ST. MARTIN FUNERAL HOME, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents. G.R. No. 130866 September 16, 1998

EN BANC REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed between him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue (BIR). 1

Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private respondent, who was formerly working as an overseas contract worker, asked for financial assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of the business. She then discovered that there were arrears in the payment of taxes and other government fees, although the records purported to show that the same were already paid. Amelita then made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment. 2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. 3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995 to January 23, 1996, or a period of about one year; and (3) in ruling that there was no employer-employee relationship between him and petitioner. 4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit, 6 hence the present petition alleging that the NLRC committed grave abuse of discretion. 7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and opportune to reexamine the functional validity and systemic practicability of the mode of judicial review it has long adopted and still follows with respect to decisions of the NLRC. The increasing number of labor disputes that find their way to this Court and the legislative changes introduced over the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six months after its promulgation. 8 Created and regulated therein is the present NLRC which was attached to the Department of Labor and Employment for program and policy coordination only. 9 Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended said provision and abolished such appeals. No appellate review has since then been provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the decision of the NLRC. 10 The present Section 223, as last amended by Section 12 of R.A. No. 6715, instead merely provides that the Commission shall

decide all cases within twenty days from receipt of the answer of the appellee, and that such decision shall be final and executory after ten calendar days from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. 11

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, 12 and then seasonably avail of the special civil action of certiorari under Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65. 14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals. 15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be completed within, three (3) months, unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate court, 16 the following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A. No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the section, such that the original exclusionary clause therein now provides "except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology. As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not lie from decisions of the NLRC. 17 Yet, under such excepting clause literally construed, the appeal from the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned amendment by transposition, also supposedly excluded are cases falling within the appellate jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and impracticable, and Congress could not have intended that procedural gaffe, since there are no cases in the Labor Code the decisions, resolutions, orders or awards wherein are within the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No. 10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech 19 from which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129, reorganized the Court of Appeals and at the same time expanded its jurisdiction and powers. Among others, its appellate jurisdiction was expanded to cover not only final judgment of Regional Trial Courts, but also all final

judgment(s), decisions, resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of BP Blg. 129 and of subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court by the transfer of some of its burden of review of factual issues to the Court of Appeals. However, whatever benefits that can be derived from the expansion of the appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the "decisions and interlocutory orders issued under the Labor Code of the Philippines and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions enumerated in Section 9 and, additionally, extends the coverage of appellate review of the Court of Appeals in the decision(s) of the Securities and Exchange Commission, the Social Security Commission, and the Employees Compensation Commission to reduce the number of cases elevated to the Supreme Court. (Emphases and corrections ours)

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Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides the ideal situation of drastically reducing the workload of the Supreme Court without depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in 1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme Court of the burden of reviewing these cases which present no important issues involved beyond the particular fact and the parties involved, so that the Supreme Court may wholly devote its time to cases of public interest in the discharge of its mandated task as the guardian of the Constitution and the guarantor of the people's basic rights and additional task expressly vested on it now "to determine whether or not there has been a grave abuse of discretion amounting to lack of jurisdiction on the part of any branch or instrumentality of the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been cut down to 300,000 cases some five years ago. I understand we are now back to 400,000 cases. Unless we distribute the work of the appellate courts, we shall continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have submitted, the Committee on Justice and Human Rights requests the support and collegial approval of our Chamber.

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Surprisingly, however, in a subsequent session, the following Committee Amendment was introduced by the said sponsor and the following proceedings transpired: 20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that issues arising from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was also discussed with our Colleagues in the House of Representatives and as we understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is approved. (Emphasis supplied).

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Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second reading and being a certified bill, its unanimous approval on third reading followed. 21 The Conference Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been approved by the House of Representatives, the same was likewise approved by the Senate on February 20, 1995, 22 inclusive of the dubious formulation on appeals to the Supreme Court earlier discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original action for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction between them, however, and with which the Court is particularly concerned here is that the special civil action of certiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of Appeals would give litigants the advantage to have all the evidence on record be reexamined and reweighed after which the findings of facts and conclusions of said bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that factual findings of the Court of Appeals are final and may not be reversed on appeal to the Supreme Court. A perusal of the records will reveal appeals which are factual in nature and may, therefore, be dismissed outright by minute resolutions. 24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law, on this score we add the further observations that there is a growing number of labor cases being elevated to this Court which, not being a trier of fact, has at times been constrained to remand the case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is procedurally equipped for that purpose, aside from the increased number of its component divisions; and that there is undeniably an imperative need for expeditious action on labor cases as a major aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into account:

One final observation. We discern in the proceedings in this case a propensity on the part of petitioner, and, for that matter, the same may be said of a number of litigants who initiate recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief directly from this Court despite

the fact that the same is available in the lower courts in the exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought therein. This practice must be stopped, not only because of the imposition upon the precious time of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals for appropriate action and disposition consistent with the views and ruling herein set forth, without pronouncement as to costs.

ABS-CBN SUPERVISORS EMPLOYEES UNION MEMBERS, petitioner, vs.

ABS-CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO BERBON, CINDY MUNOZ, CELSO JAMBALOS, SALVADOR DE VERA, ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR

LANDRITO, FRED GARCIA, CESAR LOPEZ and RUBEN BARRAMEDA, respondents. G.R. No. 106518 March 11, 1999

THIRD DIVISION PURISIMA, J.:

At bar is a special civil action for Certiorari 1 seeking the reversal of the Order 2 dated July 31, 1992 of public respondent Department of Labor and Employment Undersecretary Bienvenido E. Laguesma 3 in Case No. NCR - OD-M -90 -07-037.

From the records on hand, it can be gathered, that:

On December 7, 1989, the ABS-CBN Supervisors Employees Union ("the Union"), represented by respondent Union Officers, and ABS-CBN Broadcasting Corporation ("the Company") signed and concluded a Collective Bargaining Agreement with the following check-off provision, to wit:

Art. XII — The [C]ompany agrees to advance to the Union a sum equivalent to 10% of the sum total of all the salary increases and signing bonuses granted to the Supervisors under this collective Bargaining Agreement and upon signing hereof to cover the Union's incidental expenses, including attorney's fees and representation expenses for its organization and (sic) preparation and conduct hereof, and such advance shall be deducted from the benefits granted herein as they accrue.

On September 19, 1990, Petitioners 4 filed with the Bureau of Labor Relations, DOLE-NCR, Quezon City, a Complaint against the Union Officers 5 and ABS-CBN Broadcasting corporation, praying that (1) the special assessment of ten percent (10%) of the sum total of all salary increases and signing bonuses granted by respondent Company to the members of the Union be declared illegal for failure to comply with the Labor Code, as amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter violation of the Constitution and By-Laws of the ABS-CBN Supervisors Employees Union; (2) respondent Company be ordered to suspend further deductions from petitioners' salaries for their shares thereof.

In their Answers, respondent Union Officers and Company prayed for the dismissal of the Complaint for lack of merit. They argued that the check-off provision is in accordance with law as majority of the Union members individually executed a written authorization giving the Union officers and the Company a blanket authority to deduct subject amount.

On January 21, 1991, Med-Arbiter Rasidali C. Abdullah issued the following Order: 6

WHEREFORE, premises considered judgment is hereby rendered:

a) declaring the special assessment of 10% of the sum total of CBA benefits as illegal;

b) ordering respondents union officers to refund to the complainants and other union members the amount of Five Hundred Thousand Pesos (P500,000.00) advanced by the respondent Company as part of the 10% sum total of CBA benefits without unnecessary delay;

c) ordering the respondent company to stop and desist from further making advances and deductions from the union members' salaries their share in the advances already made to the union;

d) ordering the respondent Company to remit directly to the complainants and other union members the amount already deducted from the union members' salaries as part of their share advances already made to the union and which it had kept in trust during the pendency of this case; and

e) directing the respondents union officers and respondent Company to submit report on the compliance thereof.

SO ORDERED.

On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma handed down a Decision 7 on July 1, 1991, disposing as follows:

WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter is affirmed en toto.

On July 5, 1991, the aforesaid Decision was received by the respondent Union Officers and respondent Company. On July 13, 1991, they filed their Motion for Reconsideration stating, inter alia that the questioned ten percent (10%) special assessment is valid pursuant to the ruling in Bank of the Philippine Islands Employee Union - ALU vs. NLRC. 8

On July 31, 1992, Undersecretary B. E. Laguesma issued an Order 9; resolving, thus:

WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE, In lieu thereof, a new one is hereby entered DISMISSING the Complaint/Petition for lack of merit.

Hence, the present petition seeking to annul and set aside the above-cited Order of public respondent Undersecretary B. E. Laguesma, for being allegedly tainted with grave abuse of discretion amounting to lack of jurisdiction.

Did the public respondent act with grave abuse of discretion in issuing the challenged Order reversing his own Decision of July 1,1991? Such is the sole issue posited, which we resolve in the negative. The petition is unmeritorious.

Petitioners claim 10 that the Decision of the Secretary of Labor and Employment dated July 1, 1991, affirming in toto the Order of Med-Arbiter Rasidali Abdullah dated January 31, 1991, cannot be a subject of a motion for reconsideration because it is final and unappealable pursuant to Section 8, Rule VIII, Book V of the Omnibus Rule Implementing the Labor Code. It is further argued that the only remedy of the respondent Union Officers' is to file a petition for certiorari with this Court.

Sec. 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:

The Secretary shall have fifteen (15) calendar days within which to decide the appeal from receipt of the records of the case. The decision of the Secretary shall be final and inappealable. [Underscoring supplied]. (Comment, p. 101)

The aforecited provision cannot be construed to mean that the Decision of the public respondent cannot be reconsidered since the same is reviewable by writ of certiorari under Rule 65 of the Rules of Court. As a rule, the law requires a motion for reconsideration to enable the public respondent to correct his mistakes, if any. In Pearl S. Buck Foundation, Inc., vs. NLRC, 11 this Court held:

Hence, the only way by which a labor case may reach the Supreme Court is through a petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable time from receipt of the resolution denying the motion for reconsideration of the NLRC decision. [Emphasis supplied].

Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be availed of, the filing of a motion for reconsideration is a condition sine qua non to afford an opportunity for the correction of the error or mistake complained of.

So also, considering that a decision of the Secretary of Labor is subject to judicial review only through a special civil action of certiorari and, as a rule, cannot be resorted to without the aggrieved party having exhausted administrative remedies through a motion for reconsideration, the aggrieved party, must be allowed to move for a reconsideration of the same so that he can bring a special civil action for certiorari before the Supreme Court. 12

Furthermore, it appears that the petitioners filed with the public respondent a Motion for Early Resolution 13 dated June 24, 1992, averring that private respondents' Motion for Reconsideration did not contain substantial factual or legal grounds for the reversal of subject decision. Consequently, petitioners are now estopped from raising the issue sought for resolution. In Alfredo Marquez vs. Secretary of Labor 14 the Court said:

. . . The active participation of the party against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction.

What is more, it was only when the public respondent issued the Order adverse to them that the petitioners raised the question for the first time before this Court. Obviously, it is a patent afterthought which must be abhorred.

Petitioners also argued that the check-off provision in question is illegal because it was never submitted for consideration and approval to "all the members at a general membership meeting called for the purpose"; and further alleged that the formalities mandated by Art. 241, paragraphs (n) and (o) of the Labor Code, as amended, were not complied with.

"A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from its employees, deducts union dues or agency fees from the latter's wages and remits them directly to the union." 15 Its desirability in a labor organization is quite evident. It is assured thereby of continuous funding. As this Court has acknowledged, the system of check-off is primarily for the benefit of the Union and only indirectly, for the individual employees.

The legal basis of check-off is found in statutes or in contracts. 16 The statutory limitations on check-offs are found in Article 241, Chapter II, Title IV, Book Five of the Labor Code, which reads:

Rights and conditions of membership in a labor organization — The following are the rights and conditions of membership in a labor organization:

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(g) No officer, agent, or member of a labor organization shall collect any fees, dues, or other contributions in its behalf to make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws.

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(n) No special assessement or other extraordinary fees may be leavied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members of a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the president.

(o) Other than for mandatory activities under the Code, no special assessments, attorney's fees negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deductions. [Emphasis; supplied]

Art. 241 of the Labor Code, as amended, must be read in relation to Article 222, paragraph (b) of the same law, which states:

No attorney's fees, negotiation fees or similar charges of any kind arising from collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorney's fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. [Emphasis; supplied]

And this court elucidated the object and import of the said provision of law in Bank of Philippine Islands Employees Union - Association Labor Union (BPIEU-ALU) vs. National Labor Relations Commission: 17

The Court reads the afore-cited provision (Article 222 [b] of the Labor Code) as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. . . .

Noticeably, Article 241 speaks of three (3) requisites that must be complied with in order that the special assessment for Union's incidental expenses, attorney's fees and representation expenses, as stipulated in Article XII of the CBA, be valid and upheld namely: 1) authorization by a written resolution of the majority of all the members at the general membership meeting duly called for the purpose; (2) secretary's record of the minutes of the meeting; and (3) individual written authorization for check-off duly signed by the employee concerned.

After a thorough review of the records on hand, we find that the three (3) requisites for the validity of the ten percent (10%) special assessment for Union's incidental expenses, attorney's fees and representation expenses were met.

It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee Union held its general meeting, whereat it was agreed that a ten percent (10%) special assessment from the total economic package due to every member would be checked-off to cover expenses for negotiation, other miscellaneous expenses and attorney's fees. The minutes of the said meeting were recorded by the Union's Secretary, Ma. Carminda M. Munoz, and noted by its President, Herbert Rivera. 18

On May 24, 1991, said Union held its General Membership Meeting, wherein majority of the members agreed that "in as much as the Union had already paid Atty. P. Pascual the amount of P500,000.00, the same must be shared by all the members until this is fully liquidated. 19

Eighty-five (85) members of the same Union executed individual written authorizations for check-off, thus:

Towards that end, I hereby authorize the Management and/or Cashier of ABS-CBN BROADCASTING CORPORATION to deduct from my salary the sum of P30.00 per month as my regular union dues and said Management and/or Cashier are further authorize (sic) to deduct a sum equivalent to10% of all and whatever benefits that will become due to me under the COLLECTIVE BARGAINING AGREEMENT (CBA) that may be agreed upon by the UNION and MANAGEMENT and to apply the said sum to the advance that Management will make to our Union for incidental expenses such as attorney's fees, representations and other miscellaneous expenses pursuant to Article XII of the proposed CBA. 20

Records do not indicate that the aforesaid check-off authorizations were executed by the eighty-five (85) Union members under the influence of force or compulsion. There is, then, the presumption that such check-off authorizations were executed voluntarily by the signatories thereto. Petitioner's contention that the amount to be deducted is uncertain 21 is not persuasive because the check-off authorization clearly stated that the sum to be deducted is equivalent to ten percent (10%) of all and whatever benefits may accrue under the CBA. In other words, although the amount is not fixed, it is determinable.

Petitioners further contend that Article 241 (n) of the Labor Code, as amended, on special assessments, contemplates a general meeting after the conclusion of the collective bargaining agreement.

Subject Article does not state that the general membership meeting should be called after the conclusion of a collective bargaining agreement. Even granting ex gratia argumenti that the general meeting should be held after the conclusion of the CBA, such requirement was complied with since the May 24, 1991 General Membership Meeting was held after the conclusion of the Collective Bargaining Agreement, which was signed and concluded on December 7, 1989.

Considering that the three requisites afforesaid for the validity of a special assessment were observed or met, we uphold the validity of the ten percent (10%) special assessment authorized in Article XII of the CBA.

We also concur in the finding by public respondent that the Bank of the Philippine Islands Employees Union - ALU vs. NLRC 22 is apposite in this case. In BPIEU-ALU, the petitioners, impugned the Order of the NLRC, holding that the validity of the five percent (5%) special assessment for attorney's fees is contrary to Article 222, paragraph (b) of the Labor Code, as amended. The court ratiocinated, thus:

The Court reads the aforecited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. . . . [Emphasis supplied]

However, the public respondent overlooked the fact that in the said case, the deduction of the stipulated five percent (5%) of the total economic benefits under the new collective bargaining agreement was applied only to workers who gave their individual signed authorizations. The Court explained:

. . . And significantly, the authorized deductions affected only the workers who adopted and signed the resolution and who were the only ones from whose benefits the deductions were made by BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not bound by it. [Underscoring; supplied]

While the court also finds merit in the finding by the public respondent that Palacol vs. Ferrer-Calleja 23 is inapropos in the case under scrutiny, it does not subscribe to public respondent's reasoning — that Palacol should not be retroactively applied to the present case in the interest of justice, equity and fairplay. 24 The inapplicability of Palacol lies in the fact that it has a different factual milieu from the present case. In Palacol, the check-off authorization was declared invalid because majority of the Union members had withdrawn their individual authorizations, to wit:

Paragraph (o) on the other hand requires an individual written authorization duly signed by every employee in order that special assessment may be validly checked-off. Even assuming that the special assessment was validly levied pursuant to paragraph (n), and granting that individual written authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that the majority of the Union members had already withdrawn their individual authorizations. A withdrawal of individual authorization is equivalent to no authorization at all. . . . [Emphasis; supplied]

In this case, majority of the Union members gave their individual written check-off authorizations for the ten percent (10%) special assessment. And they have never withdrawn their individual written authorizations for check-off.

There is thus cogent reason to uphold the assailed Order, it appearing from the records of the case that twenty (20) 25 of the forty-two (42) petitioners executed a Compromise Agreement 26 ratifying the controversial check-off provision in the CBA.

Premises studiedly considered, we are of the irresistible conclusion and, so find, that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against attorney's fees in Article 222, paragraph (b) of the Labor Code applies only when the payment of attorney's fees is effected through forced contributions from the workers; and (2) that no deductions must be taken from the workers who did not sign the check-off authorization, applies to the case under consideration.

WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE Undersecretary B. E. Laguesma is AFFIRMED except that no deductions shall be taken from the workers who did not give their individual written check-off authorization. No pronouncement as to costs.

ST. LUKE'S MEDICAL CENTER, INC., petitioner, vs.

HON. RUBEN O. TORRES and ST. LUKE'S MEDICAL CENTER ASSOCIATION-ALLIANCE OF FILIPINO WORKERS ("SLMCEA-AFW"), respondents.

G.R. No. 99395 June 29, 1993 THIRD DIVISION

MELO, J.:

In response to the mandate under Article 263(g) of the Labor Code and amidst the labor controversy between petitioner St. Luke's Medical Center and private respondent St. Luke's Medical Center Employees Association-Alliance of Filipino Workers (SLMCEA-AFW), then Secretary of Labor Ruben D. Torres, issued the Order of January 28, 1991 requiring the parties to execute and finalize their 1990-1993 collective bargaining agreement (CBA) to retroact to the expiration of the anterior CBA. The parties were also instructed to incorporate in the new CBA the disposition on economic and non-economic issues spelled out in said Order (p. 48, Rollo). Separate motions for re-evaluation from the parties were to no avail; hence, the petition at bar premised on the following ascriptions of error, to wit:

I

PUBLIC RESPONDENT HON. SECRETARY OF LABOR ACTED IN EXCESS OF JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE VIOLATED PETITIONER'S RIGHT TO DUE PROCESS, PUBLIC RESPONDENT COMPLETELY IGNORED THE LATTER'S EVIDENCE AND ISSUED THE QUESTIONED AWARDS ON THE BASIS OF ARBITRARY GUESSWORKS, CONJECTURES AND INFERENCES.

II

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE CURTAILED THE PARTIES' RIGHT TO FREE COLLECTIVE BARGAINING, AND WHEN HE GRANTED MONETARY AWARDS AND ADDITIONAL BENEFITS TO THE EMPLOYEES GROSSLY DISPROPORTIONATE TO THE OPERATING INCOME OF PETITIONER.

III

PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE ADOPTED/CONSIDERED THE ALLEGATIONS OF THE UNION THAT THE HOSPITAL OFFERED SALARY AND MEAL ALLOWANCE INCREASES IN THE AMOUNT OF P1,140,00 FOR THE FIRST YEAR AND P700.00 ACROSS THE BOARD MONTHLY SALARY INCREASES FOR THE SECOND AND THIRD YEARS OF THE NEW CBA.

IV

FINALLY, PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN HE GAVE HIS AWARD RETROACTIVE EFFECT.

When the collective bargaining agreement for the period August 1, 1987 to July 30, 1990 was forged between petitioner and private respondent, the incumbent national president of AFW, the federation to which the local union SLMCEA is affiliated, was Gregorio del Prado.

Before the expiration of the 1987-90 CBA, the AFW was plagued by internal squabble splitting its leadership between Del Prado and Purita Ramirez, resulting in the filing by AFW and Del Prado of a petition later docketed before the Department of Labor as NCR-00-M-90-05-077, where a declaration was sought on the legitimacy of Del Prado's faction as bona fide officers of the federation. Pending resolution of said case, herein private respondent SLMCEA-AFW brought to the attention of petitioner via a letter dated July 4, 1990 that the 1987-1990 was about to expire, and manifested in the process that private respondent wanted to renew the CBA. This development triggered round-table talks on which occasions petitioner proposed, among other items, a maximum across-the-board monthly salary increase of P375.00 per employee, to which proposal private respondent demanded a P1,500.00 hike or 50% increase based on the latest salary rate of each employee, whichever is higher.

In the meantime, relative to the interpleader case (NCR-00-M-90-05-070) initiated by petitioner to settle the question as to who between Del Prado and Diwa was authorized to collect federation dues assessed from hospital employees, the Med-Arbiter recognized Del Prado's right (p. 423, Rollo). This resolution of July 31, 1990 was elevated to the Labor Secretary.

That talks that then ensued between petitioner and private respondent were disturbed anew when the other wing in the AFW headed by Purita Ramirez, expressed its objections to the on-going negotiations, and when a petition for certification election was filed by the Association of Democratic Labor Organization of petitioner. However, private respondent emerged victorious after the elections and was thus certified as the exclusive bargaining entity of petitioner's rank and file employees.

Following the decision dated September 14, 1990 in NCR-00-M-90-05-077 (pp. 444-445, Rollo) which upheld the legitimacy of Del Prado's status including the other officers, Bayani Diwa of the Ramirez Wing appealed; the two cases — NCR-00-M-90-05-070 for interpleader and NCR-00-90-05-077 — were consolidated.

On September 17, 1990, private respondent wrote petitioner for the resumption of their negotiations concerning the union's proposed CBA. Petitioner reacted by writing a letter on September 20, 1990 expressing willingness to negotiate a new CBA for the rank and file employees who are not occupying confidential positions. Negotiations thus resumed. However, a deadlock on issues, especially that bearing on across-the-board monthly and meal allowances followed and to pre-empt the impending strike as voted upon by a majority of private respondent's membership, petitioner lodged the petition below. The Secretary of Labor immediately assumed jurisdiction and the parties submitted their respective pleadings.

On January 22, 1991, a resolution was issued in the consolidated cases which eventually declared Gregorio del Prado and his group as the legitimate officials of the AFW and the acknowledged group to represent AFW (pp. 320-321, Rollo).

On January 28, 1991, public respondent Secretary of Labor issued the Order now under challenge. Said Order contained a disposition on both the economic and non-economic issues raised in the petition. On the economic issues, he thus ruled:

First year — P1,140.00 broken down as follows: P510.00 in compliance with the government mandated daily salary increase of P17.00; and P630.00 CBA across the board monthly salary increase.

Second year — P700.00 across the board monthly salary increase.

Third year — P700.00 across the board monthly salary increase.

It is understood that the second and third year salary increases shall not be chargeable to future government mandated wage increases. (p. 47, Rollo.)

As earlier stated, both parties moved for reconsideration of the above order, but both motions were denied. Consequently, petitioner St. Luke's filed the instant petition, a special civil action on certiorari.

In assailing the Order of January 28, 1991, petitioner St. Luke's focuses on public respondent's disposition of the economic issues.

First, petitioner finds highly questionable the very basis of public respondent's decision to award P1,140.00 as salary and meal allowance increases for the first year and P700.00 across-the-board monthly salary increases for the succeeding second and third years of the new CBA. According to petitioner, private respondent SLMCEA-AFW misled public respondent into believing that said amounts were the last offer of petitioner St. Luke's immediately prior to the deadlock. Petitioner vehemently denies having made such offer, claiming that its only offer consists of the following:

Non-Economic Issues:

St. Luke's submits that it is adopting the non-economic issues proposed and agreed upon in its Collective Bargaining Agreement with SLMCEA-AFW for the period covering 1987, 1990. Copy of the CBA is attached as Annex "F" hereof.

Economic Issue

St. Luke's respectfully offers to give an increase to all its rank and file employees computed as follows:

First Year — P900 (P700.00 basic + P200.00 food allowance) for an over all total food allowance of P320.00.

Second Year — P400

Third Year — P400

plus the union will be allowed to operate and manage one (1) canteen for free to augment their funds. Although the profit shall be divided equally between union and SLMC, the operation of the canteen will generate for them a monthly income of no less than P15,000.00, and likewise provide cheap and subsidized food to Union members.

The wage increase as proposed shall be credited to whatever increases in the minimum wage or to any across the board increases that may be mandated by the government or the DOLE. (pp. 20-21, Rollo.)

Petitioner charges that public respondent, in making such award, erroneously relied on the extrapolated figures provided by respondent SLMCEA-AFW, which grossly inflated petitioner St. Luke's net income. Petitioner contends that if the disputed award are sustained, the wage increases and benefits shall total approximately P194,403,000.00 which it claims is excessive and unreasonable, considering that said aggregate amount is more than its projected income for the next three years. To illustrate its point, petitioner submits the following computation:

YR I

A. P1,40 added to basic pay

a) P1,140 x 1,500 (no. of employees) x 12 (months) — P 20,520,000

b) 13th month pay: P1,140 x 1,500 — 1,710,000

c) Overtime pay, 20% of payroll — 4,104,000

d) Holiday pay, PM/Night pay — 1,026,000

e) Sick leave — 855,000

f) Funeral, Paternity, Maternity leaves, retirement pay — 820,000

B. P230 added to meal allowance

a) P230 x 1,500 x 12 — 4,140,000

C. One day added to sick leave

a) (Ave. pay P3,000 = P1,140) divided by 30 x 1,500 — 222,000

D. Sick leave cash conversion base reduced from 60 to 45 days

a) (P3,300 = P1,140)/30 x 1,200 — 2,664,000

E. Retirement benefits adjustment — 500,000

—————

FIRST YEAR ADDITIONAL COST P 36,561,000

YR II

A. Yr I increase except sick leave cash conversion

from 60 to 45 — P33,897,000

B. P700 added to monthly basic pay

a) P700 x 1,500 x 12 — 2,600,000 b) 13th month pay: P700 x 1,500 — 1,050,000 c) Overtime, pay, 20% of P12.6 M — 2,520,000 d) Holiday pay, PM/Night pay — 630,000 e) Sick leave: 15 days x 700/30 x 1,500 — 525,000 f) Funeral, paternity, maternity leaves, retirement pay — 504,000 ————

SECOND YEAR ADDITIONAL COST P51,726,000

YR III

A. Yr I and Yr II increases — 88,287,000

B. P700 added to basic pay

a) P700 x 1,500 x 12 — 12,600,000 b) 13th month pay: P700 x 1,500 — 1,050,000 c) Overtime pay, 20% of P12.6 M — 2,520,000 d) Holiday pay, PM/Night pay — 630,000 e) Sick leave — 525,000 f) Funeral, paternity, maternity, leaves, retirement pay — 504,000 ————

THIRD YEAR ADDITIONAL COST — 106,116,000

TOTAL THREE-YEAR ADDITIONAL

BENEFIT/WAGES — 194,403,000

(pp. 14-16, Rollo).

On the basis of the foregoing, petitioner St. Luke's concludes that it would be in a very poor position to even produce the resources necessary to pay the wage increases of its rank and file employees.

Petitioner also impugns public respondent's awards on grounds of prematurity, emphasizing that the awards in question even preceded collective bargaining negotiations which have to take place first between both litigants. It denies entering into a round of negotiations with private respondent SLMCEA-AFW on the theory that the meetings referred to by the latter were merely informal ones, without any binding effect on the parties because AFW is torn between two factions vying for the right to represent it. Thus, petitioner maintains that nothing conclusive on the terms and conditions of the proposed CBA could be arrived at when the other party, private respondent SLMCEA-AFW is confronted with an unresolved representation issue.

Petitioner argues further that since no formal negotiations were conducted, it could not have possibly made an offer of P1,140.00 as salary and meal allowance increases for the first year and an increase of P700.00 across-the-board monthly salary for the second and third years of the new CBA. It raises doubts on the veracity of the minutes presented by private respondent SLMCEA-AFW to prove that negotiations were held, particularly on October 26, 1990, when petitioner allegedly made said offer as its last ditch effort for a compromise prior to the deadlock. According to petitioner, these minutes, unsigned by petitioner, were merely concocted by private respondent SLMCEA-AFW.

Finally, petitioner attacks the Order of January 28, 1991 for being violative of Article 253-A of the Labor Code, particularly its provisions on retroactivity. Said Article pertinently provides:

xxx xxx xxx

Any agreement on such other provisions of the collective bargaining agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the collective bargaining agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code.

Petitioner argues that in granting retroactive effect to the enforceability of the CBA, public respondent committed an act contrary to the above provision of law, pointing out that the old CBA expired on July 30, 1990 and the questioned order was issued on January 28, 1991. Petitioner theorizes that following Article 13 of the Civil Code which provides that there are 30 days in one month, the questioned Order of January 28, 1991 was issued beyond the six-month period, graphically shown thus:

July 30, 1990 Expiration

July 31 = 1 day August 1-31, 1990 = 31 days September 1-30, 1990 = 30 days October 1-31, 1990 = 31 days November 1-30, 1990 = 30 days December 1-31, 1990 = 31 days January 1-28, 1991 = 28 days ————————— TOTAL = 182 days

(6 months and 2 days)

(p. 34, Rollo.)

Traversing petitioner's arguments, private respondent SLMCEA-AFW contends that the formulation of the terms and conditions of the CBA awards is well supported by the factual findings of public respondent which established that petitioner failed to refute private respondent's allegation that during their last meeting on October 26, 1990, petitioner stood pat on its offer of P1,140.00 as salary and meal allowance increases for the first year of the new CBA and P700.00 across-the-board salary increases for the second and third years thereof. Said awards, it said, are well within the means of petitioner because its reported net income of P15 million, P11 million, and 13 million for 1987, 1988, and 1989, respectively, have been actually understated. Moreover, private respondent claims that petitioner, in actual terms, does not have to pay the alleged amount of P194,403,000.00 for wages and benefits in favor of its employees. Such amount, according to private respondent, is bloated and excessive. Private respondent in substantiating such claim made the following analysis:

First P1,140.00 total salary increase for the first year (1990-1991) of the new CBA is divided into: P510.00 in compliance with the government mandated daily salary increase of P17.00 and P630.00 CBA across the board monthly salary increase, thus, the whole P1,140.00 salary increase is payable only beginning August 1, 1990 (reckoned from the CBA July 30, 1990 expiry date) up to October 31, 1990 only following the November 1, 1990 effectivity of WAGE ORDER NO. NCR-01 which granted the said P17.00 daily wage increase or P510.00 monthly of which herein petitioner promptly complied with and paid to its employees and therefore deductible from P1,140.00 total monthly salary increase (Annex "A" — Petitioner and Annex "13" hereof);

Second, the remaining P630.00 CBA across the board monthly salary increase takes effect on November 1, 1990 up to January 7, 1991 only following the January 8, 1991 effectivity of WAGE ORDER NO. NCR-02 which mandated P12.00 daily wage increase or P630.00 monthly, hence, reducing the P630.00 CBA monthly salary increase to P270.00 CBA monthly salary increase effective January 8, 1991 and onwards till July 31, 1991 (Annexes "22" and "23" hereof);

Third, that out of an estimated workforce of 1,264 regular employees inclusive of about 209 supervisors, unit, junior area, division department managers and top level executives, all occupying permanent positions, and approximately 55 regular but highly confidential employees, only 1,000 rank-and-file

regular/permanent employees (casuals, contractuals, probies and security guards excluded) are entitled to the CBA benefits for three (3) years (1990-1993) (as private respondent SLMCEA-AFW gathered and analyzed from the petitioner's Personnel Strength Report hereto attached as Annex "28" hereof) vis-a-vis the generalized and inflated 1,500 employees as total workforce purportedly entitled to CBA benefits per its self-serving and incredible computation;

Fourth, the petitioner's computed 20% overtime pay of the basic salary is unrealistic and overstated in view of its extreme cost-cutting/ savings measures on all expenditures, most specially, on overtime work adopted since last year and a continuing management priority project up to the present; and

Fifth, due to the above consideration, the total real award of wages and fringe benefits is far less than the true annual hefty operating net income of the petitioner.

The net result is that the first year award of P1,140.00 monthly salary increase of which P510.00 monthly salary increase is made in compliance with the P510.00 monthly wage increase at P17.00 daily wage increase effective November 1, 1990 under Wage Order No. NCR-01 (Annex "13" hereof) or with the intended P630.00 CBA monthly salary increase is further reduced by P360.00 monthly wage increase at P12.00 daily wage increase effective January 8, 1991 under Wage Order No. NCR-02 (Annex "22" hereof), thereby leaving a downgraded or watered down CBA monthly increase of P270.00 only.

Comparatively speaking, the 13% monthly salary increase of each employee average basic monthly salary of P2,500.00 in 1987 or P325.00 monthly salary increase granted by the petitioner under the first old CBA (1987-1990) is better than the much diluted P270.00 CBA monthly salary increase (in lieu of the awarded P630.00 CBA monthly salary increase for the first year of the new CBA under Order, dated January 28, 1991, of public respondent). (Annexes "A" and "G" — Petition). (pp. 390-391, Rollo.)

Private respondent concludes that petitioner's version that it will have to pay P194,403,000.00 is not true because this will be drastically reduced by 40% to 60% in real terms due to a smaller number of employees covered. It is further explained that the government-decreed wage increases abovementioned already form part of the P1,140.00 wage and meal allowance increases, not to mention the strict cost-cutting measures and practices on overtime and expense items adopted by petitioner since 1990.

With respect to public respondent's ruling that the CBA awards should be given retroactive effect, private respondent agrees with the Labor Secretary's view that Article 253-A of the Labor Code does not apply to arbitral awards such as those involved in the instant case. According to private respondent, Article 253-A of the Labor Code is clear and plain on its face as referring only to collective bargaining agreements entered into by management and the certified exclusive bargaining agent of all rank-and-file employees therein within six (6) months from the expiry of the old CBA.

These foregoing contentions and arguments of private respondent have been similarly put forward by the Office of the Solicitor General in its Consolidated Comment filed on November 23, 1991. The Solicitor General share a the views of private respondent SLMCEA-AFW.

We are now tasked to rule on the petition. Do petitioner's evidence and arguments provide adequate basis for the charge of alleged grave abuse of discretion committed by public respondent in his Order of January 28, 1991 as to warrant its annulment by this Court? This is the sole issue in the case at bar. Consequently, this Court would apply the following yardstick in resolving the aforestated issue: that public respondent, in the exercise of his power to assume over subject labor dispute, acted whimsically, capriciously, or in an arbitrary, despotic manner by reason of passion or personal hostility which was so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined or to act at all in contemplation of law (San Sebastian College vs. Court of Appeals, 197 SCRA 138 [1991]).

Subjected to and measure by this test, the challenged Order, we believe, can withstand even the most rigorous scrutiny.

Petitioner assails the Order of January 28, 1991 on three grounds: (a) unreasonable and baselessness; (b) prematurity; and (c) violation of Article 253-A of the Labor Code.

We rule that the Order, particularly in its disposition on the economic issues, was not arbitrarily imposed by public respondent. A perusal of the Order shows that public respondent took into consideration the parties' respective contentions, a clear indication that he was keenly aware of their contrary positions. Both sides having been heard, they were allowed to present their respective evidence. The due process requirement was thus clearly observed. Considering

public respondent's expertise on the subject and his observance of the cardinal principles of due process, the assailed Order deserves to be accorded great respect by this Court.

Equally worth mentioning is the fact that in resolving the economic issues, public respondent merely adopted in toto petitioner's proposals. Consequently, petitioner cannot now claim that the awards are unreasonable and baseless. Neither can it deny having made such proposals, as it attempted to do in its Motion for Reconsideration of the challenged Order before public respondent and which it continues to pursue in the instant petition. It is too late in the day for such pretense, especially so because petitioner failed to controvert private respondent's allegation contained in its Comment to the petition before the Labor Secretary that petitioner had offered as its last proposal said salary and meal allowance increases. As correctly pointed out by public respondent, petitioner failed, when it had the chance, to rebut the same in its Reply to said Comment, considering that the resolution of the labor dispute at that was still pending. Any objection on this point is thus deemed waived.

We do not see merit in petitioner's theory that the awards were granted prematurely. In its effort to persuade this Court along this point, petitioner denies having negotiated with private respondent SLMCEA-AFW. Petitioner collectively refers to all the talks conducted with private respondent as mere informal negotiations due to the representation issue involving AFW. Petitioner thus argues that in the absence of any formal negotiations, no collective bargaining could have taken place. Public respondent, petitioner avers, should have required the parties instead to negotiate rather than prematurely issuing his order.

We cannot agree with this line of reasoning. It is immaterial whether the representation issue within AFW has been resolved with finality or not. Said squabble could not possibly serve as a bar to any collective bargaining since AFW is not the real party-in-interest to the talks; rather, the negotiations were confined to petitioner and the local union SLMCEA which is affiliated to AFW. Only the collective bargaining agent, the local union SLMCEA in this case, possesses legal standing to negotiate with petitioner. A duly registered local union affiliated with a national union or federation does not lose its legal personality or independence (Adamson and Adamson, Inc. vs. The Court of Industrial Relations and Adamson and Adamson Supervising Union (FFW), 127 SCRA 268 [1984]). In Elisco-Elirol Labor Union (NAFLU) vs. Noriel (180 SCRA 681 [1977]), then Justice Teehankee re-echoed the words of Justice Esguerra in Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. (66 SCRA 512 [1975]), thus:

(T)he locals are separate and distinct units primarily designed to secure and maintain an equality of bargaining power between the employer and their employee-members in the economic struggle for the fruits of the joint productive effort of labor and capital; and the association of the locals into the national union (as PAFLU) was in furtherance of the same end. These associations are consensual entities capable of entering into such legal relations with their members. The essential purpose was the affiliation of the local unions into a common enterprise to increase by collective action the common bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence. (at p. 688; emphasis in the original.)

Appending "AFW" to the local union's name does not mean that the federation absorbed the latter. No such merger can be construed. Rather, what is conveyed is the idea of affiliation, with the local union and the larger national federation retaining their separate personalities.

Petitioner cannot pretend to be unaware of these legal principles since they enjoy the benefit of legal advice from their distinguished counsel. Thus, we are constrained to agree with the position of the Solicitor General that petitioner conveniently used the representation issue within AFW to skirt entering into bargaining negotiations with the private respondent.

Too, petitioner is in error in contending that the order was prematurely issued. It must be recalled that immediately after the deadlock in the talks, it was petitioner which filed a petition with the Secretary of Labor for the latter to assume jurisdiction over the labor dispute. In effect, petitioner submitted itself to the public respondent's authority and recognized the latter's power to settle the labor dispute pursuant to article 263(g) of the Labor Code granting him the power and authority to decide the dispute. It cannot, therefore, be said that public respondent's decision to grant the awards is premature and pre-emptive of the parties' right to collectively bargain, simply because the Order of January 28, 1991 was unfavorable to one or the other party, for as we held in Saulog Transit, Inc. vs. Lazaro, (128 SCRA 591 [1984]):

It is a settled rule that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after failing to obtain such relief, repudiate or question that same jurisdiction. A party cannot invoke jurisdiction at one time and reject it at another time in the same controversy to suit its interests and convenience. The Court frowns upon and does not tolerate the undesirable practice of same litigants who submit voluntarily a cause and then accepting the judgment when favorable to them and attacking it for lack of jurisdiction when adverse. (Tajonera v. Lamaroxa, 110 SCRA 447, citing Tijam v. Sibonghanoy, 23 SCRA 35). (at p. 601.)

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be property applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speak of agreements by and between the parties, and not arbitral awards . . . (p. 818, Rollo.)

Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof.

WHEREFORE, the instant petition is hereby DISMISSED for lack of merit.

METROLAB INDUSTRIES, INC., petitioner, vs.

HONORABLE MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of the Department of Labor and Employment and METRO DRUG CORPORATION EMPLOYEES ASSOCIATION -

FEDERATION OF FREE WORKERS, respondents. G.R. No. 108855 February 28, 1996

FIRST DIVISION KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court seeking the annulment of the Resolution and Omnibus Resolution of the Secretary of Labor and Employment dated 14 April 1992 and 25 January 1993, respectively, in OS-AJ-04491-11 (NCMB-NCR-NS-08-595-91; NCMB-NCR-NS-09-678-91) on grounds that these were issued with grave abuse of discretion and in excess of jurisdiction.

Private respondent Metro Drug Corporation Employees Association-Federation of Free Workers (hereinafter referred to as the Union) is a labor organization representing the rank and file employees of petitioner Metrolab Industries, Inc. (hereinafter referred to as Metrolab/MII) and also of Metro Drug, Inc.

On 31 December 1990, the Collective Bargaining Agreement (CBA) between Metrolab and the Union expired. The negotiations for a new CBA, however, ended in a deadlock.

Consequently, on 23 August 1991, the Union filed a notice of strike against Metrolab and Metro Drug Inc. The parties failed to settle their dispute despite the conciliation efforts of the National Conciliation and Mediation Board.

To contain the escalating dispute, the then Secretary of Labor and Employment, Ruben D. Torres, issued an assumption order dated 20 September 1991, the dispositive portion of which reads, thus:

WHEREFORE, PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at Metro Drug, Inc. - Metro Drug Distribution Division and Metrolab Industries, Inc.

Accordingly, any strike or lockout is hereby strictly enjoined. The Companies and the Metro Drug Corp. Employees Association - FFW are likewise directed to cease and desist from committing any and all acts that might exacerbate the situation.

Finally, the parties are directed to submit their position papers and evidence on the aforequoted deadlocked issues to this office within twenty (20) days from receipt hereof.

SO ORDERED.1 (Emphasis ours.)

On 27 December 1991, then Labor Secretary Torres issued an order resolving all the disputed items in the CBA and ordered the parties involved to execute a new CBA.

Thereafter, the union filed a motion for reconsideration.

On 27 January 1992, during the pendency of the abovementioned motion for reconsideration, Metrolab laid off 94 of its rank and file employees.

On the same date, the Union filed a motion for a cease and desist order to enjoin Metrolab from implementing the mass layoff, alleging that such act violated the prohibition against committing acts that would exacerbate the dispute as specifically directed in the assumption order. 2

On the other hand, Metrolab contended that the layoff was temporary and in the exercise of its management prerogative. It maintained that the company would suffer a yearly gross revenue loss of approximately sixty-six (66) million pesos due to the withdrawal of its principals in the Toll and Contract Manufacturing Department. Metrolab further asserted that with the automation of the manufacture of its product "Eskinol," the number of workers required for its production is significantly reduced.3

Thereafter, on various dates, Metrolab recalled some of the laid off workers on a temporary basis due to availability of work in the production lines.

On 14 April 1992, Acting Labor Secretary Nieves Confesor issued a resolution declaring the layoff of Metrolab's 94 rank and file workers illegal and ordered their reinstatement with full backwages. The dispositive portion reads as follows:

WHEREFORE, the Union's motion for reconsideration is granted in part, and our order of 28 December 1991 is affirmed subject to the modifications in allowances and in the close shop provision. The layoff of the 94 employees at MII is hereby declared illegal for the failure of the latter to comply with our injunction against committing any act which may exacerbate the dispute and with the 30-day notice requirement. Accordingly, MII is hereby ordered to reinstate the 94 employees, except those who have already been recalled, to their former positions or substantially equivalent, positions with full backwages from the date they were illegally laid off on 27 January 1992 until actually reinstated without loss of seniority rights and other benefits. Issues relative to the CBA agreed upon by the parties and not embodied in our earlier order are hereby ordered adopted for incorporation in the CBA. Further, the dispositions and directives contained in all previous orders and resolutions relative to the instant dispute, insofar as not inconsistent herein, are reiterated. Finally, the parties are enjoined to cease and desist from committing any act which may tend to circumvent this resolution.

SO RESOLVED. 4

On 6 March 1992, Metrolab filed a Partial Motion for Reconsideration alleging that the layoff did not aggravate the dispute since no untoward incident occurred as a result thereof. It, likewise, filed a motion for clarification regarding the constitution of the bargaining unit covered by the CBA.

On 29 June 1992, after exhaustive negotiations, the parties entered into a new CBA. The execution, however, was without prejudice to the outcome of the issues raised in the reconsideration and clarification motions submitted for decision to the Secretary of Labor. 5

Pending the resolution of the aforestated motions, on 2 October 1992, Metrolab laid off 73 of its employees on grounds of redundancy due to lack of work which the union again promptly opposed on 5 October 1992.

On 15 October 1992, Labor Secretary Confesor again issued a cease and desist order. Metrolab moved for a reconsiderations.6

On 25 January 1993, Labor Secretary Confesor issued the assailed Omnibus Resolution containing the following orders:

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1. MII's motion for partial reconsideration of our 14 April 1992 resolution specifically that portion thereof assailing our ruling that the layoff of the 94 employees is illegal, is hereby denied. MII is hereby ordered to pay such employees their full backwages computed from the time of actual layoff to the time of actual recall;

2. For the parties to incorporate in their respective collective bargaining agreements the clarifications herein contained; and

3. MII's motion for reconsideration with respect to the consequences of the second wave of layoff affecting 73 employees, to the extent of assailing our ruling that such layoff tended to exacerbate the dispute, is hereby denied. But inasmuch as the legality of the layoff was not submitted for our resolution and no evidence had been adduced upon which a categorical finding thereon can be based, the same is hereby referred to the NLRC for its appropriate action.

Finally, all prohititory injunctions issued as a result of our assumption of jurisdiction over this dispute are hereby lifted.

SO RESOLVED.7

Labor Secretary Confesor also ruled that executive secretaries are excluded from the closed-shop provision of the CBA, not from the bargaining unit.

On 4 February 1993, the Union filed a motion for execution. Metrolab opposed. Hence, the present petition for certiorari with application for issuance of a Temporary Restraining Order.

On 4 March 1993, we issued a Temporary Restraining Order enjoining the Secretary of Labor from enforcing and implementing the assailed Resolution and Omnibus Resolution dated 14 April 1992 and 25 January 1993, respectively.

In its petition, Metrolab assigns the following errors:

A.

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AND EXCEEDED HER JURISDICTION IN DECLARING THE TEMPORARY LAYOFF ILLEGAL, AND ORDERING THE REINSTATEMENT AND PAYMENT OF BACKWAGES TO THE AFFECTED EMPLOYEES.*

B.

THE PUBLIC RESPONDENT HON. SECRETARY OF LABOR AND EMPLOYMENT GRAVELY ABUSED HER DISCRETION IN INCLUDING EXECUTIVE SECRETARIES AS PART OF THE BARGAINING UNIT OF RANK AND FILE EMPLOYEES.8

Anent the first issue, we are asked to determine whether or not public respondent Labor Secretary committed grave abuse of discretion and exceeded her jurisdiction in declaring the subject layoffs instituted by Metrolab illegal on grounds that these unilateral actions aggravated the conflict between Metrolab and the Union who were, then, locked in a stalemate in CBA negotiations.

Metrolab argues that the Labor Secretary's order enjoining the parties from committing any act that might exacerbate the dispute is overly broad, sweeping and vague and should not be used to curtail the employer's right to manage his business and ensure its viability.

We cannot give credence to Metrolab's contention.

This Court recognizes the exercise of management prerogatives and often declines to interfere with the legitimate business decisions of the employer. However, this privilege is not absolute but subject to limitations imposed by law. 9

In PAL v. NLRC, 10 we issued this reminder:

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. . . the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that management's prerogatives must be without abuse of discretion. . . .

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All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]) . . . . (Emphasis ours.)

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The case at bench constitutes one of the exceptions. The Secretary of Labor is expressly given the power under the Labor Code to assume jurisdiction and resolve labor disputes involving industries indispensable to national interest. The disputed injunction is subsumed under this special grant of authority. Art. 263 (g) of the Labor Code specifically provides that:

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(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. . . . (Emphasis ours.)

xxx xxx xxx

That Metrolab's business is of national interest is not disputed. Metrolab is one of the leading manufacturers and suppliers of medical and pharmaceutical products to the country.

Metrolab's management prerogatives, therefore, are not being unjustly curtailed but duly balanced with and tempered by the limitations set by law, taking into account its special character and the particular circumstances in the case at bench.

As aptly declared by public respondent Secretary of Labor in its assailed resolution:

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MII is right to the extent that as a rule, we may not interfere with the legitimate exercise of management prerogatives such as layoffs. But it may nevertheless be appropriate to mention here that one of the substantive evils which Article 263 (g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts, management prerogatives must always be exercise consistently with the statutory objective. 11

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Metrolab insists that the subject layoffs did not exacerbate their dispute with the Union since no untoward incident occurred after the layoffs were implemented. There were no work disruptions or stoppages and no mass actions were threatened or undertaken. Instead, petitioner asserts, the affected employees calmly accepted their fate "as this was a matter which they had been previously advised would be inevitable. 12

After a judicious review of the record, we find no compelling reason to overturn the findings of the Secretary of Labor.

We reaffirm the doctrine that considering their expertise in their respective fields, factual findings of administrative agencies supported by substantial evidence are accorded great respect and binds this Court. 13

The Secretary of Labor ruled, thus:

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Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on speculative reactions. A misplaced recourse is not needed to prove that a dispute has been exacerbated. For instance, the Union could not be expected to file another notice of strike. For this would depart from its theory of the case that the layoff is subsumed under the instant dispute, for which a notice of strike had already been filed. On the other hand, to expect violent reactions, unruly behavior, and any other chaotic or drastic action from the Union is to expect it to commit acts disruptive of public order or acts that may be illegal. Under a regime of laws, legal remedies take the place of violent ones. 14

xxx xxx xxx

Protest against the subject layoffs need not be in the form of violent action or any other drastic measure. In the instant case the Union registered their dissent by swiftly filing a motion for a cease and desist order. Contrary to petitioner's allegations the Union strongly condemned the layoffs and threatened mass action if the Secretary of Labor fails to timely intervene:

xxx xxx xxx

3. This unilateral action of management is a blatant violation of the injunction of this Office against committing acts which would exacerbate the dispute. Unless such act is enjoined the Union will be compelled to resort to its legal right to mass actions and concerted activities to protest and stop the said management action. This mass layoff is clearly one which would result in a very serious labor dispute unless this Office swiftly intervenes. 15

xxx xxx xxx

Metrolab and the Union were still in the process of resolving their CBA deadlock when petitioner implemented the subject layoffs. As a result, motions and oppositions were filed diverting the parties', attention, delaying resolution of the bargaining deadlock and postponing the signing of their new CBA, thereby aggravating the whole conflict.

We, likewise, find untenable Metrolab's contention that the layoff of the 94 rank-and-file employees was temporary, despite the recall of some of the laid off workers.

If Metrolab intended the layoff of the 94 workers to be temporary, it should have plainly stated so in the notices it sent to the affected employees and the Department of Labor and Employment. Consider the tenor of the pertinent portions of the layoff notice to the affected employees:

xxx xxx xxx

Dahil sa mga bagay na ito, napilitan ang ating kumpanya na magsagawa ng "lay-off" ng mga empleyado sa Rank & File dahil nabawasan ang trabaho at puwesto para sa kanila. Marami sa atin ang kasama sa "lay-off" dahil wala nang trabaho para sa kanila. Mahirap tanggapin ang mga bagay na ito subalit kailangan nating gawin dahil hindi kaya ng kumpanya ang magbayad ng suweldo kung ang empleyado ay walang trabaho. Kung tayo ay patuloy na magbabayad ng suweldo, mas hihina ang ating kumpanya at mas marami ang maaaring maapektuhan.

Sa pagpapatupad ng "lay-off" susundin natin ang LAST IN-FIRST OUT policy. Ang mga empleyadong may pinakamaikling serbisyo sa kumpanya ang unang maaapektuhan. Ito ay batay na rin sa nakasaad sa ating CBA na ang mga huling pumasok sa kumpanya ang unang masasama sa "lay-off" kapag nagkaroon ng ganitong mga kalagayan.

Ang mga empleyado na kasama sa "lay-off" ay nakalista sa sulat na ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27. Hindi na muna sila papasok sa kumpanya. Makukuha nila ang suweldo nila sa Enero 30, 1992.

Hindi po natin matitiyak kung gaano katagal ang "lay-off", ngunit ang aming tingin ay matatagalan bago maakaroon na dagdag na trabaho. Dahil dito, sinimulan na namin ang isang "Redundancy Program" sa mga supervisors. Mabawasan ang mga puwesto para sa kanila, kaya sila ay mawawalan ng trabaho at bibigyan na ng redundancy pay. 16 (Emphasis ours.)

xxx xxx xxx

We agree with the ruling of the Secretary of Labor, thus:

xxx xxx xxx

. . . MII insists that the layoff in question is temporary not permanent. It then cites International Hardware, Inc. vs. NLRC, 176 SCRA 256, in which the Supreme Court held that the 30-day notice required under Article 283 of the Labor Code need not be complied with if the employer has no intention to permanently severe (sic) the employment relationship.

We are not convinced by this argument. International Hardware involves a case where there had been a reduction of workload. Precisely to avoid laying off the employees, the employer therein opted to give them work on a rotating basis. Though on a limited scale, work was available. This was the Supreme Court's basis for holding that there was no intention to permanently severe (sic) the employment relationship.

Here, there is no circumstance at all from which we can infer an intention from MII not to sever the employment relationship permanently. If there was such an intention, MII could have made it very clear in the notices of layoff. But as it were, the notices are couched in a language so uncertain that the only conclusion possible is the permanent termination, not the continuation, of the employment relationship.

MII also seeks to excuse itself from compliance with the 30-day notice with a tautology. While insisting that there is really no best time to announce a bad news, (sic) it also claims that it broke the bad news only on 27 January 1992 because had it complied with the 30-day notice, it could have broken the bad news on 02 January 1992, the first working day of the year. If there is really no best time to announce a bad news (sic), it wouldn't have mattered if the same was announced at the first working day of the year. That way, MII could have at least complied with the requirement of the law. 17

The second issue raised by petitioner merits our consideration.

In the assailed Omnibus Resolution, Labor Secretary Confesor clarified the CBA provisions on closed-shop and the scope of the bargaining unit in this wise:

xxx xxx xxx

Appropriateness of the bargaining unit.

xxx xxx xxx

Exclusions. In our 14 April 1992 resolution, we ruled on the issue of exclusion as follows:

These aside, we reconsider our denial of the modifications which the Union proposes to introduce on the close shop provision. While we note that the provision as presently worded has served the relationship of the parties well under previous CBA'S, the shift in constitutional policy toward expanding the right of all workers to self-organization should now be formally by the parties, subject to the following exclusions only:

1. Managerial employees; and

2. The executive secretaries of the President, Executive Vice-President, Vice-President, Vice-President for Sales, Personnel manager, and Director for Corporate Planning who may have access to vital labor relations information or who may otherwise act in a confidential capacity to persons who determine or formulate management policies.

The provisions of Article I (b) and Attachment I of the 1988-1990 CBA shall thus be modified consistently with the foregoing.

Article I (b) of the 1988-1990 CBA provides:

b) Close Shop. - All Qualified Employees must join the Association immediately upon regularization as a condition for continued employment. This provision shall not apply to: (i) managerial employees who are excluded from the scope of the bargaining unit; (ii) the auditors and executive secretaries of senior executive officers, such as, the President, Executive Vice-President, Vice-President for Finance, Head of Legal, Vice-President for Sales, who are excluded from membership in the Association; and (iii) those employees who are referred to in Attachment I hereof, subject, however, to the application of the provision of Article II, par. (b) hereof. Consequently, the above-specified employees are not required to join the Association as a condition for their continued employment.

On the other hand, Attachment I provides:

Exclusion from the Scope of the Close Shop Provision.

The following positions in the Bargaining Unit are not covered by the Close Shop provision of the CBA (Article I, par. b):

1. Executive Secretaries of Vice-Presidents, or equivalent positions.

2. Executive Secretary of the Personnel Manager, or equivalent Positions.

3. Executive Secretary, of the Director for Corporate Planning, or equivalent positions.

4. Some personnel in the Personnel Department, EDP Staff at Head Office, Payroll Staff at Head office, Accounting Department at Head Office, and Budget Staff, who because of the nature of their duties and responsibilities need not join the Association as a condition for their employment.

5. Newly-hired secretaries of Branch Managers and Regional Managers.

Both MDD and MII read the exclusion of managerial employees and executive secretaries in our 14 April 1992 resolution as exclusion from the bargaining unit. They point out that managerial employees are lumped under one classification with executive secretaries, so that since the former are excluded from the bargaining unit, so must the latter be likewise excluded.

This reading is obviously contrary to the intent of our 14 April 1992 resolution. By recognizing the expanded scope of the right to self-organization, our intent was to delimit the types of employees excluded from the close shop provision, not from the bargaining unit, to executive secretaries only. Otherwise, the conversion of the exclusionary provision to one that refers to the bargaining unit from one that merely refers to the close shop provision would effectively curtail all the organizational rights of executive secretaries.

The exclusion of managerial employees, in accordance with law, must therefore still carry the qualifying phrase "from the bargaining unit", in Article I (b) (i) of the 1988-1990 CBA. In the same manner, the exclusion of executive secretaries should be read together with the qualifying phrase "are excluded from membership in the Association" of the same Article and with the heading of Attachment I. The latter refers to "Exclusions from Scope of Close Shop Provision" and provides that "[t]he following positions in Bargaining Unit are not covered by the close shop provision of the CBA."

The issue of exclusion has different dimension in the case of MII. In an earlier motion for clarification, MII points out that it has done away with the positions of Executive Vice-President, Vice-President for Sales, and Director for Corporate Planning. Thus, the foregoing group of exclusions is no longer appropriate in its present organizational

structure. Nevertheless, there remain MII officer positions for which there may be executive secretaries. These include the General Manager and members of the Management Committee, specifically i) the Quality Assurance Manager; ii) the Product Development Manager; iii) the Finance Director; iv) the Management System Manager; v) the Human Resources Manager; vi) the Marketing Director; vii) the Engineering Manager., viii) the Materials Manager; and ix) the Production Manager.

xxx xxx xxx

The basis for the questioned exclusions, it should be noted, is no other than the previous CBA between MII and the Union. If MII had undergone an organizational restructuring since then, this is a fact to which we have never been made privy. In any event, had this been otherwise the result would have been the same. To repeat, we limited the exclusions to recognize the expanded scope of the right to self-organization as embodied in the Constitution. 18

Metrolab, however, maintains that executive secretaries of the General Manager and the executive secretaries of the Quality Assurance Manager, Product Development Manager, Finance Director, Management System Manager, Human Resources Manager, Marketing Director, Engineering Manager, Materials Manager and Production Manager, who are all members of the company's Management Committee should not only be exempted from the closed-shop provision but should be excluded from membership in the bargaining unit of rank and file employees as well on grounds that their executive secretaries are confidential employees, having access to "vital labor information." 19

We concur with Metrolab.

Although Article 245 of the Labor Code 20 limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and hence, are likewise privy to sensitive and highly confidential records.

The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees and their disqualification to join any labor organization was succinctly discussed in Philips Industrial Development v. NLRC: 21

xxx xxx xxx

On the main issue raised before Us, it is quite obvious that respondent NLRC committed grave abuse of discretion in reversing the decision of the Executive Labor Arbiter and in decreeing that PIDI's "Service Engineers, Sales Force, division secretaries, all Staff of General Management, Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems are included within the rank and file bargaining unit."

In the first place, all these employees, with the exception of the service engineers and the sales force personnel, are confidential employees. Their classification as such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered them as confidential employees. By the very nature of their functions, they assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusto Sanchez, this court elaborated on this rationale, thus:

. . . The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The union can also become company-dominated with the presence of managerial employees in Union membership.

In Golden Farms, Inc. vs. Ferrer-Calleja, this Court explicitly made this rationale applicable to confidential employees:

This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph operators, who having access to confidential information, may become the source of undue advantage. Said employees may act as a spy or spies of either party to a collective bargaining

agreement. This is specially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded.

xxx xxx xxx

Similarly, in National Association of Trade Union-Republic Planters Bank Supervisors Chapter v. Torres 22 we declared:

xxx xxx xxx

. . . As regards the other claim of respondent Bank that Branch Managers/OICs, Cashiers and Controllers are confidential employees, having control, custody and/or access to confidential matters, e.g., the branch's cash position, statements of financial condition, vault combination, cash codes for telegraphic transfers, demand drafts and other negotiable instruments, pursuant to Sec. 1166.4 of the Central Bank Manual regarding joint custody, this claim is not even disputed by petitioner. A confidential employee is one entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer's property. While Art. 245 of the Labor Code singles out managerial employees as ineligible to join, assist or form any labor organization, under the doctrine of necessary implication, confidential employees are similarly disqualified. . . .

xxx xxx xxx

. . . (I)n the collective bargaining process, managerial employees are supposed to be on the side of the employer, to act as its representatives, and to see to it that its interest are well protected. The employer is not assured of such protection if these employees themselves are union members. Collective bargaining in such a situation can become one-sided. It is the same reason that impelled this Court to consider the position of confidential employees as included in the disqualification found in Art. 245 as if the disqualification of confidential employees were written in the provision. If confidential employees could unionize in order to bargain for advantages for themselves, then they could be governed by their own motives rather than the interest of the employers. Moreover, unionization of confidential employees for the purpose of collective bargaining would mean the extension of the law to persons or individuals who are supposed to act "in the interest of the employers. It is not farfetched that in the course of collective bargaining, they might jeopardize that interest which they are duty-bound to protect. . . .

xxx xxx xxx

And in the latest case of Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confesor, 23 we ruled that:

xxx xxx xxx

Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and clerical. However, they should be, differentiated from rank-and-file employees because they are tasked with, among others, the typing of legal documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving notices, and such other duties as required by the legal personnel of the corporation. Legal secretaries therefore fall under the category of confidential employees. . . .

xxx xxx xxx

We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and legal secretary from the bargaining unit composed of rank-and-file employees.

xxx xxx xxx

In the case at bench, the Union does not disagree with petitioner that the executive secretaries are confidential employees. It however, makes the following contentions:

xxx xxx xxx

There would be no danger of company domination of the Union since the confidential employees would not be members of and would not participate in the decision making processes of the Union.

Neither would there be a danger of espionage since the confidential employees would not have any conflict of interest, not being members of the Union. In any case, there is always the danger that any employee would leak management secrets to the Union out of sympathy for his fellow rank and filer even if he were not a member of the union nor the bargaining unit.

Confidential employees are rank and file employees and they, like all the other rank and file employees, should be granted the benefits of the Collective Bargaining Agreement. There is no valid basis for discriminating against them. The mandate of the Constitution and the Labor Code, primarily of protection to Labor, compels such conclusion. 24

xxx xxx xxx

The Union's assurances fail to convince. The dangers sought to be prevented, particularly the threat of conflict of, interest and espionage, are not eliminated by non-membership of Metrolab's executive secretaries or confidential employees in the Union. Forming part of the bargaining unit, the executive secretaries stand to benefit from any agreement executed between the Union and Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal interests and their duty as confidential employees to act for and in behalf of Metrolab. They do not have to be union members to affect or influence either side.

Finally, confidential employees cannot be classified as rank and file. As previously discussed, the nature of employment of confidential employees is quite distinct from the rank and file, thus, warranting a separate category. Excluding confidential employees from the rank and file bargaining unit, therefore, is not tantamount to discrimination.

WHEREFORE, premises considered, the petition is partially GRANTED. The resolutions of public respondent Secretary of Labor dated 14 April 1992 and 25 January 1993 are hereby MODIFIED to the extent that executive secretaries of petitioner Metrolab's General Manager and the executive secretaries of the members of its Management Committee are excluded from the bargaining unit of petitioner's rank and file employees.

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L. PONCE, President, petitioners,

vs. HONORABLE BIENVENIDO E. LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER AND SAN

MIGUEL CORPORATION, respondents. G.R. No. 110399 August 15, 1997

SECOND DIVISION

ROMERO, J.:

This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seeking to reverse and set aside the Order of public respondent, Undersecretary of the Department of Labor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91 1 entitled "In Re: Petition for Certification Election Among the Supervisory and Exempt Employees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner." The Order excluded the employees under supervisory levels 3 and 4 and the so-called exempt employees from the proposed bargaining unit and ruled out their participation in the certification election.

The antecedent facts are undisputed:

On October 5, 1990, petitioner union filed before the Department of Labor and Employment (DOLE) a Petition for Direct Certification or Certification Election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.

On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering the conduct of certification election among the supervisors and exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit.

On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiter's error in grouping together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit, and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondent company's Appeal and ordered the remand of the case to the Med-Arbiter of origin for determination of the true classification of each of the employees sought to be included in the appropriate bargaining unit.

Upon petitioner-union's motion dated August 7, 1991, Undersecretary Laguesma granted the reconsideration prayed for on September 3, 1991 and directed the conduct of separate certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.

On September 21, 1991, respondent company, San Miguel Corporation filed a Motion for Reconsideration with Motion to suspend proceedings.

On March 11, 1993, an Order was issued by the public respondent granting the Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC 2 case. Said Order reads in part:

. . . Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining.

In this case, S3 and S4 Supervisors and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court's ruling. Consequently, they are not allowed to participate in the certification election.

WHEREFORE, the Motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election. 3

Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the company are considered confidential employees, hence ineligible from joining a union.

2. If they are not confidential employees, do the employees of the three plants constitute an appropriate single bargaining unit.

On the first issue, this Court rules that said employees do not fall within the term "confidential employees" who may be prohibited from joining a union.

There is no question that the said employees, supervisors and the exempt employees, are not vested with the powers and prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not qualified to be classified as managerial employees who, under Article 245 4 of the Labor Code, are not eligible to join, assist or form any labor organization. In the very same provision, they are not allowed membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor

organizations of their own. The only question that need be addressed is whether these employees are properly classified as confidential employees or not.

Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. 5 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. 6

The exclusion from bargaining units of employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the ''confidential employee rule." The broad rationale behind this rule is that employees should not be placed in a position involving a potential conflict of interests. 7 "Management should not be required to handle labor relations matters through employees who are represented by the union with which the company is required to deal and who in the normal performance of their duties may obtain advance information of the company's position with regard to contract negotiations, the disposition of grievances, or other labor relations matters." 8

There have been precedents in this regards, thus in Bulletin Publishing Company v. Hon. Augusto Sanchez, 9 the Court held that "if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interest. The Union can also become company-dominated with the presence of managerial employees in Union membership." The same rationale was applied to confidential employees in "Golden Farms, Inc. v. Ferrer-Calleja" 10 and in the more recent case of "Philips Industrial Development, Inc. v. NLRC" 11 which held that confidential employees, by the very nature of their functions, assist and act in a confidential capacity to, or have access to confidential matters of, persons who exercise managerial functions in the field of labor relations. Therefore, the rationale behind the ineligibility of managerial employees to form, assist or join a labor union was held equally applicable to them. 12

An important element of the "confidential employee rule" is the employee's need to use labor relations information. Thus, in determining the confidentiality of certain employees, a key question frequently considered is the employee's necessary access to confidential labor relations information. 13

It is the contention of respondent corporation that Supervisor employees 3 and 4 and the exempt employees come within the meaning of the term "confidential employees" primarily because they answered in the affirmative when asked "Do you handle confidential data or documents?" in the Position Questionnaires submitted by the Union. 14 In the same questionnaire, however, it was also stated that the confidential information handled by questioned employees relate to product formulation, product standards and product specification which by no means relate to "labor relations." 15

Granting arguendo that an employee has access to confidential labor relations information but such is merely incidental to his duties and knowledge thereof is not necessary in the performance of such duties, said access does not render the employee a confidential employee. 16 "If access to confidential labor relations information is to be a factor in the determination of an employee's confidential status, such information must relate to the employer's labor relations policies. Thus, an employee of a labor union, or of a management association, must have access to confidential labor relations information with respect to his employer, the union, or the association, to be regarded a confidential employee, and knowledge of labor relations information pertaining to the companies with which the union deals, or which the association represents, will not cause an employee to be excluded from the bargaining unit representing employees of the union or association." 17 "Access to information which is regarded by the employer to be confidential from the business standpoint, such as financial information 18 or technical trade secrets, will not render an employee a confidential employee." 19

Herein listed are the functions of supervisors 3 and higher:

1. To undertake decisions to discontinue/temporarily stop shift operations when situations require.

2. To effectively oversee the quality control function at the processing lines in the storage of chicken and other products.

3. To administer efficient system of evaluation of products in the outlets.

4. To be directly responsible for the recall, holding and rejection of direct manufacturing materials.

5. To recommend and initiate actions in the maintenance of sanitation and hygiene throughout the plant. 20

It is evident that whatever confidential data the questioned employees may handle will have to relate to their functions. From the foregoing functions, it can be gleaned that the confidential information said employees have access to concern the employer's internal business operations. As held in Westinghouse Electric Corporation v. National Labor Relations Board, 21 "an employee may not be excluded from appropriate bargaining unit merely because he has access to confidential information concerning employer's internal business operations and which is not related to the field of labor relations."

It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates the State to guarantee to "all" workers the right to self-organization. Hence, confidential employees who may be excluded from bargaining unit must be strictly defined so as not to needlessly deprive many employees of their right to bargain collectively through representatives of their choosing. 22

In the case at bar, supervisors 3 and above may not be considered confidential employees merely because they handle "confidential data" as such must first be strictly classified as pertaining to labor relations for them to fall under said restrictions. The information they handle are properly classifiable as technical and internal business operations data which, to our mind, has no relevance to negotiations and settlement of grievances wherein the interests of a union and the management are invariably adversarial. Since the employees are not classifiable under the confidential type, this Court rules that they may appropriately form a bargaining unit for purposes of collective bargaining. Furthermore, even assuming that they are confidential employees, jurisprudence has established that there is no legal prohibition against confidential employees who are not performing managerial functions to form and join a union. 23

In this connection, the issue of whether the employees of San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit needs to be threshed out.

It is the contention of the petitioner union that the creation of three (3) separate bargaining units, one each for Cabuyao, Otis and San Fernando as ruled by the respondent Undersecretary, is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 and exempt employees of the three plants have a similarity or a community of interests.

This Court finds the contention of the petitioner meritorious.

An appropriate bargaining unit may be defined as "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 24

A unit to be appropriate must effect a grouping of employees who have substantial, mutual interests in wages, hours, working conditions and other subjects of collective bargaining. 25

It is readily seen that the employees in the instant case have "community or mutuality of interests," which is the standard in determining the proper constituency of a collective bargaining unit. 26 It is undisputed that they all belong to the Magnolia Poultry Division of San Miguel Corporation. This means that, although they belong to three different plants, they perform work of the same nature, receive the same wages and compensation, and most importantly, share a common stake in concerted activities.

In light of these considerations, the Solicitor General has opined that separate bargaining units in the three different plants of the division will fragmentize the employees of the said division, thus greatly diminishing their bargaining leverage. Any concerted activity held against the private respondent for a labor grievance in one bargaining unit will, in all probability, not create much impact on the operations of the private respondent. The two other plants still in operation can well step up their production and make up for the slack caused by the bargaining unit engaged in the concerted activity. This situation will clearly frustrate the provisions of the Labor Code and the mandate of the Constitution. 27

The fact that the three plants are located in three different places, namely, in Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga is immaterial. Geographical location can be completely disregarded if the communal or mutual interests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where all non-academic rank and file employee of the University of the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in a certification election. We rule that the distance among the

three plants is not productive of insurmountable difficulties in the administration of union affairs. Neither are there regional differences that are likely to impede the operations of a single bargaining representative.

WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a certification election among the supervisors (level 1 to 4) and exempt employees of the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit is ordered conducted.

BENGUET ELECTRIC COOPERATIVE, INC., petitioner, vs.

HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO EMPLOYEES LABOR UNION, respondents.

G.R. No. 79025. December 29, 1989.

THIRD DIVISION

CORTES, J.:

On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations (hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and exclusive bargaining representative of all the rank and file employees of Benguet Electric Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging, inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees; that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of the petition; that no certification election has been conducted for the last 12 months; that there is no existing collective bargaining representative of the rank and file employees sought to represented by BWLU- ADLO; and, that there is no collective bargaining agreement in the cooperative.

An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to as BELU) contending that it was certified as the sole and exclusive bargaining representative of the subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending resolution by the National Labor Relations Commission are two cases it filed against BENECO involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars any representation question.

BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit electric cooperative engaged in providing electric services to its members and patron-consumers in the City of Baguio and Benguet Province; and, that the employees sought to be represented by BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing because they are members and joint owners of the cooperative.

On September 2, 1985 the med-arbiter issued an order giving due course to the petition for certification election. However, the med-arbiter limited the election among the rank and file employees of petitioner who are non-members thereof and without any involvement in the actual ownership of the cooperative. Based on the evidence during the hearing the med-arbiter found that there are thirty-seven (37) employees who are not members and without any involvement in the actual ownership of the cooperative. The dispositive portion of the med-arbiter's order is as follows:

WHEREFORE, premises considered, a certification election should be as it is hereby ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all the rank and file employees (non-members/consumers and without any involvement in the actual ownership of the cooperative) with the following choices:

1. BENECO WORKERS LABOR UNION-ADLO

2. BENECO EMPLOYEES LABOR UNION

3. NO UNION

The payroll for the month of June 1985 shall be the basis in determining the qualified voters who may participate in the certification election to be conducted.

SO ORDERED. [Rollo, pp. 22-23.]

BELU and BENECO appealed from this order but the same was dismissed for lack of merit on March 25,1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for preliminary injunction and /or restraining order, docketed as G.R. No. 74209, which the Supreme Court dismissed for lack of merit in a minute resolution dated April 28, 1986.

The ordered certification election was held on October 1, 1986. Prior to the conduct thereof BENECO's counsel verbally manifested that "the cooperative is protesting that employees who are members-consumers are being allowed to vote when . . . they are not eligible to be members of any labor union for purposes of collective bargaining; much less, to vote in this certification election." [Rollo, p. 28]. Petitioner submitted a certification showing that only four (4) employees are not members of BENECO and insisted that only these employees are eligible to vote in the certification election. Canvass of the votes showed that BELU garnered forty-nine (49) of the eighty-three (83) "valid" votes cast.

Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others, that the issue as to whether or not member-consumers who are employees of BENECO could form, assist or join a labor union has been answered in the affirmative by the Supreme Court in G.R. No. 74209, the med-arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO.

Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General agreed with BENECO's stance and prayed that the petition be given due course. In view of this respondent director herself was required by the Court to file a Comment. On April 19, 1989 the Court gave due course to the petition and required the parties to submit their respective memoranda.

The main issue in this case is whether or not respondent director committed grave abuse of discretion in certifying respondent BELU as the sole and exclusive bargaining representtative of the rank and file employees of BENECO.

Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit." Petitioner BENECO asserts that the certification election held on October 1, 1986 was null and void since members-employees of petitioner cooperative who are not eligible to form and join a labor union for purposes of collective bargaining were allowed to vote therein.

Respondent director and private respondent BELU on the other hand submit that members of a cooperative who are also rank and file employees are eligible to form, assist or join a labor union [Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99-100].

The Court finds the present petition meritorious.

The issue of whether or not employees of a cooperative are qualified to form or join a labor organization for purposes of collective bargaining has already been resolved and clarified in the case of Cooperative Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No. 7795, September 26,1988] and reiterated in the cases of Batangas-Electric Cooperative Labor Union v. Young, et al. [G.R. Nos. 62386, 70880 and 74560 November 9, 1988] and San Jose City Electric Service Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989] wherein the Court had stated that the right to collective bargaining is not available to an employee of a cooperative who at the same time is a member and co-owner thereof. With respect, however, to employees who are neither members nor co-owners of the cooperative they are entitled to exercise the rights to self-organization, collective bargaining and negotiation as mandated by the 1987 Constitution and applicable statutes.

Respondent director argues that to deny the members of petitioner cooperative the right to form, assist or join a labor union of their own choice for purposes of collective bargaining would amount to a patent violation of their right to self-organization. She points out that:

Albeit a person assumes a dual capacity as rank and file employee and as member of a certain cooperative does not militate, as in the instant case, against his/her exercise of the right to self-organization and to collective bargaining guaranteed by the Constitution and Labor Code because, while so doing, he/she is acting in his/her capacity as rank and file employee thereof. It may be added that while the employees concerned became members of petitioner cooperative, their status employment as

rank and filers who are hired for fixed compensation had not changed. They still do not actually participate in the management of the cooperative as said function is entrusted to the Board of Directors and to the elected or appointed officers thereof. They are not vested with the powers and prerogatives to lay down and execute managerial policies; to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees; and/or to effectively recommend such managerial functions [Comment of Respondent Director, p. 4; Rollo, p. 125.]

Private respondent BELU concurs with the above contention of respondent director and, additionally, claims that since membership in petitioner cooperative is only nominal, the rank and file employees who are members thereof should not be deprived of their right to self-organization.

The above contentions are untenable. Contrary to respondents' claim, the fact that the members-employees of petitioner do not participate in the actual management of the cooperative does not make them eligible to form, assist or join a labor organization for the purpose of collective bargaining with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a labor union for purposes of collective bargaining was based on the fact that as members of the cooperative they are co-owners thereof. As such, they cannot invoke the right to collective bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative, and not involvement in the management thereof, which disqualifies a member from joining any labor organization within the cooperative. Thus, irrespective of the degree of their participation in the actual management of the cooperative, all members thereof cannot form, assist or join a labor organization for the purpose of collective bargaining.

Respondent union further claims that if nominal ownership in a cooperative is "enough to take away the constitutional protections afforded to labor, then there would be no hindrance for employers to grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter claim that since their employees are not stockholders [of the corporation], albeit in a minimal and involuntary manner, they are now also co-owners and thus disqualified to form unions." To allow this, BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor which the Constitution endeavors to protect and which welfare it promises to promote." [Comment of BELU, p. 10; Rollo, p. 100].

The above contention of respondent union is based on the erroneous presumption that membership in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives may exercise some of the rights and privileges given to ordinary corporations provided under existing laws, such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6, and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra]. Similarly, members of cooperatives have rights and obligations different from those of stockholders of ordinary corporations. It was precisely because of the special nature of cooperatives, that the Court held in the Davao City case that members-employees thereof cannot form or join a labor union for purposes of collective bargaining. The Court held that:

A cooperative ... is by its nature different from an ordinary business concern being run either by persons, partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while the others are its employees. As above stated, irrespective of the number of shares owned by each member they are entitled to cast one vote each in deciding upon the affairs of the cooperative. Their share capital earn limited interest. They enjoy special privileges as-exemption from income tax and sales taxes, preferential right to supply their products to State agencies and even exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners.

It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras made a specific finding that there are only thirty-seven (37) employees of petitioner who are not members of the cooperative and who are, therefore, the only employees of petitioner cooperative eligible to form or join a labor union for purposes of collective bargaining [Annex "A" of the Petition, p. 12; Rollo, p. 22]. However, the minutes of the certification election [Annex "C" of the Petition: Rollo, p. 28] show that a total of eighty-three (83) employees were allowed to vote and of these, forty-nine (49) voted for respondent union. Thus, even if We agree with respondent union's contention that the thirty seven (37) employees who were originally non-members of the cooperative can still vote in the certification election since they were only "forced and compelled to join the cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still null and void since even those who were already members of the cooperative at the time of the issuance of the med-arbiter's order, and therefore cannot claim that they were forced to join the union were allowed to vote in the election.

Article 256 of the Labor Code provides, among others, that:

To have a valid, election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in the unit . . . [Italics supplied.]

In this case it cannot be determined whether or not respondent union was duly elected by the eligible voters of the bargaining unit since even employees who are ineligible to join a labor union within the cooperative because of their membership therein were allowed to vote in the certification election. Considering the foregoing, the Court finds that respondent director committed grave abuse of discretion in certifying respondent union as the sole and exclusive bargaining representative of the rank and file employees of petitioner cooperative.

WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director is ANNULLED. The certification election conducted on October 1, 1986, is SET ASIDE. The Regional Office No. 1 of San Fernando, La Union is hereby directed to immediately conduct new certification election proceedings among the rank and file employees of the petitioner who are not members of the cooperative.

TOYOTA MOTOR PHILIPPINES CORPORATION , petitioner, vs.

TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND EMPLOYMENT, respondents.

G.R. No. 121084 February 19, 1997 FIRST DIVISION KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a petition for certification election with the Department of Labor, National Capital Region, for all rank-and-file employees of the Toyota Motor Corporation. 1

In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the issuance of an Order directing the holding of a certification election on two grounds: first, that the respondent union, being "in the process of registration" had no legal personality to file the same as it was not a legitimate labor organization as of the date of the filing of the petition; and second, that the union was composed of both rank-and-file and supervisory employees in violation of law. 2 Attached to the position paper was a list of union members and their respective job classifications, indicating that many of the signatories to the petition for certification election occupied supervisory positions and were not in fact rank-and-file employees. 3

The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor organization's membership was composed of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code, 4 and that at the time of the filing of its petition, respondent union had not even acquired legal personality yet. 5

On appeal, the Office of the Secretary of Labor, in a Resolution 6 dated November 9, 1993 signed by Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993, and directed the holding of a certification election among the regular rank.-and-file employees of Toyota Motor Corporation. In setting aside the questioned Order, the Office of the Secretary contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a legitimate labor organization at the time of the filing of the petition on 26 November 1992. Records show that on 24 November 1992 or two (2) days before the filing of the said petition, it was issued a certificate of registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed the petition for certification election based on the ground that the proposed bargaining unit is a mixture of supervisory and rank-and-file employees, hence, violative of Article 245 of the Labor Code as amended.

A perusal of the petition and the other documents submitted by petitioner-appellant will readily show that what the former really seeks to represent are the regular rank-and-file employees in the company numbering about 1,800 more or less, a unit which is obviously appropriate for bargaining purposes. This

being the case, the mere allegation of respondent-appellee that there are about 42 supervisoy employees in the proposed bargaining unit should have not caused the dismissal of the instant petition. Said issue could very well be taken cared of during the pre-election conference where inclusion/exclusion proceedings will be conducted to determine the list of eligible voters. 7

Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of petition for certification election, respondent TMPCLU had not yet acquired the status of a legitimate labor organization as required by the Labor Code, and that the proposed bargaining unit was inappropriate.

Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside its earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised by petitioner both on appeal and in its motion for reconsideration were factual issues requiring further hearing and production of evidence. 8 The Order stated

We carefully re-examined the records vis-a-vis the arguments raised by the movant, and we note that movant correctly pointed out that petitioner submitted a copy of its certificate of registration for the first time on appeal and that in its petition, petitioner alleges that it is an independent organization which is in the process of registration." Movant strongly argues that the foregoing only confirms what it has been pointing out all along, that at the time the petition was filed petitioner is (sic) not yet the holder of a registration certificate; that what was actually issued on 24 November 1992 or two (2) days before the filing of the petition was an official receipt of payment for the application fee; and, that the date appearing in the Registration certificate which is November 24, 1992 is not the date when petitioner was actually registered, but the date when the registration certificate was prepared by the processor. Movant also ratiocinates that if indeed petitioner has been in possession of the registration certificate at the time this petition was filed on November 26, 1992, it would have attached the same to the petition.

The foregoing issues are factual ones, the resolution of which is crucial to the petition. For if indeed it is true that at the time of filing of the petition, the said registration certificate has not been approved yet, then, petitioner lacks the legal personality to file the petition and the dismissal order is proper. Sadly, we can not resolve the said questions by merely perusing the records. Further hearing and introduction of evidence are required. Thus, there is a need to remand the case to the Med-Arbiter solely for the purpose.

WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let the case be remanded to the Med-Arbiter for the purpose aforestated.

SO ORDERED. 9

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on September 28, 1994, stating the following: 10

[T]he controvertible fact is that petitioner could not have been issued its Certificate of Registration on November 24, 1992 when it applied for registration only on November 23, 1992 as shown by the official receipt of payment of filing fee. As Enrique Nalus, Chief LEG, this office, would attest in his letter dated September 8, 1994 addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of respondent company, in response to a query posed by the latter, "It is unlikely that an application for registration is approved on the date that it is filed or the day thereafter as the processing course has to pass thought routing, screening, and assignment, evaluation, review and initialing, and approval/disapproval procedure, among others, so that a 30-day period is provided for under the Labor Code for this purpose, let alone opposition thereto by interested parties which must be also given due course.

Another evidence which petitioner presented. . . is the "Union Registration 1992 Logbook of IRD". . . and the entry date November 25, 1992 as allegedly the date of the release of the registration certificate. . . On the other hand, respondent company presented . . . a certified true copy of an entry on page 265 of the Union Registration Logbook showing the pertinent facts about petitioner but which do not show the petitioner's registration was issued on or before November 26, 1992. 11

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that respondent TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its) petition." 12

On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a certification election among the regular rank-and-file employees of the Toyota Motor Philippines Corporation. 13 Petitioner's motion for reconsideration was denied by public respondent in his Order dated July 14, 1995. 14

Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where petitioner contends that "the Secretary of Labor and Employment committed grave abuse of discretion amounting to lack or excess of jurisdiction in reversing, contrary to law and facts the findings of the Med-Arbiters to the effect that: 1) the inclusion of the prohibited mix of rank-and file and supervisory employees in the roster of members and officers of the union cannot be cured by a simple inclusion-exclusion proceeding; and that 2) the respondent union had no legal standing at the time of the filing of its petition for certification election. 15

We grant the petition.

The purpose of every certification election is to determine the exclusive representative of employees in an appropriate bargaining unit for the purpose of collective bargaining. A certification election for the collective bargaining process is one of the fairest and most effective ways of determining which labor organization can truly represent the working force. 16 In determining the labor organization which represents the interests of the workforce, those interests must be, as far as reasonably possible, homogeneous, so as to genuinely reach the concerns of the individual members of a labor organization.

According to Rothenberg, 17 an appropriate bargaining unit is a group of employees of a given employer, composed of all or less than the entire body of employees, which the collective interests of all the employees, consistent with equity to the employer indicate to be best suited to serve reciprocal rights and duties of the parties under the collective bargaining provisions of law. In Belyca Corporation v. Ferrer Calleja, 18 we defined the bargaining unit as "the legal collectivity for collective bargaining purposes whose members have substantially mutual bargaining interests in terms and conditions of employment as will assure to all employees their collective bargaining rights." This in mind, the Labor Code has made it a clear statutory policy to prevent supervisory employees from joining labor organizations consisting of rank-and-file employees as the concerns which involve members of either group are normally disparate and contradictory. Article 245 provides:

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

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

It is the petitioner's contention that forty-two (42) of the respondent union's members, including three of its officers, occupy supervisory positions 19 In its position paper dated February 22, 1993, petitioner identified fourteen (14) union members occupying the position of Junior Group Chief 11 20 and twenty-seven (27) members in level five positions. Their respective job-descriptions are quoted below:

LEVEL 4 (JUNIOR GROUP CHIEF II) — He is responsible for all operators and assigned stations, prepares production reports related to daily production output. He oversees smooth flow of production, quality of production, availability of manpower, parts and equipments. He also coordinates with other sections in the Production Department.

LEVEL 5 — He is responsible for overseeing initial production of new models, prepares and monitors construction schedules for new models, identifies manpower requirements for production, facilities and equipment, and lay-out processes. He also oversees other sections in the production process (e.g. assembly, welding, painting)." (Annex "V" of Respondent TMP's Position Paper; which is the Job Description for an Engineer holding Level 5 position in the Production Engineering Section of the Production Planning and Control Department).

While there may be a genuine divergence of opinion as to whether or not union members occupying Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the Labor Code's definition of the term that those occupying Level 5 positions are unquestionably supervisory employees. Supervisory employees, as defined above, are those who, in the interest of the employer, effectively recommend managerial actions if the exercise of such authority is not merely routinary or clerical in nature but require the use of independent judgment. 21 Under the job description for level five employees, such personnel — all engineers — having a number of personnel under them, not only oversee production of new models but also determine manpower requirements, thereby influencing important hiring decisions at the highest levels. This determination is neither routine nor clerical but involves the independent assessment of factors affecting production, which in turn affect decisions to hire or transfer workers. The use of independent judgment in making the decision to hire, fire or transfer in the identification of manpower requirements would be greatly impaired if the employee's loyalties are torn between the interests of the union and the interests of management. A supervisory employee occupying a level five position would therefore find it difficult to objectively identify the exact manpower requirements dictated by production demands.

This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees on one hand, and supervisory employees on the other, seeks to avoid. The rationale behind the Code's exclusion of supervisors from unions of rank-and-file employees is that such employees, while in the performance of supervisory functions, become the alter ego of management in the making and the implementing of key decisions at the sub-managerial level. Certainly, it would be difficult to find unity or mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory employees. And this is so because the fundamental test of a bargaining unit's acceptability is whether or not such a unit will best advance to all employees within the unit the proper exercise of their collective bargaining rights. 22 The Code itself has recognized this, in preventing supervisory employees from joining unions of rank-and-file employees.

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

The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to whether or not respondent union was in possession of the status of a legitimate labor organization at the time of filing, when, as petitioner vigorously claims, the former was still at the stage of processing of its application for recognition as a legitimate labor organization. The union's composition being in violation of the Labor Code's Prohibition of unions composed of supervisory and rank-and-file employees, it could not possess the requisite personality to file for recognition as a legitimate labor organization. In any case, the factual issue, albeit ignored by the public respondent's assailed Resolution, was adequately threshed out in the Med-Arbiter's September 28, 1994 Order

The holding of a certification election is based on clear statutory policy which cannot be circumvented. 23 Its rules, strictly construed by this Court, are designed to eliminate fraud and manipulation. As we emphasized in Progressive Development Corporation v. Secretary, Department of Labor and Employment, 24 the Court's conclusion should not be interpreted as impairing any union's right to be certified as the employees' bargaining agent in the petitioner's establishment. Workers of an appropriate bargaining unit must be allowed to freely express their choice in an election where everything is open to sound judgment and the possibility for fraud and misrepresentation is absent. 25

WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order dated July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated September 28, 1994 of the Med-Arbiter is REINSTATED.

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON, RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA,

PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner, vs.

THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO, RTC, BRANCH 98, QUEZON CITY, respondents.

G.R. No. 85279 July 28, 1989 THIRD DIVISION

CORTES, J:

Primarily, the issue raised in this petition is whether or not the Regional Trial Court can enjoin the Social Security System Employees Association (SSSEA) from striking and order the striking employees to return to work. Collaterally, it is whether or not employees of the Social Security System (SSS) have the right to strike.

The antecedents are as follows:

On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for damages with a prayer for a writ of preliminary injunction against petitioners, alleging that on June 9, 1987, the officers and members of SSSEA staged an illegal strike and baricaded the entrances to the SSS Building, preventing non-striking employees from reporting for work and SSS members from transacting business with the SSS; that the strike was reported to the Public Sector Labor - Management Council, which ordered the strikers to return to work; that the strikers refused to return to work; and that the SSS suffered damages as a result of the strike. The complaint prayed that a writ of preliminary injunction be issued to enjoin the strike and that the strikers be ordered to return to work; that the defendants (petitioners herein) be ordered to pay damages; and that the strike be declared illegal.

It appears that the SSSEA went on strike after the SSS failed to act on the union's demands, which included: implementation of the provisions of the old SSS-SSSEA collective bargaining agreement (CBA) on check-off of union dues; payment of accrued overtime pay, night differential pay and holiday pay; conversion of temporary or contractual employees with six (6) months or more of service into regular and permanent employees and their entitlement to the same salaries, allowances and benefits given to other regular employees of the SSS; and payment of the children's allowance of P30.00, and after the SSS deducted certain amounts from the salaries of the employees and allegedly committed acts of discrimination and unfair labor practices [Rollo, pp. 21-241].

The court a quo, on June 11, 1987, issued a temporary restraining order pending resolution of the application for a writ of preliminary injunction [Rollo, p. 71.] In the meantime, petitioners filed a motion to dismiss alleging the trial court's lack of jurisdiction over the subject matter [Rollo, pp. 72-82.] To this motion, the SSS filed an opposition, reiterating its prayer for the issuance of a writ of injunction [Rollo, pp. 209-222]. On July 22,1987, in a four-page order, the court a quo denied the motion to dismiss and converted the restraining order into an injunction upon posting of a bond, after finding that the strike was illegal [Rollo, pp. 83- 86]. As petitioners' motion for the reconsideration of the aforesaid order was also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a petition for certiorari and prohibition with preliminary injunction before this Court. Their petition was docketed as G.R. No. 79577. In a resolution dated October 21, 1987, the Court, through the Third Division, resolved to refer the case to the Court of Appeals. Petitioners filed a motion for reconsideration thereof, but during its pendency the Court of Appeals on March 9,1988 promulgated its decision on the referred case [Rollo, pp. 130-137]. Petitioners moved to recall the Court of Appeals' decision. In the meantime, the Court on June 29,1988 denied the motion for reconsideration in G.R. No. 97577 for being moot and academic. Petitioners' motion to recall the decision of the Court of Appeals was also denied in view of this Court's denial of the motion for reconsideration [Rollo, pp. 141- 143]. Hence, the instant petition to review the decision of the Court of Appeals [Rollo, pp. 12-37].

Upon motion of the SSS on February 6,1989, the Court issued a temporary restraining order enjoining the petitioners from staging another strike or from pursuing the notice of strike they filed with the Department of Labor and Employment on January 25, 1989 and to maintain the status quo [Rollo, pp. 151-152].

The Court, taking the comment as answer, and noting the reply and supplemental reply filed by petitioners, considered the issues joined and the case submitted for decision.

The position of the petitioners is that the Regional Trial Court had no jurisdiction to hear the case initiated by the SSS and to issue the restraining order and the writ of preliminary injunction, as jurisdiction lay with the Department of Labor and Employment or the National Labor Relations Commission, since the case involves a labor dispute.

On the other hand, the SSS advances the contrary view, on the ground that the employees of the SSS are covered by civil service laws and rules and regulations, not the Labor Code, therefore they do not have the right to strike. Since neither the DOLE nor the NLRC has jurisdiction over the dispute, the Regional Trial Court may enjoin the employees from striking.

In dismissing the petition for certiorari and prohibition with preliminary injunction filed by petitioners, the Court of Appeals held that since the employees of the SSS, are government employees, they are not allowed to strike, and may be enjoined by the Regional Trial Court, which had jurisdiction over the SSS' complaint for damages, from continuing with their strike.

Thus, the sequential questions to be resolved by the Court in deciding whether or not the Court of Appeals erred in finding that the Regional Trial Court did not act without or in excess of jurisdiction when it took cognizance of the case and enjoined the strike are as follows:

1. Do the employees of the SSS have the right to strike?

2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS and to enjoin the strikers from continuing with the strike and to order them to return to work?

These shall be discussed and resolved seriatim

I

The 1987 Constitution, in the Article on Social Justice and Human Rights, provides 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" [Art. XIII, Sec. 31].

By itself, this provision would seem to recognize the right of all workers and employees, including those in the public sector, to strike. But the Constitution itself fails to expressly confirm this impression, for in the Sub-Article on the Civil Service Commission, it provides, after defining the scope of the civil service as "all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters," that "[t]he right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(l) and (50)]. Parenthetically, the Bill of Rights also provides that "[tlhe right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no question that the Constitution recognizes the right of government employees to organize, it is silent as to whether such recognition also includes the right to strike.

Resort to the intent of the framers of the organic law becomes helpful in understanding the meaning of these provisions. A reading of the proceedings of the Constitutional Commission that drafted the 1987 Constitution would show that in recognizing the right of government employees to organize, the commissioners intended to limit the right to the formation of unions or associations only, without including the right to strike.

Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that "[tlhe right to self-organization shall not be denied to government employees" [Art. IX(B), Sec. 2(5)], in answer to the apprehensions expressed by Commissioner Ambrosio B. Padilla, Vice-President of the Commission, explained:

MR. LERUM. I think what I will try to say will not take that long. When we proposed this amendment providing for self-organization of government employees, it does not mean that because they have the right to organize, they also have the right to strike. That is a different matter. We are only talking about organizing, uniting as a union. With regard to the right to strike, everyone will remember that in the Bill of Rights, there is a provision that the right to form associations or societies whose purpose is not contrary to law shall not be abridged. Now then, if the purpose of the state is to prohibit the strikes coming from employees exercising government functions, that could be done because the moment that is prohibited, then the union which will go on strike will be an illegal union. And that provision is carried in Republic Act 875. In Republic Act 875, workers, including those from the government-owned and controlled, are allowed to organize but they are prohibited from striking. So, the fear of our honorable Vice- President is unfounded. It does not mean that because we approve this resolution, it carries with it the right to strike. That is a different matter. As a matter of fact, that subject is now being discussed in the Committee on Social Justice because we are trying to find a solution to this problem. We know that this problem exist; that the moment we allow anybody in the government to strike, then what will happen if the members of the Armed Forces will go on strike? What will happen to those people trying to protect us? So that is a matter of discussion in the Committee on Social Justice. But, I repeat, the right to form an organization does not carry with it the right to strike. [Record of the Constitutional Commission, vol. 1, p. 569].

It will be recalled that the Industrial Peace Act (R.A. No. 875), which was repealed by the Labor Code (P.D. 442) in 1974, expressly banned strikes by employees in the Government, including instrumentalities exercising governmental functions, but excluding entities entrusted with proprietary functions:

.Sec. 11. Prohibition Against Strikes in the Government. — The terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof, are governed by law and it

is declared to be the policy of this Act that employees therein shall not strike for the purpose of securing changes or modification in their terms and conditions of employment. Such employees may belong to any labor organization which does not impose the obligation to strike or to join in strike: Provided, however, That this section shall apply only to employees employed in governmental functions and not those employed in proprietary functions of the Government including but not limited to governmental corporations.

No similar provision is found in the Labor Code, although at one time it recognized the right of employees of government corporations established under the Corporation Code to organize and bargain collectively and those in the civil service to "form organizations for purposes not contrary to law" [Art. 244, before its amendment by B.P. Blg. 70 in 1980], in the same breath it provided that "[t]he terms and conditions of employment of all government employees, including employees of government owned and controlled corporations, shall be governed by the Civil Service Law, rules and regulations" [now Art. 276]. Understandably, the Labor Code is silent as to whether or not government employees may strike, for such are excluded from its coverage [Ibid]. But then the Civil Service Decree [P.D. No. 807], is equally silent on the matter.

On June 1, 1987, to implement the constitutional guarantee of the right of government employees to organize, the President issued E.O. No. 180 which provides guidelines for the exercise of the right to organize of government employees. In Section 14 thereof, it is provided that "[t]he Civil Service law and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress." The President was apparently referring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission under date April 21, 1987 which, "prior to the enactment by Congress of applicable laws concerning strike by government employees ... 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 service." The air was thus cleared of the confusion. At present, in the absence of any legislation allowing government employees to strike, recognizing their right to do so, or regulating the exercise of the right, they are prohibited from striking, by express provision of Memorandum Circular No. 6 and as implied in E.O. No. 180. [At this juncture, it must be stated that the validity of Memorandum Circular No. 6 is not at issue].

But are employees of the SSS covered by the prohibition against strikes?

The Court is of the considered view that they are. Considering that under the 1987 Constitution "[t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180 where the employees in the civil service are denominated as "government employees"] and that the SSS is one such government-controlled corporation with an original charter, having been created under R.A. No. 1161, its employees are part of the civil service [NASECO v. NLRC, G.R. Nos. 69870 & 70295, November 24,1988] and are covered by the Civil Service Commission's memorandum prohibiting strikes. This being the case, the strike staged by the employees of the SSS was illegal.

The statement of the Court in Alliance of Government Workers v. Minister of Labor and Employment [G.R. No. 60403, August 3, 1:983, 124 SCRA 11 is relevant as it furnishes the rationale for distinguishing between workers in the private sector and government employees with regard to the right to strike:

The general rule in the past and up to the present is that 'the terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof are governed by law" (Section 11, the Industrial Peace Act, R.A. No. 875, as amended and Article 277, the Labor Code, P.D. No. 442, as amended). Since the terms and conditions of government employment are fixed by law, government workers cannot use the same weapons employed by workers in the private sector to secure concessions from their employers. The principle behind labor unionism in private industry is that industrial peace cannot be secured through compulsion by law. Relations between private employers and their employees rest on an essentially voluntary basis. Subject to the minimum requirements of wage laws and other labor and welfare legislation, the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining. In government employment, however, it is the legislature and, where properly given delegated power, the administrative heads of government which fix the terms and conditions of employment. And this is effected through statutes or administrative circulars, rules, and regulations, not through collective bargaining agreements. [At p. 13; Emphasis supplied].

Apropos is the observation of the Acting Commissioner of Civil Service, in his position paper submitted to the 1971 Constitutional Convention, and quoted with approval by the Court in Alliance, to wit:

It is the stand, therefore, of this Commission that by reason of the nature of the public employer and the peculiar character of the public service, it must necessarily regard the right to strike given to unions in private industry as not applying to public employees and civil service employees. It has been stated that the Government, in contrast to the private employer, protects the interest of all people in the public service, and that accordingly, such conflicting interests as are present in private labor relations could not exist in the relations between government and those whom they employ. [At pp. 16-17; also quoted in National Housing Corporation v. Juco, G.R. No. 64313, January 17,1985,134 SCRA 172,178-179].

E.O. No. 180, which provides guidelines for the exercise of the right to organize of government employees, while clinging to the same philosophy, has, however, relaxed the rule to allow negotiation where the terms and conditions of employment involved are not among those fixed by law. Thus:

.SECTION 13. Terms and conditions of employment or improvements thereof, except those that are fixed by law, may be the subject of negotiations between duly recognized employees' organizations and appropriate government authorities.

The same executive order has also provided for the general mechanism for the settlement of labor disputes in the public sector to wit:

.SECTION 16. The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the resolution of complaints, grievances and cases involving government employees. In case any dispute remains unresolved after exhausting all the available remedies under existing laws and procedures, the parties may jointly refer the dispute to the [Public Sector Labor- Management] Council for appropriate action.

Government employees may, therefore, through their unions or associations, either petition the Congress for the betterment of the terms and conditions of employment which are within the ambit of legislation or negotiate with the appropriate government agencies for the improvement of those which are not fixed by law. If there be any unresolved grievances, the dispute may be referred to the Public Sector Labor - Management Council for appropriate action. But employees in the civil service may not resort to strikes, walk-outs and other temporary work stoppages, like workers in the private sector, to pressure the Govemment to accede to their demands. As now provided under Sec. 4, Rule III of the Rules and Regulations to Govern the Exercise of the Right of Government- Employees to Self- Organization, which took effect after the instant dispute arose, "[t]he 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 and employees therein shall not strike for the purpose of securing changes thereof."

II

The strike staged by the employees of the SSS belonging to petitioner union being prohibited by law, an injunction may be issued to restrain it.

It is futile for the petitioners to assert that the subject labor dispute falls within the exclusive jurisdiction of the NLRC and, hence, the Regional Trial Court had no jurisdiction to issue a writ of injunction enjoining the continuance of the strike. The Labor Code itself provides that terms and conditions of employment of government employees shall be governed by the Civil Service Law, rules and regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Sector Labor - Management Council with jurisdiction over unresolved labor disputes involving government employees [Sec. 16]. Clearly, the NLRC has no jurisdiction over the dispute.

This being the case, the Regional Trial Court was not precluded, in the exercise of its general jurisdiction under B.P. Blg. 129, as amended, from assuming jurisdiction over the SSS's complaint for damages and issuing the injunctive writ prayed for therein. Unlike the NLRC, the Public Sector Labor - Management Council has not been granted by law authority to issue writs of injunction in labor disputes within its jurisdiction. Thus, since it is the Council, and not the NLRC, that has jurisdiction over the instant labor dispute, resort to the general courts of law for the issuance of a writ of injunction to enjoin the strike is appropriate.

Neither could the court a quo be accused of imprudence or overzealousness, for in fact it had proceeded with caution. Thus, after issuing a writ of injunction enjoining the continuance of the strike to prevent any further disruption of public service, the respondent judge, in the same order, admonished the parties to refer the unresolved controversies emanating from their employer- employee relationship to the Public Sector Labor - Management Council for appropriate action [Rollo, p. 86].

III

In their "Petition/Application for Preliminary and Mandatory Injunction," and reiterated in their reply and supplemental reply, petitioners allege that the SSS unlawfully withheld bonuses and benefits due the individual petitioners and they pray that the Court issue a writ of preliminary prohibitive and mandatory injunction to restrain the SSS and its agents from withholding payment thereof and to compel the SSS to pay them. In their supplemental reply, petitioners annexed an order of the Civil Service Commission, dated May 5, 1989, which ruled that the officers of the SSSEA who are not preventively suspended and who are reporting for work pending the resolution of the administrative cases against them are entitled to their salaries, year-end bonuses and other fringe benefits and affirmed the previous order of the Merit Systems Promotion Board.

The matter being extraneous to the issues elevated to this Court, it is Our view that petitioners' remedy is not to petition this Court to issue an injunction, but to cause the execution of the aforesaid order, if it has already become final.

WHEREFORE, no reversible error having been committed by the Court of Appeals, the instant petition for review is hereby DENIED and the decision of the appellate court dated March 9, 1988 in CA-G.R. SP No. 13192 is AFFIRMED. Petitioners' "Petition/Application for Preliminary and Mandatory Injunction" dated December 13,1988 is DENIED.

BENJAMIN VICTORIANO, plaintiff-appellee, vs.

ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant.

G.R. No. L-25246 September 12, 1974 SECOND DIVISION

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 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

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; 12 and 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 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 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 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 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 "no-establishment" (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 well-being 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 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 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, 59 for 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 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 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.