Republic of the Philippines

SUPREME COURT
Baguio City
FIRST DIVISION

G.R. No. 115077 April 18, 1997

PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA
HUT, petitioner,
vs.
HON. BIENVENIDO LAGUESMA, in his capacity as
Undersecretary of Labor, and NAGKAKAISANG LAKAS NG
MANGGAGAWA (NLM)-KATIPUNAN, respondents.
Labor Law; Labor Organizations; Certification Elections; After a labor
organization has filed the necessary papers and documents for
registration, it becomes mandatory for the Bureau of Labor Relations
to check if the requirements under Article 234 of the Labor Code have
been sedulously complied with. After a certificate of recognition has
been issued, the propriety of the labor organizations registration
could be assailed directly through cancellation of registration
proceedings in accordance with Articles 238 and 239 of the Labor
Code, or indirectly, by challenging its petition for the issuance of an
order for certification election.In the public respondents assailed
Resolution dated December 29, 1993, the suggestion is made that once
a labor organization has filed the necessary documents and papers
and the same have been certified under oath and attested to, said
organization necessarily becomes clothed with the character of a
legitimate labor organization. In essence, therefore, the real
controversy in this case centers on the question of whether or not,
after the necessary papers and documents have been filed by a labor
organization, recognition by the Bureau of Labor Relations merely
becomes a ministerial function. We do not agree. In the first place, the
public respondents views as expressed in his December 29, 1993
Resolution miss the entire point behind the nature and purpose of

proceedings leading to the recognition of unions as legitimate labor

organizations. A more than cursory reading of the aforecited
provisions clearly indicates that the requirements embodied therein
are intended as preventive measures against the commission of fraud.
After a labor organization has filed the necessary papers and
documents for registration, it becomes mandatory for the Bureau of
Labor Relations to check if the requirements under Article 234 have
been sedulously complied with. If its application for registration is
vitiated by falsification and serious irregularities, especially those
appearing on the face of the application and the supporting
documents, a labor organization should be denied recognition as a
legitimate labor organization. And if a certificate of recognition has
been issued, the propriety of the labor organizations registration
could be assailed directly through cancellation of registration
proceedings in accordance with Articles 238 and 239 of the Labor
Code, or indirectly, by challenging its petition for the issuance of an
order for certification election.
Same; Same; Same; Registration requirements specifically afford a
measure of protection to unsuspecting employees who may be lured
into joining unscrupulous or fly-by-night unions whose sole purpose is
to control union dues or use the labor organization for illegitimate
ends.These measures are necessaryand may be undertaken
simultaneouslyif the spirit behind the Labor Codes requirements for
registration are to be given flesh and blood. Registration requirements
specifically afford a measure of protection to unsuspecting employees
who may be lured into joining unscrupulous or fly-by-night unions
whose sole purpose is to control union funds or use the labor
organization for illegitimate ends. Such requirements are a valid
exercise of the police power, because the activities in which labor
organizations, associations and unions of workers are engaged directly
affect the public interest and should be protected.
Same; Same; Same; The Med-Arbiter should look into the merits of
the petition for cancellation of a unions registration before issuing an
order calling for certification electionregistration based on false and
fraudulent statements and documents confer no legitimacy upon a
1

labor organization irregularly recognized, which, at best, holds on to a

mere scrap of paper.The grounds ventilated in cancellation
proceedings in accordance with Article 239 of the Labor Code
constitute a grave challenge to the right of respondent Union to ask for
certification election. The Med-Arbiter should have looked into the
merits of the petition for cancellation before issuing an order calling
for certification election. Registration based on false and fraudulent
statements and documents confer no legitimacy upon a labor
organization irregularly recognized, which, at best, holds on to a mere
scrap of paper. Under such circumstances, the labor organization, not
being a legitimate labor organization, acquires no rights, particularly
the right to ask for certification election in a bargaining unit.
Same; Same; Same; The invalidity of a unions registration would
negate its legal personality to participate in certification election.As
we laid emphasis in Progressive Development Corporation vs.
Secretary of Labor, [t]he employer needs the assurance that the
union it is dealing with is a bona fide organization, one which has not
submitted false statements or misrepresentations to the Bureau.
Clearly, fraud, falsification and misrepresentation in obtaining
recognition as a legitimate labor organization are contrary to the MedArbiters conclusion not merely collateral issues. The invalidity of
respondent Unions registration would negate its legal personality to
participate in certification election.
Same; Same; Same; Where the legal personality of a union is seriously
challenged, it would be more prudent for the Med-Arbiter to grant the
request for suspension of proceedings in the certification election case
until the issue of the legality of the unions registration shall have been
resolved.Inasmuch as the legal personality of respondent Union had
been seriously challenged, it would have been more prudent for the
Med-Arbiter and public respondent to have granted petitioners
request for the suspension of proceedings in the certification election
case, until the issue of the legality of the Unions registration shall
have been resolved. Failure of the Med-Arbiter and public respondent
to heed the request constituted a grave abuse of discretion.
Progressive Development Corp.-Pizza Hut vs. Laguesma, 271 SCRA
593, G.R. No. 115077 April 18, 1997

KAPUNAN, J.:
On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)Katipunan (respondent Union) filed a petition for certification
election with the Department of Labor (National Capital Region) in
behalf of the rank and file employees of the Progressive Development
Corporation (Pizza Hut) docketed as NCR Case No. NCR-OD-M-9307020. 1
Petitioner filed on August 20, 1993, a verified Motion to Dismiss the
petition alleging fraud, falsification and misrepresentation in the
respondent. Union's registration making it void and invalid. The
motion specifically alleged that: a) respondent Union's registration
was tainted with false, forged, double or multiple signatures of those
who allegedly took part in the ratification of the respondent Union's
constitution and by-laws and in the election of its officers that there
were two sets of supposed attendees to the alleged organizational
meeting that was alleged to have taken place on June 26, 1993; that
the alleged chapter is claimed to have been supported by 318 members
when in fact the persons who actually signed their names were much
less; and b) while the application for registration of the charter was
supposed to have been approved in the organizational meeting held
on June 27, 1993, the charter certification issued by the federation
KATIPUNAN was dated June 26, 1993 or one (1) day prior to the
formation of the chapter, thus, there were serious falsities in the dates
of the issuance of the charter certification and the organization
meeting of the alleged chapter.
Citing other instances of misrepresentation and fraud, petitioner, on
August 29, 1993, filed a Supplement to its Motion to
Dismiss, 2 claiming that:
1) Respondent Union alleged that the election of its
officers was held on June 27, 1993; however, it appears
from the documents submitted by respondent union to
the BIR-DOLE that the Union's constitution and bylaws were adopted only on July 7, 1993, hence, there
was no bases for the supposed election of officers on
2

June 27, 1993 because as of this date, there existed no

positions to which the officers could be validly elected;
2) Voting was not conducted by secret ballot in
violation of Article 241, section (c) of the Labor Code;
3) The Constitution and by Laws submitted in support
of its petition were not properly acknowledged and
notarized. 3
On August 30, 1993, petitioner filed a Petition 4 seeking the
cancellation of the Union's registration on the grounds of fraud and
falsification, docketed as BIR Case No. 8-21-83. 5 Motion was likewise
filed by petitioner with the Med-Arbiter requesting suspension of
proceedings in the certification election case until after the prejudicial
question of the Union's legal personality is determined in the
proceedings for cancellation of registration.
However, in an Order dated September 29, 1993, 6 Med-Arbiter
Rasidali C. Abdullah directed the holding of a certification election
among petitioner's rank and file employees. The Order explained:

action for certiorari under Rule 65 of the Revised Rules of Court

where the principal issue raised is whether or not the public
respondent committed grave abuse of discretion in affirming the MedArbiter's order to conduct a certification election among petitioner's
rank and file employees, considering that: (1) respondent Union's
legal personality was squarely put in issue; (2) allegations of fraud and
falsification, supported by documentary evidence were made; and (3)
a petition to cancel respondent Union's registration is pending with
the regional office of the Department of Labor and Employment. 10
We grant the petition.
In the public respondent's assailed Resolution dated December 29,
1993, the suggestion is made that once a labor organization has filed
the necessary documents and papers and the same have been certified
under oath and attested to, said organization necessarily becomes
clothed with the character of a legitimate labor organization. The
resolution declares:

On appeal to the office of the Secretary of Labor, Labor

Undersecretary Bienvenido E. Laguesma in a Resolution dated
December 29, 1993 8 denied the same.

Records show that at the time of the filing of the subject

petition on 9 July 1993 by the petitioner NLMKATIPUNAN, for and in behalf of its local affiliate
Sumasaklaw sa Manggagawa ng Pizza Hut, the latter
has been clothed with the status and/or character of a
legitimate labor organization. This is so, because on 8
July 1993, petitioner submitted to the Bureau of Labor
Relations (BLR), this Department, the following
documents: Charter Certificate, Minutes of the
Organizational Meeting, List of Officers, and their
respective addresses, financial statement, Constitution
and By-Laws (CBL, and the minutes of the ratification
of the CBL). Said documents (except the charter
certificate) are certified under oath and attested to by
the local union's Secretary/Treasurer and President,
respectively.

A motion for reconsideration of the public respondent's resolution was

denied in his Order 9 dated January 27, 1994, hence, this special civil

As to the contention that the certification election

proceedings should be suspended in view of the

. . . Sumasaklaw sa Manggagawa ng Pizza Hut is a

legitimate labor organization in contemplation of law
and shall remain as such until its very charter
certificate is canceled or otherwise revoked by
competent authority. The alleged misrepresentation,
fraud and false statement in connection with the
issuance of the charter certificate are collateral issues
which could be properly ventilated in the cancellation
proceedings. 7

pending case for the cancellation of the petitioner's

certificate of registration, let it be stressed that the
pendency of a cancellation case is not a ground for the
dismissal or suspension of a representation
proceedings considering that a registered labor
organization continues to be a legitimate one entitled to
all the rights appurtenant thereto until a final valid
order is issued canceling such registration. 11
In essence, therefore, the real controversy in this case centers on the
question of whether or not, after the necessary papers and documents
have been filed by a labor organization, recognition by the Bureau of
Labor Relations merely becomes a ministerial function.
We do not agree.
In the first place, the public respondent's views as expressed in his
December 29, 1993 Resolution miss the entire point behind the nature
and purpose of proceedings leading to the recognition of unions as
legitimate labor organizations. Article 234 of the Labor Code provides:
Art. 234. Requirements of registration. Any
applicant labor organization, association or group of
unions or workers shall acquire legal personality and
shall be entitled to the rights and privileges granted by
law to legitimate labor organizations upon issuance of
the certificate of registration based on the following
requirements:

(c) The names of all its members comprising at least

twenty percent (20%) of all the employees in the
bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one
or more years, copies of its annual financial reports;
and
(e) Four (4) copies of the constitution and by-laws of
the applicant union, minutes of its adoption or
ratification, and the list of the members who
participated in it.
A more than cursory reading of the aforecited provisions clearly
indicates that the requirements embodied therein are intended as
preventive measures against the commission of fraud. After a labor
organization has filed the necessary papers and documents for
registration, it becomes mandatory for the Bureau of Labor Relations
to check if the requirements under Article 234 have been sedulously
complied with. If its application for registration is vitiated by
falsification and serious irregularities, especially those appearing on
the face of the application and the supporting documents, a labor
organization should be denied recognition as a legitimate labor
organization. And if a certificate of recognition has been issued, the
propriety of the labor organization's registration could be assailed
directly through cancellation of registration proceedings in accordance
with Articles 238 and 239 of the Labor Code, or indirectly, by
challenging its petition for the issuance of an order for certification
election.

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

(b) The names of its officers, their addresses, the
principal address of the labor organization, the minutes
of the organizational meetings and the list of the
workers who participated in such meetings;

These measures are necessary and may be undertaken

simultaneously if the spirit behind the Labor Code's requirements
for registration are to be given flesh and blood. Registration
requirements specifically afford a measure of protection to
unsuspecting employees who may be lured into joining unscrupulous
or fly-by-night unions whose sole purpose is to control union funds or
use the labor organization for illegitimate ends. 12 Such requirements
are a valid exercise of the police power, because the activities in which
4

labor organizations, associations and unions of workers are engaged

directly affect the public interest and should be protected. 13
Thus, in Progressive Development Corporation vs. Secretary of
Labor and Employment, 14 we held:
The controversy in this case centers on the
requirements before a local or chapter of a federation
may file a petition for certification election and be
certified as the sole and exclusive bargaining agent of
the petitioner's employees.

purpose is to control union funds or to use the union

for dubious ends.
xxx xxx xxx
. . . It is not this Court's function to augment the
requirements prescribed by law in order to make them
wiser or to allow greater protection to the workers and
even their employer. Our only recourse is, as earlier
discussed, to exact strict compliance with what the law
provides as requisites for local or chapter formation.

xxx xxx xxx

xxx xxx xxx

But while Article 257 cited by the Solicitor General

directs the automatic conduct of a certification election
in an unorganized establishment, it also requires that
the petition for certification election must be filed by a
legitimate labor organization . . .

The Court's conclusion should not be misconstrued as

impairing the local union's right to be certified as the
employees' bargaining agent in the petitioner's
establishment. We are merely saying that the local
union must first comply with the statutory
requirements in order to exercise this right. Big
federations and national unions of workers should take
the lead in requiring their locals and chapters to
faithfully comply with the law and the rules instead of
merely snapping union after union into their folds in a
furious bid with rival federations to get the most
number of members

xxx xxx xxx

. . . The employer naturally needs assurance that the
union it is dealing with is a bona-fide organization, one
which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the
certification and attestation requirements will in a
marked degree allay these apprehensions of
management. Not only is the issuance of any false
statement and misrepresentation or ground for
cancellation of registration (see Article 239 (a), (c) and
(d)); it is also a ground for a criminal charge of perjury.
The certification and attestation requirements are
preventive measures against the commission of fraud.
They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining
unscrupulous or fly-by-night unions whose sole

Furthermore, the Labor Code itself grants the Bureau of Labor

Relations a period of thirty (30) days within which to review all
applications for registration. Article 235 provides:
Art. 235. Action on application. The Bureau shall act
on all applications for registration within thirty (30)
days from filing.
All requisite documents and papers shall be certified
under oath by the secretary or the treasurer of the
5

organization, as the case may be, and attested to by its

president.
The thirty-day period in the aforecited provision ensures that any
action taken by the Bureau of Labor Relations is made in consonance
with the mandate of the Labor Code, which, it bears emphasis,
specifically requires that the basis for the issuance of a certificate of
registration should be compliance with the requirements for
recognition under Article 234. Since, obviously, recognition of a labor
union or labor organization is not merely a ministerial function, the
question now arises as to whether or not the public respondent
committed grave abuse of discretion in affirming the Med-Arbiter's
order in spite of the fact that the question of the Union's legitimacy
was squarely put in issue and that the allegations of fraud and
falsification were adequately supported by documentary evidence.
The Labor Code requires that in organized and
unorganized 15 establishments, a petition for certification
election mustbe filed by a legitimate labor organization. The
acquisition of rights by any union or labor organization, particularly
the right to file a petition for certification election, first and foremost,
depends on whether or not the labor organization has attained the
status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily disregarded the
petitioner's prayer that the former look into the legitimacy of the
respondent. Union by a sweeping declaration that the union was in the
possession of a charter certificate so that "for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a legitimate labor
organization." 16 Glossing over the transcendental issue of fraud and
misrepresentation raised by herein petitioner, Med-Arbiter Rasidali
Abdullah held that:
The alleged misrepresentation, fraud and false
statement in connection with the issuance of the
charter certificate are collateral issues which could be
ventilated in the cancellation proceedings. 17

It cannot be denied that the grounds invoked by petitioner for the

cancellation of respondent Union's registration fall under paragraph
(a) and (c) of Article 239 of the Labor Code, to wit:
(a) Misrepresentation, false statement or fraud in
connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the
minutes of ratification, the list of members who took
part in the ratification of the constitution and by-laws
or amendments thereto, the minutes of ratification, the
list of members who took part in the ratification;
xxx xxx xxx
(c) Misrepresentation, false statements or fraud in
connection with the election of officers, minutes of the
election of officers, the list of voters, or failure to
submit these documents together with the list of the
newly elected-appointed officers and their postal
addresses within thirty (30) days from election.
xxx xxx xxx
The grounds ventilated in cancellation proceedings in accordance with
Article 239 of the Labor Code constitute a grave challenge to the right
of respondent Union to ask for certification election. The Med-Arbiter
should have looked into the merits of the petition for cancellation
before issuing an order calling for certification election. Registration
based on false and fraudulent statements and documents confer no
legitimacy upon a labor organization irregularly recognized, which, at
best, holds on to a mere scrap of paper. Under such circumstances, the
labor organization, not being a legitimate labor organization, acquires
no rights, particularly the right to ask for certification election in a
bargaining unit.
As we laid emphasis in Progressive Development Corporation
Labor, 18 "[t]he employer needs the assurance that the union it is
dealing with is a bona fide organization, one which has not submitted
6

false statements or misrepresentations to the Bureau." Clearly, fraud,

falsification and misrepresentation in obtaining recognition as a
legitimate labor organization are contrary to the Med-Arbiter's
conclusion not merely collateral issues. The invalidity of respondent
Union's registration would negate its legal personality to participate in
certification election.
Once a labor organization attains the status of a legitimate labor
organization it begins to possess all of the rights and privileges
granted by law to such organizations. As such rights and privileges
ultimately affect areas which are constitutionally protected, the
activities in which labor organizations, associations and unions are
engaged directly affect the public interest and should be zealously
protected. A strict enforcement of the Labor Code's requirements for
the acquisition of the status of a legitimate labor organization is in
order.
Inasmuch as the legal personality of respondent Union had been
seriously challenged, it would have been more prudent for the MedArbiter and public respondent to have granted petitioner's request for
the suspension of proceedings in the certification election case, until
the issue of the legality of the Union's registration shall have been
resolved. Failure of the Med-Arbiter and public respondent to heed
the request constituted a grave abuse of discretion.
WHEREFORE, PREMISES CONSIDERED, the instant petition is
GRANTED and the Resolution and Order of the public respondent
dated December 29, 1993 and January 24, 1994, respectively, are
hereby SET ASIDE.
The case is REMANDED to the Med-Arbiter to resolve with
reasonable dispatch petitioner's petition for cancellation of
respondent Union's registration.
SO ORDERED.

COMBALICER, petitioners,
vs.
LIBERTY COTTON MILLS, INC., PHILIPPINE
ASSOCIATION OF FREE LABOR UNION (PAFLU) and the
COURT OF INDUSTRIAL RELATIONS, respondents.
Carlos E. Santiago for petitioners.
Paredes, Poblador, Nazareno, Azada, Tomacuz & Paredes for
respondent Liberty Cotton Mills, Inc. Ernesto D. Llaguno for
respondent Union.
Jose K. Manguiat, Jr. for respondent Court.
Labor relations; Labor unions; Status of national union in relation to
local union affiliated with it; Case at bar.In the Collective Bargaining
Agreements, it appears that PAFLU has been recognized as the sole
bargaining agent for all the employees of the Company other than its
supervisors and security guards. The PAFLU, 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 including the freedom to disaffiliate when
the circumstances warrant. This is clearly provided in its Constitution
and By-Laws, specifically Article X on Union Affiliation.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-33987 September 4, 1975

LIBERTY COTTON MILLS WORKERS UNION, RAFAEL
NEPOMUCENO, MARIANO CASTILLO, NELLY ACEVEDO,
RIZALINO CASTILLO and RAFAEL

Same; Same; Validity of disaffiliation by local union from national

union where disaffiliation in accordance with unions Constitution and
By-Laws; Case at bar.Under the unions Constitution and By-Laws,
the local union shall be affiliated with the PAFLU, and shall remain an
affiliate as long as ten or more of its members evidence their desire to
continue the said local unions affiliation. The record shows that only
four out of its members remained for 32 out of the 36 members of the
Union signed the resolution of disaffiliation. The disaffiliation was,
therefore, valid under the locals Constitution and By-Laws which,
taken together with the Collective Bargaining Agreement, is
controlling. The disaffiliation, coming as it did from the greater
majority of its members, is more than enough to show the collective
desire of the members of the local union to sever their relations from
8

the mother federation. The right of disaffiliation is inherent in the

compact and such act should not have been branded as an act of
disloyalty, especially considering the cause which impelled the union
to take such a step.

Petition for Certiorari to review the decision dated March 30, 1971 of
the Court of Industrial Relations in Case No. 4216, dismissing
petitioners' complaint for unfair labor practice.
The factual background of this case is as follows:

Same; Same; Dismissal of employees who signed resolution of

disaffiliation; Where dismissal at the instance of the national union,
liability of company limited only to reinstatement of employees
dismissed; Case at bar.Acting on the request of the mother
federation the Company sent notices of termination to the officers of
the local union, heavily relying on the Collective Bargaining
Agreement. The stipulation in the Collective Bargaining Agreement
does not bind the courts much less released the Company from
liability should a finding for unfair labor practice be positive.
`However, considering that the dispute revolved around the mother
federation and its local, with the company dismissing the workers
atthe instance of the mother federation, the Companys liability should
be limited to the immediate reinstatement of the workers.
Same; Same; Same; Liability of national union to pay backwages of
dismissed employees; Payment of backwages equivalent to three
years wages without deduction or qualification.Considering that the
dismissal of the employees was effected without previous hearing, and
at the instance of PAFLU, this mother federation should be held liable
to the dismissed Employees for the payment of their back wages.
Following the precedent of Mercury Drug Co. vs. CIR, of fixing an
amount of net backwages and doing away with the protracted process
of determining the complainants-workers earnings elsewhere during
the period of their illegal dismissal, the Court fixes the amount of
backwages to be paid under this decision to the complainants-workers
at three (3) years backwages without deduction or qualification.
Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., 66
SCRA 512, No. L-33987 September 4, 1975
ESGUERRA, J.:

The Liberty Cotton Mills Workers Union, hereinafter referred to as the

Union, adopted its Constitution and By-laws on January 1,
1959. 1 Among other things, the said Constitution provided:
ARTICLE I NAME AND DOMICILE.
Section 1. The name of this organization shall be
Liberty Cotton Mills Workers Union-PAFLU.
Section 2. This Union shall have its office at l233
Tecson, Tindalo, Tondo, Manila.
xxx xxx xxx
ARTICLE X UNION AFFILIATION
Section 1. The Liberty Cotton Mills Workers UnionPaflu shall be affiliated with the Philippine Association
of Free Labor Unions, otherwise known as PAFLU, and
shall remain an affiliate as long as ten or more of its
members evidence their desire to continue the said
local union's affiliation, in accordance with the Paflu
Constitution, Article XI-Paragraph 11:15 thereof;
ARTICLE XIII CHARGES, TRIALS, AND
IMPEACHMENT OF OFFICERS
AND MEMBERS: APPEALS.
Section 1. Any member or officer of the Liberty Cotton
Mills Workers Union-Paflu may be charged, tried or
impeached if an officer, in accordance with this and the
PAFLU CONSTITUTION.
9

On October 1, 1959, a Collective Bargaining Agreement 2 was entered

into by and between the Company and the Union represented by
PAFLU. Said Agreement contained these clear and unequivocal
provisions:

I. UNION RECOGNITION
The COMPANY recognizes the UNION
as the sole bargaining agent for all of its
employees, other than supervisors ...
consonant with the certification of the
said UNION by the Court of Industrial
Relations in Case No. 627-MC, entitled"
In re Petition for Certification Election,
Liberty Cotton Mills, Inc., petitioner."

This Agreement, made and entered into this 1st day of

October, 1959, in the City of Manila, by and between
The LIBERTY COTTON MILLS INC., a
corporation duly organized and existing
under the laws of the Philippines, with
principal office at 549 San Francisco
Street, Karuhatan, Polo, Bulacan,
hereinafter referred to as the
COMPANY, represented in this Act by
its President, Mr. RAFAEL GOSINGCO:

III. UNION SECURITY

All employees who, at the time of the
signing of this Agreement are members
of the UNION, or who, at any time
during the effectivity of this Agreement,
may join the UNION, shall as a
condition for continued employment,
remain members of the UNION while
this agreement remains in force; any
employee, who, at any time during the
life of this agreement shall resign from
the UNION or be expelled, therefrom in
accordance with its Constitution and ByLaws for non-payment of union dues or
other duly approved union assessments
or for disloyalty to the UNION shall be
dismissed from employment by the
COMPANY upon request in writing by
the UNION which shall hold the
COMPANY free from any liability arising
from or caused by such dismissal.

AND
THE PHILIPPINE ASSOCIATION OF
FREE LABOR UNIONS, a legitimate
labor organization existing and
operating under the laws of the
Philippines, with postal address at 1233
Tecson, Tindalo, Tondo, Manila,
hereinafter referred to as the UNION,
represented in this Act by its National
Treasurer and duly authorized
representative, Mr. CATALINO G.
LUZANO, herein acting for and in behalf
of its affiliate the LIBERTY COTTON
MILLS WORKERS UNION-PAFLU, and
the employees of the Company in the
appropriate bargaining unit hereinafter
defined:
WITNESSETH:

XI. TERM
This Agreement shall be effective from
October 1, 1959 to September 30, 1961,
10

during which time it shall be binding

upon the parties hereto and all the
employees of COMPANY comprised
within the appropriate bargaining unit
defined above, and may not be modified
by court action, by concerted activities
or by any other means. ... Should, either
party fail to give written notice to the
other of its desire to amend or
discontinue this Agreement at least
thirty (30) days from the expiry date set
forth above, this Agreement shall be
continued in force for one (1) year, and
thereafter for yearly terms unless
written notice is given at least thirty (30)
days from the expiration of the contract.
The above Collective Bargaining Agreement was amended on
February 28, 1964, thus: 3
Article III. UNION SECURITY
Additional Clause
The Company agrees to encourage
casual workers and non-union members
to join the Union which is the sole and
exclusive agent for all the employees
covered by this Agreement.
Article XI. DURATION
The Duration of this Agreement shall be
for two (2) years, that is from November
2, 1963 up to November, 1965.

The Agreements aforementioned bore the signatures of

representatives of both the Company and the PAFLU, and the
incumbent President of the local union.
On March 13, 1964, while the Collective Bargaining Agreement was in
full force, Marciano Castillo and Rafael Nepomuceno, President and
Vice-President, respectively, of the local union, wrote PAFLU, its
mother federation, complaining about the legal counsel assigned by
the PAFLU to assist them in a ULP case (Case No. 4001) they filed
against the Company. In said letter, the local union expressed its
dissatisfaction and loss of confidence in the PAFLU lawyers, claiming
that PAFLU never lifted a finger regarding this particular complaint.
On May 17, 1964, thirty two (32) out of the 36 members of the local
union disaffiliated themselves from respondent PAFLU pursuant to
their local union's Constitution and By-Laws, specifically Article X
thereof, supra (p. 12 Record). A copy of the signed resolution of
disaffiliation was furnished the Company as well as the Bureau of
Labor Relations. The following day, the local union wrote the
Company and required the turn-over of the checked-off dues directly
to its Treasurer.
On May 27, 1964, PAFLU, thru its National Secretary wrote the
Company this letter:
This is to inform your good office that sometime last
May 25, 1964, our federation was in receipt of a letter
signed by 32 persons and informing us of their desire to
disaffiliate the local union from the mother federation
PAFLU. The members and officers who made the
letter have no right to do the same under our existing
contract and under the PAFLUs Constitution and ByLaws.
We wish to make it clear with the management that the
contractural union in our contract which was signed a
few months ago is the Philippine Association of Free
Labor Union (PAFLU). The actuation made by the
11

supposed union members is inconsistent with the

present contract we have and under the provisions of
"Maintenance of Union Membership" they can an be
dismissed. Under the PAFLUs Constitution that is null
and void. And in view of the disloyalty shown by those
members, the mother federation will take over the
administration of the Union in dealing with the
management especially.
We inform your goodself that the mother federation is
not honoring the said letter and we request you do the
same under the circumstances.
Hence, all the communications pertaining to union
business and other relative matters be coursed to the
mother federation for prompt action.
And on May 29,1964, PAFLU wrote the Company again, this time
quoting en toto Article III of the Collective Bargaining Agreement on
"Union Security" and requesting the termination of the employment of
Rafael Nepomuceno, Marciano Castillo, Nelly Acevedo, Enrique
Managan, Rizalino Castillo and Rafael Combalicer, all petitioners
herein. PAFLU at the same time expelled the aforementioned workers
from their' union membership in the mother federation for allegedly
"instigating union disaffiliation.".
On May 30,1964, the Company terminated the employment of the
members expelled by the PAFLU (Exhs. "D", "D-1" to "D-3" pp. 14-17
Record). On the last day of May, 1964, counsel for the ousted workers
wrote the Company requesting their reinstatement. This was denied
by the Company; hence the complaint for unfair labor practice filed
with the Court of Industrial Relations.
After due hearing, the Court rendered its decision dismissing the
complaint, but with a strong' recommendation for the reinstatement
of complainant workers in respondent Company. The workers
(petitioners herein) being unsatisfied with the decision, appealed to
this Court and raised the following questions:

1. Under the Collective Bargaining Agreement, who

between the PAFLU and the local union is the sole
bargaining agent of the workers of the Company?
2. Was the disaffiliation of the local union from the
PAFLU valid and justified under the Constitution and
By-laws of the Union?
3. Was the disaffiliation of the Union from the PAFLU
an act of disloyalty of the petitioners (workers) which
could be a valid ground for their expulsion from their
own union and their dismissal from the Company?
4. Does the PAFLU as the mother federation of the
union possess the power to expel the officers and
members of the union under the Constitution and ByLaws? And assuming it has such powers, were the
petitioner workers validly expelled from the Union in
accordance with the Constitution and By-Laws?
5. May the workers be summarily dismissed by the
Company under the Collective Bargaining Agreement
even without valid proof of their valid expulsion from
their own union?
6. Did not the dismissal of only the five (5) petitioner
workers constitute discrimination, considering that the
disaffiliation was signed by more than the majority of
the union members?
All these questions boil down to the single issue of whether or not the
dismissal of the complaining employees, petitioners herein, was
justified or not. The resolution of this question hinges on a precise and
careful analysis of the Collective Bargaining Agreements. (Exhs. "H'
and "I") In these contracts it appears that PAFLU has been recognized
as the sole bargaining agent for all the employees of the Company
other than its supervisors and security guards. Moreover it likewise
appears that "PAFLU, represented in this Act by its National
12

Treasurer, and duly authorized representative, ... (was) acting for and
in behalf of its affiliate, the Liberty Cotton Mills Workers Union and
the employees of the Company, etc.' In other words, the PAFLU,
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 including the freedom to
disaffiliate when the circumstances warrant. This is clearly provided in
its Constitution and By-Laws, specifically Article X on Union
Affiliation, supra. At this point, relevant is the ruling in an American
case: 4
The locals are separate and distinct units primarily
designed to secure and maintain an equality of
bargaining power between the employer and their
employee-members in the economic struggle for the
fruits of the joint productive effort of labor and
capital; and the association of the locals into the
national union (as PAFLU) was in furtherance of the
same end. These associations are consensual entities
capable of entering into such legal relations with their
members. The essential purpose was the affiliation of
the local unions into a common enterprise to increase
by collective action the common bargaining power in
respect of the terms and conditions of labor. Yet the
locals remained the basic units of association, free to
serve their own and the common interest of all, subject
to the restraints imposed by the Constitution and ByLaws of the Association, and also to renounce the
affiliation for mutual welfare upon the terms laid
down in the agreement which brought it into
existence. (Emphasis supplied)
This brings Us to the question of disaffiliation which was the root
cause of the dismissal. It is claimed by PAFLU that the local union
could not have validly disaffiliated from it as the Union Security
Clause so provided. We have meticulously read the provision of the
supposed union security clause and We cannot agree with both the
stand of PAFLU and the respondent court. For while it is correct to say

that a union security clause did exist, this clause was limited by the
provision in the Unions' Constitution and By-Laws, which states:
That the Liberty Cotton Mills Workers Union-PAFLU
shall be affiliated with the PAFLU, and shall remain an
affiliate as long as ten (10) or more of its members
evidence their desire to continue the said local unions
affiliation.
Record shows that only four (4) out of its members remained for 32
out of the 36 members of the Union signed the resolution of
disaffiliation on May 17, 1964, triggered by the alleged negligence of
PAFLU in attending to the needs of its local union, particularly its
failure to assign a conscientious lawyer to the local to attend to the
ULP case they filed against the Company. The disaffiliation was,
therefore, valid under the local's Constitution and By-Laws which,
taken together with the Collective Bargaining Agreement, is
controlling. The Court of Industrial Relations likewise held in its
decision that the act of disaffiliation did not have any effect as the
workers retracted from such act. As stated by the respondent court
... it is believed that the effect of their retraction
obliterates their participation in the resolution. Hence,
under Article X of the said Constitution and By-Laws,
complainant union remained affiliated with respondent
union at the time termination of the services of
complainant workers was requested and when they
were dismissed by the Company on May 30, 1964.
Although the fact of retraction is true, We find that the respondent
court failed to notice the fact that not all signatories to the resolution
of disaffiliation dated May 17, 1964, took part in the retraction. Only a
number of employees, 16 to be exact, retracted. Also, and this is a
significant factor, the retraction is dated June 3, 1964, or four days
after the petitioners herein had been dismissed. There is no use in
saying that the retraction obliterated the act of disaffiliation when they
were already out of the service when it was done. The disaffiliation,
coming as it did from the greater majority of its members, is more
13

than enough to show the collective desire of the members of the

Liberty Cotton Mills Workers Union to sever their relations from the
mother federation. The right of disaffiliation is inherent in the
compact and such act should not have been branded as an act of
disloyalty, especially considering the cause which impelled the union
to take such a step.

Drug Co. vs. CIR, 5 of fixing an amount of net backwages and doing
away with the protracted process of determining the complainantsworkers' earnings elsewhere during the period of their illegal
dismissal, the Court fixes the amount of backwages to be paid under
this decision to the complainants-workers at three (3) years
backwages without deduction or qualification.

Lastly, we will take up the process by which the workers were

dismissed. We find that it was hastily and summarily done. The
PAFLU received the resolution to disaffiliate on or about May 25,
1964, after which it wrote the Company about its stand, first on the
27th of May followed by its letter of the 29th requesting for the
termination of petitioners herein for 'disloyalty in having instigated
disaffiliation'. The Company the acting on the request of the mother
federation sent notices of termination to the officers of the local union
immediately on the day following, or on May 30, 1964, heavily relying
on the Collective Bargaining Agreement, viz:

WHEREFORE, the decision appealed from is reversed and set aside

and the company is hereby ordered to immediately reinstate
complainant workers, within thirty (30) days from notice of this
decision and failure to so reinstate the workers without valid and just
cause shall make respondent company liable to the workers for the
payment of their wages from and after the expiration of such thirtyday period. The mother federation respondent PAFLU is sentenced to
pay complainants-workers the equivalent of three (3) years backwages
without deduction or qualification.

... for disloyalty to the union shall be dismissed from

employment by the Company upon request in writing
by the Union, which shall hold the COMPANY free
from any liability arising from or caused by such
dismissal.
While the above quoted provision may have been the basis for the
Company's actuation, as in fact it was alleged by the Company in its
Brief, We are of the opinion that such stipulation does not bind the
courts much less released the Company from liability should a finding
for unfair labor practice be positive. In the case at bar, however,
considering that the dispute revolved around the mother federation
and its local, with the company dismissing the workers at the instance
of the mother federation, We believe that the Company's liability
should be limited to the immediate reinstatement of the workers.
Considering, however, that their dismissal was effected without
previous hearing, and at the instance of PAFLU, this mother
federation should be, as it is hereby, held liable to the petitioners for
the payment of their back wages. Following the precedent of Mercury

In view of the length of time that this dispute has been pending, this
decision shall be immediately executory upon promulgation and
notice to the parties. Without pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-50283-84 April 20, 1983
DOLORES VILLAR, ROMEO PEQUITO, DIONISIO RAMOS,
BENIGNO MAMARALDO, ORLANDO ACOSTA,
RECITACION BERNUS, ANSELMA ANDAN, ROLANDO DE
GUZMAN and RITA LLAGAS, petitioners,
vs.
THE HON. AMADO G. INCIONG, as Deputy Minister of the
Ministry of Labor, AMIGO MANUFACTURING
INCORPORATED and PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS (PAFLU), respondents.
14

Aniceto Haber for petitioners.

Roberto T. Neri for respondents.
Labor Law; A close-shop agreement is a valid form of union security.
It is true that disaffiliation from a labor union is not open to legal
objection. It is implicit in the freedom of association ordainedby the
Constitution. But this Court has laid down the ruling that a closed
shop is a valid form of union security, and such provision in a
collective bargaining agreement is not a restriction of the right of
freedom of association guaranteed by the Constitution.
Same; The mother union has the right to investigate members of a
local union affiliated to it under the mother unions by-laws and
procedures, and if found guilty to expel such members.We reject
petitioners theory that their expulsion was not valid upon the grounds
adverted to earlier in this Decision. That PAFLU had the authority to
investigate petitioners on the charges filed by their co-employees in
the local union and after finding them guilty as charged, to expel them
from the roll of membership of the Amigo Employees Union-PAFLU is
clear under the constitution of the PAFLU to which the local union
was affiliated. And pursuant to the security clause of the new CBA,
reiterating the same clause in the old CBA, PAFLU was justified in
applying said security clause. We find no abuse of discretion on the
part of the OIC of Regional Office No. 4 in upholding the validity of
the expulsion and on the part of the respondent Deputy Minister of
Labor in sustaining the same.
Same; Same.The contention of petitioners that the charges against
them being intra-union problems, should have been investigated in
accordance with the constitution and by-laws of the Amigo Employees
Union-PAFLU and not of the PAFLU, is not impressed with merit. It is
true that under the Implementing Rules and Regulations of the Labor
Code, in case of intra-union disputes, redress must first be sought
within the organization itself in accordance with its constitution and
by-laws. However, it has been held that this requirement is not
absolute but yields to exception under varying circumstances.

Same; The local unions by-laws shall not apply in the investigation of
charges against its members filed by its officers, who, under said bylaws will also act as judges. In such a case, the mother unions by-laws
shall apply.The facts of the instant petition stand on all fours with
the aforecited case that the principle therein enunciated applies here
as well. In the case at bar, the petitioners were charged by the officers
of the Amigo Employees Union-PAFLU themselves who were also
members of the Board of Directors of the Amigo Employees UnionPAFLU. Thus, were the petitioners to be charged and investigated
according to the local unions constitution, they would have been tried
by a trial committee of three (3) elected from among the members of
the Board who are themselves the accusers.
(Section 2, Article 11, Constitution of the Local Union). Petitioners
would be in a far worse position had this procedure been followed.
Nonetheless, petitioners admit in their petition that two (2) of the six
(6) charges, i.e. disaffiliation and filing a petition for certification
election, are not intra-union matters and, therefore, are cognizable by
PAFLU.
Same; A mere minority of a local unions membership cannot
disaffiliate their union from its mother union.Extant from the
records is the fact that petitioners numbering ten (10), were among
the ninety-six (96) who signed the Sama-Samang Kapasiyahan
whereas there are two hundred thirty four (234) union members in
the Amigo Employees Union-PAFLU. Hence, petitioners constituted a
small minority for which reason they could not have successfully
disaffiliated the local union from PAFLU. Since only 96 wanted
disaffiliation, it can be inferred that the majority wanted the union to
remain an affiliate of PAFLU and this is not denied or disputed by
petitioners. The action of the majority must, therefore, prevail over
that of the minority members.
Same; A mere minority cannot file a petition for union disaffiliation
even within the prescribed 60-day period before the expiry of an
existing CBA.It is true, as contended by petitioners, that under
Article 257 of the Labor Code and Section 3, Rule 2, Book 2 of its
Implementing Rules, questions of exclusive bargaining representation
15

are entertainable within the sixty (60) days prior to the expiry date of
an existing CBA, and that they did file a petition for certification
election within that period. But the petition was filed in the name of
the Amigo Employees Union which had not disaffiliated from PAFLU,
the mother union. Petitioners being a mere minority of the local union
may not bind the majority members of the local union.
Same; An unregistered union has no legal personality and is not
entitled to exercise the rights and privileges of a labor union.But the
independent union organized after the Sama-Samang Kapasiyahan
executed February 7, 1977 could not have been registered earlier,
much less March 27, 1967 under Registration Certificate No. 5290-IP.
As such unregistered union, it acquires no legal personality and is not
entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration.
Same; An unregistered union cannot validly present or raise
representation issues.Simply put, the Amigo Employees Union
(Independent) which petitioners claim to represent, not being a
legitimate labor organization, may not validly present representation
issues. Therefore, the act of petitioners cannot be considered a
legitimate exercise of their right to self-organization. Hence, We
affirm and reiterate the rationale explained in Phil. Association of Free
Labor Unions vs. Sec. of Labor case, supra, in order to protect
legitimate labor and at the same time maintain discipline and
responsibility within its ranks.
Same; The execution of a new CBA is no bar to prosecution of
members for violation of the union security clause of the old CBA
where the same clause has been incorporated in the new CBA.The
contention of petitioners that the new CBA concluded between Amigo
Employees Union-PAFLU and the Company on February 15, 1977
containing the union security clause cannot be invoked as against the
petitioners for offenses committed earlier than its conclusion,
deserves scant consideration. We find it to be the fact that the union
security clause provided in the new CBA merely reproduced the union
security clause provided in the old CBA about to expire. And since

petitioners were expelled from Amigo Employees Union-PAFLU on

March 28, 1982 upon denial of their Motion for Reconsideration of the
decision expelling them, the CBA of February 15, 1977 was already
applicable to their case.
Same; Same.Finally, We reject petitioners contention that
respondent Minister committed error in law amounting to grave abuse
of discretion when he affirmed the conclusion made by the RO4 OIC,
upholding the legal applicability of the security clause of a CBA over
alleged offenses committed earlier than its conclusion and within the
60-day freedom period of an old CBA. In the first place, as We stated
earlier, the security clause of the new CBA is a reproduction or
reiteration of the same clause in the old CBA. While petitioners were
charged for alleged commission of acts of disloyalty inimical to the
interests of the Amigo Employees Union-PAFLU in the Resolution of
February 14, 1977 of the Amigo Employees Union-PAFLU and on
February 15, 1977 PAFLU and the Company entered into and
concluded a new collective bargaining agreement, petitioners may not
escape the effects of the security clause under either the old CBA or
the new CBA by claiming that the old CBA had expired and that the
new CBA cannot be given retroactive enforcement. To do so would be
to create a gap during which no agreement would govern, from the
time the old contract expired to the time a new agreement shall have
been entered into with the union.
Same; One who exercises his right to disaffiliate from union
membership has to shoulder its consequences.We, therefore, hold
and rule that petitioners, although entitled to disaffiliate from their
union and form a new organization of their own, must, however, suffer
the consequences of their separation from the union under the
security clause of the CBA. Villar vs. Inciong, 121 SCRA 444, No. L50283-84 April 20, 1983
GUERRERO, J.:
Petition for review by certiorari to set aside the Order dated February
15, 1979 of respondent Deputy Minister Amado G. Inciong affirming
the Decision of the OIC of Regional Office No. 4 dated October 14,
16

1978 which jointly resolved RO4-Case No. T-IV-3549-T and RO4-Case

No. RD 4-4088-77-T.
The facts are as follows:
Petitioners were members of the Amigo Employees Union-PAFLU, a
duly registered labor organization which, at the time of the present
dispute, was the existing bargaining agent of the employees in private
respondent Amigo Manufacturing, Inc. (hereinafter referred to as
Company). The Company and the Amigo Employees Union-PAFLU
had a collective bargaining agreement governing their labor relations,
which agreement was then about to expire on February 28, 1977.
Within the last sixty (60) days of the CBA, events transpired giving
rise to the present dispute.
On January 5, 1977, upon written authority of at least 30% of the
employees in the company, including the petitioners, the Federation
of Unions of Rizal (hereinafter referred to as FUR) filed a petition for
certification election with the Med-Arbiter's Office, Regional Office
No. 4 of the Ministry of Labor and Employment. The petition was,
however, opposed by the Philippine Association of Free Labor Unions
(hereinafter referred to as PAFLU) with whom, as stated earlier, the
Amigo Employees Union was at that time affiliated. PAFLU's
opposition cited the "Code of Ethics" governing inter-federation
disputes among and between members of the Trade Unions Congress
of the Philippines (hereinafter referred to as TUCP). Consequently, the
Med-Arbiter indorsed the case to TUCP for appropriate action but
before any such action could be taken thereon, the petitioners
disauthorized FUR from continuing the petition for certification
election for which reason FUR withdrew the petition.
On February 7, 1977, the same employees who had signed the petition
filed by FUR signed a joint resolution reading in toto as follows:
Sama-Samang Kapasiyahan
1. TUMIWALAG bilang kasaping Unyon ng Philippine
Association of Free Labor Unions (PAFLU) at

kaalinsabay nito, inaalisan namin ang PAFLU ng

kapangyarihan na katawanin kami sa anumang
pakikipagkasundo (CBA) sa Pangasiwaan ng aming
pinapasukan at kung sila man ay nagkasundo o
magkakasundo sa kabila ng pagtitiwalag na ito, ang
nasabing kasunduan ay hindi namin pinagtitibay at
tahasang aming itinatakwil/tinatanggihan;
2. BINABAWI namin ang aming pahintulot sa
Federation of Unions of Rizal (FUR) na katawanin
kami sa Petition for Certification Election (RO4-MED
Case No. 743-77) at/o sa sama-samang
pakikipagkasundo sa aming patrons;
3. PANATILIHIN na nagsasarili (independent) ang
aming samahan, AMIGO EMPLOYEES' UNION,
alinsunod sa Artikulo 240 ng Labor Code;
4. MAGHAIN KAAGAD ang aming Unyong nagsasarili,
sa pamumuno ng aming pangsamantalang Opisyal na
kinatawan, si Ginang DOLORES VILLAR, ng Petition
for Certification Election sa Department of Labor, para
kilalanin ang aming Unyong nagsasarili bilang Tanging
kinatawan ng mga manggagawa sa sama-samang
pakikipagkasundo (CBA);
5. BIGYAN ng kopya nito ang bawa't kinauukulan at
ang mga kapasiyahang ito ay magkakabisa sa oras na
matanggap ng mga kinauukulan ang kani-kanilang sipi
nito. 1
Immediately thereafter or on February 9, 1977, petitioner Dolores
Villar, representing herself to be the authorized representative of the
Amigo Employees Union, filed a petition for certification election in
the Company before Regional Office No. 4, with the Amigo Employees
Union as the petitioner. The Amigo Employees Union-PAFLU
intervened and moved for the dismissal of the petition for certification
election filed by Dolores Villar, citing as grounds therefor, viz: (a) the
17

petition lacked the mandatory requisite of at least 30% of the

employees in the bargaining unit; (2) Dolores Villar had no legal
personality to sign the petition since she was not an officer of the
union nor is there factual or legal basis for her claim that she was the
authorized representative of the local union; (3) there was a pending
case for the same subject matter filed by the same individuals; (4) the
petition was barred by the new CBA concluded on February 15, 1977;
(5) there was no valid disaffiliation from PAFLU; and (6) the
supporting signatures were procured through false pretenses.
Finding that the petition involved the same parties and causes of
action as the case previously indorsed to the TUCP, the Med-Arbiter
dismiss the petition filed by herein petitioner Villar, which dismissal is
still pending appeal before the Bureau of Labor Relations.

granting additional benefits to the workers, also reincorporated the

same provisions of the existing CBA, including the union security
clause reading, to wit:
ARTICLE III
UNION SECURITY WITH RESPECT TO PRESENT
MEMBERS
All members of the UNION as of the signing of this
Agreement shall remain members thereof in good
standing. Therefore, any members who shall resign, be
expelled, or shall in any manner cease to be a member
of the UNION, shall be dismissed from his employment
upon written request of the UNION to the Company. 2

In the meantime, on February 14, 1977, the Amigo Employees UnionPAFLU called a special meeting of its general membership. A
Resolution was thereby unanimously approved which called for the
investigation by the PAFLU national president, pursuant to the
constitution and by-laws of the Federation, of all of the petitioners and
one Felipe Manlapao, for "continuously maligning, libelling and
slandering not only the incumbent officers but even the union itself
and the federation;" spreading 'false propaganda' that the union
officers were 'merely appointees of the management', and for causing
divisiveness in the union.

Subsequently, petitioners were summoned to appear

before the PAFLU Trial Committee for the aforestated
investigation of the charges filed against them by the
Amigo Employees Union-PAFLU. Petitioners, however,
did not attend but requested for a "Bill of Particulars"
of the charges, which charges were stated by the
Chairman of the committee as follows:

Pursuant to the Resolution approved by the Amigo Employees UnionPAFLU, the PAFLU, through its national President, formed a Trial
Committee to investigate the local union's charges against the
petitioners for acts of disloyalty inimical to the interest of the local
union, as well as directing the Trial Committee to subpoena the
complainants (Amigo Employees Union-PAFLU) and the respondents
(herein petitioners) for investigation, to conduct the said investigation
and to submit its findings and recommendations for appropriate
action.

2. Filling petition for certification election with the

Bureau of Labor Relations and docketed as Case No.
R04-MED-830-77 and authorizing a certain Dolores
Villar as your authorized representative without the
official sanction of the mother Federation- PAFLU.

And on the same date of February 15, 1977, the Amigo Employees
Union- PAFLU and the Company concluded a new CBA which, besides

4. By spreading false propaganda among members of

the Amigo Employees Union-PAFLU that the
18

1. Disaffiliating from PAFLU and affiliating with the

Federation of Unions of Rizal (FUR).

3. Maligning, libelling and slandering the incumbent

officers of the union as well as of the PAFLU
Federation.

incumbent union officers are 'merely appointees' of the

management.
5. By sowing divisiveness instead of togetherness
among members of the Amigo Employees UnionPAFLU.
6. By conduct unbecoming as members of the Amigo
Employees Union- PAFLU which is highly prejudicial
to the union as well as to the PAFLU Federation.
All these charges were formalized in a resolution of the
incumbent officers of the Amigo Employees UnionPAFLU dated February 14, 1977. 3
Not recognizing PAFLU's jurisdiction over their case, petitioners again
refused to participate in the investigation rescheduled and conducted
on March 9, 1979. Instead, petitioners merely appeared to file their
Answer to the charges and moved for a dismissal.
Petitioners contend in their Answer that neither the disaffiliation of
the Amigo Employees Union from PAFLU nor the act of filing the
petition for certification election constitute disloyalty as these are in
the exercise of their constitutional right to self-organization. They
further contended that PAFLU was without jurisdiction to investigate
their case since the charges, being intra-union problems within the
Amigo Employees Union-PAFLU, should be conducted pursuant to
the provisions of Article XI, Sections 2, 3, 4 and 5 of the local union's
constitution and by-laws.
The complainants, all of whom were the then incumbent officers of the
Amigo Employees Union-PAFLU, however, appeared and adduced
their evidence supporting the charges against herein petitioners.
Based on the findings and recommendations of the PAFLU trial
committee, the PAFLU President, on March 15, 1977, rendered a
decision finding the petitioners guilty of the charges and disposing in
the last paragraph thereof, to wit,

Excepting Felipe Manlapao, the expulsion from the

AMIGO EMPLOYEES UNION of all the other nine (9)
respondents, Dionisio Ramos, Recitation Bernus,
Dolores Villar, Romeo Dequito, Rolando de Guzman,
Anselma Andan, Rita Llagas, Benigno Mamaradlo and
Orlando Acosta is hereby ordered, and as a
consequence the Management of the employer, AMIGO
MANUFACTURING, INC. is hereby requested to
terminate them from their employment in conformity
with the security clause in the collective bargaining
agreement. Further, the Trial Committee is directed to
investigate Felipe Manlapao when he shall have
reported back for duty. 4
Petitioners appealed the Decision to the PAFLU, citing the same
grounds as before, and in addition thereto, argued that the PAFLU
decision cannot legally invoke a CBA which was unratified, not
certified, and entered into without authority from the union general
membership, in asking the Company to terminate them from their
employment. The appeal was, likewise, denied by PAFLU in a
Resolution dated March 28, 1977.
After denying petitioner's appeal, PAFLU on March 28, 1977 sent a
letter to the Company stating, to wit,
We are furnishing you a copy of our Resolution on the
Appeal of the respondent in Administrative Case No. 2,
Series of 1977, Amigo Employees Union-PAFLU vs.
Dionisio Ramos, et al.
In view of the denial of their appeal and the Decision of
March 15, 1977 having become final and executory we
would appreciate full cooperation on your part by
implementing the provision of our CBA on security
clause by terminating the respondents concerned from
their employment. 5

19

This was followed by another letter from PAFLU to the Company

dated April 25, 1977, reiterating the demand to terminate the
employment of the petitioners pursuant to the security clause of the
CBA, with a statement absolving the Company from any liability or
damage that may arise from petitioner's termination.
Acting on PAFLU's demand, the Company informed PAFLU that it
will first secure the necessary clearances to terminate petitioners. By
letter dated April 28, 1977, PAFLU requested the Company to put
petitioners under preventive suspension pending the application for
said clearances to terminate the petitioners, upon a declaration that
petitioners' continued stay within the work premises will "result in the
threat to the life and limb of the other employees of the company." 6
Hence, on April 29, 1977, the Company filed the request for clearance
to terminate the petitioners before the Department of Labor, Regional
Office No. 4. The application, docketed as RO4-Case No. 7-IV-3549-T,
stated as cause therefor, "Demand by the Union Pursuant to the Union
Security Clause," and further, as effectivity date, "Termination-upon
issuance of clearance; Suspension-upon receipt of notice of workers
concerned." 7 Petitioners were then informed by memorandum dated
April 29, 1977 that the Company has applied for clearance to
terminate them upon demand of PAFLU, and that each of them were
placed under preventive suspension pending the resolution of the said
applications. The security guard was, likewise, notified to refuse
petitioners entry into the work premises. 8
In an earlier development, on April 25, 1977, or five days before
petitioners were placed under preventive suspension, they filed a
complaint with application for preliminary injunction before the same
Regional Office No. 4, docketed as RO4-Case No. RD-4-4088-77-T,
praying that after due notice and hearing, "(1) A preliminary
injunction be issued forthwith to restrain the respondents from doing
the act herein complained of, namely: the dismissal of the individual
complainants from their employment; (2) After due hearing on the
merits of the case, an Order be entered denying and/or setting aside
the Decision dated March 15, 1977 and the Resolution dated March
28, 1977, issued by respondent Onofre P. Guevara, National President

of respondent PAFLU; (3) The Appeal of the individual complainants

to the General Membership of the complainant AMIGO EMPLOYEES
UNION, dated March 22, 1977, pursuant to Sections 2, 3, 4 & 5, Article
XI in relation of Section 1, Article XII of the Union Constitution and
By-Laws, be given due course; and (4) Thereafter, the said preliminary
injunction be made permanent, with costs, and with such further
orders/reliefs that are just and equitable in the premises." 9
In these two cases filed before the Regional Office No. 4, the parties
adopted their previous positions when they were still arguing before
the PAFLU trial committee.
On October 14, 1977, Vicente Leogardo, Jr., Officer-in-Charge of
Regional Office No. 4, rendered a decision jointly resolving said two
cases, the dispositive portion of which states, to wit,
IN VIEW OF THE FOREGOING, judgment is hereby
rendered granting the application of the Amigo
Manufacturing, Inc., for clearance to terminate the
employment of Dolores D. Villar, Dionisio Ramos,
Benigno Mamaraldo, Orlando Acosta, Recitacion
Bernus, Anselma Andan, Rolando de Guzman, and Rita
Llagas. The application of oppositors, under RO4-Case
No. RD-4-4088-77, for a preliminary injunction to
restrain the Amigo Manufacturing, Inc. from
terminating their employment and from placing them
under preventive suspension, is hereby DISMISSED. 10
Not satisfied with the decision, petitioners appealed to the Office of
the Secretary of Labor. By Order dated February 15, 1979, the
respondent Amado G. Inciong, Deputy Minister of Labor, dismissed
their appeal for lack of merit. 11
Hence, the instant petition for review, raising the following issues:
A. Is it not error in both constitutional and statutory
law by the respondent Minister when he affirmed the
decision of the RO4-Officer-in-Charge allowing the
20

preventive suspension and subsequent dismissal of

petitioners by reason of the exercise of their right to
freedom of association?
B. Is it not error in law by the respondent Minister
when he upheld the decision of the RO4 OIC which
sustained the availment of the respondent PAFLU's
constitution over that of the local union constitution in
the settlement of intra-union dispute?
C. Is it not error in law amounting to grave abuse of
discretion by the Minister in affirming the conclusion
made by the RO4 OIC, upholding the legal applicability
of the security clause of a CBA over alleged offenses
committed earlier than its conclusion, and within the
60-day freedom period of an old CBA? 12
The main thrust of the petition is the alleged illegality of the dismiss of
the petitioners by private respondent Company upon demand of
PAFLU which invoked the security clause of the collective bargaining
agreement between the Company and the local union, Amigo
Employees Union-PAFLU. Petitioners contend that the respondent
Deputy Minister acted in grave abuse of discretion when he affirmed
the decision granting the clearance to terminate the petitioners and
dismissed petitioners' complaint, and in support thereof, allege that
their constitutional right to self-organization had been impaired.
Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not open to legal
objection. It is implicit in the freedom of association ordained by the
Constitution. 13 But this Court has laid down the ruling that a closed
shop is a valid form of union security, and such provision in a
collective bargaining agreement is not a restriction of the right of
freedom of association guaranteed by the Constitution. 14
In the case at bar, it appears as an undisputed fact that on February
15, 1977, the Company and the Amigo Employees Union-PAFLU
entered into a Collective Bargaining Agreement with a union security

clause provided for in Article XII thereof which is a reiteration of the

same clause in the old CBA. The quoted stipulation for closed-shop is
clear and unequivocal and it leaves no room for doubt that the
employer is bound, under the collective bargaining agreement, to
dismiss the employees, herein petitioners, for non- union
membership. Petitioners became non-union members upon their
expulsion from the general membership of the Amigo Employees
Union-PAFLU on March 15, 1977 pursuant to the Decision of the
PAFLU national president.
We reject petitioners' theory that their expulsion was not valid upon
the grounds adverted to earlier in this Decision. That PAFLU had the
authority to investigate petitioners on the charges filed by their coemployees in the local union and after finding them guilty as charged,
to expel them from the roll of membership of the Amigo Employees
Union-PAFLU is clear under the constitution of the PAFLU to which
the local union was affiliated. And pursuant to the security clause of
the new CBA, reiterating the same clause in the old CBA, PAFLU was
justified in applying said security clause. We find no abuse of
discretion on the part of the OIC of Regional Office No. 4 in upholding
the validity of the expulsion and on the part of the respondent Deputy
Minister of Labor in sustaining the same. We agree with the OIC's
decision, pertinent portion of which reads:
Stripped of non-essentials, the basic and fundamental
issue in this case tapers down to the determination of
WHETHER OR NOT PAFLU HAD THE AUTHORITY
TO INVESTIGATE OPPOSITORS AND,
THEREAFTER, EXPEL THEM FROM THE ROLL OF
MEMBERSHIP OF THE AMIGO EMPLOYEES
UNION-PAFLU.
Recognized and salutary is the principle that when a
labor union affiliates with a mother union, it becomes
bound by the laws and regulations of the parent
organization. Thus, the Honorable Secretary of Labor,
in the case of Amador Bolivar, et al. vs. PAFLU, et al.,
21

NLRC Case No. LR-133 & MC-476, promulgated on

December 3, 1973, declaredWhen a labor union affiliates with a parent
organization or mother union, or accepts a charter
from a superior body, it becomes subject to the laws of
the superior body under whose authority the local
union functions. The constitution, by-laws and rules of
the parent body, together with the charter it issues
pursuant thereto to the subordinate union, constitute
an enforceable contract between the parent body and
the subordinate union, and between the members of
the subordinate union inter se. (Citing Labor Unions,
Dangel and Shriber, pp. 279-280).
It is undisputable that oppositors were members of the
Amigo Employees Union at the time that said union
affiliated with PAFLU; hence, under the afore-quoted
principle, oppositors are bound by the laws and
regulations of PAFLU.
Likewise, it is undeniable that in the investigation of
the charges against them, oppositors were accorded
'due process', because in this jurisdiction, the doctrine
is deeply entrenched that the term 'due process' simply
means that the parties were given the opportunity to be
heard. In the instant case, ample and unmistakable
evidence exists to show that the oppositors were
afforded the opportunity to present their evidence, but
they themselves disdained or spurned the said
opportunity given to them.
PAFLU, therefore, correctly and legally acted when,
pursuant to its Constitution and By-Laws, it conducted
and proceeded with the investigation of the charges
against the oppositors and found them guilty of acts
prejudicial and inimical to the interests of the Amigo
Employees Union- PAFLU, to wit: that of falsely and

maliciously slandering the officers of the union;

spreading false propaganda among the members of the
Amigo Employees Union-PAFLU; calling the
incumbent officers as mere appointees and robots of
management; calling the union company-dominated or
assisted union; committing acts unbecoming of the
members of the union and destructive of the union and
its members.
Inherent in every labor union, or any organization for
that matter, is the right of self-preservation. When
members of a labor union, therefore, sow the seeds of
dissension and strife within the union; when they seek
the disintegration and destruction of the very union to
which they belong, they thereby forfeit their rights to
remain as members of the union which they seek to
destroy. Prudence and equity, as well as the dictates of
law and justice, therefore, compelling mandate the
adoption by the labor union of such corrective and
remedial measures in keeping with its laws and
regulations, for its preservation and continued
existence; lest by its folly and inaction, the labor union
crumble and fall.
Correctly and legally, therefore, the PAFLU acted when,
after proper investigation and finding of guilt, it
decided to remove the oppositors from the list of
members of the Amigo Employees Union-PAFLU, and
thereafter, recommended to the Amigo Manufacturing,
Inc.; the termination of the employment of the
oppositors. 15
We see no reason to disturb the same.
The contention of petitioners that the charges against them being
intra-union problems, should have been investigated in accordance
with the constitution and by-laws of the Amigo Employees UnionPAFLU and not of the PAFLU, is not impressed with merit. It is true
22

that under the Implementing Rules and Regulations of the Labor

Code, in case of intra-union disputes, redress must first be sought
within the organization itself in accordance with its constitution and
by-laws. However, it has been held that this requirement is not
absolute but yields to exception under varying circumstances. Thus,
in Kapisanan ng mga Manggagawa sa MRR vs. Hernandez, 20
SCRA 109, We held:
In the case at bar, noteworthy is the fact that the
complaint was filed against the union and its
incumbent officers, some of whom were members of
the board of directors. The constitution and by-laws of
the union provide that charges for any violations
thereof shall be filed before the said board. But as
explained by the lower court, if the complainants had
done so the board of directors would in effect be acting
as respondent investigator and judge at the same time.
To follow the procedure indicated would be a farce
under the circumstances, where exhaustion of remedies
within the union itself would practically amount to a
denial of justice or would be illusory or vain, it will not
be insisted upon, particularly where property rights of
the members are involved, as a condition to the right to
invoke the aid of a court.
The facts of the instant petition stand on all fours with the aforecited
case that the principle therein enunciated applies here as well. In the
case at bar, the petitioners were charged by the officers of the Amigo
Employees Union- PAFLU themselves who were also members of the
Board of Directors of the Amigo Employees Union-PAFLU. Thus, were
the petitioners to be charged and investigated according to the local
union's constitution, they would have been tried by a trial committee
of three (3) elected from among the members of the Board who are
themselves the accusers. (Section 2, Article 11, Constitution of the
Local Union). Petitioners would be in a far worse position had this
procedure been followed. Nonetheless, petitioners admit in their
petition that two (2) of the six (6) charges, i.e. disaffiliation and filing

a petition for certification election, are not intra-union matters and,

therefore, are cognizable by PAFLU.
Petitioners insist that their disaffiliation from PAFLU and filing a
petition for certification election are not acts of disloyalty but an
exercise of their right to self-organization. They contend that these
acts were done within the 60-day freedom period when questions of
representation may freely be raised. Under the peculiar facts of the
case, We find petitioners' insistence untenable.
In the first place, had petitioners merely disaffiliated from the. Amigo
Employees Union-PAFLU, there could be no legal objections thereto
for it was their right to do so. But what petitioners did by the very
clear terms of their "Sama-Samang Kapasiyahan" was to disaffiliate
the Amigo Employees Union-PAFLU from PAFLU, an act which they
could not have done with any effective consequence because they
constituted the minority in the Amigo Employees Union-PAFLU.
Extant from the records is the fact that petitioners numbering ten
(10), were among the ninety-six (96) who signed the "Sama-Samang
Kapasiyahan" whereas there are two hundred thirty four (234) union
members in the Amigo Employees Union-PAFLU. Hence, petitioners
constituted a small minority for which reason they could not have
successfully disaffiliated the local union from PAFLU. Since only 96
wanted disaffiliation, it can be inferred that the majority wanted the
union to remain an affiliate of PAFLU and this is not denied or
disputed by petitioners. The action of the majority must, therefore,
prevail over that of the minority members. 16
Neither is there merit to petitioners' contention that they had the right
to present representation issues within the 60-day freedom period. It
is true, as contended by petitioners, that under Article 257 of the
Labor Code and Section 3, Rule 2, Book 2 of its Implementing Rules,
questions of exclusive bargaining representation are entertainable
within the sixty (60) days prior to the expiry date of an existing CBA,
and that they did file a petition for certification election within that
period. But the petition was filed in the name of the Amigo Employees
Union which had not disaffiliated from PAFLU, the mother union.
23

Petitioners being a mere minority of the local union may not bind the
majority members of the local union.
Moreover, the Amigo Employees Union, as an independent union, is
not duly registered as such with the Bureau of Labor Relations. The
appealed decision of OIC Leogardo of Regional Office No. 4 states as a
fact that there is no record in the Bureau of Labor Relations that the
Amigo Employees Union (Independent) is registered, and this is not
disputed by petitioners, notwithstanding their allegation that the
Amigo Employees Union is a duly registered labor organization
bearing Ministry of Labor Registration Certification No. 5290-IP
dated March 27, 1967. But the independent union organized after the
"Sama-Samang Kapasiyahan" executed February 7, 1977 could not
have been registered earlier, much less March 27, 1967 under
Registration Certificate No. 5290-IP. As such unregistered union, it
acquires no legal personality and is not entitled to the rights and
privileges granted by law to legitimate labor organizations upon
issuance of the certificate of registration. Article 234 of the New Labor
Code specifically provides:
Art. 234. Requirements of Registration.Any
applicant labor organization, association, or group of
unions or workers shall acquire legal personality and
shall be entitled to the rights and privileges granted by
law to legitimate labor organizations upon issuance of
the certificate of registration. ....
In Phil. Association of Free Labor Unions vs. Sec. of Labor, 27 SCRA
40, We had occasion to interpret Section 23 of R.A. No. 875
(Industrial Peace Act) requiring of labor unions registration by the
Department of Labor in order to qualify as "legitimate labor
organization," and We said:
The theory to the effect that Section 23 of Republic Act
No. 875 unduly curtails the freedom of assembly and
association guaranteed in the Bill of Rights is devoid of
factual basis. The registration prescribed in paragraph
(b) of said section 17 is not a limitation to the right of

assembly or association, which may be exercised with

or without said registration. The latter is merely a
condition sine qua non for the acquisition of legal
personality by labor organizations, associations or
unions and the possession of the 'rights and privileges
granted by law to legitimate labor organizations.' The
Constitution does not guarantee these rights and
privileges, much less said personality, which are mere
statutory creations, for the possession and exercise of
which registration is required to protect both labor and
the public against abuses, fraud, or impostors who pose
as organizers, although not truly accredited agents of
the union they purport to represent. Such requirement
is a valid exercise of the police power, because the
activities in which labor organizations, associations and
union or workers are engaged affect public interest,
which should be protected.
Simply put, the Amigo Employees Union (Independent) Which
petitioners claim to represent, not being a legitimate labor
organization, may not validly present representation issues.
Therefore, the act of petitioners cannot be considered a legitimate
exercise of their right to self-organization. Hence, We affirm and
reiterate the rationale explained in Phil Association of Free Labor
Unions vs. Sec. of Labor case, supra, in order to protect legitimate
labor and at the same time maintain discipline and responsibility
within its ranks.
The contention of petitioners that the new CBA concluded between
Amigo Employees Union-PAFLU and the Company on February 15,
1977 containing the union security clause cannot be invoked as against
the petitioners for offenses committed earlier than its conclusion,
deserves scant consideration. We find it to be the fact that the union
security clause provided in the new CBA merely reproduced the union
security clause provided in the old CBA about to expire. And since
petitioners were expelled from Amigo Employees Union-PAFLU on
March 28, 1982 upon denial of their Motion for Reconsideration of the
decision expelling them, the CBA of February 15, 1977 was already
24

applicable to their case. The "closed-shop provision" in the CBA

provides:
All members of the UNION as of the signing of this
Agreement shall remain members thereof in good
standing. Therefore, any members who shall resign, be
expelled, or shall in any manner cease to be a member
of the UNION, shall be dismissed from his employment
upon written request of the UNION to the Company.
(Art. III)
A closed-shop is a valid form of union security, and a provision
therefor in a collective bargaining agreement is not a restriction of the
right of freedom of association guaranteed by the Constitution.
(Manalang, et al. vs. Artex Development Co., Inc., et al., L-20432,
October 30, 1967, 21 SCRA 561). Where in a closed-shop agreement it
is stipulated that union members who cease to be in good standing
shall immediately be dismissed, such dismissal does not constitute an
unfair labor practice exclusively cognizable by the Court of Industrial
Relations. (Seno vs. Mendoza, 21 SCRA 1124).
Finally, We reject petitioners' contention that respondent Minister
committed error in law amounting to grave abuse of discretion when
he affirmed the conclusion made by the RO4 OIC, upholding the legal
applicability of the security clause of a CBA over alleged offenses
committed earlier than its conclusion and within the 60-day freedom
period of an old CBA. In the first place, as We stated earlier, the
security clause of the new CBA is a reproduction or reiteration of the
same clause in the old CBA. While petitioners were charged for alleged
commission of acts of disloyalty inimical to the interests of the Amigo
Employees Union-PAFLU in the Resolution of February 14, 1977 of
the Amigo Employees Union- PAFLU and on February 15, 1977
PAFLU and the Company entered into and concluded a new collective
bargaining agreement, petitioners may not escape the effects of the
security clause under either the old CBA or the new CBA by claiming
that the old CBA had expired and that the new CBA cannot be given
retroactive enforcement. To do so would be to create a gap during
which no agreement would govern, from the time the old contract

expired to the time a new agreement shall have been entered into with
the union. As this Court said in Seno vs. Mendoza, 21 SCRA 1124,
"without any agreement to govern the relations between labor and
management in the interim, the situation would well be productive of
confusion and result in breaches of the law by either party. "
The case of Seno vs. Mendoza, 21 SCRA 1124 mentioned previously
needs further citation of the facts and the opinion of the Court,
speaking through Justice Makalintal who later became Chief Justice,
and We quote:
It appears that petitioners other than Januario T. Seno
who is their counsel, were members of the United
Seamen's Union of the Philippines. Pursuant to a letterrequest of the Union stating that they 'had ceased to be
members in good standing' and citing a closed shop
clause in its bargaining agreement with respondent
Carlos A. Go Thong & Co., the latter dismissed said
petitioners. Through counsel, petitioners requested
that they be reinstated to their former positions and
paid their backwages, otherwise they would picket
respondents' offices and vessels. The request was
denied on the ground that the dismissal was
unavoidable under the terms of the collective
bargaining agreement. ...
We, therefore, hold and rule that petitioners, although entitled to
disaffiliate from their union and form a new organization of their own,
must, however, suffer the consequences of their separation from the
union under the security clause of the CBA.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Order
appealed from affirming the joint decision of the OIC of Regional
Office No. 4 in RO4-Case No. T-IV-3549-T and RO4 Case No. RD-44088-77-T granting clearance to terminate petitioners as well as
dismissing their complaint with application for preliminary
injunction, is hereby AFFIRMED. No costs.
25

SO ORDERED.

THIRD DIVISION

G.R. No. 100898 July 5, 1993

ALEX FERRER, RAFAEL FERRER HENRY DIAZ, DOMINGO
BANCOLITA, GIL DE GUZMAN, and FEDERATION OF
DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND
DIVISION), HUI KAM CHANG (In his capacity as General
Manager of Occidental Foundry Corporation),
OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S.
VELASCO (In his capacity as representative of the
Federation of Free Workers), GENARO CAPITLE, JESUS
TUMAGAN, ERNESTO BARROGA, PEDRO LLENA,
GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE
IGNAS, PIO DOMINGO, and JAIME BAYNADO, respondents.
Genrosa P. Jacinto and Raymundo D. Mallilin for private
respondents.
Labor Law; Labor Unions; Collective Bargaining; A CBA provision for
a closed shop is a valid form of union security and it is not a restriction
on the right or freedom of association guaranteed by the Constitution.
A CBA is the law between the company and the union and
compliance therewith is mandated by the express policy to give

Republic of the Philippines

SUPREME COURT
Manila

protection to labor. Said policy should be given paramount

consideration unless otherwise provided for by law (Meycauayan
College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a closed
shop is a valid form of union security and it is not a restriction on the
right or freedom of association guaranteed by the Constitution (Lirag
Textile Mills, Inc. vs. Blanco, 109 SCRA 87 [1981]). However, in the
implementation of the provisions of the CBA, both parties thereto
should see to it that no right is violated or impaired.
26

Same; Same; Same; Due Process; The manner in which the dismissal
was enforced left much to be desired in terms of respect for the right
of petitioners to procedural due process.In the case at bar, while it is
true that the CBA between OFC and the SAMAHAN provided for the
dismissal of employees who have not maintained their membership in
the union, the manner in which the dismissal was enforced left much
to be desired in terms of respect for the right of petitioners to
procedural due process.

explain a partys side of the controversy had been accorded him.

Observance to the letter of company rules on investigation of an
employee about to be dismissed is not mandatory. It is enough that
there is due notice and hearing before a decision to dismiss is made
(Mendoza vs. NLRC, 195 SCRA 606 [1991]). But even if no hearing is
conducted, the requirement of due process would have been met
where a chance to explain a partys side of the controversy had been
accorded him.

Same; Same; Same; Same; Same; The SAMAHAN should have

observed its own constitution and by-laws by giving petitioner an
opportunity to air their side and explain their moves.No hearing
(pandinig) was ever conducted by the SAMAHAN to look into petitioners explanation of their moves to oust the union leadership under
Capitle, or their subsequent affiliation with FEDLU. While it is true
that petitioners actions might have precipitated divisiveness and,
later, showed disloyalty to the union, still, the SAMAHAN should have
observed its own constitution and by-laws by giving petitioners an
opportunity to air their side and explain their moves. If, after an
investigation the petitioners were found to have violated union rules,
then and only then should they be subjected to proper disciplinary
measures.

Same; Same; Same; Same; The need for the observance of an

employees right to procedural due process in termination cases
cannot be overemphasized.If an employee may be considered
illegally dismissed because he was not accorded fair investigation
(Hellenic Philip-pine Shipping vs. Siete, 195 SCRA 179 [1991]), the
more reason there is to strike down as an inexcusable and disdainful
rejection of due process a situation where there is no investigation at
all (See: Collegio del Sto. Nio vs. NLRC, 197 SCRA 611 [1991]; Artex
Development Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for
the observance of an employees right to procedural due process in
termination cases cannot be overemphasized. After all, ones
employment, profession, trade, or calling is a property right and the
wrongful interference therewith gives rise to an actionable wrong
(Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]).
Verily, a mans right to his labor is property within the meaning of
constitutional guarantees which he cannot be deprived of without due
process.

Same; Same; Same; Same; The need for a company investigation is

founded on the consistent ruling of the Court that the twin
requirements of notice and hearing which are essential elements of
due process must be met in employment-termination cases.The
need for a company investigation is founded on the consistent ruling
of this Court that the twin requirements of notice and hearing which
are essential elements of due process must be met in employmenttermination cases. The employee concerned must be notified of the
employers intent to dismiss him and of the reason or reasons for the
proposed dismissal. The hearing affords the employee an opportunity
to answer the charge or charges against him and to defend himself
therefrom before dismissal is effected.
Same; Same; Same; Same; Even if no hearing is conducted, the
requirement of due process would have been met where a chance to

Same; Same; Same; Same; While the law recognizes the right of an
employer to dismiss employees in warranted cases, it frowns upon
arbitrariness as when employees are not accorded due process.
While the law recognizes the right of an employer to dismiss
employees in warranted cases, it frowns upon arbitrariness as when
employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA
651 [1990]). Thus, the prerogatives of the OFC to dismiss petitioners
should not have been whimsically done for it unduly exposed itself to a
charge of unfair labor practice for dismissing petitioners in line with
the closed shop provision of the CBA, without a proper hearing.
27

Same; Same; Same; Same; While termination of employment is

traditionally considered a management prerogative, it is not an
absolute prerogative subject as it is to limitations founded in law, the
CBA or general principles of fair play and justice.Neither can the
manner of dismissal be considered within the ambit of managerial
prerogatives,for while termination of employment is traditionally
considered a management prerogative, it is not an absolute
prerogative subject as it is to limitations founded in law, the CBA, or
general principles of fair play and justice.
Same; Same; Same; The right of a local union to disaffiliate from a
federation in the absence of any provision in the federations
constitution preventing disaffiliation of a local union is legal.
Parenthetically, the right of a local union to disaffiliate from a
federation in the absence of any provision in the federations
constitution preventing disaffiliation of a local union is legal (Peoples
Industrial and Commercial Employees and Workers Org. (FFW) vs.
Peoples Industrial and Commercial Corp., 112 SCRA 440 [1982]).
Such right is consistent with the constitutional guarantee of freedom
of association.
Same; Dismissal; Benefits; A legally dismissed employee may now be
paid his back wages, allowances, and other benefits for the entire
period he was out of work subject to the rule enunciated before the
Mercury Drug Rule which is that the employer may, however, deduct
any amount which the employee may have earned during the period of
his illegal termination.A legally dismissed employee may now be
paid his back wages, allowances, and other benefits for the entire
period he was out of work subject to the rule enunciated before the
Mercury Drug Rule, which is that the employer may, however, deduct
any amount which the employee may have earned during the period of
his illegal termination (East Asiatic Company, Ltd. vs. Court of
Industrial Relations, 40 SCRA 521 [1971]). Computation of full back
wages and presentation of proof as to income earned elsewhere by the
illegally dismissed employee after his termination and before actual
reinstatement should be ventilated in the execution proceedings
before the Labor Arbiter concordant with Section 3, Rule 8 of the 1990
new Rules of Procedure of the National Labor Relations Commission.

Ferrer vs. National Labor Relations Commission, 224 SCRA 410, G.R.
No. 100898 July 5, 1993
MELO, J.:
The petition for certiorari before us seeks to annul and set aside: (a)
the decision dated June 20, 1991 of the Second Division of the
National Labor Relations Commission (NLRC) (Penned by
Commissioner Rustico L. Diokno and concurred in by Presiding
Commissioner Edna Bonto-Perez and Commissioner Domingo H.
Zapanta) which affirmed in toto the decision of April 5, 1990 of Labor
Arbiter Eduardo J. Carpio dismissing the complaint for illegal
dismissal and unfair labor practice on the ground that both the
company and the union merely complied with the collective
bargaining agreement provision sanctioning the termination of any
employee who fails to retain membership in good standing with the
union; and (b) the NLRC resolution denying the motion for the
reconsideration of said decision (NLRC NCR Case No. 00-10-0485589).
Petitioners were regular and permanent employees of the Occidental
Foundry Corporation (OFC) in Malanday, Valenzuela, Metro Manila
which was under the management of Hui Kam Chang. As piece
workers, petitioners' earnings ranged from P110 to P140 a day. They
had been in the employ of OFC for about ten years at the time of their
dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occidental
Foundry Corporation-FFW (SAMAHAN) and the OFC entered into a
collective bargaining agreement (CBA) which would be effective for
the three-year period between October 1, 1988 and September 30,
1991 (Memorandum for OFC and Hui Kam Chang, p. 6, Rollo; p. 551).
Article II thereof provides for a union security clause thus:
Sec. 1 The company agrees that all permanent and
regular factory workers in the company who are
members in good standing of the union or who
thereafter may become members, shall as a condition
28

of continued employment, maintain their membership

in the union in good standing for the duration of the
agreement.
xxx xxx xxx
Sec. 3 The parties agree that failure to retain
membership in good standing with the UNION shall be
ground for the operation of paragraph 1 hereof and the
dismissal by the company of the aforesaid employee
upon written request by the union. The aforesaid
request shall be accompanied by a verified carbon
original of the Board of (sic) Resolution by the UNION
signed by at least a majority of its officers/directors. (p.
562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in
the Department of Labor and Employment (DOLE), a complaint for
the expulsion from SAMAHAN of the following officers: Genaro
Capitle (president), Jesus Tumagan (vice-president), Godofredo
Pacheco (auditor), and Marcelino Pacheco (board member) (Case No.
NCR-00-M-89-11-01). The complaint was founded on said officers'
alleged inattentiveness to the economic demands of the workers.
However, on September 4, 1989, petitioners Diaz and Alex Ferrer
withdrew the petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special election of
officers of the SAMAHAN (pp. 205 & 583,Rollo). Said election was,
however, later questioned by the FFW. Nonetheless, the elected set of
officers tried to dissuade the OFC from remitting union dues to the
officers led by Capitle who were allied with the FFW. Later, however,
Romulo Erlano, one of the officers elected at the special election,
manifested to the DOLE that he was no longer objecting to the
remittance of union dues to the officers led by Capitle. Petitioners'
move to stage a strike based on economic demands was also later
disowned by members of the SAMAHAN.

The intraunion squabble came to a head when, on September 11, 1989,

a resolution expelling petitioners from the SAMAHAN was issued by
the aforesaid union officials headed by Capitle, together with board
members George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 &
599, Rollo). The following day, Capitle sent OFC the following letter:
129
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union
Security Clause as enunciated in our Collective
Bargaining Agreement, I would like you to dismiss the
following employees on the ground of failure to retain
membership in good standing:
1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the
Board Resolution of the union signed by the majority of
its officers/directors.
Thank you very much.
Very t
Although petitioners received this letter weeks after its date, it appears
that on that same date, they had learned about their dismissal from
employment as shown by the letter also dated September 13, 1989
29

which they sent the Federation of Democratic Labor Unions (FEDLU).

They volunteered therein to be admitted as members of the FEDLU
and requested that they be represented ("katawanin") by said
federation before the DOLE in the complaint which they intended to
file against the union (SAMAHAN), the FFW and the company for
illegal dismissal, reinstatement, and other benefits in accordance with
law
(p. 74, Rollo).
Thereafter, on various dates, petitioners sent individual letters to Hui
Kam Chang professing innocence of the charges levelled against them
by the SAMAHAN and the FFW and pleading that they be reinstated
(pp. 69-73,Rollo). Their letters appear to have elicited no response.
Thus, contending that their dismissal was without cause and in utter
disregard of their right to due process of law, petitioners, through the
FEDLU, filed a complaint for illegal dismissal and unfair labor
practice before the NLRC against Hui Kam Chang, OFC, Macedonio S.
Velasco (as representative of the FFW) the FFW, and the SAMAHAN
officers headed by Capitle (p. 75, Rollo).
In due course, after the case was ventilated through position papers
and other documents, the labor arbiter rendered a decision dismissing
petitioners' complaint (pp. 79-89, Rollo). He found that in dismissing
petitioners, OFC was "merely complying with the mandatory
provisions of the CBA the law between it and the union." He added:
To register compliance with the said covenant, all that
is necessary is a written request of the union requesting
dismissal of the employees who have failed to retain
membership in good standing with the union. The
matter or question, therefore of determining why and
how did complainants fail to retain membership in
good standing is not for the company to inquire via
formal investigation. By having the request of the
union, a legal presumption that the request was born
out of a formal inquiry by the union that subject
employees failed to exist. This means generally that

where a valid closed shop or similar agreement is in

force with respect to a particular bargaining unit as in
the case a quo, the employer shall refuse to employ any
person unless he is a member of the majority union and
the employer shall dismiss employees who fail to retain
their membership in the majority union. This must be
deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to
encourage membership in other unions. (pp. 8687, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners was an
exercise of legitimate management prerogative which cannot be
considered as an unfair labor practice. On whether the SAMAHAN
and the FFW could be held liable for illegal dismissal and unfair labor
practice, the arbiter opined that since there was no employeremployee relationship between petitioners and respondent unions, the
complaint against the latter has no factual and legal bases, because
petitioners "should not have confused expulsion from membership in
the union as one and the same incident to their subsequent
employment termination."
Consequently, petitioners appealed to the NLRC on the grounds that
there was prima facie evidence of abuse of discretion on the part of
the labor arbiter and that he committed serious errors in his findings
of facts.
On June 20, 1991, the NLRC rendered the herein questioned decision
affirming in toto the decision of the arbiter. Petitioners motion for the
reconsideration of the NLRC decision having been denied, they
resorted to the instant petition for certiorari which presents the issue
of wether or not respondent Commision gravely abused its discretion
in affirming the decision of the labor arbiter which is allegedly in
defiance of the elementary principles of procedural due process as the
petitioners were summarily dismissed from employment without an
investigation having been conducted by the OFC on the veracity of the
allegation of the SAMAHAN-FFW that they violated the CBA.
30

A CBA is the law between the company and the union and compliance
therewith is mandated by the express policy to give protection to
labor. Said policy should be given paramount consideration unless
otherwise provided for by law (Meycauayan College vs. Drilon, 185
SCRA 50 [1990]. A CBA provision for a closed shop is a valid form of
union security and it is not a restriction on the right or freedom of
association guaranteed by the Constitution (Lirag Textile Mill, Inc. vs.
Blanco, 109 SCRA 87 [1981]. However, in the implementation of the
provisions of the CBA, both parties thereto should see to it that no
right is violated or impaired. In the case at bar, while it is true that the
CBA between OFC and the SAMAHAN provided for the dismissal of
employees who have not maintained their membership in the union,
the manner in which the dismissal was enforced left much to be
desired in terms of respect for the right of petitioners to procedural
due process.
In the first place, the union has a specific provision for the permanent
or temporary "expulsion" of its erring members in its constitution and
by-laws ("saligang batas at alituntunin"). Under the heading
membership and removal ("pag-aanib at pagtitiwalag"), it states:
Sec. 4. Ang sinumang kasapi ay maaring itwalag (sic)
ng Samahan pangsamantala o tuluyan sa pamamagitan
(sic) ng tatlo't ikaapat () na bahagi ng dami ng bilang
ng Pamunuang Tagapagpaganap. Pagkaraan lamang
sa pandinig sa kanyang kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at
lihis sa patakaran ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaaring
ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng tatlong
buwan na walang sakit o Doctor's Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng
Samahan.

(e) Sinumang kasapi na natanggal sa kapisanan at

gustong, sumapi uli ay magpapanibago ng bilang, mula
sa taon ng kanyang pagsapi uli sa Samahan. (Emphasis
supplied; Ibid., p. 177).
No hearing ("pandinig") was ever conducted by the SAMAHAN to look
into petitioners' explanation of their moves to oust the union
leadership under Capitle, or their subsequent affiliation with FEDLU.
While it is true that petitioners' actions might have precipitated
divisiveness and, later, showed disloyalty to the union, still, the
SAMAHAN should have observed its own constitution and by-laws by
giving petitioners an opportunity to air their side and explain their
moves. If, after an investigation the petitioners were found to have
violated union rules, then and only then should they be subjected to
proper disciplinary measures.
Here lies the distinction between the facts of this case and that
of Cario vs. NLRC (185 SCRA 177 [1990]) upon which the Solicitor
General heavily relies in supporting the stand of petitioners.
In Cario, the erring union official was given the chance to answer the
complaints against him before an investigating committee created for
that purpose. On the other, hand, herein petitioners were not given
even one opportunity to explain their side in the controversy. This
procedural lapse should not have been overlooked considering the
union security provision of the CBA.
What aggravated the situation in this case is the fact that OFC itself
took for granted that the SAMAHAN had actually conducted an
inquiry and considered the CBA provision for the closed shop as selfoperating that, upon receipt of a notice that some members of the
SAMAHAN had failed to maintain their membership in good standing
in accordance with the CBA, it summarily dismissed petitioners. To
make matters worse, the labor arbiter and the NLRC shared the same
view in holding that "(t)he matter or question, therefore, of
determining why and how did complainants fail to retain membership
in good standing is not for the company to inquire via formal
investigation" (pp. 87 & 135, Rollo). In this regard, the following
31

words of my learned brother, Mr. Justice Feliciano, in the Resolution

in Cario are apt:
4. Turning now to the involvement of the Company in
the dismissal of petitioner Cario, we note that the
Company upon being formally advised in writing of the
expulsion of petitioner Cario from the Union, in turn
simply issued a termination letter to Cario, the
termination being made effective the very next day. We
believe that the Company should have given petitioner
Cario an opportunity to explain his side of the
controversy with the Union. Notwithstanding the
Union's Security Clause in the CBA, the Company
should have reasonably satisfied itself by its own
inquiry that the Union had not been merely acting
arbitrarily and capriciously in impeaching and
expelling petitioner Cario . . .
xxx xxx xxx
5. We conclude that the Company had failed to accord
to petitioner Cario the latter's right to procedural due
process. 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 away by a
Union Security Clause or a Union Shop Clause in a
CBA. 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 hence dismissal from his job. (pp. 186
& 189.)
The need for a company investigation is founded on the consistent
ruling of this Court that the twin requirements of notice and hearing
which are essential elements of due process must be met in
employment-termination cases. The employee concerned must be

notified of the employer's intent to dismiss him and of the reason or

reasons for the proposed dismissal. The hearing affords the employee
an opportunity to answer the charge or charges against him and to
defend himself therefrom before dismissal is effected (Kwikway
Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC,
202 SCRA 7 [1991]). Observance to the letter of company rules on
investigation of an employee about to be dismissed is not mandatory.
It is enough that there is due notice and hearing before a decision to
dismiss is made (Mendoza vs. NLRC, 195 SCRA 606 (1991]). But even
if no hearing is conducted, the requirement of due process would have
been met where a chance to explain a party's side of the controversy
had been accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA
748 [1991]).
If an employee may be considered illegally dismissed because he was
not accorded fair investigation (Hellenic Philippine Shipping vs. Siete,
195 SCRA 179 (1991]), the more reason there is to strike down as an
inexcusable and disdainful rejection of due process a situation where
there is no investigation at all (See: Colegio del Sto. Nio vs. NLRC,
197 SCRA 611 [1991]; Artex Development Co., Inc. vs. NLRC, 187
SCRA 611 [1990]). The need for the observance of an employee's right
to procedural due process in termination cases cannot be
overemphasized. After all, one's employment, profession, trade, or
calling is a "property right" and the wrongful interference therewith
gives rise to an actionable wrong (Callanta vs. Carnation Philippines,
Inc., 145 SCRA 268 (1986]). Verily, a man's right to his labor is
property within the meaning of constitutional guarantees which he
cannot be deprived of without due process (Batangas Laguna Tayabas
Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to dismiss
employees in warranted cases, it frowns upon arbitrariness as when
employees are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA
651 [1990]). Thus, the prerogatives of the OFC to dismiss petitioners
should not have been whimsically done for it unduly exposed itself to a
charge of unfair labor practice for dismissing petitioners in line with
the closed shop provision of the CBA, without a proper hearing
(Tropical Hut Employees' Union-CGW vs. Tropical Hut Food Market,
32

Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co.,

Inc. (BISCOM) vs. Philippine Association of Free Labor Unions
(PAFLU), 8 SCRA 700 [1983]). Neither can the manner of dismissal
be considered within the ambit of managerial prerogatives, for while
termination of employment is traditionally considered a management
prerogative, it is not an absolute prerogative subject as it is to
limitations founded in law, the CBA, or general principles of fair play
and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758
[1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules implementing Batas
Pambansa Blg. 130, the OFC and the SAMAHAN should solidarity
indemnify petitioners for the violation of their right to procedural due
process (Great Pacific Life Assurance Corporation vs. NLRC, 187
SCRA 694[1990], citing Wenphil vs. NLRC, 170 SCRA 69 [1989],
Cario vs. NLRC, supra). However, such penalty may be imposed only
where the termination of employment is justified and not when the
dismissal is illegal as in this case where the damages are in the form of
back wages.
As earlier discussed, petitioners' alleged act of sowing disunity among
the members of the SAMAHAN could have been ventilated and
threshed out through a grievance procedure within the union itself.
But resort to such procedure was not pursued. What actually
happened in this case was that some members, including petitioners,
tried to unseat the SAMAHAN leadership headed by Capitle due to the
latter's alleged inattention to petitioners' demands for the
implementation of the P25-wage increase which took effect on July 1,
1989. The intraunion controversy was such that petitioners even
requested the FFW to intervene to facilitate the enforcement of the
said wage increase (Petition, p. 54; p. 55, Rollo).
Petitioners sought the help of the FEDLU only after they had learned
of the termination of their employment upon the recommendation of
Capitle. Their alleged application with federations other than the FFW
(Labor Arbiter's Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be
considered as disloyalty to the SAMAHAN, nor may the filing of such
applications denote that petitioners failed to maintain in good

standing their membership in the SAMAHAN. The SAMAHAN is a

different entity from FFW, the federation to which it belonged.
Neither may it, be inferred that petitioners sought disaffiliation from
the FFW for petitioners had not formed a union distinct from that of
the SAMAHAN. Parenthetically, the right of a local union to
disaffiliate from a federation in the absence of any provision in the
federation's constitution preventing disaffiliation of a local union is
legal (People's Industrial and Commercial Employees and Worker's
Org. (FFW) vs. People's Industrial and Commercial Corp., 112 SCRA
440 (1982]). Such right is consistent with the constitutional guarantee
of freedom of association (Tropical Hut Employees Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990]).
Hence, while petitioners' act of holding a special election to oust
Capitle, et al. may be considered as an act of sowing disunity among
the SAMAHAN members, and, perhaps, disloyalty to the union
officials, which could have been dealt with by the union as a
disciplinary matter, it certainly cannot be considered as constituting
disloyalty to the union. Faced with a SAMAHAN leadership which
they had tried to remove as officials, it was but a natural act of selfpreservation that petitioners fled to the arms of the FEDLU after the
union and the OFC had tried to terminate their employment.
Petitioners should not be made accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on March
21, 1989, Article 279 of the Labor Code was amended to read as
follows:
Security of Tenure. In cases of regular employment,
the employer shall not terminate the services of an
employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from
the time his compensation was withheld from him up
to the time of his actual reinstatement.
33

and as implemented by Section 3, Rule 8 of the 1990 New Rules of

Procedure of the National Labor Relations Commission, it would seem
that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of
back wages of illegally dismissed workers to three (3) years "without
deduction or qualification" to obviate the need for further proceedings
in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages,
allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the
employee may have earned during the period of his illegal termination
(East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40
SCRA 521 [1971]). Computation of full back wages and presentation of
proof as to income earned elsewhere by the illegally dismissed
employee after his termination and before actual reinstatement should
be ventilated in the execution proceedings before the Labor Arbiter
concordant with Section 3, Rule 8 of the 1990 new Rules of Procedure
of the National Labor Relations Commission.

It may appear that Article 279 of the Labor Code, as amended by

Republic Act No. 6715, has made the employer bear a heavier burden
than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the
employee must be immediately restored to his former position, and to
impress the idea that immediate reinstatement is tantamount to a
cost-saving measure in terms of overhead expense plus incremental
productivity to the company which lies in the hands of the employer.
WHEREFORE, the decision appealed from is hereby SET ASIDE and
private respondents are hereby ordered to reinstate petitioners to
their former or equivalent positions without loss of seniority rights
and with full back wages, inclusive of allowances and other benefits or
their monetary equivalent, pursuant to Article 279 of the Labor Code,
as amended by Republic Act No. 6715.
SO ORDERED.

Inasmuch as we have ascertained in the text of this discourse that the

OFC whimsically dismissed petitioners without proper hearing and
has thus opened OFC to a charge of unfair labor practice, it ineluctably
follows that petitioners can receive their back wages computed from
the moment their compensation was withheld after their dismissal in
1989 up to the date of actual reinstatement. In such a scenario, the
award of back wages can extend beyond the 3-year period fixed by the
Mercury Drug Rule depending, of course, on when the employer will
reinstate the employees.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
34

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.
Labor Standards; Labor Relations; Collective Bargaining; Special
Assessments; Strict compliance with legal requirements regarding
special assessments must be observed.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 theunion 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.
Same; Same; Same; Same; Written resolution of a majority of all
members of the union at a general membership meeting, required for
validity of levy of a special assessment.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 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.
Same; Same; Same; Same; Withdrawal of individual authorization is
equivalent to no authorization at all; The law does not require that the
disauthorization must be in individual form.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 x x x is applicable. The Union
points out, however, that said disauthorization are not valid for being
collective in form, as they are mere bunches of randomly procured
signatures, under loose sheets of paper. The contention deserves no
merit for the simple reason that the documents containing the
disauthorization 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 disauthorizations must be in individual form.
Same; Same; Same; Same; Payment of services rendered by union
officers, not to be taken from special assessments but from regular
union dues.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
35

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 attorneys fees, negotiation 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
attorneys fees or negotiation 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. Palacol vs. Ferrer-Calleja, 182 SCRA 710, G.R.
No. 85333 February 26, 1990
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 CocaCola Bottlers (Philippines), Inc. (hereinafter referred to as the
Company) concluded a new collective bargaining agreement with the
latter. 1 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, consultants and others." 2 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 local membership
meetings on various dates. 3 The total membership of the Union was
about 800. Of this number, 672 members originally authorized the
10% special assessment, while 173 opposed the same. 4
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 supporters. 5
On account of the above-mentioned disauthorization, the Company,
being in a quandary as to whom to remit the payment of the
36

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.

(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, 6 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.

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

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.
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
37

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; and (5) failing to
present a record of the votes cast. 7 Petitioners concluded their
argument by citingGalvadores.
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 their known edge
and consent" 8 is in accord with the constitutional principle of the
State affording full protection to labor. 9
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.
38

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 membership meetings are precisely the very general
meetings required by law" 10 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 bunches of
randomly procured signatures, under loose sheets of paper." 11 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 Code ... shall be resolved
in favor of labor." 12 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
respondent-Union, 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.
39

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.

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.

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 authorize the
same, or subsequently retracted their authorizations. 13 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 Med40

* EN BANC.
55

VOL. 59, SEPTEMBER 12, 1974

55
Victoriano vs, Elizalde Rope Workers Union
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
Constitutional law; Construction and integration; There is a
presumption of constitutionality in statutes.All presumptions are
indulged in favor of constitutionality; one who attacks a statute,
alleging unconstitutionally, must prove its invalidity beyond a
________________

reasonable doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld, and the challenger must negate
all possible bases; that the courts are not concerned with the wisdom,
justice, policy, or expediency of a statute; and that a liberal
interpretation of the constitution in favor of the constitutionality of
legislation should be adopted.
Same; Right to form or join associations; An employee has the right to
join or not join a labor union.What the Constitution and the
Industrial Peace Act recognize and guarantee is the right to form or
join associations. Notwithstanding the different theories propounded
by the different schools of jurisprudence regarding the nature and
contents of a right, it can be safely said that whatever theory one
subscribes to, a right comprehends at least two broad notions, namely:
first, liberty or freedom, i.e., the absence of legal restraint, whereby an
employee may act for himself without being prevented by law; and
second, power, whereby an employee may, as he pleases, join or
refrain from joining an association. It is, therefore, the employee who
should decide for himself whether he should join or not an
association; and should he choose to join, he himself makes up his
mind as to which association he would join; and even after he has
joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time. It is clear, therefore,
41

that the right to join a union includes the right to abstain from joining
any union.
Same; Same; Labor laws; Unfair labor practice; Right to refrain from
joining labor union limited by the Industrial Peace Act.The right to
refrain from joining labor organizations recognized by Section 3 of the
Industrial Peace Act is, however, limited. The legal protection granted
to such right to refrain from joining is withdrawal by operation of law,
where a labor union and an employer have agreed on a closed shop, by
virtue of which the employer may employ only members of the
collective bargaining union, and the employees must continue to be
members of the union for the duration of the contract in order to keep
their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it
would be an unfair labor practice for an employer to discriminate in
regard to hire or tenure of employment or any term or condition of
employment to encourage or discourage membership in any labor
organization the employer is, however, not precluded from making
an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the
representative of the employees. By virtue,
56

56
SUPREME COURT REPORTS ANNOTATED
Victoriano vs. Elizalde Rope Workers Union
therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person regardless of his religious beliefs,
wishes to be employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right of said
employee not to join the labor union is curtailed and withdrawn.

Same; Same; Same; Same; Exception to closed-shop agreement

provided for employees prohibited by their religion from joining any
union.To that all-embracing coverage of the closed shop
arrangement, Republic Act No. 3350 introduced an exception, when it
added to Section 4 (a) (4) of the Industrial Peace Act the following
proviso: but such agreement shall not cover members of any religious
sects which prohibit affiliation of their members in any such labor
organization. Republic Act No. 3350 merely excludes ipso jure from
the application and coverage of the closed shop agreement the
employees belonging to any religious sects which prohibit affiliation of
their members with any labor organization. What the exception
provides, therefore, is that members of said religious sects cannot be
compelled or coerced to join labor unions even when said unions have
closed shop agreements with the employers; that in spite of any closed
shop agreement, members of said religious sects cannot be refused
employment or dismissed from their jobs on the sole ground that they
are not members of the collective bargaining union.
Same; Impairment of contracts; Prohibition against impairment of
contracts is not absolute.It should not be over looked that the
prohibition to impair the obligation of contracts is not absolute and
unqualified. The prohibition is not to be read with literal exactness
like a mathematical formula, for it prohibits unreasonable impairment
only. In spite of the constitutional prohibition, the State continues to
possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or
abrogate contracts already in effect. For not only are existing laws read
into contracts in order to fix the obligations as between the parties,
but the reservation of essential attributes of sovereign power is also
read into contracts as a postulate pf the legal order. All contracts made
with reference to any matter that is subject to regulation under the
police power must be understood as made in reference to the possible
exercise of that power. Otherwise, important and valuable reforms
may be precluded by the simple device of entering into contracts for
the purpose of doing that which otherwise may be prohibited.
Same; Same; Test for determining whether statute violates the
impairment-of-contract clause.In order to determine whether
42

57

VOL. 59, SEPTEMBER 12, 1974

57
Victoriano vs. Elizalde Rope Workers Union
legislation unconstitutionally impairs contract obligations, no
unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may be measured
or determined, has been fashioned, but every case must be determined
upon its own circumstances. Legislation impairing the obligation of
contracts can be sustained when it is enacted for the promotion of the
general good of the people, and when the means adopted to secure
that end are reasonable. Both the end sought and the means adopted
must be legitimate, i.e., within the scope of the reserved power of the
state construed in harmony with the constitutional limitation of that
power.
Same; Same; Republic Act 3350 providing for exemption from closed
shop agreements does not violate the impairment-of-contract clause
of the constitution.What then was the purpose sought to be achieved
by Republic Act No. 3350? Its purpose was to insure freedom of belief
and religion, and to promote the general welfare by preventing
discrimination against those members of religious sects which
prohibit their members from joining labor unions, confirming thereby
their natural, statutory and constitutional right to work, the fruits of
which work are usually the only means whereby they can maintain
their own life and the life of their dependents. It cannot be gainsaid
that said purpose is legitimate. The questioned Act also provides
protection to members of said religious sects against two aggregates of
group strength from which the individual needs protection. The
individual employee, at various times in his working life, is confronted
by two aggregates of powercollective labor, directed by a union, and
collective capital, directed by management. The union, an institution

developed to organize labor into a collective force and thus protect the
individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new
source of their frustration. Moreover, when the Union interacts with
management, it produces yet a third aggregate of group strength from
which the individual also needs protectionthe collective bargaining
relationship. It cannot be denied, furthermore, that the means
adopted by the Act to achieve that purposeexempting the members
of said religious sects from coverage of union security agreementsis
reasonable.
Same; Same; Religious freedom; Freedom of religion takes precedence
over the right against the impairment of contracts.It may not be
amiss to point out here that the free exercise of religious profession or
belief is superior to contract rights. In case of conflict, the latter must,
therefore, yield to the former. The Supreme Court of the United States
has also declared on several occasions that the rights in the First
Amendment, which include freedom of religion,
enjoy a preferred position in the constitutional system. Religious
freedom, although not unlimited, is a fundamental personal right and
liberty, and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an immediate and grave
danger to the security and welfare of the community that infringement
of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.
Same; Same; Same; Republic Act 3350 does not advance or diminish
the interest of any particular religion.The primary effects of the
exemption from closed shop agreements in favor of members of
religious sects that prohibit their members from affiliating with a
labor organization, is the protection of said employees against the
aggregate force of the collective bargaining agreement, and relieving
certain citizens of a burden on their religious beliefs; and by
eliminating to a certain extent economic insecurity due to
unemployment, which is a serious menace to the health, morals, and
welfare of the people of the State, the Act also promotes the well-being
43

of society. It is our view that the exemption from the effects of closed
shop agreement does not directly advance, or diminish, the interests
of any particular religion. Although the exemption may benefit those
who are members of religious sects that prohibit their members from
joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The establishment clause (of religion) does
not ban regulation on conduct whose reason or effect merely happens
to coincide or harmonize with the tenets of some or all religions. The
free exercise clause of the Constitution has been interpreted to require
that religious exercise be preferentially aided.
Same; Same; Same; Republic Act 3350 does not require religious test
for the exercise of civil or political rightThe Act does not require as a
qualification, or condition, for joining any lawful association
membership in any particular religion or in any religious sect; neither
does the Act require affiliation with a religious sect that prohibits its
members from joining a labor union as a condition or qualification for
withdrawing from a labor union. Joining or withdrawing from a labor
union requires a positive act. Republic Act No. 3350 only exempts
members with such religious affiliation from the coverage of closed
shop agreements. So, under this Act, a religious objector is not
required to do a positive actto exercise the right to join or to resign
from the union. He is exempted ipso jure without need of any positive
act on his part.
Same; Equal protection of the law; Republic Act 3350 does not violate
the equal protection of the law clause of the constitution.We
believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the
effect and coverage of union shop security agreements, into those who
by reason of their religious beliefs and convictions cannot sign up with
a labor union, and those whose religion does not prohibit membership
in labor unions. The classification rests on real or substantial, not
merely imaginary or whimsical, distinction. The classification
introduced by said Act is also germane to its purpose. The purpose of
the law is precisely to avoid those who cannot, because of their
religious belief, join labor unions, from being deprived of their right to

work and from being dismissed from their work because of union shop
security agreements.
Same; Social justice; Republic Act 3350 does not violate the concept of
social justice contained in the Constitution.Appellants further
contention that Republic Act No. 3350 violates the constitutional
provision on social justice is also baseless. Social justice is intended to
promote the welfare of all the people. Republic Act No. 3350 promotes
that welfare insofar as it looks after the welfare of those who, because
of their religious belief, cannot join labor unions; the Act prevents
their being deprived of work and of the means of livelihood. In
determining whether any particular measure is for public advantage, it
is not necessary that the entire state be directly benefitedit is
sufficient that a portion of the state be benefited thereby.
Same; Construction and interpretation; Statute is not unconstitutional
merely because it is not proper, necessary or denimble.Appellant
contends that the amendment introduced by Republic Act No. 3350 is
not called forin other words, the Act is not proper, necessary or
desirable. Anent this matter, it has been held that a statute which is
not necessary is not, for that reason, unconstitutional; that in
determining the constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the enactment of the
legislation in question. Courts do inquire into the wisdom of laws.
Moreover, legislatures, being chosen by the people, are presumed to
understand and correctly appreciate the needs of the people, and it
may change the laws accordingly.
Labor law; Labor dispute; Attorneys fees; Case at bar, labor union
liable for attorneys fees.That there was a labor dispute in the instant
case cannot be disputed, for appellant sought the discharge of
respondent by virtue of the closed shop agreement and under Section
2 (j) of Republic Act No. 875 a question involving tenure of
employment is included in the term labor dispute. The discharge or
the act of seeking it is the labor dispute itself. It being the labor
]
44

dispute itself, that very same act of the Union in asking the employer
to dismiss Appellee cannot be an act done x x x in furtherance of an
industrial dispute. The mere fact that appellant is a labor union does
not necessarily mean that all its acts are in furtherance of an industrial
dispute. Neither does Article 2208 of the Civil Code, invoked by the
Union, serve as its shield. The article provides that attorneys fees and
expenses of litigation may be awarded when the defendants act or
omission has compelled the plaintiff x x x to incur expenses to protect
his interest; and in any other case where the court deems it just and
equitable that attorneys fees and expenses of litigation should be
recovered. In the instant case, it cannot be gainsaid that appellant
Unions act in demanding Appellees dismissal caused Appellee to
incur expenses to prevent his being dismissed from his job.
Fernando, J.: Concurring

Constitutional law; Religious freedom; Religious freedom stressed.

Religious freedom is identified with the liberty every individual
possesses to worship or not a Supreme Being, and if a devotee of any
sect, to any act in accordance with its creed. This is constitutionally
safeguarded, according to Justice Laurel, that profession of faith to
an active power that binds and elevates man to his Creator * * *. The
choice of what a man wishes to believe in is his and his alone. That is a
domain left untouched, where intrusion is not allowed, a citadel to
which the law is denied entry, whatever be his thoughts or hopes. In
that sphere, what he wills reigns supreme. The doctrine to which he
pays fealty may for some be unsupported by evidence, devoid of
rational foundation. No matter. There is no requirement as to its
conformity to what has found acceptance. It suffices that for him such
a concept holds undisputed sway. That is a recognition of mans
freedom. That for him is one of the ways of self-realization. It would
be to disregard the dignity that attaches to every human being to
deprive him of such an attribute. The fixed star on our constitutional
constellation, to borrow the felicitous phrase of Justice Jackson, is
that no official, not excluding the highest, has it in his power to
prescribe what shall be orthodox in matters of conscienceor to
mundane affairs, for that matter.
Same; Same; Limitations on religious freedom cited.One may
believe in most anything, however strange, bizarre and unreasonable
the same may appear to others, even heretical when weighed in the
scales of orthodoxy or doctrinal standards. There was this
qualification though: But between the freedom of belief and the
exercise of said belief, there is quite a stretch of road to travel. If the
exercise of said religious belief clashes with the established
61

VOL. 59, SEPTEMBER 12, 1974

61
45

Victoriano vs. Elizalde Rope Workers Union

institutions of society and with the law, then the former must yield,
and give way to the latter. The Government steps in and either
restrains said exercise or even prosecutes the one exercising it.
Same; Same; Republic Act 3350 does not diminish protection to labor.
There is, however, the question of whether such an exception
possesses an implication that lessens the effectiveness of state efforts
to protect labor, likewise, as noted, constitutionally ordained. Such a
view, on the surface, may not be lacking in plausibility, but upon
closer analysis, it cannot stand scrutiny. Thought must be given to the
freedom of association, likewise an aspect of intellectual liberty. For
the late Professor Howe, a constitutionalist and in his lifetime the
biographer of the great Holmes, it even partakes of the political theory
of pluralistic sovereignty. So great is the respect for the autonomy
accorded voluntary societies. Such a right implies at the very least that
one can determine for himself whether or not he should join or refrain
from joining a labor organization, an institutional device for
promoting the welfare of the working man. A closed shop, on the other
hand, is inherently coercive. That is why, as is unmistakably reflected
in our decisions, the latest of which is Guijarno v. Court of Industrial
Relations, it is far from being a favorite of the law. For a statutory
provision then to further curtail its operation, is precisely to follow the
dictates of sound public policy. Victoriano vs. Elizalde Rope Workers
Union, 59 SCRA 54, No. L-25246 September 12, 1974

ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the decision of
the Court of First Instance of Manila in its Civil Case No. 58894.
The undisputed facts that spawned the instant case follow:
Benjamin Victoriano (hereinafter referred to as Appellee), a member
of the religious sect known as the "Iglesia ni Cristo", had been in the

employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as

Company) since 1958. As such employee, he was a member of the
Elizalde Rope Workers' Union (hereinafter referred to as Union)
which had with the Company a collective bargaining agreement
containing a closed shop provision which reads as follows:
Membership in the Union shall be required as a
condition of employment for all permanent employees
workers covered by this Agreement.
The collective bargaining agreement expired on March 3, 1964 but was
renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its
amendment by Republic Act No. 3350, the employer was not
precluded "from making an agreement with a labor organization to
require as a condition of employment membership therein, if such
labor organization is the representative of the employees." On June
18, 1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to paragraph (4) subsection (a) of section 4 of Republic
Act No. 875, as follows: ... "but such agreement shall not cover
members of any religious sects which prohibit affiliation of their
members in any such labor organization".
Being a member of a religious sect that prohibits the affiliation of its
members with any labor organization, Appellee presented his
resignation to appellant Union in 1962, and when no action was taken
thereon, he reiterated his resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the Company asking the
latter to separate Appellee from the service in view of the fact that he
was resigning from the Union as a member. The management of the
Company in turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with the Union, the
Company would be constrained to dismiss him from the service. This
prompted Appellee to file an action for injunction, docketed as Civil
Case No. 58894 in the Court of First Instance of Manila to enjoin the
Company and the Union from dismissing Appellee. 1 In its answer, the
Union invoked the "union security clause" of the collective bargaining
46

agreement; assailed the constitutionality of Republic Act No. 3350;

and contended that the Court had no jurisdiction over the case,
pursuant to Republic Act No. 875, Sections 24 and 9 (d) and
(e).2 Upon the facts agreed upon by the parties during the pre-trial
conference, the Court a quo rendered its decision on August 26, 1965,
the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is rendered
enjoining the defendant Elizalde Rope Factory, Inc.
from dismissing the plaintiff from his present
employment and sentencing the defendant Elizalde
Rope Workers' Union to pay the plaintiff P500 for
attorney's fees and the costs of this action. 3
From this decision, the Union appealed directly to this Court on
purely questions of law, assigning the following errors:
I. That the lower court erred when it did not rule that
Republic Act No. 3350 is unconstitutional.
II. That the lower court erred when it sentenced
appellant herein to pay plaintiff the sum of P500 as
attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of Republic Act No. 3350,
the Union contented, firstly, that the Act infringes on the fundamental
right to form lawful associations; that "the very phraseology of said
Republic Act 3350, that membership in a labor organization is banned
to all those belonging to such religious sect prohibiting affiliation with
any labor organization" 4 , "prohibits all the members of a given
religious sect from joining any labor union if such sect prohibits
affiliations of their members thereto" 5 ; and, consequently, deprives
said members of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill of Rights, and
thus becomes obnoxious to Article III, Section 1 (6) of the 1935
Constitution. 6

Secondly, the Union contended that Republic Act No. 3350 is

unconstitutional for impairing the obligation of contracts in that,
while the Union is obliged to comply with its collective bargaining
agreement containing a "closed shop provision," the Act relieves the
employer from its reciprocal obligation of cooperating in the
maintenance of union membership as a condition of employment; and
that said Act, furthermore, impairs the Union's rights as it deprives
the union of dues from members who, under the Act, are relieved from
the obligation to continue as such members. 7
Thirdly, the Union contended that Republic Act No. 3350
discriminatorily favors those religious sects which ban their members
from joining labor unions, in violation of Article Ill, Section 1 (7) of the
1935 Constitution; and while said Act unduly protects certain religious
sects, it leaves no rights or protection to labor organizations. 8
Fourthly, Republic Act No. 3350, asserted the Union, violates the
constitutional provision that "no religious test shall be required for the
exercise of a civil right," in that the laborer's exercise of his civil right
to join associations for purposes not contrary to law has to be
determined under the Act by his affiliation with a religious sect; that
conversely, if a worker has to sever his religious connection with a sect
that prohibits membership in a labor organization in order to be able
to join a labor organization, said Act would violate religious freedom. 9
Fifthly, the Union contended that Republic Act No. 3350, violates the
"equal protection of laws" clause of the Constitution, it being a
discriminately legislation, inasmuch as by exempting from the
operation of closed shop agreement the members of the "Iglesia ni
Cristo", it has granted said members undue advantages over their
fellow workers, for while the Act exempts them from union obligation
and liability, it nevertheless entitles them at the same time to the
enjoyment of all concessions, benefits and other emoluments that the
union might secure from the employer. 10
Sixthly, the Union contended that Republic Act No. 3350 violates the
constitutional provision regarding the promotion of social justice. 11
47

Appellant Union, furthermore, asserted that a "closed shop provision"

in a collective bargaining agreement cannot be considered violative of
religious freedom, as to call for the amendment introduced by
Republic Act No. 3350; 12and that unless Republic Act No. 3350 is
declared unconstitutional, trade unionism in this country would be
wiped out as employers would prefer to hire or employ members of
the Iglesia ni Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended that Republic
Act No. 3350 does not violate the right to form lawful associations, for
the right to join associations includes the right not to join or to resign
from a labor organization, if one's conscience does not allow his
membership therein, and the Act has given substance to such right by
prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of
contracts for said law formed part of, and was incorporated into, the
terms of the closed shop agreement; 15 that the Act does not violate the
establishment of religion clause or separation of Church and State, for
Congress, in enacting said law, merely accommodated the religious
needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized
labor with the constitutional right of an individual to freely exercise
his chosen religion; that the constitutional right to the free exercise of
one's religion has primacy and preference over union security
measures which are merely contractual 16 ; that said Act does not
violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious
tenets is based on substantial distinction, is germane to the purpose of
the law, and applies to all the members of a given class; 17 that said
Act, finally, does not violate the social justice policy of the
Constitution, for said Act was enacted precisely to equalize
employment opportunities for all citizens in the midst of the
diversities of their religious beliefs." 18
I. Before We proceed to the discussion of the first assigned error, it is
necessary to premise that there are some thoroughly established
principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All

presumptions are indulged in favor of constitutionality; one who

attacks a statute, alleging unconstitutionality must prove its invalidity
beyond a reasonable doubt, that a law may work hardship does not
render it unconstitutional; that if any reasonable basis may be
conceived which supports the statute, it will be upheld, and the
challenger must negate all possible bases; that the courts are not
concerned with the wisdom, justice, policy, or expediency of a statute;
and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No.
3350 prohibits and bans the members of such religious sects that
forbid affiliation of their members with labor unions from joining
labor unions appears nowhere in the wording of Republic Act No.
3350; neither can the same be deduced by necessary implication
therefrom. It is not surprising, therefore, that appellant, having thus
misread the Act, committed the error of contending that said Act is
obnoxious to the constitutional provision on freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of
association. Section 1 (6) of Article III of the Constitution of 1935, as
well as Section 7 of Article IV of the Constitution of 1973, provide that
the right to form associations or societies for purposes not contrary to
law shall not be abridged. Section 3 of Republic Act No. 875 provides
that employees shall have the right to self-organization and to form,
join of assist labor organizations of their own choosing for the purpose
of collective bargaining and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or protection.
What the Constitution and the Industrial Peace Act recognize and
guarantee is the "right" to form or join associations. Notwithstanding
the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right", it can be
safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or
freedom, i.e., the absence of legal restraint, whereby an employee may
act for himself without being prevented by law; and second, power,
whereby an employee may, as he pleases, join or refrain from Joining
an association. It is, therefore, the employee who should decide for
48

himself whether he should join or not an association; and should he

choose to join, he himself makes up his mind as to which association
he would join; and even after he has joined, he still retains the liberty
and the power to leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that the right to join a
union includes the right to abstain from joining any
union. 21 Inasmuch as what both the Constitution and the Industrial
Peace Act have recognized, and guaranteed to the employee, is the
"right" to join associations of his choice, it would be absurd to say that
the law also imposes, in the same breath, upon the employee the duty
to join associations. The law does not enjoin an employee to sign up
with any association.
The right to refrain from joining labor organizations recognized by
Section 3 of the Industrial Peace Act is, however, limited. The legal
protection granted to such right to refrain from joining is withdrawn
by operation of law, where a labor union and an employer have agreed
on a closed shop, by virtue of which the employer may employ only
member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract
in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial
Peace Act, before its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for an employer "to
discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in
any labor organization" the employer is, however, not precluded "from
making an agreement with a labor organization to require as a
condition of employment membership therein, if such labor
organization is the representative of the employees". By virtue,
therefore, of a closed shop agreement, before the enactment of
Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must
become a member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed and
withdrawn.
To that all-embracing coverage of the closed shop arrangement,
Republic Act No. 3350 introduced an exception, when it added to

Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but
such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization".
Republic Act No. 3350 merely excludes ipso jure from the application
and coverage of the closed shop agreement the employees belonging
to any religious sects which prohibit affiliation of their members with
any labor organization. What the exception provides, therefore, is that
members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with
the employers; that in spite of any closed shop agreement, members of
said religious sects cannot be refused employment or dismissed from
their jobs on the sole ground that they are not members of the
collective bargaining union. It is clear, therefore, that the assailed Act,
far from infringing the constitutional provision on freedom of
association, upholds and reinforces it. It does not prohibit the
members of said religious sects from affiliating with labor unions. It
still leaves to said members the liberty and the power to affiliate, or
not to affiliate, with labor unions. If, notwithstanding their religious
beliefs, the members of said religious sects prefer to sign up with the
labor union, they can do so. If in deference and fealty to their religious
faith, they refuse to sign up, they can do so; the law does not coerce
them to join; neither does the law prohibit them from joining; and
neither may the employer or labor union compel them to join.
Republic Act No. 3350, therefore, does not violate the constitutional
provision on freedom of association.
2. Appellant Union also contends that the Act is unconstitutional for
impairing the obligation of its contract, specifically, the "union
security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was
required as a condition for employment for all permanent employees
workers". This agreement was already in existence at the time
Republic Act No. 3350 was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been incorporated into the agreement.
But by reason of this amendment, Appellee, as well as others similarly
situated, could no longer be dismissed from his job even if he should
cease to be a member, or disaffiliate from the Union, and the
Company could continue employing him notwithstanding his
49

disaffiliation from the Union. The Act, therefore, introduced a change

into the express terms of the union security clause; the Company was
partly absolved by law from the contractual obligation it had with the
Union of employing only Union members in permanent positions, It
cannot be denied, therefore, that there was indeed an impairment of
said union security clause.
According to Black, any statute which introduces a change into the
express terms of the contract, or its legal construction, or its validity,
or its discharge, or the remedy for its enforcement, impairs the
contract. The extent of the change is not material. It is not a question
of degree or manner or cause, but of encroaching in any respect on its
obligation or dispensing with any part of its force. There is an
impairment of the contract if either party is absolved by law from its
performance. 22 Impairment has also been predicated on laws which,
without destroying contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the prohibition to impair
the obligation of contracts is not absolute and unqualified. The
prohibition is general, affording a broad outline and requiring
construction to fill in the details. The prohibition is not to be read with
literal exactness like a mathematical formula, for it prohibits
unreasonable impairment only. 24 In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the
vital interests of its people. Legislation appropriate to safeguarding
said interests may modify or abrogate contracts already in
effect. 25 For not only are existing laws read into contracts in order to
fix the obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into contracts as a
postulate of the legal order. All contracts made with reference to any
matter that is subject to regulation under the police power must be
understood as made in reference to the possible exercise of that
power. 26 Otherwise, important and valuable reforms may be
precluded by the simple device of entering into contracts for the
purpose of doing that which otherwise may be prohibited. The policy
of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations

are worthwhile a government which retains adequate authority to

secure the peace and good order of society. The contract clause of the
Constitution must, therefore, be not only in harmony with, but also in
subordination to, in appropriate instances, the reserved power of the
state to safeguard the vital interests of the people. It follows that not
all legislations, which have the effect of impairing a contract, are
obnoxious to the constitutional prohibition as to impairment, and a
statute passed in the legitimate exercise of police power, although it
incidentally destroys existing contract rights, must be upheld by the
courts. This has special application to contracts regulating relations
between capital and labor which are not merely contractual, and said
labor contracts, for being impressed with public interest, must yield to
the common good. 27
In several occasions this Court declared that the prohibition against
impairing the obligations of contracts has no application to statutes
relating to public subjects within the domain of the general legislative
powers of the state involving public welfare. 28 Thus, this Court also
held that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to furnish work on
Sundays to his employees, the law having been enacted to secure the
well-being and happiness of the laboring class, and being,
furthermore, a legitimate exercise of the police power. 29
In order to determine whether legislation unconstitutionally impairs
contract obligations, no unchanging yardstick, applicable at all times
and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must
be determined upon its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when the means
adopted to secure that end are reasonable. Both the end sought and
the means adopted must be legitimate, i.e., within the scope of the
reserved power of the state construed in harmony with the
constitutional limitation of that power. 30
What then was the purpose sought to be achieved by Republic Act No.
3350? Its purpose was to insure freedom of belief and religion, and to
50

promote the general welfare by preventing discrimination against

those members of religious sects which prohibit their members from
joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the
only means whereby they can maintain their own life and the life of
their dependents. It cannot be gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members of said
religious sects against two aggregates of group strength from which
the individual needs protection. The individual employee, at various
times in his working life, is confronted by two aggregates of power
collective labor, directed by a union, and collective capital, directed by
management. The union, an institution developed to organize labor
into a collective force and thus protect the individual employee from
the power of collective capital, is, paradoxically, both the champion of
employee rights, and a new source of their frustration. Moreover,
when the Union interacts with management, it produces yet a third
aggregate of group strength from which the individual also needs
protection the collective bargaining relationship. 31
The aforementioned purpose of the amendatory law is clearly seen in
the Explanatory Note to House Bill No. 5859, which later became
Republic Act No. 3350, as follows:
It would be unthinkable indeed to refuse employing a
person who, on account of his religious beliefs and
convictions, cannot accept membership in a labor
organization although he possesses all the
qualifications for the job. This is tantamount to
punishing such person for believing in a doctrine he
has a right under the law to believe in. The law would
not allow discrimination to flourish to the detriment of
those whose religion discards membership in any labor
organization. Likewise, the law would not commend
the deprivation of their right to work and pursue a
modest means of livelihood, without in any manner
violating their religious faith and/or belief. 32

It cannot be denied, furthermore, that the means adopted by the Act

to achieve that purpose exempting the members of said religious
sects from coverage of union security agreements is reasonable.
It may not be amiss to point out here that the free exercise of religious
profession or belief is superior to contract rights. In case of conflict,
the latter must, therefore, yield to the former. The Supreme Court of
the United States has also declared on several occasions that the rights
in the First Amendment, which include freedom of religion, enjoy a
preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and
liberty, 34 and has a preferred position in the hierarchy of values.
Contractual rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an immediate and grave
danger to the security and welfare of the community that infringement
of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.
3. In further support of its contention that Republic Act No. 3350 is
unconstitutional, appellant Union averred that said Act discriminates
in favor of members of said religious sects in violation of Section 1 (7)
of Article Ill of the 1935 Constitution, and which is now Section 8 of
Article IV of the 1973 Constitution, which provides:
No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof, and
the free exercise and enjoyment of religious profession
and worship, without discrimination and preference,
shall forever be allowed. No religious test shall be
required for the exercise of civil or political rights.
The constitutional provision into only prohibits legislation for the
support of any religious tenets or the modes of worship of any sect,
thus forestalling compulsion by law of the acceptance of any creed or
the practice of any form of worship, 35 but also assures the free
exercise of one's chosen form of religion within limits of utmost
amplitude. It has been said that the religion clauses of the
Constitution are all designed to protect the broadest possible liberty of
51

conscience, to allow each man to believe as his conscience directs, to

profess his beliefs, and to live as he believes he ought to live,
consistent with the liberty of others and with the common
good. 36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously
between the religions, is invalid, even though the burden may be
characterized as being only indirect. 37 But if the stage regulates
conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state's secular goals, the statute is
valid despite its indirect burden on religious observance, unless the
state can accomplish its purpose without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that the
government should not be precluded from pursuing valid objectives
secular in character even if the incidental result would be favorable to
a religion or sect. It has likewise been held that the statute, in order to
withstand the strictures of constitutional prohibition, must have a
secular legislative purpose and a primary effect that neither advances
nor inhibits religion. 40 Assessed by these criteria, Republic Act No.
3350 cannot be said to violate the constitutional inhibition of the "noestablishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and
temporal, not spiritual or religious or holy and eternal. It was
intended to serve the secular purpose of advancing the constitutional
right to the free exercise of religion, by averting that certain persons
be refused work, or be dismissed from work, or be dispossessed of
their right to work and of being impeded to pursue a modest means of
livelihood, by reason of union security agreements. To help its citizens
to find gainful employment whereby they can make a living to support
themselves and their families is a valid objective of the state. In fact,
the state is enjoined, in the 1935 Constitution, to afford protection to
labor, and regulate the relations between labor and capital and
industry. 41 More so now in the 1973 Constitution where it is
mandated that "the State shall afford protection to labor, promote full
employment and equality in employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relation
between workers and employers. 42

The primary effects of the exemption from closed shop agreements in

favor of members of religious sects that prohibit their members from
affiliating with a labor organization, is the protection of said
employees against the aggregate force of the collective bargaining
agreement, and relieving certain citizens of a burden on their religious
beliefs; and by eliminating to a certain extent economic insecurity due
to unemployment, which is a serious menace to the health, morals,
and welfare of the people of the State, the Act also promotes the wellbeing of society. It is our view that the exemption from the effects of
closed shop agreement does not directly advance, or diminish, the
interests of any particular religion. Although the exemption may
benefit those who are members of religious sects that prohibit their
members from joining labor unions, the benefit upon the religious
sects is merely incidental and indirect. The "establishment clause" (of
religion) does not ban regulation on conduct whose reason or effect
merely happens to coincide or harmonize with the tenets of some or
all religions. 43 The free exercise clause of the Constitution has been
interpreted to require that religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350, Congress acted
consistently with the spirit of the constitutional provision. It acted
merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. It was Congress
itself that imposed that burden when it enacted the Industrial Peace
Act (Republic Act 875), and, certainly, Congress, if it so deems
advisable, could take away the same burden. It is certain that not
every conscience can be accommodated by all the laws of the land; but
when general laws conflict with scrupples of conscience, exemptions
ought to be granted unless some "compelling state interest"
intervenes.45 In the instant case, We see no such compelling state
interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350 protects members
of certain religious sects, it leaves no right to, and is silent as to the
protection of, labor organizations. The purpose of Republic Act No.
3350 was not to grant rights to labor unions. The rights of labor
unions are amply provided for in Republic Act No. 875 and the new
Labor Code. As to the lamented silence of the Act regarding the rights
52

and protection of labor unions, suffice it to say, first, that the validity
of a statute is determined by its provisions, not by its silence 46 ; and,
second, the fact that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel
persons to join and remain members of a union to keep their jobs in
violation of their religious scrupples, would hurt, rather than help,
labor unions, Congress has seen it fit to exempt religious objectors lest
their resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic
objections.
Furthermore, let it be noted that coerced unity and loyalty even to the
country, and a fortiori to a labor union assuming that such unity
and loyalty can be attained through coercion is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No. 3350 violates
the constitutional prohibition against requiring a religious test for the
exercise of a civil right or a political right, is not well taken. The Act
does not require as a qualification, or condition, for joining any lawful
association membership in any particular religion or in any religious
sect; neither does the Act require affiliation with a religious sect that
prohibits its members from joining a labor union as a condition or
qualification for withdrawing from a labor union. Joining or
withdrawing from a labor union requires a positive act. Republic Act
No. 3350 only exempts members with such religious affiliation from
the coverage of closed shop agreements. So, under this Act, a religious
objector is not required to do a positive act to exercise the right to
join or to resign from the union. He is exempted ipso jure without
need of any positive act on his part. A conscientious religious objector
need not perform a positive act or exercise the right of resigning from
the labor union he is exempted from the coverage of any closed
shop agreement that a labor union may have entered into. How then
can there be a religious test required for the exercise of a right when
no right need be exercised?

We have said that it was within the police power of the State to enact
Republic Act No. 3350, and that its purpose was legal and in
consonance with the Constitution. It is never an illegal evasion of a
constitutional provision or prohibition to accomplish a desired result,
which is lawful in itself, by discovering or following a legal way to do
it. 49
5. Appellant avers as its fifth ground that Republic Act No. 3350 is a
discriminatory legislation, inasmuch as it grants to the members of
certain religious sects undue advantages over other workers, thus
violating Section 1 of Article III of the 1935 Constitution which forbids
the denial to any person of the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a guaranty of
equality in the application of the laws upon all citizens of the state. It
is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child
should be affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely as such,
but on persons according to the circumstances surrounding them. It
guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not
forbid discrimination as to things that are different. 51 It does not
prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of
knowledge or practice, is the grouping of things in speculation or
practice because they agree with one another in certain particulars. A
law is not invalid because of simple inequality. 52 The very idea of
classification is that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines the matter of
constitutionality. 53 All that is required of a valid classification is that it
be reasonable, which means that the classification should be based on
substantial distinctions which make for real differences; that it must
be germane to the purpose of the law; that it must not be limited to
53

existing conditions only; and that it must apply equally to each

member of the class. 54 This Court has held that the standard is
satisfied if the classification or distinction is based on a reasonable
foundation or rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications for the purpose of
enacting laws over matters within its jurisdiction, the state is
recognized as enjoying a wide range of discretion. 56 It is not necessary
that the classification be based on scientific or marked differences of
things or in their relation. 57 Neither is it necessary that the
classification be made with mathematical nicety. 58 Hence legislative
classification may in many cases properly rest on narrow
distinctions, 59for the equal protection guaranty does not preclude the
legislature from recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the aforementioned
requirements. The Act classifies employees and workers, as to the
effect and coverage of union shop security agreements, into those who
by reason of their religious beliefs and convictions cannot sign up with
a labor union, and those whose religion does not prohibit membership
in labor unions. Tile classification rests on real or substantial, not
merely imaginary or whimsical, distinctions. There is such real
distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different
religions differ in their dogmas and cannons. Religious beliefs,
manifestations and practices, though they are found in all places, and
in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum
of religious beliefs among the people. There are diverse manners in
which beliefs, equally paramount in the lives of their possessors, may
be articulated. Today the country is far more heterogenous in religion
than before, differences in religion do exist, and these differences are
important and should not be ignored.
Even from the phychological point of view, the classification is based
on real and important differences. Religious beliefs are not mere
beliefs, mere ideas existing only in the mind, for they carry with them

practical consequences and are the motives of certain rules. of human

conduct and the justification of certain acts. 60 Religious sentiment
makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or
unhappiness its enjoyment or irksomeness. Usually, a strong and
passionate desire is involved in a religious belief. To certain persons,
no single factor of their experience is more important to them than
their religion, or their not having any religion. Because of differences
in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the
necessities of life may be more cheerful than the one who has all
possible luxuries. Due to their religious beliefs people, like the
martyrs, became resigned to the inevitable and accepted cheerfully
even the most painful and excruciating pains. Because of differences
in religious beliefs, the world has witnessed turmoil, civil strife,
persecution, hatred, bloodshed and war, generated to a large extent by
members of sects who were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350, therefore, rests
on substantial distinctions.
The classification introduced by said Act is also germane to its
purpose. The purpose of the law is precisely to avoid those who
cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their
work because of union shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its application to
conditions existing at the time of its enactment. The law does not
provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the
law is applicable exist. As long as there are closed shop agreements
between an employer and a labor union, and there are employees who
are prohibited by their religion from affiliating with labor unions, their
exemption from the coverage of said agreements continues.
Finally, the Act applies equally to all members of said religious sects;
this is evident from its provision. The fact that the law grants a
privilege to members of said religious sects cannot by itself render the
54

Act unconstitutional, for as We have adverted to, the Act only restores
to them their freedom of association which closed shop agreements
have taken away, and puts them in the same plane as the other
workers who are not prohibited by their religion from joining labor
unions. The circumstance, that the other employees, because they are
differently situated, are not granted the same privilege, does not
render the law unconstitutional, for every classification allowed by the
Constitution by its nature involves inequality.
The mere fact that the legislative classification may result in actual
inequality is not violative of the right to equal protection, for every
classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid.
A classification otherwise reasonable does not offend the constitution
simply because in practice it results in some inequality. 61 Anent this
matter, it has been said that whenever it is apparent from the scope of
the law that its object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character, the law will
be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62
6. Appellant's further contention that Republic Act No. 3350 violates
the constitutional provision on social justice is also baseless. Social
justice is intended to promote the welfare of all the people. 63 Republic
Act No. 3350 promotes that welfare insofar as it looks after the welfare
of those who, because of their religious belief, cannot join labor
unions; the Act prevents their being deprived of work and of the
means of livelihood. In determining whether any particular measure is
for public advantage, it is not necessary that the entire state be directly
benefited it is sufficient that a portion of the state be benefited
thereby.
Social justice also means the adoption by the Government of measures
calculated to insure economic stability of all component elements of
society, through the maintenance of a proper economic and social
equilibrium in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic stability to the
members of a religious sect, like the Iglesia ni Cristo, who are also

component elements of society, for it insures security in their

employment, notwithstanding their failure to join a labor union
having a closed shop agreement with the employer. The Act also
advances the proper economic and social equilibrium between labor
unions and employees who cannot join labor unions, for it exempts
the latter from the compelling necessity of joining labor unions that
have closed shop agreements and equalizes, in so far as opportunity to
work is concerned, those whose religion prohibits membership in
labor unions with those whose religion does not prohibit said
membership. Social justice does not imply social equality, because
social inequality will always exist as long as social relations depend on
personal or subjective proclivities. Social justice does not require legal
equality because legal equality, being a relative term, is necessarily
premised on differentiations based on personal or natural
conditions. 65 Social justice guarantees equality of opportunity 66 , and
this is precisely what Republic Act No. 3350 proposes to accomplish
it gives laborers, irrespective of their religious scrupples, equal
opportunity for work.
7. As its last ground, appellant contends that the amendment
introduced by Republic Act No. 3350 is not called for in other
words, the Act is not proper, necessary or desirable. Anent this matter,
it has been held that a statute which is not necessary is not, for that
reason, unconstitutional; that in determining the constitutional
validity of legislation, the courts are unconcerned with issues as to the
necessity for the enactment of the legislation in question. 67 Courts do
inquire into the wisdom of laws. 68 Moreover, legislatures, being
chosen by the people, are presumed to understand and correctly
appreciate the needs of the people, and it may change the laws
accordingly. 69 The fear is entertained by appellant that unless the Act
is declared unconstitutional, employers will prefer employing
members of religious sects that prohibit their members from joining
labor unions, and thus be a fatal blow to unionism. We do not agree.
The threat to unionism will depend on the number of employees who
are members of the religious sects that control the demands of the
labor market. But there is really no occasion now to go further and
anticipate problems We cannot judge with the material now before Us.
At any rate, the validity of a statute is to be determined from its
55

general purpose and its efficacy to accomplish the end desired, not
from its effects on a particular case. 70 The essential basis for the
exercise of power, and not a mere incidental result arising from its
exertion, is the criterion by which the validity of a statute is to be
measured. 71
II. We now pass on the second assignment of error, in support of
which the Union argued that the decision of the trial court ordering
the Union to pay P500 for attorney's fees directly contravenes Section
24 of Republic Act No. 875, for the instant action involves an
industrial dispute wherein the Union was a party, and said Union
merely acted in the exercise of its rights under the union shop
provision of its existing collective bargaining contract with the
Company; that said order also contravenes Article 2208 of the Civil
Code; that, furthermore, Appellee was never actually dismissed by the
defendant Company and did not therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed that in the
instant case there was really no industrial dispute involved in the
attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was compelled to
institute an action to protect his right to work, appellant could legally
be ordered to pay attorney's fees under Articles 1704 and 2208 of the
Civil Code. 73
The second paragraph of Section 24 of Republic Act No. 875 which is
relied upon by appellant provides that:
No suit, action or other proceedings shall be
maintainable in any court against a labor organization
or any officer or member thereof for any act done by or
on behalf of such organization in furtherance of an
industrial dispute to which it is a party, on the ground
only that such act induces some other person to break a
contract of employment or that it is in restraint of trade
or interferes with the trade, business or employment of
some other person or with the right of some other

person to dispose of his capital or labor. (Emphasis

supplied)
That there was a labor dispute in the instant case cannot be disputed
for appellant sought the discharge of respondent by virtue of the
closed shop agreement and under Section 2 (j) of Republic Act No. 875
a question involving tenure of employment is included in the term
"labor dispute". 74 The discharge or the act of seeking it is the labor
dispute itself. It being the labor dispute itself, that very same act of the
Union in asking the employer to dismiss Appellee cannot be "an act
done ... in furtherance of an industrial dispute". The mere fact that
appellant is a labor union does not necessarily mean that all its acts
are in furtherance of an industrial dispute. 75 Appellant Union,
therefore, cannot invoke in its favor Section 24 of Republic Act No.
875. This case is not intertwined with any unfair labor practice case
existing at the time when Appellee filed his complaint before the lower
court.
Neither does Article 2208 of the Civil Code, invoked by the Union,
serve as its shield. The article provides that attorney's fees and
expenses of litigation may be awarded "when the defendant's act or
omission has compelled the plaintiff ... to incur expenses to protect
his interest"; and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be
recovered". In the instant case, it cannot be gainsaid that appellant
Union's act in demanding Appellee's dismissal caused Appellee to
incur expenses to prevent his being dismissed from his job. Costs
according to Section 1, Rule 142, of the Rules of Court, shall be
allowed as a matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and the decision,
dated August 26, 1965, of the Court of First Instance of Manila, in its
Civil Case No. 58894, appealed from is affirmed, with costs against
appellant Union. It is so ordered.

56

Labor Relations; Right to Organize; Executive Order 111; Executive

Order 180; Republic Act 6715; Executive Order 111 restored the right
to organize and to negotiate and bargain of employees of government
corporations established under the Corporation Code.But EO 111
restored the right to organize and to negotiate and bargain of
employees of government corporations established under the
Corporation Code. And EO 180, and apparently RA 6715, too, granted
to all government employees the right of collective bargaining or
negotiation except as regards those terms of their employment which
were fixed by law; and as to said terms fixed by law, they were
prohibited to strike to obtain changes thereof.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 43633-34 September 14, 1990
PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN,
and FELINO BULANDUS, petitioners,
vs.
THE COURT OF APPEALS and THE PEOPLE OF THE
PHILIPPINES, respondents.
Januario T. Seno for petitioners.

Same; Same; Same; Same; Same; Under the Implementing Rules of

Republic Act 6715 supervisors who were members of existing labor
organizations on the effectivity of said law were explicitly authorized
to remain therein.The petitioners appear to be correct in their
view of the disappearance from the law of the prohibition on
supervisors being members of labor organizations composed of
employees under their supervision. The Labor Code (PD 442) allowed
supervisors (if notmanagerial) to join rank-and-file unions. And under
the Implementing Rules of RA 6715, supervisors who were members
of existing labor organizations on the effectivity of said RA 6715 were
explicitly authorized to remain therein.
Same; Same; Unfair Labor Practice; Unfair labor practices were
declared to be crimes again under Batas Pambansa Blg. 70.The
correctness of the petitioners theory that unfair labor practices ceased
to be crimes and were deemed merely administrative offenses in
virtue of the Labor Code, cannot be gainsaid. Article 250 of the Labor
Code did provide as follows: ART. 250. Concept of unfair labor
practice.The concept of unfair labor practice is hereby modified.
Henceforth, it shall be considered merely as an administrative offense
rather than a criminal offense. Unfair labor practice complaints shall,
therefore, be processed like any ordinary labor disputes. But unfair
labor practices were declared to be crimes again by later amendments
of the Labor Code effected by Batas Pambansa Blg. 70, approved on
May 1, 1980. As thus amended, the Code now pertinently reads as
follows: ART. 248. Concept of unfair labor practice and procedure for
57

prosecution thereof.Unfair labor practices violate the constitutional

right of workers and employees to self organization, are inimical to the
legitimate interests of both labor and management, including their
right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management
relations. Consequently, unfair labor practices are not only violations
of the civil rights of both labor and management but are also criminal
offenses against the State which shall be subject to prosecution and
punishment as herein provided. xxx Recovery of civil liability in the
administrative proceedings shall bar recovery under the Civil Code.
No criminal prosecution under this title may be instituted without a
final judgment, finding that an unfair labor practice was committed
having been first obtained in the preceding paragraph.
Same; Same; Same; Supervisory Employees; Under present law,
maintenance by supervisors of membership in a rank-and-file labor
organization even after the enactment of a statute imposing a
prohibition on such membership is explicitly allowed.The decisive
consideration is that at present, supervisors who were already
members of a rank-and-file labor organization at the time of the
effectivity of R.A. No. 6715, are authorized to remain therein. It
seems plain, in other words, that the maintenance by supervisors of
membership in a rank-and-file labor organization even after the
enactment of a statute imposing a prohibition on such membership, is
not only not a crime,but is explicitly allowed, under present law.
Statutes; Effects of Repeal; Repeal of a penal law deprives the courts
of jurisdiction to punish persons charged with a violation of the old
penal laws prior to its repeal.To the same effect and in even more
unmistakable language is People v. Almuete, where the defendantsappellees were charged criminally under section 39 of Republic Act
No. 1199, as amended (the Agricultural Land Tenancy Law of 1954)
which penalized pre-threshing by either agricultural tenant or his
landlord. They sought and secured a dismissal on the ground, among
others, that there was no law punishing the act chargeda reference
to the fact that Republic Act No. 1199 had already been superseded by
the Agricultural Land Reform Code of 1963 which instituted the

leasehold system and abolished share tenancy subject to certain

conditions. On appeal by the Government, this Court upheld the
dismissal, saying: x x x The repeal of a penal law deprives the courts
of jurisdiction to punish persons charged with a violation of the old
penal law prior to its repeal. Arizala vs. Court of Appeals, 189 SCRA
584, G.R. Nos. 43633-34 September 14, 1990
NARVASA, J.:
Under the Industrial Peace Act, 1 government-owned or controlled
corporations had the duty to bargain collectively and were otherwise
subject to the obligations and duties of employers in the private
sector. 2 The Act also prohibited supervisors to become, or continue to
be, members of labor organizations composed of rank-and-file
employees, 3 and prescribed criminal sanctions for breach of the
prohibition. 4
It was under the regime of said Industrial Peace Act that the
Government Service Insurance System (GSIS, for short) became
bound by a collective bargaining agreement executed between it and
the labor organization representing the majority of its employees, the
GSIS Employees Association. The agreement contained a
"maintenance-of-membership" clause, 5 i.e., that all employees who, at
the time of the execution of said agreement, were members of the
union or became members thereafter, were obliged to maintain their
union membership in good standing for the duration of the agreement
as a condition for their continued employment in the GSIS.
There appears to be no dispute that at that time, the petitioners
occupied supervisory positions in the GSIS. Pablo Arizala and Sergio
Maribao were, respectively, the Chief of the Accounting Division, and
the Chief of the Billing Section of said Division, in the Central Visayas
Regional Office of the GSIS. Leonardo Joven and Felino Bulandus
were, respectively, the Assistant Chief of the Accounting Division
(sometimes Acting Chief in the absence of the Chief) and the Assistant
Chief of the Field Service and Non-Life Insurance Division (and Acting
Division Chief in the absence of the Chief), of the same Central Visayas
Regional Office of the GSIS. Demands were made on all four of them
58

to resign from the GSIS Employees Association, in view of their

supervisory positions. They refused to do so. Consequently, two (2)
criminal cases for violation of the Industrial Peace Act were lodged
against them in the City Court of Cebu: one involving Arizala and
Maribao 6 and the other, Joven and Bulandus. 7

have been obliterated in virtue of subsequent legislation and the

provisions of the 1973 and 1987 Constitutions.

Both criminal actions resulted in the conviction of the accused in

separate decisions. 8 They were each sentenced "to pay a fine of P
500.00 or to suffer subsidiary imprisonment in case of insolvency."
They appealed to the Court of Appeals. 9Arizala's and Maribao's appeal
was docketed as CA-G.R. No. 14724-CR; that of Joven and Bulandus,
as CA-G.R. No. 14856-CR.

1. Section 1, Article XII-B of the 1973 Constitution does indeed provide

that the "Civil Service embraces every branch, agency, subdivision and
instrumentality of the government, including government-owned or
controlled corporations, .. administered by an independent Civil
Service Commission.

The appeals were consolidated on motion of the appellants, and

eventuated in a judgment promulgated on January 29, 1976 affirming
the convictions of all four appellants. The appellants moved for
reconsideration. They argued that when the so called "1973
Constitution" took effect on January 17, 1973 pursuant to
Proclamation No. 1104, the case of Arizala and Maribao was still
pending in the Court of Appeals and that of Joven and Bulandus,
pending decision in the City Court of Cebu; that since the provisions of
that constitution and of the Labor Code subsequently promulgated
(eff., November 1, 1974), repealing the Industrial Peace Act-placed
employees of all categories in government-owned or controlled
corporations without distinction within the Civil Service, and provided
that the terms and conditions of their employment were to be
"governed by the Civil Service Law, rules and regulations" and hence,
no longer subject of collective bargaining, the appellants ceased to fall
within the coverage of the Industrial Peace Act and should thus no
longer continue to be prosecuted and exposed to punishment for a
violation thereof. They pointed out further that the criminal sanction
in the Industrial Peace Act no longer appeared in the Labor Code. The
Appellate Court denied their plea for reconsideration.
Hence, the present petition for review on certiorari.

The petitioners' contention that their liability had been erased is made
to rest upon the following premises:

2. Article 292 of the Labor Code repealed such parts and provisions of
the Industrial Peace Act as were "not adopted as part" of said Code
"either directly or by reference." The Code did not adopt the provision
of the Industrial Peace Act conferring on employees of governmentowned or controlled corporations the right of self-organization and
collective bargaining; in fact it made known that the "terms and
conditions of employment of all government employees, including
employees of government-owned and controlled corporations," would
thenceforth no longer be fixed by collective bargaining but "be
governed by the Civil Service Law, rules and regulations." 10
3. The specific penalty for violation of the prohibition on supervisors
being members in a labor organization of employees under their
supervision has disappeared.
4. The Code also modified the concept of unfair labor practice,
decreeing that thenceforth, "it shall be considered merely as an
administrative offense rather than a criminal offense (and that)
(u)nfair labor practice complaints shall x x be processed like any
ordinary labor disputes." 11
On the other hand, in justification of the Appellate Tribunal's
affirmance of the petitioners' convictions of violations of the Industrial
Peace Act, the People-

The crucial issue obviously is whether or not the petitioners' criminal

liability for a violation of the Industrial Peace Act may be deemed to
59

1) advert to the fact that said Labor Code also states that "all actions or
claims accruing prior to ... (its) effectivity ... shall be determined in
accordance with the laws in force at the time of their accrual;" and
2) argue that the legislature cannot generally intervene and vacate the
judgment of the courts, either directly or indirectly, by the repeal of
the statute under which said judgment has been rendered.
The legal principles governing the rights of self-organization and
collective bargaining of rank-and-file employees in the governmentparticularly as regards supervisory, and high level or managerial
employees have undergone alterations through the years.
Republic Act No. 875
As already intimated, under RA 875 (the Industry Peace
Act), 12 persons "employed in proprietary functions of the
Government, including but not limited to governmental corporations,"
had the right of self-organization and collective bargaining, including
the right to engage in concerted activities to attain their objectives, e.g.
strikes.
But those "employed in governmental functions" were forbidden to
"strike for the purpose of securing changes or modification in their
terms and conditions of employment" or join labor organizations
which imposed on their members the duty to strike. The reason
obviously was that the terms and conditions of their employment were
"governed by law" and hence could not be fixed, altered or otherwise
modified by collective bargaining.

Supervisory employees were forbidden to join labor organizations

composed of employees under them, but could form their own unions.
Considered "supervisors' were those 'having authority in the interest
of an employer to hire, transfer, suspend, lay-off, recall, discharge,
assign, recommend, or discipline other employees, or responsibly to
direct them, and to adjust their grievance or effectively to recommend
such acts if, in connection with the foregoing, the exercise of such
authority is not merely routinary or clerical in nature but requires the
use of independent judgment." 13
Republic Act No. 2260
Similar provisions were found in R.A. No. 2260, the Civil Service Act
of 1959. This Act declared that the "Philippine Civil Service ...
(embraced) all branches, subdivisions and instrumentalities of the
government including government-owned and controlled
corporations." 14
It prohibited such civil service employees who were "employed in
governmental functions" to belong to any labor organization which
imposed on their members "the obligation to strike or to join strikes."
And one of the first issuances of the President after the proclamation
of martial law in September, 1972, was General Order No. 5
which inter alia banned strikes in vital industries," as well as 'all
rallies, demonstrations and other forms of group actions." 15
Not so prohibited, however, were those "employed in proprietary
functions of the Government including, but not limited to,
governmental corporations." 16 The Act also penalized any person who
"violates, refuses or neglects to comply with any ... provisions (of the
Act) or rules (thereunder promulgated) ... by a fine not exceeding one
thousand pesos or by imprisonment not exceeding six months or both
such fine and imprisonment in the discretion of the court." 17
The 1973 Constitution
The 1973 Constitution laid down the broad principle that "(t)he State
shall assure the rights of workers to self-organization, collective
60

bargaining, security of tenure, and just and humane conditions of

work," 18 and directed that the "National Assembly shall provide for
the standardization of compensation of government officials and
employees,including those in government-owned or controlled
corporations, taking into account the nature of the responsibilities
pertaining to, and the qualifications required for, the positions
concerned." 19
PD 442, The Labor Code
The Labor Code of the Philippines, Presidential Decree No. 442,
enacted within a year from effectivity of the 1973
Constitution, 20 incorporated the proposition that the "terms and
conditions of employment of all government employees, including
employees of government-owned and controlled corporations ... (are)
governed by the Civil Service Law, rules and regulations." 21 It
incorporated, too, the constitutional mandate that the salaries of said
employees "shall be standardized by the National Assembly."
The Labor Code, 22 however "exempted" government employees from
the right to self-organization for purposes of collective bargaining.
While the Code contained provisions acknowledging the right of "all
persons employed in commercial, industrial and agricultural
enterprises, including religious, medical or educational institutions
operating for profit" to "self-organization and to form, join or assist
labor organizations for purposes of collective bargaining," they
"exempted from the foregoing provisions:
a) security guards;
b) government employees, including employees of government
government-owned and/ or controlled corporations;
c) managerial employees; and

d) employees of religious, charitable, medical and educational

institutions not operating for profit, provided the latter do not have
existing collective agreements or recognized unions at the time of the
effectivity of the code or have voluntarily waived their exemption." 23
The reason for denying to government employees the right to "selforganization and to form, join or assist labor organizations for
purposes of collective bargaining" is presumably the same as that
under the Industrial Peace Act, i.e., that the terms and conditions of
government employment are fixed by law and not by collective
bargaining.
Some inconsistency appears to have arisen between the Labor Code
and the Civil Service Act of 1959. Under the Civil Service Act, persons
"employed in proprietary functions of the government including, but
not limited to, governmental corporations'-not being within "the
policy of the Government that the employees therein shall not strike
for the purpose of securing changes in their terms and conditions of
employment"-could legitimately bargain with their respective
employers through their labor organizations, and corollarily engage in
strikes and other concerted activities in an attempt to bring about
changes in the conditions of their work. They could not however do so
under the Labor Code and its Implementing Rules and Regulations;
these provided that "government employees, including employees of
government-owned and/or controlled corporations," without
distinction as to function, were "exempted" (excluded is the better
term) from "the right to self-organization and to form, join or assist
labor organizations for purposes of collective bargaining," and by
implication, excluded as well from the right to engage in concerted
activities, such as strikes, as coercive measures against their
employers.
Members of supervisory unions who were not managerial employees,
were declared by the Labor Code to be "eligible to join or assist the
rank and file labor organization, and if none exists, to form or assist in
the forming of such rank and file organization " 24 Managerial
employees, on the other hand, were pronounced as 'not eligible to
join, assist or form any labor organization." 25 A "managerial
61

employee" was defined as one vested with power or prerogatives to lay

down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees, or
to effectively recommend such managerial actions." 26

respective employers." 31 To all 'other employees in the civil service, ...

(it granted merely) the right to form associations for purposes not
contrary to law," 32 not for "purposes of collective bargaining."
The 1987 Constitution

Presidential Decree No. 807

Clarification of the matter seems to have been very shortly attempted
by the Civil Service Decree of the Philippines, Presidential Decree No.
807 (eff., Oct. 6,1975) which superseded the Civil Service Law of 1959
(RA 2260) 27 and repealed or modified "all laws, rules and regulations
or parts thereof inconsistent with the provisions" thereof. The Decree
categorically described the scope and coverage of the "Civil Service" as
embracing 44 every branch, agency, subdivision, and instrumentality
of the government, including every government owned or controlled
corporation whether performing governmental or propriety
function. 28 The effect was seemingly to prohibit government
employees (including those "employed in proprietary functions of the
Government") to "strike for the purpose of securing changes of their
terms and conditions of employment," 29 something which, as
aforestated, they were allowed to do under the Civil Service Act of
1959.30
Be this as it may it seems clear that PD 807 (the Civil Service Decree)
did not modify the declared ineligibility of "managerial employees"
from joining, assisting or forming any labor organization.
Executive Order No. 111
Executive Order No. 111, issued by President Corazon C. Aquino on
December 24, 1986 in the exercise of legislative powers under the
Freedom Constitution, modified the general disqualification above
mentioned of 'government employees, including employees of
government-owned and/or controlled corporations" from "the right to
self-organization and to form, join or assist labor organizations for
purposes of collective bargaining.' It granted to employees
"of government corporations established under the Corporation
Code x x the right to organize and to bargain collectively with their

The provisions of the present Constitution on the matter appear to be

somewhat more extensive. They declare that the "right to self
organization shall not be denied to government employees;" 33 that the
State "shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities,including the right to strike in accordance with law;" and
that said workers "shall be entitled to security of tenure, humane
conditions of work, and a living wage, ... (and) also participate in
policy and decision-making processes affecting their rights and
benefits as may be provided by law. 34
CSC Memorandum Circular No. 6
Memorandum Circular No. 6 of the Civil Service Commission, issued
on April 21, 1987 enjoined strikes by government officials and
employees, to wit: 35
... Prior to the enactment by Congress of applicable
laws concerning strike by government employees, and
considering that there are existing laws which prohibit
government officials and employees from resorting to
strike, the Commission enjoins, under pain of
administrative sanctions, all government officers and
employees from staging strikes, demonstrations, mass
leaves, walk-outs and other forms of mass action which
will result in temporary stoppage or disruption of
public services. To allow otherwise is to undermine or
prejudice the government system.
Executive Order No. 180

62

The scope of the constitutional right to self-organization of

"government employees" above mentioned, was defined and
delineated in Executive Order No. 180 (eff. June 1, 1987). According to
this Executive Order, the right of self-organization does indeed pertain
to all "employees of all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or
controlled corporations with original charters;" 36such employees
"shall not be discriminated against in respect of their employment by
reason of their membership in employees' organizations or
participation in the normal activities of their organization x x (and
their) employment shall not be subject to the condition that they shall
not join or shall relinquish their membership in the employees'
organizations. 37
However, the concept of the government employees' right of selforganization differs significantly from that of employees in the private
sector. The latter's right of self-organization, i.e., "to form, join or
assist labor organizationsfor purposes of collective bargaining,"
admittedly includes the right to deal and negotiate with their
respective employers in order to fix the terms and conditions of
employment and also, to engage in concerted activities for the
attainment of their objectives, such as strikes, picketing, boycotts. But
the right of government employees to "form, join or assist employees
organizations of their own choosing" under Executive Order No. 180 is
not regarded as existing or available for "purposes of collective
bargaining," but simply "for the furtherance and protection of their
interests." 38
In other words, the right of Government employees to deal and
negotiate with their respective employers is not quite as extensive as
that of private employees. Excluded from negotiation by government
employees are the "terms and conditions of employment ... that are
fixed by law," it being only those terms and conditions not otherwise
fixed by law that "may be subject of negotiation between the duly
recognized employees' organizations and appropriate government
authorities," 39 And while EO No. 180 concedes to government
employees, like their counterparts in the private sector, the right to
engage in concerted activities, including the right to strike, the

executive order is quick to add that those activities must be

exercised in accordance with law, i.e. are subject both to "Civil
Service Law and rules" and "any legislation that may be enacted by
Congress," 40 that "the resolution of complaints, grievances and cases
involving government employees" is not ordinarily left to collective
bargaining or other related concerted activities, but to "Civil Service
Law and labor laws and procedures whenever applicable;" and that in
case "any dispute remains unresolved after exhausting all available
remedies under existing laws and procedures, the parties may jointly
refer the dispute to the (Public Sector Labor-Management) Council for
appropriate action." 41 What is more, the Rules and Regulations
implementing Executive Order No. 180 explicitly provide that since
the "terms and conditions of employment in the government,
including any political subdivision or instrumentality thereof and
government-owned and controlled corporations with original charters
are governed by law, the employees therein shall not strike for the
purpose of securing changes thereof. 42
On the matter of limitations on membership in labor unions of
government employees, Executive Order No. 180 declares that "high
level employees whose functions are normally considered as policy
making or managerial, or whose duties are of a highly confidential
nature shall not be eligible to join the organization of rank-and-file
government employees. 43 A "high level employee" is one "whose
functions are normally considered policy determining, managerial or
one whose duties are highly confidential in nature. A managerial
function refers to the exercise of powers such as: 1. To effectively
recommend such managerial actions; 2. To formulate or execute
management policies and decisions; or 3. To hire, transfer, suspend,
lay off, recall, dismiss, assign or discipline employees. 44
Republic Act No. 6715
The rule regarding membership in labor organizations of managerial
and supervisory employees just adverted to, was clarified and refined
by Republic Act No. 6715, effective on March 21, 1989, further
amending the Labor Code.
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Under RA 6715 labor unions are regarded as organized either (a) "for
purposes of negotiation," or (b) "for furtherance and protection"of the
members' rights. Membership in unions organized "for purposes of
negotiation" is open only to rank-and-file employees. "Supervisory
employees" are ineligible "for membership in a labor organization of
the rank-and-file employees but may join, assist or form separate
labor organizations of their own," i.e., one organized "for furtherance
and protection" of their rights and interests. However, according to
the Rules implementing RA 6715, "supervisory employees who
are included in an existing rank-and- file bargaining unit, upon the
effectivity of Republic Act No. 6715 shall remain in that unit ..."
Supervisory employees are "those who, in the interest of the employer,
effectively recommend such managerial actions 45 if the exercise of
such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. 46
Membership in employees' organizations formed for purposes of
negotiation are open to rank-and-file employees only, as above
mentioned, and not to high level employees. 47 Indeed, "managerial
employees" or "high level employees" are, to repeat, "not eligible to
join, assist or form any labor organization" at
all. 48 A managerial employee is defined as "one who is vested with
powers or prerogatives to lay down and execute, management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees." 49
This is how the law now stands, particularly with respect to
supervisory employees vis a vis labor organizations of employees
under them.
Now, the GSIS performs proprietary functions. It is a non-stock
corporation, managed by a Board of Trustees exercising the "usual
corporate powers." 50 In other words, it exercises all the powers of a
corporation under the Corporation Law in so far as they are not
otherwise inconsistent with other applicable law. 51 It is engaged
essentially in insurance, a business that "is not inherently or
exclusively a governmental function, ... (but) is on the contrary, in
essence and practice, of a private nature and interest." 52

1. The petitioners contend that the right of self-organization and

collectivebargaining had been withdrawn by the Labor Code from
government employees including those in government-owned and
controlled corporations- chiefly for the reason that the terms and
conditions of government employment, all embraced in civil service,
may not be modified by collective bargaining because set by law. It is
therefore immaterial, they say, whether supervisors are members of
rank-and-file unions or not; after all, the possibility of the employer's
control of the members of the union thru supervisors thus rendering
collective bargaining illusory, which is the main reason for the
prohibition, is no longer of any consequence.
This was true, for a time. As already discussed, both under the Labor
Code and PD 807, government employees, including those in
government-owned or controlled corporations, were indeed precluded
from bargaining as regards terms and conditions of employment
because these were set by law and hence could not possibly be altered
by negotiation.
But EO 111 restored the right to organize and to negotiate and bargain
of employees of "government corporations established under the
Corporation Code." And EO 180, and apparently RA 6715, too, granted
to all government employees the right of collective bargaining or
negotiation except as regards those terms of their employment which
were fixed by law; and as to said terms fixed by law, they were
prohibited to strike to obtain changes thereof.
2. The petitioners appear to be correct in their view of the
disappearance from the law of the prohibition on supervisors being
members of labor organizations composed of employees under their
supervision. The Labor Code (PD 442) allowed supervisors (if not
managerial) to join rank-and-file unions. And under the
Implementing Rules of RA 6715, supervisors who were members of
existing labor organizations on the effectivity of said RA 6715 were
explicitly authorized to "remain therein."
3. The correctness of the petitioners' theory that unfair labor practices
ceased to be crimes and were deemed merely administrative offenses
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in virtue of the Labor Code, cannot be gainsaid. Article 250 of the

Labor Code did provide as follows:
ART. 250. Concept of unfair labor practice.-The
concept of unfair labor practice is hereby modified.
Henceforth, it shall be considered merely as an
administrative offense rather than a criminal offense.
Unfair labor practice complaints shall, therefore, be
processed like any ordinary labor disputes.
But unfair labor practices were declared to be crimes again by later
amendments of the Labor Code effected by Batas Pambansa Blg. 70,
approved on May 1, 1980. As thus amended, the Code now pertinently
reads as follows:
ART. 248. Concept of unfair labor practice and
procedure for prosecution thereof. Unfair labor
practices violate the right of workers and employees to
self organization, are inimical to the legitimate interests
of both labor and management including their right to
bargain collectively and otherwise deal with each other
in an atmosphere of freedom and mutual respect, and
hinder the promotion of healthy and stable labor
management relations. Consequently, unfair labor
practices are not only violations of the civil rights of
both labor and management but are also offenses
against the State which shall be subject to prosecution
and punishment as herein provided.

The decisive consideration is that at present, supervisors who were

already members of a rank-and-file labor organization at the time of
the effectivity of R.A. No. 6715, are authorized to "remain therein." It
seems plain, in other words, that the maintenance by supervisors of
membership in a rank-and-file labor organization even after the
enactment of a statute imposing a prohibition on such membership, is
not only not a crime, but is explicitly allowed, under present law.
Now, in a case decided as early as 1935, People v. Tamayo, 53 where
the appellants had appealed from a judgment convicting them of a
violation of a municipal -ordinance, and while their appeal was
pending, the ordinance was repealed such that the act complained of
ceased to be a criminal act but became legal, this Court dismissed the
criminal proceedings, pronouncing the effects of the repeal to be as
follows:
In the leading case of the United States vs. Cuna (12
Phil. 241), and Wing vs. United States (218 U.S. 272),
the doctrine was clearly established that in the
Philippines repeal of a criminal act by its reenactment,
even without a saving clause would not destroy
criminal liability. But not a single sentence in either
derision indicates that there was any desire to hold that
a person could be prosecuted convicted, and punished
for acts no longer criminal.

Recovery of civil liability in the administrative

proceedings shall bar recovery under the Civil Code.

There is no question that at common law and in

America a much more favorable attitude towards the
accused exists relative to statutes that have been
repealed than has been adopted here. Our rule is more
in conformity with the Spanish doctrine, but even in
Spain, where the offense ceased to be criminal, petition
cannot be had (1 Pacheco, Commentaries, 296).

No criminal prosecution under this title may be

instituted without a final judgment, finding that an
unfair labor practice was committed having been first
obtained in the preceding paragraph. ...

The repeal here was absolute and not a reenactment

and repeal by implication. Nor was there any saving
clause. The legislative intent as shown by the action of
the municipal is that such conduct, formerly

xxx xxx xxx

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denounced, is no longer deemed criminal, and it would

be illogical for this court to attempt to sentence
appellant for the offense that no longer exists.
We are therefore of the opinion that the proceedings
against appellant must be dismissed.
To the same effect and in even more unmistakable language is People
v. Almuete 54 where the defendants-appellees were charged under
section 39 of Republic Act No. 1199, as amended (the Agricultural
Land Tenancy Law of 1954) which penalized pre-threshing by either
agricultural tenant or his landlord. They sought and secured a
dismissal on the ground, among others, that there was no law
punishing the act charged-a reference to the fact that Republic Act No.
1199 had already been superseded by the Agricultural Land Reform
Code of 1963 which instituted the leasehold system and abolished
share tenancy subject to certain conditions. On appeal by the
Government, this Court upheld the dismissal, saying:
The legislative intent not to punish anymore the
tenant's act of pre-reaping and pre-threshing without
notice to the landlord is inferable from the fact that, as
already noted, the Code of Agrarian Reforms did not
reenact section 39 of the Agricultural Tenancy Law and
that it abolished share tenancy which is the basis for
penalizing clandestine pre-reaping and pre-threshing.

ceased to be an offense under the subsequent law, the

Code of Agrarian Reforms. To prosecute it as an offense
when the Code of Agrarian Reforms is already in force
would be repugnant or abhorrent to the policy and
spirit of that Code and would subvert the manifest
legislative intent not to punish anymore pre-reaping
and pre-threshing without notice to the landholder.
xxx xxx xxx
The repeal of a penal law deprives the courts of
jurisdiction to punish persons charged with a violation
of the old penal law prior to its repeal (People vs.
Tamayo, 61 Phil. 225; People vs. Sindiong and Pastor,
77 Phil. 1000; People vs. Binuya, 61 Phil. 208; U.S. vs.
Reyes, 10 Phil. 423; U.S. vs. Academia, 10 Phil. 431. See
dissent in Lagrimas vs. Director of Prisons, 57 Phil.
247, 252, 254).
The foregoing precedents dictate absolution of the appellants of the
offenses imputed to them.
WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-CR
and CA-G.R. No. 14856-CR, subject of the appeal, as well as those in
Crim. Case No. 5275-R and Crim. Case No. 4130-R rendered by the
Trial Court, are REVERSED and the accused-appellants ACQUITTED
of the charges against them, with costs de officio.

xxx xxx xxx

SO ORDERED.
As held in the Adillo case, the act of pre-reaping and
pre-threshing without notice to the landlord, which is
an offense under the Agricultural Tenancy Law, had
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