SECOND DIVISION

[G.R. No. 97020. June 8, 1992.]

CALIFORNIA MANUFACTURING CORPORATION, Petitioner, v. THE HONORABLE
UNDERSECRETARY OF LABOR BIENVENIDO E. LAGUESMA ABD FEDERATION
OF FREE WORKERS (FFW), CALIFORNIA MFG. CORP. SUPERVISORS UNION
CHAPTER (CALMASUCO), Respondents.
V.E. del Rosario & Associates for Petitioner.
Ferdinand E. Laguna for Private Respondent.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; CERTIFICATION
ELECTION; NOT APPLICABLE TO ESTABLISHMENTS WHERE THERE EXISTS A
CERTIFIED BARGAINING AGENT. The Court has already categorically ruled that Article
257 of the Labor Code is applicable to unorganized labor organizations and not to establishments
where there exists a certified bargaining agent which had previously entered into a collective
bargaining agreement with the management (Associated Labor Unions [ALU] v. Calleja, G.R.
No. 85085, November 6, 1989, 179 SCRA 127). Otherwise stated, the establishment concerned
must have no certified bargaining agent (Associated Labor Unions [ALU] v. Calleja, G.R. No.
82260, July 19, 1989, 175 SCRA 490). In the instant case, it is beyond cavil that the supervisors
of CMC which constitute a bargaining unit separate and distinct from that of the rank-and-file,
have no such agent, thus they correctly filed a petition for certification election thru union FFWCALMASUCO, likewise indubitably a legitimate labor organization.
2. ID.; ID.; ID.; TWENTY-FIVE PERCENT (25%) SUBSCRIPTION REQUIREMENT;
IMMATERIAL THERETO; REASONS THEREFOR. CMCs insistence on the 25%
subscription requirement, is clearly immaterial. The same has been expressly deleted by Section
24 of Republic Act No. 6715 and is presently prescribed only in organized establishments, that
is, those with existing bargaining agents. Compliance with the said requirement need not need
even be established with absolute certainty. The Court has consistently ruled that "even
conceding that the statutory requirement of 30% (now 25%) of the labor force asking for a
certification election had not been strictly complied with, the Director (now the Med-Arbiter) is
still empowered to order that it be held precisely for the purpose of ascertaining which of the
contending labor organizations shall be the exclusive collective bargaining agent (Atlas Free
Workers Union (AFWU-PSSLU Local v. Noriel, G.R. No. L-51905, May 26, 1981, 104 SCRA
565). The requirement than is relevant only when it becomes mandatory to conduct a
certification election. In all other instances, the discretion, according to the rulings of this
Tribunal, ought to be ordinarily exercised in favor of a petition for certification (National Mines
and Allied Workers Union (NAMAWU-UIL) v. Luna, Et Al., G.R. No. L-46722, June 15, 1978,
83 SCRA 607).

3. ID.; ID.; ID.; AS A GENERAL RULE, AN EMPLOYER HAS NO STANDING TO

QUESTION THEREOF; EXCEPTION. CMC, as employer has no standing to question a
certification election (Asian Design and Manufacturing Corporation v. Calleja, Et Al., G.R. No.
77415, June 29, 1989, 174 SCRA 477). Such is the sole concern of the worker has to file the
petition for certification election pursuant to Article 259 (now 258) of the Labor Code because it
was requested to bargain collectively. Thereafter, the role of the employer in the certification
process ceases. The employer becomes merely a by-stander. Oft-quoted is the pronouncement of
the Court on management interference in certification elections, thus: "On matters that should be
the exclusive concern of labor, the choice of a collective bargaining representative, the employer
is definitely an intruder. His participation, to say the least, deserves no encouragement. This
Court should be the last agency to lend support to such an attempt at interference with purely
internal affair of labor." (Trade Unions of the Philippines and Allied Services (TUPAS) v.
Trajano, G.R. No. L-61153,, January 17, 1983, 120 SCRA 64 citing Consolidated Farms, Inc. v.
Noriel, G.R. No. L-47752, July 31, 1978, 84 SCRA 469, 473).
DECISION
PARAS, J.:
This is a petition for review on certiorari with prayer for preliminary injunction and/or
temporary restraining order seeking to annul and set aside the (a) resolution * of the Department
of Labor and Employment dated October 16, 1990 in OS-A-10-283-90 (NCR-OD-M-90-05-095)
entitled "In Re: Petition for Certification Election Among the Supervisors of California
Manufacturing Corporation, Federation of Free Workers (FFW) California Mfg. Corp.
Supervisors Union Chapter (CALMASUCO), petitioner-appellee, California Manufacturing
Corporation, employer-appellant" which denied herein petitioners appeal and affirmed the order
of Med-Arbiter Arsenia Q. Ocampo dated August 22, 1990 directing the conduct of a
certification election among the supervisory employees of California Manufacturing
Corporation, and (b) the Order ** of the same Department denying petitioners motion for
reconsideration.
As culled from the records, the following facts appear undisputed:chanrob1es virtual 1aw library
On May 24, 1990, a petition for certification election among the supervisors of California
Manufacturing Corporation (CMC for brevity) was filed by the Federation of Free Workers
(FFW) California Manufacturing Corporation Supervisors Union Chapter (CALMASUCO),
alleging inter alia, that it is a duly registered federation with registry certificate no. 1952-TTT-IP,
while FFW-CALMASUCO Chapter is a duly registered chapter with registry certificate no. 1AFBI-038 issued on May 21, 1990 (Annex "A", Rollo, p. 63); that the employer CMC employs
one hundred fifty (150) supervisors; that there is no recognized supervisors union existing in the
company; that the petition is filed in accordance with Article 257 of the Labor Code, as amended
by Republic Act No. 6715; and that the petition is nevertheless supported by a substantial
number of signatures of the employees concerned (Annexes "E" and "F", Ibid., pp. 2829).chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

In its answer, CMC, now petitioner herein, alleged among others, that the petition for the holding
of a certification election should be denied as it is not supported by the required twenty-five
percent (25%) of all its supervisors and that a big number of the supposed signatories to the
petition are not actually supervisors as they have no subordinates to supervise, nor do they have
the powers and functions which under the law would classify them as supervisors (Annex "D",
Ibid., p. 25).
On July 24, 1990, FFW-CALMASUCO filed its reply maintaining that under the law, when
there is no existing unit yet in a particular bargaining unit at the time a petition for certification
election is filed, the 25% rule on the signatories does not apply; that the "organized
establishment" contemplated by law does not refer to a "company" per se but rather refers to a
"bargaining unit" which may be of different classifications in a single company; that CMC has at
least two (2) different bargaining units, namely, the supervisory (unorganized) and the rank-andfile (organized); that the signatories to the petition have been performing supervisory functions;
that since it is CMC which promoted them to the positions of supervisors, it is already estopped
from claiming that they are not supervisors; that the said supervisors were excluded from the
coverage of the collective bargaining agreement of its rank-and-file employees; and that the
contested signatories are indeed supervisors as shown in the "CMC Master List of Employees" of
January 2, 1990 and the CMS Publication (Annex "G", Ibid., p. 30).
On August 22, 1990, the Med-Arbiter issued an order, the decretal portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, it is hereby ordered that a certification election be
conducted among the supervisory employees of California Manufacturing Corporation within
twenty (20) days from receipt hereof with the usual pre-election conference of the parties to
thresh out the mechanics of the election. The payroll of the company three (3) months prior to
the filing of the petition shall be used as the basis in determining the list of eligible voters.
The choices are:chanrob1es virtual 1aw library
1. Federation of Free Workers (FFW) California Manufacturing Corporation Supervisors
Union Chapter (CALMASUCO); and
2. No union.
"SO ORDERED." (Annex "H", Ibid., p. 33)
CMC thereafter appealed to the Department of Labor and Employment which, however, affirmed
the above order in its assailed resolution dated October 16, 1990 (Annex "B", Ibid., p. 18).
CMCs subsequent motion for reconsideration was also denied in its order dated November 17,
1990 (Annex "A", Ibid., p. 15), hence, his petition.chanrobles.com : virtual law library
The issues are presented by CMC in this wise:jgc:chanrobles.com.ph

"a) whether or not the term "unorganized establishment" in Article 257 of the Labor Code refers
to a bargaining unit or a business establishment;
"b) whether or not non-supervisors can participate in a supervisors certification election; and
"c) whether or not the two (2) different and separate plants of herein petitioner in Paraaque and
Las Pias can be treated as a single bargaining unit."cralaw virtua1aw library
The petition must be denied.
The Court has already categorically ruled that Article 257 of the Labor Code is applicable to
unorganized labor organizations and not to establishments where there exists a certified
bargaining agent which had previously entered into a collective bargaining agreement with the
management (Associated Labor Unions [ALU] v. Calleja, G.R. No. 85085, November 6, 1989,
179 SCRA 127) (Underscoring supplied). Otherwise stated, the establishment concerned must
have no certified bargaining agent (Associated Labor Unions [ALU] v. Calleja, G.R. No. 82260,
July 19, 1989, 175 SCRA 490). In the instant case, it is beyond cavil that the supervisors of CMC
which constitute a bargaining unit separate and distinct from that of the rank-and-file, have no
such agent, thus they correctly filed a petition for certification election thru union FFWCALMASUCO, likewise indubitably a legitimate labor organization. CMCs insistence on the
25% subscription requirement, is clearly immaterial. The same has been expressly deleted by
Section 24 of Republic Act No. 6715 and is presently prescribed only in organized
establishments, that is, those with existing bargaining agents. Compliance with the said
requirement need not even be established with absolute certainty. The Court has consistently
ruled that "even conceding that the statutory requirement of 30% (now 25%) of the labor force
asking for a certification election had not been strictly complied with, the Director (now the
Med-Arbiter) is still empowered to order that it be held precisely for the purpose of ascertaining
which of the contending labor organizations shall be the exclusive collective bargaining agent
(Atlas Free Workers Union (AFWU)-PSSLU Local v. Noriel, G.R. No. L-51905, May 26, 1981,
104 SCRA 565). The requirement then is relevant only when it becomes mandatory to conduct a
certification election. In all other instances, the discretion, according to the rulings of this
Tribunal, ought to be ordinarily exercised in favor of a petition for certification (National Mines
and Allied Workers Union (NAMAWU-UIF) v. Luna, Et Al., G.R. No. L-46722, June 15, 1978,
83 SCRA 607).
In any event, CMC as employer has no standing to question a certification election (Asian
Design and Manufacturing Corporation v. Calleja, Et Al., G.R. No. 77415, June 29, 1989, 174
SCRA 477). Such is the sole concern of the workers. The only exception is where the employer
has to file the petition for certification election pursuant to Article 259 (now 258) of the Labor
Code because it was requested to bargain collectively. Thereafter, the role of the employer in the
certification process ceases. The employer becomes merely a by-stander. Oft-quoted is the
pronouncement of the Court on management interference in certification elections,
thus:jgc:chanrobles.com.ph
"On matters that should be the exclusive concern of labor, the choice of a collective bargaining
representative, the employer is definitely an intruder. His participation, to say the least, deserves

no encouragement. This Court should be the last agency to lend support to such an attempt at
interference with purely internal affair of labor." (Trade Unions of the Philippines and Allied
Services (TUPAS) v. Trajano, G.R. No. L-61153, January 17, 1983, 120 SCRA 64 citing
Consolidated Farms, Inc. v. Noriel, G.R. No. L-47752. July 31, 1978, 84 SCRA 469, 473).
PREMISES CONSIDERED, the petition is DISMISSED for utter lack of merit.
SO ORDERED.
Narvasa, C.J., Padilla and Regalado, JJ., concur.
Nocon, J., is on leave.
++++++++++++++++++++++++++++++++
2.
G.R. No. 96490 February 3, 1992
INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner,
vs.
VOLUNTARY ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE
MILLS, INC., respondents.
Romeo C. Lagman for petitioner.
Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc.

MEDIALDEA, J.:
This is a petition for certiorari seeking the nullification of the award issued by the respondent
Voluntary Arbitrator Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c),
Article I of the Collective Bargaining Agreement between Indophil Textile Mills, Inc. and
Indophil Textile Mill Workers Union-PTGWO does not extend to the employees of Indophil
Acrylic Manufacturing Corporation as an extension or expansion of Indophil Textile Mills,
Incorporated.
The antecedent facts are as follows:
Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly
registered with the Department of Labor and Employment and the exclusive bargaining agent of
all the rank-and-file employees of Indophil Textile Mills, Incorporated. Respondent Teodorico P.
Calica is impleaded in his official capacity as the Voluntary Arbitrator of the National

Conciliation and Mediation Board of the Department of Labor and Employment, while private
respondent Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and
export of yarns of various counts and kinds and of materials of kindred character and has its
plants at Barrio Lambakin. Marilao, Bulacan.
In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent
Indophil Textile Mills, Inc. executed a collective bargaining agreement effective from April 1,
1987 to March 31, 1990.
On November 3, 1967 Indophil Acrylic Manufacturing Corporation was formed and registered
with the Securities and Exchange Commission. Subsequently, Acrylic applied for registration
with the Board of Investments for incentives under the 1987 Omnibus Investments Code. The
application was approved on a preferred non-pioneer status.
In 1988, Acrylic became operational and hired workers according to its own criteria and
standards. Sometime in July, 1989, the workers of Acrylic unionized and a duly certified
collective bargaining agreement was executed.
In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the
petitioner union claimed that the plant facilities built and set up by Acrylic should be considered
as an extension or expansion of the facilities of private respondent Company pursuant to Section
1(c), Article I of the CBA, to wit,.
c) This Agreement shall apply to the Company's plant facilities and
installations and to any extension and expansion thereat. (Rollo,
p.4)
In other words, it is the petitioner's contention that Acrylic is part of the Indophil
bargaining unit.
The petitioner's contention was opposed by private respondent which submits that it is a juridical
entity separate and distinct from Acrylic.
The existing impasse led the petitioner and private respondent to enter into a submission
agreement on September 6, 1990. The parties jointly requested the public respondent to act as
voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper
interpretation of the CBA provision.
After the parties submitted their respective position papers and replies, the public respondent
Voluntary Arbitrator rendered its award on December 8, 1990, the dispositive portion of which
provides as follows:
PREMISES CONSIDERED, it would be a strained interpretation and application
of the questioned CBA provision if we would extend to the employees of Acrylic
the coverage clause of Indophil Textile Mills CBA. Wherefore, an award is made
to the effect that the proper interpretation and application of Sec. l, (c), Art. I, of

the 1987 CBA do (sic) not extend to the employees of Acrylic as an extension or
expansion of Indophil Textile Mills, Inc. (Rollo, p.21)
Hence, this petition raising four (4) issues, to wit:
1. WHETHER OR NOT THE RESPONDENT ARBITRATOR
ERRED IN INTERPRETING SECTION 1(c), ART I OF THE
CBA BETWEEN PETITIONER UNION AND RESPONDENT
COMPANY.
2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE
AND DISTINCT ENTITY FROM RESPONDENT COMPANY
FOR PURPOSES OF UNION REPRESENTATION.
3. WHETHER OR NOT THE RESPONDENT ARBITRATOR
GRAVELY ABUSED HIS DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF HIS JURISDICTION.
4. WHETHER OR NOT THE RESPONDENT ARBITRATOR
VIOLATED PETITIONER UNION'S CARDINAL PRIMARY
RIGHT TO DUE PROCESS. (Rollo, pp. 6-7)
The central issue submitted for arbitration is whether or not the operations in Indophil Acrylic
Corporation are an extension or expansion of private respondent Company. Corollary to the
aforementioned issue is the question of whether or not the rank-and-file employees working at
Indophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit.
Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section l(c),
Article I of the CBA in its literal meaning without taking cognizance of the facts adduced that
the creation of the aforesaid Indophil Acrylic is but a devise of respondent Company to evade the
application of the CBA between petitioner Union and respondent Company.
Petitioner stresses that the articles of incorporation of the two corporations establish that the two
entities are engaged in the same kind of business, which is the manufacture and sale of yarns of
various counts and kinds and of other materials of kindred character or nature.
Contrary to petitioner's assertion, the public respondent through the Solicitor General argues that
the Indophil Acrylic Manufacturing Corporation is not an alter ego or an adjunct or business
conduit of private respondent because it has a separate legitimate business purpose. In addition,
the Solicitor General alleges that the primary purpose of private respondent is to engage in the
business of manufacturing yarns of various counts and kinds and textiles. On the other hand, the
primary purpose of Indophil Acrylic is to manufacture, buy, sell at wholesale basis, barter,
import, export and otherwise deal in yarns of various counts and kinds. Hence, unlike private
respondent, Indophil Acrylic cannot manufacture textiles while private respondent cannot buy or
import yarns.

Furthermore, petitioner emphasizes that the two corporations have practically the same
incorporators, directors and officers. In fact, of the total stock subscription of Indophil Acrylic,
P1,749,970.00 which represents seventy percent (70%) of the total subscription of P2,500,000.00
was subscribed to by respondent Company.
On this point, private respondent cited the case of Diatagon Labor Federation v. Ople, G.R. No.
L-44493-94, December 3, 1980, 10l SCRA 534, which ruled that two corporations cannot be
treated as a single bargaining unit even if their businesses are related. It submits that the fact that
there are as many bargaining units as there are companies in a conglomeration of companies is a
positive proof that a corporation is endowed with a legal personality distinctly its own,
independent and separate from other corporations (see Rollo, pp. 160-161).
Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension
or expansion of private respondent, to wit:
(a) the two corporations have their physical plants, offices and
facilities situated in the same compound, at Barrio Lambakin,
Marilao, Bulacan;
(b) many of private respondent's own machineries, such as dyeing
machines, reeling, boiler, Kamitsus among others, were transferred
to and are now installed and being used in the Acrylic plant;
(c) the services of a number of units, departments or sections of
private respondent are provided to Acrylic; and
(d) the employees of private respondent are the same persons
manning and servicing the units of Acrylic. (see Rollo, pp. 12-13)
Private respondent insists that the existence of a bonafide business relationship between Acrylic
and private respondent is not a proof of being a single corporate entity because the services
which are supposedly provided by it to Acrylic are auxiliary services or activities which are not
really essential in the actual production of Acrylic. It also pointed out that the essential services
are discharged exclusively by Acrylic personnel under the control and supervision of Acrylic
managers and supervisors.
In sum, petitioner insists that the public respondent committed grave abuse of discretion
amounting to lack or in excess of jurisdiction in erroneously interpreting the CBA provision and
in failing to disregard the corporate entity of Acrylic.
We find the petition devoid of merit.
Time and again, We stress that the decisions of voluntary arbitrators are to be given the highest
respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude
judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous interpretation of the law were brought to our

attention. (see Ocampo, et al. v. National Labor Relations Commission, G.R. No. 81677, 25 July
1990, First Division Minute Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R. No.
L-43890, July 16, 1984, 130 SCRA 392)
It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator
Teodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute for
Industrial Relations, found that the existing law and jurisprudence on the matter, supported the
private respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts
and the law upon which he based the award. Hence, public respondent did not abuse his
discretion.
Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist,
the legal fiction that a corporation is an entity with a juridical personality separate and distinct
from its members or stockholders may be disregarded. In such cases, the corporation will be
considered as a mere association of persons. The members or stockholders of the corporation
will be considered as the corporation, that is liability will attach directly to the officers and
stockholders. The doctrine applies when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of
a person, or where the corporation is so organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.
(Umali et al. v. Court of Appeals, G.R. No. 89561, September 13, 1990, 189 SCRA 529, 542)
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that
the creation of the corporation is a devise to evade the application of the CBA between petitioner
Union and private respondent Company. While we do not discount the possibility of the
similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply
the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of
private respondent and Acrylic are related, that some of the employees of the private respondent
are the same persons manning and providing for auxilliary services to the units of Acrylic, and
that the physical plants, offices and facilities are situated in the same compound, it is our
considered opinion that these facts are not sufficient to justify the piercing of the corporate veil
of Acrylic.
In the same case of Umali, et al. v. Court of Appeals (supra), We already emphasized that "the
legal corporate entity is disregarded only if it is sought to hold the officers and stockholders
directly liable for a corporate debt or obligation." In the instant case, petitioner does not seek to
impose a claim against the members of the Acrylic.
Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the
ULGWP v. Ople (supra) that it is grave abuse of discretion to treat two companies as a single
bargaining unit when these companies are indubitably distinct entities with separate juridical
personalities.

Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file
employees working at Acrylic should not be recognized as part of, and/or within the scope of the
petitioner, as the bargaining representative of private respondent.
All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator
did not commit grave abuse of discretion in its interpretation of Section l(c), Article I of the CBA
that the Acrylic is not an extension or expansion of private respondent.
ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator
are hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Cruz and Grino-Aquino, JJ., concur.
+++++++++++++++++++++++++
3.
SECOND DIVISION
[G.R. No. 114974. June 16, 2004]
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner, vs. The
Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND
EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard
Chartered Bank Employees Union, seeking the nullification of the October 29, 1993 Order1[1]
of then Secretary of Labor and Employment Nieves R. Confesor and her resolutions dated
December 16, 1993 and February 10, 1994.
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business
in the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is
the Standard Chartered Bank Employees Union (the Union, for brevity).

In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement
(CBA) with a provision to renegotiate the terms thereof on the third year. Prior to the expiration
of the three-year period2[2] but within the sixty-day freedom period, the Union initiated the
negotiations. On February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent
a letter3[3] containing its proposals4[4] covering political provisions5[5] and thirty-four (34)
economic provisions.6[6] Included therein was a list of the names of the members of the Unions
negotiating panel.7[7]
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took
note of the Unions proposals. The Bank attached its counter-proposal to the non-economic
provisions proposed by the Union.8[8] The Bank posited that it would be in a better position to
present its counter-proposals on the economic items after the Union had presented its
justifications for the economic proposals.9[9] The Bank, likewise, listed the members of its
negotiating panel.10[10] The parties agreed to set meetings to settle their differences on the
proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the
Banks Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the
bank lawyers should be excluded from the negotiating team. The Bank acceded.11[11]
Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the
National Union of Bank Employees (NUBE), the federation to which the Union was affiliated,
be excluded from the Unions negotiating panel.12[12] However, Umali was retained as a
member thereof.

On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno
suggested that the negotiation be kept a family affair. The proposed non-economic provisions
of the CBA were discussed first.13[13] Even during the final reading of the non-economic
provisions on May 4, 1993, there were still provisions on which the Union and the Bank could
not agree. Temporarily, the notation DEFERRED was placed therein. Towards the end of the
meeting, the Union manifested that the same should be changed to DEADLOCKED to indicate
that such items remained unresolved. Both parties agreed to place the notation
DEFERRED/DEADLOCKED.14[14]
On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the
basis of the Unions economic proposals was made. The next meeting, the Bank made a similar
presentation. Towards the end of the Banks presentation, Umali requested the Bank to validate
the Unions guestimates, especially the figures for the rank and file staff.15[15] In the
succeeding meetings, Umali chided the Bank for the insufficiency of its counter-proposal on the
provisions on salary increase, group hospitalization, death assistance and dental benefits. He
reminded the Bank, how the Union got what it wanted in 1987, and stated that if need be, the
Union would go through the same route to get what it wanted.16[16]
Upon the Banks insistence, the parties agreed to tackle the economic package item by item.
Upon the Unions suggestion, the Bank indicated which provisions it would accept, reject, retain
and agree to discuss.17[17] The Bank suggested that the Union prioritize its economic proposals,
considering that many of such economic provisions remained unresolved. The Union, however,
demanded that the Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following proposals:
Wage Increase:
1st Year Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually
Death Assistance:
For the employee -- Reduced from P50,000.00 to P45,000.00

For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00

Dental and all others -- No change from the original demand.18[18]
In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not
make the necessary revisions on its counter-proposal, it would be best to seek a third party
assistance.19[19] After the break, the Bank presented its revised counter-proposal20[20] as
follows:
Wage Increase : 1st Year from P1,000 to P1,050.00
2nd Year P800.00 no change
Group Hospitalization Insurance
From: P35,000.00 per illness
To : P35,000.00 per illness per year
Death Assistance For employee
From: P20,000.00
To : P25,000.00
Dental Retainer Original offer remains the same21[21]
The Union, for its part, made the following counter-proposal:
Wage Increase: 1st Year - 40%
2nd Year - 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year
Dental:
Temporary Filling/ P150.00
Tooth Extraction
Permanent Filling 200.00
Prophylaxis 250.00
Root Canal From P2,000 per tooth
To: 1,800.00 per tooth

Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00.22[22]
The Unions original proposals, aside from the above-quoted, remained the same.
Another set of counter-offer followed:
Management
Wage Increase
1st Year P1,050.00
2nd Year 850.00

Union
40%
19.0%23[23]

Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify
what it wanted to be included in the total economic package. Umali replied that it was
impossible to do so because the Banks counter-proposal was unacceptable. He furthered
asserted that it would have been easier to bargain if the atmosphere was the same as before,
where both panels trusted each other. Diokno requested the Union panel to refrain from
involving personalities and to instead focus on the negotiations.24[24] He suggested that in order
to break the impasse, the Union should prioritize the items it wanted to iron out. Divinagracia
stated that the Bank should make the first move and make a list of items it wanted to be included
in the economic package. Except for the provisions on signing bonus and uniforms, the Union
and the Bank failed to agree on the remaining economic provisions of the CBA. The Union
declared a deadlock25[25] and filed a Notice of Strike before the National Conciliation and
Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-NS-06-380-93.26[26]
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages
before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila,
docketed as NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank
alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded sky high economic demands, indicative of blue-sky
bargaining.27[27] Further, the Union violated its no strike- no lockout clause by filing a notice
of strike before the NCMB. Considering that the filing of notice of strike was an illegal act, the
Union officers should be dismissed. Finally, the Bank alleged that as a consequence of the

illegal act, the Bank suffered nominal and actual damages and was forced to litigate and hire the
services of the lawyer.28[28]
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor,
pursuant to Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the
labor dispute at the Bank. The complaint for ULP filed by the Bank before the NLRC was
consolidated with the complaint over which the SOLE assumed jurisdiction. After the parties
submitted their respective position papers, the SOLE issued an Order on October 29, 1993, the
dispositive portion of which is herein quoted:
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees
Union NUBE are hereby ordered to execute a collective bargaining agreement incorporating
the dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall
remain effective for two years thereafter, or until such time as a new CBA has superseded it. All
provisions in the expired CBA not expressly modified or not passed upon herein are deemed
retained while all new provisions which are being demanded by either party are deemed denied,
but without prejudice to such agreements as the parties may have arrived at in the meantime.
The Banks charge for unfair labor practice which it originally filed with the NLRC as NLRCNCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack
of merit. On the other hand, the Unions charge for unfair labor practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No. 0006-04191-93 is pending for his guidance and appropriate action.29[29]
The SOLE gave the following economic awards:
1.

b)

2.

c)
3.

Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year adjusted salary
Additional fixed amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month
Group Insurance
a) Hospitalization : P45,000.00
b) Life
: P130,000.00
Accident
: P130,000.00
Medicine Allowance

Fourth year : P5,500.00

Fifth year : P6,000.00
4.

Dental Benefits
Provision of dental retainer as proposed by the Bank, but without diminishing
existing benefits

5.

Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00

6.

Death Assistance
a) Employee : P30,000.00
b)
Immediate Family Member : P5,000.00
7.
8.

Emergency Leave Five (5) days for each contingency

Loans
a) Car Loan : P200,000.00
b)
Housing Loan : It cannot be denied that the costs attendant to having ones
own home have tremendously gone up. The need, therefore, to improve on
this benefit cannot be overemphasized. Thus, the management is urged to
increase the existing and allowable housing loan that the Bank extends to its
employees to an amount that will give meaning and substance to this CBA
benefit.30[30]

The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both
parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana
Tobacco Corporation,31[31] the SOLE stated that ULP charges would prosper only if shown to
have directly prejudiced the public interest.
Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed
a motion for reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration, which was, likewise, denied on
February 10, 1994.
On March 22, 1994, the Bank and the Union signed the CBA.32[32] Immediately thereafter, the
wage increase was effected and the signing bonuses based on the increased wage were
distributed to the employees covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of
Procedure alleging as follows:
A.
RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE
UNIONS CHARGE OF UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR
EVIDENCE OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR
PRACTICES CHARGED.33[33]
B.
RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON
OTHER UNFAIR LABOR PRACTICES CHARGED.34[34]
C.
RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE
CHARGES OF UNFAIR LABOR PRACTICES ON THE GROUND THAT NO PROOF OF
INJURY TO THE PUBLIC INTEREST WAS PRESENTED.35[35]
The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when it found that the Bank did not commit unfair labor practice when it
interfered with the Unions choice of negotiator. It argued that, Dioknos suggestion that the
negotiation be limited as a family affair was tantamount to suggesting that Federation
President Jose Umali, Jr. be excluded from the Unions negotiating panel. It further argued that
contrary to the ruling of the public respondent, damage or injury to the public interest need not
be present in order for unfair labor practice to prosper.
The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges
arising from the Banks surface bargaining. The Union contended that the Bank merely went
through the motions of collective bargaining without the intent to reach an agreement, and made
bad faith proposals when it announced that the parties should begin from a clean slate. It argued
that the Bank opened the political provisions up for grabs, which had the effect of diminishing
or obliterating the gains that the Union had made.
The Union also accused the Bank of refusing to disclose material and necessary data, even after a
request was made by the Union to validate its guestimates.
In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It

asserted that contrary to the Unions allegations, it was the Union that committed ULP when
negotiator Jose Umali, Jr. hurled invectives at the Banks head negotiator, Cielito Diokno, and
demanded that she be excluded from the Banks negotiating team. Moreover, the Union engaged
in blue-sky bargaining and isolated the no strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public respondent, prayed that the
petition be dismissed. It asserted that the Union failed to prove its ULP charges and that the
public respondent did not commit any grave abuse of discretion in issuing the assailed order and
resolutions.
The Issues
The issues presented for resolution are the following: (a) whether or not the Union was able to
substantiate its claim of unfair labor practice against the Bank arising from the latters alleged
interference with its choice of negotiator; surface bargaining; making bad faith non-economic
proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not
the public respondent acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when she issued the assailed order and resolutions; and, (c) whether or not the
petitioner is estopped from filing the instant action.
The Courts Ruling
The petition is bereft of merit.
Interference under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e., interference in the
selection of the Unions negotiating panel, when Cielito Diokno, the Banks Human Resource
Manager, suggested to the Unions President Eddie L. Divinagracia that Jose P. Umali, Jr.,
President of the NUBE, be excluded from the Unions negotiating panel. In support of its claim,
Divinagracia executed an affidavit, stating that prior to the commencement of the negotiation,
Diokno approached him and suggested the exclusion of Umali from the Unions negotiating
panel, and that during the first meeting, Diokno stated that the negotiation be kept a family
affair.
Citing the cases of U.S. Postal Service36[36] and Harley Davidson Motor Co., Inc., AMF,37[37]
the Union claims that interference in the choice of the Unions bargaining panel is tantamount to
ULP.
In the aforecited cases, the alleged ULP was based on the employers violation of Section 8(a)(1)
and (5) of the National Labor Relations Act (NLRA),38[38] which pertain to the interference,

restraint or coercion of the employer in the employees exercise of their rights to selforganization and to bargain collectively through representatives of their own choosing; and the
refusal of the employer to bargain collectively with the employees representatives. In both
cases, the National Labor Relations Board held that upon the employers refusal to engage in
negotiations with the Union for collective-bargaining contract when the Union includes a person
who is not an employee, or one who is a member or an official of other labor organizations, such
employer is engaged in unfair labor practice under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association
NATU vs. Insular Life Assurance Co., Ltd.,39[39] wherein this Court said that the test of whether
an employer has interfered with and coerced employees in the exercise of their right to selforganization within the meaning of subsection (a)(1) is whether the employer has engaged in
conduct which it may reasonably be said, tends to interfere with the free exercise of employees
rights under Section 3 of the Act.40[40] Further, it is not necessary that there be direct evidence
that any employee was in fact intimidated or coerced by statements of threats of the employer if
there is a reasonable inference that anti-union conduct of the employer does have an adverse
effect on self-organization and collective bargaining.41[41]
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF
ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to which the
Philippines is a signatory, workers and employers, without distinction whatsoever, shall have
the right to establish and, subject only to the rules of the organization concerned, to job
organizations of their own choosing without previous authorization.42[42] Workers and
employers organizations shall have the right to draw up their constitutions and rules, to elect
their representatives in full freedom to organize their administration and activities and to
formulate their programs.43[43] Article 2 of ILO Convention No. 98 pertaining to the Right to
Organize and Collective Bargaining, provides:
Article 2
1.
Workers and employers organizations shall enjoy adequate protection against any acts
or interference by each other or each others agents or members in their establishment,
functioning or administration.

2.
In particular, acts which are designed to promote the establishment of workers
organizations under the domination of employers or employers organizations or to support
workers organizations by financial or other means, with the object of placing such organizations
under the control of employers or employers organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243
thereof, which provides:
ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELF-ORGANIZATION. All persons
employed in commercial, industrial and agricultural enterprises and in religious, charitable,
medical or educational institutions whether operating for profit or not, shall have the right to selforganization and to form, join, or assist labor organizations of their own choosing for purposes of
collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor organizations for their mutual
aid and protection.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as early as the
1935 Constitution,44[44] the State had already expressly bestowed protection to labor as part of
the general provisions. The 1973 Constitution,45[45] on the other hand, declared it as a policy of
the state to afford protection to labor, specifying that the workers rights to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work would be
assured. For its part, the 1987 Constitution, aside from making it a policy to protect the rights of
workers and promote their welfare,46[46] devotes an entire section, emphasizing its mandate to
afford protection to labor, and highlights the principle of shared responsibility between
workers and employers to promote industrial peace.47[47]
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer
interferes, restrains or coerces employees in the exercise of their right to self-organization or the
right to form association. The right to self-organization necessarily includes the right to
collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union
to exclude from its panel of negotiators a representative of the Union, and if it can be inferred
that the employer adopted the said act to yield adverse effects on the free exercise to right to selforganization or on the right to collective bargaining of the employees, ULP under Article 248(a)
in connection with Article 243 of the Labor Code is committed.

In order to show that the employer committed ULP under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.48[48] In the case at bar,
the Union bases its claim of interference on the alleged suggestions of Diokno to exclude Umali
from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank
consciously adopted such act to yield adverse effects on the free exercise of the right to selforganization and collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneously with
Divinagracias suggestion that the bank lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with the inclusion
of Umali in the Unions negotiating panel, the negotiations pushed through. The complaint was
made only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation occurred after the
arguments and differences over the economic provisions became heated and the parties had
become frustrated. It happened after the parties started to involve personalities. As the public
respondent noted, passions may rise, and as a result, suggestions given under less adversarial
situations may be colored with unintended meanings.49[49] Such is what appears to have
happened in this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the
normal relations and innocent communications, which are all part of the friendly relations
between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under
Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just went through
the motions of bargaining without any intent of reaching an agreement, as evident in the Banks
counter-proposals. It explained that of the 34 economic provisions it made, the Bank only made
6 economic counterproposals. Further, as borne by the minutes of the meetings, the Bank, after
indicating the economic provisions it had rejected, accepted, retained or were open for
discussion, refused to make a list of items it agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating without any legal
intent to reach an agreement.50[50] The resolution of surface bargaining allegations never

presents an easy issue. The determination of whether a party has engaged in unlawful surface
bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the
party in question, and usually such intent can only be inferred from the totality of the challenged
partys conduct both at and away from the bargaining table.51[51] It involves the question of
whether an employers conduct demonstrates an unwillingness to bargain in good faith or is
merely hard bargaining.52[52]
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had
any intention of violating its duty to bargain with the Union. Records show that after the Union
sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counterproposals on February 24, 1993. Thereafter, meetings were set for the settlement of their
differences. The minutes of the meetings show that both the Bank and the Union exchanged
economic and non-economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from the
bargaining table, which tend to show that it did not want to reach an agreement with the Union or
to settle the differences between it and the Union. Admittedly, the parties were not able to agree
and reached a deadlock. However, it is herein emphasized that the duty to bargain does not
compel either party to agree to a proposal or require the making of a concession.53[53] Hence,
the parties failure to agree did not amount to ULP under Article 248(g) for violation of the duty
to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they
accepted some of the demands while they refused the others even leaving open other demands
for future discussion is correct, especially so when those demands were discussed at a meeting
called by respondents themselves precisely in view of the letter sent by the union on April 29,
196054[54]
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made
bad faith provisions has no leg to stand on. The records show that the Banks counter-proposals
on the non-economic provisions or political provisions did not put up for grabs the entire work
of the Union and its predecessors. As can be gleaned from the Banks counter-proposal, there
were many provisions which it proposed to be retained. The revisions on the other provisions
were made after the parties had come to an agreement. Far from buttressing the Unions claim
that the Bank made bad-faith proposals on the non-economic provisions, all these, on the
contrary, disprove such allegations.

We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish
the information it needed.
While the refusal to furnish requested information is in itself an unfair labor practice, and also
supports the inference of surface bargaining,55[55] in the case at bar, Umali, in a meeting dated
May 18, 1993, requested the Bank to validate its guestimates on the data of the rank and file.
However, Umali failed to put his request in writing as provided for in Article 242(c) of the Labor
Code:
Article 242. Rights of Legitimate Labor Organization
(c) To be furnished by the employer, upon written request, with the annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the request, after the union has been duly recognized by
the employer or certified as the sole and exclusive bargaining representatives of the employees in
the bargaining unit, or within sixty (60) calendar days before the expiration of the existing
collective bargaining agreement, or during the collective negotiation;
The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy
of the data about the Banks rank and file employees. Moreover, as alleged by the Union, the
fact that the Bank made use of the aforesaid guestimates, amounts to a validation of the data it
had used in its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal, board, or officer
exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction and
there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law for the
purpose of annulling the proceeding.56[56] Grave abuse of discretion implies such capricious
and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility which
must be so patent and gross as to amount to an invasion of positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law. Mere abuse of discretion is
not enough.57[57]
While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to
prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise
of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the

public respondent exercised its power in an arbitrary and despotic manner by reason of passion
or personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it
signed the new CBA.
Article 1431 of the Civil Code provides:
Through estoppel an admission or representation is rendered conclusive upon the person making
it, and cannot be denied or disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another.58[58]
In the case, however, the approval of the CBA and the release of signing bonus do not
necessarily mean that the Union waived its ULP claim against the Bank during the past
negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while
the signing bonus was included in the CBA itself. Moreover, the Union twice filed a motion for
reconsideration respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining
or making exaggerated or unreasonable proposals.59[59] The Bank failed to show that the
economic demands made by the Union were exaggerated or unreasonable. The minutes of the
meeting show that the Union based its economic proposals on data of rank and file employees
and the prevailing economic benefits received by bank employees from other foreign banks
doing business in the Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion amounting
to lack or excess of jurisdiction when it issued the questioned order and resolutions. While the
approval of the CBA and the release of the signing bonus did not estop the Union from pursuing
its claims of ULP against the Bank, we find that the latter did not engage in ULP. We, likewise,
hold that the Union is not guilty of ULP.

IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and
February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor are AFFIRMED.
The Petition is hereby DISMISSED.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

+++++++++++++++++++
4. G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT,
petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG
KILUSAN NG PAGGAWA (KILUSAN), respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.

CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor Relations Commission
(NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor
practice for unjustified refusal to bargain, in violation of par. (g) of Article 249 2 of the New
Labor Code, 3 and declared the draft proposal of the Union for a collective bargaining agreement
as the governing collective bargaining agreement between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union
for short), a legitimate late labor federation, won and was subsequently certified in a resolution
dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining
agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The
Company's motion for reconsideration of the said resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with
two copies of its proposed collective bargaining agreement. At the same time, it requested the
Company for its counter proposals. Eliciting no response to the aforesaid request, the Union

again wrote the Company reiterating its request for collective bargaining negotiations and for the
Company to furnish them with its counter proposals. Both requests were ignored and remained
unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to the bargaining table, the
Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations
(BLR) on ground of unresolved economic issues in collective bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all
attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to
certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration
pursuant to Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to
whom the case was assigned, set the initial hearing for April 29, 1979. For failure however, of
the parties to submit their respective position papers as required, the said hearing was cancelled
and reset to another date. Meanwhile, the Union submitted its position paper. The Company did
not, and instead requested for a resetting which was granted. The Company was directed anew to
submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of
record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered
his appearance as counsel for the Company only to request for another postponement allegedly
for the purpose of acquainting himself with the case. Meanwhile, the Company submitted its
position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as scheduled, the Company's
representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban
then requested for another postponement which the labor arbiter denied. He also ruled that the
Company has waived its right to present further evidence and, therefore, considered the case
submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor
Relations Commission. On July 20, 1979, the National Labor Relations Commission rendered its
decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of
unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article
249), of P.D. 442, as amended. Further, the draft proposal for a collective
bargaining agreement (Exh. "E ") hereto attached and made an integral part of this
decision, sent by the Union (Private respondent) to the respondent (petitioner
herein) and which is hereby found to be reasonable under the premises, is hereby
declared to be the collective agreement which should govern the relationship
between the parties herein.
SO ORDERED. (Emphasis supplied)

Petitioner now comes before Us assailing the aforesaid decision contending that the National
Labor Relations Commission acted without or in excess of its jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction in rendering the challenged decision. On August 4,
1980, this Court dismissed the petition for lack of merit. Upon motion of the petitioner, however,
the Resolution of dismissal was reconsidered and the petition was given due course in a
Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due process has been violated
when it was precluded from presenting further evidence in support of its stand and when its
request for further postponement was denied. Petitioner further contends that the National Labor
Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by
law and the evidence considering that it was only on May 24, 1979 when the Union furnished
them with a copy of the proposed Collective Bargaining Agreement and it was only then that
they came to know of the Union's demands; and finally, that the Collective Bargaining
Agreement approved and adopted by the National Labor Relations Commission is unreasonable
and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of
the democratic frameworks under the New Labor Code, designed to stabilize the relation
between labor and management and to create a climate of sound and stable industrial peace. It is
a mutual responsibility of the employer and the Union and is characterized as a legal obligation.
So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an
employer to refuse "to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours of work, and all other terms
and conditions of employment including proposals for adjusting any grievance or question
arising under such an agreement and executing a contract incorporating such agreement, if
requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any
legal duty to initiate contract negotiation. 7 The mechanics of collective bargaining is set in
motion only when the following jurisdictional preconditions are present, namely, (1) possession
of the status of majority representation of the employees' representative in accordance with any
of the means of selection or designation provided for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code .
... all of which preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation, there can
be no doubt that the Union has a valid cause to complain against its (Company's) attitude, the
totality of which is indicative of the latter's disregard of, and failure to live up to, what is
enjoined by the Labor Code to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner Company is
GUILTY of unfair labor practice. It has been indubitably established that (1) respondent Union
was a duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with

a copy of the proposed Collective Bargaining Agreement, to the Company not only once but
twice which were left unanswered and unacted upon; and (3) the Company made no counter
proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A
Company's refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true where the Union's request for a counter
proposal is left unanswered. 9 Even during the period of compulsory arbitration before the
NLRC, petitioner Company's approach and attitude-stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach
an agreement with the Union. Petitioner has not at any instance, evinced good faith or
willingness to discuss freely and fully the claims and demands set forth by the Union much less
justify its opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union
(PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair labor practice is
committed when it is shown that the respondent employer, after having been served with a
written bargaining proposal by the petitioning Union, did not even bother to submit an answer or
reply to the said proposal This doctrine was reiterated anew in Bradman vs. Court of Industrial
Relations 12 wherein it was further ruled that "while the law does not compel the parties to reach
an agreement, it does contemplate that both parties will approach the negotiation with an open
mind and make a reasonable effort to reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner
capitalizes on the issue of due process claiming, that it was denied the right to be heard and
present its side when the Labor Arbiter denied the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements
granted in its behalf, the claimed denial of due process appeared totally bereft of any legal and
factual support. As herein earlier stated, petitioner had not even honored respondent Union with
any reply to the latter's successive letters, all geared towards bringing the Company to the
bargaining table. It did not even bother to furnish or serve the Union with its counter proposal
despite persistent requests made therefor. Certainly, the moves and overall behavior of
petitioner-company were in total derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of economic disputes. Hence, this Court is not
prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining
Agreement which was approved and adopted by the NLRC is a total nullity for it lacks the
company's consent, much less its argument that once the Collective Bargaining Agreement is
implemented, the Company will face the prospect of closing down because it has to pay a
staggering amount of economic benefits to the Union that will equal if not exceed its capital.
Such a stand and the evidence in support thereof should have been presented before the Labor
Arbiter which is the proper forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy
to precipitately accept or agree to the proposals of the other. But an erring party should not be

tolerated and allowed with impunity to resort to schemes feigning negotiations by going through
empty gestures. 13 More so, as in the instant case, where the intervention of the National Labor
Relations Commission was properly sought for after conciliation efforts undertaken by the BLR
failed. The instant case being a certified one, it must be resolved by the NLRC pursuant to the
mandate of P.D. 873, as amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment embodied in any Collective
Bargaining Agreement. To that extent, utmost deference to its findings of reasonableness of any
Collective Bargaining Agreement as the governing agreement by the employees and
management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on
August 27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Concepcion, Jr., (Chairman), Abad Santos, Escolin and Alampay, JJ., concur.

++++++++++++++++++++++++++
FIRST DIVISION
[G.R. No. 111262. September 19, 1996]
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President
RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary
of Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA
CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, BMeg Plant), respondents.
DECISION
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on
February 15, 1993 involving a labor dispute at San Miguel Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union - PTGWO entered
into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation
(SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989.

This CBA provided, among others, that:

ARTICLE XIV
DURATION OF AGREEMENT
SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this
Agreement insofar as the representation aspect is concerned, shall be for five (5) years from July
1, 1989 to June 30, 1994. Hence, the freedom period for purposes of such representation shall be
sixty (60) days prior to June 30, 1994.
SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all
provisions of this Agreement, except insofar as the representation aspect is concerned. If no
agreement is reached in such negotiations, this Agreement shall nevertheless remain in force up
to the time a subsequent agreement is reached by the parties.i[1]
In keeping with their vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated August 13, 1991ii[2]that the company which was
composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks,
(4) Magnolia and Agri-business would undergo a restructuring.iii[3]
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and
became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and
effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and
Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two
parties submitting their respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations: Magnolia and SMFI; and that the
renegotiated terms of the CBA shall be effective only for the remaining period of two years or
until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia
and SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the
CBA should be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990.

On October 2, 1992, a Notice of Strike was filed against SMC.

In order to avert a strike, SMC requested the National Conciliation and Mediation Board
(NCMB) to conduct preventive mediation. No settlement was arrived at despite several meetings
held between the parties.
On November 3, 1992, a strike vote was conducted which resulted in a yes vote in favor of a
strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital
industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November
10, 1992.iv[4] Several conciliation meetings were held but still no agreement/settlement was
arrived at by both parties.
After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA
shall cover only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of
Labor.
Subsequently, on March 30, 1995,v[5] petitioner-union filed a Motion for Issuance of a
Temporary Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the
certification elections in the different companies, maintaining that the employees of Magnolia
and SMFI fall within the bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary restraining order
prayed for.vi[6]
Meanwhile, an urgent motion for leave to intervenevii[7]in the case was filed by the Samahan ng
Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMCFFW) through its authorized representiative, Elmer S. Armando, alleging that it is one of the
contending parties adversely effected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma,viii[8] G.R.
No. 101766, March 5, 1993, where the Court recognized the separation of the employees of
Magnolia from the SMC bargaining unit. It then prayed for the lifting of the temporary
restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized
the employees right to conclude a new CBA. At the same time, he challenged the legal

personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter
was already officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of Magnolia and
SMFI.
Petitioner-union contends that the duration for the non-representation provisions of the CBA
should be coterminous with the term of the bargaining agency which in effect shall be for the
remaining two years of the current CBA, citing a previous decision of the Secretary of Labor on
December 14, 1992 in the matter of the labor dispute at Philippine Refining Company.ix[9]
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is concerned,
be for a term of five (5) years. No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day period immediately before the
date of expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3)
years after its execution. 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 such 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. (underlining supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No.
6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states
that the CBA has a term of five (5) years instead of three years, before the amendment of the law
as far as the representation aspect is concerned. All other provisions of the CBA shall be
negotiated not later than three (3) years after its execution. The representation aspect refers to
the identity and majority status of the union that negotiated the CBA as the exclusive bargaining
representative of the appropriate bargaining unit concerned. All other provisions simply refers

to the rest of the CBA, economic as well as non-economic provisions, except

representation.x[10]
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous
with the terms of the other provisions of the CBA. It is a cardinal principle of statutory
construction that the Court must ascertain the legislative intent for the purpose of giving effect to
any statute. The history of the times and state of the things existing when the act was framed or
adopted must be followed and the conditions of the things at the time of the enactment of the law
should be considered to determine the legislative intent.xi[11] We look into the discussions
leading to the passage of the law:
THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic provisions are
concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede nang
magnegotiate in that CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years
but assuming three years which, I think, thats the likelihood. . . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a
change of agent, at least he has one year to administer and to adjust, to develop rapport with the
management. Yan ang importante.
You know, for us na nagne-negotiate, and hazard talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng
Labor; ang mga employer, ito bayaran ko lang ito okay na.
Yan ang nangyayari, but let us give that allowance for one year to let them know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you
encourage union to fight each other. Yan ang problema.xii[12]
xxx

xxx

xxx

HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to
provide some doubts later on in the implementation. Sabi kasi rito, insofar as representation
issue is concerned, seven years ang lifetime . . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later
than three years.
HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan
then, seven years . . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period three years nang three years,
but under this law with respect to representation five years, ano? Now, after three years,
nagkaroon ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon
sa representation issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus
three.
HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So,
another CBA was formed and this CBA mayroon na naman siyang bagong five years with
respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for
three years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: On the third year you can start negotiating to change the terms
and conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
HON. ISIDRO: Oo.

HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be
questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union
loses, then the new union administers the contract for one year to give him time to know his
counterpart the employer, before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and
conditions and then, so you have to renew that in three years you renew for another three
years, mayroon na naman another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year. . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then,
voluntary arbitration na kayo and then mayroon ka nang probisyon retroact on the date of the
expiry date. Pagnatalo and incumbent unyon, mag-aassume and new union, administer the
contract. As far as the term ang condition, for one year, and that will give him time and the
employer to know each other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it
would not want to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening
now in the country is that the term ng contract natin, duon din mage-expire ang representation.
Iyon and nangyari. That is where you have the gulo. Ganoon and nangyari. So, ang nangyari
diyan, pag-mayroon certification election, expire ang contract, ano ang usual issue - company
union. I can you (sic) give you more what the incumbent union is giving. So ang mangyayari
diyan, pag-negotiate mo hardline na agad.
HON. CHAIRMAN VELOSO: Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the
representation aspect why do we have to distinguish between three and five? Whats wrong
with having a uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan,
Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, thats the average, aabot
pa minsan ng one year. Pagkatapos ng negotiation mo, signing kayo. There will be an allowed
period of one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang
unyon because the reality in Trade Union committee, they organize, we organize. So, actually,

you have only industrial peace for one year, effective industrial peace. That is what we are
trying to change. Otherwise, we will continue to discourage the investors and the union will
never grow because every other year it has to use its money for the certification election. Ang
grabe pang practice diyan, mag-a-advance ang federation for three years union dues para
panggastos lang sa certification election. That is what we are trying to avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari.
And I think our responsibility here is to create a legal framework to promote industrial peace and
to develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .
xxx
HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the period of
effectivity of the CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
HON. CHAIRMAN VELOSO: Only on
HON. CHAIRMAN HERRERA: the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga, mag-negotiate
when the company is (interrupted)xiii[13]
xxx
From the aforesaid discussions, the legislators were more inclined to have the period of
effectivity for three (3) years insofar as the economic as well as non-economic provisions are
concerned, except representation.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having
both management and labor work harmoniously together without any disturbance. Thus, no
outside union can enter the establishment within five (5) years and challenge the status of the
incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of
employment (economic and non-economic) can not be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract between the

parties and the parties must respect the terms and conditions of the agreement.xiv[14] Notably,
the framers of the law did not give a fixed term as to the effectivity of the terms and conditions
of employment. It can be gleaned from their discussions that it was left to the parties to fix the
period.
In the instant case, it is not difficult to determine the period of effectivity for the nonrepresentation provisions of the CBA. Taking it from the history of their CBAs, SMC intended
to have the terms of the CBA effective for three (3) years reckoned from the expiration of the old
or previous CBA which was on June 30, 1989, as it provides:
SECTION 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
The argument that the PRC case is applicable is indeed misplaced. We quote with favor the
Order of the Secretary of Labor in the light of SMCs peculiar situation as compared with PRCs
company situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic), Labor Dispute at
Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing so, we placed premium on the
fact that PRC has only two (2) unions and no other union had yet executed a renewed term of 3
years. Nonetheless, in ruling for a shortened term, we were guided by our considered perception
that the said term would improve, rather than ruin, the general welfare of both the workers and
the company. It is equally true that once the economic provisions of the CBA expire, the
residual representative status of the union is effective for only 2 more years. However, if
circumstances warrant that the contract duration which it is soliciting from the company for the
benefit of the workers, shall be a little bit longer than its lifespan, then this Office cannot stand in
the way of a more ideal situation. We must not lose sight of the fact that the primordial purpose
of a collective contract is to promote industrial harmony and stability in the terms and conditions
of employment. To our mind, this objective cannot be achieved without giving due
consideration to the peculiarities and unique characteristics of the employer. In the case at bar,
there is no dispute that the mother corporation (SMC) spun-off two of its divisions and thereby
gave birth to two (2) other entities now known as Magnolia Corporation and San Miguel Foods,
Inc. In order to effect a smooth transition, the companies concerned continued to recognize the
existing unions as the bargaining agents of their respective bargaining units. In the meantime,
the other unions in these companies eventually concluded their CBA negotiations on the
remaining term and all of them agreed on a 3-year cycle. Notably, the following CBAs were
forged incorporating a term of 3-years on the renegotiated provisions, to wit:
1. SMC

daily-paid employees union (IBM)

2. SMF

monthly-paid employees and daily-paid employees at the Cabuyao Plant.

There is a direct link between the voluntary recognition by the company of the continuing
representative status of the unions after the aforementioned spin-offs and the stand of the

company for a 3-year renegotiated cycle when the economic provisions of the existing CBAs
expired, i.e., to maintain stability and avoid confusion when the umbilical cord of the two
divisions were severed from their parent. These two cannot be considered independently of each
other for they were intended to reinforce one another. Precisely, the company conceded to face
the same union notwithstanding the spin-offs in order to preserve industrial peace during the
infancy of the two corporations. If the union would insist on a shorter renegotiated term, then all
the advantages gained by both parties in this regard, would have gone to naught. With this in
mind, this office feels that it will betray its mandate should we order the parties to execute a 2year renegotiated term for then chaos and confusion, rather than tranquility, would be the order
of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and
possible mass actions against the company coming from the other unions who had already agreed
to a 3-year renegotiated terms. If this happens, the purpose of this Offices intervention into the
parties controversy would have been defeated.xv[15]
The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24,
1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on
January 16, 1995 in the certification election case involving the SMC employees.xvi[16] In said
memorandum, the Secretary of Labor had occasion to clarify the term of the renegotiated terms
of the CBA vis-a-vis the term of the bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a
term which would coincidde (sic) with the aforesaid five (5) year term of the bargaining
representative.
In the event however, that the parties, by mutual agreement, enter into a renegotiated contract
with a term of three (3) years or one which does not coincide with the said 5-year term, and said
agreement is ratified by majority of the members in the bargaining unit, the subject contract is
valid and legal and therefore, binds the contracting parties. The same will however not adversely
affect the right of another union to challenge the majority status of the incumbent bargaining
agent within sixty (60) days before the lapse of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling
that the effectivity of the renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-unions assertion that
the employees of Magnolia and SMFI should still be considered part of the bargaining unit of
SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with its vision and long term
strategy as it explained in its letter addressed to the employees dated August 13, 1991:
x x x As early as 1986, we announced the decentralization program and spoke of the need for
structures that can react fast to competition, a changing environment, shorter product life cycles
and shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders

that San Miguels businesses will be more autonomous and self sufficient so as to better acquire
and master new technologies, cope with a labor force with different expertises and expectations,
and master and satisfy the changing needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility, greater awareness of operating
results, and speedier, more responsive decision making.
xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this
company was organized about ten years ago, to see the benefits that arise from restructuring a
division of San Miguel into a more competitive organization. As a stand-alone enterprise,
CCBPI engineered a dramatic turnaround and has sustained its sales and market share leadership
ever since.
We are confident that history will repeat itself, and the transformation of Magnolia and FLD will
be successful as that of CCBPI.xvii[17]
Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals.
Neither can we impute any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil.xviii[18] Ever mindful of the employees interests,
management has assured the concerned employees that they will be absorbed by the new
corporations without loss of tenure and retaining their present pay and benefits according to the
existing CBAs.xix[19] They were advised that upon the expiration of the CBAs, new agreements
will be negotiated between the management of the new corporations and the bargaining
representatives of the employees concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management teams
including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and policies and are not
dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited separately from each
other.xx[20]
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case of
Diatagon Labor Federation Local 110 of the ULGWP v. Ople.xxi[21] We elucidate:
The fact that their businesses are related and that the 236 employees of Georgia Pacific
International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a
justification for disregarding their separate personalities. Hence, the 236 employees, who are
now attached to Georgia Pacific International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate

certification election to determine the collective bargaining representative of the employees of

Georgia Pacific International Corporation.
Petitioner-unions attempt to include the employees of Magnolia and SMFI in the SMC
bargaining unit so as to have a bigger mass base of employees has, therefore, no more valid
ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of employment and working conditions as
evinced by the type of work they performed.xxii[22] Considering the spin-offs, the companies
would consequently have their respective and distinctive concerns in terms of the nature of work,
wages, hours of work and other conditions of employment. Interests of employees in the
different companies perforce differ. SMC is engaged in the business of beer manufacturing.
Magnolia is involved in the manufacturing and processing of dairy productsxxiii[23] while SMFI
is involved in the production of feeds and the processing of chicken.xxiv[24] The nature of their
products and scales of business may require different skills which must necessarily be
commensurated by different compensation packages. The different companies may have
different volumes of work and different working conditions. For such reason, the employees of
the different companies see the need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have separate bargaining units for the
different companies where the employees can bargain separately according to their needs and
according to their own working conditions.
We reiterate what we have explained in the case of University of the Philippines v. FerrerCallejaxxv[25] that:
[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the determination.
The weight accorded to any particular factor varies in accordance with the particular question or
questions that may arise in a given case. What are these factors? Rothenberg mentions a good
number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2)
affinity and unit of employees interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior collective bargaining history; and
(4) employment status, such as temporary, seasonal and probationary employees x x.
xxx
An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in
the 10th Annual Report of the National Labor Relations Board wherein it is emphasized that the
factors which said board may consider and weigh in fixing appropriate units are: the history,
extent and type of organization of employees; the history of their collective bargaining; the
history, extent and type of organization of employees in other plants of the same employer, or
other employers in the same industry; the skill wages, work, and working conditions of the
employees; the desires of the employees; the eligibility of the employees for membership in the

union or unions involved; and the relationship between the unit or units proposed and the
employers organization, management, and operation x x.
x x In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of collective
bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162) x x.
Finally, we take note of the fact that the separate interests of the employees of Magnolia and
SMFI from those of SMC has been recognized in the case of Daniel Borbon v.
Laguesma.xxvi[26] We quote:
Even assuming in gratia argumenti that at the time of the election they were regular employees
of San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation
in any manner because Magnolia has ceased to be a division of San Miguel Corporation and has
been formed into a separate corporation with a personality of its own (p. 305, Rollo). This
development, which was brought to our attention by private respondents, necessarily renders
moot and academic any further discourse on the propriety of the elections which petitioners
impugn via the present recourse (p. 319, Rollo).
In view of all the foregoing, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on March 29, 1995 is lifted.
SO ORDERED.
Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.
Padilla, J. (Chairman), took no part, in view of stock investments in SMC.
++++++++++++++++++++++

6. THIRD DIVISION
[G.R. No. 81883. September 23, 1992.]
KNITJOY MANUFACTURING, INC., Petitioner, v. PURA FERRER-CALLEJA, Director
of Bureau of Labor Relations, and KNITJOY MONTHLY EMPLOYEES UNION,
Respondents.
[G.R. No. 82111. September 23, 1992.]

CONFEDERATION OF FILIPINO WORKERS (CFW), Petitioner, v. DIRECTOR PURA

FERRER-CALLEJA and KNITJOY MONTHLY EMPLOYEES UNION (KMEU),
Respondents.
V.E. Del Rosario & Associates for petitioner in G.R. No. 81883.
Rogelio R. Udarbe for petitioner in G.R. No. 82111.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates for Private Respondent.

SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE
COMPANY-ONE UNION POLICY; EXCEPTION. The suggested bias of the Labor Code in
favor of the one company-one union policy, anchored on the greater mutual benefits which the
parties could derive, especially in the case of employees whose bargaining strength could
undeniably be enhanced by their unity and solidarity but diminished by their disunity, division
and dissension, is not without exceptions. The present Article 245 of the Labor Code expressly
allows supervisory employees who are not performing managerial functions to join, assist or
form their separate union but bars them from membership in a labor organization of the rankand-file employees. Even Section 2(c), Rule V, Book V of the Implementing Rules and
Regulations of the Labor Code, which seeks to implement the policy, also recognizes exceptions.
The usual exception, of course, is where the employer unit has to give way to the other units like
the craft unit, plant unit, or a subdivision thereof, the recognition of these exceptions takes into
account the policy to assure employees of the fullest freedom in exercising their rights.
Otherwise stated, the one company-one union policy must yield to the right of the employees to
form unions or associations for purposes not contrary to law, to self-organization and to enter
into collective bargaining negotiations, among others, which the Constitution guarantees.
2. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO FROM UNION OR
ASSOCIATIONS; SCOPE. The right to form a union or association or to self-organization
comprehends two (2) broad notions, to wit: (a) the liberty or freedom, i.e., the absence of
restraint which guarantees that the employee may act for himself without being prevented by
law, and (b) the power, by virtue of which an employee may, as he pleases, join or refrain from
joining an association. (Victoriano v. Elizalde Rope Workers Union, 59 SCRA 54).
3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; ONE
COMPANY-ONE UNION POLICY; NOT APPLICABLE WHERE EXISTING UNION
COVERED ONLY ONE CLASS OF EMPLOYEES; CASE AT BAR. in the bargaining
history of KNITJOY, the CBA has been consistently limited to the regular rank-and-file
employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees

paid on a monthly basis were never included within its scope. Respondent KMEUs membership
is limited to the latter class of employees, KMEU does not seek to dislodge CFW as the
exclusive bargaining representative for the former. The records further disclose that in the
certification solicited by TUPAS and during the elections which followed thereafter, resulting in
the certification of CFW as the exclusive bargaining representative, the monthly-paid employees
were expressly excluded. Thus, the negotiations between CFW and KNITJOY following such a
certification could only logically refer to the rank-and-file employees paid on a daily or piecerate basis. Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid
employees are concerned, the latters constituting a separate bargaining unit with the appropriate
union as sole bargaining representative, can neither be prevented nor avoided without infringing
on these employees rights to form a union and to enter into collective bargaining negotiations.
Stated differently, KNITJOY and CFW recognize the fact that the existing bargaining unit in the
former is not and has never been the employer unit. Given this historical and factual
setting, KMEU had the unquestioned and undisputed right to seek certification as the exclusive
bargaining representative for the monthly-paid rank-and-file employees; both KNITJOY and
CFW cannot block the same on the basis of this Courts declaration in Bulletin Publishing Corp.
v. Hon. Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor Relations (155
SCRA 283 [1987]) regarding the one-company-one union concept.
4. ID.; ID.; ID.; CERTIFICATION ELECTION; RESULTS THEREOF CONFINED ONLY TO
THE GROUP IT REPRESENTS; CBA ENTERED DOES NOT BAR HOLDING OF
ANOTHER CERTIFICATION ELECTION FOR THE OTHER GROUP; CASE AT BAR.
Considering that (a) the TUPAS solicited certification election was strictly confined to the rankand-file employees who are paid on a daily or piece-rate basis, (b) the results of the election must
also necessarily confine the certified unions representation to the group it represents and (c) the
issue of the plight of the monthly-paid employees was still pending, KNITJOY and CFW clearly
acted with palpable bad faith and malice in including within the scope of the new CBA these
monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the right of the
KMEU and its members to bargain collectively and negotiate for themselves, to impose upon the
latter a contract the negotiation for which they were not even given notice of, consulted or
allowed to participate in, and to oust from the BLR the pending appeal on the certification issue.
In the latter case, KNITJOY and CFW are guilty of contumacious conduct. It goes without
saying then that the new CBA cannot validly include in its scope or coverage the monthly-paid
rank-and-file employees of KNITJOY. It does not bar the holding of a certification election to
determine their sole bargaining agent, and the negotiation for and the execution of a subsequent
CBA between KNITJOY and the eventual winner in said election (Section 4, Rule V, Book V of
the Rules Implementing the Labor Code).
DECISION
DAVIDE, JR., J.:
These petitions have a common origin and raise identical issues. They were ordered consolidated
on 23 November 1988.

In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of the Bureau of
Labor Relations in BLR Case No. A-10-315-87, which reversed the Order of Med-ArbiterDesignate Rolando S. dela Cruz dated 4 September 1987 and ordered the holding of a
certification election among the regular rank-and-file monthly-paid employees of Knitjoy
Manufacturing, Inc. (KNITJOY), is assailed by the latter.
The Med-Arbiters order dismissed the petition of private respondent Knitjoy Monthly
Employees Union (KMEU) for such certification election and directed the parties "to work out
(sic) towards the formation of a single union in the company."cralaw virtua1aw library
The antecedent material operative facts in these petitions are as follows:chanrob1es virtual 1aw
library
Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation of
Filipino Workers (FFW). The bargaining unit covered only the regular rank-and-file employees
of KNITJOY paid on a daily or piece-rate basis. It did not include regular rank-and-file office
and production employees paid on a monthly basis. The CBA expired on 15 June 1987. Prior to
its expiration, the FFW was split into two (2) factions the Johnny Tan and the Aranzamendez
factions. The latter eventually became the Confederation of Filipino Workers (CFW), herein
petitioner in G.R. No. 82111.
Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied Services
(TUPAS) filed a petition for the holding of a certification election among KNITJOYs regular
rank-and-file employees paid on a daily and piece-rate basis. Excluded were the regular rankand-file employees paid on a monthly basis. In the certification election conducted on 10 June
1987, CFW emerged as the winner; thereafter, negotiations for a new CBA between CFW and
KNITJOY commenced.chanroblesvirtualawlibrary
On 24 June 1987, during the pendency of the said negotiations, private respondent KMEU filed a
petition for certification election among KNITJOYs regular rank-and-file monthly-paid
employees with Regional Office No. IV of the Department of Labor and Employment (DOLE)
which docketed the same as R-04-OD-M-6-75-87. The Knitjoy Monthly Employees Association
and Confederation of Citizens Labor Union (KMEA-CCLU), another union existing in the said
company, and petitioner CFW intervened therein.
The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter Rolando S. de la
Cruz, the dispositive portion of which reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the petition is hereby Dismissed, but the parties are
instructed to work out (sic) towards the formation of a single union in the company." 1
KMEU filed a motion to reconsider this order, which was treated as an appeal by the Bureau of
Labor Relations (BLR).
On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the BLR, handed down

a Decision 2 reversing the order of Med-Arbiter de la Cruz. The dispositive portion of the
Decision reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly Employees is hereby
granted subject to the exclusion of the monthly paid employees who are deemed managerial.
Let, therefore, the certification election proceed without delay, with the following as
choices:chanrob1es virtual 1aw library
1. Knitjoy Monthly Employees Union (KMEU); and
2. No Union.
The companys latest payroll shall be the basis in determining the list of eligible voters.
SO ORDERED."cralaw virtua1aw library
Respondent Director brushed aside KNITJOYs arguments that the monthly-paid employees
have the same working incentives as their counterparts, the daily-paid workers; that the existing
collective bargaining agent (CFW) is willing to include the monthly-paid employees, and that out
of the 212 monthly-paid employees, 116 qualify as managerial employees while the rest who are
holding confidential or technical positions should likewise be excluded. In finding for KMEU,
said Director declared that:jgc:chanrobles.com.ph
"As pointed out by the Supreme Court in the similar case of General Rubber and Footwear
Corporation v. Bureau of Labor Relations, Et Al., G.R. No. 74262, it is perhaps unusual for
management to have to deal with two (2) collective bargaining unions but there is no one to
blame except management for creating the situation it is in. From the beginning of the existence
of the CBA, management had sought to indiscriminately suppress the members of the
petitioners right (sic) to self-organization. Respondents argument that the incumbent collective
bargaining agent is willing to accommodate herein petitioner is of no moment since the option
now rests upon the petitioner as to whether or not they desire to join the existing collective
bargaining agent or remain as separate (sic) union." 3
KNITJOY and CFW separately moved to reconsider the said decision alleging, as principal
underpinning therefor, the conclusion and signing between them, allegedly on 27 November
1987 before the rendition of the challenged decision of a CBA which includes in its
coverage the monthly-paid rank-and-file employees. It is averred that said CBA has rendered the
case moot and academic; moreover, to remove the monthly-paid employees from their present
bargaining unit would lead to the fragmentation thereof, contrary to existing labor policies
favoring larger units.chanrobles virtual lawlibrary
In her Decision of 8 February 1988, respondent Director denied for lack of merit the motion for
reconsideration on the principal ground that although the monthly-paid rank-and-file employees
were allegedly included within the scope of the new CBA, they are not barred from forming a
separate bargaining unit considering that: (a) since the petition for certification election was filed

as early as 24 June 1987, there already existed a pending. representation issue when KNITJOY
and CFW commenced negotiations for a new CBA; nevertheless, KMEU was not brought into
the said negotiations and was therefore not a privy to the CBA; (b) members of KMEU did not
participate in the ratification of the CBA; contrary to KNITJOY s claim that the same was
unanimously ratified by the members of the bargaining unit, the CBA failed to mention even one
monthly-paid employee who participated in the ratification process, and (c) while it is true that
the policy of the DOLE is to favor a one company-one union scenario which finds basis in
Section 2, Rule V, Book V of the Rules Implementing the Labor Code, there are, nonetheless,
some exceptions thereto, as where the bargaining history requires the formation of another
bargaining unit. Besides, such a policy must yield to an employees Constitutional right to form
unions which includes the freedom to join a union of ones choice. 4
The new CBA, which KMEU claims to have been signed on 12 December 1987, and not on 27
November 1987 as both KNITJOY and CFW boldly assert, defines the bargaining unit covered
as follows:jgc:chanrobles.com.ph
"SECTION 2. The bargaining unit covered by this Agreement consists of all regular and
permanent rank-and-file employees of the COMPANY employed in its production plants and
paid on a daily or piece-rate basis and regular, rank-and-file monthly paid office employees,
excluding managerial, supervisory, casual, temporary and probationary employees, and security
guards." 5
Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the instant
petitions. The former imputes upon respondent Director grave abuse of discretion in holding that
(a) the scope of the bargaining unit agreed upon in the new CBA does not bind KMEU because it
is not a party thereto, (b) the acceptance by all the members of KMEU of all benefits of the CBA
did not constitute an overt act of ratification and (c) the CBA was concluded on 12 December
1987 and not on 27 November 1987. It further contends that respondent Director contumaciously
violated the one company-one union policy of the Labor Code and disregarded the ruling of this
Court in Bulletin Publishing Corp. v. Hon. Sanchez, 6 reiterated in part in General Rubber and
Footwear Corp. v. Bureau of Labor Relations. 7 Upon the other hand, CFW contends that
respondent Director committed grave abuse of discretion in (a) allowing the creation of a unit
separate from the existing bargaining unit defined in the new CBA thus abetting the proliferation
of unions, (b) disregarding the CBA provisions which consider the CFW as the sole and
exclusive bargaining agent of all rank-and-file employees and (c) excluding CFW from the
choices of unions to be voted upon. 8
On 24 August 1988, 9 this Court gave due course to the petition in G.R. No. 81883 after both the
public and private respondents filed their separate comments and the petitioner filed its
consolidated reply thereto. 10
On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883 and the
petitioner in the former was ordered to file a consolidated reply to the separate comments of both
respondents. 11
The principal issues raised in these petitions are:chanrob1es virtual 1aw library

1. Whether or not petitioner KNITJOYs monthly-paid regular rank-and-file employees can

constitute an appropriate bargaining unit separate and distinct from the existing unit composed of
daily or piece-rate paid regular rank-and-file employees, and
2. Whether or not the inclusion in the coverage of the new CBA between KNITJOY and CFW of
the monthly-paid rank-and-file employees bars the holding of a certification election among the
said monthly paid employees.
We decide for the respondents.
1. The suggested bias of the Labor Code in favor of the one company-one union policy, anchored
on the greater mutual benefits which the parties could derive, especially in the case of employees
whose bargaining strength could undeniably be enhanced by their unity and solidarity but
diminished by their disunity, division and dissension, is not without exceptions.
The present Article 245 of the Labor Code expressly allows supervisory employees who are not
performing managerial functions to join, assist or form their separate union but bars them from
membership in a labor organization of the rank-and-file employees. It
reads:jgc:chanrobles.com.ph
"ARTICLE 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."cralaw virtua1aw library
This provision obviously allows more than one union in a company.
Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the Labor
Code, which seeks to implement the policy, also recognizes exceptions. It reads:chanrobles
virtual lawlibrary
"SECTION 2. Who may file. Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization shall contain, among
others:chanrob1es virtual 1aw library
x

(c) description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require; . . . ." (Emphasis supplied)
The usual exception, of course, is where the employer unit has to give way to the other units like
the craft unit, plant unit, or a subdivision thereof, the recognition of these exceptions takes into

account the policy to assure employees of the fullest freedom in exercising their rights. 12
Otherwise stated, the one company-one union policy must yield to the right of the employees to
form unions or associations for purposes not contrary to law, to self-organization and to enter
into collective bargaining negotiations, among others, which the Constitution guarantees. 13
The right to form a union or association or to self-organization comprehends two (2) broad
notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which guarantees that the
employee may act for himself without being prevented by law, and (b) the power, by virtue of
which an employee may, as he pleases, join or refrain from joining an association. In Victoriano
v. Elizalde Rope Workers Union, 14 this Court stated:jgc:chanrobles.com.ph
". . . 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 [Pagkakaisa
Samahang Manggagawa ng San Miguel Brewery v. Enriquez, Et Al., 108 Phil., 1010, 1019]. It is
clear, therefore, that the right to join a union includes the right to abstain from joining any union
[Abo, Et. Al. v. PHILAME (KG) Employees Union, Et Al., L-19912, January 30, 1965, 13
SCRA 120, 123, quoting Rothenberg, Labor Relations]. 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."cralaw virtua1aw library
Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has been
consistently limited to the regular rank-and-file employees paid on a daily or piece-rate basis. On
the other hand, the rank-and-file employees paid on a monthly basis were never included within
its scope. Respondent KMEUs membership is limited to the latter class of employees, KMEU
does not seek to dislodge CFW as the exclusive bargaining representative for the former. The
records further disclose that in the certification solicited by TUPAS and during the elections
which followed thereafter, resulting in the certification of CFW as the exclusive bargaining
representative, the monthly-paid employees were expressly excluded. Thus, the negotiations
between CFW and KNITJOY following such a certification could only logically refer to the
rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore, KNITJOY and
CFW recognize that insofar as the monthly-paid employees are concerned, the latters
constituting a separate bargaining unit with the appropriate union as sole bargaining
representative, can neither be prevented nor avoided without infringing on these employees
rights to form a union and to enter into collective bargaining negotiations. Stated differently,
KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is not
and has never been the employer unit. Given this historical and factual setting, KMEU had the
unquestioned and undisputed right to seek certification as the exclusive bargaining representative

for the monthly-paid rank-and-file employees; both KNITJOY and CFW cannot block the same
on the basis of this Courts declaration in Bulletin Publishing Corp. v. Hon. Sanchez 15 and
General Rubber and Footwear Corp. v. Bureau of Labor Relations 16 regarding the one
company-one union concept. Petitioners have obviously misread these cases. In the first, We
stated that" [t]he crux of the dispute . . . is whether or not supervisors in petitioner company
therein may, for purposes of collective bargaining, form a union separate and distinct from the
existing union organized by the rank-and-file employees of the same company," 17 and ruled
that the members of the Bulletin Supervisory Union, wholly composed of supervisors, are not
qualified to form a union of their own under the law and rules then existing, considering that" [a]
perusal of the job descriptions corresponding to the private respondents as outlined in the
petition, clearly reveals the private respondents to be managers, purchasing officers, personnel
officers, property officers, supervisors, cashiers, heads of various sections and the like. The
nature of their duties gives rise to the irresistible conclusion that most of the herein private
respondents are performing managerial functions;" 18 hence, under Article 246 19 of the Labor
Code, they cannot form, join and assist labor organizations. It should be stressed that the
statement therein that supervisors "who do not assume any managerial function may join or
assist an existing rank-and-file union or if none exists, to join or assist in the formation of such
rank-and-file organization" 20 is no longer legally feasible under existing laws. As earlier noted,
the present Article 245 of the Labor Code allows supervisory employees who are not exercising
managerial functions to join, assist or form separate labor organizations of their own but
prohibits them from joining a labor organization composed of the rank-and-file
employees.chanrobles lawlibrary : rednad
The second case on the other hand, demolishes the stand of KNITJOY and CFW for, as correctly
contended by the respondents, it in fact recognizes an exception to the one company-one union
concept. Thus:jgc:chanrobles.com.ph
"Perhaps it is unusual for the petitioner to have to deal with two (2) collective bargaining unions
but there is no one to blame except petitioner itself for creating the situation it is in. From the
beginning of the existence in 1963 of a bargaining unit for the employees up to the present,
petitioner had sought to indiscriminately suppress the members of the private respondents right
(sic) to self-organization provided for by law. Petitioner, in justification of its action, maintained
that the exclusion of the members of the private respondent from the bargaining union of the
rank-and-file or from forming their own union was agreed upon by petitioner corporation with
the previous bargaining representatives . . . Such posture has no leg to stand on. It has not been
shown that private respondent was privy to this agreement. And even if it were so, it can never
bind subsequent federations and unions particularly private respondent-union because it is a
curtailment of the right to self-organization guaranteed by the labor laws. However, to prevent
any difficulty and to avoid confusion to all concerned and, more importantly, to fulfill the policy
of the New Labor Code as well as to be consistent with Our ruling in the Bulletin case, supra, the
monthly-paid rank-and-file employees should be allowed to join the union of the daily-paidrank-and-file employees of petitioner so that they can also avail of the CBA benefits or to form
their own rank-and-file union, without prejudice to the certification election that has been
ordered." 21 (Emphasis supplied)
2. Regardless of the date when the new CBA was executed - whether on 27 November 1987 as

contended by KNITJOY and CFW or 12 December 1967 as claimed by the respondents the
fact remains that it was executed before the resolution of KMEUs petition for certification
election among the monthly paid employees became final. This Court, however, sustains the
respondents claim for indeed if it was executed by the parties on 27 November 1987, both
KNITJOY and CFW would have immediately filed the appropriate pleading with the BLR
informing it of such execution and moving for the dismissal of the appeal on the ground that it
has been rendered moot and academic. Moreover, public respondents finding on this point is
supported by substantial evidence, thus:jgc:chanrobles.com.ph
"The parties could not have signed the said CBA on 27 November 1987, contrary to their
allegation, because from 4:00 - 10:00 p.m. on the same day, 27 November 1987, the parties still
attended a conciliation conference before Assistant Director Maximo L. Lim of the NCR (see
Annex "F" of respondents Supplemental Motion for Reconsideration) and agreed in principle on
nine (9) items or provisions to be included in said CBA. Said minutes do not state that these nine
items are the remaining unresolved issues in the negotiation of the CBA." 22 It was only in their
motion for the reconsideration of public respondents decision of 1 December 1987 that the
existence of the new CBA was made known.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
Considering that (a) the TUPAS solicited certification election was strictly confined to the rankand-file employees who are paid on a daily or piece-rate basis, (b) the results of the election must
also necessarily confine the certified unions representation to the group it represents and (c) the
issue of the plight of the monthly-paid employees was still pending, KNITJOY and CFW clearly
acted with palpable bad faith and malice in including within the scope of the new CBA these
monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the right of the
KMEU and its members to bargain collectively and negotiate for themselves, to impose upon the
latter a contract the negotiation for which they were not even given notice of, consulted or
allowed to participate in, and to oust from the BLR the pending appeal on the certification issue.
In the latter case, KNITJOY and CFW are guilty of contumacious conduct. It goes without
saying then that the new CBA cannot validly include in its scope or coverage the monthly-paid
rank-and-file employees of KNITJOY. It does not bar the holding of a certification election to
determine their sole bargaining agent, and the negotiation for and the execution of a subsequent
CBA between KNITJOY and the eventual winner in said election. Section 4, Rule V, Book V of
the Rules Implementing the Labor Code expressly provides:jgc:chanrobles.com.ph
"SECTION 4. Effects of early agreements. The representation case shall not, however, be
adversely affected by a collective bargaining agreement registered before or during the last 60
days of a subsisting agreement or during the pendency of the representation case." (Emphasis
supplied)
The public respondent then committed no abuse of discretion ordering a certification election
among the monthly-paid rank-and-file employees, except managerial employees, of KNITJOY.
The choice however, should not be, as correctly contended by CFW, limited to merely (a)
KMEU and (b) no union. The records disclose that the intervenors in the petition for certification
are the KMEA-CCLU and CFW. They should be included as among the choices in the
certification election.cralawnad

WHEREFORE, the instant petitions are DISMISSED. However, the challenged decision of
public respondent of 1 December 1987 is modified to include in the choices for the certification
election petitioner Confederation of Filipino Workers (CFW) and the Knitjoy Monthly
Employees Association and Confederation of Citizens Labor Unions (KMEU-CCLU).
Costs against petitioners.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on official leave.