged that the establishment in which they sought to operate was unorganized. Petitioner Coastal Subic Bay Terminal, Inc. (CSBTI) opposed both petitions for certification election alleging that the rank-and-file union and supervisory union were not legitimate labor organizations, and that the proposed bargaining units were not particularly described. Without ruling on the legitimacy of the respondent unions, the Med-Arbiter dismissed, without prejudice to refiling, both petitions which had been consolidated. The Med-Arbiter held that the ALU and APSOTEU are one and the same
1

federation having a common set of officers. Thus, the supervisory and the rank-and-file unions were in effect affiliated 4 with only one federation. The Med-Arbiter ruled as follows: Viewed in the light of all the foregoing, this Office finds the simultaneous filing of the instant petitions to be invalid and unwarranted. Consequently, this Office has no recourse but to dismiss both petitions without prejudice to the refiling of either. WHEREFORE, PREMISES CONSIDERED, let the instant petitions be, as they are hereby DISMISSED. SO ORDERED.
5

Both parties appealed to the Secretary of Labor and Employment, who reversed the decision of the Med-Arbiter. The Secretary thru Undersecretary R. Baldoz, ruled that CSBTI-SU and CSBTI-RFU have separate legal personalities to file their separate petitions for certification election. The Secretary held that APSOTEU is a legitimate labor organization because it was properly registered pursuant to the 1989 Revised Rules and Regulations implementing Republic Act No. 6715, the rule applicable at the time of its registration. It further ruled that ALU and APSOTEU are separate and distinct labor unions having separate certificates of registration from the DOLE. They also have different sets of locals. The Secretary declared CSBTI-RFU and CSBTI-SU as legitimate labor organizations having been chartered respectively by ALU and APSOTEU after submitting all the requirements with the Bureau of Labor Relations (BLR). Accordingly, the Secretary ordered the holding of separate certification election, viz: WHEREFORE, the decision of the Med-Arbiter, Regional Office No. III is hereby REVERSED. Let separate certification elections be conducted immediately among the appropriate employees of CSBTI, after the usual preelection conference, with the following choices: I. For all rank and file employees of CSBTI: 1. COASTAL SUBIC BAY TERMINAL, INC. RANK-AND-FILE UNION-ALU-TUCP; and 2. NO UNION. II. For all supervisory employees of CSBTI: 1. COASTAL SUBIC BAY TERMINAL, INC. SUPERVISORY EMPLOYEES UNION-APSOTEU; and 2. NO UNION. The latest payroll of the employer, including its payrolls for the last three months immediately preceding the issuance of this decision, shall be the basis for determining the qualified list of voters. SO DECIDED.
6

The motion for reconsideration was also denied.

On appeal, the Court of Appeals affirmed the decision of the Secretary. It held that there was no grave abuse of discretion on the part of the Secretary; its findings are supported by evidence on record; and thus should be accorded 9 with respect and finality. The motion for reconsideration was likewise denied. following grounds:
10

Hence, the instant petition by the company anchored on the

THE HONORABLE COURT OF APPEALS ERRED IN RELYING ON THE "1989 REVISED RULES AND REGULATIONS IMPLEMENTING RA 6715" AS BASIS TO RECOGNIZE PRIVATE RESPONDENT APSOTEUS REGISTRATION BY THE DOLE REGIONAL DIRECTOR. II THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED PUBLIC RESPONDENTS APPLICATION OF THE PRINCIPLE OF STARE DECISIS TO HASTILY DISPOSE OF THE LEGAL PERSONALITY ISSUE OF APSOTEU. III THE HONORABLE COURT OF APPEALS DID NOT DECIDE IN ACCORD WITH LAW AND JURISPRUDENCE WHEN IT AFFIRMED PUBLIC RESPONDENTS APPLICATION OF THE "UNION AUTONOMY" THEORY. IV IN AFFIRMING PUBLIC RESPONDENTS FINDING THAT PRIVATE RESPONDENTS ARE "SEPARATE FEDERATIONS," THE HONORABLE COURT OF APPEALS: (1) IGNORED JURISPRUDENCE RECOGNIZING THE BINDING NATURE OF A MEDARBITERS FACTUAL FINDINGS; AND (2) DISREGARDED EVIDENCE ON RECORD OF "ILLEGAL COMMINGLING."
11

Plainly, the issues are (1) Can the supervisory and the rank-and-file unions file separate petitions for certification election?; (2) Was the Secretarys decision based on stare decisis correct?; and (3) Were private respondents engaged in commingling? The issue on the status of the supervisory union CSBTI-SU depends on the status of APSOTEU, its mother federation. Petitioner argues that APSOTEU improperly secured its registration from the DOLE Regional Director and not from the BLR; that it is the BLR that is authorized to process applications and issue certificates of registration in 12 accordance with our ruling in Phil. Association of Free Labor Unions v. Secretary of Labor; that the certificates of registration issued by the DOLE Regional Director pursuant to the rules are questionable, and possibly even void ab initio for being ultra vires; and that the Court of Appeals erred when it ruled that the law applicable at the time of APSOTEUs registration was the 1989 Revised Implementing Rules and Regulations of Rep. Act No. 6715. Petitioner insists that APSOTEU lacks legal personality, and its chartered affiliate CSBTI-SU cannot attain the status 13 of a legitimate labor organization to file a petition for certification election. It relies on Villar v. Inciong, where we held therein that Amigo Employees Union was not a duly registered independent union absent any record of its registration with the Bureau. Pertinent is Article 235 of the Labor Code which provides that applications for registration shall be acted upon by the Bureau. "Bureau" as defined under the Labor Code means the BLR and/or the Labor Relations Division in the 15 Regional Offices of the Department of Labor. Further, Section 2, Rule II, Book V of the 1989 Revised Implementing Rules of the Labor Code (Implementing Rules) provides that: Section 2. Where to file application; procedure Any national labor organization or labor federation or local union may file an application for registration with the Bureau or the Regional Office where the applicants principal offices is located. The Bureau or the Regional Office shall immediately process and approve or deny the application. In case of approval, the Bureau or the Regional Office shall issue the registration certificate within thirty (30) calendar days from 16 receipt of the application, together with all the requirements for registration as hereinafter provided. The Implementing Rules specifically Section 1, Rule III of Book V, as amended by Department Order No. 9, thus:
14

SECTION 1. Where to file applications. The application for registration of any federation, national or industry union or trade union center shall be filed with the Bureau. Where the application is filed with the Regional Office, the same shall be immediately forwarded to the Bureau within forty-eight (48) hours from filing thereof, together with all the documents supporting the registration. The applications for registration of an independent union shall be filed with and acted upon by the Regional Office where the applicants principal office is located . xxxx The DOLE issued Department Order No. 40-03, which took effect on March 15, 2003, further amending Book V of the above implementing rules. The new implementing rules explicitly provide that applications for registration of labor 17 organizations shall be filed either with the Regional Office or with the BLR. Even after the amendments, the rules did not divest the Regional Office and the BLR of their jurisdiction over applications for registration by labor organizations. The amendments to the implementing rules merely specified that when the application was filed with the Regional Office, the application would be acted upon by the BLR. The records in this case showed that APSOTEU was registered on March 1, 1991. Accordingly, the law applicable at that time was Section 2, Rule II, Book V of the Implementing Rules, and not Department Order No. 9 which took effect only on June 21, 1997. Thus, considering further that APS OTEUs principal office is located in Diliman, Quezon City, and its registration was filed with the NCR Regional Office, the certificate of registration is valid. The petitioner misapplied Villar v. Inciong. 19 Union was registered.
18

In said case, there was no record in the BLR that Amigo Employees

Did the Court of Appeals err in its application of stare decisis when it upheld the Secretarys ruling that APSOTEU is a legitimate labor organization and its personality cannot be assailed unless in an independent action for cancellation of 20 registration certificate? We think not. Section 5, Rule V, Book V of the Implementing Rules states: Section 5. Effect of registration The labor organization or workers association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack, but maybe questioned only in an independent petition for cancellation in 21 accordance with these Rules. Thus, APSOTEU is a legitimate labor organization and has authority to issue charter to its affiliates. local charter certificate to CSBTI-SU and correspondingly, CSBTI-SU is legitimate.
22

It may issue a

Are ALU, a rank-and-file union and APSOTEU, a supervisory union one and the same because of the commonalities between them? Are they commingled? The petitioner contends that applying by analogy, the doctrine of piercing the veil of corporate fiction, APSOTEU and ALU are the same federation. Private respondents disagree. First, as earlier discoursed, once a labor union attains the status of a legitimate labor organization, it continues as 23 such until its certificate of registration is cancelled or revoked in an independent action for cancellation. In addition, 24 the legal personality of a labor organization cannot be collaterally attacked. Thus, when the personality of the labor organization is questioned in the same manner the veil of corporate fiction is pierced, the action partakes the nature of a collateral attack. Hence, in the absence of any independent action for cancellation of registration against either APSOTEU or ALU, and unless and until their registrations are cancelled, each continues to possess a separate legal personality. The CSBTI-RFU and CSBTI-SU are therefore affiliated with distinct and separate federations, despite the commonalities of APSOTEU and ALU.

Under the rules implementing the Labor Code, a chartered local union acquires legal personality through the charter certificate issued by a duly registered federation or national union, and reported to the Regional Office in accordance 25 with the rules implementing the Labor Code. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency, where the former acts in 26 representation of the latter. Hence, local unions are considered principals while the federation is deemed to be 27 merely their agent. As such principals, the unions are entitled to exercise the rights and privileges of a legitimate labor organization, including the right to seek certification as the sole and exclusive bargaining agent in the appropriate employer unit.1wphi1 A word of caution though, under Article 245 of the Labor Code, supervisory employees are not eligible for membership in a labor union of rank-and-file employees. The supervisory employees are allowed to form their own 29 union but they are not allowed to join the rank-and-file union because of potential conflicts of interest. Further, to avoid a situation where supervisors would merge with the rank-and-file or where the supervisors labor union would represent conflicting interests, a local supervisors union should not be allowed to affiliate with the national federation of unions of rank-and-file employees where that federation actively participates in the union activity within the 30 company. Thus, the limitation is not confined to a case of supervisors wanting to join a rank-and-file union. The prohibition extends to a supervisors local union applying f or membership in a national federation the members of 31 which include local unions of rank-and-file employees. In De La Salle University Medical Center and College of Medicine v. Laguesma, we reiterated the rule that for the prohibition to apply, it is not enough that the supervisory union and the rank-and-file union are affiliated with a single federation. In addition, the supervisors must have direct 32 authority over the rank-and-file employees. In the instant case, the national federations that exist as separate entities to which the rank-and-file and supervisory unions are separately affiliated with, do have a common set of officers. In addition, APSOTEU, the supervisory federation, actively participates in the CSBTI-SU while ALU, the rank-and-file federation, actively participates in the CSBTI-RFU, giving occasion to possible conflicts of interest among the common officers of the federation of rankand-file and the federation of supervisory unions. For as long as they are affiliated with the APSOTEU and ALU, the supervisory and rank-and-file unions both do not meet the criteria to attain the status of legitimate labor organizations, and thus could not separately petition for certification elections. 1wphi1 The purpose of affiliation of the local unions into a common enterprise is to increase the collective bargaining power 33 in respect of the terms and conditions of labor. When there is commingling of officers of a rank-and-file union with a supervisory union, the constitutional policy on labor is circumvented. Labor organizations should ensure the freedom of employees to organize themselves for the purpose of leveling the bargaining process but also to ensure the freedom of workingmen and to keep open the corridor of opportunity to enable them to do it for themselves. WHEREFORE, the petition is GRANTED. The Court of Appeals Decision dated August 31, 2001, in CA -G.R. SP No. 54128 and the Resolution dated February 5, 2003 are SET ASIDE. The decision of the Med-Arbiter is herebyAFFIRMED. SO ORDERED.
28

G.R. Nos. 174040-41

September 22, 2010

INSULAR HOTEL EMPLOYEES UNION-NFL, Petitioner, vs. WATERFRONT INSULAR HOTEL DAVAO, Respondent. DECISION PERALTA, J.: Before this Court is a petition for review on certiorari, under Rule 45 of the Rules of Court, seeking to set aside the 2 3 Decision dated October 11, 2005, and the Resolution dated July 13, 2006 of the Court of Appeals (CA) in
1

consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision reversed 4 the Decision dated the April 5, 2004 of the Accredited Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo). The facts of the case, as culled from the records, are as follows: On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent the Department of Labor and 5 Employment (DOLE), Region XI, Davao City, a Notice of Suspension of Operations notifying the same that it will suspend its operations for a period of six months due to severe and serious business losses. In said notice, respondent assured the DOLE that if the company could not resume its operations within the six-month period, the company would pay the affected employees all the benefits legally due to them. During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees Union (DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of letters asking management to reconsider its decision. In a letter dated November 8, 2000, Rojas intimated that the members of the Union were determined to keep their jobs and that they believed they too had to help respondent, thus: xxxx Sir, we are determined to keep our jobs and push the Hotel up from sinking. We believe that we have to help in this (sic) critical times. Initially, we intend to suspend the re-negotiations of our CBA. We could talk further on possible adjustments on economic benefits, the details of which we are hoping to discuss with you or any of your emissaries. x 7 xx In another letter dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to wit: We would like to thank you for giving us the opportunity to meet [with] your representatives in order for us to air our sentiments and extend our helping hands for a possible reconsideration of the company's decision. The talks have enabled us to initially come up with a suggestion of solving the high cost on payroll. We propose that 25 years and above be paid their due retirement benefits and put their length of service to zero without loss of status of employment with a minimum hiring rate. Thru this scheme, the company would be able to save a substantial amount and reduce greatly the payroll costs without affecting the finance of the families of the employees because they will still have a job from where they could get their income. Moreover, we are also open to a possible reduction of some economic benefits as our gesture of sincere desire to help. We are looking forward to a more fruitful round of talks in order to save the hotel.
10 9 8 6

In another letter dated November 20, 2000, Rojas sent respondent more proposals as a form of the Union's gesture of their intention to help the company, thus: 1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced. 2) Pay all the employees their benefits due, and put the length of service to zero with a minimum hiring rate. Payment of benefits may be on a staggered basis or as available. 3) Night premium and holiday pays shall be according to law. Overtime hours rendered shall be offsetted as practiced. 4) Reduce the sick leaves and vacation leaves to 15 days/15days.

5) Emergency leave and birthday off are hereby waived. 6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks and double meal allowance. The cook drinks be stopped as practiced. 7) We will shoulder 50% of the group health insurance and family medical allowance be reduced to 1,500.00 instead of 3,000.00. 8) The practice of bringing home our uniforms for laundry be continued. 9) Fixed manning shall be implemented, the rest of manpower requirements maybe sourced thru WAP and casual hiring. Manpower for fixed manning shall be 145 rank-and-file union members. 10) Union will cooperate fully on strict implementation of house rules in order to attain desired productivity and discipline. The union will not tolerate problem members. 11) The union in its desire to be of utmost service would adopt multi-tasking for the hotel to be more competitive. It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be adopted and that all provisions therein shall remain enforced except for those mentioned in this proposal. These proposals shall automatically supersede the affected provisions of the CBA.
12 11

In a handwritten letter dated November 25, 2000, Rojas once again appealed to respondent for it to consider their proposals and to re-open the hotel. In said letter, Rojas stated that manpower for fixed manning shall be one hundred (100) rank-and-file Union members instead of the one hundred forty-five (145) originally proposed. Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a Manifesto concretizing their earlier proposals. After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and Vice-Presidents, 14 Exequiel J. Varela Jr. and Avelino C. Bation, Jr., signed a Memorandum of Agreement (MOA) wherein respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in its Manifesto. Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth in the terms of the MOA. Moreover, as agreed upon in the MOA, a new pay scale was also prepared by respondent. The retained employees individually signed a "Reconfirmation of Employment" which embodied the new terms and conditions of their continued employment. Each employee was assisted by Rojas who also signed the document. On June 15, 2001, respondent resumed its business operations. On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National Federation 16 of Labor (NFL), filed a Notice of Mediation before the National Conciliation and Mediation Board (NCMB), Region XI, Davao City. In said Notice, it was stated that the Union involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of Labor." The issue raised in said Notice was the "Diminution of wages and other benefits through unlawful Memorandum of Agreement." On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees Union-NFL (IHEU-NFL), 17 represented by Joves, signed a Submission Agreement wherein they chose AVA Alfredo C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was the determination of whether or not there was a diminution of wages and other benefits through an unlawful MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several Special Powers of Attorney (SPA) which were, however, undated and unnotarized.
15 13

On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second Preliminary 18 Conference, raising the following grounds: 1) The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL have no authority to represent the Union; 2) The individuals who executed the special powers of attorney in favor of the person who filed the instant complaint have no standing to cause the filing of the instant complaint; and 3) The existence of an intra-union dispute renders the filing of the instant case premature.
19

On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied any existence of an intra-union dispute among the members of the union. Cullo, however, confirmed that the case was filed not by the IHEU-NFL but by the NFL. When asked to present his authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in the SPAs. The hearing officer directed both parties to 20 elevate the aforementioned issues to AVA Olvida. The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again raised its objections, specifically arguing that the persons who signed the complaint were not the authorized representatives of the Union indicated in the Submission Agreement nor were they parties to the MOA. AVA Olvida directed respondent to file a formal motion to withdraw its submission to voluntary arbitration. On October 16, 2002, respondent filed its Motion to Withdraw. captioned: NATIONAL FEDERATION OF LABOR And 79 Individual Employees, Union Members, Complainants, -versusWaterfront Insular Hotel Davao, Respondent. In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit: xxxx 2. Respondent must have been lost when it said that the individuals who executed the SPA have no standing to represent the union nor to assail the validity of Memorandum of Agreement (MOA). What is correct is that the individual complainants are not representing the union but filing the complaint through their appointed attorneys-in-fact to assert their individual rights as workers who are entitled to the benefits 23 granted by law and stipulated in the collective bargaining agreement.
24 21

Cullo then filed an Opposition

22

where the same was

On November 11, 2002, AVA Olvida issued a Resolution denying respondent's Motion to Withdraw. On December 25 16, 2002, respondent filed a Motion for Reconsideration where it stressed that the Submission Agreement was void because the Union did not consent thereto. Respondent pointed out that the Union had not issued any resolution duly authorizing the individual employees or NFL to file the notice of mediation with the NCMB. Cullo filed a Comment/Opposition to respondent's Motion for Reconsideration. Again, Cullo admitted that the case was not initiated by the IHEU-NFL, to wit: The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB duly furnishing respondent, copy of which is hereto attached as Annex "A" for reference and consideration of the Honorable Voluntary Arbitrator. There is no mention there of Insular Hotel Employees Union, but only National Federation of Labor (NFL). The one appearing at the Submission Agreement was only a matter of filling up the blanks particularly on the question there of Union; which was filled up with Insular Hotel Employees Union-NFL. There is nothing there that indicates that it is a
26

complainant as the case is initiated by the individual workers and National Federation of Labor, not by the local union. 27 The local union was not included as party-complainant considering that it was a party to the assailed MOA. On March 18, 2003, AVA Olvida issued a Resolution denying respondent's Motion for Reconsideration. He, however, ruled that respondent was correct when it raised its objection to NFL as proper party-complainant, thus: Anent to the real complainant in this instant voluntary arbitration case, the respondent is correct when it raised objection to the National Federation of Labor (NFL) and as proper party-complainants. The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the recognized and incumbent bargaining agent of the rank-and-file employees of the respondent hotel. In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members. However, since the NFL is the mother federation of the local union, and signatory to the existing CBA, it can represent the union, the officers, the members or union and officers or members, as the case may be, in all stages of proceedings in courts or administrative bodies provided that the issue of the case will involve labor-management relationship like in the case at bar. The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads: WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November 11, 2002 is modified in so far as the party-complainant is concerned; thus, instead of "National Federation of Labor and 79 individual employees, union members," shall be "Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11, 2002, No further motion of the same nature shall be entertained.
29 28

On May 9, 2003, respondent filed its Position Paper Ad Cautelam, where it declared, among others, that the same was without prejudice to its earlier objections against the jurisdiction of the NCMB and AVA Olvida and the standing of the persons who filed the notice of mediation. Cullo, now using the caption "Insular Hotel Employees Union-NFL, Complainant," filed a Comment 32 2003. On June 23, 2003, respondent filed its Reply.
33 31

30

dated June 5,

Later, respondent filed a Motion for Inhibition alleging AVA Olvida's bias and prejudice towards the cause of the 34 employees. In an Order dated July 25, 2003, AVA Olvida voluntarily inhibited himself out of " delicadeza" and ordered the remand of the case to the NCMB. On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator for the selection of a new voluntary arbitrator. In a letter dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the individual union members have no standing to file the notice of mediation before the NCMB. Respondent stressed that the complaint should have been filed by the Union. On September 12, 2003, the NCMB sent both parties a Notice asking them to appear before it for the selection of the new voluntary arbitrator. Respondent, however, maintained its stand that the NCMB had no jurisdiction over the case. Consequently, at the instance of Cullo, the NCMB approved ex parte the selection of AVA Montejo as the new voluntary arbitrator. On April 5, 2004, AVA Montejo rendered a Decision
37 36 35

ruling in favor of Cullo, the dispositive portion of which reads:

WHEREOF, in view of the all the foregoing, judgment is hereby rendered:

1. Declaring the Memorandum of Agreement in question as invalid as it is contrary to law and public policy; 2. Declaring that there is a diminution of the wages and other benefits of the Union members and officers under the said invalid MOA. 3. Ordering respondent management to immediately reinstate the workers wage rates and other benefits that they were receiving and enjoying before the signing of the invalid MOA; 4. Ordering the management respondent to pay attorneys fees in an amount equivalent to ten percent (10%) of whatever total amount that the workers union may receive representing individual wage differentials. As to the other claims of the Union regarding diminution of other benefits, this accredited voluntary arbitrator is of the opinion that she has no authority to entertain, particularly as to the computation thereof. SO ORDERED.
38

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so far as it did not categorically order respondent to pay the covered workers their differentials in wages reckoned from the effectivity of the MOA up to the actual reinstatement of the reduced wages and benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831. Respondent, for its part, questioned among others the jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into with the officers of the Union was valid. Respondent's petition was docketed as CA-G.R. SP No. 83657. Both cases were consolidated by the CA. On October 11, 2005, the CA rendered a Decision reads:
39

ruling in favor of respondent, the dispositive portion of which

WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657 is hereby GRANTED, while the petition in CA-G.R. SP No. 83831 is DENIED. Consequently, the assailed Decision dated April 5, 2004 rendered by AVA Rosalina L. Montejo is hereby REVERSED and a new one entered declaring the Memorandum of Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties are DIRECTED to comply with the terms and conditions thereof. SO ORDERED.
40

Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution dated July 13, 2006. Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit: I. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN FINDING THAT THE ACCREDITED VOLUNTARY ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE THE NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE SUBMISSION AGREEMENT DULY SIGNED BY THE PARTIES AND THEIR LEGAL COUNSELS THAT MENTIONS THE NAME OF THE LOCAL UNION. II. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR BY DISREGARDING THE PROVISIONS OF THE CBA SIMPLY BECAUSE IT BELIEVED THE UNPROVEN ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS SUFFERING FROM FINANCIAL CRISIS. III.

41

THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN CONCLUDING THAT ARTICLE 100 OF THE LABOR CODE APPLIES ONLY TO BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE LABOR CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS ENJOYED BY EMPLOYEES 42 FROM ITS ADOPTION HENCEFORTH. The petition is not meritorious. Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the case was submitted to voluntary arbitration, the parties signed a Submission Agreement which mentioned the name of the local union and not only NFL. Cullo, thus, contends that the CA committed error when it ruled that the voluntary arbitrator had no jurisdiction over the case simply because the Notice of Mediation did not state the name of the local union thereby disregarding the Submission Agreement which states the names of local union as Insular Hotel Employees 43 Union-NFL. In its Memorandum, respondent maintains its position that the NCMB and Voluntary Arbitrators had no jurisdiction over the complaint. Respondent, however, now also contends that IHEU-NFL is a non-entity since it is DIHFEU-NFL 45 which is considered by the DOLE as the only registered union in Waterfront Davao. Respondent argues that the Submission Agreement does not name the local union DIHFEU-NFL and that it had timely withdrawn its consent to arbitrate by filing a motion to withdraw. A review of the development of the case shows that there has been much confusion as to the identity of the party 46 which filed the case against respondent. In the Notice of Mediation filed before the NCMB, it stated that the union involved was "DARIUS JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor." In the Submission 47 Agreement, however, it stated that the union involved was "INSULAR HOTEL EMPLOYEES UNION-NFL." Furthermore, a perusal of the records would reveal that after signing the Submission Agreement, respondent persistently questioned the authority and standing of the individual employees to file the complaint. Cullo then clarified in subsequent documents captioned as "National Federation of Labor and 79 Individual Employees, Union Members, Complainants" that the individual complainants are not representing the union, but filing the complaint 48 through their appointed attorneys-in-fact. AVA Olvida, however, in a Resolution dated March 18, 2003, agreed with respondent that the proper party-complainant should be INSULAR HOTEL EMPLOYEES UNION-NFL, to wit: x x x In the submission agreement of the parties dated August 29, 2002, the party complainant written is INSULAR 49 HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members. The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads: WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The resolution dated November 11, 2002, is modified in so far as the party complainant is concerned, thus, instead of "National Federation of Labor and 79 individual employees, union members," shall be "Insular Hotel Employees Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002. Respondent is directed to comply with the 50 decision of this Arbitrator dated November 11, 2002. After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted "Insular Hotel Employees Union-NFL et. al.,Complainant" as the caption in all his subsequent pleadings. Respondent, however, was still adamant that neither Cullo nor the individual employees had authority to file the case in behalf of the Union. While it is undisputed that a submission agreement was signed by respondent and "IHEU-NFL," then represented by Joves and Cullo, this Court finds that there are two circumstances which affect its validity: first, the Notice of Mediation was filed by a party who had no authority to do so; second, that respondent had persistently voiced out its objection questioning the authority of Joves, Cullo and the individual members of the Union to file the complaint before the NCMB. Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after this step that a submission agreement may be entered into by the parties concerned. Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation, to wit:
44

Who may file a notice or declare a strike or lockout or request preventive mediation. Any certified or duly recognized bargaining representative may file a notice or declare a strike or request for preventive mediation in cases of bargaining deadlocks and unfair labor practices . The employer may file a notice or declare a lockout or request for preventive mediation in the same cases. In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the establishment may file a notice, request preventive mediation or declare a strike, but only on grounds of unfair labor practice. From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice or request for preventive mediation. It is curious that even Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union but by individual members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed before it. Even though respondent signed a Submission Agreement, it had, however, immediately manifested its desire to withdraw from the proceedings after it became apparent that the Union had no part in the complaint. As a matter of fact, only four days had lapsed after the signing of the Submission Agreement when respondent called the attention 51 of AVA Olvida in a "Manifestation with Motion for a Second Preliminary Conference" that the persons who filed the instant complaint in the name of Insular Hotel Employees Union-NFL had no authority to represent the Union. Respondent cannot be estopped in raising the jurisdictional issue, because it is basic that the issue of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. In Figueroa v. People,
52

this Court explained that estoppel is the exception rather than the rule, to wit:

Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that time, no considerable period had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not sustain the defense of "estoppel by laches" unless it further appears that the party, knowing his rights, has not sought to enforce them until the condition of the party pleading laches has in good faith become so changed that he cannot be restored to his former state, if the rights be then enforced, due to loss of evidence, change of title, intervention of equities, and other causes. In applying the principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein considered the patent and revolting inequity and unfairness of having the judgment creditors go up their Calvary once more after more or less 15 years.The same, however, does not obtain in the instant case. We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied rarely only from necessity, and only in extraordinary circumstances. The doctrine must be applied with great care and the equity must be strong in its favor.When misapplied, the doctrine of estoppel may be a most effective weapon for the 53 accomplishment of injustice. x x x (Italics supplied.) The question to be resolved then is, do the individual members of the Union have the requisite standing to question 54 the MOA before the NCMB? On this note, Tabigue v. International Copra Export Corporation (INTERCO) is instructive: Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration as called for in the CBA, the same does not lie.The pertinent portion of the CBA reads: In case of any dispute arising from the interpretation or implementation of this Agreement or any matter affecting the relations of Labor and Management, the UNION and the COMPANY agree to exhaust all possibilities of conciliation through the grievance machinery. The committee shall resolve all problems submitted to it within fifteen (15) days after the problems ha[ve] been discussed by the members. If the dispute or grievance cannot be settled by the Committee, or if the committee failed to act on the matter within the period of fifteen (15) days herein stipulated, the UNION and the COMPANY agree to submit the issue to Voluntary Arbitration. Selection of the arbitrator shall be made within seven (7) days from the date of notification by the aggrieved party. The Arbitrator shall be selected by lottery from four (4) qualified individuals nominated by in equal numbers by both parties taken from the list of Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the Company and the Union representatives within ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of the Arbitrator shall be final and binding upon the parties. However, the Arbitrator shall not have the authority to change any provisions of the Agreement.The cost of arbitration shall be borne equally by the parties.

Petitioners have not, however, been duly authorized to represent the union. Apropos is this Courts pronouncement in Atlas Farms, Inc. v. National Labor Relations Commission, viz: x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators designated in advance by parties to a CBA. Consequently, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators . (Emphasis and 55 underscoring supplied.) If the individual members of the Union have no authority to file the case, does the federation to which the local union is affiliated have the standing to do so? On this note, Coastal Subic Bay Terminal, Inc. v. Department of Labor and 56 Employment is enlightening, thus: x x x A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency, where the former acts in representation of the latter. Hence, local 57 unions are considered principals while the federation is deemed to be merely their agent. x x x Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that NFL had no authority to file the complaint in behalf of the individual employees, to wit: Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the case. Waterfront contents that the Notice of Mediation does not mention the name of the Union but merely referred to the National Federation of Labor (NFL) with which the Union is affiliated. In the subsequent pleadings, NFL's legal counsel even confirmed that the case was not filed by the union but by NFL and the individual employees named in the SPAs which were not even dated nor notarized. Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the local union and the labor federation or national union with which the former was affiliated is generally understood to be that of agency, where the local is the principal and the federation the agency. Being merely an agent of the local union, NFL should have presented its authority to file the Notice of Mediation. While We commend NFL's zealousness in protecting the rights of lowly workers, We cannot, however, allow it to go beyond what it is empowered to do. As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining representative and an employer may file a notice of mediation, declare a strike or lockout or request preventive mediation. The Collective Bargaining Agreement (CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining representative of all permanent employees. The inclusion of the word "NFL" after the name of the local union merely stresses that the local union is NFL's affiliate. It does not, however, mean that the local union cannot stand on its own. The local union owes its creation and continued existence to the will of its members and not to the federation to 58 which it belongs. The spring cannot rise higher than its source, so to speak. In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the only recognized bargaining unit in their establishment. While the resolution of the said argument is already moot and academic given the discussion above, this Court shall address the same nevertheless. While the November 16, 2006 Certification of the DOLE clearly states that "IHEU-NFL" is not a registered labor organization, this Court finds that respondent is estopped from questioning the same as it did not raise the said issue in the proceedings before the NCMB and the Voluntary Arbitrators. A perusal of the records reveals that the main theory posed by respondent was whether or not the individual employees had the authority to file the complaint notwithstanding the apparent non-participation of the union. Respondent never put in issue the fact that DIHFEU-NFL was not the same as IHEU-NFL. Consequently, it is already too late in the day to assert the same. Anent the second issue raised by Cullo, the same is again without merit. Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo anchors his position on the denial by the Wage Board of respondent's petition for exemption from Wage Order No. RTWPB-X1-08 60 on the ground that it is a distressed establishment. In said denial, the Board ruled:
59

A careful analysis of applicant's audited financial statements showed that during the period ending December 31, 1999, it registered retained earnings amounting to P8,661,260.00. Applicant's interim financial statements for the quarter ending June 30, 2000 cannot be considered, as the same was not audited . Accordingly, this Board finds 61 that applicant is not qualified for exemption as a distressed establishment pursuant to the aforecited criteria. In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the hotel's operation and financial viability, to wit: x x x We cannot close Our eyes to the impending financial distress that an employer may suffer should the terms of employment under the said CBA continue. If indeed We are to tilt the balance of justice to labor, then We would be inclined to favor for the nonce petitioner Waterfront. To uphold the validity of the MOA would mean the continuance of the hotel's operation and financial viability. Otherwise, the eventual permanent closure of the hotel would only result to prejudice of the employees, as a 62 consequence thereof, will necessarily lose their jobs. In its petition before the CA, respondent submitted its audited financial statements which show that for the years 1998, 1999, until September 30, 2000, its total operating losses amounted to P48,409,385.00. Based on the foregoing, the CA was not without basis when it declared that respondent was suffering from impending financial distress. While the Wage Board denied respondent's petition for exemption, this Court notes that the denial was partly due to the fact that the June 2000 financial statements then submitted by respondent were not audited. Cullo did not question nor discredit the accuracy and authenticity of respondent's audited financial statements. This Court, therefore, has no reason to question the veracity of the contents thereof. Moreover, it bears to point out that respondent's audited financial statements covering the years 2001 to 2005 show that it still continues to suffer 64 losses. Finally, anent the last issue raised by Cullo, the same is without merit. Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only to benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 of the Labor Code provides: PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this Code. On this note, Apex Mining Company, Inc. v. NLRC
65 63

is instructive, to wit:

Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 66 does not, in other words, purport to apply to situations arising after the promulgation date of the Labor Code x x x. Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent that the same does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees. In Rivera v. 67 Espiritu, this Court ruled that the right to free collective bargaining, after all, includes the right to suspend it, thus: A CBA is "a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement." The primary purpose of a CBA is the stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. In construing a CBA, the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve. The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latters closure.We find no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to

promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A.1awphi1 The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the unions exercise of its right to collective bargaining. The right to free collective bargaining, 68 after all, includes the right to suspend it. Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws specifically provides that "the results of the collective bargaining negotiations shall be subject to ratification and approval by majority vote of the 69 Union members at a meeting convened, or by plebiscite held for such special purpose." Accordingly, it is undisputed that the MOA was not subject to ratification by the general membership of the Union. The question to be resolved then is, does the non-ratification of the MOA in accordance with the Union's constitution prove fatal to the validity thereof? It must be remembered that after the MOA was signed, the members of the Union individually signed contracts 70 denominated as "Reconfirmation of Employment." Cullo did not dispute the fact that of the 87 members of the Union, who signed and accepted the "Reconfirmation of Employment," 71 are the respondent employees in the case at bar. Moreover, it bears to stress that all the employees were assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract. Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition, it bears to stress that specific provisions of the new contract also made reference to the MOA. Thus, the individual members of the union cannot feign knowledge of the execution of the MOA. Each contract was freely entered into and there is no indication that the same was attended by fraud, misrepresentation or duress. To this Court's mind, the signing of the individual "Reconfirmation of Employment" should, therefore, be deemed an implied ratification by the Union members of the MOA. In Planters Products, Inc. v. NLRC, this Court refrained from declaring a CBA invalid notwithstanding that the same was not ratified in view of the fact that the employees had enjoyed benefits under it, thus: Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a collective [bargaining] agreement are required to furnish copies of the appropriate Regional Office with accompanying proof of ratification by the majority of all the workers in a bargaining unit. This was not done in the case at bar. But we do not declare the 1984-1987 CBA invalid or void considering that the employees have enjoyed benefits from it. They cannot receive benefits under provisions favorable to them and later insist that the CBA is void simply because other provisions turn out not to the liking of certain employees. x x x. Moreover, the two CBAs prior to the 1984-1987 CBA were not also formally ratified, yet the employees are basing their present claims on these CBAs. It is iniquitous to 72 receive benefits from a CBA and later on disclaim its validity. Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain benefits previously enjoyed by the members of the Union, it cannot escape this Court's attention that it was the execution of the MOA which paved the way for the re-opening of the hotel, notwithstanding its financial distress. More importantly, the execution of the MOA allowed respondents to keep their jobs. It would certainly be iniquitous for the members of the Union to sign new contracts prompting the re-opening of the hotel only to later on renege on their agreement on the fact of the non-ratification of the MOA. In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with respondent's management. The Constitution and By-Laws of DIHFEU-NFL clearly provide that the president is authorized to represent the union 73 on all occasions and in all matters in which representation of the union may be agreed or required. Furthermore, 74 Rojas was properly authorized under a Board of Directors Resolution to negotiate with respondent, the pertinent portions of which read: SECRETARY's CERTIFICATE I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting of the Board of Directors of the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly constituted, the following resolutions were unanimously approved:
71

RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be approved ratified and adopted; RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-NFL, be hereby authorized to negotiate with Waterfront Insular Hotel Davao and to work for the latter's acceptance of the proposals contained in DIHFEU-NFL Manifesto; and RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any and all documents to 75 implement, and carry into effect, his foregoing authority. Withal, while the scales of justice usually tilt in favor of labor, the peculiar circumstances herein prevent this Court from applying the same in the instant petition. Even if our laws endeavor to give life to the constitutional policy on social justice and on the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in 76 the interest of fair play. WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005, and the Resolution dated July 13, 2006 of the Court of Appeals in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657, are AFFIRMED. SO ORDERED. G.R. No. 113907 February 28, 2000

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-UWP), petitioners, vs. HON. CRESENCIO J. RAMOS, respondents. PURISIMA, J.: At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the National Labor Relations Commission in an unfair labor practice case instituted by a local union against its employer company and the officers of its national federation. The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter referred to as the "local union", is an affiliate of the private respondent, United Lumber and General Workers of the Philippines (ULGWP), referred to as the "federation". The collective bargaining agreement between MSMG and M. Greenfield, Inc., names the parties as follows: This agreement made and entered into by and between: M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the Republic of the Philippines with office address at Km. 14, Merville Road, Paraaque, Metro Manila, represented in this act by its General manager, Mr. Carlos T. Javelosa, hereinafter referred to as the Company; -andMALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor organization with address at Suite 404, Trinity Building, T. M. Kalaw Street, Manila, represented in this act by a Negotiating Committee 1 headed by its National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the UNION. The CBA includes, among others, the following pertinent provisions: Art. II-Union Security

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

Sec. 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his membership in the UNION for non-payment of UNION dues, for resignation and for violation of UNION's Constitution and By-Laws and any new employee as defined in Section 2 of this Article shall upon written notice of such failure to join or to maintain membership in the UNION and upon written recommendation to the COMPANY by the UNION, be dismissed from the employment by the COMPANY; provided, however, that the UNION shall hold the COMPANY free and blameless from any and all liabilities that may arise should the dismissed employee question, in any manner, his dismissal; provided, further that the matter of the employee's dismissal under this Article may be submitted as a grievance under Article XIII and, provided, finally, that no such written recommendation shall be made upon the COMPANY nor shall COMPANY be compelled to act upon any such recommendation within the period of sixty (60) days prior to the expiry date of this Agreement conformably to law. Art. IX Sec. 4. Program Fund The Company shall provide the amount of P10,000.00 a month for a continuing 2 labor education program which shall be remitted to the Federation . . . On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners. Minutes of the said election were duly filed with the Bureau of Labor Relations on September 29, 1986. On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the defeated candidates in the aforementioned election. On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not yield any unfavorable result and the local union officers were cleared of the charges of anomaly in the custody, handling and disposition of the union funds.1wphi1.nt The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and to present evidence in support of the allegations. On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in Pasig. Several union members failed to attend the meeting, prompting the Executive Board to create a committee tasked to investigate the non-attendance of several union members in the said assembly, pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of the union, which read: Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon ng sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng hindi hihigit sa P50.00 sa bawat araw na nagkulang. Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at maparusahan itong alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00 at babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli ay 3 ituturing na pagliban. On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union fines from the wages/salaries of those union members who failed to attend the general membership meeting. A portion of the said letter stated:

xxx

xxx

xxx

In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct the amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8, 1988 4 as fine for their failure to attend said general membership meeting. In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo Paceo, Jr. disapproved the resolution of the local union imposing the P50.00 fine. The union officers protested such action by the Federation in a Reply dated July 4, 1988. On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct the fifty-peso fine from the salaries of the union members requesting that: . . . any and all future representations by MSMG affecting a number of members be first cleared from the 5 federation before corresponding action by the Company. The following day, respondent company sent a reply to petitioner union's request in a letter, stating that it cannot deduct fines from the employees' salary without going against certain laws. The company suggested that the union refer the matter to the proper government office for resolution in order to avoid placing the company in the middle of the issue. The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and the local union culminating in the latter's declaration of general autonomy from the former through Resolution No. 10 passed by the local executive board and ratified by the general membership on July 16, 1988. In retaliation, the national federation asked respondent company to stop the remittance of the local union's share in the education funds effective August 1988. This was objected to by the local union which demanded that the education fund be remitted to it in full. The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory Relief with the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case No. OD-M-8-435-88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order, disposing thus: WHEREFORE, premises considered, it is hereby ordered: 1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union officers shall administer the collective bargaining agreement (CBA). 2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the ULGWP subject to the condition that it shall use the said amount for its intended purpose. 3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17, 1988. However, if the MSMG Officers could present the individual written authorizations of the 356 union members, then the company is obliged to deduct from the salaries of the 356 union members the P50.00 6 fine. On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in part the earlier disposition, to wit: WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that the company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for its 7 intended purpose.

Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph International, General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of the federation and education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on December 25, 1988 in an Order which directed the audit and examination of the books of account of ULGWP. On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and appointing respondent Cesar Clarete as administrator. On October 27, 1988, the said administrator wrote the respondent company informing the latter of its designation of a certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent union officers from representing the employees. This action by the national federation was protested by the petitioners in a letter to respondent company dated November 11, 1988. On November 13, 1988, the petitioner union officers received identical letters from the administrator requiring them to explain within 72 hours why they should not be removed from their office and expelled from union membership. On November 26, 1988, petitioners replied: (a) Questioning the validity of the alleged National Executive Board Resolution placing their union under trusteeship; (b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the latter's inability to give proper educational, organizational and legal services to its affiliates and the pendency of the audit of the federation funds; (c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of ULGWP; (d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion, 8 intimidation and harassment. However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination letter read: Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or acts inimical to the interest and violative to the Constitution and by-laws of your federation. You failed and/or refused to offer an explanation inspite of the time granted to you. Since you are no longer a member of good standing, ULGWP is constrained to recommend for your termination from your employment, and provided in Article II Section 4, known as UNION SECURITY, in the 9 Collective Bargaining agreement. On the same day, the federation advised respondent company of the expulsion of the 30 union officers and demanded their separation from employment pursuant to the Union Security Clause in their collective bargaining agreement. This demand was reiterated twice, through letters dated February 21 and March 4, 1989, respectively, to respondent company. Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to compel the company to effect the immediate termination of the expelled union officers. On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30 union officers from employment, serving them identical copies of the termination letter reproduced below: We received a demand letter dated 21 November 1988 from the United Lumber and General Workers of the Philippines (ULGWP) demanding for your dismissal from employment pursuant to the provisions of Article II,

Section 4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter, ULGWP informed us that as of November 21, 1988, you were expelled from the said federation "for committing acts of disloyalty and/or acts inimical to the interest of ULGWP and violative to its Constitution and By-laws particularly Article V, Section 6, 9, and 12, Article XIII, Section 8. In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in your employment with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of existing provisions of law. In view thereof, we are left with no alternative but to comply with the provisions of the Union Security Clause of our CBA. Accordingly, we hereby serve notice upon you that we are dismissing you from your employment with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective 10 immediately. On that same day, the expelled union officers assigned in the first shift were physically or bodily brought out of the company premises by the company's security guards. Likewise, those assigned to the second shift were not allowed to report for work. This provoked some of the members of the local union to demonstrate their protest for the dismissal of the said union officers. Some union members left their work posts and walked out of the company premises. On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed with the NCMB. On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike: (a) Discrimination (b) Interference in union activities (c) Mass dismissal of union officers and shop stewards (d) Threats, coercion and intimidation (e) Union busting The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union members who cast their votes, 2,086 members voted to declare a strike. On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case No. NCMBNCR-NS-03-216-89, with the Office of the Secretary of the Department of Labor and Employment praying for the suspension of the effects of their termination from employment. However, the petition was dismissed by then Secretary Franklin Drilon on April 11, 1989, the pertinent portion of which stated as follows: At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No mass layoff is evident as the terminations have been limited to those allegedly leading the secessionist group leaving MSMG-ULGWP to form a union under the KMU. . . . xxx xxx xxx

WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary authority under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby DISMISSED for lack of merit. SO ORDERED.
11

On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension by respondent company. This prompted the union members to again stage a walk-out and resulted in the official declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was attended with violence, force and intimidation on both sides resulting to physical injuries to several employees, both striking and non-striking, and damage to company properties. The employees who participated in the strike and allegedly figured in the violent incident were placed under preventive suspension by respondent company. The company also sent return-to-work notices to the home addresses of the striking employees thrice successively, on March 27, April 8 and April 31, 1989, respectively. However, respondent company admitted that only 261 employees were eventually accepted back to work. Those who did not respond to the return-to-work notice were sent termination letters dated May 17, 1989, reproduced below: M. Greenfield Inc., (B) Km. 14, Merville Rd., Paraaque, M.M. May 17, 1989 xxx xxx xxx

On March 14, 1989, without justifiable cause and without due notice, you left your work assignment at the prejudice of the Company's operations. On March 27, April 11, and April 21, 1989, we sent you notices to report to the Company. Inspite of your receipt of said notices, we have not heard from you up to this date. Accordingly, for your failure to report, it is construed that you have effectively abandoned your employment and the Company is, therefore, constrained to dismiss you for said cause. Very truly yours, M. GREENFIELD, INC., (B) By: WENZEL STEPHEN LIGOT 12 Asst. HRD Manager On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents of unfair labor practice which consists of union busting, illegal dismissal, illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and oppression. After the filing of the complaint, the lease contracts on the respondent company's office and factory at Merville Subdivision, Paraaque expired and were not renewed. Upon demand of the owners of the premises, the company was compelled to vacate its office and factory. Thereafter, the company transferred its administration and account/client servicing department at AFP-RSBS Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for relocation of its factory and manufacturing operations, the company was constrained to move the said departments to Tacloban, Leyte. Hence, on April 16, 1990, respondent company accordingly notified its employees of a temporary shutdown in operations. Employees who were interested in relocating to Tacloban were advised to enlist on or before April 23, 1990. The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was thereafter reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from acting on the case.

On December 15, 1992, finding the termination to be valid in compliance with the union security clause of the collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint. Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from the service, leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman Bartolome Carale in the First Division. When Commissioner Veloso inhibited himself from the case, Commissioner Joaquin Tanodra of the Third Division was temporarily designated to sit in the First Division for the proper disposition of the case. The First Division affirmed the Labor Arbiter's disposition. With the denial of their motion for reconsideration on January 28, 1994, petitioners elevated the case to this Court, attributing grave abuse of discretion to public respondent NLRC in: I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY AS VALID; II. HOLDING THAT THE STRIKE STAGED BY THE PETITIONERS AS ILLEGAL; III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED THEIR WORK AND HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY; AND IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS OF UNFAIR LABOR PRACTICE. Notwithstanding the several issues raised by the petitioners and respondents in the voluminous pleadings presented before the NLRC and this Court, they revolve around and proceed from the issue of whether or not respondent company was justified in dismissing petitioner employees merely upon the labor federation's demand for the enforcement of the union security clause embodied in their collective bargaining agreement. Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be resolved. Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because Commissioner Tanodra, who is from the Third Division, did not have any lawful authority to sit, much less write the ponencia, on a case pending before the First Division. It is claimed that a commissioner from one division of the NLRC cannot be assigned or temporarily designated to another division because each division is assigned a particular territorial jurisdiction. Thus, the decision rendered did not have any legal effect at all for being irregularly issued. Petitioners' argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the Chairman of the National Labor Relations Commission provides that: The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. Whenever the required membership in a division is not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary. It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the three commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case because the counsel for the petitioners was his former classmate in law school. The First Division was thus left with only one commissioner. Since the law requires the concurrence of two commissioners to arrive at a judgment or resolution, the Commission was constrained to temporarily designate a commissioner from another division to complete the First Division. There is nothing irregular at all in such a temporary designation for the law empowers the Chairman to make temporary assignments whenever the required concurrence is not met. The law does not say that a commissioner from the first division cannot be temporarily assigned to the second or third division to fill the gap or vice versa. The territorial divisions do not confer exclusive jurisdiction to each division and are merely designed for administrative efficiency. Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the petitioners against respondent company which charges union busting, illegal dismissal, illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and oppression actually proceeds from one main

issue which is the termination of several employees by respondent company upon the demand of the labor federation pursuant to the union security clause embodied in their collective bargaining agreement. Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and illegal manner because it was undertaken by the respondent company without any prior administrative investigation; that, had respondent company conducted prior independent investigation it would have found that their expulsion from the union was unlawful similarly for lack of prior administrative investigation; that the federation cannot recommend the dismissal of the union officers because it was not a principal party to the collective bargaining agreement between the company and the union; that public respondents acted with grave abuse of discretion when they declared petitioners' dismissals as valid and the union strike as illegal and in not declaring that respondents were guilty of unfair labor practice. Private respondents, on the other hand, maintain that the thirty dismissed employees who were former officers of the federation have no cause of action against the company, the termination of their employment having been made upon the demand of the federation pursuant to the union security clause of the CBA; the expelled officers of the local union were accorded due process of law prior to their expulsion from their federation; that the strike conducted by the petitioners was illegal for noncompliance with the requirements; that the employees who participated in the illegal strike and in the commission of violence thereof were validly terminated from work; that petitioners were deemed to have abandoned their employment when they did not respond to the three return to work notices sent to them; that petitioner labor union has no legal personality to file and prosecute the case for and on behalf of the individual employees as the right to do so is personal to the latter; and that, the officers of respondent company cannot be liable because as mere corporate officers, they acted within the scope of their authority. Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and legally terminated because the dismissal was effected in compliance with the union security clause of the CBA which is the law between the parties. And this was affirmed by the Commission on appeal. Moreover, the Labor Arbiter declared that notwithstanding the lack of a prior administrative investigation by respondent company, under the union security clause provision in the CBA, the company cannot look into the legality or illegality of the recommendation to dismiss 13 by the union nd the obligation to dismiss is ministerial on the part of the company. This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due process. The reason behind the enforcement of union 14 security clauses which is the sanctity and inviolability of contracts cannot override one's right to due process. In the case of Cario vs. National Labor Relations Commission, this Court pronounced that while the company, under a maintenance of membership provision of the collective bargaining agreement, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing. The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement, . . . Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor. In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly committing acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon demand of the federation, the company terminated the petitioners without conducting a separate and independent investigation. Respondent company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. Relying merely upon the federation's allegations, respondent company terminated petitioners from employment when a separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers. Respondent company's allegation that petitioners were accorded due process is belied by the termination letters received by the petitioners which state that the dismissal shall be immediately effective. As held in the aforecited case of Cario, "the right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped
15

away by a union security clause or a union shop clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job. While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not 16 characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. In its decision, public respondent also declared that if complainants (herein petitioners) have any recourse in law, their right of action is against the federation and not against the company or its officers, relying on the findings of the Labor Secretary that the issue of expulsion of petitioner union officers by the federation is a purely intra-union matter. Again, such a contention is untenable. While it is true that the issue of expulsion of the local union officers is originally between the local union and the federation, hence, intra-union in character, the issue was later on converted into a termination dispute when the company dismissed the petitioners from work without the benefit of a separate notice and hearing. As a matter of fact, the records reveal that the termination was effective on the same day that the termination notice was served on the petitioners. In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. , the Court held the company liable for the payment of backwages for having acted in bad faith in effecting the dismissal of the employees. . . . Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must assume solidary liability, since it apparently chose to summarily dismiss the workers at the union's instance secure in the union's contractual undertaking that the union would hold it "free from any liability" arising from such dismissal. Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it undertook to hold the company free from any liability resulting from such a dismissal, the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter. Anent petitioners contention that the federation was not a principal party to the collective bargaining agreement between the company and the union, suffice it to say that the matter was already ruled upon in the Interpleader case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled: After a careful examination of the facts and evidences presented by the parties, this Officer hereby renders its decision as follows: 1.) It appears on record that in Collective Bargaining Agreement (CBA) which took effect on July 1, 1986, the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc. (B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). However, MSMG was not yet registered labor organization at the time of the signing of the CBA. Hence, the union 18 referred to in the CBA is the ULGWP. Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows: It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records). It has been established also that the company and ULGWP signed a 3-year collective bargaining agreement 19 effective July 1, 1986 up to June 30, 1989. Although the issue of whether or not the federation had reasonable grounds to expel the petitioner union officers is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations, being an intra-union conflict,
17

this Court deems it justifiable that such issue be nonetheless ruled upon, as the Labor Arbiter did, for to remand the same to the Bureau of Labor Relations would be to intolerably delay the case. The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for committing acts of disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP with failure to provide any legal, educational or organizational support to the local. . . . and declared autonomy, wherein they prohibit the federation 20 from interfering in any internal and external affairs of the local union." It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding on this Court, but it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC as when the Court finds insufficient or insubstantial evidence on record to support those factual findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced from the bare or incomplete facts appearing of 21 record. In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by the local union was part of its "plan to take over the respondent federation." This is purely conjecture and speculation on the part of public respondent, totally unsupported by the evidence. A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a separate and voluntary association, is free to serve the interests of all its members including the freedom to disaffiliate or declare its autonomy from the federation to which it belongs when circumstances warrant, in accordance with the 22 constitutional guarantee of freedom of association. The purpose of affiliation by a local union with a mother union or a federation. . . . is to increase by collective action the bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into 23 existence. Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation's constitution 24 prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate with its parent union. The evidence on hand does not show that there is such a provision in ULGWP's constitution. Respondents' reliance upon Article V, Section 6, of the federation's constitution is not right because said section, in fact, bolsters the petitioner union's claim of its right to declare autonomy: Sec. 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it pertains to its internal affairs, except as provided elsewhere in this Constitution. There is no disloyalty to speak of, neither is there any violation of the federation's constitution because there is nothing in the said constitution which specifically prohibits disaffiliation or declaration of autonomy. Hence, there cannot be any valid dismissal because Article II, Section 4 of the union security clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain membership in the union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of the union's Constitution and By-Laws. To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989, the petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through an election and filed a petition for the registration of UWP as a national federation. It should be pointed out, however, that these occurred after the federation had already expelled the union officers. The expulsion was effective November 21, 1988. Therefore, the act of establishing a different federation, entirely separate from the federation which expelled them, is but a normal retaliatory reaction to their expulsion. With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike was illegal for the following reasons: (1) it was based on an intra-union dispute which cannot properly be the subject of a strike, the right to strike being limited to cases of bargaining deadlocks and unfair labor practice (2) it was made in violation of the "no

strike, no lock-out" clause in the CBA, and (3) it was attended with violence, force and intimidation upon the persons of the company officials, other employees reporting for work and third persons having legitimate business with the company, resulting to serious physical injuries to several employees and damage to company property. On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the intra-union conflict between the federation and the local union, it bears reiterating that when respondent company dismissed the union officers, the issue was transformed into a termination dispute and brought respondent company into the picture. Petitioners believed in good faith that in dismissing them upon request by the federation, respondent company was guilty of unfair labor practice in that it violated the petitioner's right to self-organization. The strike was staged to protest respondent company's act of dismissing the union officers. Even if the allegations of unfair labor practice are 25 subsequently found out to be untrue, the presumption of legality of the strike prevails. Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no lockout provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only be invoked when the strike is economic in nature, i.e. to force wage or other concessions from the employer which he is not required by 26 law to grant. Such a provision cannot be used to assail the legality of a strike which is grounded on unfair labor practice, as was the honest belief of herein petitioners. Again, whether or not there was indeed unfair labor practice does not affect the strike. On the allegation of violence committed in the course of the strike, it must be remembered that the Labor Arbiter and the Commission found that "the parties are agreed that there were violent incidents . . . resulting to injuries to both 27 sides, the union and management." The evidence on record show that the violence cannot be attributed to the striking employees alone for the company itself employed hired men to pacify the strikers. With violence committed on both sides, the management and the employees, such violence cannot be a ground for declaring the strike as illegal. With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to heed respondent's recall to work notice is a clear indication that they were no longer interested in continuing their employment and is deemed abandonment. It is admitted that three return to work notices were sent by respondent company to the striking employees on March 27, April 11, and April 21, 1989 and that 261 employees who responded to the notice were admitted back to work. However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have 28 been a clear intention to sever the employer-employee relationship manifested by some overt acts. Deliberate and unjustified refusal on the part of the employee to go back to his work post amd resume his employment must be established. Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply 29 does not want to work anymore. And the burden of proof to show that there was unjustified refusal to go back to work rests on the employer. In the present case, respondents failed to prove that there was a clear intention on the part of the striking employees to sever their employer-employee relationship. Although admittedly the company sent three return to work notices to them, it has not been substantially proven that these notices were actually sent and received by the employees. As a matter of fact, some employees deny that they ever received such notices. Others alleged that they were refused entry to the company premises by the security guards and were advised to secure a clearance from ULGWP and to sign a waiver. Some employees who responded to the notice were allegedly told to wait for further notice from respondent company as there was lack of work. Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said to have 30 abandoned his work. The filing of a complaint for illegal dismissal is inconsistent with the allegation of abandonment. In the case under consideration, the petitioners did, in fact, file a complaint when they were refused reinstatement by respondent company. Anent public respondent's finding that there was no unfair labor practice on the part of respondent company and federation officers, the Court sustains the same. As earlier discussed, union security clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and binding. Corollary, dismissals pursuant to union security clauses are valid and legal subject only to the requirement of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an employee by the company pursuant to a labor union's demand in accordance 31 with a union security agreement does not constitute unfair labor practice.

However, the dismissal was invalidated in this case because of respondent company's failure to accord petitioners with due process, that is, notice and hearing prior to their termination. Also, said dismissal was invalidated because the reason relied upon by respondent Federation was not valid. Nonetheless, the dismissal still does not constitute unfair labor practice. Lastly, the Court is of the opinion, and so holds, that respondent company officials cannot be held personally liable for damages on account of the employees' dismissal because the employer corporation has a personality separate and distinct from its officers who merely acted as its agents. It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of employees has been repeatedly violated and the sanction imposed for such violation enunciated in Wenphil Corporation 32 vs.NLRC has become an ineffective deterrent. Thus, the Court recently promulgated a decision to reinforce and make more effective the requirement of notice and hearing, a procedure that must be observed before termination of employment can be legally effected. In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the Court ruled that an employee who is dismissed, whether or not for just or authorized cause but without prior notice of his termination, is entitled to full backwages from the time he was terminated until the decision in his case becomes final, when the dismissal was for cause; and in case the dismissal was without just or valid cause, the backwages shall be computed from the time of his dismissal until his actual reinstatement. In the case at bar, where the requirement of notice and hearing was not complied with, the aforecited doctrine laid down in the Serrano case applies. WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in Case No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to immediately reinstate the petitioners to their respective positions. Should reinstatement be not feasible, respondent company shall pay separation pay of one month salary for every year of service. Since petitioners were terminated without the requisite written notice at least 30 days prior to their termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations Commission and Isetann Department Store, the respondent company is hereby ordered to pay full backwages to petitioner-employees while the Federation is also ordered to pay full backwages to petitioner-union officers who were dismissed upon its instigation. Since the dismissal of petitioners was without cause, backwages shall be computed from the time the herein petitioner employees and union officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their backwages shall be computed from the time petitioners were terminated until the finality of this decision. Costs against the respondent company.1wphi1.nt SO ORDERED.

G.R. No. 127374

January 31, 2002

PHILIPPINE SKYLANDERS, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, respondents. BELLOSILLO, J.: This is a petition for certiorari seeking to set aside the 31 July 1996 Decision of the National Labor Relations Commission affirming the 30 June 1995 Decision of the Labor Arbiter holding petitioners Philippine Skylanders, Inc., 3 Mariles C. Romulo and Francisco Dakila as well as the elected officers of the Philippine Skylanders Employees and 4 Workers Association-PAFLU guilty of unfair labor practice and ordering them to pay private respondent Philippine 5 Association of Free Labor Union (PAFLU) September P150,000.00 as damages. Petitioners likewise seek the reversal of the 31 October 1996 Resolution of the NLRC denying their Motion for Reconsideration. In November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
1 2

Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor. Several months later, pending settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU's supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation. PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association - National Congress of Workers (PSEA-NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW. On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment. Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of PSI's audited financial statement. Ayroso explained that with the dismissal of PSEA-WATU's election protest the time was ripe for the parties to enter into a collective bargaining agreement. On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the request citing as reason PSEA's disaffiliation from PAFLU and its subsequent affiliation with NCW. Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI's refusal to bargain collectively with its workers, the company through its president and personnel manager, was 6 also liable for interfering with its employees' union activities. Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA's organizational meeting thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining 7 agreement which was detrimental to their interests. The two (2) complaints were thereafter consolidated. On 1 February 1995 PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner 8 Francisco Dakila. PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. On the other hand, PSEA-NCW took the cudgels for its officers who were being sued in their capacities as former officers of PSEA-PAFLU and asserted that since PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint. In support of this assertion, PSEA-NCW submitted in evidence a Katunayan signed by 111 out of 120 rank and file employees of PSI disauthorizing Ayroso or PAFLU from 9 instituting any action in their behalf. In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice. The Decision explained that despite PSEA-PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file employees, the company knowingly sanctioned and confederated with Dakila in actively assisting a rival union. This, according to the Labor Arbiter, was a classic case of interference for which PSI could be held responsible. As PSEA-NCW's personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid. Ayroso's legal personality to file the complaint was sustained on the ratiocination that under the Labor Code no petition questioning the majority status of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day period immediately before the expiry date of such five (5)-year term of the collective bargaining agreement that the

parties may enter into. Accordingly, judgment was rendered ordering PSI, PSEA-PAFLU and their officers to pay 10 PAFLU P150,000.00 in damages. PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter and conjectured that since an election protest questioning PSEA-PAFLU's certification as the sole and exclusive bargaining agent was pending resolution before the Secretary of Labor, PSEA could not validly separate from PAFLU, join another national federation and subsequently enter into a collective 11 bargaining agreement with its employer-company. Petitioners separately moved for reconsideration but both motions were denied. Hence, these petitions for certiorari filed by PSI and PSEA-NCW together with their respective officers pleading for a reversal of the NLRC's Decision which they claimed to have been rendered in excess of jurisdiction. In due time, both petitions were consolidated. In these petitions, petitioner PSEA together with its officers argued that by virtue of their disaffiliation PAFLU as a mere agent had no authority to represent them before any proceedings. They further asserted that being an independent labor union PSEA may freely serve the interest of all its members and readily disaffiliate from its mother federation when circumstances so warrant. This right, they averred, was consistent with the constitutional guarantee 12 of freedom of association. For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain collectively with PSEA-NCW was actuated, to a large extent, by PAFLU's behavior. Having heard no objections or protestations from PAFLU 13 relative to PSEA's disaffiliation, they reckoned that PSEA's subsequent association with NSW was done bona fide. The Solicitor General filed a Manifestation in Lieu of Comment recommending that both petitions be granted. In hisManifestation, the Solicitor General argued against the Labor Arbiter's assumption of jurisdiction citing the following as reasons: first, there was no employer-employee relationship between complainant Ayroso and PSI over which the Labor Arbiter could rightfully assert his jurisdiction; second, since the case involved a dispute between PAFLU as mother federation and PSEA as local union, the controversy fell within the jurisdiction of the Bureau of Labor Relations; and lastly, the relationship of principal-agent between PAFLU and PSEA had been severed by the 14 local union through the lawful exercise of its right of disaffiliation. Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of PSEA's disaffiliation. To be more precise, may PSEA, which is an independent and separate local union, validly disaffiliate from PAFLU pending the settlement of an election protest questioning its status as the sole and exclusive bargaining agent of PSI's rank and file employees? At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the jurisdiction of which properly 15 lies with the Bureau of Labor Relations (BLR) and not with the Labor Arbiter. Nonetheless, with due recognition of this fact, we deem it proper to settle the controversy at this instance since to remand the case to the BLR would only mean intolerable delay for the parties. The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. In the 16 landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. we upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves. Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence. Such dictum has been punctiliously followed since then.
17

Upon an application of the aforecited principle to the issue at hand, the impropriety of the questioned Decisions becomes clearly apparent. There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway.

As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf. Surely, this is not a case where one (1) or two (2) members of the local union decided to disaffiliate from the mother federation, but it is a case where almost all local union members decided to disaffiliate. It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members. There is a further consideration that likewise argues for the granting of the petitions. It stands unchallenged that PAFLU instituted the complaint for unfair labor practice against the wishes of workers whose interests it was supposedly protecting. The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union. Recreant to its mission, PAFLU cannot simply ignore the demands of the local chapter and decide for its welfare. PAFLU might have forgotten that as an agent it could only act in representation of and in accordance with the interests of the local union. The complaint then for unfair labor practice lodged by PAFLU against PSI, PSEA and their respective officers, having been filed by a party which has no legal personality to institute the complaint, should have been dismissed at the first instance for failure to state a cause of action. Policy considerations dictate that in weighing the claims of a local union as against those of a national federation, those of the former must be preferred. Parenthetically though, the desires of the mother federation to protect its locals are not altogether to be shunned. It will however be to err greatly against the Constitution if the desires of the federation would be favored over those of its members. That, at any rate, is the policy of the law. For if it were otherwise, instead of protection, there would be disregard and neglect of the lowly workingmen. WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders and Workers AssociationNCW, together with their respective officers, are GRANTED. The Decision of the National Labor Relations Commission of 31 July 1996 affirming the Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine Skylanders and Workers Association-NCW, Philippine Skylanders, Inc. and their respective officers, guilty of unfair labor practice and ordering them to pay damages to private respondent Philippine Association of Free Labor Unions (PAFLU) September (now UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying reconsideration is REVERSED and SET ASIDE. No costs. SO ORDERED.

Union Dues, Special Assessments and Agency Fees G.R. No. 115949 March 16, 2000

EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, EVELYN SIA, RODOLFO EUGENIO, ISAGANI MAKISIG, and DEMETRIO SALAS, petitioners, vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SIMEON SARMIENTO, JESUS CARLOS MARTINEZ III, ALBERT NAPIAL, MARVIN ALMACIN, ROGELIO MATEO, GLENN SIAPNO, EMILIANO CUETO, SALOME ATIENZA, NORMA V. GO, JUDITH DUDANG, MONINA DIZON, EUSEBIO ROMERO, ISAGANI MORALES, ELISEO BUENAVENTURA, CLEMENTE AGCAMARAN, CARMELITA NOLASCO, JOVITA FERI, LULU ACOSTA, CAROL LAZARO, NIDA ARRIZA, ROMAN BERNARDO, DOMINGO B. MACALDO, EUGENE PIDLAOAN, MA. SOCORRO T. ANGOB, JOSEPHINE ALVAREZ, LOURDES FERRER, JACQUILINE BAQUIRAN, GRACIA R. ESCUADRO, KRISTINA HERNANDEZ, LOURDES IBEAS, MACARIO GARCIA, BILLY TECSON, ALEX RECTO III, LEBRUDO, JOSE RICAFORTE, RODOLFO MORADA, TERESA AMADO, ROSITA TRINIDAD, JEANETTE ONG, VICTORINO LAS-AY, RANIEL DAYAO OSCAR SANTOS, CRISTINA SALAVER, VICTORIA ARINO, A.H. SAJO, MICHAEL BIETE, RED RP, GLORIA JUAT, ETHELINDA CASILAN, FAMER DIPASUPIL, MA. HIDELISA POMER, MA. CHARLOTTE TAWATAO, GRACE REYES, ERNIE COLINA, ZENAIDA MENDOZA, PAULITA ADORABLE, BERNARDO MADUMBA, NESTOR NAVARRO, EASTER YAP, ALMA LIM, FELISA YU, TIMOTEO GANASTRA, REVELITA CARTAJENAS, ANGELITO CABUAL, ROBERTA TAN, DOMINADOR TAPO,

GRACE LIM GADIANE JEMIE, CHRISTHDY DAUD, BENEDICTO ACOSTA, JESUSA ACOSTA, MA. AVELINA ARYAP, EVELYN BENITEZ, ESTERITA CHU, EVANGELINE CHU, BETTY CINCO, RICARDO CONNEJO, MANULITO EVALO, FRANCIS LEONIDA, GREGORIO NOBLEZA, RODOLFO RIVERAL, ELSA SIA, CLARA SUGBO, EDGARDO TABAO, MANUEL VELOSO, MARLYN YU, ABSALON BUENA, WILFREDO PUERTO, FLORENTINA PINGOL, MARILOU DAR, FE MORALES, MALEN BELLO, LORENA TAMAYO, CESAR LIM, PAUL BALTAZAR, ALFREDO GAYAGAS, DUMAGUETE EMPLOYEES, CEBU EMPLOYEES, OZAMIZ EMPLOYEES, TACLOBAN EMPLOYEES AND ALL OTHER SOLID BANK UNION MEMBERS, respondents. QUISUMBING, J.: Before us is a special civil action for certiorari seeking to reverse partially the Order of public respondent dated June 3, 1994, in Case No. OS-MA-A-8-170-92, which ruled that the workers through their union should be made to shoulder the expenses incurred for the professional services of a lawyer in connection with the collective bargaining negotiations and that the reimbursement for the deductions from the workers should be charged to the union's general fund or account. The records show the following factual antecedents: Petitioners comprise the Executive Board of the SolidBank Union, the duly recognized collective bargaining agent for the rank and file employees of Solid Bank Corporation. Private respondents are members of said union. Sometime in October 1991, the union's Executive Board decided to retain anew the service of Atty. Ignacio P. Lacsina (now deceased) as union counsel in connection with the negotiations for a new Collective Bargaining Agreement (CBA). Accordingly, on October 19, 1991, the board called a general membership meeting for the purpose. At the said meeting, the majority of all union members approved and signed a resolution confirming the decision of the executive board to engage the services of Atty. Lacsina as union counsel. As approved, the resolution provided that ten percent (10%) of the total economic benefits that may be secured through the negotiations be given to Atty. Lacsina as attorney's fees. It also contained an authorization for SolidBank Corporation to check-off said attorney's fees from the first lump sum payment of benefits to the employees under the 2 new CBA and to turn over said amount to Atty. Lacsina and/or his duly authorized representative. The new CBA was signed on February 21, 1992. The bank then, on request of the union, made payroll deductions for attorney's fees from the CBA benefits paid to the union members in accordance with the abovementioned resolution. On October 2, 1992, private respondents instituted a complaint against the petitioners and the union counsel before the Department of Labor and Employment (DOLE) for illegal deduction of attorney's fees as well as for quantification 3 of the benefits in the 1992 CBA. Petitioners, in response, moved for the dismissal of the complaint citing litis 4 pendentia, forum shopping and failure to state a cause of action as their grounds. On April 22, 1993, Med-Arbiter Paterno Adap of the DOLE-NCR issued the following Order: WHEREFORE, premises considered, the Respondents Union Officers and Counsel are hereby directed to immediately return or refund to the Complainants the illegally deducted amount of attorney's fees from the package of benefits due herein complainants under the aforesaid new CBA. Furthermore, Complainants are directed to pay five percent (5%) of the total amount to be refunded or returned by the Respondent Union Officers and Counsel to them in favor of Atty. Armando D. Morales, as attorney's fees, in accordance with Section II, Rule VIII of Book II (sic) of the Omnibus Rules Implementing 5 the Labor Code. On appeal, the Secretary of Labor rendered a Resolution dated December 27, 1993, stating: WHEREFORE, the appeal of respondents Evangeline Gabriel, et. al., is hereby partially granted and the Order of the Med-Arbiter dated 22 April 1993 is hereby modified as follows: (1) that the ordered refund shall be limited to those union members who have not signified their conformity to the check-off of attorney's fees; and (2) the directive on the payment of 5% attorney's fees should be deleted for lack of basis.
6 1

SO ORDERED.

On Motion for Reconsideration, public respondent affirmed the said Order with modification that the union's counsel be dropped as a party litigant and that the workers through their union should be made to shoulder the expenses incurred for the attorney's services. Accordingly, the reimbursement should be charged to the union's general 8 fund/account. Hence, the present petition seeking to partially annul the above-cited order of the public respondent for being allegedly tainted with grave abuse of discretion amounting to lack of jurisdiction. The sole issue for consideration is, did the public respondent act with grave abuse of discretion in issuing the challenged order? Petitioners argue that the General Membership Resolution authorizing the bank to check-off attorney's fee from the first lump sum payment of the legal benefits to the employees under the new CBA satisfies the legal requirements for 9 such assessment. Private respondents, on the other hand, claim that the check-off provision in question is illegal because it was never submitted for approval at a general membership meeting called for the purpose and that it failed 10 to meet the formalities mandated by the Labor Code. In check-off, the employer, on agreement with the Union, or on prior authorization from employees, deducts union 11 dues or agency fees from the latter's wages and remits them directly to the union. It assures continuous funding; for the labor organization. As this Court has acknowledged, the system of check-off is primarily for the benefit of the 12 union and only indirectly for the individual employees. The pertinent legal provisions on check-offs are found in Article 222 (b) and Article 241 (o) of the Labor Code. Art. 222 (b) states: No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusions of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorney's fees may be charged against unions funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. (Emphasis ours) Art. 241 (o) provides: Other than for mandatory activities under the Code, no special assessment, attorney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction . (Emphasis ours). Art. 241 has three (3) requisites for the validity of the special assessment for union's incidental expenses, attorney's fees and representation expenses. These are: 1) authorization by a written resolution of the majority of all the members at the general membership meeting called for the purpose; (2) secretary's record of the minutes of the meeting; and (3) individual written authorization for check off duly signed by the employees concerned. Clearly, attorney's fees may not be deducted or checked off from any amount due to an employee without his written consent. After a thorough review of the records, we find that the General Membership Resolution of October 19, 1991 of the SolidBank Union did not satisfy the requirements laid down by law and jurisprudence for the validity of the ten percent (10%) special assessment for union's incidental expenses, attorney's fees and representation expenses. There were no individual written check off authorizations by the employees concerned and so the assessment cannot be legally deducted by their employer. Even as early as February 1990, in the case of Palacol vs. Ferrer-Calleja we said that the express consent of employees is required, and this consent must be obtained in accordance with the steps outlined by law, which must
13

be followed to the letter. No shortcuts are allowed. In Stellar Industrial Services, Inc. vs. NLRC we reiterated that a written individual authorization duly signed by the employee concerned is a condition sine qua non for such deduction. These pronouncements are also in accord with the recent ruling of this Court in the case of ABS-CBN Supervisors 15 Employees Union Members vs. ABS-CBN Broadcasting Corporation, et. al., which provides: Premises studiedly considered, we are of the irresistible conclusion and, so find that the ruling in BPIEUALU vs. NLRC that (1) the prohibition against attorney's fees in Article 222, paragraph (b) of the Labor Code applies only when the payment of attorney's fees is effected through forced contributions from the workers; and (2) that no deduction must be take from the workers who did not sign the check-off authorization, applies to the case under consideration. (Emphasis ours.) We likewise ruled in Bank of the Philippine Islands Employees Union-Association Labor Union (BPIEU-ALU) vs. 16 NLRC, . . . the afore-cited provision (Article 222 (b) of the Labor Code) as prohibiting the payment of attorney's fees only when it is effected through forced contributions from workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual worker to assume the obligation to pay attorney's fees from their own pockets . So categorical is this intent that the law makes it clear that any agreement to the contrary shall be null and void ab initio. (Emphasis ours.)1wphi1 From all the foregoing, we are of the considered view that public respondent did not act with grave abuse of discretion in ruling that the workers through their union should be made to shoulder the expenses incurred for the services of a lawyer. And accordingly the reimbursement should be charged to the union's general fund or account. No deduction can be made from the salaries of the concerned employees other than those mandated by law. WHEREFORE, the petition is DENIED. The assailed Order dated June 3, 1994, of respondent Secretary of Labor signed by Undersecretary Bienvenido E. Laguesma is AFFIRMED. No pronouncement as to costs. 1wphi1.nt SO ORDERED.

14

G.R. No. 106518 March 11, 1999 ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner, vs. ABS-CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUNOZ, CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR LANDRITO, FRED GARCIA, CESAR LOPEZ and RUBEN BARRAMEDA, respondents.

PURISIMA, J.: At bar is a special civil action for Certiorari 1 seeking the reversal of the Order dated July 31, 1992 of public 3 respondent Department of Labor and Employment Undersecretary Bienvenido E. Laguesma in Case No. NCR OD-M -90 -07-037. From the records on hand, it can be gathered, that:
2

On December 7, 1989, the ABS-CBN Supervisors Employees Union ("the Union"), represented by respondent Union Officers, and ABS-CBN Broadcasting Corporation ("the Company") signed and concluded a Collective Bargaining Agreement with the following check-off provision, to wit: Art. XII The [C]ompany agrees to advance to the Union a sum equivalent to 10% of the sum total of all the salary increases and signing bonuses granted to the Supervisors under this collective Bargaining Agreement and upon signing hereof to cover the Union's incidental expenses, including attorney's fees and representation expenses for its organization and ( sic) preparation and conduct hereof, and such advance shall be deducted from the benefits granted herein as they accrue. On September 19, 1990, Petitioners filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a Complaint 5 against the Union Officers and ABS-CBN Broadcasting corporation, praying that (1) the special assessment of ten percent (10%) of the sum total of all salary increases and signing bonuses granted by respondent Company to the members of the Union be declared illegal for failure to comply with the Labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2) respondent Company be ordered to suspend further deductions from petitioners' salaries for their shares thereof. In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint for lack of merit. They argued that the check-off provision is in accordance with law as majority of the Union members individually executed a written authorization giving the Union officers and the Company a blanket authority to deduct subject amount. On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order:
6 4

WHEREFORE, premises considered judgment is hereby rendered: a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal; b) ordering respondents union officers to refund to the complainants and other union members the amount of Five Hundred Thousand Pesos (P500,000.00) advanced by the respondent Company as part of the 10% sum total of CBA benefits without unnecessary delay; c) ordering the respondent company to stop and desist from further making advances and deductions from the union members' salaries their share in the advances already made to the union; d) ordering the respondent Company to remit directly to the complainants and other union members the amount already deducted from the union members' salaries as part of their share advances already made to the union and which it had kept in trust during the pendency of this case; and e) directing the respondents union officers and respondent Company to submit report on the compliance thereof. SO ORDERED. On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision on July 1, 1991, disposing as follows: WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is affirmed en toto. On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and respondent Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter alia that the questioned ten percent (10%) special assessment is valid pursuant to the ruling in Bank of the Philippine Islands Employee Union - ALU vs. 8 NLRC.
7

On July 31, 1992, Undersecretary B. E. Laguesma issued an Order ; resolving, thus: WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE, In lieu thereof, a new one is hereby entered DISMISSING the Complaint/Petition for lack of merit. Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to lack of jurisdiction. Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing his own Decision of July 1,1991? Such is the sole issue posited, which we resolve in the negative. The petition is unmeritorious. Petitioners claim that the Decision of the Secretary of Labor and Employment dated July 1, 1991, affirming in toto the Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a subject of a motion for reconsideration because it is final and unappealable pursuant to Section 8, Rule VIII, Book V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only remedy of the respondent Union Officers' is to file a petition for certiorari with this Court. Sec. 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides: The Secretary shall have fifteen (15) calendar days within which to decide the appeal from receipt of the records of the case. The decision of the Secretary shall be final and inappealable. [Underscoring supplied]. (Comment, p. 101) The aforecited provision cannot be construed to mean that the Decision of the public respondent cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules of Court. As a rule, the law requires a motion for reconsideration to enable the public respondent to correct his mistakes, if any. In Pearl S. 11 Buck Foundation, Inc., vs. NLRC, this Court held: Hence, the only way by which a labor case may reach the Supreme Court is through a petition forcertiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable time from receipt of the resolution denying the motion for reconsideration of the NLRC decision. [Emphasis supplied]. Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the filing of a motion for reconsideration is a condition sine qua non to afford an opportunity for the correction of the error or mistake complained of. So also, considering that a decision of the Secretary of Labor is subject to judicial review only through a special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must be allowed to move for a reconsideration of 12 the same so that he can bring a special civil action for certiorari before the Supreme Court. Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early Resolution dated June 24, 1992, averring that private respondents' Motion for Reconsideration did not contain substantial factual or legal grounds for the reversal of subject decision. Consequently, petitioners are now estopped from raising the issue 14 sought for resolution. In Alfredo Marquez vs. Secretary of Labor the Court said: . . . The active participation of the party against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction. What is more, it was only when the public respondent issued the Order adverse to them that the petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought which must be abhorred.
13 10

Petitioners also argued that the check-off provision in question is illegal because it was never submitted for consideration and approval to "all the members at a general membership meeting called for the purpose"; and further alleged that the formalities mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as amended, were not complied with. "A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the 15 latter's wages and remits them directly to the union." Its desirability in a labor organization is quite evident. It is assured thereby of continuous funding. As this Court has acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for the individual employees. The legal basis of check-off is found in statutes or in contracts. The statutory limitations on check-offs are found in Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads: Rights and conditions of membership in a labor organization The following are the rights and conditions of membership in a labor organization: xxx xxx xxx (g) No officer, agent, or member of a labor organization shall collect any fees, dues, or other contributions in its behalf to make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws. xxx xxx xxx (n) No special assessement or other extraordinary fees may be leavied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the president. (o) Other than for mandatory activities under the Code, no special assessments, attorney's fees negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deductions. [Emphasis; supplied] Art. 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the same law, which states: No attorney's fees, negotiation fees or similar charges of any kind arising from collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. [Emphasis; supplied] And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands Employees 17 Union - Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission: The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. . . . Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the special assessment for Union's incidental expenses, attorney's fees and representation expenses, as stipulated in Article XII of the CBA, be valid and upheld namely: 1) authorization by a written resolution of the majority of all the members at the general
16

membership meeting duly called for the purpose; (2) secretary's record of the minutes of the meeting; and (3) individual written authorization for check-off duly signed by the employee concerned. After a thorough review of the records on hand, we find that the three (3) requisites for the validity of the ten percent (10%) special assessment for Union's incidental expenses, attorney's fees and representation expenses were met. It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee Union held its general meeting, whereat it was agreed that a ten percent (10%) special assessment from the total economic package due to every member would be checked-off to cover expenses for negotiation, other miscellaneous expenses and attorney's fees. The minutes of the said meeting were recorded by the Union's Secretary, Ma. Carminda M. Munoz, and noted by its 18 President, Herbert Rivera. On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members agreed that "in as much as the Union had already paid Atty. P. Pascual the amount of P500,000.00, the same must be shared by all 19 the members until this is fully liquidated. Eighty-five (85) members of the same Union executed individual written authorizations for check-off, thus: Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN BROADCASTING CORPORATION to deduct from my salary the sum of P30.00 per month as my regular union dues and said Management and/or Cashier are further authorize ( sic) to deduct a sum equivalent to10% of all and whatever benefits that will become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA) that may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to the advance that Management will make to our Union for incidental expenses such as attorney's fees, representations and other miscellaneous expenses 20 pursuant to Article XII of the proposed CBA. Records do not indicate that the aforesaid check-off authorizations were executed by the eighty-five (85) Union members under the influence of force or compulsion. There is, then, the presumption that such check-off authorizations were executed voluntarily by the signatories thereto. Petitioner's contention that the amount to be 21 deducted is uncertain is not persuasive because the check-off authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is determinable. Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments, contemplates a general meeting after the conclusion of the collective bargaining agreement. Subject Article does not state that the general membership meeting should be called after the conclusion of a collective bargaining agreement. Even granting ex gratia argumenti that the general meeting should be held after the conclusion of the CBA, such requirement was complied with since the May 24, 1991 General Membership Meeting was held after the conclusion of the Collective Bargaining Agreement, which was signed and concluded on December 7, 1989. Considering that the three requisites afforesaid for the validity of a special assessment were observed or met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of the CBA. We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees Union - ALU vs. 22 NLRC is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order of the NLRC, holding that the validity of the five percent (5%) special assessment for attorney's fees is contrary to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus: The Court reads the aforecited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. . . . [Emphasis supplied]

However, the public respondent overlooked the fact that in the said case, the deduction of the stipulated five percent (5%) of the total economic benefits under the new collective bargaining agreement was applied only to workers who gave their individual signed authorizations. The Court explained: . . . And significantly, the authorized deductions affected only the workers who adopted and signed the resolution and who were the only ones from whose benefits the deductions were made by BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not bound by it. [Underscoring; supplied] While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-Calleja 23 is inapropos in the case under scrutiny, it does not subscribe to public respondent's reasoning that Palacolshould not be 24 retroactively applied to the present case in the interest of justice, equity and fairplay. The inapplicability of Palacol lies in the fact that it has a different factual milieu from the present case. In Palacol, the check-off authorization was declared invalid because majority of the Union members had withdrawn their individual authorizations, to wit: Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that special assessment may be validly checked-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that the majority of the Union members had already withdrawn their individual authorizations. A withdrawal of individual authorization is equivalent to no authorization at all. . . . [Emphasis; supplied] In this case, majority of the Union members gave their individual written check-off authorizations for the ten percent (10%) special assessment. And they have never withdrawn their individual written authorizations for check-off. There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case that twenty 25 26 (20) of the forty-two (42) petitioners executed a Compromise Agreement ratifying the controversial check-off provision in the CBA. Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against attorney's fees in Article 222, paragraph (b) of the Labor Code applies only when the payment of attorney's fees is effected through forced contributions from the workers; and (2) that no deductions must be taken from the workers who did not sign the check-off authorization, applies to the case under consideration. WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is AFFIRMED except that no deductions shall be taken from the workers who did not give their individual written check-off authorization. No pronouncement as to costs. SO ORDERED.

G.R. No. 110007 October 18, 1996 HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HON. JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF DAVAO COLLEGE UNION-KALIPUNAN NG MANGGAGAWANG PILIPINO (KAMAPI), respondents.

NARVASA, C.J.:p

A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational institution, and the affiliate labor organization representing its employees, respondent Holy Cross of Davao College Union-KAMAPI (hereafter KAMAPI). Shortly before the expiration of the agreement, KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his union's desire to renew the agreement, withal seeking its extension for two months, or until July 31, 1989, on the ground that the teachers were still on summer vacation and union activities 1 necessary or incident to the negotiation of a new agreement could not yet be conducted. Holy Cross President Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the collective 2 bargaining agreement. On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of electing a new set of union officers, at which Rodolfo Gallera won election as president. To the surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated discussions for the union's disaffiliation from the KAMAPI Federation. Gallera's group subsequently formed a separate organization known as the Holy Cross of Davao College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the expiry date of the two-month extension it had 3 sought. Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees the corresponding union dues and special assessments (payable by union members), and agency fees (payable by non4 members), in accordance with the check-off clause of the CBA, prompting KAMAPI, on September 1, 1989, to demand an explanation. In the meantime, there ensued between the two unions a full-blown action on the basic issue of representation, which was to last for some two years. It began with the filing by the new union (headed by Gallera) of a petition for 5 certification election in the Office of the Med-Arbiter. KAMAPI responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI also advised Holy Cross of the election of a new set officers who 6 would also comprise its negotiating panel. The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered the dismissal of the petition for certification election, which action was eventually sustained by this Court in appropriate proceedings. After its success in the certification election case KAMAPI presented, on April 11, 1991, revised bargaining proposals 7 to Holy Cross; and on July 11, 1991, it sent a letter to the School asking for its counter-proposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect; and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counter-proposals as regards the terms of a new CBA. In response, Holy Cross declared that it would take no action towards a new CBA without a "definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired on May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's request). Said Article provides inter alia for the automatic extension of the CBA for another period of three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification or amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the 8 meaning and import of said Article I had earlier been sought by the College president, Emilio Palma Gil. KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice of strike with the National Mediation 9 and Conciliation Board. KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on October 2, 1991. Several conciliation meetings were thereafter held between them, and when these failed to bring about any amicable 10 settlement, the parties agreed to submit the case to voluntary arbitration. Both parties being of the view that the dispute did indeed revolve around the interpretation of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following issues presented by them for resolution to the voluntary arbitrator:

a. Whether or not the CBA which expired on May 31, 1989 was automatically renewed and did not serve merely as a holdover CBA; and b. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao College. On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI. Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary Arbitrator ruled that the request for extension filed by KAMAPI constituted seasonable notice of its intention to renew, modify or amend the agreement, which it could not however pursue because of the absence of the teachers who were then on summer 11 vacation. He rejected the contention of Holy Cross that KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining proposals, opining that the delay was partly attributable to the School's prolonged inaction on KAMAPI's request for extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic renewal of the CBA because it ceased to implement the check-off provision embodied in the CBA, declaring said School's argument that a "definitive ruling" by the DOLE on the correct interpretation of the automatic-extension clause of the old CBA was a condition precedent to negotiations for a new CBA to be a mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven that it was the legally-empowered bargaining agent of the school employees. In the dispositive portion of his award, the Voluntary Arbitrator ordered Holy Cross to: 1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains the collective bargaining agent of the permanent and regular teachers of said educational institution; (and) 2. pay to the Union the amount equivalent to the uncollected union dues from August 1989 up to the time respondent shall have concluded a new CBA with the Union, it appearing that respondent 12 stopped complying with the CBA's check-off provisions as of said date. The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao City, to make the proper computation of the union dues to be paid by management to the complainant union. Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the following 13 grounds, viz.: 1. That the voluntary arbitrator erred and acted in grave abuse of discretion amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the uncollected union dues to private respondent which was not even an issue submitted for voluntary arbitration, resulting in serious violation of due process. 2. That the voluntary arbitrator erred in considering that petitioner refused to negotiate with (the) Union, contrary to the records and evidence presented in the case. The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's permanent and regular teachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to pronouncing that reasoned conclusion to have been made so whimsically, capriciously, oppressively, or unjustifiably in other words, attended by grave abuse of discretion amounting to lack or excess of jurisdiction as to call for extension of the Court's correcting hand through the extraordinary writ of certiorari. Said finding should therefore be, and is hereby, sustained. Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining agreement, Holy Cross contends that this was not one of the issues raised in the arbitration proceedings; that said issue was therefore extraneous and improper; and that even assuming the contrary, it (Holy Cross) had not in truth violated the CBA. Holy Cross asserts that it could not comply with the check-off provision because contrary to established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every 8th day of the month, a list of employees from whom union dues and the corresponding agency fees were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent with whom it would deal a matter settled only upon its receipt of

a copy of this Court's Resolution on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to 14 the union the uncollected employees' dues or agency fees would amount to the union's unjust enrichment. KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately connected with those submitted for 15 resolution and necessary for complete adjudication of the rights and obligations of the parties; and that said position paper had alleged the manifest bad faith of management in not providing information as to who were regular employees, thereby precluding determination of teachers eligible for union membership. Disregarding the objection of failure to seasonably set up the check-off question the factual premises thereof not being indisputable, and technical objections of this sort being generally inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from their salaries as union dues (with respect to union members) or agency fees (as regards those not union members) in accordance with the check-off provisions of the collective bargaining contract (CBA) which it claims to have been automatically extended. A check-off is a process or device whereby the employer, on agreement with the union recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the 16 latter's wages and remits them directly to the union. Its desirability to a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has acknowledged that the system of check-off is primarily for the 1 benefit of the union and, only indirectly, of the individual laborers. 7 When so stipulated in a collective bargaining agreement, or authorized in writing by the employees concerned the Labor Code and its Implementing Rules recognize it to be the duty of the employer to deduct sums equivalent to the amount of union dues from the employees' wages for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the local union which continues to represent the employees under the terms of a CBA, and not to the parent association from which 18 it has disaffiliated. The legal basis of check-off is thus found in statute or in contract. Statutory limitations on check-offs generally require written authorization from each employee to deduct wages; however, a resolution approved and adopted by a majority to the union members at a general meeting will suffice when the right to check-off has been recognized by the employer, including collection of reasonable assessments in connection with mandatory activities of the union, or 20 other special assessments and extraordinary fees. Authorization to effect a check-off of union dues is co-terminous with the union affiliation or membership of 21 employees. On the other hand, the collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of the Labor Code. No requirement of written authorization from the non-union employee is imposed. The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasicontractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by 22 benefiting from employment conditions negotiated by the bargaining union. No provision of law makes the employer directly liable for the payment to the labor organization of union dues and assessments that the former fails to deduct from its employees' salaries and wages pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may constitute a violation of a contractual 23 commitment for which it may incur liability for unfair labor practice. But it does not by that omission, incur liability to the union for the aggregate of dues or assessments uncollected from the union members, or agency fees for nonunion employees. Check-offs in truth impose an extra burden on the employer in the form of additional administrative and bookkeeping costs. It is a burden assumed by management at the instance of the union and for its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance. But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but the individual employee. It is a personal obligation not demandable from the employer upon default or refusal of the employee to consent to a check-off. The only obligation of the employer under a check-off is to effect the deductions and remit the collections to the union. The principle of unjust enrichment necessarily precludes recovery of union dues or agency fees from the employer, these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union. Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate that the union itself undertake the collection
19

of union dues and assessments from its members (and agency fees from non-union employees); this, of course, without prejudice to suing the employer for unfair labor practice. There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the union dues and assessments, and agency fees that it had failed to deduct from its employees' salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to the college comptroller every 8th day of the month, a list of employees from whose pay union dues and the corresponding agency fees were to be deducted. WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union dues and agency fees from August 1989 up to the time a new collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary Arbitrator is hereby AFFIRMED. SO ORDERED.

G.R. No. 85333 February 26, 1990 CARMELITO L. PALACOL, ET AL., petitioners, vs. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES), INC., respondents. Wellington B. Lachica for petitioners. Adolpho M. Guerzon for respondent Union.

GANCAYCO, J.: Can a special assessment be validly deducted by a labor union from the lump-sum pay of its members, granted under a collective bargaining agreement (CBA), notwithstanding a subsequent disauthorization of the same by a majority of the union members? This is the main issue for resolution in the instant petition for certiorari. As gleaned from the records of the case, the pertinent facts are as follows: On October 12, 1987, the respondent Manila CCBPI Sales Force Union (hereinafter referred to as the Union), as the collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of the Manila Plant and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines), Inc. (hereinafter referred to as the Company) 1 concluded a new collective bargaining agreement with the latter. Among the compensation benefits granted to the employees was a general salary increase to be given in lump sum including recomputation of actual commissions earned based on the new rates of increase. On the same day, the president of the Union submitted to the Company the ratification by the union members of the new CBA and authorization for the Company to deduct union dues equivalent to P10.00 every payday or P20.00 every month and, in addition, 10% by way of special assessment, from the CBA lump-sum pay granted to the union members. The last one among the aforementioned is the subject of the instant petition. As embodied in the Board Resolution of the Union dated September 29, 1987, the purpose of the special assessment sought to be levied is "to put up a cooperative and credit union; purchase vehicles and other items needed for the benefit of the officers and the general membership; and for the payment for services rendered by union officers, 2 consultants and others." There was also an additional proviso stating that the "matter of allocation ... shall be at the discretion of our incumbent Union President."

This "Authorization and CBA Ratification" was obtained by the Union through a secret referendum held in separate 3 local membership meetings on various dates. The total membership of the Union was about 800. Of this number, 4 672 members originally authorized the 10% special assessment, while 173 opposed the same. Subsequently however, one hundred seventy (170) members of the Union submitted documents to the Company stating that although they have ratified the new CBA, they are withdrawing or disauthorizing the deduction of any amount from their CBA lump sum. Later, 185 other union members submitted similar documents expressing the same intent. These members, numbering 355 in all (170 + 185), added to the original oppositors of 173, turned the tide in favor of disauthorization for the special assessment, with a total of 528 objectors and a remainder of 272 5 supporters. On account of the above-mentioned disauthorization, the Company, being in a quandary as to whom to remit the payment of the questioned amount, filed an action for interpleader with the Bureau of Labor Relations in order to resolve the conflicting claims of the parties concerned. Petitioners, who are regular rank-and-file employees of the Company and bona fide members of the Union, filed a motion/complaint for intervention therein in two groups of 161 and 94, respectively. They claimed to be among those union members who either did not sign any individual written authorization, or having signed one, subsequently withdrew or retracted their signatures therefrom. Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article 222(b) of the Labor Code. Article 222(b) provides as follows: ART. 222. Appearances and Fees. xxx xxx xxx (b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union; Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. On the other hand, Article 241(o) mandates that: ART. 241. Rights and conditions of membership in a labor organization. xxx xxx xxx (o) Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction; As authority for their contention, petitioners cited Galvadores v. Trajano, wherein it was ruled that no check-offs from any amount due employees may be effected without individual written authorizations duly signed by the employees specifically stating the amount, purpose, and beneficiary of the deduction. In its answer, the Union countered that the deductions not only have the popular indorsement and approval of the general membership, but likewise complied with the legal requirements of Article 241 (n) and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special assessment had been duly approved in a general membership meeting and that the collection of a special fund for labor education and research is mandated. Article 241(n) of the Labor Code states that ART. 241. Rights and conditions of membership in a labor organization.
6

xxx xxx xxx (n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessments or fees. The record shall be attested to by the president; Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated February 15, 1988 whereby he directed the Company to remit the amount it had kept in trust directly to the rank-and-file personnel without delay. On appeal to the Bureau of Labor Relations, however, the order of the Med-Arbiter was reversed and set aside by the respondent-Director in a resolution dated August 19, 1988 upholding the claim of the Union that the special assessment is authorized under Article 241 (n) of the Labor Code, and that the Union has complied with the requirements therein. Hence, the instant petition. Petitioners allege that the respondent-Director committed a grave abuse of discretion amounting to lack or excess of jurisdiction when she held Article 241 (n) of the Labor Code to be the applicable provision instead of Article 222(b) in relation to Article 241(o) of the same law. According to petitioners, a cursory examination and comparison of the two provisions of Article 241 reveals that paragraph (n) cannot prevail over paragraph (o). The reason advanced is that a special assessment is not a matter of major policy affecting the entire union membership but is one which concerns the individual rights of union members. Petitioners further assert that assuming arguendo that Article 241(n) should prevail over paragraph (o), the Union has nevertheless failed to comply with the procedure to legitimize the questioned special assessment by: (1) presenting mere minutes of local membership meetings instead of a written resolution; (2) failing to call a general membership meeting; (3) having the minutes of three (3) local membership meetings recorded by a union director, and not by the union secretary as required; (4) failing to have the list of members present included in the minutes of the meetings; 7 and (5) failing to present a record of the votes cast. Petitioners concluded their argument by citing Galvadores. After a careful review of the records of this case, We are convinced that the deduction of the 10% special assessment by the Union was not made in accordance with the requirements provided by law. Petitioners are correct in citing the ruling of this Court in Galvadores which is applicable to the instant case. The principle "that employees are protected by law from unwarranted practices that diminish their compensation without 8 their known edge and consent" is in accord with the constitutional principle of the State affording full protection to 9 labor. The respondent-Union brushed aside the defects pointed out by petitioners in the manner of compliance with the legal requirements as "insignificant technicalities." On the contrary, the failure of the Union to comply strictly with the requirements set out by the law invalidates the questioned special assessment. Substantial compliance is not enough in view of the fact that the special assessment will diminish the compensation of the union members. Their express consent is required, and this consent must be obtained in accordance with the steps outlined by law, which must be followed to the letter. No shortcuts are allowed. The applicable provisions are clear. The Union itself admits that both paragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers to "check-off" of a special assessment. Both provisions must be complied with. Under paragraph (n), the Union must submit to the Company a written resolution of a majority of all the members at a general membership meeting duly called for the purpose. In addition, the secretary of the organization must record the minutes of the meeting which, in turn, must include, among others, the list of all the members present as well as the votes cast. As earlier outlined by petitioners, the Union obviously failed to comply with the requirements of paragraph (n). It held local membership meetings on separate occasions, on different dates and at various venues, contrary to the express

requirement that there must be a general membership meeting. The contention of the Union that "the local 10 membership meetings are precisely the very general meetings required by law" is untenable because the law would not have specified a general membership meeting had the legislative intent been to allow local meetings in lieu of the latter. It submitted only minutes of the local membership meetings when what is required is a written resolution adopted at the general meeting. Worse still, the minutes of three of those local meetings held were recorded by a union director and not by the union secretary. The minutes submitted to the Company contained no list of the members present and no record of the votes cast. Since it is quite evident that the Union did not comply with the law at every turn, the only conclusion that may be made therefrom is that there was no valid levy of the special assessment pursuant to paragraph (n) of Article 241 of the Labor Code. Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that a special assessment may be validly checked-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that the majority of the union members had already withdrawn their individual authorizations. A withdrawal of individual authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that "no check-offs from any amounts due employees may be effected without an individual written authorization signed by the employees ... " is applicable. The Union points out, however, that said disauthorizations are not valid for being collective in form, as they are "mere 11 bunches of randomly procured signatures, under loose sheets of paper." The contention deserves no merit for the simple reason that the documents containing the disauthorizations have the signatures of the union members. The Court finds these retractions to be valid. There is nothing in the law which requires that the disauthorization must be in individual form. Moreover, it is well-settled that "all doubts in the implementation and interpretation of the provisions of the Labor 12 Code ... shall be resolved in favor of labor." And as previously stated, labor in this case refers to the union members, as employees of the Company. Their mere desire to establish a separate bargaining unit, albeit unproven, cannot be construed against them in relation to the legality of the questioned special assessment. On the contrary, the same may even be taken to reflect their dissatisfaction with their bargaining representative, the respondentUnion, as shown by the circumstances of the instant petition, and with good reason. The Med-Arbiter correctly ruled in his Order that: The mandate of the majority rank and file have (sic) to be respected considering they are the ones directly affected and the realities of the high standards of survival nowadays. To ignore the mandate of the rank and file would enure to destabilizing industrial peace and harmony within the rank and file and the employer's fold, which we cannot countenance. Moreover, it will be recalled that precisely union dues are collected from the union members to be spent for the purposes alluded to by respondent. There is no reason shown that the regular union dues being now implemented is not sufficient for the alleged expenses. Furthermore, the rank and file have spoken in withdrawing their consent to the special assessment, believing that their regular union dues are adequate for the purposes stated by the respondent. Thus, the rank and file having spoken and, as we have earlier mentioned, their sentiments should be respected. Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only the collection of a special fund for labor and education research is mandated, as correctly pointed out by the Union. The two other purposes, namely, the purchase of vehicles and other items for the benefit of the union officers and the general membership, and the payment of services rendered by union officers, consultants and others, should be supported by the regular union dues, there being no showing that the latter are not sufficient to cover the same. The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney's fees, negotiations fees and similar charges arising out of the conclusion of a collective bargaining agreement from being imposed on any individual union member. The collection of the special assessment partly for the payment for services rendered by union officers, consultants and others may not be in the category of "attorney's fees or negotiations fees." But there is no question that it is an exaction which falls within the category of a "similar charge," and, therefore, within the coverage of the

prohibition in the aforementioned article. There is an additional proviso giving the Union President unlimited discretion to allocate the proceeds of the special assessment. Such a proviso may open the door to abuse by the officers of the Union considering that the total amount of the special assessment is quite considerable P1,027,694.33 collected from those union members who originally authorized the deduction, and P1,267,863.39 from those who did not 13 authorize the same, or subsequently retracted their authorizations. The former amount had already been remitted to the Union, while the latter is being held in trust by the Company. The Court, therefore, stakes down the questioned special assessment for being a violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor Code. WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-Arbiter dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is hereby ordered to immediately remit the amount of P1,267,863.39 to the respective union members from whom the said amount was withheld. No pronouncement as to costs. This decision is immediately executory. SO ORDERED.

G.R. No. 117418

January 24, 1996

STELLAR INDUSTRIAL SERVICES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO H. PEPITO, respondents. DECISION REGALADO, J.: Imputing grave abuse of discretion by public respondent as its cause of concern in this special civil action 1 forcertiorari, petitioner Stellar Industrial Services, Inc. (Stellar) seeks the annulment of the decision, dated May 31, 1994, of the National Labor Relations Commission in NLRC NCR CA No. 004326-93 and its resolution of July 21, 1994 denying petitioner's motion for reconsideration. Interestingly, this recourse is the culmination of petitioner's sustained corporate and legal efforts directed against a mere janitor who was formerly employed by it. Stellar Industrial Services, Inc., an independent contractor engaged in the business of providing manpower services, employed private respondent Roberto H. Pepito as a janitor on January 27, 1975 and assigned the latter to work as such at the Maintenance Base Complex of the Philippine Airlines (MBC-PAL) in Pasay City. There, Pepito toiled for a decade and a half. According to petitioner, private respondent's years of service at MBC-PAL were marred by various infractions of company rules ranging from tardiness to gambling, but he was nevertheless retained as a janitor out of 2 humanitarian consideration and to afford him an opportunity to reform. Stellar finally terminated private respondent's services on January 22, 1991 because of what it termed as Pepito's being "Absent Without Official Leave (AWOL)/Virtual Abandonment of Work - Absent from November 2 - December 10, 1990." Private respondent had insisted in a letter to petitioner dated December 2, 1990, to which was attached what purported to be a medical certificate, that during the period in question he was unable to report for work due to severe stomach pain and that, as he could hardly walk by reason thereof, he failed to file the corresponding official 3 leave of absence. As petitioner disbelieved private respondent's explanation regarding his absences, the latter contested his severance from employment before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila in a complaint docketed as NLRC NCR-00-03-01869-91 for illegal dismissal, illegal deduction and underpayment of wages under Wage Order NCR-001, with prayer for moral and exemplary damages and attorney's fees. While the labor arbiter was of them view that Pepito was not entitled to differential pay under said wage order, or to moral and exemplary damages for lack of bad faith on the part of petitioner, he opined that private respondent had duly proved 4 that his 39-day absence was justified on account of illness and that he was illegally dismissed without just cause.

Thus the decision rendered on December 28, 1992 by Labor Arbiter Manuel R. Caday decreed: WHEREFORE, judgment is hereby rendered declaring the dismissal of the complainant as illegal and ordering the respondent to immediately reinstate complainant to his former position as Utilityman, without loss of seniority rights and with full backwages and other rights and privileges appurtenant to his position until he is actually reinstated. As computed, the judgment award in favor of the complainant is stated hereunder: Backwages 1/27/91 - 12/27/92 at P118. 00 per day Refund of amount illegally deducted (3 years) Grand Total P82,550.83 288.00 P82,838.83 ========

The respondent is further ordered to pay the complainant reasonable attorney's fees equivalent to 10% of 5 the amount recoverable by the complainant. As hereinbefore stated, said judgment of the labor arbiter was affirmed by respondent commission. Petitioner's subsequent motion for reconsideration was likewise rebuffed by the NLRC, hence the present remedial resort to this Court. Petitioner contends that public respondent acted with grave abuse of discretion when it discussed and resolved the issue of abandonment which petitioner had not, at any time, raised before it for resolution. Further, petitioner considers it patently erroneous for public respondent to rule that the medical certificate adduced by Pepito sufficiently established the fact of sickness on his part which thereby justified his absences. Additionally, it claims that respondent commission gravely erred when it did not carefully examine the evidence, pointing out Pepito's errant 6 behavior and conduct. Petitioner argues, moreover, that the award of back wages and attorney's fees was not justified considering that Pepito was validly dismissed due to serious misconduct on his part. Lastly, petitioner insists that the deductions it imposed upon and collected from Pepito's salary was authorized by a board resolution of Stellar Employees 7 Association, of which private respondent was a member. The Court, however, is unable to perceive or deduce facts constitutive of grave abuse of discretion in public respondent's disposition of the controversy which would suffice to overturn its affirmance of the labor arbiter's decision. On the initial issue posed by petitioner, respondent commission should indeed have refrained from passing upon the matter of abandonment, much less from considering the same as the ground for petitioner's termination of private respondent's services. The records of the case indicate that Pepito's employment was cut short by Stellar due to his having violated a company rule which requires the filing of an official leave of absence should an employee be unable to report for work, aside from the circumstance that Stellar did not find credible Pepito's explanation that he was then suffering from severe stomach and abdominal pains. To be sure, public respondent may well have been misled by the fact that petitioner, in dismissing Pepito, labelled his 8 violation as "Absent Without Official Leave (AWOL)/Virtual Abandonment. Respondent NLRC should have noted that the matter of abandonment was never brought up as an issue before it and that Stellar never considered Pepito as having abandoned his job. As a matter of fact, private respondent was only considered by petitioner as absent until 9 December 10, 1990. Pepito was dismissed from work simply for going on leave without prior official approval and for failing to justify his absence. This is evident from the fact that petitioner did not assail Pepito's allegations that, at the start of his extended absence, he had informed Stellar, through telephone calls to his superior at MBC-PAL, that he could not report for work due to illness. Thus, while abandonment is indisputably a valid legal ground for terminating 10 one's employment, it was a non-issue in this dispute. Be that as it may, that misapprehension of the NLRC on this particular issue is not to be considered an abuse of discretion of such gravity as to constitute reversible error. In the main, therefore, what is truly at issue here is whether or not serious misconduct for non-observance of company rules and regulations may be attributed to Pepito and, if so, whether or not the extreme penalty of dismissal meted to him by Stellar may be justified under the circumstances. We resolve both issues in the negative.

Stellar's company rules and regulations on the matter could not be any clearer, to wit: Absence Without Leave Any employee who fails to report for work without any prior approval from his superior(s) shall be considered absent without leave. In the case of an illness or emergency for an absence of not more than one (1) day, a telephone call or written note to the head office, during working hours, on the day of his absence, shall be sufficient to avoid being penalized. In the case of an illness or an emergency for an absence of two (2) days or more, a telephone call to the head office, during regular working hours, on the first day of his absence, or a written note to the head office, (ex. telegram) within the first three (3) days of his absence, and the submission of the proper documents (ex. medical certificate) on the first day he reports after his absence shall be sufficient to avoid being penalized. 1st offense - three (3) days suspension 2nd offense - seven (7) days suspension 3rd offense - fifteen (15) days suspension 4th offense - dismissal with a period of one (1) year.
11

There was substantial compliance with said company rule by private respondent. He immediately informed his supervisor at MBC-PAL of the fact that he could not report for work by reason of illness. At the hearing, it was also established without contradiction that Pepito was able to talk by telephone to one Tirso Pamplona, foreman at MBC12 PAL, and he informed the latter that he would be out for two weeks as he was not feeling well. Added to this is his letter to the chief of personnel which states that, on November 2, 1990, he relayed to his supervisor at MBC-PAL his reason for not reporting for work and that, thereafter, he made follow-up calls to their office when he still could not 13 render services. As earlier noted, these facts were never questioned nor rebutted by petitioner. While there is no record to show that approval was obtained by Pepito with regard to his absences, the fact remains that he complied with the company rule that in case of illness necessitating absence of two days or more, the office should be informed beforehand about the same, that is, on the first day of absence. Since the cause of his absence could not have been anticipated, to require prior approval would be unreasonable. On this score, then, no serious misconduct may be imputed to Pepito. Necessarily, his dismissal from work, tainted as it is by lack of just cause, was clearly illegal. More importantly, private respondent duly presented the requisite medical certificate. True, Stellar did not accept the veracity of the same, but it did so quite erroneously. Carlos P. Callanga, petitioner's vice-president for operations, interpreted the certificate submitted by Pepito in the following strained and nitpicking manner: a) The medical certificate merely states that Pepito suffered from "alleged, abdominal pain" from November 2, 1990 to December 14, 1990. It does not state that the abdominal pain was so severe as to incapacitate him for (sic)work. b) Because the medical certificate states that the abdominal pain was merely "alleged," I had reason to believe that the doctor who issued it did not personally know if such abdominal pain really existed for the period in question. c) From the medical certificate, I gathered that the doctor who signed it examined Pepito only on December 14, 1990, which is the date it appears to have been issued. It does not state that said doctor actually treated Pepito for the period of his absence. d) The medical certificate also says Pepito was suffering from alleged abdominal pains until December 14, 1990, but that he could resume work anytime thereafter. This implies that he was physically fit to resume

work anytime thereafter. However, our records show that Pepito was absent only until December 10, 1990. If it is true that Pepito's abdominal pains incapacitated him for (sic) work, he should have been absent until December 14, 1990. These give me reason to believe that the medical certificate was secured only as an 14 afterthought and does not satisfactorily explain Pepito's protracted absence. A careful perusal and objective appreciation of the medical certificate in question, which was property signed by a physician whose existence and professional license number was not questioned by petitioner, convince us to conclude otherwise. Handwritten by the issuing doctor, it states in no uncertain terms: This is to inform that I had examined Roberto Pepito. He has already recovered from his intestinal abdominal pains suffered last Nov. 2/90 to Dec. 14/90. He may resume his work anytime.
15

Thus, nowhere in said certificate is there any indication that the abdominal pain suffered by Pepito was only asalleged by him. It definitely states that Pepito was personally examined by the physician and it can be clearly deduced from the affirmative statements "(h)e has already recovered. . ." and "(h)e may resume his work anytime" that Pepito was really not in a position to report for work from November 2 to December 14, 1990 on account of actual, and not merely alleged, intestinal abdominal pains. The certificate further confirms Pepito's earlier information given by him on November 2, 1990 and which he duty relayed to his supervisor as the true reason for his inability to work. Callanga obviously misread, we hope unwittingly, "intestinal abdominal pain" as "alleged abdominal pain." Again, there is no logic in Callanga's assumption that the certificate was obtained only as an afterthought. It should be noted that Callanga required Pepito to make a written explanation regarding his absences only on December 18, 16 1990. Pepito accordingly complied with the same and he attached therewith the medical certificate which showed 17 its date of issuance as December 14, 1990. Thus, even before he was made to explain his absences, he already had the medical certificate to prove the reason therefor. To characterize the procurement of the certificate as an afterthought is consequently baseless, especially considering that it bears all the earmarks of regularity in its issuance. Labor is entitled to at least elementary fairness from management. Petitioner's reliance on Pepito's past infractions as sufficient grounds for his eventual dismissal, in addition to his prolonged absences, is likewise unavailing. The correct rule is that previous infractions may be used as justification 18 for an employee's dismissal from work in connection with a subsequent similar offense. That is not the case here. Stellar contends that Pepito's service record shows that he was under preventive suspension in October, 1979 due to gambling and that, at various days of certain months in 1986, 1987, and 1988, he was issued several warnings for habitual tardiness. Then, in October, 1988, he was asked to explain why he was carrying three sacks of rice in violation of company rules. In the present case, private respondent's absences, as already discussed, were incurred with due notice and compliance with company rules and he had not thereby committed a "similar offense" as those he had committed in the past. Furthermore, as correctly observed by the labor arbiter, those past infractions had either been "satisfactorily explained, not proven, sufficiently penalized or condoned by the respondent." In fact, the termination notice furnished Pepito only indicated that he was being dismissed due to his absences from November 2, 1990 to December 10, 1990 supposedly without any acceptable excuse therefor. There was no allusion therein that his dismissal was due to his supposed unexplained absences on top of his past infractions of company rules. To refer to those earlier violations as added grounds for dismissing him is doubly unfair to private respondent. Significantly enough, no document or any other piece of evidence was adduced by petitioner showing previous absences of Pepito, whether with or without official leave. Regarding the amount deducted from Pepito's salary, Stellar stresses that said deduction concerning death aid benefits is lawful since these were made in accordance with Board Resolution No. 02-85 adopted on August 17, 1988 by the board of directors of the Stellar Employees Association. However, Article 241(n) of the Labor Code and the implementing rules thereon in Section 13(a), Rule VIII, Book III disallow such deductions. Article 241(n) states that "(n)o special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. . . ." The deduction could be characterized as a special assessment for a "Death Aid Program." Consequently, a mere board resolution of the directors, and not by the majority of all the members, cannot validly allow such deduction.

Also, a written individual authorization duly signed by the employee concerned is a condition sine qua nontherefor. Employees are protected by law from unwarranted practices that have for their object the diminution of the hard19 earned compensation due them. Private respondent herein must be extended that protection, especially in view of his lowly employment status. IN VIEW OF THE FOREGOING, no grave abuse of discretion having been committed by respondent National Labor Relations Commission in its decision and resolution assailed in the case at bar, the instant petition of Stellar Industrial Services, Inc. is hereby DISMISSED for lack of merit. SO ORDERED.